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EXHIBIT 1.1
BEACH FIRST NATIONAL BANCSHARES, INC.
520,000 SHARES(1)
COMMON STOCK
UNDERWRITING AGREEMENT
July __, 0000
Xxxxx & Xxxxxxxxxxxx, Inc.
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Ladies and Gentlemen:
Beach First National Bancshares, Inc., a South Carolina corporation (herein
called the Company), proposes to issue and sell 520,000 shares of its authorized
but unissued Common Stock, $1.00 par value (herein called the Common Stock),
(such 520,000 shares of Common Stock being herein called the Underwritten
Stock). The Company proposes to grant to the Underwriter (as hereinafter
defined) an option to purchase up to 68,182 additional shares of Common Stock
(herein called the Option Stock and with the Underwritten Stock herein
collectively called the Stock). The Common Stock is more fully described in the
Registration Statement and the Prospectus hereinafter mentioned.
1. REGISTRATION STATEMENT. The Company has filed with the Securities and
Exchange Commission (herein called the Commission) a registration statement on
Form S-2 (No. 333-57120), including the related preliminary prospectus, for the
registration under the Securities Act of 1933, as amended (herein called the
Securities Act) of the Stock. Copies of such registration statement and of each
amendment thereto, if any, including the related preliminary prospectus (meeting
the requirements of Rule 430A of the rules and regulations of the Commission)
heretofore filed by the Company with the Commission have been delivered to you.
The term Registration Statement as used in this agreement shall mean such
registration statement, including all exhibits and financial statements, all
information omitted therefrom in reliance upon Rule 430A and contained in the
Prospectus referred to below, in the form in which it became effective, and any
registration statement filed pursuant to Rule 462(b) of the rules and
regulations of the Commission with respect to the Stock (herein called a Rule
462(b) registration statement), and, in the event of any amendment thereto after
the effective date of such registration statement (herein called the Effective
Date), shall also mean (from and after the
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(1) Plus an option to purchase from the Company up to 68,182 additional shares
to cover overallotments.
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effectiveness of such amendment) such registration statement as so amended
(including any Rule 462(b) registration statement). The term Prospectus as used
in this Agreement shall mean the prospectus relating to the Stock first filed
with the Commission pursuant to Rule 424(b) and Rule 430A (or if no such filing
is required, as included in the Registration Statement) and, in the event of any
supplement or amendment to such prospectus after the Effective Date, shall also
mean (from and after the filing with the Commission of such supplement or the
effectiveness of such amendment) such prospectus as so supplemented or amended.
The term Preliminary Prospectus as used in this Agreement shall mean each
preliminary prospectus included in such registration statement prior to the time
it becomes effective.
The Registration Statement has been declared effective under the Securities Act,
and no post-effective amendment to the Registration Statement has been filed as
of the date of this Agreement. The Company has caused to be delivered to you
copies of each Preliminary Prospectus and has consented to the use of such
copies for the purposes permitted by the Securities Act.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants as follows:
(a) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the jurisdiction of its
incorporation, has full corporate power and authority to own or lease its
properties and conduct its business as described in the Registration Statement
and the Prospectus and as being conducted, and is duly qualified as a foreign
corporation and in good standing in all jurisdictions in which the character of
the property owned or leased or the nature of the business transacted by it
makes qualification necessary (except where the failure to be so qualified would
not have a material adverse effect on the business, properties, financial
condition or results of operations of the Company and its subsidiaries, taken as
a whole).
(b) Except as disclosed in the Prospectus, the Company owns all of
the shares of capital stock of each subsidiary of the Company and each of the
Company's subsidiaries has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has full corporate power and authority to own or lease its
properties and conduct its business as described in the Registration Statement
and the Prospectus and as being conducted, and is duly qualified as a foreign
corporation and in good standing in all jurisdictions in which the character of
the property owned or leased or the nature of the business transacted by it
makes qualification necessary (except where the failure to be so qualified would
not have a material adverse effect on the business, properties, financial
condition or results of operations of the Company and its subsidiaries, taken as
a whole). All of the issued shares of capital stock of each subsidiary of the
Company have been duly and validly authorized and issued, are fully paid and
non-assessable (except as provided by Section 55 of the National Bank Act), and
are owned directly by the Company, fee and clear of all liens, encumbrances,
equities or claims.
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(c) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there has not been any materially
adverse change in the business, properties, financial condition 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, other than as set
forth in the Registration Statement and the Prospectus, and since such dates,
except in the ordinary course of business, neither the Company nor any of its
subsidiaries (i) has entered into any material transaction or incurred any
material liability or obligation, direct or contingent, not referred to in the
Registration Statement and the Prospectus; (ii) has purchased any of its
outstanding capital stock, or declared, paid or otherwise made any dividend or
distribution of any kind on its capital stock; or (iii) has had any material
change in the capital stock, short-term debt or long-term debt of the Company
and its consolidated subsidiaries, taken as a whole, except for the grant of
stock options under the Company's stock option plans as described in the
Prospectus and the issuance of shares of Common Stock upon exercise of such
options, and otherwise in each case as described or specifically contemplated in
the Registration Statement and the Prospectus.
(d) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus relating to the proposed
offering of the Stock nor instituted or, to the knowledge of the Company,
threatened instituting proceedings for that purpose. The Registration Statement
and the Prospectus comply, and on the Closing Date (as hereinafter defined) and
any later date on which Option Stock is to be purchased, the Prospectus will
comply, in all material respects, with the provisions of the Securities Act and
the rules and regulations of the Commission thereunder; on the Effective Date,
the Registration Statement did not contain any untrue statement of a material
fact and did not omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading; and, on the
Effective Date the Prospectus did not and, on the Closing Date and any later
date on which Option Stock is to be purchased, will not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; PROVIDED, HOWEVER, that none of the
representations and warranties in this subparagraph (d) shall apply to
statements in, or omissions from, the Registration Statement or the Prospectus
made in reliance upon and in conformity with information herein or otherwise
furnished in writing to the Company by or on behalf of the Underwriter for use
in the Registration Statement or the Prospectus.
