Exhibit 1.1
AMERICAN COMMUNITY BANCSHARES, INC.
(a North Carolina corporation)
_________ Units
Each Unit consisting of one share of Common Stock and
one warrant to purchase one share of common stock
UNDERWRITING Agreement
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This Underwriting Agreement is made and entered into this _____ day of ____
2002 by and between American Community Bancshares, Inc., a North Carolina
corporation (the "Company") and ▇▇▇▇, ▇▇▇▇ & Co, LLC (the "Underwriter"). The
Company hereby confirms its agreement with the Underwriter with respect to the
issue and sale by the Company and the purchase by the Underwriter of
approximately ______ of the Company's units (the "Initial Units"), each unit
consisting of one share of the Company's common stock, par value $1.00 per share
("Common Stock") and one warrant to purchase one share of Common Stock (a
"Warrant"). The Company also proposes to issue and sell to the Underwriter, at
the Underwriter's option, up to an additional ____ units (the "Option Units") as
set forth herein. The term "Units" as used herein, unless indicated otherwise,
shall mean the Initial Units and the Option Units.
The Warrants will be governed by the terms of a warrant agreement (the
"Warrant Agreement") between the Company and the Company's transfer agent, as
warrant agent in the form annexed hereto as Exhibit A. Each Warrant shall
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entitle the holder to purchase one share of Common Stock at a price fixed at
approximately 120% of the price per Unit sold in the Offering (as defined
below). Each Warrant shall be exercisable from the date of Closing until three
years from the date of Closing.
The initial public offering price for the Units, the purchase price to
be paid by the Underwriter for the Units, and the number of Units to be sold to
the Underwriter by the Company shall be agreed upon by the Company and the
Underwriter, and such agreement shall be set forth in a separate written
instrument substantially in the form of Exhibit B hereto (the "Price
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Agreement"). The Price Agreement may take the form of an exchange of any
standard form of written telecommunication between the Company and the
Underwriter and shall specify such applicable information as is indicated in
Exhibit B hereto. The offering of the Units will be governed by this Agreement,
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as supplemented by the Price Agreement. From and after the date of the execution
and delivery of the Price Agreement, this Agreement shall be deemed to
incorporate, and all references herein to "this Agreement" shall be deemed to
include, the Price Agreement.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-2 (File Nos.
333-_____ and 333-______-01) covering the registration of the Units under the
Securities Act of 1933, as amended (the "1933
Act"), including the related preliminary prospectus or prospectuses, and,
if such registration statement has not become effective, the Company will
prepare and file, prior to the effective date of such registration statement, an
amendment to such registration statement, including a final prospectus. Each
prospectus used before the time such registration statement becomes effective is
herein called a "preliminary prospectus." Such registration statement, including
the exhibits thereto and the documents incorporated by reference therein
pursuant to Item 12 of Form S-2 under the 1933 Act, at the time it becomes
effective, is herein called the "Registration Statement," and the prospectus,
including the documents incorporated by reference therein pursuant to Item 12 of
Form S-2 under the 1933 Act, included in the Registration Statement at the time
it becomes effective is herein called the "Prospectus," except that, if any
revised prospectus provided to the Underwriter by the Company for use in
connection with the offering of the Units differs from the prospectus included
in the Registration Statement at the time it becomes effective (whether or not
such prospectus is required to be filed pursuant to Rule 424(b) under the 1933
Act ("Rule 424(b)"), the term "Prospectus" shall refer to such revised
prospectus from and after the time it is first furnished to the Underwriter for
such use.
The Company understands that the Underwriter proposes to make a public
offering of the Units (the "Offering") as soon as possible after the
Registration Statement becomes effective. The Underwriter may assemble and
manage a selling group of broker-dealers that are members of the National
Association of Securities Dealers, Inc. ("NASD") to participate in the
solicitation of purchase orders for the Units.
Section 1. Representations and Warranties.
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(a) The Company represents and warrants to and agrees with the Underwriter
that:
(i) The Company meets the requirements for use of Form S-2 under the 1933
Act and, when the Registration Statement on such form shall become effective and
at all times subsequent thereto up to the Closing Time referred to below (and,
with respect to the Option Units, up to the Option Closing Date referred to
below), (A) the Registration Statement and any amendments and supplements
thereto will comply in all material respects with the requirements of the 1933
Act and the rules and regulations of the Commission under the 1933 Act (the
"1933 Act Regulations"); (B) neither the Registration Statement nor any
amendment or supplement thereto will contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading; and (C) neither the Prospectus nor any amendment or
supplement thereto will include an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that this representation and warranty does not apply to statements or omissions
made in reliance upon and in conformity with information furnished in writing to
the Company by the Underwriter expressly for use in the Registration Statement
or the Prospectus. The statements contained under the caption "Underwriting" in
the Prospectus constitute the only information furnished to the Company in
writing by the Underwriter expressly for use in the Registration Statement or
the Prospectus.
(ii) The documents incorporated by reference in the Prospectus pursuant to
Item 12 of Form S-2 under the 1933 Act, at the time they were filed either with
the Commission, or, if filed by American Community Bank, with the Federal
Deposit Insurance Corporation (the "FDIC"), as predecessor filer to the Company,
complied in all material respects with the requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and the rules and regulations
of the Commission thereunder (the "1934 Act Regulations") as adopted by the
appropriate federal banking regulator and, when read together and with the other
information in the Prospectus, at the time the Registration Statement becomes
effective and at all times subsequent thereto up to the Closing Time, will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, in each case after excluding any statement that does not
constitute a part of the Registration Statement or the Prospectus pursuant to
Rule 412 of the 1933 Act Regulations.
(iii) ▇▇▇▇▇ ▇▇▇▇ PLLC ("▇▇▇▇▇"), who are reporting upon the audited
financial statements included or incorporated by reference in the Registration
Statement, has advised the Company that it is an independent certified public
accountant as required by the 1933 Act and the 1933 Act Regulations and within
the meaning of the Code of Ethics of the AICPA, and ▇▇▇▇▇ is, with respect to
the Company and each of its subsidiaries, independent certified public
accountants.
(iv) The consolidated financial statements, audited and unaudited
(including the notes thereto), included or incorporated by reference in the
Registration Statement present fairly the consolidated financial position of the
Company and its subsidiaries as of the dates indicated and the consolidated
results of operations and cash flows of the Company and its subsidiaries for the
periods specified. Such financial statements have been prepared in conformity
with generally accepted accounting principles applied on a consistent basis
throughout the periods involved, except as otherwise stated therein. The
financial statement schedules, if any, included in the Registration Statement
present fairly the information required to be stated therein. The selected
financial, pro forma and statistical data included in the Prospectus are
accurate in all material respects and present fairly the information shown
therein and have been compiled on a basis consistent with that of the audited
and unaudited consolidated financial statements included or incorporated by
reference in the Registration Statement.
(v) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of North Carolina with corporate power
and authority under such laws to own, lease and operate its properties and
conduct its business as described in the Prospectus. Each direct and indirect
subsidiary of the Company is an entity duly organized, validly existing and in
good standing under the laws of its respective jurisdiction of organization with
corporate power and authority under such laws to own, lease and operate its
properties and conduct its business. The Company and each of its direct and
indirect subsidiaries is duly qualified to transact business as a foreign
corporation and is in good standing in each other jurisdiction in which it owns
or leases property of a nature, or transacts business of a type, that would make
such qualification necessary, except to the extent that the failure to so
qualify or be
in good standing would not have a material adverse effect on the condition
(financial or otherwise), earnings, business affairs, assets or business
prospects of the Company and its subsidiaries, considered as one enterprise.
