EX-10.5 FORM OF SALES AGENCY AGREEMENT



 





EXHIBIT 10.5




UP TO 800,000 SHARES

OF

COMMON STOCK

OF

MOUNTAIN VALLEY BANCSHARES, INC.

 






AGENCY AGREEMENT




 






                    , 2007




SAMCO Capital Markets, Inc.

1700 Pacific Avenue, Suite 2000

Dallas, Texas 75201




Ladies and Gentlemen:




     Mountain Valley Bancshares, Inc., a Georgia corporation (the “Company”), and its wholly-owned
subsidiary, Mountain Valley Community Bank, a Georgia banking association (the “Bank”), propose,
subject to the terms and conditions stated herein, to engage SAMCO Capital Markets, Inc. (the
“Agent” or “you”) to assist the Company in structuring 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 up to 800,000 shares of the Common Stock, $.01 par value per share (the “Shares”), 433,195
shares of which have been sold by the Company prior to the date hereof.



     1. The Offering. The Company is offering the Shares at a purchase price equal to $15
per share, in connection with the Company’s public offering of Common Stock that commenced in
August 2006 (the “Offering”).



     The Company has prepared and filed, in accordance with the provisions of the Securities Act of
1933, as amended, and the rules and regulations thereunder (collectively, the “1933 Act”), with the
Securities and Exchange Commission (the “Commission”) a registration statement on Form SB-2 (File
No. 333-112960) under the 1933 Act, including a prospectus, relating to the Shares. Except where
the context otherwise requires, “Registration Statement,” as used herein, means the post-effective
amendment to the registration statement filed on May ___, 2007, as amended at the time of such
registration statement’s effectiveness for purposes of Section 11 of the 1933 Act (the “Effective
Time”), including (i) all documents filed as a part thereof, (ii) any information contained in a
prospectus subsequently filed with the Commission pursuant to Rule 424(b) under the 1933 Act and
deemed, pursuant to Rule 430A or Rule 430C under the 1933 Act, to be part of the registration
statement at the Effective Time, and (iii) any registration



 









 







statement filed to register the offer and sale of the Shares pursuant to Rule 462(b) under the
1933 Act.



     Except where the context otherwise requires, a “Preliminary Prospectus,” as used herein, means
any preliminary prospectus included in the Registration Statement or filed with the Commission
pursuant to Rule 424(a) under the Securities Act.



     Except where the context otherwise requires, “Prospectus,” as used herein, means the
prospectus filed by the Company with the Commission pursuant to Rule 424(b) under the 1933 Act on
or before the second business day after the Effective Time (or such earlier time as may be required
under the 1933 Act), or, if no such filing is required, the final prospectus included in the
Registration Statement at the Effective Time.



     “Permitted Free Writing Prospectuses,” as used herein, means the documents listed on
Schedule A attached hereto and each “road show” (as defined in Rule 433(h)(4) under the
1933 Act), if any, related to the Offering of the Shares contemplated hereby that is a “written
communication” (as defined in Rule 405 under the 1933 Act).



     “Disclosure Package,” as used herein, means any Preliminary Prospectus together with any
combination of one or more of the Permitted Free Writing Prospectuses, if any.



     Any reference herein to the Registration Statement, any Preliminary Prospectus, the Prospectus
or any Permitted Free Writing Prospectus shall be deemed to refer to and include the
documents, if any, incorporated by reference, or deemed to be incorporated by reference, therein
(the “Incorporated Documents”), including, without limitation, unless the context otherwise
requires, the documents, if any, filed as exhibits to such Incorporated Documents. Any reference
herein to the terms “amend,” “amendment” or “supplement” with respect to the Registration
Statement, any Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus
shall be deemed to refer to and include the filing of any document under the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder (the “Exchange Act”) on or after
the Effective Time, or the date of such Preliminary Prospectus, the Prospectus or such Permitted
Free Writing Prospectus, as the case may be, and deemed to be incorporated therein by reference.



     “Blue Sky Application,” as used herein, means any instrument or document executed by the
Company or based upon written information supplied by the Company filed in any state or
jurisdiction to register or qualify any or all of the Shares or to claim an exemption therefrom or
provided to any state or jurisdiction to exempt the Company as a broker-dealer or the officers,
directors or employees as broker-dealers or agents under the securities laws thereof. Legal
counsel to the Company shall prepare and submit any Blue Sky Application and shall prepare any blue
sky memorandum (the “Blue Sky Survey”).



     “Regulatory Agencies” as used herein, means the Georgia Department of Banking and Finance
(“DBF”), the FDIC and the Federal Reserve Board.