(e) The Common Stock outstanding prior to the issuance of the
Common Stock to be sold by the Company has been duly authorized and is validly
issued, fully paid and non-assessable. Except as set forth in the Prospectus and
other than options to purchase shares of the Company's Common Stock granted to
employees and directors (including former employees) pursuant to the Company's
1997 Stock Option Plan (herein referred to as the 1997 Plan) as described in the
Prospectus, neither the Company nor any of its subsidiaries has outstanding any
options to purchase, or any preemptive rights or other rights to subscribe for
or to purchase, any securities or obligations convertible into, or any contracts
or commitments to issue or sell, shares of its capital stock or any such
options, rights, convertible securities or obligations. All outstanding shares
of capital stock and options and other rights to acquire capital stock have been
issued in compliance with the registration and qualification provisions of all
applicable securities laws (or applicable exemptions thereof) other than federal
or state antifraud laws and were not
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issued in violation of any preemptive rights, rights of first refusal and other
similar rights. The Stock to be sold by the Company has been duly authorized,
and when issued and delivered in accordance with the terms of this Agreement,
will be validly issued, fully paid and non-assessable, and the issuance of such
Shares will not be subject to any preemptive or similar rights. No further
corporate action on the part of the shareholders or the Board of Directors of
the Company will be required for the transfer and sale of the Stock to be sold
by the Company as contemplated herein.
(f) The authorized capital stock of the Company conforms as to
legal matters in all material respects to the description thereof contained in
the Prospectus. The form of certificates for the Stock conforms in all material
respects to the corporate law of the jurisdiction of the Company's
incorporation, and the Company's articles of incorporation and bylaws.
(g) The consolidated financial statements of the Company, together
with related notes and schedules as set forth in the Registration Statement
("Company Financial Statements"), present fairly the financial position and the
results of operations of the Company and its subsidiaries, taken as a whole, at
the indicated dates and for the indicated periods. The Company Financial
Statements, schedules and related notes have been prepared in accordance with
generally accepted accounting principles, consistently applied through the
period involved, except as may be otherwise stated therein, and all adjustments
necessary for a fair presentation of results for such periods have been made.
(h) Neither the Company nor any of its subsidiaries is in
violation or default under any provision of their respective charter documents
or bylaws, as currently in effect, or any indenture, license, mortgage, lease,
franchise, permit, deed of trust or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or their respective properties is bound or may be affected,
except where such violation or default would not have a material adverse effect
on the business, financial condition or results of operations of the Company and
its subsidiaries taken as a whole.
(i) The Company has full legal right, power and authority to enter
into this Agreement and perform the transactions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by the Company and is
a valid and binding agreement on the part of the Company, enforceable in
accordance with its terms, except as rights to indemnity and contribution
hereunder may be limited by applicable laws and except as the enforcement hereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors' rights generally, or by general
equitable principles.
(j) The execution and performance of this Agreement and the
consummation of the transactions herein contemplated do not and will not
conflict with or result in a breach of, or violation of, any of the terms or
provisions of, or constitute, either by itself or upon notice or the passage of
time or both, a default under, any indenture, license, mortgage, lease,
franchise, permit, deed of trust or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or their respective properties is bound or may be affected, or
violate any material order, judgment, statute, rule or regulation applicable to
the Company or any of its subsidiaries of any court or of any regulatory,
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administrative or governmental body or agency having jurisdiction over the
Company, any of its subsidiaries or their respective properties except where
such breach, violation or default would not have a materially adverse effect on
the business, financial condition or results of operations of the Company and
its subsidiaries taken as a whole, or violate any of the provisions of the
charter or articles of incorporation or bylaws, as applicable, each as amended,
of the Company or any of its subsidiaries.
(k) There are no legal or governmental proceedings pending or, to
the Company's knowledge, threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the Company or its
subsidiaries is subject that are required to be described in the Registration
Statement or the Prospectus and are not so described or any statutes,
regulations, contracts or other documents that are required to be described in
the Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required. The
contracts so described in the Prospectus are in full force and effect on the
date hereof except as disclosed therein; and neither the Company nor any of its
subsidiaries nor, to the Company's knowledge any other party, is in material
breach of or default under any of such contracts.
(l) The Company and its subsidiaries possess all consents,
approvals, orders, certificates, authorizations and permits issued by, and has
made all declarations and filings with, all appropriate federal, state or
foreign governmental and self-regulatory authorities and all courts and other
tribunals and all required state agencies in connection with applicable
franchise laws, regulations and requirements necessary to conduct their
respective businesses and to own, lease, license and use their properties in the
manner described in the Prospectus, except to the extent that the failure to
obtain or file would not have a material adverse effect on the business,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, and neither the Company nor its subsidiaries has
received any notice of proceedings related to the revocation or modification of
any such consent, approval, order, certificate, authorization or permit that,
singly or in the aggregate, would have a material adverse effect on the
business, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole.
(m) The Company and each of its subsidiaries (i) are in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws with
respect to its business as conducted and as proposed to be conducted in the
Registration Statement and (iii) are in compliance with all terms and conditions
of any such permit, license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits,
licenses or approvals would not, singly or in the aggregate, have a material
adverse effect on the business, financial condition or results of operations of
the Company or its subsidiaries, taken as a whole. To the Company's knowledge,
there are no costs or liabilities associated with Environmental Laws (including,
without limitation, any capital or operating expenditures required for clean-up,
closure of properties or compliance with Environmental Laws or any permit,
license or approval, any related constraints on operating activities and any
potential liabilities to third parties) which
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would, singly or in the aggregate, have a material adverse effect on the Company
and its subsidiaries, taken as a whole.
(n) The Company and each of its subsidiaries has good and
marketable title to all real and personal property that they respectively own
free and clear of all liens, encumbrances and defects except such as are
described in the Registration Statement or the Prospectus or such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company or its
subsidiaries; and any real property and buildings held under lease by the
Company or its subsidiaries 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 by the Company
or its subsidiaries.
(o) The Company has not taken and will not take, directly or
indirectly, any action designed to cause or result in, or which constitutes or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock to facilitate the sale
or resale of the Stock.
(p) The Company and each of its subsidiaries owns or possesses
adequate rights to use all material patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names currently employed by
them in connection with the business now operated by them, and, except as
described in the Prospectus, neither the Company nor its subsidiaries has
received any notice of infringement of or conflict with asserted rights of
others with respect to any of the foregoing which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would result in
any material adverse change in the condition, financial or otherwise, or in the
earnings, business or operations of the Company or its subsidiaries, taken as a
whole. The expiration of any patents, patent rights or copyrights at their
respective expiration dates will not have a material adverse effect on the
business, financial condition or results of operations of the Company or its
subsidiaries, taken as a whole.
(q) 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 with the Company
would have any liability; the Company has not incurred and does not expect to
incur liability under (i) Title IV or 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 failure to act, that would cause the loss of such qualification.
(r) The Company is not and, after giving effect to the offering
and sale of the Stock and the application of the proceeds thereof as described
in the Prospectus, will not be an
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"investment company" or an entity "controlled" by an "investment company" as
such terms are defined in the Investment Company Act of 1940, as amended.