(vi) The Company is duly registered with the Board of Governors of the
Federal Reserve System as a financial holding company under the
▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Financial Services Act of 1999 ("GLB"); American Community
Bank (the "Bank") is a North Carolina-chartered commercial bank subsidiary of
the Company; and the deposit accounts of the Bank are insured by the Bank
Insurance Fund of the FDIC up to the maximum allowable limits thereof. The
Company has all such power, authority, authorization, approvals and orders as
may be required to enter into this Agreement and the Warrant Agreement, to carry
out the provisions and conditions hereof and thereof and to issue and sell the
Units.
(vii) All of the outstanding shares of capital stock of the Bank and each
of the Company's other subsidiaries have been duly authorized and validly issued
and are fully paid and non-assessable (except to the extent set forth in
N.C.G.S. 53-42 as to the Bank) and are owned by the Company directly or
indirectly, free and clear of any pledge, lien, security interest, charge,
claim, equity or encumbrance of any kind.
(viii) Except for the Bank and American Community Capital Trust I, the
Company does not have any "significant subsidiaries" as defined in Rule 1-02 of
Regulation S-X of the Commission.
(ix) The Company had at the date indicated a duly authorized and
outstanding capitalization as set forth in the Prospectus under the caption
"Description of Capital Stock." The capital stock of the Company and the
Warrants conform in all material respects to the description thereof contained
or incorporated by reference in the Prospectus and such description conforms to
the rights set forth in the instruments defining the same.
(x) This Agreement and the Warrant Agreement have been duly authorized,
executed and delivered by the Company and, when duly executed by the
Underwriter, will constitute the valid and binding agreements of the Company
enforceable against the Company in accordance with their terms, except as
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally or by general equitable principles.
(xi) The Units (including the Common Stock and the Warrants constituting
the Units) have been duly and validly authorized by the Company for issuance and
sale to the Underwriter pursuant to this Agreement and, when issued and
delivered by the Company to the Underwriter pursuant to this Agreement against
payment of the consideration set forth herein, will be validly issued, fully
paid and non-assessable and will constitute valid and legally binding
obligations of the Company enforceable in accordance with their terms. The Units
conform in all material respects to the description thereof in the Prospectus,
and such description conforms in all material respects to the rights set forth
in the instruments defining the same; the holders of the Units will be entitled
to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State
of North Carolina; and the issuance of the Units is not subject to any
preemptive or other similar rights.
(xii) Except for information provided in writing to the Company by the
Underwriter about the Underwriter for use in the Prospectus, the Company has not
relied upon the Underwriter or its legal or other advisors for any legal, tax or
accounting advice.
(xiii) The issuance and sale of the Units by the Company, the compliance by
the Company with all of the provisions of this Agreement and the Warrant
Agreement, and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Company or any of its properties; and no consent, approval, authorization,
order, license, certificate, permit, registration or qualification of or with
any such court or other governmental agency or body is required to be obtained
by the Company for the issue and sale of the Units by the Company, or the
consummation by the Company of the transactions contemplated by this Agreement
and the Warrant Agreement, except for such consents, approvals, authorizations,
licenses, certificates, permits, registrations or qualifications as have already
been obtained, or as may be required under the 1933 Act or the 1933 Act
Regulations, the 1934 Act or the 1934 Act Regulations, or state securities laws.
(xiv) Each person who is an officer or director of the Company has agreed
to sign an agreement substantially in the form attached hereto as Exhibit C (the
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"Lock-up Agreements"). The Company has provided to counsel for the Underwriter
true, accurate and complete copies of all of the Lock-up Agreements presently in
effect or effected hereby. The Company hereby represents and warrants that it
will not release any of its officers, directors or other shareholders from any
Lock-up Agreements currently existing or hereafter effected without the prior
written consent of the Underwriter.
(xv) The Company has not engaged in any activity that would result in the
Company being, and after giving effect to the offering and sale of the Units,
the Company 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 "Investment Company Act").
(xvi) All of the outstanding shares of capital stock of the Company have
been duly authorized and validly issued, are fully paid and non-assessable, and
are not subject to the preemptive rights of any stockholder of the Company.
(xvii) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, except as otherwise stated therein,
there has not been (A) any material adverse change in the condition (financial
or otherwise), earnings, business affairs, assets or business prospects of the
Company and its subsidiaries, considered as one enterprise, whether or not
arising in the ordinary course of business, (B) any transaction entered into by
the Company or any subsidiary, other than
in the ordinary course of business, that is material to the Company and its
subsidiaries, considered as one enterprise, or (C) any dividend (other than the
stock dividend declared by the Company on October 1, 2001) or distribution of
any kind declared, paid or made by the Company on its capital stock. Neither the
Company, the Bank nor any other subsidiary has any material liability of any
nature, contingent or otherwise, except as set forth in the Prospectus.
(xviii) Neither the Company, the Bank nor any other subsidiary is in
violation of any provision of its articles of incorporation, charter or bylaws
or in default in the 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 to which it is a party
or by which it may be bound or to which any of its respective properties may be
subject, except for such defaults that, individually or in the aggregate, would
not have a material adverse effect on the condition (financial or otherwise),
earnings, business affairs, assets or business prospects of the Company and its
subsidiaries, considered as one enterprise.
(xix) Except as disclosed in the Prospectus, there is no action, suit or
proceeding before or by any government, governmental instrumentality or court,
domestic or foreign, now pending or, to the knowledge of the Company, threatened
against the Company, the Bank or any other subsidiary that is required to be
disclosed in the Prospectus or that could reasonably be expected to result in
any material adverse change in the condition (financial or otherwise), earnings,
business affairs, assets or business prospects of the Company and its
subsidiaries, considered as one enterprise, or that could reasonably be expected
materially and adversely to affect the properties or assets of the Company and
its subsidiaries, considered as one enterprise, or that could reasonably be
expected materially and adversely to affect the consummation of the transactions
contemplated in this Agreement; all pending legal or governmental proceedings to
which the Company, the Bank or any other subsidiary is a party that are not
described in the Prospectus, including ordinary routine litigation incidental to
its business, if decided in a manner adverse to the Company, would not have a
material adverse effect on the condition (financial or otherwise), earnings,
business affairs or business prospects of the Company and its subsidiaries,
considered as one enterprise.
(xx) There are no material contracts or documents of a character required
to be described in the Registration Statement or the Prospectus or to be filed
as exhibits to the Registration Statement that are not described and filed as
required.
(xxi) Each of the Company and its direct and indirect subsidiaries,
including the Bank, has good and marketable title to all properties and assets
described in the Prospectus as owned by it, free and clear of all liens,
charges, encumbrances or restrictions, except such as (A) are described in the
Prospectus or (B) are neither material in amount nor materially significant in
relation to the business of the Company and its subsidiaries, considered as one
enterprise; all of the leases and subleases material to the business of the
Company and its subsidiaries, considered as one enterprise are in full force and
effect, and neither the Company, the Bank nor any other subsidiary has any
notice of any material claim that has been asserted by anyone adverse to the
rights of the
Company, the Bank or any other subsidiary under any such lease or sublease
or affecting or questioning the rights of such corporation to the continued
possession of the leased or subleased premises under any such lease or sublease.
