330,000 SHARES
CNB HOLDINGS, INC.
COMMON STOCK
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AGENCY AGREEMENT
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XXXXXXXXX & COMPANY LLC
Xxx Xxxxx Xxxxxx
X.X. Xxx 00000
Xxxxxxxx, Xxxxxxxx 00000-0000
December 11, 1998
Dear Sirs:
CNB Holdings, Inc., a Virginia corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to engage Xxxxxxxxx & Company
LLC (the "Placement Agent" or "you") to advise the Company in the structure of
an offering of the Company's common stock (the "Common Stock") and, as agent of
the Company, to assist in the sale on a best efforts basis of (i) 330,000 shares
of the Common Stock, $5.00 par value per share, and, at the election of the
Company, up to 50,000 additional shares of the Common Stock (collectively
referred to herein as the "Shares"), less (ii) any Shares that are subscribed
for prior to January 10, 1998, by shareholders of record on December 10, 1997
(the "Present Shareholders").
1. Representations and Warranties.
The Company represents and warrants to, and agrees with, the Placement
Agent that:
(a) A registration statement in respect of the Shares on Form SB-2
(File No. 333- 38727) under the Securities Act of 1933, as amended (the "Act"),
and as a part thereof a preliminary prospectus, in respect of the Shares has
been filed with the Securities and Exchange Commission (the "Commission") in the
form heretofore delivered to you; such registration statement, as amended, has
been declared effective by the Commission; no other document with respect to
such registration statement has heretofore been filed with the Commission; and
no stop order suspending the effectiveness of such registration statement has
been issued and no proceeding for that purpose has been instituted or threatened
by the Commission (any preliminary prospectus included in such registration
statement or filed with the Commission pursuant to Rule 424 of the rules and
regulations of the Commission under the Act, being hereinafter called a
"Preliminary Prospectus", the various parts of such registration statement,
including all exhibits thereto, and including the information contained in the
form of final prospectus filed with the Commission pursuant to Rule 424(b) under
the Act in accordance with Section 5(a) of this Agreement and deemed by virtue
of Rule 430A under the Act to be part of the registration statement at the time
it was declared effective, together with any related registration statement
filed with the Commission for registration of a portion of the Shares, which
registration statement became effective pursuant to Rule 462(b) under the Act,
being herein called collectively the "Registration Statement," and the final
prospectus, in the form first filed pursuant to Rule 424(b), being hereinafter
called the "Prospectus," provided, that if the Company elects to rely on Rule
434 under the Act, all references to the Prospectus shall be deemed to include,
without limitation, the form of prospectus and the abbreviated term sheet, taken
together, provided to the Placement Agent by the Company in reliance on Rule
434);
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary Prospectus,
at the time of filing thereof, conformed in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder, and did not contain any 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 the light of the circumstances under which they were
made, 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 the Placement
Agent for use therein;
(c) The Registration Statement conforms, and the Prospectus and any
amendments or supplements thereto do and will conform, in all material respects
to the requirements of the Act and the rules and regulations of the Commission
thereunder and do not and will not as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the applicable filing
date as to the Prospectus and any amendment or supplement thereto 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;
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 the Placement Agent expressly for use
therein;
(d) Except for the Company's wholly-owned subsidiary, Community
National Bank, a federally-chartered national bank (the "Bank"), the Company
does not own more than 5% of the equity interests of any other business entities
other than shares of publicly-held companies held solely for investment;
(e) Neither the Company nor the Bank has sustained since the date of
the latest audited financial statements included in the Prospectus 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 set forth or
contemplated in the Prospectus; and, since the respective dates as of which
information is given in the Registration Statement and the Prospectus, there has
not been any change in the outstanding capital stock or long-term debt of the
Company or the Bank or any material adverse change, or any development involving
a prospective material adverse change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of operations of
the Company or the Bank, otherwise than as set forth or contemplated in the
Prospectus;
(f) Each of the Company and the Bank has good and marketable title in
fee simple to all real property and good title to all personal property owned by
it, in each case free and clear of all liens, encumbrances and defects except
such as are described in the Prospectus, or such as do not materially affect the
value of such property and do not interfere with the use made and proposed to be
made of such property by either the Company or the Bank; and any real property
and buildings held under lease by either the Company or the Bank are held by it
under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and propose to be made of such
property and buildings by either the Company or the Bank;
(g) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of Virginia, with power and
authority (corporate and other) to own or lease its properties and conduct its
business as described in the Prospectus; the Bank is duly organized and validly
existing under United States law and regulations promulgated by the Office of
the Comptroller of the Currency ("OCC"), with power and authority to own or
lease its properties and conduct its business as described in the Prospectus;
the Company and the Bank do not conduct business in any jurisdiction other than
the Commonwealth of Virginia; the Company is duly registered as a bank holding
company under the Bank Holding Company Act of 1956, as amended, and the rules
and regulations promulgated thereunder; and each of the Company and the Bank