(s) There is no owner of any securities of the Company who has any
right, not effectively satisfied or waived, to require registration of any
shares of capital stock of the Company in connection with the filing of the
Registration Statement or the sale of any shares thereunder. There are no
contracts, agreements or understandings between the Company and any person
granting such person the right to require the Company to file a registration
statement under the Securities Act with respect to any securities of the Company
or to require the Company to include such securities with the Stock registered
pursuant to the Registration Statement.
(t) The Company and its subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles of the United States and to maintain asset accountability;
(iii) access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(u) No material labor dispute with employees of the Company or any
of its subsidiaries exists or to the knowledge of the Company is imminent, and,
without conducting any independent investigation, the Company has not been
notified in writing of any existing, threatened or imminent labor disturbance by
the employees of any of its principal suppliers, vendors or contractors that
could have a material adverse effect on the business, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole.
Except as disclosed in the Prospectus, the employment of each officer and
employee of the Company and its subsidiaries is terminable at the will of the
Company. To its knowledge, the Company and its subsidiaries have each complied
in all material respects with all applicable state and federal equal employment
opportunity laws and with other laws related to employment. To the Company's
knowledge, no employee of the Company or any of its subsidiaries, nor any
consultant or independent contractor with whom the Company or any of its
subsidiaries has contracted, is in violation of any term of any employment
contract, proprietary information agreement or any other agreement relating to
the right of any such individual to be employed by, or to contract with, the
Company because of the nature of the business to be conducted by the Company or
any of its subsidiaries; and to the Company's knowledge the continued employment
by the Company and its subsidiaries of its present employees, and the
performance of the Company's contracts with its independent contractors, will
not result in any such violation. The Company and its subsidiaries have not
received any notice alleging that any such violation has occurred. The Company
is not aware that any officer or key employee, or that any group of key
employees, intends to terminate their employment with the Company or any of its
subsidiaries, nor does the Company have a present intention to terminate the
employment of any of the foregoing.
(v) The Company has not offered, or caused the Underwriter to
offer, Stock to any person by way of directed shares with the specific intent to
unlawfully influence (i) a customer or
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supplier of the Company 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.
(w) The Company and each of its subsidiaries, taken as a whole,
are insured by insurers of recognized financial responsibility against such
losses and risks and in such amounts as are prudent and customary in the
business in which it is engaged, and neither the Company nor any of such
subsidiaries has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the Company
and its subsidiaries, taken as a whole, in each case except as described in or
contemplated by the Prospectus.
3. PURCHASE OF THE STOCK BY THE UNDERWRITER.
(a) On the basis of the representations and warranties and subject
to the terms and conditions herein set forth, the Company agrees to issue and
sell 520,000 shares of the Underwritten Stock to the Underwriter, and the
Underwriter agrees to purchase from the Company 520,000 shares of Underwritten
Stock. The price at which such shares of Underwritten Stock shall be sold by the
Company and purchased by the Underwriter shall be $___ per share which
represents a gross underwriting discount of seven percent (7.0%) of the offering
price of the Stock (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 150,000 of the Underwritten Stock (the
"Directed Shares") to the Directors and executive officers of the Company and
the Company subsidiaries and their immediate families, set forth in Schedule II
hereto (the "Named Directors and Officers"). Notwithstanding the first paragraph
of this Section 3(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 no Underwriting Discount in connection with the
sale of Directed Shares actually purchased by the Named Directors and Officers.
The Underwriting Discount shall apply with respect to any Directed Shares that
are not purchased by one of the Named Directors and Officer. The Company shall
pay to the Underwriter a financial advisory fee of $72,000; provided, however,
that if the number of Directed Shares purchased by the Named Directors and
Officers is less than 150,000 shares, the financial advisory fee will be equal
to an amount determined by multiplying $72,000 by a fraction the numerator of
which is the total number of Directed Shares purchased by Named Directors and
Officers and the denominator of which is 150,000.
(b) On the basis of the representations, warranties and covenants
herein contained, and subject to the terms and conditions herein set forth, the
Company grants an option to the Underwriter to purchase up to 68,182 shares in
the aggregate of the Option Stock from the Company at the same price per share
as the Underwriter shall pay for the Underwritten Stock. This option may be
exercised only to cover over-allotments in the sale of the Underwritten Stock
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by the Underwriter and may be exercised in whole or in part at any time (but not
more than once) on or before the thirtieth day after the date of this Agreement
upon written or faxed notice by you to the Company setting forth the aggregate
number of shares of the Option Stock as to which the Underwriter is exercising
the option. Delivery of certificates for the shares of Option Stock, and payment
therefor, shall be made as provided in Section 5 hereof.
4. OFFERING BY UNDERWRITER.
(a) The terms of the initial public offering by the Underwriter of
the Stock to be purchased by them shall be as set forth in the Prospectus.
(b) The information set forth under "Underwriting" in the
Registration Statement, any Preliminary Prospectus and the Prospectus relating
to the Stock filed by the Company (insofar as such information relates to the
Underwriter) constitutes the only information furnished by the Underwriter to
the Company for inclusion in the Registration Statement, any Preliminary
Prospectus, and the Prospectus, and the Underwriter represents and warrants to
the Company that the statements made therein are correct.
5. DELIVERY OF AND PAYMENT FOR THE STOCK.
(a) Delivery of certificates for the shares of the Underwritten
Stock and the Option Stock (if the option granted by Section 3(b) hereof shall
have been exercised not later than 10:00 A.M., Eastern Time, on the date two
business days preceding the Closing Date), and payment therefor, shall be made
at the office of Haynsworth Xxxxxxx Xxxx, P.A., 00 Xxxxxxx Xxxxx, Xxxxxxxx
Floor, Xxx Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000. Such delivery and
payment shall be made, at 10:00 a.m., Eastern Daylight Time, on ______ __, 2001
(the "Closing Date").
(b) If the option granted by Section 3(c) hereof shall be
exercised after 10:00 a.m., Eastern Daylight Time, on the date two business days
preceding the Closing Date, delivery of certificates for the shares of Option
Stock, and payment therefor, shall be made at the office of Haynsworth Xxxxxxx
Xxxx, P.A., referenced above at 10:00 a.m., Eastern Daylight Time, on the third
business day after the exercise of such option.
(c) Payment for the Stock purchased from the Company shall be made
to the Company or its order by wire transfer or by one or more certified or
official bank check or checks in same day funds. Such payment shall be made upon
delivery of certificates for the Stock to you against receipt therefor signed by
you. Certificates for the Stock to be delivered to you shall be registered in
such name or names and shall be in such denominations as you may request at
least one business day before the Closing Date, in the case of Underwritten
Stock, and at least one business day prior to the purchase thereof, in the case
of the Option Stock. Such certificates will be made available to the
Underwriters for inspection, checking and packaging at the offices of First
Citizens Bank and Trust Company of South Carolina, 0000 Xxxx Xxxxxx, Xxxxxxxx,
Xxxxx Xxxxxxxx 00000 on the business day prior to the Closing Date or, in the
case of
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the Option Stock, by 3:00 p.m., Eastern Time, on the business day preceding the
date of purchase.