(xxii) Each of the Company and its direct and indirect subsidiaries, owns,
possesses or has obtained all material governmental licenses, permits,
certificates, consents, orders, approvals and other authorizations necessary to
own or lease, as the case may be, and to operate its properties and to carry on
its business as presently conducted, and neither the Company, the Bank nor any
other subsidiary has received any notice of any restriction upon, or any notice
of proceedings relating to revocation or modification of, any such licenses,
permits, certificates, consents, orders, approvals or authorizations.
(xxiii) No labor problem with the employees of the Company, the Bank or any
other subsidiary exists or, to the best knowledge of the Company, is imminent
that could materially adversely affect the condition (financial or otherwise),
earnings, business affairs or business prospects of the Company and its
subsidiaries, considered as one enterprise, and the Company is not aware of any
existing or imminent labor disturbance by the employees of any of its, the
Bank's or any other subsidiary's principal suppliers, contractors or customers
that could reasonably be expected to materially adversely affect the condition
(financial or otherwise), earnings, business affairs or business prospects of
the Company and its subsidiaries, considered as one enterprise.
(xxiv) Except as disclosed in the Prospectus, there are no persons with
registration or other similar rights to have any securities of the Company
registered pursuant to the Registration Statement or otherwise registered by the
Company under the 1933 Act.
(xxv) Except as disclosed in the Prospectus, the Company and its direct and
indirect subsidiaries, including the Bank, own or possess all patents, patent
rights, licenses, inventions, copyrights, know-how (including trade secrets or
other unpatented and/or unpatentable proprietary or confidential information
systems or procedures), trademarks, service marks and trade names (collectively,
"patent and proprietary rights") currently employed by them in connection with
the business now operated by them except where the failure to own, possess or
acquire such patent and proprietary rights would not have a material adverse
effect on the condition (financial or otherwise), earnings, business affairs,
assets or business prospects of the Company and its subsidiaries, considered as
one enterprise. Neither the Company, the Bank nor any other subsidiary has
received any notice or is otherwise aware of any infringement of or conflict
with asserted rights of others with respect to any patent or proprietary rights,
and which infringement or conflict (if the subject of any unfavorable decision,
rule and refinement, singly or in the aggregate) could reasonably be expected to
result in any material adverse change in the condition (financial or otherwise),
earnings, business affairs, assets or business prospects of the Company and its
subsidiaries, considered as one enterprise.
(xxvi) The Company and each subsidiary of the Company have filed all
federal, state and local income, franchise or other tax returns required to be
filed and have made
timely payments of all taxes due and payable in respect of such returns,
and no material deficiency has been asserted with respect thereto by any taxing
authority.
(xxvii) The Warrants have been approved for inclusion in the Nasdaq
SmallCap Market.
(xxviii) The Company has filed with the NASD all documents and notices
required by the NASD of companies that have issued securities that are traded in
the over-the-counter market and quotations for which are reported by the Nasdaq
SmallCap Market.
(xxix) Neither the Company, the Bank nor any other subsidiary of the
Company has taken or will take, directly or indirectly, any action designed to
cause or result in, or which has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation, under the Exchange
Act or otherwise, of the price of the Units or the Common Stock.
(xxx) Neither the Company, the Bank nor any other subsidiary is or has been
(by virtue of any action, omission to act, contract to which it is a party or by
which it is bound, or any occurrence or state of facts whatsoever) in violation
of any applicable foreign, federal, state, municipal or local statutes, laws,
ordinances, rules, regulations and/or orders issued pursuant to foreign,
federal, state, municipal or local statutes, laws, ordinances, rules, or
regulations (including those relating to any aspect of banking, bank holding
companies, consumer credit, truth-in-lending, usury, currency transaction
reporting, environmental protection, occupational safety and health and equal
employment practices) heretofore or currently in effect, except such violations
that have been fully cured or satisfied without recourse or that in the
aggregate will not have a material adverse effect on the condition (financial or
otherwise), earnings, business affairs, assets or business prospects of the
Company and its subsidiaries, considered as one enterprise.
(xxxi) Neither the Company, the Bank nor any other subsidiary has any
agreement or understanding with any person (A) concerning the future acquisition
by the Company or the Bank of a controlling interest in any entity or (B)
concerning the future acquisition by any person of a controlling interest in the
Company, the Bank or any other subsidiary, in either case that is required by
the 1933 Act or the 1933 Act Regulations to be disclosed by the Company that is
not disclosed in the Prospectus.
(b) Any certificate signed by any authorized officer of the Company or the
Bank and delivered to the Underwriter or to counsel for the Underwriter pursuant
to this Agreement shall be deemed a representation and warranty by the Company
to the Underwriter as to the matters covered thereby.
(c) The Underwriter represents and warrants to and agrees with the Company
that:
(i) The Underwriter is registered as a broker-dealer with the Commission
and is a member of the NASD.
(ii) The Underwriter is validly existing and in good standing as a limited
liability company under the laws of the State of New Jersey with corporate power
and authority to provide the services to be furnished to the Company hereunder.
(iii) The execution and delivery of this Agreement and the consummation of
the transactions herein contemplated have been duly and validly authorized by
all necessary corporate action on the part of the Underwriter, and this
Agreement is a legal, valid and binding obligation of the Underwriter,
enforceable in accordance with its terms, except as limited under applicable law
and subject to bankruptcy, insolvency, reorganization or other laws relating to
or affecting the enforcement of creditor's rights generally and equitable
principles limiting the right to obtain specific enforcement or similar
equitable relief.
(iv) The Underwriter and, to the Underwriter's knowledge, its employees,
and agents who shall perform any of the services required hereunder to be
performed by the Underwriter shall be duly authorized and shall have all
licenses, approvals and permits necessary to perform such services.
(v) The execution and delivery of this Agreement by the Underwriter, the
fulfillment of the terms set forth herein and the consummation of the
transactions herein contemplated shall not violate or conflict with the
corporate charter or By-laws of the Underwriter or violate, conflict with or
constitute a breach of, or default (or any event which, with notice or lapse of
time, or both, would constitute a default) under, any material agreement,
indenture or other instrument by which the Underwriter is bound or under any
governmental license or permit or any law, administrative regulation,
authorization, approval or order or court decree, injunction or order applicable
to it.
(vi) Any funds received by the Underwriter to purchase Units will be
handled in accordance with Rule 15c2-4 under the 1934 Act, if applicable.
(vii) There is not now pending or, to the Underwriter's knowledge,
threatened against the Underwriter any material action or proceeding before the
Commission, the NASD, any state securities commission or any state or federal
court concerning the Underwriter's activities as a broker-dealer.
Section 2. Sale and Delivery to the Underwriter; Closing.
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(a) 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 the Underwriter, and the Underwriter agrees to purchase from the Company, the
number of Initial Units set forth at the purchase price and terms set forth
herein and in the Price Agreement.
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 Underwriter to purchase all or a portion of the
Option Units in accordance with the terms set forth
herein and in the Price Agreement. The option hereby granted will expire at 5:00
p.m. on the 30th day after the date the Registration Statement is declared
effective by the Commission (or at 5:00 p.m. on the next business day following
the 30th day if such 30th day is not a business day) and may be exercised,
solely for the purpose of covering over-allotments which may be made in
connection with the offering and distribution of the Initial Units upon notice
by the Underwriter to the Company setting forth the number of Option Units as to
which the Underwriter is exercising the option and the time, date and place of
payment and delivery for the Option Units. Such time and date of delivery (the
"Option Closing Date") shall be determined by the Underwriter but shall not be
later than five full business days after the exercise of said option, nor in any
event prior to Closing Time, as hereinafter defined, nor earlier than the second
business day after the date on which the notice of the exercise of the option
shall have been given.
