EXHIBIT 1.1
▇▇▇▇▇▇ COUNTY BANCSHARES, INC.
(A TENNESSEE CORPORATION)
1,500,000 SHARES OF COMMON STOCK
(PAR VALUE $2.00 PER SHARE)
PURCHASE AGREEMENT
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, 2005
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▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC.
as Representative of the several Underwriters
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
▇▇▇▇▇▇ County Bancshares, Inc., a Tennessee corporation (the "Company")
confirms its agreement with ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. ("▇▇▇▇▇ ▇▇▇▇▇▇▇▇") and
each of the other Underwriters named in Schedule A hereto (collectively, the
"Underwriters," which term shall also include any underwriter substituted as
hereinafter provided in Section 10 hereof), for whom ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ is acting as
representative (in such capacity, the "Representative"), with respect to (i) the
sale by the Company and the purchase by the Underwriters of the respective
numbers of shares of Common Stock, $2.00 par value per share, of the Company
("Common Stock") set forth in Schedules A and B hereto and (ii) the grant by the
Company to the Underwriters, acting severally and not jointly, of the option
described in Section 2(b) hereof to purchase all or any part of 225,000
additional shares of Common Stock to cover over-allotments, if any. The
aforesaid 1,500,000 shares of Common Stock (the "Initial Securities") to be
purchased by the Underwriters and all or any part of the 225,000 shares of
Common Stock subject to the option described in Section 2(b) hereof (the "Option
Securities") are hereinafter called, collectively, the "Securities."
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representative deems advisable after
this Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-127120) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will
prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations. The information included in such prospectus that was
omitted from such registration statement at the time it became effective but
that is deemed to be part of such registration statement at the time it became
effective pursuant to paragraph (b) of Rule 430A is referred to as "Rule 430A
Information." Each prospectus used before such registration statement became
effective, and any prospectus that omitted the Rule 430A Information that was
used after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus." Such registration
statement, including the exhibits thereto, schedules thereto, if any, and the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, at the time it became effective and including the Rule 430A
Information, is herein called the "Registration Statement." Any registration
statement filed pursuant to Rule 462(b) of the 1933 Act Regulations is herein
referred to as the "Rule 462(b) Registration Statement," and after such filing
the term "Registration Statement" shall include the Rule 462(b) Registration
Statement. The final prospectus, including the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the 1933 Act, in the
form first furnished to the Underwriters for use in connection with the offering
of the Securities is herein called the "Prospectus." For purposes of this
Agreement, all references to the Registration Statement, any preliminary
prospectus, the Prospectus or any amendment or supplement to any of the
foregoing shall be deemed to include the copy filed with the Commission pursuant
to its Electronic Data Gathering, Analysis and Retrieval system ("▇▇▇▇▇").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included," "described," "referred
to" or "stated" in the Registration Statement, any preliminary prospectus or the
Prospectus (or other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other information which
is incorporated by reference in the Registration Statement, any preliminary
prospectus or the Prospectus, as the case may be; and all references in this
Agreement to amendments or supplements to the Registration Statement, any
preliminary prospectus or the Prospectus shall be deemed to mean and include the
filing of any document under the Securities Exchange Act of 1934, as amended
(the "1934 Act"), which is incorporated by reference in the Registration
Statement, such preliminary prospectus or the Prospectus, as the case may be.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company
represents and warrants to each Underwriter as of the date hereof, as of the
Closing Time referred to in Section 2(c) hereof, and as of each Date of Delivery
(if any) referred to in Section 2(b) hereof, and agrees with each Underwriter,
as follows:
(i) Compliance with Registration Requirements. The
Company meets the requirements for use of Form S-3 under the 1933 Act.
Each of the Registration Statement and any Rule 462(b) Registration
Statement has become effective under the 1933 Act and no stop order
suspending the effectiveness of the Registration Statement or any Rule
462(b) Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company,
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are contemplated by the Commission, and any request on the part of the
Commission for additional information has been complied with.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto
became effective and at the Closing Time (and, if any Option Securities
are purchased, at the Date of Delivery), the Registration Statement,
the Rule 462(b) Registration Statement and any amendments and
supplements thereto complied and will comply in all material respects
with the requirements of the 1933 Act and the 1933 Act Regulations and
did not and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. Neither the
Prospectus nor any amendments or supplements thereto, at the time the
Prospectus or any such amendment or supplement was issued and at the
Closing Time (and, if any Option Securities are purchased, at the Date
of Delivery), included or will include an untrue statement of a
material fact or omitted or will omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The
representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or
Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by any Underwriter through ▇▇▇▇▇
▇▇▇▇▇▇▇▇ expressly for use in the Registration Statement or Prospectus,
provided however, that such information shall be limited to the
information described in the final proviso contained in Section 6(a).
Each preliminary prospectus and the prospectus filed as part
of the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectus
delivered to the Underwriters for use in connection with this offering
was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to ▇▇▇▇▇, except to the extent permitted
by Regulation S-T.
(ii) Incorporated Documents. The documents incorporated or
deemed to be incorporated by reference in the Registration Statement
and the Prospectus, at the time they were or hereafter are filed with
the Commission, complied and will comply in all material respects with
the requirements of the 1933 Act and the 1933 Act Regulations or the
1934 Act and the rules and regulations of the Commission thereunder
(the "1934 Act Regulations"), as applicable, and, when read together
with the other information in the Prospectus, at the time the
Registration Statement became effective, at the time the Prospectus was
issued and at the Closing Time (and, if any Option Securities are
purchased, at the Date of Delivery), did not and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading.
(iii) Independent Registered Public Accounting Firm. ▇▇▇▇▇
▇▇▇▇▇▇, PLLC and ▇▇▇▇▇ ▇▇▇▇▇▇ and Company LLC the accounting firms that
certified the financial statements and supporting schedules of the
Company included in the Registration Statement and the Prospectus is an
independent registered public accounting firm as
3
required by the 1933 Act and the 1933 Act Regulations. With respect to
the Company, ▇▇▇▇▇ ▇▇▇▇▇▇, PLLC and ▇▇▇▇▇ ▇▇▇▇▇▇ and Company LLC are
not and have not been in violation of the auditor independence
requirements of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 ("▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act")
and the related rules and regulations of the Commission.
(iv) Financial Statements. The financial statements
included in the Registration Statement and the Prospectus, together
with the related schedules and notes, present fairly the financial
position of the Company and its consolidated subsidiaries at the dates
indicated and the balance sheet, statement of income and comprehensive
income, statement of changes in shareholders' equity and statement of
cash flows of the Company and its consolidated subsidiaries for the
periods specified; said financial statements have been prepared in
conformity with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved. The
supporting schedules, if any, included in the Registration Statement
present fairly in accordance with GAAP the information required to be
stated therein. The selected financial data and the summary financial
information included in the Prospectus present fairly the information
shown therein and have been compiled on a basis consistent with that of
the audited financial statements included in the Registration
Statement. No other financial statements or supporting schedules are
required to be included in the Registration Statement or the
Prospectus. All disclosures contained in the Registration Statement or
the Prospectus regarding "non-GAAP financial measures" (as such term is
defined by the rules and regulations of the Commission) comply with
Regulation G of the 1934 Act, the 1934 Act Regulations and Item 10 of
Regulation S-K under the 1933 Act, to the extent applicable.
(v) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Registration
Statement and the Prospectus, except as otherwise stated therein, (A)
there has been no material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business
(a "Material Adverse Effect"), (B) there have been no transactions
entered into by the Company or any of its subsidiaries, other than
those in the ordinary course of business, which are material with
respect to the Company and its subsidiaries considered as one
enterprise, and (C) except for regular dividends on the Common Stock in
amounts per share that are consistent with past practice, there has
been no dividend or distribution of any kind declared, paid or made by
the Company on any class of its capital stock.
(vi) Good Standing of the Company. The Company is a
registered bank holding company under the Bank Holding Company Act of
1956, as amended ("BHCA"), has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of Tennessee and has the corporate power and authority to own, lease
and operate its properties and to conduct its business as described in
the Prospectus and to enter into and perform its obligations under this
Agreement; and the Company is duly qualified as a foreign corporation
to transact business and is in good standing in each other jurisdiction
in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where
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the failure so to qualify or to be in good standing would not result in
a Material Adverse Effect.