6. FURTHER AGREEMENTS OF THE COMPANY. The Company covenants and agrees as
follows:
(a) The Company will (i) prepare and timely file with the
Commission under Rule 424(b) a Prospectus containing information previously
omitted at the time of effectiveness of the Registration Statement in reliance
on Rule 430A and (ii) not file any amendment to the Registration Statement or
supplement to the Prospectus of which you shall not previously have been advised
and furnished with a copy or to which you shall have reasonably objected in
writing or which is not in compliance with the Securities Act or the rules and
regulations of the Commission.
(b) The Company will promptly notify you in the event of (i) the
request by the Commission for amendment of the Registration Statement or for
supplement to the Prospectus or for any additional information, (ii) the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement, (iii) the institution or notice of intended institution
of any action or proceeding for that purpose, (iv) the receipt by the Company of
any notification with respect to the suspension of the qualification of the
Stock for sale in any jurisdiction, or (v) the receipt by it of notice of the
initiation or threatening of any proceeding for such purpose. The Company will
make every reasonable effort to prevent the issuance of such a stop order and,
if such an order shall at any time be issued, to obtain the withdrawal thereof
at the earliest possible moment.
(c) The Company will (i) on or before the Closing Date, deliver to
you a signed copy of the Registration Statement as originally filed and of each
amendment thereto filed prior to the time the Registration Statement becomes
effective and, promptly upon the filing thereof, a signed copy of each
post-effective amendment, if any, to the Registration Statement (together with,
in each case, all exhibits thereto unless previously furnished to you), (ii) as
promptly as possible deliver to you at such office or offices as you may
designate, as many copies of the Prospectus as you may reasonably request, and
(iii) thereafter from time to time during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer, likewise send to
you as many additional copies of the Prospectus and as many copies of any
supplement to the Prospectus and of any amended prospectus, filed by the Company
with the Commission, as you may reasonably request for the purposes contemplated
by the Securities Act.
(d) If at any time during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer any event relating
to or affecting the Company, or of which the Company shall be advised in writing
by you, shall occur as a result of which it is necessary, in the opinion of
counsel for the Company or of your counsel, to supplement or amend the
Prospectus in order to make the Prospectus not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser of the Stock,
the Company will forthwith prepare and file with the Commission a supplement to
the Prospectus or an amended prospectus so that the Prospectus as so
supplemented or amended will not contain any untrue
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statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances existing
at the time such Prospectus is delivered to such purchaser, not misleading. The
Company authorizes the Underwriter and all dealers to whom any of the Stock may
be sold by the Underwriter to use the Prospectus, as from time to time amended
or supplemented, in connection with the sale of the Stock in accordance with the
applicable provisions of the Securities Act and the applicable rules and
regulations thereunder for such period.
(e) Prior to the filing thereof with the Commission, the Company
will submit to you, for your information, a copy of any post-effective amendment
to the Registration Statement and any supplement to the Prospectus or any
amended prospectus proposed to be filed.
(f) The Company will cooperate, when and as requested by you, in
the qualification of the Stock for offer and sale under the securities or blue
sky laws of such jurisdictions as you may designate and, during the period in
which a prospectus is required by law to be delivered by an Underwriter or
dealer, in keeping such qualifications in good standing under such securities or
blue sky laws; PROVIDED, HOWEVER, that the Company shall not be obligated to
file any general consent to service of process or to qualify as a foreign
corporation in any jurisdiction in which it is not so qualified. 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 you may reasonably request for distribution of the
Stock.
(g) For at least five years commencing with the date hereof, the
Company will file with the Commission on a timely basis all information,
documents and reports required to be so filed by law and regulation and will
make available to you copies of all periodic and special reports furnished to
shareholders of the Company and of all information, documents and reports filed
with the Commission. Further, during such period, the Company will take all
steps which may be necessary to cause the Common Stock to be eligible for
quotation on the OTC Bulletin Board.
(h) Not later than the 45th day following the end of the fiscal
quarter first occurring after the first anniversary of the Effective Date, the
Company will make generally available to its security holders an earnings
statement in accordance with Section 11(a) of the Securities Act and Rule 158
thereunder.
(i) The Company agrees to pay all costs and expenses incident to
the performance of obligations under this Agreement, including all costs and
expenses incident to (i) the preparation, printing and filing with the
Commission and the National Association of Securities Dealers, Inc. ("NASD") of
the Registration Statement, any Preliminary Prospectus and the Prospectus, (ii)
the furnishing to the Underwriter of copies of any Preliminary Prospectus and of
the several documents required by paragraph (c) of this Section 6 to be so
furnished (iii) the printing of this Agreement and related documents delivered
to the Underwriter, (iv) the preparation, printing and filing of all supplements
and amendments to the Prospectus referred to in paragraph (d) of this Section 6,
(v) the furnishing to you of the reports and information referred to in
paragraph (g) of
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this Section 6 and (vi) the printing and issuance of stock certificates,
including the transfer agent's fees.
(j) The Company agrees to reimburse you for blue sky fees and
related disbursements (including counsel fees and disbursements up to an
aggregate amount of $20,000.00) paid by or for the account of the you or your
counsel in qualifying the Stock under state securities or blue sky laws and in
the review of the offering by the NASD.
(k) The Company agrees to reimburse you for: (i) all of your
expenses related to due diligence and investigation of the business and
financial condition of the Company up to a maximum of $2,000.00; (ii) fees and
expenses of your counsel up to a maximum of $45,000.00; (iii) listing fees for
the Common Stock on the NASDAQ, Inc., OTC Bulletin Board; and (iv) all
miscellaneous and travel fees and expenses incurred by you and all expenses of
informational meetings associated with the offering of the Underwritten Stock up
to a maximum of $12,000.00.
(l) The Company hereby agrees that, without the prior written
consent of the Underwriter, the Company and its executive officers and directors
will not, for a period of 180 days following the effective date of the
Registration Statement, directly or indirectly, sell, lend, offer, contract to
sell, transfer the economic risk of ownership in, make any short sale, pledge or
otherwise dispose of any shares of Common Stock or any securities convertible
into or exchangeable or exercisable for or any other rights to purchase or
acquire Common Stock. The foregoing sentence shall not apply to (A) the Stock to
be sold to you pursuant to this Agreement, (B) shares of Common Stock issued by
the Company upon the exercise of options granted or to be granted under the 1997
Plan, all as described in the Preliminary Prospectus, and (C) options to
purchase Common Stock granted or to be granted under the 1997 Plan.
