EXHIBIT 1.1
CRESCENT FINANCIAL CORPORATION
Common Stock
($1.00 par value)
UNDERWRITING AGREEMENT
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______________ __, 2002
▇▇▇▇▇▇▇▇ & Company, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Gentlemen:
Crescent Financial Corporation, a corporation organized under North
Carolina law ("Crescent" or the "Company"), proposes to employ you ("you" or the
"Underwriter") to advise Crescent in the structure of subscription and public
offerings of Crescent's Common Stock, par value $1.00 (the "Common Stock"), and,
as agent of Crescent, to assist in the sale on a best efforts basis of (i) up to
_________ shares of Crescent's Common Stock (the "Shares") in the public
offering (the "Public Offering"), less (ii) any Shares that are subscribed for
by 5:00 P.M. Eastern Time, ____________ __, 2002 in Crescent's subscription
offering of __________ Shares of its Common Stock (the "Subscription Offering").
You have advised Crescent (a) that you are authorized to enter into
this Agreement and (b) that you are willing to sell the Shares on a best efforts
basis as agent for Crescent.
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, Crescent and
the Underwriter hereby agree as follows:
1. Representations and Warranties of Crescent. The Company represents
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and warrants as follows:
(a) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Securities Act"), a registration
statement on Form SB-2 (File No. ___-_____), including a preliminary prospectus,
relating to the Shares. Such registration statement as amended at the time that
it becomes effective is referred to collectively in this Agreement as the
"Registration Statement," and the prospectuses in the form filed with the
Commission as part of the Registration Statement or pursuant to its Rule 424(b),
if any, after the Registration Statement becomes effective are referred to
collectively as the "Prospectus."
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(b) Each Prospectus filed as part of the Registration
Statement as originally filed or as part of any amendment or supplement thereto
when so filed complied in all material respects with the provisions of the
Securities Act; except that this representation and warranty does not apply to
statements in or omissions from information relating to the Underwriter in the
last paragraph on the front cover of the Prospectus and in the section of the
Prospectus entitled "Underwriting", which were made in reliance upon and
conformity with information furnished to the Company by such Underwriter
expressly for use therein.
(c) The Registration Statement in the form in which it becomes
effective and also in such form as it may be when any post-effective amendment
thereto shall become effective, and the Prospectus filed as part of the
Registration Statement and in the form first filed with the Commission under its
Rule 424(b), if any, and when any supplement thereto is filed with the
Commission, will comply in all material respects with the provisions of the
Securities Act and will not contain at any such times an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, except that this
representation and warranty does not apply to statements in or omissions from
information relating to the Underwriter in the last paragraph on the front cover
of the Prospectus and in the section of the Prospectus entitled "Underwriting",
which were made in reliance upon and conformity with information furnished to
the Company in writing by the Underwriter expressly for use therein.
(d) The Company has the capitalization set forth in the
Prospectus under the caption "Capitalization." All of the outstanding shares of
Common Stock are duly authorized and validly issued, fully paid and
non-assessable and free of preemptive or similar rights (other than the right of
the Company's existing shareholders to purchase one share for each 10 shares
held of record on May 3, 2002). The Shares to be issued and sold by the Company
have been duly authorized, and upon delivery to the subscribers therefor (the
"Subscribers") against payment therefor in accordance with the terms hereof,
will have been validly issued and fully paid and will be nonassessable and free
of preemptive or similar rights; and the Common Stock conforms in all material
respects to the description thereof in the Registration Statement and the
Prospectus (or any amendment or supplement thereto).
(e) The Company and its wholly owned subsidiary, Crescent
State Bank (the "Bank"), are duly organized and validly existing and in good
standing under North Carolina law. There are no other subsidiaries of the
Company and there are no subsidiaries of the Bank. The Company and the Bank are
duly qualified to do business and are in good standing in all jurisdictions that
require such qualification or in which the failure to qualify in such
jurisdictions could have, in the aggregate, any material adverse effect on the
business, condition or properties of the Company or the Bank. The Company and
the Bank hold all material licenses, certificates and permits from governmental
authorities necessary for the conduct of their businesses as described in the
Prospectus and own, or possess adequate rights to use, all material rights
necessary for the conduct of their business and have not received any notice of
conflict with the asserted rights of others in respect thereof; and the Company
and the Bank have the corporate
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power and authority to own their properties and conduct their businesses as
described in the Prospectus.
(f) All of the outstanding shares of capital stock of the Bank
are owned by the Company, have been duly authorized and are validly issued,
fully paid and nonassessable (except as provided in N.C. G.S. 53-42) and are
owned by the Company free and clear of any lien, claim, security interest or
other encumbrance. None of the Company's issued and outstanding shares of Common
Stock was issued in violation of the Securities Act.