(b) Payment of the purchase price for, and delivery of certificates for,
the Common Stock and the Warrants issuable in connection with the Initial Units
shall be made at such place as shall be agreed upon by the Company and the
Underwriter, at 9:30 a.m. on the third full business day after the effective
date of the Registration Statement, or at such other time not earlier than three
nor more than ten full business days thereafter as the Underwriter and the
Company shall determine (such date and time of payment and delivery being herein
called the "Closing Time"). In addition, in the event that any or all of the
Option Units are purchased by the Underwriter, payment of the purchase price
for, and delivery of certificates for, such Option Units shall be made at such
place as shall be agreed upon by the Company and the Underwriter, on the Option
Closing Date as specified in the notice from the Underwriter to the Company.
Payment for the Initial Units and the Option Units, if any, shall be made to the
Company by wire transfer of immediately available funds, against delivery of
certificates for the Common Stock and Warrants which comprise the Initial Units
and Option Units, as the case may be, to the Underwriter.
(c) Certificates for the Common Stock and Warrants which comprise the
Initial Units and Option Units, as the case may be, shall be registered in such
name or names and in such denominations as the Underwriter may request in
writing at least two business days prior to the Closing Time or the Option
Closing Time, as the case may be. The Company will make such certificates
available for examination by the Underwriter and counsel to the Underwriter not
later than 10:00 a.m. Eastern time on the business day prior to the Closing Time
or the Option Closing Time, as the case may be.
Section 3. Certain Covenants of the Company. The Company covenants with the
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Underwriter as follows:
(a) The Company will use its best efforts to cause the Registration
Statement to become effective and will notify the Underwriter immediately, and
confirm the notice in writing, (i) when the Registration Statement, or any
post-effective amendment to the Registration Statement, shall have 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 of the Commission to amend the Registration Statement or amend or
supplement 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 Units for offering or sale in any jurisdiction, or of the institution or
threatening of any proceedings for any of such purposes. The Company will use
every reasonable effort to prevent the issuance of any such stop order or of any
order preventing or suspending such use and, if any such order is issued, to
obtain the lifting thereof at the earliest possible moment.
(b) The Company will not at any time file or make any amendment to the
Registration Statement or, if the Company has elected to rely upon Rule 430A of
the 1933 Act Regulations ("Rule 430A"), any amendment or supplement to the
Prospectus (including documents incorporated by reference into the Registration
Statement or the Prospectus) of which the Underwriter shall not previously have
been advised and furnished a copy, or to which the Underwriter or counsel for
the Underwriter shall reasonably object.
(c) The Company has furnished or will furnish to the Underwriter as many
signed and conformed copies of the Registration Statement as originally filed
and of each amendment thereto, whether filed before or after the Registration
Statement becomes effective, copies of all exhibits and documents filed
therewith (including documents incorporated by reference into the Prospectus
pursuant to Item 12 of Form S-2 under the ▇▇▇▇ ▇▇▇) and signed copies of all
consents and certificates of experts as the Underwriter may reasonably request.
(d) The Company will deliver or cause to be delivered to the Underwriter,
without charge, from time to time until the effective date of the Registration
Statement, as many copies of each preliminary prospectus as the Underwriter may
reasonably request, and the Company hereby consents to the use of such copies
for purposes permitted by the 1933 Act. The Company will deliver or cause to be
delivered to the Underwriter, without charge, as soon as the Registration
Statement shall have become effective (or, if the Company has elected to rely
upon Rule 430A, as soon as practicable after the Price Agreement has been
executed and delivered) and thereafter from time to time as requested by the
Underwriter during the period when the Prospectus is required to be delivered
under the 1933 Act, such number of copies of the Prospectus (as supplemented or
amended) as the Underwriter may reasonably request.
(e) The Company will comply to the best of its ability 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 Units 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 Units,
any event shall occur or condition exist as a result of which it is necessary,
in the reasonable opinion of counsel for the Underwriter or counsel for the
Company, to amend the Registration Statement or amend or supplement the
Prospectus in order that the Prospectus will not include an untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein not misleading, in light of the circumstances existing at the
time it is delivered to a purchaser, or if it shall be necessary, in the
reasonable opinion of either 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)
hereof, such amendment or supplement as may be necessary to correct such untrue
statement or omission or to make the Registration Statement or the Prospectus
comply with such requirements.
(f) The Company will use its best efforts, in cooperation with the
Underwriter, to qualify the Units (and the Common Stock and Warrants which
comprise the Units) for offering and sale under the applicable securities laws
of such states and other jurisdictions as the Underwriter may designate and to
maintain such qualifications in effect for a period of not less than one year
from the effective date of the 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. The Company will file such statements and reports as may
be required by the laws of each jurisdiction in which the Units (and the Common
Stock and Warrants which comprise the Units) have been qualified as above
provided.
(g) The Company will make generally available (within the meaning of Rule
158 of the 1933 Act Regulations ("Rule 158") to the holders of the Units and the
Underwriter as soon as practicable, but not later than 90 days after the close
of the period covered thereby, an earnings statement of the Company and its
subsidiaries (in form complying with the provisions of Rule 158) covering a
period of at least 12 months beginning after the effective date of the
Registration Statement but not later than the first day of the Company's fiscal
quarter next following such effective date.
(h) The Company and the Bank will use the net proceeds received by them
from the sale of the Units in the manner specified in the Prospectus under the
caption "Use of Proceeds."
(i) The Company, during the period when a prospectus is required by the
1933 Act to be delivered in connection with the conversion of the Warrants into
Common Stock, will file promptly all documents required to be filed with the
Commission pursuant to Section 13 or 14 of the 1934 Act subsequent to the time
the Registration Statement becomes effective.
(j) For a period of five years after the Closing Time, the Company will
furnish to the Underwriter copies of all annual reports, quarterly reports and
current reports filed by the Company with the Commission, such other documents,
reports, proxy statements and information as shall be furnished by the Company
to its stockholders generally, and such other public information concerning the
Bank or the Company as the Underwriter may reasonably request.
(k) The Company will provide to the holders of the Common Stock annual
reports containing financial statements audited by the Company's independent
auditors and, upon written request, the Company's annual reports on Form 10-K.
(l) The Company will file with the NASD all documents and notices required
by the NASD of companies that have issued securities that are traded in the
Nasdaq Stock Market.
(m) The Company shall cause to be prepared by its counsel one or more "blue
sky" surveys (each, a "Blue Sky Survey") for use in connection with the offering
of the Units (and the Common Stock and Warrants comprising the Units) as
contemplated by the Prospectus
and a copy of each Blue Sky Survey or surveys shall be delivered to each of the
Company and the Underwriter.
(n) If, at the time the Registration Statement becomes effective, any
information shall have been omitted therefrom in reliance upon Rule 430A, then
the Company will prepare, and file or transmit for filing with the Commission in
accordance with Rule 430A and Rule 424(b), copies of an amended Prospectus or,
if required by Rule 430A, a post-effective amendment to the Registration
Statement (including an amended Prospectus) containing all information so
omitted.
(o) The Company will, at its expense, subsequent to the issuance of the
Units, prepare and distribute to the Underwriter and counsel to the Underwriter
a bound volume containing copies of the documents used in connection with the
issuance of the Units.
(p) The Company will not, prior to the Option Closing Date or thirty (30)
days after the date of this Agreement, whichever occurs first, incur any
material liability or obligation, direct or contingent, or enter into any
material transaction, other than in the ordinary course of business, or any
transaction with a related party which is required to be disclosed in the
Prospectus pursuant to Item 404 of Regulation S-K of the Commission, except as
contemplated by the Prospectus.
