Old Line Bancshares,
Inc.
Common Stock
($0.01 par value)
McKinnon &
Company, Inc.
999 Waterside Drive, Suite 1200
Norfolk, Virginia 23510
Old Line
Bancshares, Inc., a corporation organized under Maryland law (the
“Company”), proposes to employ you (“you”
or the “Underwriter”), as agent to the Company, to
assist the Company in the public offering of up to 2,096,538 shares
of the Company’s Common Stock, par value $0.01 per share (the
“Common Stock”) on a best efforts basis (the
“Public Offering”). The shares of Common Stock to be
issued in the Public Offering are referred to herein as the
“Shares.”
You have advised
the Company (a) that you are authorized to enter into this
Agreement and (b) that you are willing to sell the Shares on a best
efforts basis as agent for the Company.
In consideration
of the mutual agreements contained herein and of the interests of
the parties in the transactions contemplated hereby, the Company
and the Underwriter hereby agree as follows:
1.
Representations and Warranties of the Company . The Company
represents and warrants as follows:
(a) The
Company has prepared and filed with the Securities and Exchange
Commission (the “Commission”) in accordance with the
provisions of the Securities Act of 1933, as amended, and the rules
and regulations of the Commission thereunder (collectively, the
“Securities Act”), a registration statement on Form
SB-2 (File No. 333-127792) including a preliminary prospectus,
relating to the Shares to be sold in the Public Offering. Such
registration statements, as amended, including the financial
statements, exhibits and schedules thereto, at the time when it
becomes effective and as thereafter amended by any post-effective
amendment, is referred to collectively in this Agreement as the
“Registration Statement.” The prospectus in the form
included in the Registration Statement or pursuant to its Rule
424(b) filing or as part of a post-effective amendment to the
Registration Statement after the Registration Statement becomes
effective, the prospectus so filed, is referred to collectively as
the “Prospectus.” If the Company files another
registration statement with the Commission to register a portion of
the Shares pursuant to Rule 462(b) under the Securities Act (the
“Rule 462 Registration Statement”), then any
reference to “Registration Statement,” herein shall be
deemed to include the Registration Statement (as defined above) and
the Rule 462 Registration Statement, as each such registration
statement may be amended pursuant to the Securities Act.
(b) Each
preliminary Prospectus that is filed as part of the Registration
Statement as originally filed or as part of any amendment or
supplement thereto and distributed by the Underwriter or a selected
dealer to potential purchasers complied, when so filed, in all
material respects with the provisions of the Securities Act; except
that this representation and warranty does not apply to statements
in or omissions from information
McKinnon &
Company, Inc.
Page 2
relating to the
Underwriter on the front cover of the Prospectus and in the section
of the Prospectus entitled “Plan of Distribution” that
were made in reliance upon and conformity with information
furnished to the Company by such Underwriter expressly for use
therein.
(c) The
Registration Statement in the form in which it becomes effective
and also in such form as it may be when any post-effective
amendment thereto shall become effective, and the Prospectus filed
as part of such Registration Statement and in the form first filed
with the Commission under its Rule 424(b) filing, if any, and when
any supplement thereto is filed with the Commission, will comply in
all material respects with the provisions of the Securities Act and
will not contain at any such times an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, except that this representation and warranty does not
apply to statements in or omissions from information relating to
the Underwriter on the front cover of the Prospectus and in the
section of the Prospectus entitled “Plan of
Distribution” that were made in reliance upon and conformity
with information furnished to the Company by the Underwriter
expressly for use therein.
(d) The
Company has the capitalization set forth in the Prospectus under
the caption “Capitalization.” All of the outstanding
shares of Common Stock are duly authorized and validly issued,
fully paid and non-assessable and free of preemptive or similar
rights. The Shares to be issued and sold by the Company have been
duly authorized, and upon delivery to the purchasers thereof
against payment therefor in accordance with the terms hereof, will
have been validly issued and fully paid and will be non-assessable
and free of preemptive or similar rights; and the Common Stock
conforms in all material respects to the description thereof in the
Registration Statement and the Prospectus (or any amendment or
supplement thereto). None of the Company’s issued and
outstanding shares of Common Stock was issued in violation of the
Securities Act.