(m) The Company is familiar with the Investment Company Act of
1940, as amended, and has in the past conducted its affairs, and will in the
future conduct its affairs, in such a manner to ensure that the Company was not
and will not be an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, and the rules and regulations thereunder.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) Subject to the provisions of paragraph (f) of this Section 7,
the Company agrees to indemnify and hold harmless you and each person (including
each partner or officer thereof) who controls you within the meaning of Section
15 of the Securities Act from and against any and all losses, claims, damages or
liabilities, joint or several, to which such indemnified parties or any of them
may become subject under the Securities Act, the Exchange Act, or the common law
or otherwise, and the Company agrees to reimburse you and each such controlling
person for any legal or other expenses (including, except as otherwise
hereinafter provided, reasonable fees and disbursements of counsel) incurred by
the respective indemnified parties in connection with defending against any such
losses, claims, damages or liabilities or in connection with any investigation
or inquiry of, or other proceeding which may be brought against, the respective
indemnified parties, in each case arising out of or based upon (i) any untrue
statement or alleged
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untrue statement of a material fact contained in the Registration Statement
(including the Prospectus as part thereof and any Rule 462(b) registration
statement) or any post-effective amendment thereto (including any Rule 462(b)
registration statement), or 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, or (ii) any untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus or the Prospectus (as
amended or as supplemented if the Company shall have filed with the Commission
any amendment thereof or supplement thereto) or the omission or alleged omission
to state therein a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; PROVIDED, HOWEVER, that (1) the indemnity agreements of the Company
contained in this paragraph (a) shall not apply to any such losses, claims,
damages, liabilities or expenses if such statement or omission was made in
reliance upon and in conformity with information furnished as herein stated or
otherwise furnished in writing to the Company by or on behalf of you for use in
any Preliminary Prospectus or the Registration Statement or the Prospectus or
any such amendment thereof or supplement thereto, (2) the indemnity agreements
contained in this paragraph (a) with respect to any Preliminary Prospectus shall
not inure to your benefit (or to the benefit of any person controlling you) if
at or prior to the written confirmation of the sale of such Stock a copy of the
Prospectus (or the Prospectus as amended or supplemented) was not sent or
delivered to the person asserting any such losses, claims, damages, liabilities
or expenses and the untrue statement or omission of a material fact contained in
such Preliminary Prospectus was corrected in the Prospectus (or the Prospectus
as amended or supplemented) unless the failure is the result of noncompliance by
the Company with paragraph (c) of Section 6 hereof. The indemnity agreements of
the Company contained in this paragraph (a) and the representations and
warranties of the Company contained in Section 2 hereof shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of any indemnified party and shall survive the delivery of and payment
for the Stock.
(b) You agree to indemnify and hold harmless the Company, each of
its officers who signs the Registration Statement on his own behalf or pursuant
to a power of attorney, each of its directors, and each person (including each
partner or officer thereof) who controls the Company within the meaning of
Section 15 of the Securities Act, from and against any and all losses, claims,
damages or liabilities, joint or several, to which such indemnified parties or
any of them may become subject under the Securities Act, the Exchange Act, or
the common law or otherwise and to reimburse each of them for any legal or other
expenses (including, except as otherwise hereinafter provided, reasonable fees
and disbursements of counsel) incurred by the respective indemnified parties in
connection with defending against any such losses, claims, damages or
liabilities or in connection with any investigation or inquiry of, or other
proceeding which may be brought against, the respective indemnified parties, in
each case arising out of or based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(including the Prospectus as part thereof and any Rule 462(b) registration
statement) or any post-effective amendment thereto (including any Rule 462(b)
registration statement) or 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 or (ii) any untrue statement or alleged untrue statement
of a material fact contained in the Prospectus (as amended or as supplemented if
the Company shall have filed with the Commission any amendment thereof or
supplement thereto) or the omission or alleged omission to state therein a
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material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, if such statement
or omission was made in reliance upon and in conformity with information
furnished as herein stated or otherwise furnished in writing to the Company by
or on behalf of you for use in the Registration Statement or the Prospectus or
any such amendment thereof or supplement thereto. The indemnity agreement of the
Underwriter contained in this paragraph (b) shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
indemnified party and shall survive the delivery of and payment for the Stock.
(c) Each party indemnified under the provision of paragraphs (a)
and (b) of this Section 7 agrees that, upon the service of a summons or other
initial legal process upon it in any action or suit instituted against it or
upon its receipt of written notification of the commencement of any
investigation or inquiry of, or proceeding against, it in respect of which
indemnity may be sought on account of any indemnity agreement contained in such
paragraphs, it will promptly give written notice (herein called the Notice) of
such service or notification to the party or parties from whom indemnification
may be sought hereunder. No indemnification provided for in such paragraphs
shall be available to any party who shall fail so to give the Notice if the
party to whom such Notice was not given was unaware of the action, suit,
investigation, inquiry or proceeding to which the Notice would have related and
was prejudiced by the failure to give the Notice, but the omission so to notify
such indemnifying party or parties of any such service or notification shall not
relieve such 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 such indemnity agreement. Any indemnifying party shall be entitled at its own
expense to participate in the defense of any action, suit or proceeding against,
or investigation or inquiry of, an indemnified party. Any indemnifying party
shall be entitled, if it so elects within a reasonable time after receipt of the
Notice by giving written notice (herein called the Notice of Defense) to the
indemnified party, to assume (alone or in conjunction with any other
indemnifying party or parties) the entire defense of such action, suit,
investigation, inquiry or proceeding, in which event such defense shall be
conducted, at the expense of the indemnifying party or parties, by counsel
chosen by such indemnifying party or parties and reasonably satisfactory to the
indemnified party or parties; PROVIDED, HOWEVER, that (i) if the indemnified
party or parties reasonably determine that there may be a conflict between the
positions of the indemnifying party or parties and of the indemnified party or
parties in conducting the defense of such action, suit, investigation, inquiry
or proceeding or that there may be legal defenses available to such indemnified
party or parties different from or in addition to those available to the
indemnifying party or parties, then counsel for the indemnified party or parties
shall be entitled to conduct the defense to the extent reasonably determined by
such counsel to be necessary to protect the interests of the indemnified party
or parties and (ii) in any event, the indemnified party or parties shall be
entitled to have counsel chosen by such indemnified party or parties participate
in, but not conduct, the defense. If, within a reasonable time after receipt of
the Notice, an indemnifying party gives a Notice of Defense and the counsel
chosen by the indemnifying party or parties is reasonably satisfactory to the
indemnified party or parties, the indemnifying party or parties will not be
liable under paragraphs (a) through (c) of this Section 7 for any legal or other
expenses subsequently incurred by the indemnified party or parties in connection
with the defense of the action, suit, investigation, inquiry or proceeding,
except that (A) the indemnifying party or parties shall bear the legal and other
expenses incurred in
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connection with the conduct of the defense as referred to in clause (i) of the
proviso to the preceding sentence and (B) the indemnifying party or parties
shall bear such other expenses as it or they have authorized to be incurred by
the indemnified party or parties. If, within a reasonable time after receipt of
the Notice, no Notice of Defense has been given, the indemnifying party or
parties shall be responsible for any legal or other expenses incurred by the
indemnified party or parties in connection with the defense of the action, suit,
investigation, inquiry or proceeding.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
paragraph (a) or (b) of this Section 7, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in paragraph (a) or (b) of this Section 7 (i) in such
proportion as is appropriate to reflect the relative benefits received by each
indemnifying party from the offering of the Stock or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of each indemnifying party in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, or actions in respect thereof, as well as any
other relevant equitable considerations. The relative benefits received by the
Company and you shall be deemed to be in the same respective proportions as the
total net proceeds from the offering of the Stock received by the Company and
the total underwriting discount received by you, as set forth in the table on
the cover page of the Prospectus, bear to the aggregate public offering price of
the Stock. 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 each indemnifying party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission.