(q) The Company will not sell or issue, contract to sell or issue, or
otherwise dispose of, for a period of 180 days after the Closing Time, without
the prior written consent of the Underwriter, any shares of, or any securities
convertible into or exercisable for shares of, Common Stock other than in
connection with any plan or arrangement described in the Prospectus.
Section 4. Payment of Expenses.
-------------------
(a) Whether or not the sale of the Units by the Company is consummated, the
Company agrees to pay all expenses incident to the performance of the
obligations of the Company under this Agreement, including the following: (i)
the preparation, printing, issuance and delivery of the certificates evidencing
the Common Stock and Warrants; (ii) the fees and disbursements of the Company's
counsel, accountants and other advisors; (iii) the qualification or exemption
from qualification of the Units (and the Common Stock and Warrants comprising
the Units) under all applicable securities or Blue Sky laws, including filing
fees and the reasonable fees and disbursements of counsel in connection
therewith and in connection with the preparation of the Blue Sky Survey
concerning such jurisdictions as the Underwriter may reasonably designate; (iv)
the printing and delivery to the Underwriter in such quantities as the
Underwriter shall reasonably request copies of the Prospectus, and all other
documents in connection with this Agreement; (v) the filing fees and the fees
and disbursements of counsel incurred in connection with the review of the
Offering by the NASD; (vi) the fees for listing the Common Stock, Warrants and
Units on the Nasdaq SmallCap market; (vii) the fees and expenses relating to
advertising expenses, investor meeting expenses and other miscellaneous expenses
relating to the marketing by the Underwriter of the Units; (viii) the fees and
charges of any transfer agent, registrar or other agent; and (ix) the fees and
charges of the Warrant Agent. In the event that the Underwriter incurs any such
expenses on behalf of the Company, the Company
will pay or reimburse the Underwriter for such expenses regardless of whether
the Offering is successfully completed, and such reimbursements will not be
included in the expense limitations set forth in the following paragraph.
(b) In addition, the Company will reimburse the Underwriter for all
reasonable out-of- pocket expenses, including legal fees and expenses of
Underwriter's counsel, incurred by the Underwriter in connection with the
services provided by the Underwriter to the Company pursuant to this Agreement.
Such legal fees shall not exceed (i) $45,000 with regard to the Offering
(excluding the out-of-pocket expenses of counsel and any Blue Sky fees and
expenses), (ii) and $10,000 with regard to the Underwriter's other out-of-pocket
expenses without the approval of the Company. The Underwriter will provide a
detailed accounting of the out-of-pocket expenses referred to in this paragraph,
which will be paid by the Company on the Closing Time. The parties hereto
acknowledge that the expense limitations set forth in this paragraph may be
exceeded in the event of a material delay in the Offering that requires an
update of financial or other information contained in the Prospectus.
(c) If (i) the Closing Time does not occur on or before _______, 2002, (ii)
the Company abandons or terminates the Offering, or (iii) this Agreement is
terminated by the Underwriter in accordance with the provisions of Section 5 or
9(a), the Company shall reimburse the Underwriter for its reasonable
out-of-pocket expenses, as set forth in this Section 4, including the reasonable
fees and disbursements of counsel for the Underwriter.
Section 5. Conditions of Underwriter's Obligations. The
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obligations of the Underwriter to purchase and pay for the Units that it has
agreed to purchase pursuant to this Agreement are subject, in the discretion of
the Underwriter, to the accuracy of the representations and warranties of the
Company contained herein or in certificates of the officers of the Company or
any subsidiary delivered pursuant to the provisions hereof, to the execution of
the Price Agreement no later than 5:30 p.m. on the first business day following
the date hereof, or at such later time as the Underwriter may agree in writing
(in the Underwriter's sole discretion), to the performance by the Company of its
obligations hereunder and to the following further conditions:
(a) The Registration Statement shall have become effective not later than
4:00 p.m. on the first business day following the date hereof, or at such later
time or on such later date as the Underwriter may agree to in writing; at the
Closing Time, no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act and no proceedings for that
purpose shall be pending or, to the Underwriter's knowledge or the knowledge of
the Company, shall be contemplated by the Commission, and any request on the
part of the Commission for additional information shall have been complied with
to the satisfaction of counsel for the Underwriter. If the Company has elected
to rely upon Rule 430A, a prospectus containing the information required by Rule
430A 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) At the Closing Time, the Underwriter shall have received:
(i) The favorable opinion, dated as of the Closing Time, of ▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, P.A.,. ("▇▇▇▇▇"), counsel for the Company, in form and substance
reasonably satisfactory to counsel for the Underwriter, substantially in the
form set forth in Exhibit D.
(ii) The favorable opinion, dated as of the Closing Time, of ▇▇▇▇▇▇, ▇▇▇▇▇▇
& ▇▇▇▇▇, P.A, ("▇▇▇▇▇▇") counsel for the Underwriter, in form and substance
satisfactory to the Underwriter.
In rendering their opinion, counsel may rely, to the extent such counsel
deems such reliance necessary or appropriate, upon certificates of governmental
officials, certificates or opinions of other counsel reasonably satisfactory to
the Underwriter and, as to matters of fact, officers' certificates. The opinion
of such counsel need refer only to matters of North Carolina and federal law and
may add other qualifications and explanations of the basis of their opinion as
may be reasonably acceptable to the Underwriter.
(c) At the Closing Time and again at the Option Closing Date, (i) the
Registration Statement and the Prospectus, as they may then be amended or
supplemented, shall contain all statements that are required to be stated
therein under the 1933 Act and the 1933 Act Regulations and shall conform in all
material respects to the requirements of the 1933 Act and the 1933 Act
Regulations, the Company shall have complied in all material respects with Rule
430A (if they shall have elected to rely thereon), and neither the Registration
Statement nor the Prospectus, as they may then be amended or supplemented, shall
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; (ii) there shall not have been, since the respective dates as of
which information is given in the Registration Statement, any material adverse
change in the condition (financial or otherwise), earnings, business affairs,
assets or business prospects of the Company and its subsidiaries, considered as
one enterprise, whether or not arising in the ordinary course of business; (iii)
no action, suit or proceeding at law or in equity shall be pending or, to the
knowledge of the Company, threatened against the Company or its subsidiaries
that would be required to be set forth in the Prospectus that is not set forth
therein, and no proceedings shall be pending or, to the knowledge of the
Company, threatened against either of the Company or any subsidiary of the
Company before or by any federal, state or other commission, board or
administrative agency wherein an unfavorable decision, ruling or finding would
materially adversely affect the condition (financial or otherwise), earnings,
business affairs, assets or business prospects of the Company and its
subsidiaries, considered as one enterprise, other than as set forth in the
Prospectus; (iv) the Company shall have complied, in all material respects, with
all agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the Closing Time or Option Closing Date, as applicable;
(v) the other representations and warranties of the Company set forth in Section
l(a) hereof shall be accurate in all material respects as though expressly made
at and as of the Closing Time or Option Closing Date, as applicable; and (vi) no
stop order suspending the effectiveness of the Registration Statement shall have
been issued and no proceeding for that purpose been initiated or, to the best
knowledge of the Company, threatened by the Commission. At the Closing Time, the
Underwriter shall have received a certificate of the President and the Chief
Financial Officer of the Company, dated as of the Closing Time, to such effect.