     In connection with the Offering, the Agent will assist the Company with the following
services: (a) establishing a comprehensive plan for the development and execution of the



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Offering; (b) establishing a computer database that will enable the Company’s management and
directors to gauge the progress of the Offering on a daily basis; (c) preparing written news
releases regarding the Offering, the Company, as well as its officers and directors for
dissemination by the Company; (d) preparing layout and design work for the Company’s “tombstone”
announcements, and assisting on placement and related sales factors, such as location in newspaper,
style of announcement, and announcement identification techniques; (e) coordinating all aspects of
the Company’s selling efforts with respect to the Offering including recommendations regarding
allocation of each director’s fundraising responsibilities and consultations with officers and
directors regarding sales techniques that will enable them to maximize their efforts; (f) preparing
officers and directors of the Company to introduce and describe the Offering to potential investors
at investor meetings, including open houses, breakfast meetings, luncheon meetings, and cocktail
receptions; and (g) working with the management of the Company in processing all retirement account
purchases of shares in the Offering through the various types of retirement accounts that potential
investors may have already established. If potential investors wish to use retirement funds to
invest in the Shares, but do not have a retirement account established or have a custodian that
will not process this type of transaction, then the Agent will seek out those retirement custodians
who will allow such a transaction and refer the potential investor to such retirement custodians.



     During the term of this Agreement, the Agent will provide the assistance of at least one
appropriately licensed representative, or such other employees or representatives as may be
appropriate to provide the services called for by this Agreement or otherwise provided by the Agent
to the Company.



     2. Retention of the Agent; Compensation; Sale and Delivery of the Shares. Subject to
the terms and conditions herein set forth, the Company hereby appoints the Agent as its exclusive
placement agent (i) to utilize its “best efforts” to solicit subscriptions for Shares and to assist
the Company with respect to the Company’s sale of the Shares in the Offering, and (ii) to manage
the sale of Shares through a group of selected broker dealers, if necessary.



     On the basis of the representations and warranties and subject to the terms and conditions of
this Agreement, the Agent accepts such appointment and agrees to consult with and assist the
Company as to matters set forth herein. It is acknowledged by the Company that the Agent shall not
be obligated to purchase any Shares and shall not be obligated to take any action which the Agent
deems to be inconsistent with any applicable law, regulation, decision or order. Subscriptions for
Shares in the Offering will be offered as described in the Registration Statement. Except as
otherwise provided in this Agreement, the appointment of the Agent will terminate upon completion
of the Offering.



     Upon acceptance of any subscriptions, the Company agrees to promptly issue, or have issued,
the Shares sold in the Offering against payment to the Company by any means authorized pursuant to
the Registration Statement; provided, however, that no more than every thirty (30) days, the
Company and the Agent shall close the Offering (the “Closing”), subject to satisfaction of the
conditions specified in Section 7 hereof, which conditions shall have been complied with to the
reasonable satisfaction of the Agent and its counsel. Certificates for Shares shall be delivered
by the Company or its transfer agent directly to the purchasers in accordance with their
directions. Each date upon which the Company and the Agent shall engage in a Closing is called



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the “Closing Date.” The Agent shall receive the following compensation for its services
hereunder:




     (a) A consulting fee of $20,000 due to the Agent payable upon the Agent’s receipt of
and delivery to the Company a “no objection” notice from the National Association of
Securities Dealers, Inc. (“NASD”) in connection with the Offering and a consulting fee of
$20,000 upon the Agent’s commencement of the Offering (which for purposes of this Agreement
shall be the date of the Prospectus (the “Commencement Date”)). On the 28th day
after the Commencement Date and for each four week period thereafter, the Company will pay
the Agent a consulting fee equal to $20,000 (due at the start of each new four week period)
for the term of this Agreement on the dates set forth on Appendix 1 attached hereto and made
apart hereof.




     (b) A commission equal to five percent (5.0%) of the aggregate dollar amount of Shares
sold in the Offering after the Commencement Date; provided, however, the commission due to
the Agent pursuant to this Section 2(b) shall be reduced by the aggregate amount of fees
paid to the Agent pursuant to Section 2(a) above.




     (c) The Agent shall be reimbursed for reasonable expenses as contemplated by Section 6
hereof, regardless of whether the Offering is successfully completed. Any consulting fee,
out-of-pocket expenses or commissions payable hereunder, shall be paid in immediately
available funds on regular intervals following Agent’s presentation of expenses to the
Company; provided that all expenses shall be paid at the earlier of the Closing Date or a
determination by the Company to terminate or abandon the Offering.




     (d) If the Company elects to engage the Agent as a sponsoring dealer under applicable
Blue Sky laws for the Offering, the Company shall pay the Agent an additional fee of $10,000
for the first state and an additional fee of $2,500 for each additional state requiring a
sponsoring dealer.




     (e) The Company acknowledges and agrees that in connection with the Offering, sale of
the Shares or any other services the Agent may be deemed to be providing hereunder,
notwithstanding any preexisting relationship, advisory or otherwise, between the parties or
any oral representations or assurances previously or subsequently made by the Agent: (i) no
fiduciary or agency relationship exists between the Company or any other person, on the one
hand, and the Agent, on the other hand; (ii) the Agent is not acting as advisor, expert or
otherwise, to the Company, including, without limitation, with respect to the determination
of the Offering price of the Shares, and such relationship between the Company, on the one
hand, and the Agent, on the other hand, is entirely and solely commercial, based on
arms-length negotiations and that the Agent serves as an independent contractor; (iii) any
duties and obligations that the Agent may have to the Company shall be limited to those
duties and obligations specifically stated herein; and (iv) the Agent and its respective
affiliates may have interests that differ from those of the Company. The Company hereby
waives any claims that the Company may have against the Agent with respect to any breach of
fiduciary duty in connection with the Offering.



