1
SUN BANCSHARES, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
_____________________ , 2000
WACHOVIA SECURITIES, INC.
As representative of the several
Underwriters named in Schedule I hereto,
c/o Wachovia Securities, Inc.
IJL Financial Center
201 North Tryon Street
Charlotte, North Carolina 28202
Ladies and Gentlemen:
Sun Bancshares, Inc., a South Carolina corporation (the "Company") and
proposed holding company for SunBank, N.A., a national banking association (the
"Bank"), proposes, subject to the terms and conditions stated herein, to issue
and sell to the underwriters named in Schedule I hereto (the "Underwriters") an
aggregate of 1,000,000 shares of common stock, no par value (the "Common
Stock"), of the Company (the "Firm Shares"), and, at the election of the
Underwriters, subject to the terms and conditions stated herein, to sell to the
Underwriters up to 150,000 additional shares of Common Stock (the "Optional
Shares") solely to cover overallotments, if any (the Firm Shares and the
Optional Shares that the Underwriters elect to purchase pursuant to Section 2
hereof are collectively called the "Shares").
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with each of the Underwriters that:
(a) A registration statement on Form SB-2 (File No.
333-_____) with respect to the Shares, has been filed by the Company
with the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Securities Act"). The
registration statement and any amendments thereto, including any
post-effective amendments, have been declared effective by the
Commission in such form and copies of each of those items have been
delivered by the Company to you. No other document with respect to the
registration statement or any post effective amendment thereto has
been filed with the Commission; and no stop order suspending the
effectiveness of the registration statement has been issued and no
proceeding for that purpose has been instituted or threatened by the
Commission. Any preliminary
2
prospectus included in the registration statement or filed with the
Commission pursuant to Rule 424 of the Rules and Regulations of the
Commission under the Securities Act (the "Rules and Regulations"),
is herein called a "Preliminary Prospectus." The various parts of such
registration statement, including the prospectus, Part II, all
financial schedules and exhibits thereto, and including the
information contained in the form of final prospectus filed with the
Commission pursuant to Rule 424(b) under the Securities Act, and
deemed by virtue of Rule 430A under the Securities Act to be part of
the registration statement at the time it was declared effective, as
amended at the time such part became effective, are herein called
collectively the "Registration Statement," and the final prospectus,
in the form first filed pursuant to Rule 424(b) or as included in the
Registration Statement at the time it is declared effective if no Rule
424(b) filing is required, is herein called the "Prospectus."
(b) No order preventing or suspending the use of any
Prospectus, including any Preliminary Prospectus, has been issued and
no proceeding for that purpose has been instituted or threatened by
the Commission or the securities authority of any state or other
jurisdiction. No stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued and no
proceeding for that purpose has been instituted or threatened or, to
the knowledge of the Company, contemplated by the Commission or the
securities authority of any state or other jurisdiction.
(c) Each Preliminary Prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto complied when so filed in all material respects with the
requirements applicable to it under the Securities Act and the Rules
and Regulations and none of such documents 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; and any further amendment or supplement
thereto, when such documents become effective or are filed with the
Commission, as the case may be, will conform in all material respects
to the requirements of the Securities Act, and the Rules and
Regulations and will not contain an untrue statement of material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter
through Wachovia Securities, Inc. (the "Representative") expressly for
use therein. When the Registration Statement or any amendment thereto
was declared effective, and at each Time of Delivery (as hereinafter
defined), it (i) contained all statements required to be stated
therein in accordance with, and complied or will comply in all
material respects with the requirements of, the Securities Act and the
Rules and Regulations and (ii) did not include any untrue statement of
a material fact or omit to state any material fact necessary to make
the statements therein not misleading. When the Prospectus or any
amendment or supplement thereto is filed with the Commission pursuant
to Rule 424(b) (or, if the Prospectus or such amendment or supplement
is not required to be so filed, when the Registration Statement or the
amendment thereto containing such amendment
2
3
or supplement to the Prospectus was or is declared effective) and at
each Time of Delivery, the Prospectus, as amended or supplemented at
any such time (i) contained or will contain all statements required to
be stated therein in accordance with, and complied or will comply in
all material respects with the requirements of, the Securities Act and
the Rules and Regulations and (ii) did not or will not include any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein not misleading.
(d) The descriptions in the Registration Statement and
the Prospectus of statutes, rules, regulations, legal and governmental
proceedings or contracts and other documents that are required to be
so described are accurate and fairly present the information required
to be shown; and there are no statutes, rules, regulations or legal or
governmental proceedings required to be described in the Registration
Statement or the Prospectus that are not described as required and no
contracts or documents of a character that are required to be
described in the Registration Statement or the Prospectus or to be
filed as exhibits to the Registration Statement that are not described
and filed as required.
(e) The Company has been duly incorporated, is validly
existing as a corporation under the laws of the State of South
Carolina and has full power and authority to own or lease its
properties and conduct its business as described in the Prospectus.
The Bank is a national banking association in organization under the
laws of the United States of America and, upon the issuance of a
charter by the Office of the Comptroller of the Currency (the "OCC"),
will have full power and authority to own or lease its properties and
conduct its business as described in the Prospectus. The Company has
full power and authority to enter into this Agreement and to perform
its obligations hereunder. Neither the Company nor the Bank is
required to be qualified to transact business as a foreign corporation
under the laws of any other jurisdiction.
(f) The capitalization of the Company is as disclosed
under the caption "Capitalization" in the Prospectus. All of the issued
shares of capital stock of the Company have been duly authorized and
validly issued, are fully paid and nonassessable and conform to the
description of the capital stock under the caption "Description of Sun
Bancshares' Capital Stock and Shareholders' Rights" contained in the
Prospectus. None of the issued shares of capital stock of the Company
has been issued or is owned or held in violation of any preemptive or
similar rights, and no person or entity (including any holder of
outstanding shares of capital stock of the Company or its subsidiary)
has any preemptive or other rights to subscribe for any of the Shares.
None of the shares of capital stock of the Bank has been issued.
(g) Upon the issuance of a charter by the OCC and the
payment for the capital stock of the Bank, all of the issued shares of
the Bank will be duly authorized and validly issued, fully paid, and,
except as may be applicable under the National Bank Act, nonassessable
and will be owned beneficially by the Company free and clear of all
liens, security interests, pledges, charges, encumbrances, defects,
shareholders' agreements,
3
4
voting trusts, equities or claims of any nature whatsoever. The
Company has made application
(i) to the Board of Governors of the Federal
Reserve System for approval to become a bank holding company
and to acquire all of the shares of the Bank;
(ii) to the OCC, for approval to charter a national
bank; and
(iii) to the Federal Deposit Insurance Corporation
for approval for Federal Deposit Insurance for Bank deposits
(each a "Regulatory Approval" and collectively, the
"Regulatory Approvals").