(e) The
Company and its wholly owned subsidiary, Old Line Bank (the
“Bank”), are duly organized and validly existing and in
good standing under Maryland law. There are no other subsidiaries
of the Company, other than the Bank, and there are no subsidiaries
of the Bank. The Company and the Bank are duly qualified to do
business and are in good standing in all jurisdictions that require
such qualification or in which the failure to qualify in such
jurisdictions could have, in the aggregate, any material adverse
effect on the business, condition (financial or otherwise) or
properties of the Company or the Bank. The Company and the Bank
hold all material licenses, certificates, permits and other
authorizations from governmental authorities necessary for the
conduct of their businesses as described in the Prospectus and own,
or possess adequate rights to use, all material rights necessary
for the conduct of their business and have not received any notice
of conflict with the asserted rights of others in respect thereof;
and the Company and the Bank have the corporate power and authority
to own their properties and conduct their businesses as described
in the Prospectus. The Company is duly registered as a bank holding
company under the Bank Holding Company Act of 1956, as amended. The
deposit accounts of the Bank are insured by the Bank Insurance Fund
administered by the Federal Deposit Insurance Corporation up to the
maximum amount provided by law, and no proceedings for the
modification, termination or revocation of any such insurance are
pending or, to the knowledge of the Company, threatened.
(f) All
of the outstanding shares of capital stock of the Bank are owned by
the Company, have been duly authorized and are validly issued,
fully paid and non-assessable and are owned by the Company free and
clear of any lien, claim, security interest or other
encumbrance.
(g) The
Company and the Bank have good and marketable title to all property
described in the Prospectus as being owned by them, free and clear
of all liens, claims, security interests or other encumbrances
except such as are described in the Registration Statement and the
Prospectus (or any amendment or supplement thereto or in a document
filed as an exhibit to the Registration Statement) or such as are
not material and do not interfere in any material respect with the
use of the property or the conduct of the business of the Company
and the Bank taken as a whole, and the property held under lease by
the Company or the Bank is held by them under valid and enforceable
leases with only such exceptions as in the aggregate are not
material and do not interfere in any material respect with the
conduct of the business of the Company and the Bank taken as a
whole; provided that no representation or warranty is made hereby
to the title of the lessor of any such property.
McKinnon &
Company, Inc.
Page 3
(h) There
are no legal or governmental proceedings pending, or to the
knowledge of the Company threatened, required to be described in
the Registration Statement or the Prospectus (or any amendment or
supplement thereto) that are not described as required, and there
is no contract or document of a character required to be described
in the Registration Statement or the Prospectus or to be filed as
an exhibit to the Registration Statement that is not described or
filed as required.
(i) Neither
the Company nor the Bank is in violation of its articles of
incorporation or bylaws or in default in any material respect in
the performance of any obligation, agreement or condition contained
in any bond, debenture, note or any other evidence of indebtedness
or in any agreement, indenture, lease or other instrument to which
the Company or the Bank is a party or by which its assets are
bound, or in violation of any law, administrative regulation or
ruling or court decree applicable to the Company or the Bank or any
of their properties. Neither the issuance nor the sale of the
Shares nor the execution and delivery of this Agreement nor the
performance of the obligations of the Company set forth herein nor
the consummation of the transactions herein contemplated requires
any consent, approval, authorization or other order of any court,
regulatory body, administrative agency or other governmental body
(except such as may be required under the Securities Act or other
securities laws or Blue Sky laws or rules of the National
Association of Securities Dealers, Inc. (the “NASD”)
that may be applicable to the Underwriter or rules of the NASDAQ
SmallCap Market) or will conflict with the articles of
incorporation or bylaws of the Company or the Bank, or constitute a
breach or default under any agreement, indenture or other
instrument to which the Company or the Bank is a party or by which
either of them or their property is bound, or any law,
administrative regulation or ruling or court decree applicable to
the Company or the Bank or any of their properties, which conflict,
breach or default would have a material adverse effect on the
business, condition (financial or otherwise) or property of the
Company and the Bank taken as a whole.
(j) Except
as disclosed in the Registration Statement and the Prospectus (or
any amendment or supplement thereto), subsequent to the respective
dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement
thereto), the Company has not incurred any liability or obligation,
direct or contingent, or entered into any transaction, not in the
ordinary course of business, that is material to the Company and
the Bank taken as a whole, and there has not been any material
change in the capital stock, or material increase in the short-term
debt or long-term debt, of the Company or the Bank, or any material
adverse change, or any development involving a prospective material
adverse change, in the condition (financial or otherwise),
business, net worth or results of operations of the Company and the
Bank taken as a whole.