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     3. Representations and Warranties of the Company.



     The Company represents and warrants to, and agrees with, the Agent that:




     (a) The Registration Statement on Form SB-2 (File No. 333-112960) in respect of the
Shares has been filed with the Commission; the Registration Statement and any post-effective
amendment thereto, each in the form heretofore delivered to you, and, excluding exhibits
thereto have been declared effective by the Commission in such form; other than a
registration statement, if any, increasing the size of the Offering (a “Rule 462(b)
Registration Statement”), filed pursuant to Rule 462(b) under the 1933 Act, which became
effective upon filing, no other document with respect to the Registration Statement has
heretofore been filed with the Commission; the Company has complied to the Commission’s
satisfaction with all requests of the Commission for additional or supplemental information;
and no stop order suspending the effectiveness of the Registration Statement, any
post-effective amendment thereto or the Rule 462(b) Registration Statement, if any, has been
issued and no proceeding for that purpose has been initiated or threatened by the
Commission.




     (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 1933 Act and the rules and
regulations of the Commission thereunder, and did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in 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 Agent expressly for use therein.




     (c) The Registration Statement conforms, and the Prospectus and any further amendments
or supplements to the Registration Statement or the Prospectus will conform, in all material
respects to the requirements of the 1933 Act and the rules and regulations of the Commission
thereunder; on the effective date and at any Closing, the Registration Statement did not or
will not contain any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements therein not
misleading; and when filed and at any Closing, the Prospectus (together with any supplement
thereto) will not include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; 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 Agent
expressly for use therein. Each Preliminary Prospectus and the Prospectus when filed, if
filed by electronic transmission, pursuant to EDGAR (except as may be permitted by
Regulation S-T under the 1933 Act), was identical to the copy thereof delivered to the Agent
for use in connection with the offer and sale of the Shares.



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     (d) As of each Closing, neither (i) any Issuer-Represented General Use Free Writing
Prospectuses issued at or prior to the Closing and the Statutory Prospectus, all considered
together (collectively, the “General Disclosure Package”), nor (ii) any individual
Issuer-Represented Limited-Use Free Writing Prospectus issued at or prior to the Closing,
when considered together with the General Disclosure Package, included any untrue statement
of a material fact or omitted to state any material fact necessary in order 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 Agent expressly for use therein. As used in this paragraph
and elsewhere in this Agreement:




     (i) “Statutory Prospectus” as of any time means the most recent Preliminary
Prospectus that is included in the Registration Statement immediately prior to the
Closing.




     (ii) “Issuer-Represented Free Writing Prospectus” means any “issuer free
writing prospectus,” as defined in Rule 433 under the 1933 Act, relating to the
Shares in the form filed or required to be filed with the Commission or, if not
required to be filed, in the form retained in the Company’s records pursuant to Rule
433(g) under the 1933 Act.




     (iii) “Issuer-Represented General Use Free Writing Prospectus” means any
Issuer-Represented Free Writing Prospectus that is intended for general distribution
to prospective investors.




     (iv) “Issuer-Represented Limited-Use Free Writing Prospectus” means any
Issuer-Represented Free Writing Prospectus that is not an Issuer-Represented General
Use Free Writing Prospectus.




     (e) Each Issuer-Represented Free Writing Prospectus, as of its issue date and at all
subsequent times through the completion of the public offer and sale of the Shares or until
any earlier date that the Company notified or notifies the Agent as described in Section
5(b), did not, does not and will not include any information that conflicted, conflicts or
will conflict with the information contained in the Registration Statement; 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 Agent expressly for use therein.




     (f) Neither the Company nor any of its subsidiaries has sustained since the date of the
latest audited financial statements included in each of the General Disclosure Package and
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 each of the General Disclosure Package and the Prospectus; and, since the respective
dates as of which information is given in the Registration Statement, the General Disclosure
Package and the Prospectus, except as set forth or contemplated in the



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each of the General Disclosure Package and the Prospectus, (A) there has not been any
material change in the capital stock or long-term debt of the Company or any of its
subsidiaries or any material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs, management, business
prospects, financial position, shareholders’ equity or results of operations of the Company
and its subsidiaries taken as a whole (a “Material Adverse Effect”), (B) there have been no
transactions entered into by the Company or any of its subsidiaries, other than those in the
ordinary course of business, which are material with respect to the Company and its
subsidiaries, taken as a whole, and (C) there has been no dividend or distribution of any
kind declared, paid or made by the Company on any class of its capital stock.




     (g) The Company and its subsidiaries have good and marketable title in fee simple to
all real property, if any, and good and marketable title to all personal property owned by
them, in each case free and clear of all liens, encumbrances and defects except such as are
described in each of the General Disclosure Package and 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 the Company and its subsidiaries; and any real
property and buildings held under lease by the Company and its subsidiaries are held by them
under valid, subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and buildings by
the Company and its subsidiaries.




     (h) The Company is a registered bank holding company under the Bank Holding Company Act
of 1956, as amended and has been duly incorporated and is validly existing as a corporation
in good standing under the laws of the State of Georgia, with power and authority (corporate
and other) to own its properties and conduct its business as described in each of the
General Disclosure Package and the Prospectus, and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing under the laws of each
other 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 or be in good standing
does not have, and could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.