The Company and the Bank have obtained or have filed for all
other material licenses, consents and approvals, and have satisfied or
have taken all action required at this time to satisfy all material
eligibility and other similar requirements imposed by federal and
state regulatory bodies, administrative agencies or other governmental
bodies, agencies or officials, in each case applicable to the conduct
of the business in which they are engaged or are contemplated to be
engaged as described in the Registration Statement. With respect to
the Regulatory Approvals, as well as all other material licenses,
consents and approvals, and any other similar requirements that the
Company or the Bank does not have at this time, (i) all applications
therefor are complete, accurate, and have been filed with the
appropriate regulatory authorities, (ii) the Company has received
preliminary notice from the OCC that such application for Regulatory
Approval will be approved, and (iii) the Company knows of no reason
why all final Regulatory Approvals will not be received prior to the
time required. Other than the Bank, the Company does not own, directly
or indirectly, any capital stock or other equity securities of any
corporation or any ownership interest in any partnership, joint
venture or other association.
(h) Except as disclosed in the Prospectus, there are no
outstanding (i) securities or obligations of the Company or the Bank
convertible into or exchangeable for any capital stock of the Company
or the Bank, (ii) warrants, rights or options to subscribe for or
purchase from the Company or the Bank any such capital stock or any
such convertible or exchangeable securities or obligations, or (iii)
obligations of the Company or the Bank to issue any shares of capital
stock, any such convertible or exchangeable securities or obligations,
or any such warrants, rights or options.
(i) Since the date as of which information is given in
the Prospectus, neither the Company nor the Bank has sustained any
material loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree,
otherwise than as disclosed in or contemplated by the Prospectus.
(j) Since the date as of which information is given in
the Prospectus, (i) neither the Company nor the Bank has incurred any
liabilities or obligations, direct or contingent, or entered into any
transactions, not in the ordinary course of business, that
4
5
are material to the Company and the Bank, (ii) the Company has not
purchased any of its outstanding capital stock or declared, paid or
otherwise made any dividend or distribution of any kind on its capital
stock, (iii) there has not been any change in the capital stock,
long-term debt or short-term debt of the Company or the Bank (except
with respect to such changes in the balance due under the Company's
line of credit described in the Prospectus), and (iv) there has not
been any material adverse change, or any development involving a
prospective material adverse change, in or affecting the financial
position, general affairs, management, business or prospects of the
Company and the Bank, in each case other than as disclosed in or
contemplated by the Prospectus.
(k) The consolidated financial statements of the Company,
together with related notes and schedules as set forth in the
Registration Statement, conform to the requirements of the Securities
Act and the Rules and Regulations. Such financial statements fairly
present the consolidated financial position of the Company at the
respective dates indicated in accordance with generally accepted
accounting principles applied on a consistent basis for the periods
indicated. The Company and the Bank have no material contingent
obligations which are not disclosed in the Company's financial
statements which are included in the Registration Statement.
Tourville, Simpson & Caskey, L.L.P. whose report is included in the
Registration Statement, are independent certified public accountants
as required by the Securities Act and the Rules and Regulations.
(l) The Shares to be sold by the Company hereunder have been
duly authorized and, when issued and delivered against payment
therefor as provided herein, will be validly issued and fully paid and
nonassessable and will conform to the description of the Common Stock
contained in the Prospectus; and all corporate action required to be
taken for the authorization, issuance and sale of the Shares has been
validly taken. The Underwriters will receive good and marketable title
to the Shares to be issued and delivered hereunder, free and clear of
all liens, encumbrances, claims, security interests, restrictions,
shareholders' agreements and voting trusts whatsoever. The
certificates evidencing the Shares will be in due and proper form and
will comply with all applicable legal requirements.
(m) There are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company owned or
to be owned by such person or to require the Company to include such
securities in the securities registered pursuant to the Registration
Statement or any securities being registered pursuant to any other
registration statement filed by the Company under the Securities Act.
(n) Neither the Company nor the Bank is, or (with or without
the giving of notice or passage of time or both) would be: (i) in
violation of its Articles of Incorporation, Articles of Association,
Bylaws or other governing instruments; or (ii) in
5
6
default under any indenture, mortgage, deed of trust, loan agreement,
lease or other agreement or instrument to which the Company or the
Bank is a party or to which any of their respective properties or
assets are subject, except, in the case of clause (ii) above, where
such default would not have a material adverse effect on either the
Company or the Bank.
(o) The issue and sale of the Shares and the performance of
this Agreement and the consummation of the transactions herein
contemplated will not conflict with, or (with or without the giving of
notice or the passage of time or both) result in a breach or violation
of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which the Company or the Bank is a party or
to which any of their respective properties or assets is subject, nor
will such action conflict with or violate any provision of the
Articles of Incorporation, Articles of Association, Bylaws or other
governing instruments of the Company or the Bank, or any statute, rule
or regulation or any order, judgment or decree of any court or
governmental agency or body having jurisdiction over the Company or
the Bank or any of their respective properties or assets.
(p) The Company and the Bank have good and marketable title
in fee simple to all real property, if any, and good title to all
personal property owned by them, in each case free and clear of all
liens, security interests, pledges, charges, encumbrances, mortgages
and defects, except such as are disclosed in the Prospectus or such as
do not materially and adversely interfere with the operations of the
Company and the Bank; and any real property and buildings held under
lease by the Company or the Bank are held under valid, subsisting and
enforceable leases, with such exceptions as are disclosed in the
Prospectus or are not material and do not interfere with the
operations of the Company or the Bank.
(q) No consent, approval, authorization, order or declaration
of or from, or registration, qualification or filing with, any court
or governmental agency or body or third party is required for the
issue and sale of the Shares or the consummation of the transactions
contemplated by this Agreement, except (i) the registration of the
Shares under the Securities Act and such as may be required by the
National Association of Securities Dealers, Inc. (the "NASD") and
under state securities or blue sky laws in connection with the offer,
sale and distribution of the Shares by the Underwriters, and (ii) as
required in connection with the Regulatory Approvals.
(r) Other than as disclosed in the Prospectus, there is no
litigation, arbitration, claim, proceeding (formal or informal) or
investigation pending or, to the knowledge of any director or
executive officer of the Company, threatened (or any reasonable basis
therefor) in which the Company or the Bank is a party or of which any
of their respective properties or assets are the subject which, if
determined adversely to the Company or the Bank, would individually or
in the aggregate have a material adverse effect on the
6
7
financial position, general affairs, management, business or prospects
of the Company and the Bank.
(s) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the valid and binding
agreement of the Company enforceable against the Company in accordance
with its terms subject, as to enforcement, to applicable bankruptcy,
insolvency, reorganization and moratorium laws and other laws relating
to or affecting the enforcement of creditors' rights generally and to
general equitable principles, and except as the enforceability of
rights to indemnity and contribution under this Agreement may be
limited under applicable securities laws or the public policy
underlying such laws.
(t) Neither the Company nor any of its officers, directors or
affiliates has (i) taken, directly or indirectly, any action designed
to cause or result in, or that has constituted or might reasonably be
expected to constitute, the stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of the
Shares or (ii) since the filing of the Registration Statement (A)
sold, bid for, purchased or paid anyone any compensation for
soliciting purchases of, the Shares or (B) paid or agreed to pay to
any person any compensation for soliciting another to purchase any
other securities of the Company.