holds all material licenses, certificates, authorizations and permits from
governmental authorities necessary for the conduct of its business as described
in the Registration Statement and the Prospectus;
(h) The Company has an authorized capitalization as set forth in the
Prospectus; all of the issued shares of capital stock of the Company have been
duly and validly authorized and issued, are fully paid and nonassessable and
conform to the description of the capital stock of the Company contained in the
Prospectus; there are no preemptive or other similar rights to subscribe for or
to purchase any securities of the Company; except as described in the
Prospectus, there are no warrants, options or other rights to purchase any
securities of the Company; neither the filing of the Registration Statement nor
the offering or sale of the Shares as contemplated by this Agreement give rise
to any rights for or relating to the registration of any securities of the
Company with respect to such filing, offering or sale;
(i) The Shares have been duly and validly authorized and, when issued
and delivered against payment therefor as provided herein, will be duly and
validly issued and fully paid and nonassessable and will conform to the
description of the Shares contained in the Prospectus as amended or
supplemented;
(j) The issuance and sale of the Shares being issued at the Delivery
Date (as hereinafter defined) by the Company and the performance of this
Agreement and the consummation by the Company of the other transactions herein
contemplated will not conflict with or result in a breach or violation of any
terms or provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which the
Company or the Bank is a party or by which any of the property or assets of the
Company or the Bank is bound or to which any of the property or assets of the
Company or the Bank is subject, nor will such action result in any violation of
the provisions of the Articles of Incorporation, as amended, or By-laws, as
amended, of the Company or the Bank or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Company or the Bank or any of their properties; and no consent, approval,
authorization, order, registration or qualification of or with any such court or
governmental agency or body is required for the issuance and sale of the Shares
or the consummation by the Company of the transactions contemplated by this
Agreement, except such consents, approvals, authorizations, registrations or
qualifications as may be required under the Act and under state securities or
Blue Sky laws in connection with the purchase and distribution of the Shares by
the Placement Agent;
(k) There are no legal or governmental proceedings pending to which the
Company or the Bank is a party or of which any property of the Company or the
Bank is the subject, which, if determined adversely to the Company or the Bank,
would individually or in the aggregate, have a material adverse effect on the
consolidated financial position, stockholders' equity or results of operations
of the Company or of the Company and the Bank taken as a whole and, to the best
of the Company's knowledge, no such proceedings are threatened or contemplated
by governmental authorities or by others;
(l) Xxxxxxx, Xxxxxxxx & Company, L.C., which has certified certain
financial statements of the Company, are independent public accountants as
required by the Act and the rules and regulations of the Commission thereunder;
(m) All employee benefit plans (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
established, maintained or contributed to by the Company or the Bank (except any
such plan for which the principal sponsor or plan administrator is an affiliate
other than the Company or the Bank) comply in all material respects with the
requirements of ERISA and no employee pension benefit plan (as defined in
Section 3(2) of ERISA) has incurred or assumed an "accumulated funding
deficiency" within the meaning of Section 302 of ERISA or has incurred or
assumed any material liability (other than for the payment of premiums) to the
Pension Benefit Guaranty Corporation;
(n) The consolidated financial statements of the Company and the Bank,
together with related notes, as set forth in the Registration Statement present
fairly the consolidated financial position and the results of operations of the
Company and the Bank at the indicated dates and for the indicated periods; such
financial statements have been prepared in accordance with generally accepted
accounting principles, consistently applied throughout the periods presented
except as noted in the accountants' notes thereon, and all adjustments necessary
for a fair presentation of results for such periods have been made; and the
selected financial information included in the Prospectus presents fairly the
information shown therein and has been compiled on a basis consistent with the
financial statements presented therein;
(o) The Company and the Bank have timely filed all necessary federal,
state and foreign income, franchise and excise tax returns and have paid all
taxes shown thereon as due, and there is no tax deficiency that has been or, to
the best knowledge of the Company, might be asserted against the Company that
might have a material adverse effect on the business, properties, business
prospects, condition (financial or otherwise), earnings or results of operations
of the Company, and all tax liabilities are adequately provided for on the books
of the Company and the Bank;
(p) The Company is not in violation of any federal or state law,
regulation, or treaty relating to the storage, handling, transportation,
treatment or disposal of hazardous substances (as defined in 42 U.S.C. Section
9601) or hazardous materials (as defined by any federal or state law or
regulation) or other waste products, which violation may have a material adverse
effect on the financial condition or business operations or properties of the
Company; the Company has received all permits, licenses or other approvals as
may be required of it under applicable federal and state environmental laws and
regulations to conduct its business as described in the Prospectus, and the
Company is in compliance in all material respects with the terms and conditions
of any such permit, license or approval; the Company has not received any
notices or claims that it is a responsible party or a potentially responsible
party in connection with any claim or notice asserted pursuant to 42 U.S.C.