(vii) Good Standing of Subsidiaries. Each direct or
indirect subsidiary of the Company has been duly organized and is
validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and is duly qualified as a
foreign corporation to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect. ▇▇▇▇▇▇ County
Capital Trust I and ▇▇▇▇▇▇ County Capital Trust II have been duly
formed and are validly existing as business trusts under the Delaware
Business Trust Act, 12 Del. Code Section 3801, et seq., and are in good
standing under the laws of the State of Delaware. All of the issued and
outstanding capital stock of each such subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable and is
owned by the Company, directly or through subsidiaries, free and clear
of any security interest, mortgage, pledge, lien, encumbrance, claim or
equity; none of the outstanding shares of capital stock of any
subsidiary was issued in violation of the preemptive or similar rights
of any securityholder of such subsidiary. The only subsidiaries of the
Company are the subsidiaries listed on Schedule D hereto.
(viii) Subsidiary Operations. Except as disclosed in the
Prospectus, the Company and its subsidiaries conduct their respective
businesses in compliance in all material respects with all federal,
state, local and foreign statutes, laws, rules, regulations, decisions,
directives and orders applicable to them (including, without
limitation, all regulations and orders of, or agreements with, the
Board of Governors of the Federal Reserve System ("FRB"), the Federal
Deposit Insurance Corporation ("FDIC"), the Tennessee Department of
Financial Institutions, as applicable, and the Equal Credit Opportunity
Act, the Fair Housing Act, the Community Reinvestment Act, the Home
Mortgage Disclosure Act, all other applicable fair lending laws or
other laws relating to discrimination and the Bank Secrecy Act and
Title III of the USA Patriot Act). Neither the Company nor its
subsidiaries has received any communication from any governmental
entity asserting that the Company or any subsidiary is not in
compliance with any statute, law, rule, regulation, decision, directive
or order.
(ix) Capitalization. The authorized, issued and
outstanding capital stock of the Company is as set forth in the
Prospectus in the column entitled "Actual" under the caption
"Capitalization" (except for subsequent issuances, if any, pursuant to
this Agreement, pursuant to reservations, agreements or employee
benefit plans referred to in the Prospectus or pursuant to the exercise
of convertible securities or options referred to in the Prospectus).
The shares of issued and outstanding capital stock have been duly
authorized and validly issued and are fully paid and non-assessable;
none of the outstanding shares of capital stock was issued in violation
of the preemptive or other similar rights of any securityholder of the
Company. The Securities to be purchased by the Underwriters from the
Company have been duly authorized for issuance and sale to the
Underwriters and, when issued and delivered by the Company pursuant to
this
5
Agreement against payment of the consideration set forth herein, will
be validly issued and fully paid and non-assessable and no holder of
the Securities will be subject to personal liability by reason of being
such a holder.
(x) Authorization of Agreement. This Agreement has been
duly authorized, executed and delivered by the Company and, when duly
executed by the Underwriters, will constitute the valid and binding
agreement of the Company enforceable against the Company in accordance
with its terms, except as may be limited or otherwise affected by (A)
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar statutes, rules, regulations or other laws
affecting the enforcement of creditors' rights and remedies generally,
and (B) the unavailability of, or limitation on the availability of, a
particular right or remedy (whether in a proceeding in equity or at
law) because of an equitable principle or a requirement as to
commercial reasonableness, conscionability or good faith.
(xi) Authorization and Description of Securities. The
Securities to be purchased by the Underwriters from the Company have
been duly authorized for issuance and sale to the Underwriters pursuant
to this Agreement and, when issued and delivered by the Company
pursuant to this Agreement against payment of the consideration set
forth herein, will be validly issued and fully paid and non-assessable;
the Common Stock conforms to all statements relating thereto contained
or incorporated by reference in the Prospectus and such description
conforms to the rights set forth in the instruments defining the same;
no holder of the Securities will be subject to personal liability by
reason of being such a holder; and the issuance of the Securities is
not subject to the preemptive or other similar rights of any
securityholder of the Company.
(xii) Absence of Defaults and Conflicts. Neither the
Company nor any of its subsidiaries is in violation of its charter or
by-laws or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which it or any of them may be bound,
or to which any of the property or assets of the Company or any
subsidiary is subject (collectively, "Agreements and Instruments")
except for such defaults that would not result in a Material Adverse
Effect; and the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated herein and in the
Registration Statement (including the issuance and sale of the
Securities and the use of the proceeds from the sale of the Securities
as described in the Prospectus under the caption "Use of Proceeds") and
compliance by the Company with its obligations hereunder have been duly
authorized by all necessary corporate action and do not and will not,
whether with or without the giving of notice or passage of time or
both, conflict with or constitute a breach of, or default or Repayment
Event (as defined below) under, or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the
Company or any subsidiary pursuant to, the Agreements and Instruments
(except for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not result in a Material Adverse Effect), nor
will such action result in any violation of the provisions of the
charter or by-laws of the Company or any subsidiary or any applicable
law, statute, rule,
6
regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any subsidiary or any of their assets,
properties or operations. As used herein, a "Repayment Event" means any
event or condition which gives the holder of any note, debenture or
other evidence of indebtedness (or any person acting on such holder's
behalf) the right to require the repurchase, redemption or repayment of
all or a portion of such indebtedness by the Company or any subsidiary.
(xiii) Absence of Labor Dispute. No labor dispute with the
employees of the Company or any subsidiary exists or, to the knowledge
of the Company, is imminent, and the Company is not aware of any
existing or imminent labor disturbance by the employees of any of its
or any subsidiary's principal suppliers, manufacturers, customers or
contractors, which, in either case, may reasonably be expected to
result in a Material Adverse Effect.
(xiv) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company, threatened, against or affecting the
Company or any subsidiary, which is required to be disclosed in the
Registration Statement (other than as disclosed therein), or which
might reasonably be expected to result in a Material Adverse Effect, or
which might reasonably be expected to materially and adversely affect
the properties or assets thereof or the consummation of the
transactions contemplated in this Agreement or the performance by the
Company of its obligations hereunder; the aggregate of all pending
legal or governmental proceedings to which the Company or any
subsidiary is a party or of which any of their respective property or
assets is the subject which are not described in the Registration
Statement, including ordinary routine litigation incidental to the
business, could not reasonably be expected to result in a Material
Adverse Effect.
(xv) Accuracy of Exhibits. There are no contracts or
documents which are required to be described in the Registration
Statement, the Prospectus or the documents incorporated by reference
therein or to be filed as exhibits thereto which have not been so
described and filed as required.
(xvi) Possession of Intellectual Property. The Company and
its subsidiaries own or possess, or can acquire on reasonable terms,
adequate 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, trade names or other
intellectual property (collectively, "Intellectual Property") necessary
to carry on the business now operated by them, and neither the Company
nor any of its subsidiaries has received any notice or is otherwise
aware of any infringement of or conflict with asserted rights of others
with respect to any Intellectual Property or of any facts or
circumstances which would render any Intellectual Property invalid or
inadequate to protect the interest of the Company or any of its
subsidiaries therein, and which infringement or conflict (if the
subject of any unfavorable decision, ruling or finding) or invalidity
or inadequacy, singly or in the aggregate, would result in a Material
Adverse Effect.
7
(xvii) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company of
its obligations hereunder, in connection with the offering, issuance or
sale of the Securities hereunder or the consummation of the
transactions contemplated by this Agreement, except such as have been
already obtained or as may be required under the 1933 Act or the 1933
Act Regulations or state securities laws.
(xviii) Possession of Licenses and Permits. The Company and
its subsidiaries possess such permits, licenses, approvals, consents
and other authorizations (collectively, "Governmental Licenses") issued
by the appropriate federal, state, local, banking or foreign regulatory
agencies or bodies necessary to conduct the business now operated by
them; the Company and its subsidiaries are in compliance with the terms
and conditions of all such Governmental Licenses, except where the
failure so to comply would not, singly or in the aggregate, have a
Material Adverse Effect; all of the Governmental Licenses are valid and
in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to
be in full force and effect would not have a Material Adverse Effect;
and neither the Company nor any of its subsidiaries has received any
notice of proceedings relating to the revocation or modification of any
such Governmental Licenses which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in
a Material Adverse Effect.
(xix) Title to Property. The Company and its subsidiaries
have good and marketable title to all real property owned by the
Company and its subsidiaries and good title to all other properties
owned by them, in each case, free and clear of all mortgages, pledges,
liens, security interests, claims, restrictions or encumbrances of any
kind except such as (a) are described in the Prospectus or (b) do not,
singly or in the aggregate, 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 any of its subsidiaries; and all of
the leases and subleases material to the business of the Company and
its subsidiaries, considered as one enterprise, and under which the
Company or any of its subsidiaries holds properties described in the
Prospectus, are in full force and effect, and neither the Company nor
any subsidiary has any notice of any material claim of any sort that
has been asserted by anyone adverse to the rights of the Company or any
subsidiary under any of the leases or subleases mentioned above, or
affecting or questioning the rights of the Company or such subsidiary
to the continued possession of the leased or subleased premises under
any such lease or sublease.