     (i) Each subsidiary of the Company either has been duly incorporated and is validly
existing as a corporation or a statutory business trust or, with respect to the Bank, the
Bank has been duly chartered and is validly existing as a state banking corporation, in each
case in good standing under the laws of the jurisdiction of its organization, with power and
authority (corporate and other) to own its properties and conduct its business as described
in each of the General Disclosure Package and the Prospectus, and has been duly qualified as
a foreign corporation for the transaction of business and is in good standing under the laws
of each other 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 or be in good
standing does not have, and could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect; the Bank, a Georgia state chartered bank, does not
have any subsidiaries; all of the issued shares of capital stock of each subsidiary of the
Company have been duly authorized and validly issued



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and are fully paid and nonassessable and are owned, directly or through other
subsidiaries of the Company, by the Company, free and clear of any pledge, lien,
encumbrance, claim or equity; the Company does not own or control, directly or indirectly,
any corporation, association or other entity other than the subsidiaries listed in Exhibit
21 to the Registration Statement.




     (j) The Company has an authorized capitalization as set forth in each of the General
Disclosure Package and the Prospectus under the caption “Capitalization,” 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 have been issued in compliance with federal and
state securities laws and conform to the description of the Shares contained in each of the
General Disclosure Package and the Prospectus under the caption “Description of Capital
Stock”; and no such shares were issued in violation of the preemptive or similar rights of
any security holder of the Company; and no person has any preemptive or similar right to
purchase any shares of capital stock or equity securities of the Company.




     (k) The unissued Shares to be issued and sold by the Company to the Agent hereunder
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 each of the
General Disclosure Package and the Prospectus under the caption “Description of Capital
Stock”.




     (l) Except as described in each of the General Disclosure Package and the Prospectus,
(A) there are no outstanding rights (contractual or otherwise), warrants or options to
acquire, or instruments convertible into or exchangeable for, or agreements or
understandings with respect to the sale or issuance of, any shares of capital stock of or
other equity interest in the Company and (B) 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 1933 Act or otherwise register any
securities of the Company owned or to be owned by such person;




     (m) The issue and sale of the Shares by the Company and the compliance by the Company
and the Bank with all of the provisions of this Agreement and the consummation of the
transactions herein contemplated will not conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default under, any contract,
indenture, mortgage, deed of trust, loan agreement, note, lease or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject (collectively, the “Agreements and
Instruments”), nor will any such action (A) result in any violation of the provisions of the
articles of incorporation or charter (as applicable) or by-laws of the Company or any of its
subsidiaries or any law, statute or any order, rule or regulation of any federal, state,
local or foreign court, arbitrator, regulatory authority or governmental agency or body
(each, a “Governmental Entity”) having jurisdiction over the Company or any of its
subsidiaries or any of their properties or (B) constitute a Repayment Event (as defined



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below) under, or result in the creation or imposition of any lien, charge or other
encumbrance upon any assets or operations of the Company or any subsidiary pursuant to, any
of the Agreements and Instruments; and no consent, approval, authorization, order,
registration or qualification of or with any such Governmental Entity is required for the
issue and sale of the Shares or the consummation by the Company of the transactions
contemplated by this Agreement, except the registration under the 1933 Act and the
Securities Exchange Act of 1934, as amended (the “1934 Act”), of the Shares, as may be
required under the rules and regulations of the NASD and such consents, approvals,
authorizations, registrations or qualifications as may be required under state securities or
Blue Sky laws in connection with the purchase and distribution of the Shares by the Agent.
As used herein, a “Repayment Event” means any event or condition which gives the holder of
any note, debenture or other evidence of indebtedness (or any person acting on such holder’s
behalf) the right to require the repurchase, redemption or repayment of all or a portion of
such indebtedness by the Company or any subsidiary;




     (n) Neither the Company nor any of its subsidiaries is (A) in violation of its articles
of incorporation or charter, as applicable, or by-laws or (B) in default in the performance
or observance of any obligation, agreement, covenant or condition contained in any of the
Agreements and Instruments, except with respect to subsection (B) for such default that
would not be reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.




     (o) The statements set forth in each of the General Disclosure Package and the
Prospectus under the caption “Description of Capital Stock,” insofar as they purport to
constitute a summary of the terms of the capital stock of the Company, are accurate and
complete in all material respects.




     (p) The financial statements included in each of the Registration Statement, the
General Disclosure Package and the Prospectus, together with the supporting schedules, if
any, and notes, present fairly in all material respects the consolidated financial condition
of the Company and its subsidiaries at the dates indicated and the consolidated results of
operations and cash flows of the Company and its subsidiaries for the periods specified.
Such financial statements and supporting schedules, if any, have been prepared in conformity
with generally accepted accounting principles (“GAAP”) applied on a consistent basis
throughout the periods involved. The summary financial information included in each of the
Registration Statement, the General Disclosure Package and the Prospectus present fairly in
all material respects the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements included in the Registration
Statement, the General Disclosure Package and the Prospectus. Pro forma financial
statements are not required to be included in the Registration Statement, the General
Disclosure Package or the Prospectus under the 1933 Act, the rules and regulations
thereunder or GAAP.