Section 9601 et seq. or any state superfund law; and the disposal of all of the
Company's hazardous substances, hazardous materials and other waste products has
been lawful;
(q) No material relationship, direct or indirect, exists between or
among the Company or the Bank, on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or the Bank on the other
hand, that is required by the Act, or by the rules and regulations under such
Act to be described in the Registration Statement and the Prospectus that is not
so described;
(r) Neither the Company nor the Bank has taken and neither of such
entities will take, directly or indirectly, any action which is designed to or
which has constituted or which might reasonably be expected to cause or result
in stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares;
(s) Each of the Company and the Bank holds and is operating in
compliance, in all material respects, with all franchises, grants,
authorizations, licenses, permits, easements, consents, certificates and orders
of any governmental or self-regulatory body required for the conduct of its
business as presently being conducted ("licenses") and all licenses are valid
and in full force and effect; and each of the Company and the Bank is in
compliance, in all material respects, with all laws, regulations, orders and
decrees applicable to it;
(t) Each of the Company and the Bank maintains insurance of the types
and in the amounts that are reasonable or required for the business operated by
it, all of which insurance is in full force and effect;
(u) This Agreement has been duly authorized, executed and delivered by
the Company;
(v) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences;
(w) There is no document or contract of a character required to be
described in the Registration Statement or the Prospectus or to be filed as an
exhibit to the Registration Statement which is not described or filed as
required. All such contracts to which the Company or the Bank is a party
constitute valid and binding agreements of the Company or the Bank and are
enforceable against the Company or the Bank in accordance with the terms
thereof, except as may be limited by bankruptcy, insolvency, fraudulent transfer
or other similar laws affecting the rights and remedies of creditors generally
and subject to general principles of equity, and except to the extent that any
such contract contains provisions for indemnification for liabilities under the
Act;
(x) The Company is in compliance in all material respects with all
applicable laws administered by and regulations of the Board of Governors of the
Federal Reserve System (the "Board of Governors"), the failure to comply with
which would have a material adverse effect on the Company taken as a whole; and
(y) The Bank is in compliance in all material respects with all
applicable laws administered by and regulations of the Federal Deposit Insurance
Corporation (the "FDIC"), the OCC, and any state bank regulatory authority with
jurisdiction over the Bank, the failure to comply with which would have a
material adverse effect on the Bank taken as a whole.
2. Placement Agent Sale of Shares and Compensation.
On the basis of the representations, warranties and covenants herein
contained, and subject to the conditions herein set forth, the Company agrees to
issue and sell the Shares through the Placement Agent, as agent for the Company,
to the public and the Placement Agent agrees to use its best efforts to sell the
Shares as agent for the Company, at the price per share set forth in the
Prospectus (the "Public Offering Price"), subject to the Company's sale of
Shares by subscription to Present Shareholders. The Company reserves the right
to increase, at its sole option prior to the closing of the offering, the total
number of Shares offered to the public by up to 50,000 Shares. The Company
agrees to pay the Placement Agent a commission equal to $0.45 per Share of the
Shares sold through the Placement Agent in the public offering (the "Selling
Commission"), excluding shares subscribed for prior to January 10, 1998,
pursuant to subscription of Present Shareholders of the Company, for which no
commission shall be paid.
The Placement Agent may reject any offer to purchase the Shares made
through the Placement Agent in whole or in part, and any such rejection shall
not be deemed a breach of the Placement Agent's agreement contained herein.
The Placement Agent has advised and agrees to continue to advise the
Company on the structure, format and manner of consummation of the Company's
offering of the Shares to its Present Shareholders and to the public. For such
assistance, the Company shall pay to the Placement Agent an advisory fee of
$25,000.00 (the "Advisory Fee").
3. Offering by the Placement Agent.
Upon the authorization by you of the release of the Shares, the
Placement Agent proposes to offer the Shares for sale upon the terms and
conditions set forth in the Prospectus.