The parties agree that it would not be just and equitable if contributions
pursuant to this paragraph (d) were to be determined by pro rata allocation or
by any other method of allocation which does not take into account the equitable
considerations referred to in the first sentence of this paragraph (d). The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities, or actions in respect thereof, referred to in the first sentence
of this paragraph (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigation,
preparing to defend or defending against any action or claim which is the
subject of this paragraph (d). Notwithstanding the provisions of this paragraph
(d), you shall not be required to contribute any amount in excess of the
underwriting discount applicable to the Stock purchased by you. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
Each party entitled to contribution agrees that upon the service of a summons or
other initial legal process upon it in any action instituted against it in
respect of which contribution may be sought, it will promptly give written
notice of such service to the party or parties from whom contribution may be
sought, but the omission so to notify such party or parties of any such service
shall not relieve the party from whom contribution may be sought from any
obligation it
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may have hereunder or otherwise (except as specifically provided in paragraph
(c) of this Section 7).
(e) The Company will not, without your prior written consent,
settle or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which indemnification
may be sought hereunder (whether or not you or any person who controls you
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act is a party to such claim, action, suit or proceeding) unless such
settlement, compromise or consent includes an unconditional release of you and
each such controlling person from all liability arising out of such claim,
action, suit or proceeding.
8. TERMINATION. This Agreement may be terminated by you at any time prior
to the Closing Date by giving written notice to the Company if after the date of
this Agreement trading in the Common Stock shall have been suspended, or if
there shall have occurred (i) the engagement in hostilities or an escalation of
major hostilities by the United States or the declaration of war or a national
emergency by the United States on or after the date hereof, (ii) any outbreak of
hostilities or other national or international calamity or crisis or change in
economic or political conditions if the effect of such outbreak, calamity,
crisis or change in economic or political conditions in the financial markets of
the United States would, in your reasonable judgment, make the offering or
delivery of the Stock impracticable, (iii) suspension of trading in securities
generally or a material adverse decline in value of securities generally on the
New York Stock Exchange, the American Stock Exchange, or The Nasdaq Stock
Market, or limitations on prices (other than limitations on hours or numbers of
days of trading) for securities on either such exchange or system, if the effect
of such material adverse decline or limitation on prices would, in your
reasonable judgment, make the offering or delivery of the Stock impracticable,
(iv) the enactment, publication, decree or other promulgation of any federal or
state statute, regulation, rule or order of, or commencement of any proceeding
or investigation by, any court, legislative body, agency or other governmental
authority which in your reasonable opinion materially and adversely affects or
will materially or adversely affect the business or operations of the Company,
(v) declaration of a banking moratorium by federal authorities or (vi) the
taking of any action by any federal, state or local government or agency in
respect of its monetary or fiscal affairs which in your reasonable opinion has a
material adverse effect on the securities markets in the United States, if the
effect of such action would, in your reasonable judgment, make the offering or
delivery of the Stock impracticable. If this Agreement shall be terminated
pursuant to this Section 8, there shall be no liability of the Company to you
and no liability of you to the Company; PROVIDED, HOWEVER, that in the event of
any such termination the Company agree to indemnify and hold you harmless from
all costs or expenses incident to the performance of the obligations of the
Company under this Agreement, including all costs and expenses referred to in
paragraphs (i) and (j) of Section 6 hereof.
9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. Your obligation to purchase
and pay for the Stock shall be subject to the performance by the Company of all
its obligations to be performed hereunder at or prior to the Closing Date or any
later date on which Option Stock is to be purchased, as the case may be, and to
the following further conditions:
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(a) The Registration Statement shall have become effective; and no
stop order suspending the effectiveness thereof shall have been issued and no
proceedings therefor shall be pending or threatened by the Commission.
(b) The legality and sufficiency of the sale of the Stock
hereunder and the validity and form of the certificates representing the Stock,
all corporate proceedings and other legal matters incident to the foregoing, and
the form of the Registration Statement and of the Prospectus (except as to the
financial statements contained therein), shall have been approved at or prior to
the Closing Date by your counsel, Haynsworth Xxxxxxx Xxxx, P.A.
(c) You shall have received from Xxxxxx Xxxxxxx Xxxxx &
Scarborough, LLP, counsel for the Company, an opinion, addressed to you and
dated the Closing Date, covering the matters set forth in Annex A hereto, and if
Option Stock is purchased at any date after the Closing Date, additional
opinions from such counsel, addressed to you and dated such later date,
confirming that the statements expressed as of the Closing Date in such opinions
remain valid as of such later date.