     (q) Each of the Company and its subsidiaries maintains a system of accounting controls
sufficient to provide reasonable assurances that (A) transactions are executed in accordance
with the management’s general or specific authorization, (B) transactions are recorded as
necessary to permit preparation of financial statements in



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conformity with GAAP and to maintain asset accountability, (C) access to assets is
permitted only in accordance with the management’s general or specific authorization and (D)
the recorded accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.




     (r) The Company has established and maintains disclosure controls and procedures (as
such term is defined in Rule 13a-15(e) and 15d-15(e) under the 1934 Act). Such disclosure
controls and procedures (A) are designed to ensure that material information relating to the
Company, including its consolidated subsidiaries, is made known to the Company’s chief
executive officer and its chief financial officer by others within those entities to allow
timely decisions regarding disclosures, (B) have been evaluated for effectiveness as of the
end of the most recent fiscal quarter and (C) are effective to perform the functions for
which they were established. The Company’s independent registered public accounting firm
and the audit committee of the board of directors of the Company have been advised of (1)
any significant deficiencies or material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the
Company’s ability to record, process, summarize, and report financial data and (2) any
fraud, whether or not material, that involves management or other employees who have a role
in the Company’s internal control over financial reporting. Since the date of the most
recent evaluation of such disclosure controls and procedures, there have been no changes in
internal control over financial reporting that have materially affected, or are reasonably
likely to materially affect the Company’s internal control over financial reporting.




     (s) Neither the Company nor any of its subsidiaries is subject or is party to, or has
received any notice or advice that any of them may become subject or party to any
investigation with respect to, any corrective, suspension or cease-and-desist order,
agreement, consent agreement, memorandum of understanding or other regulatory enforcement
action, proceeding or order with or by, or is a party to any commitment letter or similar
undertaking to, or is subject to any directive by, or has been a recipient of any
supervisory letter from, or has adopted any board resolutions at the request of, any
Regulatory Agency (as defined below) that currently relates to or restricts in any material
respect the conduct of their business or that in any manner relates to their capital
adequacy, credit policies or management (each, a “Regulatory Agreement”), nor has the
Company or any of its subsidiaries been advised by any Regulatory Agency that it is
considering issuing or requesting any such Regulatory Agreement. There is no unresolved
violation, criticism or exception by any Regulatory Agency with respect to any report or
statement relating to any examinations of the Company or any of its subsidiaries which, in
the reasonable judgment of the Company, is expected to result in a Material Adverse Effect.
As used herein, the term “Regulatory Agency” means any Governmental Entity having
supervisory or regulatory authority with respect to the Company or any of its subsidiaries,
including, but not limited to, any federal or state agency charged with the supervision or
regulation of depositary institutions or holding companies of depositary institutions, or
engaged in the insurance of depositary institution deposits.



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     (t) Except as disclosed in each of the General Disclosure Package and the Prospectus,
the Company and its subsidiaries are conducting their respective businesses in compliance
with all statutes, laws, rules, regulations, judgments, decisions, directives, orders and
decrees of any Governmental Entity (including, without limitation, all regulations and
orders of, or agreements with, the Board of the Federal Reserve system (the “FRB”), the
Georgia Department of Banking and Finance, or the Federal Deposit Insurance Corporation (the
“FDIC”)) applicable to them, except where the failure to so comply would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.




     (u) Other than as set forth in each of the General Disclosure Package and the
Prospectus, there are no legal or governmental actions, suits, investigations or proceedings
before or by any Governmental Entity, now pending or, to the Company’s knowledge, threatened
or contemplated by Governmental Entities or threatened by others, to which the Company or
any of its subsidiaries is a party or of which any property or asset of the Company or any
of its subsidiaries is the subject (A) that are required to be disclosed in the Registration
Statement by the 1933 Act or by the rules and regulations of the Commission thereunder and
not disclosed therein or (B) which, if determined adversely to the Company or any of its
subsidiaries, would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect; and there are no contracts or documents of the Company or any of
its subsidiaries that are required to be described in the Registration Statement or to be
filed as exhibits thereto by the 1933 Act or by the rules and regulations of the Commission
thereunder which have not been so described and filed.




     (v) Each of the Company and its subsidiaries possess such permits, licenses, approvals,
consents and other authorizations (collectively, “Governmental Licenses”) issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies necessary to
conduct the business now operated by the Company or its subsidiaries except where the
failure to possess would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect; the Company and its subsidiaries are in compliance with the
terms and conditions of all such Governmental Licenses, except where the failures so to
comply would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect; all of the Governmental Licenses are valid and in full force and
effect, except where the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect; and neither the Company
nor any of its subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which, individually or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would reasonably be
expected to result in a Material Adverse Effect.




     (w) Each of the Company and its subsidiaries is in compliance with all applicable
federal, state and local environmental laws and regulations, including, without limitation,
those applicable to emissions to the environment, waste management, and waste disposal (each
an “Environmental Law”), except where such noncompliance would



11









 







not reasonably be expected to have a Material Adverse Effect, or except as disclosed in
each of the General Disclosure Package and the Prospectus, and to the knowledge of the
Company, there are no circumstances that would prevent, interfere with or materially
increase the cost of such compliance in the future.