4. Delivery and Payment.
An escrow procedure shall be established which shall comply with
Commission Rule 5c2-4, promulgated under the Securities Exchange Act of 1934
(the "Exchange Act"), with Crestar Bank as escrow agent (the "Escrow Agent").
The Placement Agent shall transmit all funds received from subscribers to the
Escrow Agent by noon of the next business day following receipt thereof. The
Placement Agent shall direct the Escrow Agent to make payment for Shares sold
hereunder by wire transfer or certified or bank cashier's check drawn to the
order of the Company in next day funds. Such payment is to be made at the
offices of CNB Holdings, Inc., 000 Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, at
10:00 a.m. local time, on February 10, 1998, or at such other time, date and
place as the Placement Agent and the Company shall agree upon, such time and
date being referred to herein as the "Delivery Date." The certificates for the
Shares shall be delivered in such denominations and in such registrations as the
Placement Agent requests in writing not later than the second (2nd) full
business day prior to the Delivery Date, and will be made available for
inspection by the Placement Agent at least twenty-four (24) hours prior to the
Delivery Date. Such certificates will be delivered to the Escrow Agent by 12:00
p.m. on the day prior to the Delivery Date, along with addressed labels to be
used to mail the certificates to the purchasers thereof. The Company shall
direct the Escrow Agent to deliver payment of the Advisory Fee (less any portion
thereof previously paid to the Placement Agent) and the Selling Commission to
the Placement Agent by wire transfer or certified or bank cashier's check drawn
to the order of the Placement Agent in next day funds, to the Placement Agent on
the Delivery Date.
5. Agreements of the Company.
The Company agrees with the Placement Agent:
(a) To prepare the Prospectus in a form reasonably approved by you and
to file such Prospectus (or a term sheet as permitted by Rule 434(c)) pursuant
to Rule 424(b) under the Act not later than the Commission's close of business
on the second business day following the execution and delivery of this
Agreement or, if applicable, such earlier time as may be required by Rule
430A(a)(3) under the Act; to make no amendment or supplement to the Registration
Statement or Prospectus prior to the Delivery Date which shall be reasonably
disapproved by you promptly after reasonable notice thereof; to advise you,
promptly after it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any supplement to
the Prospectus or any amended Prospectus has been filed and to furnish you with
copies thereof; to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the Commission
subsequent to the date of the Prospectus and for so long as the delivery of a
Prospectus is required in connection with the offering or sale of the Shares; to
advise you, promptly after it receives notice thereof; of the issuance by the
Commission of any stop order or of any order preventing or suspending the use of
any Preliminary Prospectus or the Prospectus, of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, of the
initiation or threatening of any proceeding for any such purpose, of any request
by the Commission for the amending or supplementing of the Registration
Statement or Prospectus or for additional information and, in the event of the
issuance of any stop order or of any order preventing or suspending the use of
any Preliminary Prospectus or the Prospectus or suspending any such
qualification, to use promptly its best efforts to obtain its withdrawal;
(b) Promptly from time to time to take such actions as you may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as you may reasonably request and to
comply with such laws so as to permit the continuance of sales and dealings
therein in such jurisdictions 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;
(c) To furnish the Placement Agent with copies of the Registration
Statement and the Prospectus in such quantities as you may from time to time
reasonably request during such period following the date hereof that a
prospectus is required to be delivered in connection with offers or sales of
Shares, and, if the delivery of a prospectus is required during this period and
if at such time any event shall have occurred as a result of which 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 the light of the circumstances under which they were
made when such Prospectus is delivered, not misleading, or, if for any other
reason it shall be necessary during such period to amend or supplement the
Prospectus to comply with the Act, to notify you and upon your request to file
such document and to prepare and furnish without charge to you and to any dealer
in securities as many copies as you may from time to time reasonably request of
an amended Prospectus or a supplement to the Prospectus which will correct such
statement or omission or effect such compliance;
(d) As soon as practicable after the effective date of the Registration
Statement, to make generally available to its stockholders and to deliver to
you, an earnings statement of the Company, conforming with the requirements of
Section 11(a) of the Act and Rule 158 under the Act, covering a period of at
least 12 months beginning after the effective date of the Registration
Statement;
(e) For a period of 180 days from the date of the Prospectus, not to
offer, sell, contract to sell or otherwise dispose of any shares of the
Company's Common Stock or securities exercisable for or convertible into shares
of Common Stock (other than the Shares or pursuant to employee stock option or
stockholder dividend reinvestment plans or pursuant to options, warrants or
rights outstanding on the date of this Agreement or pursuant to bona fide gifts
to persons who agree in writing with the donor to be bound by this restriction)
without your prior written consent, which consent shall not be unreasonably
withheld;
(f) During a period of three years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders, and deliver to
you (i) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Board of Governors, the FDIC, the OCC,
the Commission, any national securities exchange or quotation system on which
any class of securities of the Company is listed or included; and (ii) such
additional information concerning the business and financial condition of the
Company as you may from time to time reasonably request; and
(g) To apply the net proceeds from the sale of the Shares for the
purposes set forth in the Prospectus.