(u) None of the Company, the Bank, nor, to the knowledge of
the Company, any director or executive officer, agent, employee or
other person acting on behalf of the Company or the Bank has (i) used
or authorized the use of, any corporate or other funds for unlawful
payments, or contributions, (ii) made unlawful expenditures relating
to political activity to government officials, or (iii) established or
maintained any unlawful or unrecorded funds in violation of any
federal, state, or local law or regulation, including Section 30A of
the Exchange Act. None of the Company, the Bank, nor, to the knowledge
of the Company, any director or executive officer of the Company or
the Bank has accepted or received any unlawful contributions or
payments.
(v) The Company has obtained for the benefit of the Company
and the Underwriters from each of its directors and executive officers
a written agreement (the "Lockup Agreements") that for a period of 180
days from the date of the Prospectus such director or officer will
not, without your prior written consent, offer, pledge, sell, contract
to sell, grant any option for the sale of, or otherwise dispose of (or
announce any offer, pledge, sale, grant of an option to purchase or
other disposition), directly or indirectly, any shares of Common Stock
or securities convertible into, or exercisable or exchangeable for,
shares of Common Stock.
(w) The Bank, upon the issuance of a charter by the OCC, will
not be prohibited, directly or indirectly, from paying any dividends
to the Company, from making any other distributions on the Bank's
capital stock, from repaying to the
7
8
Company any loans or advances to the Bank or from transferring the
Bank's property or assets to the Company, except under federal
regulations as disclosed in the Prospectus.
(x) The Company and the Bank have filed all material foreign,
federal, state and local tax returns that are required to be filed by
them and have paid all taxes shown as due on such returns as well as
all other taxes, assessments and government charges that are due and
payable; and no deficiency with respect to any such return has been
assessed or proposed in any material respects. All tax liabilities
have been adequately provided for in the financial statements of the
Company.
(y) The Company is not, nor will it become as a result of
transactions contemplated hereby, and does not intend to conduct its
business in a manner that would cause it to become an "investment
company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940.
2. PURCHASE AND SALE OF SHARES.
(a) Subject to the terms and conditions herein set forth, (i)
the Company agrees to issue and sell to each of the Underwriters, and
each of the Underwriters agree, severally and not jointly, to purchase
from the Company the number of Firm Shares set opposite the name of
such Underwriter in Schedule 1 hereto, at the following purchase
prices: (A) with respect to the Firm Shares not purchased by the
Company's directors, executive officers and certain other investors
identified in writing by the Company, as described in (B) and (C)
below, at a purchase price of $9.25 per share, and (B) with respect to
the Firm Shares purchased by the Company's directors and executive
officers, but only up to a maximum of 200,000 Firm Shares, at a
purchase price of $10.00 per share, and (C) with respect to the Firm
Shares purchased by certain other investors identified in writing by
the Company, but only up to a maximum of 100,000 Firm Shares, at a
purchase price of $9.65 per share, (ii) in the event and to the extent
that the Underwriters shall exercise the election to purchase Optional
Shares as provided below, the Company agrees to issue and to sell to
each of the Underwriters, and each of the Underwriters agree,
severally and not jointly, to purchase from the Company, at a purchase
price of $9.25 per share, that portion of the number of Optional
Shares as to which such election shall have been exercised (to be
adjusted by you so as to eliminate fractional shares) determined by
multiplying such number of Optional Shares by a fraction, the
numerator of which is the maximum number of Optional Shares that such
Underwriter is entitled to purchase as set forth opposite the name of
such Underwriter in Schedule I hereto and the denominator of which is
the maximum number of the Optional Shares that all of the Underwriters
are entitled to purchase hereunder.
(b) The Company hereby grants to the Underwriters the right
to purchase at their election in whole or in part from time to time up
to 150,000 Optional Shares, at the purchase price of $9.25 per share
for the sole purpose of covering over-allotments in the sale of Firm
Shares. Any such election to purchase Optional Shares may be exercised
by
8
9
written notice from you to the Company, given from time to time within
a period of 30 calendar days after the date of this Agreement and
setting forth the aggregate number of Optional Shares to be purchased
and the date on which the Optional Shares are to be delivered, as
determined by you but in no event (i) earlier than the First Time of
Delivery (as hereinafter defined) or (ii) unless you and the Company
otherwise agree in writing, earlier than two or later than ten
business days after the date of such notice. In the event you elect to
purchase all or a portion of the Optional Shares, the Company agrees
to furnish or cause to be furnished to you the certificates, letters
and opinions, and to satisfy all conditions set forth in Section 7
hereof at each Subsequent Time of Delivery (as hereinafter defined).
3. OFFERING BY THE UNDERWRITERS. Upon the release of the Shares,
the several Underwriters propose to offer the Shares for sale upon the terms
and conditions disclosed in the Prospectus.
4. DELIVERY OF SHARES; CLOSING. Certificates in definitive form
for the Shares to be purchased by each Underwriter hereunder, and in such
denominations and registered in such names as the Representative may request
upon at least 48 hours prior notice to the Company shall be delivered by or on
behalf of the Company to you for your account against payment by you of the
purchase price therefor by wire transfer of immediately available funds to an
account designated by the Company. The closing of the sale and purchase of the
Shares shall be held at the offices of Smith Helms Mulliss & Moore, L.L.P.,
Charlotte, North Carolina. The time and date of such delivery and payment shall
be, with respect to the Firm Shares, at 10:00 a.m., Charlotte, North Carolina
time, on the 3rd (or if the Firm Shares are priced, as contemplated by Rule
15c6-1(c) under the Exchange Act, after 4:30 p.m., Washington, D.C. time, the
4th) full business day after the execution of this Agreement or at such other
legally permissible time and date as you and the Company may agree upon in
writing, and, with respect to the Optional Shares, at 10:00 a.m., Charlotte,
North Carolina time, on the date specified by you in the written notice given
by you of the Underwriters' election to purchase all or part of such optional
shares, or at such other time and date as you and the Company may agree upon in
writing. Such time and date for delivery of the Firm Shares is herein called
the "First Time of Delivery," such time and date for delivery of the Optional
Shares, if not the First Time of Delivery, is herein called a "Subsequent Time
of Delivery," and each such time and date for delivery is herein called a "Time
of Delivery." The Company will make such certificates available for checking
and packaging at least 24 hours prior to each Time of Delivery at your office
at the address set forth above or such other location designated by you to the
Company. If the Representative so elects, delivery of the Firm Shares and the
Optional Shares, if any, may be made by credit through full fast transfer to
the accounts at the Depositary Trust Company designated by the Representative.