(g) The Company and the Bank have good and marketable title to
all property described in the Prospectus as being owned by them, free and clear
of all liens, claims, security interests or other encumbrances except such as
are described in the Registration Statement and the Prospectus (or any amendment
or supplement thereto or in a document filed as an exhibit to the Registration
Statement) or such as are not material and do not interfere in any material
respect with the use of the property or the conduct of the business of the
Company and the Bank taken as a whole, and the property held under lease by the
Company or the Bank is held under valid and enforceable leases with only such
exceptions as in the aggregate are not material and do not interfere in any
material respect with the conduct of the business of the Company and the Bank
taken as a whole; provided that no representation or warranty is made hereby to
the title of the lessor of any such property.
(h) There are no legal or governmental proceedings pending, or
to the knowledge of the Company threatened, required to be described in the
Registration Statement or the Prospectus (or any amendment or supplement
thereto) that are not described as required, and there is no contract or
document of a character required to be described in the Registration Statement
or the Prospectus or to be filed as an exhibit to the Registration Statement
that is not described or filed as required.
(i) Neither the Company nor the Bank is in violation of its
articles of incorporation or bylaws or in default in any material respect in the
performance of any obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in any agreement,
indenture, lease or other instrument to which the Company or the Bank is a party
or by which its assets are bound. Neither the issuance nor the sale of the
Shares nor the execution and delivery of this Agreement nor the performance of
the obligations of the Company set forth herein nor the consummation of the
transactions herein contemplated requires any consent, approval, authorization
or other order of any court, regulatory body, administrative agency or other
governmental body (except such as may be required under the Securities Act or
other securities laws or Blue Sky laws) or will conflict with or constitute a
breach of, or default under, the articles of incorporation or bylaws or articles
of organization or operating agreement, as applicable, of the Company or the
Bank, or constitute a breach or default under any agreement, indenture or other
instrument to which the Company or the Bank is a party or by which either of
them or their property is bound, or any law, administrative regulation or ruling
or court decree applicable to the Company or the Bank or any of their
properties, which
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breach or default is material to the business or property of the Company and the
Bank taken as a whole.
(j) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement thereto), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement thereto), the
Company has not incurred any liability or obligation, direct or contingent, or
entered into any transaction, not in the ordinary course of business, that is
material to the Company and the Bank taken as a whole, and there has not been
any material change in the capital stock, or material increase in the short-term
debt or long-term debt, of the Company or the Bank, or any material adverse
change, or any development involving a prospective material adverse change, in
the condition (financial or otherwise), business, net worth or results of
operations of the Company and the Bank taken as a whole.
(k) ▇▇▇▇▇ ▇▇▇▇ PLLC, who have certified certain of the
financial statements filed with the Commission as part of the Registration
Statement and the Prospectus, have consented in writing to the inclusion of
their report in the Prospectus and are independent public accountants as
required by the Securities Act.
(l) The Company's financial statements, together with related
schedules and notes, forming part of the Registration Statement and the
Prospectus, present fairly the financial position and the results of operations
of the Company and the Bank at the respective dates or for the respective
periods to which they apply; said statements and related notes have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; and the financial and statistical information and data set forth in the
Registration Statement and the Prospectus is fairly presented and prepared on a
basis consistent with such financial statements and the books and records of the
Company and the Bank. The Company and the Bank have no material contingent
obligations that are not disclosed in the Registration Statement and the
Prospectus, as they may be amended or supplemented.
(m) No holders of securities of the Company have rights to the
registration of such securities in the Public Offering.
(n) The Company and the Bank have filed all federal, state and
foreign income tax returns that have been required to be filed and have paid all
taxes indicated by said returns and all assessments received by them or any of
them to the extent that such taxes have become due, and are not being contested
in good faith.
(o) The Company and the Bank hold all material licenses,
certificates and permits from governmental authorities that are necessary to the
conduct of their businesses; and neither the Company nor the Bank has infringed
any patents, patent rights, trade names, trademarks or copyrights in any manner
material to the business of the Company and the Bank taken as a whole.
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(p) This Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement of the Company
enforceable in accordance with its terms.
(q) All employee benefit plans established, maintained or
contributed by the Company comply in all material respects with requirements of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
no such plan incurred or assumed any "accumulated funding deficiency" within the
meaning of Section 302 of ERISA or has incurred or assumed any material
liability to the Pension Benefit Guaranty Corporation.
2. Advisory Fee. The Underwriter has advised and agrees to continue to
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advise Crescent on the structure, format and manner of consummation of the
Subscription Offering. The Underwriter has further agreed to use its best
efforts in the Public Offering to sell any shares offered by Crescent to its
shareholders in the Subscription Offering that are not purchased by Crescent's
shareholders. For such assistance and stand-by commitment, Crescent shall pay
the Underwriter an advisory/stand-by fee equal to one percent (1%) of the
aggregate price of the _________ Shares that Crescent sells to its shareholders
in the Subscription Offering.