6. Payment of Expenses.
The Company covenants and agrees with you that it will pay or cause to
be paid the following: (i) the fees, disbursements and expenses of the Company's
counsel and accountants in connection with the registration of the Shares under
the Act and all other expenses in connection with the preparation, printing and
filing of the Registration Statement, any Preliminary Prospectus and the
Prospectus and any amendments or supplements thereto, and the mailing and
delivering of copies thereof to the Placement Agent and dealers; (ii) the cost
of printing or reproducing this agreement, the Blue Sky Survey, any dealer
agreements and any other documents in connection with the offering, purchase,
sale and delivery of the Shares; (iii) all expenses in connection with the
qualification of the Shares for offering and sale under state securities laws as
provided in Section 5(b) hereof, including the reasonable fees and disbursements
of counsel for the Placement Agent in connection with such qualification and in
connection with the Blue Sky Survey; (iv) the filing fees incident to securing
any required review by the National Association of Securities Dealers, Inc. of
the terms of the sale of the Shares; (v) the cost of preparing stock
certificates; (vi) the costs or expenses of any transfer agent or registrar;
(vii) all reasonable out-of-pocket fees and expenses of the Placement Agent,
including the reasonable fees and expenses of counsel for the Placement Agent
related to the offering and not otherwise specifically provided for in this
Section; and (viii) all other costs and expenses incident to the performance of
its obligations hereunder which are not otherwise specifically provided for in
this Section.
7. Conditions to Obligations of Placement Agent.
The obligations of the Placement Agent hereunder, as to the Shares to
be delivered at the Delivery Date, shall be subject, in its discretion, to the
condition that all representations and warranties and other statements of the
Company are, at and as of such Delivery Date, true and correct in all material
respects and the condition that the Company shall have performed in all material
respects all of its obligations hereunder theretofore to be performed, and the
following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) under the Act within the applicable time period prescribed for
such filing by the rules and regulations under the Act and in accordance with
Section 5(a) of this Agreement; no stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the Commission; and all
requests for additional information on the part of the Commission shall have
been complied with to your reasonable satisfaction;
(b) Williams, Mullen, Christian & Xxxxxxx, P.C., counsel for the
Placement Agent, shall have furnished to you such opinion or opinions, dated
such Delivery Date, with respect to the incorporation of the Company, the
validity of the Shares being issued at such Delivery Date, the Registration
Statement, the Prospectus, and other related matters as you may reasonably
request, and such counsel shall have received such papers and information as
they may reasonably request to enable them to pass upon such matters;
(c) Xxxx & Valentine, L.L.P., counsel for the Company, shall have
furnished to you their written opinion, dated such Delivery Date, in form and
substance satisfactory to you to the effect that:
(i) Each of the Company and the Bank has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the United States and the Commonwealth of Virginia,
respectively, with corporate power and authority to own or lease its
properties and conduct its business as described in the Prospectus;
(ii) Each of the Company and the Bank has been duly qualified
as a foreign corporation for the transaction of business and is in good
standing under the laws of each jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such
qualification, except where the failure to so qualify will not result
in a material adverse effect on the Company (such counsel being
entitled to rely in respect of the opinion in this clause upon
certificates of appropriate governmental authorities in such
jurisdictions, opinions of local counsel and, in respect of matters of
fact, upon certificates of officers of the Company);
(iii) The Company has an authorized capitalization as set
forth in the Prospectus under the caption "Capitalization and
Dilution," and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
nonassessable and conform to the description of the capital stock
contained in the Prospectus; there are no preemptive or other similar
rights to subscribe for or to purchase any securities of the Company;
except as described in the Prospectus, there are no warrants or options
to purchase any securities of the Company; to the best of such
counsel's knowledge, neither the filing of the Registration Statement
nor the offering or sale of the Shares as contemplated by this
Agreement gives rise to any rights for or relating to the registration
of any securities of the Company with respect to such filing, offering
or sale; and the form of the certificates evidencing the Shares
complies with all formal requirements of Virginia law;
(iv) The Shares have been duly and validly authorized and