(d) At the time that this Agreement is executed by the Company, the
Underwriter shall have received from ▇▇▇▇▇ ▇▇▇▇ PLLC a letter or letters, dated
such date, in form and substance satisfactory to the Underwriter, confirming
that they are independent certified public accountants with respect to the
Company within the meaning of the 1933 Act and the 1933 Act Regulations, and
stating in effect that, with respect to the Company:
(i) in their opinion, the consolidated financial statements as of December
31, 2001 and 2000, and for each of the years in the three year period ended
December 31, 2001 and the related financial statement schedules, if any,
included or incorporated by reference in the Registration Statement and the
Prospectus and covered by their opinions included therein comply as to form in
all material respects with the applicable accounting requirements of the 1933
Act and the 1933 Act Regulations;
(ii) on the basis of procedures (but not an audit in accordance with
generally accepted accounting standards) specified by the American Institute
of Certified Public Accountants for a review of interim financial information
as described in SAS No. 71, Interim Financial Information, including a reading
-----------------------------
of the latest available interim consolidated financial statements of the
Company, a reading of the minutes of all meetings of the Board of Directors of
the Company and the Bank and of the Audit and Executive Committees of the
Board of Directors of the Bank since _____, 2002, inquiries of certain
officials of the Company and its subsidiaries responsible for financial and
accounting matters, and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused them to
believe that:
(A) the unaudited interim consolidated financial information included
or incorporated by reference in the Prospectus, if any, do not comply as to
form in all material respects with applicable accounting requirements of
the 1933 Act, or are not presented in conformity with generally accepted
accounting principles applied on a basis consistent with that of the
audited financial statements included in the Prospectus;
(B) at a specified date not more than three days prior to the date of
this Agreement, there was any increase in total borrowings, real estate
owned or Federal Home Loan Bank advances of the Company and its
consolidated subsidiaries or any decrease in total assets, total deposits
or stockholders' equity of the Company and its consolidated subsidiaries,
any increase in the number of outstanding shares of capital stock of the
Company and its consolidated subsidiaries or any increase or decrease in
loan loss allowance of the Company and its consolidated subsidiaries, in
each case as compared with amounts shown in the financial statements at
_____, 2002 included in the Registration Statement, except in all cases for
changes, increases or decreases that the Registration Statement discloses
have occurred or may occur; or
(C) for the period from December 31, 2001 to a specified date not more
than three days prior to the date of this Agreement, there was any decrease
in consolidated net interest income, non-interest income, net income or net
income per share or any increase in the consolidated provision for loan
losses, in
each case as compared with a period of comparable length in the preceding
year, except in all cases for changes, increases or decreases that the
Registration Statement discloses have occurred or may occur; and
(iii) in addition to the procedures referred to in clause (ii) above, they
have performed other specified procedures, not constituting an audit, with
respect to certain amounts, percentages, numerical data and financial
information appearing in the Registration Statement (including the Selected
Consolidated Financial Data) (having compared such items with, and have found
such items to be in agreement with, the financial statements of the Company or
general accounting records of the Company, as applicable, which are subject to
the Company's internal accounting controls or other data and schedules prepared
by the Company from such records); and
(iv) on the basis of a review of schedules provided to them by the Company,
nothing came to their attention that caused them to believe that the pro forma
information set forth in the Prospectus under the heading "Capitalization" had
not been correctly calculated on the basis described therein.
(e) At the Closing Time, the Underwriter shall have received from ▇▇▇▇▇
▇▇▇▇ PLLC a letter, in form and substance satisfactory to the Underwriter and
dated as of the Closing Time, reaffirming the statements made in the letter(s)
furnished pursuant to Section 5(d) hereof, except that the inquiries specified
in Section 5(d) hereof shall be made based upon the latest available unaudited
interim consolidated financial statements and the specified date referred to
shall be a date not more than five days prior to the Closing Time.
(f) At the Closing Time, counsel for the Underwriter shall have been
furnished with all such documents, certificates and opinions as they may
reasonably request for the purpose of enabling them to pass upon the issuance
and sale of the Units as contemplated in this Agreement and the matters referred
to in Section 5(c) hereof and in order to evidence the accuracy and completeness
of any of the representations, warranties or statements of the Company, the
performance of any of the covenants of the Company or the fulfillment of any of
the conditions herein contained; and all proceedings taken by the Company at or
prior to the Closing Time in connection with the authorization, issuance and
sale of the Units as contemplated in this Agreement shall be satisfactory in
form and substance to the Underwriter and to counsel for the Underwriter.
(g) The Company shall have paid, or made arrangements satisfactory to the
Underwriter for the payment of, all such expenses as may be required by Section
4 hereof.
(h) In the event the Underwriter exercises its option provided in Section 2
hereof to purchase all or any portion of the Option Units, the obligations of
the Underwriter to purchase the Option Units that it has agreed to purchase
shall be subject to the receipt by the Underwriter on the Option Closing Date
of:
(i) A certificate, dated the Option Closing Date, of the President and the
Chief Financial Officer of the Company confirming that the certificate delivered
at the Closing Time pursuant to Section 5(c) hereof remains true as of the
Option Closing Date;
(ii) The favorable opinion of ▇▇▇▇▇, counsel for the Company, addressed to
the Underwriter and dated the Option Closing Date, in form satisfactory to
▇▇▇▇▇▇, counsel to the Underwriter, relating to the Option Units and otherwise
to the same effect as the opinion required by Section 5(b)(i) hereof;
(iii) The favorable opinion of ▇▇▇▇▇▇, counsel to the Underwriter, dated
the Option Closing Date, relating to the Option Units and otherwise to the same
effect as the opinion required by Section 5(b)(ii) hereof; and
(iv) A letter from ▇▇▇▇▇ ▇▇▇▇ PLLC addressed to the Underwriter and dated
the Option Closing Date, in form and substance satisfactory to the Underwriter
and substantially the same in form and substance as the letter(s) furnished to
the Underwriter pursuant to Section 5(e) hereof.
(i) The Units (and the Common Stock and the Warrants comprising the Units)
shall have been qualified or registered for sale, or subject to an available
exemption from such qualification or registration, under the "blue sky" or
securities laws of such jurisdictions as shall have been reasonably specified by
the Underwriter, and the Offering contemplated by this Agreement shall have been
cleared by the NASD.
(j) The Company shall have executed and delivered the Warrant Agreement in
such form reasonably satisfactory to the Underwriter and its counsel.
(k) The Lock-Up Agreements shall have been delivered to the Underwriter.
If any of the conditions specified in this Section 5 shall not have been
fulfilled when and as required by this Agreement, this Agreement may be
terminated by the Underwriter on notice to the Company at any time at or prior
to the Closing Time, and such termination shall be without liability of any
party to any other party, except as provided in Section 4 of this Agreement.
Notwithstanding any such termination, the provisions of Sections 4, 6, 7, 10 and
12 of this Agreement shall remain in effect.
Section 6. Indemnification.