5. COVENANTS OF THE COMPANY. The Company covenants and agrees with the
Underwriters:
9
10
(a) The Company shall comply with the provisions of and make all
requisite filings with the Commission pursuant to and in accordance with Rule
430A and subparagraph (1) (or, if applicable and if consented to by you,
subparagraph (4)) of Rule 424(b) not later than the earlier of (i) the second
business day following the execution and delivery of this Agreement or (ii) the
date on which the Prospectus is first used after the Registration Statement is
declared effective. The Company will advise you promptly of any such filing
pursuant to Rules 430A or 424(b).
(b) The Company will not file with the Commission the Prospectus
or any amendment or supplement to the Prospectus or any amendment to the
Registration Statement unless you have received a reasonable period of time to
review any such proposed amendment or supplement and consented to the filing
thereof and will use its best efforts to cause any such amendment to the
Registration Statement to be declared effective as promptly as possible. Upon
the request of the Representative or counsel for the Representative, the
Company will promptly prepare and file with the Commission, in accordance with
the Rules and Regulations, any amendments to the Registration Statement or
amendments or supplements to the Prospectus that may be necessary or advisable
in connection with the distribution of the Shares by the Underwriters and will
use its best efforts to cause any such amendment to the Registration Statement
to be declared effective as promptly as possible. If required, the Company will
file any amendment or supplement to the Prospectus with the Commission in the
manner and within the time period required by Rule 424(b) under the Securities
Act. The Company will advise the Representative, promptly after receiving
notice thereof, of the time when the Registration Statement or any amendment
thereto has been filed or declared effective or the Prospectus or any amendment
or supplement thereto has been filed and will provide evidence to the
Representative of each such filing or effectiveness.
(c) The Company will advise you promptly after receiving notice or
obtaining knowledge of (i) the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or any part thereof
or any order preventing or suspending the use of any Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto, (ii) the suspension of
the qualification of the Shares for offer or sale in any jurisdiction or of the
initiation or threatening of any proceeding for any such purpose, or (iii) any
request made by the Commission or any securities authority of any other
jurisdiction for amending the Registration Statement, for amending or
supplementing the Prospectus or for additional information. The Company will
use its best efforts to prevent the issuance of any such stop order and, if any
such stop order is issued, to obtain the withdrawal thereof as promptly as
possible.
(d) If during the period in which a prospectus is required by law
to be delivered by an Underwriter or dealer, any events shall have occurred as
a result of which, in the judgment of the Company or the opinion of the
Underwriters, the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light
10
11
of the circumstances under which they were made, not misleading, or if for any
reason it is necessary during such same period to amend or supplement the
Prospectus to comply with the Securities Act or the Rules and Regulations or
any law, the Company will promptly notify you and upon your request (but at
the Company's expense) prepare and file with the Commission and any state or
other governmental securities commissions in jurisdictions where the Shares
have been sold by the Underwriters, an amendment or supplement to the
Prospectus that corrects such statement or omission or effects such compliance
and will furnish without charge to each Underwriter and to any dealer in
securities, as many copies of such amended or supplemented Prospectus as you
may from time to time reasonably request. Neither your consent to, nor the
Underwriter's delivery of, any such amendment or supplement shall constitute a
waiver of any of the conditions set forth in Section 7.
(e) The Company promptly from time to time will take such action
as you may reasonably request to qualify the Shares for offering and sale under
the securities or blue sky laws of such jurisdictions as you may request and
will continue such qualifications in effect for as long as may be necessary to
complete the distribution of the Shares, provided that in connection therewith
the Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any jurisdiction. In the event
that the qualification of the Shares in any jurisdiction is suspended, the
Company shall so advise the Representative promptly in writing.
(f) The Company will deliver to, or upon the order of, the
Representative, from time to time, as many copies of the Preliminary Prospectus
as the Representative may reasonably request. The Company will deliver to, or
upon the order of, the Representative, during the period when delivery of a
Prospectus is required under the Securities Act, as many copies of the
Prospectus in final form, or as thereafter amended or supplemented, as the
Representative may reasonably request. The Company will deliver to the
Representative at or before the Time of Delivery, four signed copies of the
Registration Statement and all amendments thereto including all exhibits filed
therewith, and will deliver to the Representative such number of copies of the
Registration Statement (including such number of copies of the exhibits filed
therewith that may be reasonably requested), and of all amendments thereto, as
the Representative may reasonably request.
(g) The Company will, from time to time, after the effective date
of the Registration Statement file with the Commission such reports as are
required by the Securities Act, the Exchange Act and the Rules and Regulations,
and the Company agrees to keep the Common Stock registered pursuant to the
Exchange Act for at least five years from the date hereof. The Company shall
also file with foreign, state and other governmental securities commissions in
jurisdictions where the Shares have been sold by the Underwriters such reports
as are required to be filed by the securities acts and the regulations of those
jurisdictions.
11
12
(h) As soon as practicable, but in any event not later than the
last day of the thirteenth month after the effective date of the Registration
Statement, the Company will make generally available to its security holders an
earnings statement (which need not be audited) in reasonable detail covering a
period of at least 12 consecutive months beginning after the effective date of
the Registration Statement, complying with Section 11(a) of the Securities Act
and the Rules and Regulations and will advise you in writing when such
statement has been so made available.
(i) The Company will, for a period of three years from the Time
of Delivery, deliver to the Representative copies of annual reports and copies
of all other documents, reports and information furnished by the Company to its
shareholders or filed with the NASD or any securities exchange pursuant to the
requirements of such exchange or with the Commission pursuant to the Securities
Act or the Exchange Act. The Company will deliver to the Representative similar
reports with respect to significant subsidiaries, as that term is defined in
the Rules and Regulations, which are not consolidated in the Company's
financial statements.
(j) During the period beginning from the date hereof and
continuing to and including the date 180 days after the date of the Prospectus,
the Company will not, without your prior written consent, offer, pledge, issue,
sell, contract to sell, grant any option for the sale of, or otherwise dispose
of (or announce any offer, pledge, sale, grant of an option to purchase or other
disposition), directly or indirectly, any shares of Common Stock or securities
convertible into, exercisable or exchangeable for, shares of Common Stock,
except as provided in Section 2 and except as described in the Prospectus.
(k) Neither the Company nor any of its officers, directors or
affiliates will (i) take, directly or indirectly, prior to the closing of the
purchase and sale of the Shares, any action designed to cause or to result in,
or that might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of any of the Shares, (ii) sell, bid for, purchase or pay anyone any
compensation for soliciting purchases of, the Shares or (iii) pay or agree to
pay to any person any compensation for soliciting another to purchase any other
securities of the Company.
(l) The Company will apply the net proceeds from the offering in
the manner set forth under the heading "Use of Proceeds" in the Prospectus,
including the payment of the full amount required for the capitalization of the
Bank, and will timely report such use of proceeds pursuant to Item 701 of
Regulation S-B and S-K in its periodic reports filed pursuant to Section 13(a)
and 15(d) of the Exchange Act in accordance with Rule 463 of the Securities Act
or any successor provision.
12
13
(m) Following the Time of Delivery, the Company will
diligently take all steps appropriate to obtain all Regulatory Approvals and
cause the Bank to be opened for the conduct of business as described in the
Prospectus.