     (x) To the knowledge of the Company, under applicable law, there are no past or present
actions, activities, circumstances, events or incidents, including, without limitation,
releases of any material into the environment, that are reasonably likely to form the basis
of any claim under any Environmental Law, including common law, against the Company or its
subsidiaries, which would be reasonably likely to have a Material Adverse Effect.




     (y) The statistical and market related data contained in each of the General Disclosure
Package, the Prospectus or the Registration Statement are based on or derived from sources
which the Company believes are reliable and accurate.




     (z) This Agreement has been duly authorized, executed and delivered by the Company.




     (aa) Neither the Company, nor to the Company’s knowledge, any affiliate of the Company
nor any person acting on their behalf has taken, nor will the Company take, directly or
indirectly, any action which is designed to or which has constituted or which would 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 and the Company will use its
reasonable best efforts to preclude any affiliate or person acting on their behalf from
taking such actions directly or indirectly.




     (bb) The Company is not and, after giving effect to the offering and sale of the
Shares, and after receipt of payment for the Shares and the application of such proceeds as
described in each of the General Disclosure Package and the Prospectus, will not be an
“investment company” or an entity “controlled” by an “investment company”, as such terms are
defined in the Investment Company Act of 1940, as amended (the “Investment Company Act”).




     (cc) Cherry, Bekaert & Holland, L.L.P., who have certified the financial statements and
supporting schedules of the Company and its subsidiaries, included in the Registration
Statement, the General Disclosure Package and the Prospectus are independent registered
public accountants as required by the 1933 Act and the rules and regulations of the
Commission thereunder, and, to the Company’s knowledge, such accountants are not in
violation of the auditor independence requirements of the Sarbanes-Oxley Act of 2002 with
respect to the Company.




     (dd) No labor problem or dispute with the employees of the Company or any of its
subsidiaries exists or, to the Company’s knowledge, is threatened or imminent, that could
have a Material Adverse Effect, whether or not arising from transactions in the ordinary
course of business, except as set forth in each of the General Disclosure Package and the
Prospectus.



12









 






     (ee) The Company and each of its subsidiaries, taken as a whole, are insured by
insurers of recognized financial responsibility against such losses and risks and in such
amounts as are commercially reasonable and, to the knowledge of the Company, customary in
the business in which they are engaged; all policies of insurance insuring the Company or
any of its subsidiaries are in full force and effect; the Company and its subsidiaries are
in compliance with the terms of such policies and instruments in all material respects; and
there are no claims by the Company or any of its subsidiaries under any such policy or
instrument as to which any insurance company is denying liability or defending under a
reservation of rights clause; neither the Company nor any such subsidiary has been refused
any insurance coverage sought or applied for; and neither the Company nor any such
subsidiary has any reason to believe that it 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 its business at a cost that would not have
a Material Adverse Effect, except as set forth or contemplated in each of the General
Disclosure Package and the Prospectus.




     (ff) The Company has filed all foreign, federal, state and local tax returns that are
required to be filed or is eligible for, and has requested, extensions thereof, except as
set forth or contemplated in each of the General Disclosure Package and the Prospectus, and
has paid all taxes required to be paid by it and any other assessment, fine or penalty
levied against it, to the extent that any of the foregoing is due and payable, except for
any such assessment, fine or penalty that is currently being contested in good faith or as
would not have a Material Adverse Effect, except as set forth or contemplated in each of the
General Disclosure Package and the Prospectus.




     (gg) No subsidiary of the Company is currently prohibited, directly or indirectly, from
paying any dividends to the Company, from making any other distribution on such subsidiary’s
capital stock, from repaying to the Company any loans or advances to such subsidiary from
the Company or from transferring any of such subsidiary’s property or assets to the Company
or any other subsidiary of the Company, except as set forth or contemplated in each of the
General Disclosure Package and the Prospectus or imposed by law or regulation.




     (hh) Reserved.




     (ii) The Company and its subsidiaries own or possess, or can acquire on reasonable
terms, adequate patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks, trade names or
other intellectual property (collectively, “Intellectual Property”) necessary to carry on
the business now operated by them, and neither the Company nor any of its subsidiaries has
received any notice or is otherwise aware of any infringement of or conflict with asserted
rights of others with respect to any Intellectual Property or of any facts or circumstances
which would render any Intellectual Property invalid or inadequate to protect the interest
of the Company or its subsidiaries therein, and which infringement or conflict (if the
subject of any unfavorable decision, ruling or finding) or invalidity or inadequacy,
individually or in the aggregate, would result in a Material Adverse Effect.




13










 






     (jj) Neither the Company nor any of its subsidiaries nor, to the knowledge of the
Company, any director, officer, agent, employee or other person associated with or acting on
behalf of the Company or any of its subsidiaries has (A) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating to political
activity; (B) made any direct or indirect unlawful payment to any foreign or domestic
government official or employee; (C) violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977; or (D) made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.