(k) Rowles
& Company, LLP, who have certified certain of the financial
statements filed with the Commission as part of the Registration
Statement and the Prospectus, have consented in writing to the
inclusion of their report in the Prospectus and have informed the
Company that they are an independent registered public accounting
firm as required by the Securities Act.
(l) The
Company’s consolidated financial statements, together with
related schedules and notes, forming part of the Registration
Statement and the Prospectus, present fairly the financial position
and the results of operations of the Company and the Bank at the
respective dates or for the respective periods to which they apply;
such statements and related notes have been prepared in accordance
with generally accepted accounting principles consistently applied
throughout the periods involved, except as disclosed therein; and
the financial and statistical information and data set forth in the
Registration Statement and the Prospectus is fairly presented and
prepared on a basis consistent with such financial statements and
the books and records of the Company and the Bank; provided,
however, that any interim unaudited financial statements of the
Company included in the Registration Statement and the Prospectus
are subject to normal year-end adjustments and lack footnotes and
other presentation items. The Company and the Bank have no material
contingent obligations that are not disclosed in the Registration
Statement and the Prospectus (or any amendment or supplement
thereto).
(m) No
holders of securities of the Company have rights to the
registration of such securities for sale in the Public
Offering.
McKinnon &
Company, Inc.
Page 4
(n) The
Company and the Bank have filed all federal, state and foreign
income tax returns that have been required to be filed and have
paid all taxes indicated by such returns and all assessments
received by them or any of them to the extent that such taxes have
become due, and are not being contested in good faith.
(o) The
Company and the Bank hold all material licenses, certificates and
permits from governmental authorities that are necessary to the
conduct of their businesses; and neither the Company nor the Bank
has infringed any patents, patent rights, trade names, trademarks
or copyrights in any manner material to the business of the Company
and the Bank taken as a whole.
(p) The
Company and the Bank are insured by insurers of recognized
financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the business in which it is
engaged; all policies of insurance and fidelity or surety bonds
insuring the Company and the Bank and their businesses, assets,
employees, officers and directors, if any, are in full force and
effect; the Company and the Bank are in compliance with the terms
of any such policies and instruments in all material respects; and
there are no claims by the Company or the Bank under any such
policy or instrument as to which any insurance company is denying
liability or defending under a reservation of rights clause; the
Company and the Bank have not been refused any insurance coverage
sought or applied for; and the Company and the Bank have no reason
to believe that they will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to
continue their businesses at a cost that would not have a material
adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of them taken as a
whole, whether or not arising from transactions in the ordinary
course of business, except as set forth in or contemplated in the
Prospectus (exclusive of any amendment or supplement
thereto).
(q) The
Company and the Bank maintain a system of internal accounting
controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with
management’s general or specific authorizations;
(ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset
accountability; (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 the existing assets at reasonable intervals and
appropriate action is taken with respect to any
differences.
(r) The
Company has not taken, directly or indirectly, any action designed
to or that would constitute or that might reasonably be expected to
cause or result in, under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), or otherwise,
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares.
(s) No
relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company on the other hand, that is
required to be described in the Prospectus that is not so fully and
accurately described.
(t) The
Company is not and, after giving effect to the offer and sale of
the Shares, will not be an “investment company” or an
entity “controlled” by an “investment
company,” as such terms are defined in the Investment Company
Act of 1940, as amended.
(u) Any
statistical and market-related data included in the Prospectus are
based on or derived from sources that the Company believes to be
reliable and accurate, and the Company has obtained the written
consent to the use of such data from such sources to the extent
required.
(v) All
employee benefit plans established, maintained or contributed by
the Company and the Bank comply, to the extent they are required to
comply, in all material respects with requirements of the Employee
Retirement Income Security Act of 1974, as amended
(“ERISA”), and no such plan incurred or assumed any
“accumulated funding deficiency” within the meaning of
Section 302 of ERISA or has incurred or assumed any material
liability to the Pension Benefit Guaranty Corporation.
McKinnon &
Company, Inc.
Page 5
(w) This
Agreement has been duly authorized, executed and delivered by the
Company and is a valid and binding obligation of the Company,
enforceable in accordance with its terms.