(n) If at any time during the 90-day period after the
Registration Statement becomes effective, any rumor, publication or event
relating to or affecting the Company shall occur as a result of which in your
reasonable opinion the market price of the Common Stock has been or is likely
to be materially affected (regardless of whether such rumor, publication or
event necessitates a supplement to or amendment of the Prospectus) and after
written notice from you advising the Company to the effect set forth above, the
Company agrees to forthwith prepare, consult with you concerning the substance
of, and disseminate a press release or other public statement, reasonably
satisfactory to you, responding to or commenting on such rumor, publication or
event.
(o) The Company will cause the Shares to be quoted on the
Nasdaq OTC Bulletin Board (or any other exchange acceptable to the
Representative) at each Time of Delivery and for at least five years from the
date hereof.
6. EXPENSES. The Company will pay all costs and expenses incident
to the performance of its obligations under this Agreement, whether or not the
transactions contemplated hereby are consummated or this Agreement is
terminated pursuant to Section 10 hereof, including without limitation all
costs and expenses incident to (i) the fees, disbursements and expenses of the
Company's counsel and accountants in connection with the registration of the
Shares under the Securities Act and all other expenses in connection with the
preparation, printing and filing of the Registration Statement (including all
amendments thereto), any Preliminary Prospectus, the Prospectus and any
amendments and supplements thereto, this Agreement and any blue sky memoranda;
(ii) the delivery of copies of the foregoing documents to the Underwriters;
(iii) the filing fees of the Commission and the National Association of
Securities Dealers, Inc. relating to the Shares; (iv) the preparation, issuance
and delivery to the Underwriters of any certificates evidencing the Shares,
including transfer agent's and registrar's fees; (v) the qualification of the
Shares for offering and sale under state securities and blue sky laws,
including filing fees and fees and disbursements of counsel for the
Underwriters relating thereto; (vi) any expenses of listing the Shares on the
Nasdaq OTC Bulletin Board; (vii) any expenses for travel, lodging and meals
incurred by the Company and any of its officers, directors and employees in
connection with any meetings with prospective investors in the Shares. It is
understood, however, that, except as provided in this Section, Section 8 and
Section 10 hereof, the Underwriters will pay all of their own costs and
expenses, including the fees of their counsel (other than those related to
qualification of the Shares under state securities or blue sky laws).
7. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations
of the Underwriters hereunder to purchase and pay for the Shares to be
delivered at each Time of Delivery shall be subject, in their discretion, to
the accuracy of the representations and warranties of the Company contained
herein as of the date hereof and as of such Time of Delivery, to the accuracy
of the statements of Company officers made pursuant to the provisions hereof,
to the
13
14
performance by the Company of its covenants and agreements hereunder, and to
the following additional conditions precedent:
(a) The Registration Statement as amended to date shall have
become effective prior to the execution of this Agreement or at such
later date and/or time as shall have been consented to by you in
writing. If required, the Prospectus and any amendment or supplement
thereto shall have been filed with the Commission pursuant to Rule
424(b) within the applicable time period prescribed for such filing
and in accordance with Section 5(a) of this Agreement; no stop order
suspending the effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceedings for that purpose
shall have been instituted, threatened or, to the knowledge of the
Company and the Representative, contemplated by the Commission; and
all requests for additional information on the part of the Commission
shall have been complied with to your satisfaction.
(b) Smith Helms Mulliss & Moore, L.L.P., counsel for the
Underwriters, shall have furnished to you such opinion or opinions,
dated such Time of Delivery, with respect to such matters as you may
reasonably require and which are customary, and the Company shall have
furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters and such firm may
rely, as to matters of South Carolina law, upon the opinion of Powell,
Goldstein, Frazer & Murphy LLP.
(c) You shall have received an opinion, dated such Time of
Delivery, of Powell, Goldstein, Frazer & Murphy LLP, counsel for the
Company in form and substance satisfactory to you and your counsel, to
the effect that:
(i) The Company is a corporation in existence and in
good standing under the laws of the State of South Carolina
and has the corporate power and authority to own or lease its
properties and conduct its business as described in the
Registration Statement and the Prospectus and to enter into
this Agreement and perform its obligations hereunder. The
Company is not qualified to transact business as a foreign
corporation under the laws of any other jurisdiction.
(ii) The Company has applied for registration as a
"bank holding company" under the Bank Holding Company Act to
acquire the stock of the Bank. The Organizers of the Bank
have filed for and received preliminary conditional approval
from the OCC for the Bank to become a national bank under the
laws of the United States, and they have filed an application
to obtain deposit insurance from the FDIC.
(iii) The Bank is a national banking association in
organization under the laws of the United States of America
and, upon the issuance of articles of association by the OCC,
will have the corporate power and authority to own or
14
15
lease its properties and conduct its business as described in
the Registration Statement and the Prospectus.
(iv) The Company's authorized, issued and outstanding
capital stock is as disclosed under the caption
"Capitalization" in the Prospectus. None of the issued shares
have been issued in violation of or subject to any preemptive
rights provided for by law, agreement or the Company's
Articles of Incorporation or Bylaws.
(v) Upon the issuance of articles of association by
the OCC, the shares of capital stock of the Bank will be
issued only to the Company free and clear of any liens,
claims or encumbrances of any kind, and the Bank will become
a wholly owned subsidiary of the Company.
(vi) The Shares to be sold by the Company have been
duly authorized and, when issued and delivered against
payment therefor as provided herein, will be validly issued
and fully paid and nonassessable and will conform to the
description of the Common Stock contained in the Prospectus.
The Underwriters will receive the Shares to be issued and
delivered by the Company pursuant to this Agreement, free and
clear of all liens, encumbrances, claims, security interests,
restrictions, shareholders' agreements and voting trusts
whatsoever.
(vii) To the knowledge of such counsel, the Company
does not have outstanding any options to purchase, or any
rights or warrants to subscribe for, or any securities or
obligations convertible into, or any contracts or commitments
to issue or sell any capital stock, and there are no
preemptive rights or other rights to subscribe for or
purchase any capital stock of the Company, or any restriction
upon the transfer of, the Shares pursuant to the Company's
Articles of Incorporation or Bylaws or any agreement or other
instrument to which the Company is a party or by which it may
be bound, except as described in the Prospectus. To the
knowledge of such counsel, neither the filing of the
Registration Statement nor the offer or sale of the Shares as
contemplated by this Agreement gives rise to any rights for
or relating to the registration of any Common Stock or any
other securities of the Company.
(viii) The issue and sale of the Shares being issued
at such Time of Delivery and the performance of this
Agreement and the consummation of the transactions herein
contemplated will not conflict with, or (with or without the
giving of notice or the passage of time or both) result in a
breach or violation of any of the terms or provisions of, or
constitute a default under any document or agreement which is
an Exhibit to the Registration Statement, or violate any
provision of the Articles of Incorporation, Articles of
Association, Bylaws or other governing instruments of the
Company or the Bank and, except for such conflicts, breaches,
violations or defaults as would not individually, or in the
aggregate, materially and adversely
15
16
affect the business, financial condition or results of
operations of the Company and the Bank, taken as a whole, any
statute, rule or regulation or, to such counsel's knowledge,
any order, judgment or decree of any court or governmental
agency or body having jurisdiction over the Company or the
Bank or any of their respective properties or assets.