---------------
(a) The Company agrees to indemnify and hold harmless the Underwriter, each
officer, director, employee, agent and legal counsel of the Underwriter, and
each person, if any, who controls the Underwriter within the meaning of Section
15 of the 1933 Act or Section 20(a) of the 1934 Act, against any loss,
liability, claim, damage and expense whatsoever (which shall include, but not be
limited to, amounts incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim or investigation
whatsoever and any and all amounts paid in settlement of any claim or
litigation, provided such settlement is entered into with the consent of the
Company as provided herein), as and when incurred, arising out of, based upon or
in connection with (i) any untrue statement or alleged untrue statement of a
material fact or any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, contained in (A) any preliminary prospectus, the Registration
Statement or the Prospectus (as from time to time amended and supplemented), or
any amendment or supplement thereto or in any document incorporated by reference
therein or required to be delivered with any preliminary prospectus or
the Prospectus or (B) in any application or other document or communication
(collectively called an "application") executed by or on behalf of the Company
or based upon written information furnished by or on behalf of the Company filed
in any jurisdiction in order to qualify the Units under the "blue sky" or
securities laws thereof or filed with the Commission, the NASD or any securities
exchange, unless such statement or omission or alleged statement or omission was
made in reliance upon and in conformity with written information concerning the
Underwriter, this Agreement or the compensation of the Underwriter furnished to
the Company by or on behalf of the Underwriter expressly for inclusion in any
preliminary prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or in any application, as the case may be, or
(ii) any breach of any representation, warranty, covenant or agreement of the
Company contained in this Agreement. For purposes of this section, the term
"expense" shall include, but not be limited to, counsel fees and costs, court
costs, out-of-pocket costs and compensation for the time spent by any of the
Underwriter's directors, officers, employees and counsel according to his or her
normal hourly billing rates. The indemnification provisions shall also extend to
all directors, officers, employees, agents, legal counsel and controlling
persons of each affiliate of the Underwriter.
(b) The Underwriter agrees to indemnify and hold harmless the Company, its
directors, each officer 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(a) of the 1934 Act, against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
above, as incurred, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in any preliminary prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or any application in reliance upon and in conformity with written
information about the Underwriter, this Agreement or the compensation of the
Underwriter, furnished to the Company by the Underwriter expressly for inclusion
in such preliminary prospectus, the Registration Statement or the Prospectus, or
any amendment or supplement thereto, or in any application.
(c) An indemnified party shall give prompt notice to each indemnifying
party if any action, suit, proceeding or investigation is commenced in respect
of which indemnity may be sought hereunder, but failure to notify an
indemnifying party shall not relieve the indemnifying party from its obligations
to indemnify hereunder, except to the extent that the indemnifying party has
been prejudiced in any material respect by such failure. If it so elects within
a reasonable time after receipt of such notice, an indemnifying party may assume
the defense of such action, including the employment of counsel satisfactory to
the indemnified parties and the payment of all expenses of the indemnified party
in connection with such action. Such indemnified party or parties shall have the
right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless the employment of such counsel shall have been authorized in
writing by the indemnifying party in connection with the defense of such action
or the indemnifying party shall not have promptly employed counsel satisfactory
to such indemnified party or parties or such indemnified party or parties shall
have reasonably concluded that there may be one or more legal defenses available
to it or them or to other indemnified parties that are different from or
additional to those available to one or more of the indemnifying parties, in any
of which events such fees and expenses shall be borne by the indemnifying party
and the indemnifying party shall not have the right to direct the defense of
such action on behalf of the indemnified party or
parties. The Company shall be liable for any settlement of any claim against the
Underwriter (or any of its directors, officers, employees, agents, legal counsel
or controlling persons) made with the Company's written consent, which consent
shall not be unreasonably withheld. The Company shall not, without the written
consent of the Underwriter, settle or compromise any claim against the
Underwriter (or any of its directors, officers, employees, agents, legal counsel
or controlling persons) based upon circumstances giving rise to an
indemnification claim against the Company hereunder unless such settlement or
compromise provides that the Underwriter and the other indemnified parties shall
be unconditionally and irrevocably released from all liability in respect to
such claim.
(d) In order to provide for just and equitable contribution, if a claim for
indemnification pursuant to these indemnification provisions is made but it is
found in a final judgment by a court that such indemnification may not be
enforced in such case, even though the express provisions hereof provide for
indemnification in such case, then the Company, on the one hand, and the
Underwriter, on the other hand, shall contribute to the amount paid or payable
by such indemnified persons as a result of such loss, liability, claim, damage
and expense (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the Underwriter, on the
other hand, from the underwriting, or (ii) if the allocation 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 the Underwriter, on the
other hand, in connection with the statements, acts or omissions which resulted
in such loss, liability, claim, damage and expense, and any other relevant
equitable considerations. No person found liable for a fraudulent
misrepresentation or omission shall be entitled to contribution from any person
who is not also found liable for such fraudulent misrepresentation or omission.
Notwithstanding the foregoing, the Underwriter shall not be obligated to
contribute any amount hereunder that exceeds the amount of the underwriting
discount retained by them.
(e) The indemnity and contribution agreements contained herein are in
addition to any liability which the Company may otherwise have to the
Underwriter.
(f) Neither termination nor completion of the engagement of the Underwriter
nor any investigation made by or on behalf of the Underwriter shall affect the
indemnification obligations of the Company or the Underwriter hereunder, which
shall remain and continue to be operative and in full force and effect.
Section 7. Representations, Warranties and Agreements to Survive Delivery.
---------------------------------------------------------------
The representations, warranties, indemnities, agreements and other statements of
the Company or its officers set forth in or made pursuant to this Agreement will
remain operative and in full force and effect regardless of any investigation
made by or on behalf of the Underwriter or any controlling person of the
Underwriter and will survive termination of this Agreement and receipt or
delivery of and payment for the Units.
Section 8. Offering by the Underwriter. The Company is advised by the
-----------------------------
Underwriter that the Underwriter proposes to make a public offering of the
Units, on the terms and conditions set forth in the Registration Statement from
time to time as and when the Underwriter deems advisable after the Registration
Statement becomes effective
Section 9. Termination of Agreement.
------------------------
(a) The Underwriter may terminate this Agreement, by notice to the Company,
at any time at or prior to the Closing Time (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 Registration Statement, any material adverse change
in the condition (financial or otherwise), 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 of
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, in
each case the effect of which is such as to make it, in the judgment of the
Underwriter, impracticable or inadvisable to market the Units or enforce
contracts for the sale of the Units; or (iii) if trading in any securities of
the Company has been suspended or materially limited by the Commission or the
NASD, or if trading generally on The New York Stock Exchange, Nasdaq National
Market, Nasdaq SmallCap Market or in the over-the-counter market has been
suspended or materially limited, or minimum or maximum prices for trading have
been fixed, or maximum ranges for prices for securities have been required, by
such exchange or system or by order of the Commission, the NASD or any other
governmental authority with appropriate jurisdiction over such matters, or a
material disruption has occurred in commercial banking or securities settlement
or clearance services in the United States; or (iv) if a banking moratorium has
been declared by any federal, North Carolina, New York or New Jersey authority;
or (v) if there shall have been such material and substantial change in the
market for securities in general or in political, financial or economic
conditions as in the Underwriter's judgment makes it inadvisable to proceed with
the offering, sale and delivery of the Units on the terms contemplated by the
Prospectus; or (vi) if the Underwriter reasonably determines (which
determination shall be in good faith) that there has not been satisfactory
disclosure of all relevant financial information relating to the Company in the
Company's disclosure documents and that the sale of the Units is inadvisable
given such disclosures; or (vii) if the Price Agreement has not been executed by
all the parties hereto prior to 5:30 p.m. on the first business day following
the date of this Agreement.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party, except
to the extent provided in Section 4 hereof. Notwithstanding any such
termination, the provisions of Sections 4, 6, 7, 10 and 12 hereof shall remain
in effect.
Section 10. Notices. All notices and other communications under this
-------
Agreement shall be in writing and shall be deemed to have been duly given if
delivered, mailed or transmitted by any standard form of telecommunication.