(d) You shall be satisfied that (i) as of the Effective Date, the
statements made in the Registration Statement and the Prospectus were true and
correct and neither the Registration Statement nor the Prospectus omitted to
state any material fact required to be stated therein or necessary in order to
make the statements therein, respectively, not misleading, (ii) since the
Effective Date, no event has occurred which should have been set forth in a
supplement or amendment to the Prospectus which has not been set forth in such a
supplement or amendment, (iii) since the respective dates as of which
information is given in the Registration Statement in the form in which it
originally became effective and the Prospectus contained therein, there has not
been any material adverse change or any development involving a prospective
material adverse change in or affecting the business, properties, financial
condition 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, and, since such dates, except in the ordinary course of business,
neither the Company nor any of its subsidiaries has entered into any material
transaction not referred to in the Registration Statement in the form in which
it originally became effective and the Prospectus contained therein, (iv)
neither the Company nor any of its subsidiaries has any material contingent
obligations which are not disclosed in the Registration Statement and the
Prospectus, (v) there are not any pending or known threatened legal proceedings
to which the Company or any of its subsidiaries is a party or of which property
of the Company or any of its subsidiaries is the subject which are material and
which are not disclosed in the Registration Statement and the Prospectus, (vi)
there are not any franchises, contracts, leases or other documents which are
required to be filed as exhibits to the Registration Statement which have not
been filed as required, (vii) the representations and warranties of the Company
herein are true and correct in all material respects as of the Closing Date or
any later date on which Option Stock is to be purchased, as the case may be, and
(viii) there has not been any material change in the market for securities in
general or in political, financial or economic conditions from those reasonably
foreseeable as to render it impracticable in your reasonable judgment to make a
public offering of the Stock, or a material adverse change in market levels for
securities in general (or those of companies in particular) or financial or
economic conditions which render it inadvisable to proceed.
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(e) You shall have received on the Closing Date and on any later
date on which Option Stock is purchased a certificate, dated the Closing Date or
such later date, as the case may be, and signed by the President and the Chief
Financial Officer of the Company, stating that the respective signers of such
certificate have carefully examined the Registration Statement in the form in
which it originally became effective and the Prospectus contained therein and
any supplements or amendments thereto, and that the statements included in
clauses (i) through (vii) of paragraph (d) of this Section 9 are true and
correct.
(f) You shall have received from Xxxxxxx, Xxxxx & Co., LLP, a
letter or letters, addressed to the Underwriter and dated the Closing Date and
any later date on which Option Stock is purchased, confirming that they are
independent public accountants with respect to the Company within the meaning of
the Securities Act and the applicable published rules and regulations thereunder
and based upon the procedures described in their letter delivered to you
concurrently with the execution of this Agreement (herein called the Original
Letter), but carried out to a date not more than three business days prior to
the Closing Date or such later date on which Option Stock is purchased (i)
confirming, to the extent true, that the statements and conclusions set forth in
the Original Letter are accurate as of the Closing Date or such later date, as
the case may be, and (ii) setting forth any revisions and additions to the
statements and conclusions set forth in the Original Letter which are necessary
to reflect any changes in the facts described in the Original Letter since the
date of the Original Letter or to reflect the availability of more recent
financial statements, data or information. The letters shall not disclose any
change, or any development involving a prospective change, in or affecting the
business or properties of the Company or any of its subsidiaries which, in your
sole judgment, makes it impractical or inadvisable to proceed with the public
offering of the Stock or the purchase of the Option Stock as contemplated by the
Prospectus. You shall have been furnished evidence in usual written or
telegraphic form from the appropriate authorities of the several jurisdictions,
or other evidence satisfactory to you, of the qualification referred to in
paragraph (f) of Section 6 hereof.
(g) On or prior to the Closing Date, you shall have received from
all current and former directors of the Company except for Xxxxxxx Xxxx Xxxx and
Xx. Xxxx X. Xxxxx, Xx. (subject to such other exceptions as may be agreed upon
by you) agreements, in form reasonably satisfactory to you, stating that without
the prior written consent of you, such person or entity will not, for a period
of 180 days following the effective date of the Registration Statement, directly
or indirectly, sell, lend, offer, contract to sell, transfer the economic risk
of ownership in, make any short sale, pledge or otherwise dispose of any shares
of Common Stock or any securities convertible into or exchangeable or
exercisable for or any other rights to purchase or acquire Common Stock.
All the agreements, opinions, certificates and letters mentioned above
or elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if your counsel, Haynsworth Xxxxxxx Xxxx, P.A., shall be
satisfied that they comply in form and scope.
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In case any of the conditions specified in this Section 9 shall not be
fulfilled, this Agreement may be terminated by you by giving notice to the
Company. Any such termination shall be without liability of the Company to you
and without liability of you to the Company; PROVIDED, HOWEVER, that (i) in the
event of such termination, the Company agrees to indemnify and hold you harmless
from all costs or expenses incident to the performance of the obligations of the
Company under this Agreement, including all costs and expenses referred to in
paragraphs (i) and (j) of Section 6 hereof, and (ii) if this Agreement is
terminated by you because of any refusal, inability or failure on the part of
the Company to perform any agreement herein, to fulfill any of the conditions
herein, or to comply with any provision hereof other than by reason of a default
by you, the Company will reimburse you upon demand for all out-of-pocket
expenses (including reasonable fees and disbursements of counsel) that shall
have been incurred by you in connection with the transactions contemplated
hereby; but the Company shall not in any event be liable to you for damages on
account of loss of anticipated profits from the sale by it of the Stock.
10. CONDITIONS OF THE OBLIGATION OF THE COMPANY. The obligation of the
Company to deliver the Stock shall be subject to the conditions that (a) the
Registration Statement shall have become effective and (b) no stop order
suspending the effectiveness thereof shall be in effect and no proceedings
therefor shall be pending or threatened by the Commission.
In case either of the conditions specified in this Section 10 shall not be
fulfilled, this Agreement may be terminated by the Company by giving notice to
you. Any such termination shall be without liability of the Company to you and
without liability of you to the Company; PROVIDED, HOWEVER, that in the event of
any such termination the Company agrees to indemnify and hold you harmless from
all costs or expenses incident to the performance of the obligations of the
Company under this Agreement, including all costs and expenses referred to in
paragraphs (i) and (j) of Section 6 hereof.
11. REIMBURSEMENT OF CERTAIN EXPENSES. In addition to their other
obligations under Section 7 of this Agreement, the Company agrees to reimburse
you on a quarterly basis for all reasonable legal and other expenses incurred in
connection with investigating or defending any claim, action, investigation,
inquiry or other proceeding arising out of or based upon any statement or
omission, or any alleged statement or omission, described in paragraph (a) of
Section 7 of this Agreement, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the obligations under
this Section 11 and the possibility that such payments might later be held to be
improper; PROVIDED, HOWEVER, that (i) to the extent any such payment is
ultimately held to be improper, the persons receiving such payments shall
promptly refund them and (ii) such persons shall provide to the Company, upon
request, reasonable assurances of their ability to effect any refund, when and
if due.
12. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall inure to
the benefit of the Company and you and, with respect to the provisions of
Section 7 hereof, the several parties (in addition to the Company and you)
indemnified under the provisions of such Section 7, and their respective
personal representatives, successors and assigns. Nothing in this Agreement is
intended or shall be construed to give to any other person, firm or corporation
any
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legal or equitable remedy or claim under or in respect of this Agreement or any
provision herein contained. The term "successors and assigns" as herein used
shall not include any purchaser, as such purchaser, of any of the Stock from
you.