(xx) Investment Company Act. The Company is not, and upon
the issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the
Prospectus will not be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended (the "1940 Act").
8
(xxi) Environmental Laws. Except as described in the
Registration Statement and except as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the Company
nor any of its subsidiaries is in violation of any federal, state,
local or foreign statute, law, rule, regulation, ordinance, code,
policy or rule of common law or any judicial or administrative
interpretation thereof, including any judicial or administrative order,
consent, decree or judgment, relating to pollution or protection of
human health, the environment (including, without limitation, ambient
air, surface water, groundwater, land surface or subsurface strata) or
wildlife, including, without limitation, laws and regulations relating
to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum
or petroleum products (collectively, "Hazardous Materials") or to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"), (B) the Company and its subsidiaries have all
permits, authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements,
(C) there are no pending or threatened administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigation or proceedings
relating to any Environmental Law against the Company or any of its
subsidiaries and (D) there are no events or circumstances that might
reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or any of
its subsidiaries relating to Hazardous Materials or any Environmental
Laws.
(xxii) Taxes. The Company and each of the subsidiaries has
(a) timely filed all material foreign, United States federal, state and
local tax returns, information returns, and similar reports that are
required to be filed (taking into account valid extensions), and all
tax returns are true, correct and complete, (b) paid in full all taxes
required to be paid by it and any other assessment, fine or penalty
levied against it, except for any such assessment, fine or penalty that
is currently being contested in good faith or as would not have,
individually or in the aggregate, a Material Adverse Effect, and (c)
established on the most recent balance sheet reserves that are adequate
for the payment of all taxes not yet due and payable.
(xxiii) Regulatory Agreements. Neither the Company nor any of
its subsidiaries is a party to or subject to any order, decree,
agreement, memorandum or understanding or similar agreement with, or a
commitment letter, supervisory letter or similar submission to, any
governmental entity charged with the supervision or regulation of
depository institutions or engaged in the insurance of deposits
(including the FDIC) or the supervision or regulation of it or any of
its subsidiaries, except as would not, singly or in the aggregate,
result in a Material Adverse Effect, and neither the Company nor any of
its subsidiaries has been advised by any such governmental entity that
such governmental entity is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any such
order, decree, agreement, memorandum or understanding, commitment
letter, supervisory letter or similar submission, except as would not,
singly or in the aggregate, result in a Material Adverse Effect.
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(xxiv) Statistical and Market Data. The statistical and
market related data contained in the Prospectus and Registration
Statement are based on or derived from sources which the Company
believes are reliable and accurate.
(xxv) Relationship. No relationship, direct or indirect,
exists between or among the Company or any of its subsidiaries, on the
one hand, and the directors, officers, shareholders, customers or
suppliers of the Company or any of its subsidiaries, on the other, that
is required by the Securities Act or by the rules and regulations of
the Commission thereunder to be described in the Registration Statement
and/or the Prospectus and that is not so described.
(xxvi) Internal Control Over Financial Reporting. The
Company and its subsidiaries maintain a system of internal control over
financial reporting (as such term is defined in Rules 13a-15(f) and
15d-15(f) under the ▇▇▇▇ ▇▇▇) sufficient to provide reasonable
assurances that (A) transactions are executed in accordance with
management's general or specific authorizations, (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain accountability for assets, (C)
access to assets is permitted only in accordance with management's
general or specific authorization and (D) the recorded accounting for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. The
Company's independent registered public accounting firm and the Audit
Committee of the Board of Directors have been advised of: (A) any
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which could
adversely affect the Company's ability to record, process, summarize,
and report financial data; and (B) any fraud, whether or not material,
that involves management or other employees who have a significant role
in the Company's internal control over financial reporting.
(xxvii) Unlawful Payments. Neither the Company nor any of its
subsidiaries nor, to the knowledge of the Company, any director,
officer, agent, employee or other person associated with or acting on
behalf of the Company or any of its subsidiaries has (A) used any
corporate funds for any unlawful contribution, gift, entertainment or
other unlawful expense relating to political activity; (B) made any
direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (C) violated or
is in violation of any provision of the Foreign Corrupt Practices Act
of 1977; or (D) made any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment.
(xxviii) Deposit Insurance. The deposit accounts of ▇▇▇▇▇▇
County Bank are insured by the Federal Deposit Insurance Corporation to
the legal maximum, ▇▇▇▇▇▇ County Bank has paid all premiums and
assessments required by the Federal Deposit Insurance Corporation and
the regulations thereunder and no proceeding for the termination or
revocation of such insurance is pending or threatened. ▇▇▇▇▇▇ County is
a member in good standing of the Federal Home Loan Bank of Cincinnati.
(xxix) No Registration Rights. No person has the right to
require the Company or any of its subsidiaries to register any
securities for sale under the 1933 Act by reason
10
of the filing of the Registration Statement with the Commission or the
issuance and sale of the Securities to be sold by the Company
hereunder.
(xxx) No Stabilization or Manipulation. The Company has not
taken, directly or indirectly, any action designed to or that could
reasonably be expected to cause or result in any stabilization or
manipulation of the price of the Securities.
(xxxi) No Unauthorized Use of Prospectus. The Company has
not distributed and, prior to the later to occur of (i) the Closing
Time and (ii) completion of the distribution of the Securities, will
not distribute any prospectus (as such term is defined in the 1933 Act
and the 1933 Act Regulations) in connection with the offering and sale
of the Securities other than the Registration Statement, any
preliminary prospectus, the Prospectus or other materials, if any,
permitted by the 1933 Act or by the 1933 Act Regulations and approved
by the Representative.
(xxxii) Forward-Looking Statements. No forward-looking
statement (within the meaning of Section 27A of the 1933 Act and
Section 21E of the ▇▇▇▇ ▇▇▇) contained or incorporated by reference in
the Registration Statement and the Prospectus has been made or
reaffirmed without a reasonable basis or has been disclosed other than
in good faith.
(xxxiii) ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. The Company is in compliance with
the applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, the rules
and regulations of the Commission thereunder, and the corporate
governance and other rules and requirements of Nasdaq and will comply
with any such provisions that will become effective in the future upon
their effectiveness. The Company and its subsidiaries maintain systems
of internal accounting controls sufficient to provide reasonable
assurance that (A) transactions are executed in accordance with
management's general or specific authorizations; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability; (C) access to assets is permitted only
in accordance with management's general or specific authorization; and
(D) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(xxxiv) Lock-up Agreements. Each of the Company's executive
officers and directors and 5% or greater shareholders and certain other
shareholders, in each case as listed on Schedule E hereto, has executed
and delivered lock-up agreements as contemplated by Section 5(i)
hereof.
(xxxv) Fees. Other than as contemplated by this Agreement,
there is no broker, finder or other party that is entitled to receive
from the Company or any subsidiary any brokerage or finder's fee or any
other fee, commission or payment as a result of the transactions
contemplated by this Agreement.
(xxxvi) ERISA. The Company and each of the subsidiaries or
their "ERISA Affiliates" (as defined below) are in compliance in all
material respects with all presently
11
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 "employee benefit plan" (as
defined in ERISA) for which the Company or any of the subsidiaries or
ERISA Affiliates would have any liability; the Company and each of the
subsidiaries or their ERISA Affiliates have not incurred and do not
expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "employee benefit plan" or (ii)
Sections 412, 4971, 4975 or 4980B of the United States Internal Revenue
Code of 1986, as amended, and the regulations and published
interpretations thereunder (collectively the "Code"); and each
"employee benefit plan" for which the Company and each of its
Subsidiaries or any of their ERISA Affiliates would have any liability
that is intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing as occurred, whether by
action or by failure to act, which would cause the loss of such
qualification. "ERISA Affiliate" means, with respect to the Company or
a subsidiary, any member of any group of organizations described in
Sections 414(b), (c), (m) or (o) of the Code or Section 400(b) of ERISA
of which the Company or such subsidiary is a member.