(ix) No consent, approval, authorization or order
from, or registration, qualification or filing with, any
governmental agency or body or third party is required for
the issue and sale of the Shares or the consummation of the
transactions contemplated by this Agreement, except (a) the
registration of the Shares under the Securities Act and such
as may be required by the NASD and under state securities or
blue sky laws in connection with the offer, sale and
distribution of the Shares by the Underwriters, and (b) as
required in connection with the Regulatory Approvals.
(x) This Agreement has been duly authorized,
executed and delivered by the Company and constitutes the
valid and binding agreement of the Company enforceable
against the Company in accordance with its terms subject, as
to enforcement, to applicable bankruptcy, insolvency,
reorganization and moratorium laws and other laws relating to
or affecting the enforcement of creditors' rights generally
and to general equitable principles, and except as the
enforceability of rights to indemnity and contribution under
this Agreement may be limited under applicable securities
laws and further subject to 12 U.S.C. ss.1818(b)(6)(D) and
similar bank regulatory powers and to the application of the
public policy underlying such laws.
(xi) The Company and the Bank have obtained or have
filed for all licenses, consents and approvals, and have
satisfied or have taken all action required at this time to
satisfy all eligibility and other similar requirements
imposed by federal and state regulatory bodies,
administrative agencies or other governmental bodies,
agencies or officials, in each case necessary for the conduct
of the banking business in which they are engaged or are
contemplated to be engaged as described in the Prospectus
(except where the failure to have any such licenses,
consents, and approvals, or to have satisfied or taken such
action to satisfy the requirements, individually or in the
aggregate, would not have a material adverse effect on the
business, properties, operations, or financial condition of
the Company or its subsidiaries, taken as a whole). With
respect to any such necessary licenses, consents and
approvals, and any such necessary eligibility and other
similar requirements that the Company or the Bank does not
have at this time, (i) all applications therefor are, to such
counsel's knowledge, complete and accurate, and have been
filed with the appropriate regulatory authorities, and (ii)
counsel knows of no reason why the same will not be received
or satisfied prior to the time the same are required to
conduct business as described in the Prospectus.
16
17
(xii) To such counsel's knowledge, there is not
pending or threatened any action, suit, proceeding, inquiry
or investigation, to which the Company or the Bank is a
party, or to which property of the Company or the Bank is
subject, before or brought by any court or governmental
agency or body that is required to be disclosed in the
Registration Statement and the Prospectus and has not been
properly disclosed therein. In rendering the opinion set
forth in this paragraph, such counsel shall not be required
to search the dockets of any courts or governmental
authority.
(xiii) To the knowledge of such counsel, neither the
Company nor the Bank is in violation of any law, ordinance,
administrative or governmental rule or regulation applicable
to the Company or the Bank, or any decree of any court or
governmental agency or body having jurisdiction over the
Company or the Bank, except where such violation does not and
will not have a material adverse effect on the Company and
the Bank as a whole.
(xiv) The Registration Statement and the Prospectus
and each amendment or supplement thereto (other than the
financial statements and schedules and other financial
information included therein, as to which such counsel need
express no opinion), as of their respective effective or
issue dates, complied as to form in all material respects
with the requirements of the Securities Act and the Rules and
Regulations. The descriptions in the "Supervision and
Regulation" section of the Registration Statement and the
Prospectus of statutes, rules and regulations are accurate
and fairly present the information required to be shown; and
such counsel does not know of any statutes, rules,
regulations or legal or governmental proceedings required to
be described in the Registration Statement or Prospectus that
are not described as required or of any contracts or
documents of a character required to be described in the
Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement which are not
described and filed as required.
(xv) The Registration Statement and all
post-effective amendments thereto have become effective under
the Securities Act; any required filing of the Prospectus
pursuant to Rule 430A and Rule 424(b) has been made in the
manner and within the time period required by such rules; and
to such counsel's knowledge no stop order suspending the
effectiveness of the Registration Statement or any part
thereof has been issued and, to such counsel's knowledge, no
proceedings for that purpose have been instituted or
threatened or are contemplated by the Commission.
(xvi) The Company is not, and will not be as a
result of the consummation of the transactions contemplated
by this Agreement, an
17
18
"investment company," or a company "controlled" by an
"investment company," within the meaning of the Investment
Company Act of 1940.
In addition, such opinion shall also contain a
statement that such counsel has participated in conferences
with officers and representatives of the Company,
representatives of the independent public accountants for the
Company and representatives of the Underwriters at which the
contents of the Registration Statement and the Prospectus and
related matters were discussed and, although such counsel is
not passing upon and does not assume any responsibility for
the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus
(other than as specifically provided above), and any
amendments or supplements thereto, on the basis of the
foregoing, no facts have come to the attention of such
counsel that would lead such counsel to believe that either
the Registration Statement at the time it became effective
(including the information deemed to be part of the
Registration Statement at the time of effectiveness pursuant
to Rule 430A(b) or Rule 434, if applicable) or any amendment
thereof made prior to the Closing Date as of the date of such
amendment, contained an untrue statement of a material fact
or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading or that the Prospectus as of its date (or any
amendment thereof or supplement thereto made prior to the
Closing Date as of the date of such amendment or supplement)
and as of the Closing Date contained or contains an untrue
statement of a material fact or omitted or omits to state any
material fact required to be stated therein or necessary to
make the statements therein, in the light of the
circumstances under which they were made, not misleading (it
being understood that such counsel need express no belief or
opinion with respect to the financial statements and
schedules and other financial and statistical data included
or incorporated by reference therein).
In rendering any such opinion, such counsel may
rely, as to matters of fact, to the extent such counsel deems
proper, on certificates of responsible officers of the
Company and public officials.
(d) You shall have received from Tourville, Simpson &
Caskey, L.L.P., letters dated, respectively, the date of this
Agreement and the effective date of the most recently filed
post-effective amendment to the Registration Statement and also at
each Time of Delivery, in form and substance satisfactory to you,
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.
(e) You shall have received at each Time of Delivery a
certificate or certificates of the President and Chief Executive
Officer and the Chief Financial Officer of the Company to the effect
that:
18
19
(i) the representations and warranties of the
Company in Section 1 of this Agreement are true and correct,
as if made at and as of the First Time of Delivery or the
Subsequent Time of Delivery, as the case may be, and the
Company has complied with all the agreements and covenants
and satisfied all the conditions on its part to be performed
or satisfied at or prior to the Time of Delivery and as to
such other matters as you may reasonably request;
(ii) no stop order suspending the effectiveness of
the Registration Statement has been issued, and no
proceedings for that purpose have been initiated or are
pending, or to their knowledge, contemplated under the
Securities Act;
(iii) all filings required by Rule 424 and Rule 430A
of the Rules and Regulations have been made;
(iv) they have carefully examined the Registration
Statement and the Prospectus, and any amendments or
supplements thereto, and in his or her opinion, such
documents do not include any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading in light of the circumstances under which they
were made; and
(v) since the effective date of the Registration
Statement, there has occurred no event required to be set
forth in an amendment or supplement to the Registration
Statement or the Prospectus which has not been so set forth.