issued and, when issued and delivered against payment therefor, will be
fully paid and nonassessable, and the Shares conform to the description
of the Shares contained in the Prospectus as amended or supplemented;
(v) To such counsel's knowledge, there is no legal or
governmental proceeding pending to which either the Company or the Bank
is a party or of which any property of either the Company or the Bank
is the subject, other than as set forth or contemplated in the
Prospectus, that, if determined adversely to the Company or the Bank,
would individually or in the aggregate have a material adverse effect
on the financial position, stockholders' equity or results of
operations of the Company; and, to such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental authorities
or threatened by others;
(vi) The issuance and sale of the Shares being issued at such
Delivery Date by the Company and the performance of this Agreement by
the Company and the consummation by the Company of the other
transactions herein contemplated will not conflict with or result in a
breach or violation of any terms or provisions of; or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument known to such counsel to which the
Company is a party or by which the Company is bound or to which any of
the property or assets of the Company is subject, nor will such action
result in any violation of the provisions of the Articles of
Incorporation, as amended, or By-laws, as amended, of the Company or of
any statute or any order, rule or regulation known to such counsel of
any court or governmental agency or body having jurisdiction over the
Company or any of its properties;
(vii) No consent, approval, authorization, order, registration
or qualification of or with any such court or governmental agency or
body is required for the issuance and sale of the Shares by the Company
or the consummation by the Company of the other transactions
contemplated by this Agreement, except such as have been obtained under
the Act and such as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the Shares by
the Placement Agent;
(viii) The Registration Statement and the Prospectus and any
further amendments and supplements thereto made by the Company prior to
such Delivery Date (other than the financial statements and related
schedules and such other financial and statistical data included
therein as to which such counsel need express no opinion) comply as to
form in all material respects with the requirements of the Act and the
rules and regulations thereunder; such counsel does not know of any
contracts or other documents of a character required to be filed as an
exhibit to the Registration Statement or required to be described in
the Registration Statement or the Prospectus which are not filed or
described as required;
(ix) The descriptions in the Registration Statement and
Prospectus under the captions "Supervision and Regulation" and
"Description of Capital Stock" and any further amendments or
supplements thereto, insofar as such descriptions constitute a summary
of documents referred to therein or matters of law, are accurate and
fairly present the information required to be shown;
(x) The descriptions in the Prospectus and any further
amendments or supplements thereto of statutes, legal and governmental
proceedings and contracts and other documents are accurate and fairly
present such information in all material respects;
(xi) This Agreement has been duly authorized, executed and
delivered by the Company.
Such counsel shall also provide a written opinion to the effect that
such counsel participated in conferences with officers and other representatives
of the Company, representatives of the independent public accountants of the
Company and representatives of the Placement Agent at which the contents of the
Registration Statement and Prospectus were discussed and, although such counsel
is not passing upon and does not assume responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or Prospectus (except as and to the extent stated in subparagraphs
(iii), (iv) and (ix) above with respect to certain descriptions contained
therein), on the basis of the foregoing (relying as to materiality where
appropriate upon the opinions of officers and other representatives of the
Company) nothing has come to the attention of such counsel that causes them to
believe that the Registration Statement or any amendment thereto at the time
such Registration Statement or amendment became effective contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
that the Prospectus, at the date of such Prospectus, and at all times up to and
including the date of such counsel's opinion, 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, in light of the circumstances under
which they were made, not misleading (it being understood that such counsel need
express no opinion with respect to the financial statements and schedules and
other financial and statistical data included in the Registration Statement or
Prospectus).
Where any of the foregoing opinions refers to the knowledge of counsel,
such counsel may state that their opinion is limited to the actual knowledge of
attorneys actively involved in the transactions contemplated by this agreement
or in the preparation of the opinion letter required by this subsection (c).