(b) Officer's Certificates. Any certificate signed by any officer
of the Company or any of its subsidiaries delivered to the Representative or to
counsel for the Underwriters shall be deemed a representation and warranty by
the Company to each Underwriter as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each Underwriter, severally and not
jointly, and each Underwriter, severally and not jointly, agrees to purchase
from the Company, at the price per share set forth in Schedule C, that number of
Initial Securities set forth in Schedule A opposite the name of such
Underwriter, plus any additional number of Initial Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof, subject, in each case, to such adjustments among the
Underwriters as the Representative in its sole discretion shall make to
eliminate any sales or purchases of fractional securities.
(b) Option Securities. In addition, on the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Company hereby grants an option to the
Underwriters, severally and not jointly, to purchase up to an additional 225,000
shares of Common Stock, as set forth in Schedule B, at the price per share set
forth in Schedule C, less an amount per share equal to any dividends or
distributions declared by the Company and payable on the Initial Securities but
not payable on the Option Securities. The option hereby granted will expire 30
days after the date hereof and may be exercised in whole or in part from time to
time only for the purpose of covering over-allotments which may be made in
connection with the offering and distribution of the Initial Securities upon
notice by the Representative to the Company setting forth the number of Option
Securities as to which the several Underwriters are then exercising the option
and the time and date of payment and delivery for such Option Securities. Any
such time and date of delivery (a "Date of Delivery")
12
shall be determined by the Representative, but shall not be later than seven
full business days after the exercise of said option, nor in any event prior to
the Closing Time, as hereinafter defined. If the option is exercised as to all
or any portion of the Option Securities, each of the Underwriters, acting
severally and not jointly, will purchase that proportion of the total number of
Option Securities then being purchased which the number of Initial Securities
set forth in Schedule A opposite the name of such Underwriter bears to the total
number of Initial Securities, subject in each case to such adjustments as the
Representative in its discretion shall make to eliminate any sales or purchases
of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of ▇▇▇▇▇▇
& Bird LLP, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other
place as shall be agreed upon by the Representative and the Company, at 10:00
A.M. (Eastern time) on the third (fourth, if the pricing occurs after 4:30 P.M.
(Eastern time) on any given day) business day after the date hereof (unless
postponed in accordance with the provisions of Section 10), or such other time
not later than ten business days after such date as shall be agreed upon by the
Representative and the Company (such time and date of payment and delivery being
herein called "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representative
and the Company, on each Date of Delivery as specified in the notice from the
Representative to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company against delivery to
the Representative for the respective accounts of the Underwriters of
certificates for the Securities to be purchased by them. It is understood that
each Underwriter has authorized the Representative, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
Initial Securities and the Option Securities, if any, which it has agreed to
purchase. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, individually and not as representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the Initial Securities or the Option Securities, if any, to be
purchased by any Underwriter whose funds have not been received by the Closing
Time or the relevant Date of Delivery, as the case may be, but such payment
shall not relieve such Underwriter from its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial
Securities and the Option Securities, if any, shall be in such denominations and
registered in such names as the Representative may request in writing at least
one full business day before the Closing Time or the relevant Date of Delivery,
as the case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Representative(s) in The City of New York not later than 10:00 A.M. (Eastern
time) on the business day prior to the Closing Time or the relevant Date of
Delivery, as the case may be.
SECTION 3. Covenants of the Company. The Company covenants with each
Underwriter as follows:
13
(a) Compliance with Securities Regulations and Commission
Requests. The Company, subject to Section 3(b), will comply with the
requirements of Rule 430A or Rule 434, as applicable, and will notify
the Representative immediately, and confirm the notice in writing, (i)
when any post-effective amendment to the Registration Statement shall
become effective, or any supplement to the Prospectus or any amended
Prospectus shall have been filed, (ii) of the receipt of any comments
from the Commission, (iii) of any request by the Commission for any
amendment to the Registration Statement or any amendment or supplement
to the Prospectus or for additional information, and (iv) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing
or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Securities for offering or sale
in any jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes. The Company will promptly effect
the filings necessary pursuant to Rule 424(b) and will take such steps
as it deems necessary to ascertain promptly whether the form of
prospectus transmitted for filing under Rule 424(b) was received for
filing by the Commission and, in the event that it was not, it will
promptly file such prospectus. The Company will make every reasonable
effort to prevent the issuance of any stop order and, if any stop order
is issued, to obtain the lifting thereof at the earliest possible
moment.
(b) Filing of Amendments. The Company will give the
Representative notice of its intention to file or prepare any amendment
to the Registration Statement (including any filing under Rule 462(b))
or any amendment, supplement or revision to either the prospectus
included in the Registration Statement at the time it became effective
or to the Prospectus, whether pursuant to the 1933 Act, the 1934 Act or
otherwise, will furnish the Representative with copies of any such
documents a reasonable amount of time prior to such proposed filing or
use, as the case may be, and will not file or use any such document to
which the Representative or counsel for the Underwriters shall object.
(c) Delivery of Registration Statements. The Company has
furnished or will deliver to the Representative and counsel for the
Underwriters, without charge, signed copies of the Registration
Statement as originally filed and of each amendment thereto (including
exhibits filed therewith or incorporated by reference therein and
documents incorporated or deemed to be incorporated by reference
therein) and signed copies of all consents and certificates of experts,
and will also deliver to the Representative, without charge, a
conformed copy of the Registration Statement as originally filed and of
each amendment thereto (without exhibits) for each of the Underwriters.
The copies of the Registration Statement and each amendment thereto
furnished to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to ▇▇▇▇▇,
except to the extent permitted by Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered
to each Underwriter, without charge, as many copies of each preliminary
prospectus as such Underwriter reasonably requested, and the Company
hereby consents to the use of such copies for purposes permitted by the
1933 Act. The Company will furnish to each Underwriter, without charge,
during the period when the Prospectus is required to be delivered under
the 1933 Act or the 1934 Act, such number of copies of the Prospectus
14
(as amended or supplemented) as such Underwriter may reasonably
request. The Prospectus and any amendments or supplements thereto
furnished to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to ▇▇▇▇▇,
except to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The
Company will comply with the 1933 Act and the 1933 Act Regulations and
the 1934 Act and the 1934 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in
this Agreement and in the Prospectus. If at any time when a prospectus
is required by the 1933 Act to be delivered in connection with sales of
the Securities, any event shall occur or condition shall exist as a
result of which it is necessary, in the opinion of counsel for the
Underwriters or for the Company, to amend the Registration Statement or
amend or supplement the Prospectus in order that the Prospectus will
not include any untrue statements of a material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the opinion
of such counsel, at any such time to amend the Registration Statement
or amend or supplement the Prospectus in order to comply with the
requirements of the 1933 Act or the 1933 Act Regulations, the Company
will promptly prepare and file with the Commission, subject to Section
3(b), such amendment or supplement as may be necessary to correct such
statement or omission or to make the Registration Statement or the
Prospectus comply with such requirements, and the Company will furnish
to the Underwriters such number of copies of such amendment or
supplement as the Underwriters may reasonably request.
(f) Blue Sky Qualifications. The Company will use its
best efforts, in cooperation with the Underwriters, to qualify the
Securities for offering and sale under the applicable securities laws
of such states and other jurisdictions (domestic or foreign) as the
Representative may designate and to maintain such qualifications in
effect for a period of not less than one year from the later of the
effective date of the Registration Statement and any Rule 462(b)
Registration Statement; 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 or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it
is not otherwise so subject. In each jurisdiction in which the
Securities have been so qualified, the Company will file such
statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a period of
not less than one year from the effective date of the Registration
Statement and any Rule 462(b) Registration Statement.
(g) Rule 158. The Company will timely file such reports
pursuant to the 1934 Act as are necessary in order to make generally
available to its securityholders as soon as practicable an earnings
statement for the purposes of, and to provide the benefits contemplated
by, the last paragraph of Section 11(a) of the 1933 Act.
15
(h) Use of Proceeds. The Company will use the net
proceeds received by it from the sale of the Securities in the manner
specified in the Prospectus under "Use of Proceeds."
(i) Listing. The Company will use its best efforts to
effect and maintain the quotation of the Securities on The Nasdaq
National Market and will file with The Nasdaq National Market all
documents and notices required by The Nasdaq National Market of
companies that have securities that are traded in the over-the-counter
market and quotations for which are reported by The Nasdaq National
Market.