(f) Since the date of the latest audited financial statements
included in the Prospectus, neither the Company nor the Bank shall
have sustained (i) any loss or interference with their respective
businesses from fire, explosion, flood, hurricane or other calamity,
whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as
disclosed in or contemplated by the Prospectus, or (ii) any change, or
any development involving a prospective change (including without
limitation a change in management or control of the Company), in or
affecting the position (financial or otherwise), results of
operations, net worth or business prospects of the Company and the
Bank, otherwise than as disclosed in or contemplated by the Prospectus
(including any amendment), the effect of which, in either such case,
is in your judgment so material and adverse as to make it
unpracticable or inadvisable to proceed with the purchase, sale and
delivery of the Shares being delivered at such Time of Delivery as
contemplated by the Registration Statement, as amended as of the date
hereof.
(g) Subsequent to the date hereof there shall not have
occurred any of the following: (i) any suspension or limitation in
trading in securities generally on the New
19
20
York Stock Exchange or the over-the-counter market (other than normal
market breaks or cooling periods), or any setting of minimum prices
for trading on such exchange, or if trading in any securities of the
Company has been suspended by the Commission, or limitations on prices
for trading (other than limitations on hours or numbers of days of
trading) have been fixed, or maximum ranges for prices for securities
have been required, by the Nasdaq OTC Bulletin Board or the NASD or by
order of the Commission or any other governmental authority; (ii) a
moratorium on commercial banking activities in New York declared by
either federal or state authorities; (iii) any major outbreak or major
escalation of hostilities involving the United States, declaration by
the United States of a national emergency (other than with respect to
natural disasters) or war or any other national or international
calamity or emergency or any material adverse change in general
economic, political or financial conditions if the effect of any such
event specified in this clause (iii) in your judgment makes it
impracticable or inadvisable to proceed with the purchase, sale and
delivery of the Shares being delivered at such Time of Delivery as
contemplated by the Registration Statement.
(h) The Shares shall be approved for quotation on the
Nasdaq OTC Bulletin Board when issued.
(i) The Company shall have furnished the Representative
with evidence of its receipt of the preliminary conditional approval
of the OCC and the applications for each of the Regulatory Approvals.
(j) The Representative shall have received the Lockup
Agreements as described in Section 1(v).
8. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to
indemnify and hold harmless each Underwriter against any losses, claims,
damages or liabilities, joint or several, to which such Underwriter may become
subject, under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon: (i) any untrue statement or alleged untrue statement made by the
Company in Section 1 of this Agreement; (ii) any untrue statement or alleged
untrue statement of any material fact contained in (A) the Registration
Statement or any amendment thereto, any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto, or (B) any application or
other document, or any amendment or supplement thereto, executed by the Company
or based upon written information furnished by or on behalf of the Company
filed in any jurisdiction in order to qualify the Shares under the securities
or blue sky laws thereof or filed with the Commission or any securities
association or securities exchange (each an "Application"); or (iii) the
omission or alleged omission to state in the Registration Statement or
any amendment thereto, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or any Application, a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each Underwriter for any legal or other expenses
reasonably incurred by such Underwriter in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim,
20
21
damage, liability or action arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement or any amendment thereto, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto or any
Application in reliance upon and in conformity with written information
furnished to the Company by any Underwriter expressly for inclusion in the
Prospectus beneath the heading "Underwriting". The Company will not, without
the prior written consent of each Underwriter, settle or compromise or consent
to the entry of any judgment in any pending or threatened claim, action, suit
or proceeding (or related cause of action or portion thereof) in respect of
which indemnification may be sought hereunder (whether or not such Underwriter
is a party to such claim, action, suit or proceeding), unless such settlement,
compromise or consent includes an unconditional release of such Underwriter
from all liability arising out of such claim, action, suit or proceeding or
related cause of action or portion thereof.
(b) Each Underwriter agrees to indemnify and hold harmless the
Company and its officers, directors, agents, representatives and affiliates
against any losses, claims, damages or liabilities to which the Company or its
officers, directors, agents, representatives and affiliates may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement or any amendment thereto, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto or any
Application or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but
only to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by the Underwriter through the
Representative expressly for inclusion in the Prospectus beneath the heading
"Underwriting"; and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or
defending any such loss, claim, damage, liability or action.
(c) Promptly after receipt by an indemnified party under
subsection (a) and (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party); provided, however, that if the defendants in any such action included
both the indemnified party and the indemnifying party,
21
22
and the indemnified party shall have reasonably concluded that there may be one
or more legal defenses available to it or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such
action on behalf of such indemnified party and such indemnified party shall
have the right to select separate counsel to defend such action on behalf of
such indemnified party. After such notice from the indemnifying party to such
indemnified party of its election so to assume the defense of any action and
approval by such indemnified party of counsel appointed to defend such action,
the indemnifying party will not be liable to such indemnified party under this
Section 8 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense of the action, unless (i) the indemnified party shall have
employed separate counsel in accordance with the proviso to the next preceding
sentence (it being understood, however, that in connection with such action the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (in addition to local counsel) in any one action or separate
but substantially similar actions in the same jurisdiction arising out of the
same general allegations or circumstances, which separate counsel shall be
designated by the Representative in the case of indemnity arising under
paragraph (a) of this Section 8) or (ii) the indemnifying party has authorized
the employment of counsel for the indemnified party at the expense of the
indemnifying party. Nothing in this Section 8(c) shall preclude an indemnified
party from participating at its own expense in the defense of any such action
so assumed by the indemnifying party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand and the
Underwriter on the other from the offering of the Shares. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law or if the indemnified party failed to give the notice required
under subsection (c) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Underwriter on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriter on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company on the
one hand or the Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the
22
23
Underwriters agree that it would not be just and equitable if contributions
pursuant to this subsection (d) were determined by pro rata allocation (even if
the Underwriters were treated as one for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (d), the
Underwriter shall not be required to contribute any amount in excess of the
amount by which the total price at which the Shares underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(e) The obligations of the Company under this Section 8 shall be
in addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Underwriter within the meaning of the Securities Act; and the
obligations of the Underwriters under this Section 8 shall be in addition to
any liability which the Underwriters may otherwise have and shall extend, upon
the same terms and conditions, to each officer and director of the Company and
to each person, if any, who controls the Company within the meaning of the
Securities Act.