(d) At 10:00 a.m., Richmond time, on the date of this Agreement and the
effective date of the most recently filed post-effective amendment to the
Registration Statement and also at the Delivery Date, Xxxxxxx, Xxxxxxxx &
Company, L.C. shall have furnished to you a letter or letters, dated the
respective date of delivery thereof, in form and substance satisfactory to you,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to Placement Agents with respect to the financial
statements and certain financial information relating to the Company contained
in the Registration Statement and the Prospectus;
(e) (i) Neither the Company nor the Bank shall have sustained, since
the date of the latest audited financial statements included in the Prospectus,
any 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 set forth or
contemplated in the Prospectus, and (ii) since the respective dates as of which
information is given in the Prospectus there shall not have been any change in
the capital stock or lone-term debt of the Bank or any change, or any
development involving a prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of operations of
either the Company or the Bank otherwise than as set forth or contemplated in
the Prospectus, the effect of which, in any such case described in clause (i) or
(ii) is in your reasonable judgment so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Shares being delivered at such Delivery Date on the terms and in the
manner contemplated by the Prospectus;
(f) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading of any of the
equity securities of the Company; (ii) any United States federal or state
statute, regulation, rule or order of any court, legislative body, agency or
other governmental authority shall have been enacted, published, decreed or
promulgated or any proceeding or investigation shall have been commenced which,
in your reasonable judgment, materially and adversely affects the business or
operations of the Company; (iii) a suspension or material limitation in trading
in securities generally on the New York Stock Exchange or in the publication of
quotations on The Nasdaq SmallCap Market; (ii) a general moratorium on
commercial banking activities in New York or Virginia declared by either federal
or New York or Virginia authorities; (iii) the outbreak or escalation of
hostilities involving the United States or the declaration by the United States
of a national emergency or war if any such event specified in this clause (iii)
would have such a materially adverse effect, in your judgment, as to make it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Shares being delivered at such Delivery Date on the terms and in the
manner contemplated in the Prospectus; or (iv) such a material adverse change in
general economic, political, financial or international conditions affecting
financial markets in the United States having a material adverse impact on
trading prices of securities in general, as, in your judgment, makes it
inadvisable to proceed with the payment for and delivery of the Shares;
(g) The Company shall have furnished to you copies of agreements
between the Company and each of the executive officers and directors of the
Company specified by you, in form and content satisfactory to you, pursuant to
which such persons agree not to offer, sell, or contract to sell, or otherwise
dispose of; any shares of Common Stock beneficially owned by them or any
securities convertible into, or exchangeable for, Common Stock, on or before the
180th day after the date of this Agreement without your prior written consent;
and
(h) The Company shall have furnished or caused to be furnished to you
at such Delivery Date certificates of officers of the Company satisfactory to
you as to the accuracy of the representations and warranties of the Company
herein at and as of such Delivery Date, as to the performance by the Company of
all of its obligations hereunder to be performed at or prior to such Delivery
Date, as to the matters set forth in subsections (a) and (e) of this Section and
as to such other matters as you may reasonably request.
8. Indemnification and Contribution.
(a) The Company will indemnify and hold harmless the Placement Agent
against any losses, claims, damages or liabilities to which the Placement Agent
may become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, 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,
and will promptly reimburse the Placement Agent for any legal or other expenses
reasonably incurred by it in connection with investigating, preparing to defend
or defending, or appearing as a third party witness in connection with, any such
action or claim; provided, however, that the Company shall not be liable in any
such case to the extent that any such loss, claim, damage or liability arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in any Preliminary Prospectus, the
Registration Statement or Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by the Placement Agent expressly for use therein.
(b) The Placement Agent will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities, joint or several, to which
the Company may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus or any amendment or supplement thereto, 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 any Preliminary Prospectus or Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by you expressly for use therein; and will
promptly reimburse the Company for any legal or other expenses reasonably
incurred by the Company in connection with investigating, preparing to defend or
defending, or appearing as a third party witness in connection with, any such
action or claim. The Company acknowledges that the statements set forth in the
last paragraph of the cover page and the first, second, third and fifth
paragraphs under the heading "Placement Agent" in the Preliminary Prospectus and
the Prospectus constitute the only information furnished in writing by the
Placement Agent for inclusion in the Preliminary Prospectus or the Prospectus,
and the Placement Agent confirms that such statements are correct.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (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; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have been advised by counsel
that representation of such indemnified party and the indemnifying party may be
inappropriate under applicable standards of professional conduct due to actual
or potential differing interests between them, the indemnified party or parties
shall have the right to select separate counsel to defend such action on behalf
of such indemnified party or parties. It is understood that the indemnifying
party shall, in connection with any such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of only one separate firm of attorneys together with appropriate local
counsel at any time for all indemnified parties unless such firm of attorneys
shall have reasonably concluded that one or more indemnified parties has actual
differing interests with any other indemnified party. Upon receipt of notice
from the indemnifying party to such indemnified party of its election so to
appoint counsel to defend such action and approval by the indemnified party of
such counsel, the indemnifying party will not be liable for any settlement
entered into without its consent and will not be liable to such indemnified
party under this Section 8 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence, (ii) the indemnifying party shall not
have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action or (iii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of the
indemnifying party; and except that, if clause (i) or (iii) is applicable, such
liability shall be only in respect of the counsel referred to in such clause (i)
or (iii). Notwithstanding the immediately preceding sentence and the third
preceding sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such indemnifying
party of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement.