(j) Restriction on Sale of Securities. During a period of
180 days from the date of the Prospectus (the "Restricted Period"), the
Company will not, without the prior written consent of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
directly or indirectly, (i) offer, pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of any share of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or
file any registration statement under the 1933 Act with respect to any
of the foregoing or (ii) enter into any swap, hedge or any other
agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap, hedge or transaction described in
clause (i) or (ii) above is to be settled by delivery of Common Stock
or such other securities, in cash or otherwise. The foregoing sentence
shall not apply to (A) the Securities to be sold hereunder, (B) any
shares of Common Stock issued by the Company upon the exercise of an
option or warrant outstanding on the date hereof and referred to in the
Prospectus, (C) any shares of Common Stock issued or options to
purchase Common Stock granted pursuant to existing employee benefit
plans of the Company referred to in the Prospectus, or (D) any
transfer, sale or other disposition with the prior written consent of
▇▇▇▇▇ ▇▇▇▇▇▇▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ agrees, for the benefit of the other
Representatives, if applicable, not to provide such consent without
providing notice to each Representative to permit compliance with
applicable provisions of NASD Conduct Rule 2177(f) restricting
publication and distribution of research and public appearances by
research analysts before and after the expiration, waiver or
termination of a lock-up agreement and agrees only to provide consent
in circumstances that will permit such compliance by the
Representatives. Notwithstanding the foregoing, in the event that
either (i) during the period that begins on the date that is 15
calendar days plus three (3) business days before the last day of the
Restricted Period and ends on the last day of the Restricted Period,
the Company issues an earnings release or material news or a material
event relating to the Company occurs, or (ii) prior to the expiration
of the Restricted Period, the Company announces that it will release
earnings results during the 16-day period beginning on the last day of
the Restricted Period, the restrictions set forth herein will continue
to apply until the expiration of the date that is 15 calendar days plus
three (3) business days after the date on which the earnings release is
issued or the material news or event related to the Company occurs.
(k) Reporting Requirements. The Company, during the
period when the Prospectus is required to be delivered under the 1933
Act or the 1934 Act, will file all
16
documents required to be filed with the Commission pursuant to the 1934
Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
(l) Compliance with the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. During the
time when a prospectus is required to be delivered under the 1933 Act,
the Company shall at all times comply, in all material respects, with
all applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, including
the related rules and regulations promulgated thereunder by the
Commission and The Nasdaq Stock Market, Inc., in effect from time to
time.
(m) Notice of Issuance. The Company will timely file a
"Notification Form: Change in the Number of Shares Outstanding" with
the Nasdaq Stock Market, Inc.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay or cause to be paid all
expenses incident to the performance of their obligations under this Agreement,
including (i) the preparation, printing and filing of the Registration Statement
(including financial statements and exhibits) as originally filed and of each
amendment thereto, (ii) the preparation, printing and delivery to the
Underwriters of this Agreement, any Agreement among Underwriters and such other
documents as may be required in connection with the offering, purchase, sale,
issuance or delivery of the Securities, (iii) the preparation, issuance and
delivery of the certificates for the Securities to the Underwriters, including
any stock or other transfer taxes and any stamp or other duties payable upon the
sale, issuance or delivery of the Securities to the Underwriters, (iv) the fees
and disbursements of the Company's counsel, accountants and other advisors, (v)
the qualification of the Securities under securities laws in accordance with the
provisions of Section 3(f) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of the Blue Sky Survey and any supplement
thereto, (vi) the printing and delivery to the Underwriters of copies of each
preliminary prospectus, and of the Prospectus and any amendments or supplements
thereto, (vii) the preparation, printing and delivery to the Underwriters of
copies of the Blue Sky Survey and any supplement thereto, (viii) the fees and
expenses of any transfer agent or registrar for the Securities and (ix) the
filing fees incident to, and the reasonable fees and disbursements of counsel to
the Underwriters in connection with, the review by the National Association of
Securities Dealers, Inc. (the "NASD") of the terms of the sale of the Securities
and (x) the fees and expenses incurred in connection with the inclusion of the
Securities in the Nasdaq National Market.
(b) Termination of Agreement. If this Agreement is terminated by
the Representative in accordance with the provisions of Section 5, Section 9(a)
or Section 11 hereof, the Company shall reimburse the Underwriters for all of
their out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of the Company or any subsidiary of the Company
delivered pursuant to the provisions hereof, to the performance by the
17
Company of its covenants and other obligations hereunder, and to the following
further conditions:
(a) Effectiveness of Registration Statement. The
Registration Statement, including any Rule 462(b) Registration
Statement, has become effective and at Closing Time no stop order
suspending the effectiveness of the Registration Statement shall have
been issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to
the reasonable satisfaction of counsel to the Underwriters. A
prospectus containing the Rule 430A Information shall have been filed
with the Commission in accordance with Rule 424(b) (or a post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A).
(b) Opinion of Counsel for Company. At Closing Time, the
Representative shall have received the favorable opinion, dated as of
Closing Time, of Bass, ▇▇▇▇▇ & ▇▇▇▇ PLC, counsel for the Company, in
form and substance satisfactory to counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of
the other Underwriters to the effect set forth in Exhibit A hereto and
to such further effect as counsel to the Underwriters may reasonably
request.
(c) Opinion of Counsel for Underwriters. At Closing Time,
the Representative shall have received the favorable opinion, dated as
of Closing Time, of ▇▇▇▇▇▇ & Bird LLP, special counsel for the
Underwriters.
(d) Officers' Certificate. At Closing Time, there shall
not have been, since the date hereof or since the respective dates as
of which information is given in the Prospectus, any material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in
the ordinary course of business, and the Representative shall have
received a certificate of the chief executive officer of the Company
and of the chief financial or chief accounting officer of the Company,
dated as of Closing Time, to the effect that (i) there has been no such
material adverse change, (ii) the representations and warranties in
Section 1(a) hereof are true and correct with the same force and effect
as though expressly made at and as of Closing Time, (iii) the Company
has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied at or prior to Closing Time, and (iv)
no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or are contemplated by the Commission.
(e) Accountant's Comfort Letter. At the time of the
execution of this Agreement, the Representative shall have received
from ▇▇▇▇▇ ▇▇▇▇▇▇, PLLC a letter dated such date, in form and substance
satisfactory to the Representative, together with signed or reproduced
copies of such letter for each of the other Underwriters containing
statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus.
18
(f) Bring-down Comfort Letter. At Closing Time, the
Representative shall have received from ▇▇▇▇▇ ▇▇▇▇▇▇, PLLC a letter,
dated as of Closing Time, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection (e) of
this Section, except that the specified date referred to shall be a
date not more than three business days prior to Closing Time.
(g) Approval of Listing. At Closing Time, the Securities
shall have been approved for inclusion in and listing on The Nasdaq
National Market, subject only to official notice of issuance.
(h) No Objection. The NASD has confirmed that it has not
raised any objection with respect to the fairness and reasonableness of
the underwriting terms and arrangements.
(i) Lock-up Agreements. Prior to the distribution of the
preliminary prospectus, the Representative shall have received an
agreement substantially in the form of Exhibit B hereto signed by the
persons listed on Schedule E hereto.
(j) Delivery of Prospectus. The Company shall have
complied with the provisions hereof with respect to the furnishing of
prospectuses on the New York business day next succeeding the date of
this Agreement.
(k) No Termination Event. On or after the date hereof
there shall not have occurred any of the events, circumstances or
occurrences set forth in Section 9(a).
(l) Conditions to Purchase of Option Securities. In the
event that the Underwriters exercise their option provided in Section
2(b) hereof to purchase all or any portion of the Option Securities,
the representations and warranties of the Company contained herein and
the statements in any certificates furnished by the Company and any
subsidiary of the Company hereunder shall be true and correct as of
each Date of Delivery and, at the relevant Date of Delivery, the
Representative shall have received:
(i) Officers' Certificate. A certificate, dated such Date
of Delivery, of the chief executive officer of the Company and
of the chief financial or chief accounting officer of the
Company confirming that the certificate delivered at the
Closing Time pursuant to Section 5(d) hereof remains true and
correct as of such Date of Delivery.
(ii) Opinion of Counsel for Company. The favorable opinion
of Bass, ▇▇▇▇▇ & ▇▇▇▇ PLC, counsel for the Company, in form
and substance satisfactory to counsel for the Underwriters,
dated such Date of Delivery, relating to the Option Securities
to be purchased on such Date of Delivery and otherwise to the
same effect as the opinion required by Section 5(b) hereof.
(iii) Opinion of Counsel for Underwriters. The favorable
opinion of ▇▇▇▇▇▇ & Bird LLP, counsel for the Underwriters,
dated such Date of Delivery, relating to
19
the Option Securities to be purchased on such Date of Delivery
and otherwise to the same effect as the opinion required by
Section 5(c) hereof.