9. DEFAULT OF UNDERWRITERS. (a) If any Underwriter defaults in
its obligation to purchase Shares at a Time of Delivery, you may in your
discretion arrange for you or another party, or other parties to purchase such
shares on the terms contained herein. If within 36 hours after such default by
any Underwriter you do not arrange for the purchase of such Shares, the Company
shall be entitled to a further period of 36 hours within which to procure
another party or other parties satisfactory to you to purchase such Shares on
such terms. In the event that, within the respective prescribed periods, you
notify the Company that you have so arranged for the purchase of such Shares,
or the Company notifies you that it has so arranged for the purchase of such
Shares, you or the Company shall have the right to postpone a Time of Delivery
for a period of not more than 7 days in order to effect whatever change is made
necessary thereby in the Registration Statement or the Prospectus, or in any
other documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus that in your opinion
may thereby be made necessary. The cost of preparing, printing and filing any
such amendments shall be paid for by the Underwriters. The term "Underwriters"
as used in this Agreement shall include any person substituted under this
Section with effect as if such person had originally been a party to this
Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase
of the Shares of a defaulting Underwriter or Underwriters by you and the
Company as provided in subsection (a)
23
24
above, the aggregate number of such Shares which remains unpurchased does not
exceed one eleventh of the aggregate number of Shares to be purchased at such
Time of Delivery, then the Company shall have the right to require each
non-defaulting Underwriter to purchase the number of Shares which such
Underwriter agreed to purchase hereunder at such Time of Delivery and, in
addition, to require each non-defaulting Underwriter to purchase its pro rata
share (based on the number of Shares which such Underwriter agreed to purchase
hereunder) of the Shares of such defaulting Underwriter or Underwriters for
which such arrangements have not been made, but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
10. TERMINATION. (a) This Agreement may be terminated with respect
to the Firm Shares or any Optional Shares in the sole discretion of the
Representative by notice to the Company given prior to the First Time of
Delivery or any Subsequent Time of Delivery, respectively, in the event that
(i) any condition to the obligations of the Underwriters set forth in Section 7
hereof has not been satisfied, or (ii) the Company shall have failed, refused
or been unable to deliver the Shares or to perform all obligations and satisfy
all conditions on its part to be performed or satisfied hereunder at or prior
to such Time of Delivery, in either case other than by reason of a default by
any of the Underwriters. If this Agreement is terminated pursuant to this
Section 10(a), the Company will reimburse the Underwriters upon demand for all
out-of-pocket expenses (including counsel fees and disbursements) that shall
have been incurred by it in connection with the proposed purchase and sale of
the Shares.
(b) If, after giving effect to any arrangements for the purchase
of the Shares of a defaulting Underwriter or Underwriters by you and the
Company as provided in Section 9(a), the aggregate number of such Shares which
remain unpurchased exceeds one-eleventh of the aggregate number of Shares to be
purchased at such Time of Delivery, or if the Company shall not exercise the
right described in Section 9(b) to require non-defaulting Underwriters to
purchase Shares of a defaulting Underwriter or Underwriters, then this
Agreement (or, with respect to a Subsequent Time of Delivery, the obligations
of the Underwriters to purchase and of the Company to sell the Optional Shares)
thereupon will terminate, without liability on the part of any nondefaulting
Underwriter or the Company, except for the expenses to be borne by the Company
and the Underwriters as provided in Section 6 hereof and the indemnity and
contribution agreements in Section 8 hereof; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
11. SURVIVAL. The respective indemnities, agreements,
representations, warranties and other statements of the Company, its officers
and the Underwriter, as set forth in this Agreement or made by or on behalf of
them, respectively, pursuant to this Agreement, shall remain in full force and
effect, regardless of any investigation (or any statement as to the results
thereof) made by or on behalf of the Underwriter or any controlling person
referred to in Section 8(e) or made by or on behalf of the Company, or any
officer or director or controlling person of the Company referred to in Section
8(e), and shall survive delivery of and payment for the Shares. The respective
agreements, covenants, indemnities and other statements set forth in Sections
6, 8 and 13 hereof shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement.
24
25
12. NOTICES. All communications hereunder shall be in writing and,
if sent to the Representative, shall be mailed, delivered or faxed and
confirmed in writing to Wachovia Securities, Inc., IJL Financial Center, 201
North Tryon Street, Charlotte, North Carolina 28202, Attention: Investment
Banking Department (with a copy to Boyd C. Campbell, Jr. at Smith Helms Mulliss
& Moore L.L.P., 201 North Tryon Street, Charlotte, North Carolina 28202), and
if sent to the Company, shall be mailed, delivered or faxed and confirmed in
writing to the Company at 911 Riverwood Drive, Murrells Inlet, South Carolina
29576, Attention: President (with a copy to Kathryn L. Knudson at Powell,
Goldstein, Frazer & Murphy, LLP, 191 Peachtree Street, N.E., 16th Floor,
Atlanta, Georgia 30303).
13. RIGHT OF FIRST REFUSAL. The Company grants to the
Representative an unconditional right of first refusal to serve as exclusive or
lead advisor to the Company on all corporate finance transactions undertaken or
considered by the Company for three years from the effective date of the
Prospectus. The Representative shall not be entitled to more than one payment
or fee in exchange for the waiver or termination of this right of first
refusal, and any payment or fee to waive or terminate the right of first
refusal shall be paid in cash and will not exceed the greater of (a) one
percent (1%) of the aggregate purchase price of the Shares purchased pursuant
to this Agreement, and (b) five percent (5%) of the underwriting discount or
commission paid in connection with the future financing (including any
overallotment option that may be exercised).
14. REPRESENTATIVE. You will act for the several Underwriters in
connection with the transactions contemplated by this Agreement, and any action
under this Agreement taken by you will be binding upon all the Underwriters.
15. BINDING EFFECT. This Agreement shall be binding upon, and
inure solely to the benefit of, each Underwriter and the Company and to the
extent provided in Sections 8 and 10 hereof, the officers and directors and
controlling persons referred to therein and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Shares from the Underwriters shall be deemed a successor or assign by reason
merely of such purchase.
16. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of North Carolina without
giving effect to any provisions regarding conflicts of laws.
17. COUNTERPARTS. This Agreement may be executed by any one or
more of the parties hereto in any number of counterparts, each of which shall
be deemed to be an original, but all such counterparts shall together
constitute one and the same instrument.
25
26
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us one of the counterparts hereof, and
upon the acceptance hereof by Wachovia Securities, Inc., this letter will
constitute a binding agreement among the Underwriters and the Company.
Very truly yours,
SUN BANCSHARES, INC.
By:
-------------------------------------
Name: Thomas Bouchette
Title: President
WACHOVIA SECURITIES, INC.
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
26
27
SCHEDULE I
SUN BANCSHARES, INC.
1,000,000 SHARES
COMMON STOCK
NUMBER OF
OPTIONAL SHARES
TOTAL NUMBER OF TO BE PURCHASED
FIRM SHARES TO IF MAXIMUM
UNDERWRITER BE PURCHASED OPTION EXERCISED
- ----------- --------------- ----------------
Wachovia Securities, Inc.
Total
27