2. Sale
of the Shares . 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 up to
2,096,538 shares of the Common Stock in the Public Offering. All
Shares to be offered and sold in the Public Offering shall be
issued and sold through the Underwriter, as agent for the Company,
to the public and the Underwriter agrees to use its best efforts to
sell the Shares as agent for the Company, at the price per share
set forth on the cover page of the Final Prospectus for the Public
Offering (the “Public Offering Price”). The Company
agrees to pay the Underwriter a commission (“Selling
Commission”) equal to five percent (5%) of the Public
Offering Price of all Shares sold through the Underwriter in the
Public Offering (including Shares sold through selected dealers).
It shall be the Underwriter’s responsibility to compensate
any selected dealers out of the commissions that it receives from
the Company. The Underwriter may reject any offer to purchase the
Shares made through the Underwriter or a selected dealer in whole
or in part, and any such rejection shall not be deemed a breach of
the Underwriter’s agreement contained herein.
3. Sales
by the Underwriter . It is understood that, after the
Registration Statement becomes effective, the Underwriter proposes
to sell the Shares to the public as agent for the Company upon the
terms and conditions set forth in the Prospectus. The escrow
procedures established by the Underwriter shall comply with
Commission Rule 15c2-4 promulgated under the Exchange Act. All
purchasers to whom the Underwriter directly sells Shares shall be
instructed to make their check for payment of the Shares payable to
“Old Line Bancshares, Inc. Public Offering Escrow
Account.” In addition, the Underwriter shall comply with
Rule 15c2-4. The Underwriter shall transmit all funds that it
receives from purchasers to SunTrust Bank, the escrow agent (the
“Escrow Agent”) by noon of the next business day
following receipt thereof. Only broker/dealers who are either
(i) members in good standing of the NASD that are registered
with the NASD and maintain net capital pursuant to Rule 15c3-1
promulgated under the Exchange Act of not less than $25,000 or
(ii) dealers with their principal places of business located
outside the United States, its territories and its possessions and
not registered as brokers or dealers under the Exchange Act, who
have agreed not to make any sales within the United States, its
territories or its possessions or to persons who are nationals
thereof or residents therein shall be designated selected dealers
by the Underwriter. The Underwriter shall require all selected
dealers to comply with Rule 15c2-4.
4.
Payment and Delivery . The Underwriter shall direct the
Escrow Agent to make payment for the Shares sold hereunder by wire
transfer. Such payment is to be made at the offices of Old Line
Bancshares, Inc., 2995 Crain Highway, Waldorf, Maryland 20601, at
12:00 p.m. (noon) local time, on or about
October 21, 2005, or at such other time, date and place as you
and the Company shall agree upon, such time and date being herein
referred to as the “Closing Date.” Unless the
transaction is closed book-entry through The Depository Trust
Company and no certificates are requested, in which case the
procedures applicable thereto shall be complied with, the
certificates for the Shares will be delivered in such denominations
and in such registrations as the Underwriter requests in writing
not later than the third (3rd) full business day prior to the
Closing Date, and will be made available for inspection by the
Underwriter at least twenty-four (24) hours prior to the
Closing Date. Any such certificates will be delivered by the
Company to its transfer agent, or the Depository Trust Company, as
applicable, by 12:00 p.m. on the day prior to the Closing
Date, along with addressed labels to be used to mail the
certificates to the purchasers thereof. The Company shall direct
the Escrow Agent to deliver (i) payment of the portion of the
Selling Commission due to the Underwriter by wire transfer or
certified or bank cashier’s check drawn to the order of the
Underwriter in next day funds, to the Underwriter on the Closing
Date and (ii) payment of the portion of the Selling Commission
due to each selected dealer by wire transfer or certified or bank
cashier’s check drawn to the order of such selected dealer in
next day funds, to each selected dealer on the Closing
Date.
5.
Covenants of the Company . The Company covenants and agrees
with the Underwriter as follows:
(a) The
Company will endeavor to cause the Registration Statement to become
effective and will advise you promptly and, if requested by you,
will confirm such advice in writing (i) when the
Registration
McKinnon &
Company, Inc.
Page 6
Statement has
become effective and when any amendment thereto thereafter becomes
effective, (ii) of any request by the Commission for
amendments or supplements to the Registration Statement or the
Prospectus or for additional information, (iii) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of the suspension of
qualification of the Shares for offering or sale in any
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