3. Sale of the Shares. On the basis of the representations, warranties
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and covenants herein contained, and subject to the conditions herein set forth,
Crescent agrees to issue and sell up to _________ of the Shares through a
combination of the Subscription Offering and the Public Offering. All Shares to
be offered and sold in the Public Offering shall be issued and sold through the
Underwriter, as agent for Crescent, to the public and the Underwriter agrees to
use its best efforts to sell the Shares as agent for Crescent, at the price per
share set forth on the cover page of the Final Prospectus for the Public
Offering (the "Public Offering Price"). Crescent agrees to pay the Underwriter a
commission ("Selling Commission) equal to six percent (6%) of the Public
Offering Price of all Shares sold through the Underwriter in the Public
Offering, including Shares that were offered but not sold in the Subscription
Offering (and including Shares sold through selected dealers). It shall be the
Underwriter's responsibility to compensate any selected dealers out of the
commissions that it receives from Crescent. The Underwriter may reject any offer
to purchase the Shares made through the Underwriter in whole or in part, and any
such rejection shall not be deemed a breach of the Underwriter's agreement
contained herein.
4. Sales by the Underwriter. It is understood that, after the
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Registration Statement becomes effective, the Underwriter proposes to sell the
Shares to the public as agent for Crescent upon the terms and conditions set
forth in the Prospectus. The escrow procedures established by the Underwriter
shall comply with Commission Rule 15c2-4 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). All subscribers to whom
the Underwriter directly sells Shares shall be instructed to make their check
for payment of the Shares payable to "Crescent Financial Corporation Escrow
Account." In addition, the Underwriter shall comply with Rule 15c2-4. The
Underwriter shall transmit all funds it receives from subscribers to SunTrust
Bank, the escrow agent (the "Escrow Agent") by noon of the next business day
following receipt thereof. Only broker/dealers who are either (i) members in
good
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standing of the National Association of Securities Dealers, Inc. (the "NASD")
that are registered with the NASD and maintain net capital pursuant to Rule
15c3-1 promulgated under the Exchange Act of not less than $25,000 or (ii)
dealers with their principal places of business located outside the United
States, its territories and its possessions and not registered as brokers or
dealers under the Exchange Act, who have agreed not to make any sales within the
United States, its territories or its possessions or to persons who are
nationals thereof or residents therein shall be designated selected dealers by
the Underwriter. The Underwriter shall require all selected dealers to comply
with Rule 15c2-4.
5. Payment and Delivery. The Underwriter shall direct the Escrow Agent
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to make payment for the Shares sold hereunder by wire transfer. Such payment is
to be made at the offices of Crescent Financial Corporation, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m. local time, on or about
____________, 2002, or at such other time, date and place as you and the Company
shall agree upon, such time and date being herein referred to as the "Closing
Date." Unless the transaction is closed book-entry through The Depository Trust
Company and no certificates are requested, in which case the procedures
applicable thereto shall be complied with, the certificates for the Shares will
be delivered in such denominations and in such registrations as the Underwriter
requests in writing not later than the third (3rd) full business day prior to
the Closing Date, and will be made available for inspection by the Underwriter
at least twenty-four (24) hours prior to the Closing Date. Such certificates
will be delivered by the Company to the Escrow Agent by 12:00 p.m. on the day
prior to the Closing Date, along with addressed labels to be used to mail the
certificates to the purchasers thereof. The Company shall direct the Escrow
Agent to deliver (i) payment of the portion of the Selling Commission due to the
Underwriter by wire transfer or certified or bank cashier's check drawn to the
order of the Underwriter in next day funds, to the Underwriter on the Closing
Date and (ii) payment of the portion of the Selling Commission due to each
selected dealer by wire transfer or certified or bank cashier's check drawn to
the order of such selected dealer in next day funds, to each selected dealer on
the Closing Date.
6. Covenants of the Company. The Company covenants and agrees with the
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Underwriter as follows:
(a) The Company will endeavor to cause the Registration
Statement to become effective and will advise you promptly and, if requested by
you, will confirm such advice in writing (i) when the Registration Statement has
become effective and when any amendment thereto thereafter becomes effective,
(ii) of any request by the Commission for amendments or supplements to the
Registration Statement or the Prospectus or for additional information, (iii) of
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or of the suspension of qualification of the Shares
for offering or sale in any jurisdiction, or the initiation or contemplation of
any proceeding for such purposes and (iv) within the period of time referred to
in Section 6(e), of the happening of any event that makes any statement made in
the Registration Statement or the Prospectus (as then amended or supplemented)
untrue in any material respect or that requires the making of any addition to or
change in the Registration Statement or the Prospectus (as then amended or
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supplemented) to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or of the necessity to
amend or supplement the Prospectus (as then amended or supplemented) to comply
with the Securities Act or any other law. If at any time the Commission shall
issue any stop order suspending the effectiveness of the Registration Statement,
the Company will make every reasonable effort to obtain the withdrawal of such
order at the earliest possible time.