(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 or proceedings 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 or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Placement Agent 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 Placement Agent on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Placement Agent on the
other shall be deemed to be in the same proportion as the total net proceeds
from the offering (after deducting the total selling commissions, but before
deducting expenses) received by the Company bear to the total selling
commissions received by the Placement Agent, in each case as set forth in the
table on the cover page of the Prospectus. 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 Placement Agent 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 Placement Agent agree that it would not be just
and equitable if contributions pursuant to this subsection (d) were determined
by pro rata allocation or by any other method of allocation which does not take
into account 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 or proceedings 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 Placement Agent shall
not be required to contribute any amount in excess of the amount by which the
total price at which the Shares distributed by the Placement Agent to the public
were offered to the public exceeds the amount of damages which the Placement
Agent 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 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 officer and director of the
Placement Agent and to each person, if any, who controls the Placement Agent
within the meaning of the Act; and the obligations of the Placement Agent under
this Section 8 shall be in addition to any liability which the Placement Agent
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 Act.
9. Representations and Indemnities to Survive.
The respective indemnities, agreements, representations, warranties and
other statements of the Company and the Placement Agent, 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 termination
or cancellation of this Agreement or any investigation (or any statement as to
the results thereof) made by or on behalf of the Placement Agent, or any
controlling person of the Placement Agent, or the Company, or any officer or
director or controlling person of the Company, and shall survive delivery of and
payment for the Shares.
10. Termination and Payment of Expenses.
If for any reason any Shares are not delivered by or on behalf of the
Company as provided herein, the Company will reimburse the Placement Agent for
all out-of-pocket expenses, including fees and disbursements of counsel,
reasonably incurred by the Placement Agent in making preparations for the
purchase, sale and delivery of the Shares not so delivered, and shall pay the
Advisory Fee as defined in Section 2 of this Agreement, but the Company shall
then be under no further liability to the Placement Agent except as provided in
Section 6 and Section 8 hereof.
11. Notices.
All statements, requests, notices and agreements hereunder shall be in
writing or by telegram if promptly confirmed in writing, and if to the Placement
Agent shall be sufficient in all respects if delivered or sent by reliable
courier, first class mail, telex or facsimile transmission to Xxxxxxxxx &
Company LLC, Xxx Xxxxx Xxxxxx, X.X. Xxx 00000, Xxxxxxxx, Xxxxxxxx 23285- 5678
Attention: Corporate Finance Department; and if to the Company shall be
sufficient in all respects if delivered or sent by reliable courier, first class
mail, telex or facsimile transmission to CNB Holdings, Inc., 000 Xxxxxxxx Xxxxx,
Xxxxxxx, Xxxxxxxx 00000, Attention: Xxxxx X. Xxxxxxxxx, President. Any such
statements, requests, notices or agreements shall take effect upon receipt
thereof.
12. Successors.
This Agreement shall be binding upon, and inure solely to the benefit
of, the Placement Agent and the Company and, to the extent provided in Sections
8 and 9 hereof; the officers and directors of the Company and each person who
controls the Company, or the Placement Agent, 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 Placement Agent shall be deemed a successor or assign
by reason merely of such purchase.
13. Time of the Essence.
Time shall be of the essence in this Agreement.
14. Business Day.
As used herein, the term "business day" shall mean any day when the
Commission's office in Washington, D.C. is open for business.
15. Applicable Law.
This Agreement shall be construed in accordance with the laws of the
Commonwealth of Virginia.
16. Captions.
The captions included in this Agreement are included solely for
convenience of reference and shall not be deemed to be a part of this Agreement.
17. Counterparts.
This Agreement may be executed by any one or more of the parties 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.
18. Pronouns.
All pronouns used herein shall be deemed to refer to the masculine,
feminine or neuter gender as the context requires.
If the foregoing is in accordance with your understanding, please sign
and return to us two counterparts hereof, and upon the acceptance hereof by you,
this letter and such acceptance hereof shall constitute a binding agreement
between us.
Very truly yours,
CNB HOLDINGS, INC.
By: /s/ Xxxxxxxx Xxxxxx, Xx.
---------------------------
Name: Xxxxxxxx Xxxxxx, Xx.
-------------------------
Title: Chairman, President, CEO
------------------------
Accepted as of the date hereof at Richmond, Virginia:
XXXXXXXXX & COMPANY LLC
By: /s/ Xxxxx X. Xxxxxx
---------------------------
Name: Xxxxx X. Xxxxxx
--------------------------
Title: Vice President
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