Notices shall be addressed as follows:
If to the Underwriter:
▇▇▇▇, ▇▇▇▇ & Co., LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Managing Director
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇, P.A.
3200 Beechleaf Court
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to the Company:
American Community Bancshares, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Executive Officer
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇., Esq.
Section 11. Parties. This Agreement is made solely for the benefit of the
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Underwriter, and the officers, directors, employees, agents and legal counsel of
the Underwriter specified in Section 6 hereof, the Company and, to the extent
expressed, any person controlling the Company or the Underwriter, and the
directors of the Company, its officers who have signed the Registration
Statement, and their respective executors, administrators, successors and
assigns, and no other person shall acquire or have any right under or by virtue
of this Agreement. The term "successors and assigns" shall not include any
purchaser, as such purchaser, from the Underwriter of the Units.
Section 12. WAIVER OF TRIAL BY JURY. THE UNDERWRITER AND THE COMPANY HEREBY
-----------------------
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR
COUNTERCLAIM (WHETHER BASED IN CONTRACT, TORT OR OTHERWISE) RELATED TO OR
ARISING OUT OF THIS AGREEMENT.
Section 13. Governing Law and Time. This Agreement shall be governed by the
----------------------
laws of the State of New Jersey. Specified times of the day refer to New York
City time.
Section 14. Counterparts. This Agreement may be executed in one or more
------------
counterparts, and when a counterpart has been executed by each party, all such
counterparts taken together shall constitute one and the same agreement.
Section 15. Miscellaneous. This Agreement, including all Exhibits hereto,
-------------
constitutes the entire understanding of the parties and supercedes any and all
prior negotiations
of the parties with respect to this subject matter. This Agreement may be
amended only in writing signed by each of the parties. In the event that any
term, provision or covenant herein or the application thereof to any
circumstances or situation shall be invalid or unenforceable, in whole or in
part, the remainder hereof and the application of said term, provision or
covenant to any other circumstance or situation shall not be affected thereby,
and each term, provision or covenant herein shall be valid and enforceable to
the full extent permitted by law. The failure or delay by the Underwriter or the
Bank in exercising any right, power or privilege hereunder shall not operate as
a waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege hereunder. If the Public Offering is consummated, the Underwriter may,
at its option and expense, place an announcement in such newspapers and
periodicals as the Underwriter may choose stating that the Underwriter has so
acted, and the capacity in which it has acted.
IN WITNESS WHEREOF, the parties hereto have signed this
Agreement and have declared it effective as of the date written above.
AMERICAN Community BANCSHARES, INC.
Southern Community Financial Corporation, as Depositor
By: _____________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief Executive Officer
▇▇▇▇, ▇▇▇▇ & CO., LLC
By: _____________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇
Managing Director
EXHIBIT A
WARRANT AGREEMENT
EXHIBIT B
PRICE AGREEMENT
_____, 2002
▇▇▇▇, ▇▇▇▇ & Co., L.L.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated the date hereof (the
"Underwriting Agreement"), between the Company (as defined in the Underwriting
Agreement) and ▇▇▇▇, ▇▇▇▇ & Co., L.L.C. (the "Underwriter"). The Underwriting
Agreement provides for the purchase by the Underwriter from the Company of a
number of Units (as such term is defined in the Underwriting Agreement) of the
Company to be determined in the manner set forth in the Underwriting Agreement
and to be set forth herein (the "Units").
This Agreement is the Price Agreement referred to in the Underwriting
Agreement.
Pursuant to Section 2 of the Underwriting Agreement, the Company agrees
with the Underwriter as follows:
1. The public offering price per Unit shall be $_____.
2. The purchase price for the Units to be paid by the Underwriter shall be
$_____ per Unit.
3. The number of Initial Units to be purchased by the Underwriter is
______________.
The Company represents and warrants to the Underwriter that the
representations and warranties of the Company set forth in Section 1(a) of the
Underwriting Agreement are accurate as though expressly made at and as of the
date hereof.
This Agreement shall be governed by the laws of the State of New Jersey.
[The remainder of this page left blank intentionally.]
If the foregoing is in accordance with the understanding of the
Underwriter of the agreement between the Underwriter and the Company, please
sign and return to the Company a counterpart hereof, whereupon this instrument,
along with all counterparts and together with the Underwriting Agreement, shall
be a binding agreement between the Underwriter and the Company in accordance
with its terms and the terms of the Underwriting Agreement.
Very truly yours,
AMERICAN COMMUNITY BANCSHARES, INC.
By: _____________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief Executive Officer
Confirmed and accepted as of
the date first above written:
▇▇▇▇, ▇▇▇▇ & CO., LLC
By: __________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Managing Director
EXHIBIT C
Lock-Up Agreement
▇▇▇▇, ▇▇▇▇ & Co., L.L.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
RE: American Community Bancshares, Inc.
-----------------------------------
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of
Common Stock ("Common Stock") of the American Community Bancshares, Inc. (the
"Company") or securities convertible into or exchangeable or exercisable for
Common Stock (the "Offering"). The Company proposes to carry out a public
offering of Units of the Company each consisting of one share of Common Stock
and one Warrant to purchase one share of Common Stock (the "Units") for which
you will act as underwriter. The undersigned recognizes that the Offering will
be of benefit to the undersigned and will benefit the Company by, among other
things, raising additional capital for its operations. The undersigned
acknowledges that you are relying on the representations and agreements of the
undersigned contained in this letter in carrying out the Offering and in
entering into underwriting agreements with the Company with respect to the
Offering.
In consideration of the foregoing, the undersigned hereby agrees that the
undersigned will not offer to sell, contract to sell, or otherwise sell, dispose
of, loan, pledge or grant any rights with respect to (collectively, a
"Disposition") any shares of Common Stock, any options or warrants to purchase
any shares of Common Stock or any securities convertible into or exchangeable
for shares of Common Stock (collectively, "Securities") now owned or hereafter
acquired directly by such person or with respect to which such person has or
hereafter acquires the power of disposition, otherwise than (i) as a bona fide
gift or gifts, provided the donee or donees thereof agree in writing to be bound
by this restriction, (ii) for grants of employee stock options pursuant to the
terms of a plan in effect on the date hereof, issuances of Common Stock pursuant
to the exercise of such options or the exercise of any other employee stock
options outstanding on the date hereof, or (iii) with the prior written consent
of the Underwriter, for a period commencing on the date hereof and continuing to
a date 180 days after the offering has been closed (the "Lock-up Period"). The
foregoing restriction has been expressly agreed to preclude the holder of the
Securities from engaging in any hedging or other transaction which is designed
to or reasonably expected to lead to or result in a Disposition of Securities
during the Lock-up Period, even if such Securities would be disposed of by
someone other than such holder. Such prohibiting hedging or other transactions
would include, without limitation, any short sale (whether or not against the
box) or any purchase, sale or grant of any right (including, without limitation,
any put or call option) with respect to any Securities or with respect to any
security (other than a broad-based market basket or index) that included,
relates to or derives any significant part of its value from Securities. 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 shares of Common Stock or Securities held by the undersigned except
in compliance with the foregoing restrictions.
This agreement is irrevocable and will be binding on the undersigned and the
respective successors, heirs, personal representatives, and assigns of the
undersigned. This letter agreement shall terminate and be no further force and
effect upon a decision by the Underwriter or the Company not to proceed with the
Offering.
Dated: ___________________________
___________________________
[Printed Name of Holder]
By: ________________________________
[Signature]
________________________________
Printed Name of Person Signing
EXHIBIT D
Company Counsel's Opinion