(b) The Company will furnish you, without charge, three signed
copies of the Registration Statement as originally filed with the Commission and
of each amendment to it, including financial statements and all exhibits
thereto, and will also furnish to you, such number of conformed copies of the
Registration Statement (without exhibits) as originally filed and of each
amendment thereto as you may reasonably request.
(c) The Company will not file any amendment to the
Registration Statement or make any amendment or supplement to the Prospectus of
which you shall not have been advised previously or to which you shall
reasonably object in writing promptly after being so advised.
(d) Prior to the effective date of the Registration Statement,
the Company has delivered or will deliver to you, without charge, in such
quantities as you have requested or may hereafter reasonably request, copies of
each form of preliminary prospectus. The Company consents to the use, in
accordance with the provisions of the Securities Act and with the securities or
Blue Sky laws of the jurisdictions in which the Shares are offered by the
Underwriter and by dealers to whom Shares may be sold, prior to the effective
date of the Registration Statement, of each preliminary prospectus so furnished
by the Company.
(e) On the effective date of the Registration Statement and
thereafter from time to time, for such period as in the opinion of counsel for
the Underwriter a prospectus is required by law to be delivered in connection
with sales by an Underwriter or a dealer, the Company will deliver to you and
each dealer through whom Shares may be sold without charge (except as provided
below) as many copies of the Prospectus (and of any amendment or supplement
thereto) as they may reasonably request. The Company consents to the use of such
Prospectus (and of any amendment or supplement thereto) in accordance with the
provisions of the Securities Act and with the securities or Blue Sky laws of the
jurisdictions in which the Shares are offered by the Underwriter and by dealers
through whom Shares may be sold, both in connection with the offering or sale of
the Shares and for such period of time thereafter as the Prospectus is required
by law to be delivered in connection therewith. If during such period of time
any event shall occur that in the judgment of the Company, or in the opinion of
counsel for the Underwriter, requires that a material fact be stated in the
Prospectus (as then amended or supplemented) in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or if it is necessary to amend or supplement the Prospectus to
comply with the Securities Act or any other law, the Company at its own expense
(except as provided below) will forthwith prepare and file with the Commission
an appropriate amendment
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or supplement thereto, and will furnish to the Underwriter and each dealer
through whom Shares may be sold without charge (except as provided below), a
reasonable number of copies thereof.
(f) If required, the Company will cooperate with you and your
counsel in connection with the registration or qualification of the Shares for
offer and sale by you and by dealers through whom Shares may be sold under the
securities or Blue Sky laws of such jurisdictions as you may designate and will
file such consents to service of process or other documents as may be necessary
in order to effect such registration or qualification; provided that in no event
shall the Company be obligated to qualify to do business in any jurisdiction
where it is not now so qualified or to take any action that would subject it to
the service of process in suits, other than those arising out of the offer and
sale of the Shares, in any jurisdiction where it is not now so subject.
(g) The Company will make generally available to its security
holders an earnings statement, which need not be audited, covering a 12-month
period commencing after the effective date of the Registration Statement and
ending no later than 15 months thereafter, as soon as practicable after the end
of such period, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act and any applicable regulation.
(h) During the period of five years hereafter, the Company
will furnish to you without charge (i) as soon as available, a copy of each
report of the Company mailed to shareholders or filed with the Commission and
(ii) from time to time such other proper information concerning the business and
financial condition of the Company as you may reasonably request.
7. Costs and Expenses.
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(a) The Company will pay all costs and expenses incident to
the performance by it of its obligations hereunder, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits), each preliminary prospectus, the Prospectus
and all amendments and supplements to any of the foregoing, during the period
specified in Section 6(e) but not exceeding nine months after the date on which
the Shares are first offered to the public, (ii) the preparation, printing,
authentication, issuance and delivery of certificates for the Shares, including
any stamp tax in connection with the original issuance of the Shares, (iii) the
preparation and delivery of the preliminary and supplemental Blue Sky Memoranda
(including the reasonable fees and disbursements of counsel for the Underwriter
relating thereto), (iv) the registration or qualification, if required, of the
Shares for offer and sale under the securities or Blue Sky laws of the several
states (including the reasonable fees and disbursements of counsel for the
Underwriter relating thereto), (v) the fees and expenses of the Company's
accountants and the fees and expenses of counsel for the Company and the
Underwriter, (vi) during the period specified in Section 6(e) but not exceeding
nine months after the date on which the Shares are first offered to the public,
delivery to the Underwriter and dealers through whom Shares may be sold
(including postage, air freight and the expenses of counting and packaging) of
such copies of the Registration Statement, the
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Prospectus, each preliminary prospectus and amendments or supplements to the
Registration Statement and the Prospectus as may be requested for use by the
Underwriter or by dealers through whom Shares may be sold in connection with the
offering and sale of the Shares and during such period of time thereafter as the
Prospectus is required, in the judgment of the Company or in the opinion of
counsel for the Underwriter, to be delivered in connection with the offer and
sale of the Shares by you and by dealers, (vii) filing fees with the NASD in
connection with the Public Offering, (viii) filing fees and costs associated
with the inclusion of the Shares for trading on The Nasdaq Stock Market, Inc.