     (kk) The operations of the Company and its subsidiaries are and have been conducted at
all times in compliance with applicable financial recordkeeping and reporting requirements
of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money
laundering statutes of all jurisdictions, the rules and regulations thereunder and any
related or similar rules, regulations or guidelines, issued, administered or enforced by any
governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or
proceeding by or before any court or governmental agency, authority or body or any
arbitrator involving the Company or any of its subsidiaries with respect to the Money
Laundering Laws is pending or, to the best knowledge of the Company, threatened.




     (ll) No relationship, direct or indirect, exists between or among the Company or any of
its subsidiaries, on the one hand, and the directors, officers, shareholders, customers or
suppliers of the Company or any of its subsidiaries, on the other, that is required by the
1933 Act to be described in each of the General Disclosure Package and the Prospectus and
that is not so described.




     (mm) Except as described in each of the General Disclosure Package and the Prospectus,
there are no material off-balance sheet transactions, arrangements, obligations (including
contingent obligations), or any other relationships with unconsolidated entities or other
persons, that may have a material current or future effect on the Company’s financial
condition, changes in financial condition, results of operations, liquidity, capital
expenditures, capital resources, or significant components of revenues or expenses.




     (nn) The Company is in compliance with the provisions of the Sarbanes-Oxley Act and the
rules and regulations of the Commission thereunder applicable to it except where such
noncompliance would not reasonably be expected to have a Material Adverse Effect.



     4. Delivery and Payment.



     The Company shall receive all subscriptions and funds from subscribers. Such payment is to be
made at the offices of the Company located at 136 North Main Street, Cleveland, Georgia, 30528, at
10:00 a.m. local time accompanying each subscription. If the Agent receives any subscriptions and
funds, the Agent shall transmit all funds received to the Company by noon of the next business day
following receipt thereof in compliance with Commission Rule 15c2-4, promulgated under the 1934
Act. The Company shall be deemed to accept all subscriptions upon



14









 




deposit of the funds. If the Company rejects any subscription, the Company shall transmit all
rejected funds back to the subscriber by noon of the next business day. The Company and the Agent
shall record all accepted subscriptions, and the Company and the Agent shall close the transactions
on each Closing Date pursuant to Section 2. On each Closing Date, the Company shall pay the fees
due to the Agent pursuant to Section 2 hereof (less any portion thereof previously paid to the
Agent) by wire transfer drawn to the order of the Agent in immediately available funds on the
Closing Date.




     5. Covenants of the Company. The Company hereby covenants to the Agent as follows:




     (a) To prepare the Prospectus in a form approved by the Agent and to file such
Prospectus pursuant to Rule 424(b) under the 1933 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 1933 Act; to make no further amendment or any supplement to the Registration Statement
or Prospectus which shall be disapproved by the Agent 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 the
Agent with copies thereof; 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, Issuer-Represented Free Writing Prospectus or 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, or of
any request by the Commission for the amending or supplementing of the Registration
Statement, any Preliminary Prospectus, any Issuer-Represented Free Writing Prospectus 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,
Issuer-Represented Free Writing Prospectus or Prospectus or suspending any such
qualification, promptly to use its best efforts to obtain the withdrawal of such order;




     (b) If at any time following issuance of an Issuer-Represented Free Writing Prospectus
there occurred or occurs an event or development as a result of which such
Issuer-Represented Free Writing Prospectus conflicted or would conflict with the information
contained in the Registration Statement or included or would include an untrue statement of
a material fact or omitted or would omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances prevailing at that subsequent
time, not misleading, the Company has notified or will notify promptly the Agent so that any
use of such Issuer-Represented Free-Writing Prospectus may cease until it is amended or
supplemented and the Company has promptly amended or will promptly amend or supplement such
Issuer-Represented Free Writing Prospectus to eliminate or correct such conflict, untrue
statement or omission; provided, however, that this covenant 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 Agent expressly for use therein.



15









 






     (c) The Company represents and agrees that, unless it obtains the prior written consent
of the Agent, and the Agent represents and agrees that, unless it obtains the prior written
consent of the Company, it has not made and will not make any offer relating to the Shares
that would constitute an “issuer free writing prospectus,” as defined in Rule 433 under the
1933 Act, or that would otherwise constitute a “free writing prospectus,” as defined in Rule
405 under the 1933 Act, required to be filed with the Commission. Any such free writing
prospectus consented to by the Company and the Agent is hereinafter referred to as a
“Permitted Free Writing Prospectus.” The Company represents that it has treated or agrees
that it will treat each Permitted Free Writing Prospectus as an “issuer free writing
prospectus,” as defined in Rule 433, and has complied and will comply with the requirements
of Rule 433 applicable to any Permitted Free Writing Prospectus, including timely filing
with the Commission where required, legending and record keeping. The Company represents
that it has satisfied the conditions in Rule 433 to avoid a requirement to file with the
Commission any electronic road show.