(iv) Bring-down Comfort Letter. A letter from ▇▇▇▇▇
▇▇▇▇▇▇, PLLC, in form and substance satisfactory to the
Representative and dated such Date of Delivery, substantially
in the same form and substance as the letter furnished to the
Representative pursuant to Section 5(f) hereof, except that
the "specified date" in the letter furnished pursuant to this
paragraph shall be a date not more than five days prior to
such Date of Delivery.
(v) No Termination Event. There shall not have occurred
prior to the Date of Delivery any of the events, circumstances
or occurrences set forth in Section 9(a).
(m) Additional Documents. At Closing Time and at each
Date of Delivery counsel for the Underwriters shall have been furnished
with such documents and opinions as they may require for the purpose of
enabling them to pass upon the issuance and sale of the Securities as
herein contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company
in connection with the issuance and sale of the Securities as herein
contemplated shall be satisfactory in form and substance to the
Representative and counsel for the Underwriters.
(n) Termination of Agreement. If any condition specified
in this Section 5 shall not have been fulfilled when and as required to
be fulfilled, this Agreement, or, in the case of any condition to the
purchase of Option Securities on a Date of Delivery which is after the
Closing Time, the obligations of the several Underwriters to purchase
the relevant Option Securities, may be terminated by the Representative
by notice to the Company at any time at or prior to Closing Time or
such Date of Delivery, as the case may be, and such termination shall
be without liability of any party to any other party except as provided
in Section 4 and except that Sections 1, 6, 7 and 8 shall survive any
such termination and remain in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. The Company and its
subsidiaries agree, jointly and severally, to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act to the
extent and in the manner set forth in clauses (i), (ii) and (iii) below:
(i) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment thereto), including the
Rule 430A Information, if applicable, or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out
of any untrue statement or alleged untrue statement of a material fact
included in any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), or the omission or alleged omission
therefrom of a
20
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission; provided
that (subject to Section 6(d) below) any such settlement is effected
with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by ▇▇▇▇▇
▇▇▇▇▇▇▇▇), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information, if
applicable, or any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto); provided further that the parties acknowledge and agree
that the only information that any Underwriter has furnished to the Company
specifically for inclusion in the Registration Statement, preliminary prospectus
and Prospectus (or any amendment or supplement thereto) are the concession and
reallowance figures appearing in the Prospectus in the section entitled
"Underwriting" and the information contained under the captions "Underwriting -
Stabilization" and "Underwriting - Passive Market Making."
(b) Indemnification of Company and Directors and Officers. Each
Underwriter severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act, against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), including the Rule 430A Information, if
applicable, or any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ expressly
for use in the Registration Statement (or any amendment thereto) or such
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), provided that the parties acknowledge and agree that the only written
information that any Underwriter has furnished to the Company specifically for
inclusion in the Registration Statement, preliminary prospectus and Prospectus
(or any amendment or supplement thereto) are
21
the concession and reallowance figures appearing in the Prospectus in the
section entitled "Underwriting" and the information contained under the captions
"Underwriting - Stabilization" and "Underwriting - Passive Market Making."
(c) Actions against Parties; Notification. Each indemnified party
shall give notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it is
not materially prejudiced as a result thereof and in any event shall not relieve
it from any liability which it may have otherwise than on account of this
indemnity agreement. In the case of parties indemnified pursuant to Section 6(a)
above, counsel to the indemnified parties shall be selected by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
and, in the case of parties indemnified pursuant to Section 6(b) above, counsel
to the indemnified parties shall be selected by the Company. An indemnifying
party may participate at its own expense in the defense of any such action;
provided, however, that counsel to the indemnifying party shall not (except with
the consent of the indemnified party) also be counsel to the indemnified party.
In no event shall the indemnifying parties be liable for fees and expenses of
more than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 6(a)(ii) effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.
SECTION 7. Contribution. If the indemnification provided for in Section
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other hand from the offering of the Securities
pursuant to this Agreement or (ii) if the allocation
22
provided by clause (i) 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
Underwriters on the other hand in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Underwriters on the other hand in connection with the offering of the Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Securities
pursuant to this Agreement (before deducting expenses) received by the Company
and the total underwriting discount received by the Underwriters, in each case
as set forth on the cover of the Prospectus.
The relative fault of the Company on the one hand and the Underwriters
on the other hand shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any 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 ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations
23
to contribute pursuant to this Section 7 are several in proportion to the number
of Initial Securities set forth opposite their respective names in Schedule A
hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of any
Underwriter or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Representative may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time or
Date of Delivery (i) if there has been, since the time of execution of this
Agreement or since the respective dates as of which information is given in the
Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States, any
outbreak of hostilities or escalation thereof or other calamity or crisis or any
change or development involving a prospective change in national or
international political, financial or economic conditions, including without
limitation as a result of terrorist activities, in each case the effect of which
is such as to make it, in the judgment of the Representative, impracticable or
inadvisable to market the Securities or to enforce contracts for the sale of the
Securities, or (iii) if trading in any securities of the Company has been
suspended or materially limited by the Commission or the Nasdaq National Market,
or if trading generally on the American Stock Exchange or the New York Stock
Exchange or in the Nasdaq National Market has been suspended or materially
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices have been required, by any of said exchanges or by such system
or by order of the Commission, the National Association of Securities Dealers,
Inc. or any other governmental authority, or (iv) if a banking moratorium has
been declared by either Federal or New York or Tennessee authorities or a
material disruption in commercial banking or securities settlement or clearance
services in the United States has occurred.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.
SECTION 10. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail at Closing Time or a Date of Delivery to purchase
the Securities which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the Representative shall have the right, within 24
hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representative shall not have completed
such arrangements within such 24-hour period, then:
24
(a) if the number of Defaulted Securities does not exceed
10% of the number of Securities to be purchased on such date, each of
the non-defaulting Underwriters shall be obligated, severally and not
jointly, to purchase the full amount thereof in the proportions that
their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of
the number of Securities to be purchased on such date, this Agreement
or, with respect to any Date of Delivery which occurs after the Closing
Time, the obligation of the Underwriters to purchase and of the Company
to sell the Option Securities to be purchased and sold on such Date of
Delivery shall terminate without liability on the part of any
non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement or, in the case of a Date of Delivery which is after the
Closing Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Company to sell the relevant Option Securities,
as the case may be, either (i) the Representative or (ii) the Company shall have
the right to postpone Closing Time or the relevant Date of Delivery, as the case
may be, for a period not exceeding seven days in order to effect any required
changes in the Registration Statement or Prospectus or in any other documents or
arrangements. As used herein, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 10.
SECTION 11. Default by the Company. If the Company shall fail at
Closing Time or at the Date of Delivery to sell the number of Securities that it
is obligated to sell hereunder, then this Agreement shall terminate without any
liability on the part of any nondefaulting party; provided, however, that the
provisions of Sections 1, 4, 6, 7 and 8 shall remain in full force and effect.
No action taken pursuant to this Section shall relieve the Company from
liability, if any, in respect of such default.
SECTION 12. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representative at ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇,
Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, attention of
General Counsel; notices to the Company shall be directed to it at ▇▇▇▇▇▇ County
Bancshares, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
attention of R. ▇▇▇▇ ▇▇▇▇▇▇▇.
SECTION 13. Parties. This Agreement shall inure to the benefit of and
be binding upon the Underwriters and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters and the Company and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs
25
and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the Underwriters and the Company and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Securities from any Underwriter
shall be deemed to be a successor by reason merely of such purchase.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 15. General Provisions. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may be executed in two
or more counterparts, each one of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement may not be amended or modified unless in writing by all of the
parties hereto, and no condition herein (express or implied) may be waived
unless waived in writing by each party whom the condition is meant to benefit.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
[Signatures on Next Page]
26
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company, whereupon this instrument,
along with all counterparts, will become a binding agreement among the
Underwriters and the Company in accordance with its terms.
Very truly yours,
▇▇▇▇▇▇ COUNTY BANCSHARES, INC.
By:
--------------------------------
Title:
-----------------------------
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC.
By:
----------------------------------
Authorized Signatory
For itself and as Representative of the other Underwriters named in Schedule A
hereto.
27
SCHEDULE A
Number of
Name of Underwriter Initial
------------------- Securities
----------
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc..........................
▇▇▇▇ ▇▇▇▇▇▇ Investments, Inc..........................
SunTrust Capital Markets, Inc.........................
Total..................................................