("Nasdaq"); (ix) the costs of all informational and/or investor due diligence
meetings and (x) the performance by the Company of its other obligations under
this Agreement. The Underwriter shall pay its own costs and expenses except as
otherwise provided in this Agreement.
(b) If this Agreement shall be terminated pursuant to any of
the provisions hereof (other than by notice given by you terminating this
Agreement pursuant to Section 12 hereof), or if this Agreement shall be
terminated by you because of any failure or refusal on the part of the Company
to comply in any material respect with the terms, or fulfill in any material
respect any of the conditions, of this Agreement, the Company agrees without
further obligation to reimburse you for all out-of-pocket expenses (including
fees and expenses of your counsel) reasonably and actually incurred in
connection herewith.
8. Conditions of the Underwriter's Obligations. The obligations of you
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hereunder are subject to the following conditions:
(a) That the Registration Statement shall have become
effective not later than 5:00 p.m., on the date hereof, or at such later date
and time as shall be consented to by you.
(b) That subsequent to the effective date of the Registration
Statement, there shall not have occurred any change, or any development
involving a prospective change, in or affecting particularly the condition
(financial or otherwise), business, properties, net worth or results of
operations of the Company or the Bank not contemplated by the Prospectus (or any
amendment or supplement thereto) that, in your opinion, would materially
adversely affect the market for the Shares.
(c) That you shall have received on the Closing Date an
opinion dated the Closing Date, from ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.A., counsel to the
Company, to the effect that:
(i) the Company and the Bank have been duly organized
and incorporated or formed, as applicable, are validly existing under the laws
of their respective state or other jurisdiction of incorporation or
organization, are in good standing under applicable law and are duly qualified
to do business and are in good standing in all jurisdictions that require such
qualification or in which the failure to qualify in such jurisdictions could, in
the aggregate, have any material adverse effect on the business, condition or
properties of the Company or the Bank;
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Page 10
(ii) all of the shares of Common Stock of the Company
outstanding prior to the issuance of the Shares to be issued and sold by the
Company hereunder have been duly authorized and validly issued and are fully
paid and nonassessable;
(iii) all of the outstanding shares of capital stock
or ownership interests of the Bank are owned by the Company, have been duly
authorized and validly issued, and are fully paid and nonassessable (except as
set forth in N.C. G.S. 53-42) and, to the knowledge of such counsel, are owned
by the Company free and clear of any lien, claim, security interest or other
encumbrance, except as otherwise described in the Registration Statement and the
Prospectus (or any amendment or supplement thereto) or such as are not material;
(iv) the Shares to be issued and sold by the Company
hereunder have been duly authorized, and when issued and delivered in accordance
with the terms of this Agreement, will have been validly issued and will be
fully paid and nonassessable, and the issuance of such Shares is not subject to
any preemptive rights or, to the knowledge of such counsel, similar rights,
other than the right of Crescent's existing shareholders to purchase one share
for each 10 shares held of record on May 3, 2002, in the Subscription Offering;
(v) Except as described in the Prospectus, there are
no warrants or options to purchase any securities of Crescent; to the best of
such counsel's knowledge, the offering or sale of the Shares as contemplated by
this Agreement does not give rise to any rights for the offering or sale of
other shares of capital stock of Crescent;
(vi) the certificates for the Shares are in proper
legal form;
(vii) this Agreement has been duly authorized,
executed and delivered by the Company and (assuming due authorization, execution
and delivery by the Underwriter) is a valid and binding agreement of the Company
enforceable in accordance with its terms, except in all cases as rights of
indemnity or contribution hereunder may be limited under applicable law and
except as the enforceability hereof may be limited by bankruptcy, receivership,
moratorium, conservatorship, reorganization or other laws of general application
affecting the rights of creditors generally or general equitable principles;
(viii) neither the Company nor the Bank, to the
knowledge of such counsel, is in violation of its articles of incorporation or
bylaws or in default in any material respect in the performance of any
obligation, agreement or condition contained in any bond, debenture, note or
other evidence of indebtedness or in any agreement, indenture or other
instrument known to such counsel that is material to the conduct of the business
of the Company and the Bank taken as a whole, and the execution, delivery and
performance of this Agreement, compliance by the Company with all provisions
hereof and the consummation of the transactions contemplated hereby will not
conflict with or constitute a breach of any of the terms or provisions of, or a
default under, the articles of incorporation or bylaws or articles of
organization or operating agreement, as applicable, of the Company or the Bank
or, to the knowledge of such counsel, any material agreement, indenture or other
instrument to which the
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Company or the Bank is a party or by which either of them is bound, or (assuming
compliance with the Securities Act and other securities or Blue Sky laws)