13. NOTICES. Except as otherwise provided herein, all communications
hereunder shall be in writing or by fax delivered to Xxxxx & Xxxxxxxxxxxx, Inc.,
00 Xxxxx Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000, Attention: Xxxxx X.
Xxxxx; and if to the Company, shall be mailed, faxed, or delivered to it at its
office, 000 Xxxxx Xxx Xxxxxx, Xxxxxx Xxxxx, Xxxxx Xxxxxxxx 00000, Attention:
Xxxxxx X. Xxxxxxxx, III. All notices given by fax shall be promptly confirmed by
letter.
14. 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 you or controlling person thereof, or by or on behalf of the Company
or their respective directors or officers, and (c) delivery and payment for the
Stock under this Agreement.
15. This Agreement may be executed in two or more 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 South Carolina.
Please sign and return to the Company the enclosed duplicates of this letter,
whereupon this letter will become a binding agreement between the Company and
you in accordance with its terms.
Very truly yours,
Beach First National Bancshares, Inc.
By:
-----------------------------------------
Xxxxxx X. Xxxxxxxx, III
President and CEO
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
Xxxxx & Xxxxxxxxxxxx, Inc.
By:
-------------------------------
Xxxxx X. Xxxxx
Its: Executive Vice President
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ANNEX A
MATTERS TO BE COVERED IN THE OPINION OF
XXXXXX XXXXXXX XXXXX & XXXXXXXXXXX, LLP
COUNSEL FOR THE COMPANY
(i) Each of the Company and Beach First National Bank (the "Bank")
has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, is duly
qualified as a foreign corporation and in good standing in each state of the
United States of America in which its ownership or leasing of property requires
such qualification (except where the failure to be so qualified would not have a
material adverse effect on the business, properties, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole),
and has full corporate power and authority to own or lease its properties and
conduct its business as described in the Registration Statement; all the issued
and outstanding capital stock of the Bank has been duly authorized and validly
issued and is fully paid and nonassessable, and is owned by the Company free and
clear of all liens, encumbrances and security interests, and to the best of such
counsel's knowledge, 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 Bank are
outstanding;
(ii) the authorized capital stock of the Company consists of
10,000,000 shares of Preferred Stock, of which there are no outstanding shares,
and 10,000,000 shares of Common Stock, $1.00 par value, of which there are
_____________ outstanding shares (including the Underwritten Stock plus the
number of shares of Option Stock issued on the date hereof) and such additional
number of shares, if any, as may have been issued after and prior to the Closing
Date, pursuant to ______________; proper corporate proceedings have been taken
validly to authorize such authorized capital stock; all of the outstanding
shares of such capital stock (including the Underwritten Stock and the shares of
Option Stock issued, if any) have been duly and validly issued and are fully
paid and nonassessable; any Option Stock purchased after the Closing Date, when
issued and delivered to and paid for by the Underwriter as provided in the
Underwriting Agreement, will have been duly and validly issued and be fully paid
and nonassessable; and no preemptive rights of, or rights of refusal in favor
of, shareholders exist with respect to the Stock, or the issue and sale thereof,
pursuant to the Articles of Incorporation or Bylaws of the Company and, to the
knowledge of such counsel, there are no preemptive rights, rights of first
refusal or rights of co-sale with respect to the issuance of the Stock contained
in any agreement to which the Company is a party that have not been satisfied or
waived;
(iii) the Registration Statement has become effective under the
Securities Act and, to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement or suspending or
preventing the use of the Prospectus is in effect and no proceedings for that
purpose have been instituted or are pending or contemplated by the Commission;
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(iv) the Registration Statement and the Prospectus (except as to
the financial statements and schedules and other financial and statistical data
contained therein, as to which such counsel need express no opinion) comply as
to form in all material respects with the requirements of the Securities Act and
with the rules and regulations of the Commission thereunder;
(v) such counsel have no reason to believe that the Registration
Statement (except as to the financial statements and schedules and other
financial and statistical data contained or incorporated by reference therein,
as to which such counsel need not express any opinion or belief) at the
Effective Date contained any 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, or that the Prospectus (except as to the
financial statements and schedules and other financial and statistical data
contained or incorporated by reference therein, as to which such counsel need
not express any opinion or belief) as of its date or at the Closing Date (or any
later date on which Option Stock is purchased), contained or contains any untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading;
(vi) the information required to be set forth in the Registration
Statement in answer to Items 9 and 10 (insofar as it relates to such counsel) of
Form S-2 is to such counsel's knowledge accurately and adequately set forth
therein in all material respects or no response is required with respect to such
Items, and the description of the Company's stock option plan and the options
granted and which may be granted thereunder and the options granted otherwise
than under such plan set forth in the Prospectus accurately and fairly presents
in all material respects the information required to be shown with respect to
such plan and options to the extent required by the Securities Act and the rules
and regulations of the Commission thereunder;
(vii) such counsel do not know of any franchises, contracts,
leases, documents or legal proceedings, pending or threatened, which in the
opinion of such counsel are of a character required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement, which are not described and filed as required;
(viii) the Underwriting Agreement has been duly authorized, executed
and delivered by the Company;
(ix) the issue and sale by the Company of the shares of Stock sold
by the Company as contemplated by the Underwriting Agreement will not result in
a breach of the Articles of Incorporation or Bylaws of the Company or any of its
subsidiaries or any agreement included as an exhibit to the Registration
Statement or any applicable law or regulation known by such counsel to be
applicable to the Company, or so far as is known to such counsel, any order,
writ, injunction or decree, of any jurisdiction, court or governmental
instrumentality;
(x) no holders of securities of the Company have rights to the
registration of shares of Common Stock, or other securities, because of the
filing of the Registration Statement by the Company;
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(xi) the Company has made all filings with the Commission required
by the Securities Act and the Securities Exchange Act and the regulations
thereunder;
(xii) no consent, approval, authorization or order of any court or
governmental agency or body is required by the Company for the consummation of
the transactions contemplated in the Underwriting Agreement, except such as have
been obtained under the Securities Act and such as may be required under state
securities or blue sky laws in connection with the purchase and distribution of
the Stock by the Underwriter; and
Counsel rendering the foregoing opinion may rely as to questions of law not
involving the laws of the United States or of the State of South Carolina, upon
opinions of local counsel satisfactory in form and scope to counsel for the
Underwriter. Copies of any opinions so relied upon shall be delivered to the
Underwriter and to counsel for the Underwriters and the foregoing opinion shall
also state that counsel knows of no reason the Underwriter is not entitled to
rely upon the opinions of such local counsel.
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