=========
Sch A - 1
SCHEDULE B
Number of Initial Maximum Number of Option
Securities to be Sold Securities to Be Sold
--------------------- ---------------------
▇▇▇▇▇▇ County Bancshares, Inc. 1,500,000 225,000
Total............................... 1,500,000 225,000
Sch B - 1
SCHEDULE C
▇▇▇▇▇▇ COUNTY BANCSHARES, INC.
1,500,000 shares of Common Stock
(Par Value $2.00 Per Share)
1. The public offering price per share for the Securities,
determined as provided in said Section 2, shall be _________.
2. The purchase price per share for the Securities to be paid by
the several Underwriters shall be $_______, being an amount equal to the public
offering price set forth above less $______ per share; provided that the
purchase price per share for any Option Securities purchased upon the exercise
of the over-allotment option described in Section 2(b) shall be reduced by an
amount per share equal to any dividends or distributions declared by the Company
and payable on the Initial Securities but not payable on the Option Securities.
Sch C - 1
SCHEDULE D
List of subsidiaries
▇▇▇▇▇▇ County Bank
Superior Financial Services, Inc.
GCB Acceptance Corporation
Fairway Title Company
▇▇▇▇▇▇ County Capital Trust I
▇▇▇▇▇▇ County Capital Trust II
Sch D- 1
SCHEDULE E
List of persons and entities
subject to lock-up agreements
1. R. ▇▇▇▇ ▇▇▇▇▇▇▇
2. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
3. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
4. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
5. ▇.▇. ▇▇▇▇▇▇▇
6. ▇▇▇▇▇ ▇▇▇▇▇▇
7. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
8. ▇▇▇▇▇ ▇▇▇▇▇▇▇
9. ▇▇▇▇ ▇▇▇▇▇▇
10. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
11. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
12. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
13. ▇▇▇▇▇ ▇. ▇▇▇▇▇
14. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Sch E- 1
Exhibit A
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) The Company is a registered bank holding company under the
Bank Holding Company Act of 1956, as amended ("BHCA"), and has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the State of Tennessee. The activities of each of the Company's direct
and indirect subsidiaries are permissible for subsidiaries of a bank holding
company. The activities of Superior Financial Services, Inc., GCB Acceptance
Corporation and Fairway Title Company are permissible for subsidiaries of a
Tennessee chartered and FDIC insured bank.
(ii) The Company has corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the
Purchase
Agreement.
(iii) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect.
(iv) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus in the column entitled "Actual" under
the caption "Capitalization" (except for subsequent issuances, if any, pursuant
to the
Purchase Agreement or pursuant to reservations, agreements or employee
benefit plans referred to in the Prospectus or pursuant to the exercise of
convertible securities or options referred to in the Prospectus); the shares of
issued and outstanding capital stock of the Company have been duly authorized
and validly issued and are fully paid and non-assessable; and none of the
outstanding shares of capital stock of the Company was issued in violation of
the preemptive or other similar rights of any securityholder of the Company.
(v) The Securities to be purchased by the Underwriters from the
Company have been duly authorized for issuance and sale to the Underwriters
pursuant to the
Purchase Agreement and, when issued and delivered by the Company
pursuant to the
Purchase Agreement against payment of the consideration set
forth in the
Purchase Agreement, will be validly issued and fully paid and
non-assessable and no holder of the Securities is or will be subject to personal
liability by reason of being such a holder.
(vi) The issuance and sale of the Securities by the Company is not
subject to the preemptive or other similar rights of any securityholder of the
Company.
(vii) Each direct and indirect subsidiary of the Company listed on
Schedule A hereto has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and operate its
A-1
properties and to conduct its business as described in the Prospectus and is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect; all of the issued and outstanding capital
stock of each subsidiary has been duly authorized and validly issued, is fully
paid and non-assessable and, to the best of our knowledge, is owned by the
Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity; none of the
outstanding shares of capital stock of any subsidiary was issued in violation of
the preemptive or similar rights of any securityholder of such subsidiary.
(viii) The
Purchase Agreement has been duly authorized, executed and
delivered by the Company and, when duly executed by the Underwriters, will
constitute the valid and binding agreement of the Company enforceable against
the Company in accordance with its terms, except as may be limited or otherwise
affected by (A) bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar statutes, rules, regulations or other laws affecting
the enforcement of creditors' rights and remedies generally, and (B) the
unavailability of, or limitation on the availability of, a particular right or
remedy (whether in a proceeding in equity or at law) because of an equitable
principle or a requirement as to commercial reasonableness, conscionability or
good faith.
(ix) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the 1933 Act; any
required filing of the Prospectus pursuant to Rule 424(b) has been made in the
manner and within the time period required by Rule 424(b); and, to the best of
our knowledge, no stop order suspending the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement has been issued under the
1933 Act and no proceedings for that purpose have been instituted or are pending
or threatened by the Commission.
(x) The Registration Statement, including any Rule 462(b)
Registration Statement and the Rule 430A Information, as applicable, the
Prospectus, excluding the documents incorporated by reference therein, and each
amendment or supplement to the Registration Statement and Prospectus, excluding
the documents incorporated by reference therein, as of their respective
effective or issue dates (other than the financial statements and supporting
schedules included therein or omitted therefrom, as to which we need express no
opinion) complied as to form in all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations.
(xi) The documents incorporated by reference in the Prospectus
(other than the financial statements and supporting schedules included therein
or omitted therefrom, as to which we need express no opinion), when they became
effective or were filed with the Commission, as the case may be, complied as to
form in all material respects with the requirements of the 1933 Act or the 1934
Act, as applicable, and the rules and regulations of the Commission thereunder.
(xii) The form of certificate used to evidence the Common Stock
complies in all material respects with all applicable statutory requirements,
with any applicable requirements of the charter and by-laws of the Company and
the requirements of The Nasdaq National Market.
(xiii) To the best of our knowledge, there is not pending or
threatened any action, suit, proceeding, inquiry or investigation, to which the
Company or any subsidiary is a party, or to which
A-2
the property of the Company or any subsidiary is subject, before or brought by
any court or governmental agency or body, domestic or foreign, which might
reasonably be expected to result in a Material Adverse Effect, or which might
reasonably be expected to materially and adversely affect the properties or
assets thereof or the consummation of the transactions contemplated in the
Purchase Agreement or the performance by the Company of its obligations
thereunder.
(xiv) The information in the Prospectus under "Risk Factors,"
"Description of Capital Stock" and "Underwriting" and in the Registration
Statement under Items 14 and 15, in each instance to the extent that it
constitutes matters of law, summaries of legal matters, the Company's charter
and bylaws or legal proceedings, or legal conclusions, have been reviewed by us
and are accurate and complete.
(xv) To the best of our knowledge, there are no statutes or
regulations that are required to be described in the Prospectus that are not
described as required.
(xvi) All descriptions in the Registration Statement of contracts
and other documents to which the Company or its subsidiaries are a party are
accurate in all material respects; to the best of our knowledge, there are no
franchises, contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those described or
referred to therein or filed or incorporated by reference as exhibits thereto,
and the descriptions thereof or references thereto are correct in all material
respects.
(xvii) Neither the Company nor any subsidiary is in violation of its
charter or by-laws and no default by the Company or any subsidiary exists in the
due performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan agreement, note,
lease or other agreement or instrument that is described or referred to in the
Registration Statement or the Prospectus or filed or incorporated by reference
as an exhibit to the Registration Statement.
(xviii) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign (other than under the 1933 Act and the
1933 Act Regulations, which have been obtained, or as may be required under the
securities or blue sky laws of the various states, as to which we need express
no opinion) is necessary or required in connection with the due authorization,
execution and delivery of the
Purchase Agreement or for the offering, issuance,
sale or delivery of the Securities.
(xix) The execution, delivery and performance of the
Purchase
Agreement and the consummation of the transactions contemplated in the Purchase
Agreement and in the Registration Statement (including the issuance and sale of
the Securities and the use of the proceeds from the sale of the Securities as
described in the Prospectus under the caption "Use Of Proceeds") and compliance
by the Company with its obligations under the Purchase Agreement do not and will
not, whether with or without the giving of notice or lapse of time or both,
conflict with or constitute a breach of, or default or Repayment Event (as
defined in Section 1(a)(xii) of the Purchase Agreement) under or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any subsidiary pursuant to any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or any other
agreement or instrument, known to us, to which the Company or any subsidiary is
a party or by which it or any of them may be bound, or to which any
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of the property or assets of the Company or any subsidiary is subject (except
for such conflicts, breaches or defaults or liens, charges or encumbrances that
would not have a Material Adverse Effect), nor will such action result in any
violation of the provisions of the charter or by-laws of the Company or any
subsidiary, or any applicable law, statute, rule, regulation, judgment, order,
writ or decree, known to us, of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over the Company or any
subsidiary or any of their respective properties, assets or operations.