violate any law, administrative regulation or ruling (except as the
indemnification or contribution provisions in this Agreement may be limited by
applicable law) or, to the knowledge of such counsel, court decree applicable to
the Company or the Bank or any of their respective properties;
(ix) except for the order of the Commission making
the Registration Statement effective and any permits and similar authorizations
required under other securities or Blue Sky laws, no consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body is required for the consummation of the sale
of the Shares to the purchasers through the Underwriter as contemplated by this
Agreement;
(x) the statements in the Prospectus under "Business
- Legal Proceedings", "Description of Capital Stock" and "Supervision and
Regulation" insofar as such statements constitute a summary of the documents,
legal matters or proceedings referred to therein, fairly and accurately present
in all material respects the information with respect to such documents, legal
matters or proceedings;
(xi) to the knowledge of such counsel, there are no
pending or threatened legal or governmental proceedings to which the Company or
the Bank is a party or of which any property of the Company or the Bank is the
subject, which, if determined adversely to the Company or the Bank, would
individually or in the aggregate have a material adverse effect on the financial
position or results of operations of the Company and the Bank taken as a whole.
Subject to its customary practices and limitations relating to the
scope of such counsel's participation in the preparation of the Prospectus and
its investigation or verification of information contained therein, ▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, P.A. also shall state that nothing has come to its attention to cause
it to believe that the Prospectus (except for financial statements, schedules
and other financial data included therein, as to which such counsel need not
express any belief) contained any untrue statement of any material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus and any
amendment or supplement thereto (except as aforesaid) as of their respective
dates contains any untrue statement of a material fact or omits to state any
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
In rendering the opinions required by this Section 8(b), such counsel
with the consent of Underwriter's counsel may rely, as to matters of fact, upon
certificates and representations of officers of Crescent and the Bank and on
certificates of public officials.
(c) That you shall have received on the Closing Date the
opinion of Williams, Mullen, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, as special counsel to you, dated
the Closing Date, covering such matters as you may have reasonably requested.
▇▇▇▇▇▇▇▇ & Company, Inc.
_____________ __, 2002
Page 12
(d) That you shall have received letters addressed to you and
dated the date hereof and the Closing Date from ▇▇▇▇▇ ▇▇▇▇ PLLC, independent
public accountants, substantially in the form heretofore approved by you.
(e) That (i) no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or, to the knowledge of the Company, shall be
contemplated by the Commission at or prior to the Closing Date; (ii) there shall
not have been any material change in the capital stock of the Company nor any
material increase in long-term debt of the Company or the Bank from that set
forth or contemplated in the Registration Statement and the Prospectus (or any
amendment or supplement thereto); (iii) there shall not have been, since the
respective dates as of which information is given in the Registration Statement
and the Prospectus (or any amendment or supplement thereto), except as may
otherwise be stated in the Registration Statement and the Prospectus (or any
amendment or supplement thereto), any material adverse change in the condition
(financial or otherwise), business, properties, net worth or results of
operations of the Company and the Bank, taken as a whole; (iv) neither the
Company nor the Bank shall have any material liability or obligation, direct or
contingent, other than those liabilities or obligations reflected in the
Registration Statement and the Prospectus (or any amendment or supplement
thereto) or incurred or arising in the ordinary course of business; and (v) all
of the representations and warranties of the Company contained in this Agreement
shall be true and correct in all material respects on and as of the date hereof
and the Closing Date as if made on and as of such date, and you shall have
received a certificate, dated the Closing Date and signed by the President and
the chief financial officer of the Company, to the effect set forth in this
Section 8(e) and Section 8(f) below.
(f) That the Company shall not have failed at or prior to the
Closing Date to have performed or complied in any material respect with any of
the agreements herein contained and required to be performed or complied with by
it at or prior to the Closing Date.
(g) The Company shall have furnished you such further
certificates and documents confirming the representations and warranties
contained herein and related matters as you may reasonably have requested.
9. Conditions to the Obligations of the Company. The obligations of the
--------------------------------------------
Company to sell and deliver the portion of the Shares required to be delivered
as and when specified in this Agreement are subject to the conditions that at or
before 5:00 p.m., on the date of this Agreement, or such later time and date to
which the Company and the Underwriter may from time to time consent, the
Registration Statement shall have become effective; at the Closing Date, no stop
order suspending the effectiveness of the Registration Statement shall have been
issued and in effect or proceedings therefor initiated or threatened; and the
Escrow Agent shall have tendered to the Corporation payment for the Shares.
▇▇▇▇▇▇▇▇ & Company, Inc.
_____________ __, 2002
Page 13
10. Indemnification and Contribution.
--------------------------------
(a) The Company agrees to indemnify and hold harmless the
Underwriter and each person, if any, who controls the Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
from and against any and all losses, claims, damages, liabilities or expenses
(including reasonable costs of investigation) arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus or in the Registration Statement or the Prospectus or in
any amendment or supplement thereto, or arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses arise
out of or are based upon any untrue statement or omission or alleged untrue
statement based upon information relating to the Underwriter in the last
paragraph on the front cover of the Prospectus and in the Section of the
Prospectus entitled "Underwriting", which were made in reliance upon and
conformity with information furnished in writing to the Company by or on behalf
of the Underwriter expressly for use in connection therewith; provided that the
indemnification contained in this paragraph with respect to any preliminary
prospectus shall not inure to the benefit of the Underwriter (or any person
controlling the Underwriter) on account of any such loss, claim, damage,
liability or expense arising from the sale of the Shares by the Underwriter to
any person if a copy of the Prospectus shall not have been delivered or sent to
such person with or prior to the written confirmation of the sale involved (or
any supplement to the Prospectus at the time of such confirmation was not so
delivered or sent) and the statement or omission giving rise to such loss,
claim, damage, liability or expense was contained in the preliminary prospectus
and corrected in the Prospectus (or any supplement thereto at the time such
confirmation was delivered or sent).
(b) If any action or claim shall be brought against the
Underwriter or any person controlling the Underwriter, in respect of which
indemnity may be sought against the Company in accordance with Section 10(a),
the Underwriter shall promptly notify the Company in writing, and the Company
shall assume the defense thereof, including the employment of counsel and
payment of all reasonable fees and expenses. The Underwriter or any such person
controlling the Underwriter shall have the right to employ separate counsel in
any such action and participate in the defense thereof, but the reasonable fees
and expenses of such counsel shall be at the expense of the Underwriter or such
controlling person unless (i) the Company has agreed in writing to pay such fees
and expenses, (ii) the Company has failed to assume the defense and employ
counsel or (iii) the named parties to any such action (including any impleaded
party) include both the Underwriter or controlling person and the Company and
representations of both parties by the same counsel would be inappropriate due
to actual or potential differing interests between them (in which case, if such
Underwriter or controlling person notifies the Company in writing that it elects
to employ separate counsel at the expense of the Company, the Company shall not
have the right to assume the defense of such action on behalf of the Underwriter
or such controlling person, it being understood, however, that the Company shall
not, in connection with any such action or separate but substantially related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be
▇▇▇▇▇▇▇▇ & Company, Inc.
_____________ __, 2002
Page 14
liable for the reasonable fees and expenses of more than one separate firm of
attorneys at any time for the Underwriter and controlling persons, which firm
shall be designated in writing by you). The Company shall not be liable for any
settlement of any such action effected without the written consent of the
Company, but if settled with such written consent, or if there be a final
judgment for the plaintiff in any such action, the Company agrees to indemnify
and hold harmless the Underwriter and any such controlling person from and
against any loss, liability, damage or expense by reason of such settlement or
judgment.
(c) The Underwriter agrees to indemnify and hold harmless the
Company, its directors, its officers who sign the Registration Statement and any
person controlling the Company to the same extent as the foregoing indemnity
from the Company to the Underwriter, but only with respect to information in the
last paragraph on the front cover of the Prospectus and in the section of the
Prospectus entitled "Underwriting," which were furnished by or on behalf of the
Underwriter expressly for use in the Registration Statement, the Prospectus or
any preliminary prospectus, or any amendment or supplement thereto. If any
action or claim shall be brought or asserted against the Company, its directors,
any such officer or any such controlling person based on the Registration
Statement, the Prospectus or any preliminary prospectus, or any amendment or
supplement thereto and in respect of which indemnity may be sought against the
Underwriter, the Underwriter shall have the rights and duties given to the
Company by Section 10(b) hereof (except that if the Company shall have assumed
the defense thereof, the Underwriter shall not be required to do so, but may
employ separate counsel therein and participate in the defense thereof but the
fees and expenses of such counsel shall be at the expense of the Underwriter),
and the Company, its directors, any such officer, any such controlling person
shall have the rights and duties given to the Underwriter by Section 10(b)
above.