(xx) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the 1940
Act.
(xxi) To such counsel's knowledge, without independent
investigation, neither the Company nor its subsidiaries is a party to or subject
to any order, decree, agreement, memorandum of understanding or similar
arrangement with, or a commitment letter, supervisory letter or similar
submission to, any governmental entity charged with the supervision or
regulation of depository institutions or engaged in the insurance of deposits
(including the FDIC) or the supervision or regulation of the Company or any of
its subsidiaries and neither the Company nor its subsidiaries has been advised
by any such governmental entity that such governmental entity is contemplating
issuing or requesting (or is considering the appropriateness of issuing or
requesting) any such order, decree, agreement, memorandum of understanding,
commitment letter, supervisory letter or similar submission.
(xxii) With respect to the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002:
(A) The Company has adopted a Code of Ethics and
Code of Conduct for senior financial officers meeting the
requirements of 17 CFR Part 228.406 and an audit committee
charter meeting the requirements of Rule 4350(d)(1)(C) of the
Nasdaq Marketplace Rules;
(B) The Company's Board of Directors has
determined that a majority of its members and all of the
members of its compensation and audit committees are
independent under applicable Nasdaq Marketplace Rules, and
based solely on our review of written representations
furnished by such directors, to our knowledge no independent
director of the Company has any relationship prohibited under
Rule 4200(a)(15)(A) through (G) of the Nasdaq Marketplace
Rules and no audit committee member has any relationship
prohibited under Rule 4350(d)(2)(a)(1) of the Nasdaq
Marketplace Rules;
(C) The Board of Directors has adopted a policy
regarding the nominations process pursuant to Rule
4350(b)(4)(B) of the Nasdaq Marketplace Rules that provides
for the nomination of directors in accordance with such rules;
and
(D) The certifications pursuant to Sections 302
and 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 contained in the
Company's periodic reports filed with the Commission since
August 14, 2002 complied as to form in all material respects
with the requirements of such Act and the Commission's
regulations promulgated thereunder; provided, however, that we
do not give any opinion as to the accuracy of the content of
such certifications.
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(xiii) The Company and its subsidiaries conduct their respective
businesses in compliance in all material respects with all federal, state, local
and foreign statutes, laws, rules, regulations, decisions, directives and orders
applicable to them (including, without limitation, all regulations and orders
of, or agreements with, the Board of Governors of the Federal Reserve System
("FRB"), the FDIC, the Tennessee Department of Financial Institutions, as
applicable, and the Equal Credit Opportunity Act, the Fair Housing Act, the
Community Reinvestment Act, the Home Mortgage Disclosure Act, all other
applicable fair lending laws or other laws relating to discrimination and the
Banks Secrecy Act and Title III of the USA Patriot Act), and neither the Company
nor its subsidiaries have received any communication from any governmental
entity asserting that the Company or any of its subsidiaries is not in
compliance with any statute, law, rule, regulation, decision, directive or
order.
Nothing has come to our attention that would lead us to believe that
the Registration Statement or any amendment thereto, including the Rule 430A
Information (if applicable), (except for financial statements and schedules and
other financial data included or incorporated by reference therein or omitted
therefrom, as to which we need make no statement), at the time such Registration
Statement or any such amendment became effective, contained an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
Prospectus or any amendment or supplement thereto (except for financial
statements and schedules and other financial data included or incorporated by
reference therein or omitted therefrom, as to which we need make no statement),
at the time the Prospectus was issued, at the time any such amended or
supplemented prospectus was issued or at the Closing Time, included or includes
an untrue statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering such opinions, such counsel may rely as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document relating to
legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991).
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EXHIBIT B
________, 2005
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
as Representative of the several
Underwriters to be named in the
within-mentioned Purchase Agreement
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Proposed Public Offering by ▇▇▇▇▇▇ County Bancshares, Inc.
----------------------------------------------------------
Dear Sirs:
The undersigned, a shareholder and an executive officer and/or director
of ▇▇▇▇▇▇ County Bancshares, Inc., a Tennessee corporation (the "Company"),
understands that ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. ("▇▇▇▇▇ ▇▇▇▇▇▇▇▇") proposes to
enter into a Purchase Agreement (the "Purchase Agreement") with the Company
providing for the public offering of shares (the "Securities") of the Company's
common stock, $2.00 par value per share (the "Common Stock"). In recognition of
the benefit that such an offering will confer upon the undersigned as a
shareholder and an executive officer and/or director of the Company, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the undersigned agrees with each underwriter to be named in
the Purchase Agreement that, during a period of 180 days from the date of the
Purchase Agreement, the undersigned will not, without the prior written consent
of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, directly or indirectly, (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant for the sale of, or otherwise
dispose of or transfer any shares of the Company's Common Stock or any
securities convertible into or exchangeable or exercisable for Common Stock,
whether now owned or hereafter acquired by the undersigned or with respect to
which the undersigned has or hereafter acquires the power of disposition, or
file any registration statement under the Securities Act of 1933, as amended,
with respect to any of the foregoing or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Common Stock, whether
any such swap or transaction is to be settled by delivery of Common Stock or
other securities, in cash or otherwise. In the event that either (i) during the
period that begins on the date that is 15 calendar days plus three (3) business
days before the last day of the 180-day restricted period and ends on the last
day of the 180-day restricted period, the Company issues an earnings release or
material news or a material event relating to the Company occurs, or (ii) prior
to the expiration of the 180-day restricted period, the Company announces that
it will release earnings results during the 16-day period beginning on the last
day of the 180-day restricted period, the restrictions set forth herein will
continue to apply until the expiration of the date that is 15 calendar days plus
three (3) business days after the date on which the earnings release is issued
or the material news or event related to the Company occurs.
Notwithstanding the foregoing, the undersigned may transfer the undersigned's
shares of Common Stock (i) as a bona fide gift or gifts, provided that the donee
or donees agree to be bound in writing by the restrictions set forth herein,
(ii) to any trust or family limited partnership for the direct or indirect
benefit of the undersigned or the immediate family of the undersigned,
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provided that the trustee of the trust or general partner of the family limited
partnership, as the case may be, agrees to be bound by the restrictions set
forth herein, and provided further that any such transfer shall not involve a
disposition for value, (iii) pledged in a bona fide transaction outstanding as
of the date hereof to a lender to the undersigned, as disclosed in writing to
the underwriters (iv) pursuant to the exercise by the undersigned of stock
options that have been granted by the Company prior to, and are outstanding as
of, the date of the Purchase Agreement, where the Common Stock received upon any
such exercise is held by the undersigned, individually or as fiduciary, in
accordance with the terms of this Lock-Up Agreement, or (v) with the prior
written consent of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇. For purposes of this Lock-Up Agreement,
"immediate family" shall mean any relationship by blood, marriage or adoption,
not more remote than first cousin. The undersigned now has and, except as
contemplated by clauses (i) through (v) above, for the duration of the Lock-Up
Agreement will have good and marketable title to the undersigned's shares of
Common Stock, free and clear of all liens, encumbrances, and claims whatsoever,
except with respect to any liens, encumbrances and claims that were in existence
on the date hereof. The undersigned also agrees and consents to the entry of
stop transfer instructions with the Company's transfer agent and registrar
against the transfer of the undersigned's common stock, except in compliance
with this Lock-Up Agreement. In furtherance of the foregoing, the Company and
its transfer agent are hereby authorized to decline to make any transfer of
securities if such transfer would constitute a violation or breach of this
Lock-Up Agreement.
The undersigned represents and warrants that the undersigned has full power and
authority to enter into this Lock-Up Agreement. The undersigned agrees that the
provisions of this Lock-Up Agreement shall be binding also upon the successors,
assigns, heirs and personal representatives of the undersigned.
The undersigned understands that, if the Purchase Agreement does not become
effective, or if the Purchase Agreement (other than the provisions thereof which
survive termination) shall terminate or be terminated prior to payment for and
delivery of the Common Stock to be sold thereunder, the undersigned shall be
released from all obligations under this Lock-up Agreement.
This Lock-up Agreement shall be governed by and construed in accordance with the
laws of the State of
New York.
Very truly yours,
Signature:
--------------------------
Print Name:
------------------------
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