(d) If the indemnification of the Underwriter or the Company
provided for in this Section 10 is unavailable as a matter of law to the
Underwriter or the Company, as the case may be, in respect of any loss, claim,
damage, liability or expense referred to therein, then the indemnifying party,
in lieu of indemnifying such indemnified party thereunder, shall contribute to
the amount paid or payable by such indemnified party as a result of such loss,
claim, damage, liability or expense (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company, as the case may be, on
the one hand and the Underwriter on the other from the Public Offering 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 the
Company on the one hand and of the Underwriter on the other in connection with
the statements or omissions that resulted in such loss, claim, damage, liability
or expense, 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 Public Offering (before deducting expenses) received by the Company,
bear to the total underwriting commissions received by the Underwriter as set
forth in the table on the cover page of the Prospectus (as amended or
supplemented) and in the section entitled "Underwriting" in the Prospectus (as
amended or supplemented). The relative fault of the Company on the one hand
▇▇▇▇▇▇▇▇ & Company, Inc.
_____________ __, 2002
Page 15
and of the Underwriter on the other 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 related to
information supplied by the Company on the one hand or by the Underwriter on the
other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the Underwriter agree that it would not be just and
equitable if contribution pursuant to this Section 10(d) were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities and expenses referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses actually and reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 10(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 sold by it as agent for the
Company exceeds the amount of any damages that the Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. 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
misrepresentations.
(e) In any proceeding relating to the Registration Statement,
any preliminary prospectus, the Prospectus or any supplement or amendment
thereto, each party against whom contribution may be sought under this Section
10 hereby consents to the jurisdiction of any court having jurisdiction over any
other contributing party, agrees that process issuing from such court may be
served upon him or it by any other contributing party and consents to the
service of such process and agrees that any other contributing party may join
him or it as an additional defendant in any such proceeding in which such other
contributing party is a party.
(f) The indemnity and contribution agreements contained in
this Section 10 and the respective agreements, representations, warranties and
other statements of the Company or its officers and the Underwriter set forth in
or made pursuant to this Agreement shall remain operative and in full force and
effect, regardless of (i) any investigation made by or on behalf of the
Underwriter or the Company or any person controlling the Underwriter, the
Company or its directors, officers (or any person controlling the Company), (ii)
acceptance of any Shares and payment therefor hereunder and (iii) any
termination of this Agreement. A successor of the Underwriter or the Company or
its directors or officers referred to above (or of any person controlling the
Underwriter or the Company) shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this Section 10.
11. Effective Date of Agreement. This Agreement shall become effective
---------------------------
when notification of the effectiveness of the Registration Statement has been
released by the Commission. Until such time as this Agreement shall have become
effective, it may be
▇▇▇▇▇▇▇▇ & Company, Inc.
_____________ __, 2002
Page 16
terminated by the Company by notifying you, or by you by notifying the Company;
provided, however, that the provisions of this Section 11 and of Section 7 and
Section 10 hereof shall at all times be effective.
12. Termination of Agreement. This Agreement shall be subject to
------------------------
termination in your sole discretion, without liability on your part, by notice
given to Crescent, if prior to the Closing Date (i) trading in securities
generally on the New York Stock Exchange shall have been suspended or materially
limited, (ii) a general moratorium on commercial banking or thrift activities in
North Carolina or the United States shall have been declared by either federal
or state authorities or (iii) there shall have occurred any major outbreak or
escalation of hostilities or other international or domestic calamity or crisis
or major change in political, financial or economic conditions, the effect of
which on the financial markets of the United States is such as to make it, in
your reasonable judgment, impracticable or inadvisable to proceed with the
Public Offering. Notice of such cancellation shall be given to Crescent by
telegraph or telephone but shall be subsequently confirmed by letter.
13. Notices. All communications hereunder shall be in writing and,
-------
except as otherwise provided herein, will be mailed, delivered or telecopied and
confirmed as follows: if to the Underwriter, to ▇▇▇▇▇▇▇▇ & Company, Inc., ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇.; if to Crescent, to Crescent Financial Corporation, ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
President.
14. Successors. This Agreement has been and is made solely for the
----------
benefit of the Underwriter, Crescent and their respective successors, executors,
administrators, heirs and assigns, and the officers, directors and controlling
persons referred to herein, and no other person will have any right or
obligation hereunder. The term "successor" shall not include any purchaser of
the Shares merely because of such purchase.
15. Counterparts. 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.
16. Governing Law. This Agreement shall be governed by, and construed
-------------
in accordance with, the laws of Virginia without reference to the conflict of
laws principles thereof.
▇▇▇▇▇▇▇▇ & Company, Inc.
_____________ __, 2002
Page 17
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement between Crescent and the
Underwriter in accordance with its terms.
Very truly yours,
CRESCENT FINANCIAL CORPORATION
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
The foregoing Underwriting Agreement
is hereby confirmed and accepted as of
the date first above written.
▇▇▇▇▇▇▇▇ & COMPANY, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------