     (d) Promptly from time to time to take such action as the Agent may reasonably request
to qualify the Shares for offering and sale under the securities laws of such jurisdictions
as the Agent may 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;




     (e) To furnish the Agent with copies of the Prospectus in such quantities as the Agent
may from time to time reasonably request, and, if the delivery of a prospectus is required
at any time after the time of issue of the Prospectus in connection with the Offering or
sale of the Shares 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 in order to comply with the 1933 Act, to notify
the Agent and upon its request to prepare and furnish without charge to the Agent and to any
dealer in securities as many copies as the Agent 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, and in case the Agent is required to deliver a
prospectus in connection with sales of any of the Shares at any time nine months or more
after the time of issue of the Prospectus, upon the Agent’s request but at its expense, to
prepare and deliver to the Agent as many copies as it may request of an amended or
supplemented Prospectus complying with Section 10(a)(3) of the 1933 Act;




     (f) To make generally available to its shareholders as soon as practicable, but in any
event not later than eighteen months after the effective date of the Registration Statement
(as defined in Rule 158(c) under the 1933 Act), an earning statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a)
of the 1933 Act and the rules and regulations thereunder (including, at the option of the Company, Rule 158);



16









 






     (g) During the period beginning from the date hereof and continuing to and including
the date 90 days after the date of the Prospectus, not to sell or issue, contract to sell or
otherwise dispose of, for a period of 90 days after the date hereof, without the Agent’s
prior written consent, which consent shall not be unreasonably withheld, any Shares other
than in connection with any plan or arrangement described in the Registration Statement.




     (h) To furnish to its shareholders, as soon as practicable after the end of each fiscal
year, an annual report (including a balance sheet and statements of income, shareholders’
equity and cash flows of the Company and its consolidated subsidiaries certified by an
independent registered public accounting firm) and, as soon as practicable after the end of
each of the first three quarters of each fiscal year (beginning with the fiscal quarter
ending after the effective date of the Registration Statement), to make available to its
shareholders consolidated summary financial information of the Company and its subsidiaries
for such quarter in reasonable detail;




     (i) During a period of five years from the effective date of the Registration
Statement, to furnish to the Agent copies of all reports or other communications (financial
or other) furnished to shareholders, and to deliver to the Agent (i) as soon as they are
available, copies of any reports and financial statements furnished to or filed with the
Commission or any national securities exchange on which any class of securities of the
Company is listed; and (ii) such additional information concerning the business and
financial condition of the Company as the Agent may from time to time reasonably request
(such financial statements to be on a consolidated basis to the extent the accounts of the
Company and its subsidiaries are consolidated in reports furnished to its shareholders
generally or to the Commission); for purposes of this paragraph, filing via Edgar shall be
considered delivery to the Agent;




     (j) To use the net proceeds received by it from the sale of the Shares pursuant to this
Agreement in the manner specified in each of the General Disclosure Package and the
Prospectus under the caption “Use of Proceeds”;




     (k) If the Company elects to rely on Rule 462(b), the Company shall file a Rule 462(b)
Registration Statement with the Commission in compliance with Rule 462(b) by 10:00 p.m.,
Washington, D.C. time, on the date of this Agreement, and the Company shall at the time of
filing either pay to the Commission the filing fee for the Rule 462(b) Registration
Statement or give irrevocable instructions for the payment of such fee pursuant to Rule
111(b) under the 1933 Act;




     (l) To file with the Commission such information on Form 10-KSB or Form 10-QSB as may
be required by Rule 463 under the 1933 Act; and




     (m) To comply, and to use its best efforts to cause the Company’s directors and
officers, in their capacities as such, to comply, in all material respects, with all effective applicable provisions of the Sarbanes-Oxley Act of 2002 and the rules and
regulations thereunder.



17









 






     (n) If any event relating to or affecting the Company shall occur, as a result of which
it is necessary, in the reasonable opinion of counsel for the Company or for the Agent, to
amend or supplement the Registration Statement in order to make them not misleading in light
of the circumstances existing at the time of its use, the Company will, at its expense,
forthwith prepare, file with the Regulatory Agencies, and furnish to the Agent, a reasonable
number of copies of an amendment or amendments of, or a supplement or supplements to, the
Registration Statement (in form and substance satisfactory to counsel for the Agent after a
reasonable time for review) which will amend or supplement the Registration Statement so
that as amended or supplemented it will not contain an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements therein, in light
of the circumstances existing at the time, not misleading. For the purpose of this
subsection, the Company will furnish such information with respect to itself as the Agent
may from time to time reasonably request.




     (o) Prior to the Closing Date, the Company will inform the Agent of any event or
circumstances of which it is aware as a result of which the Registration Statement would
include an untrue statement of a material fact or omit to state a material fact necessary in
order to make the statements therein not misleading.




     (p) The Company will distribute the Prospectus or other offering materials in
connection with the Offering and sale of the Shares only as set forth in the Prospectus, and
the laws of any state in which the Shares are qualified for sale or exempt from such
qualification.



     6. Payment of Expenses. The Company covenants and agrees with the Agent that it will
pay or cause to be paid the following: (i) the fees, disbursements and expenses of counsel to the
Company and accountants in connection with the registration of the Shares under the 1933 Act and
all other expenses in connection with the preparation, printing and filing of the Registration
Statement and any amendments or supplements thereto, and the mailing and delivering of copies
thereof to the Agent; (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(d) hereof, including the
reasonable fees and disbursements of counsel for the Agent in connection with such qualification
and in connection with the Blue Sky Survey, provided that it is contemplated that the Company’s
counsel shall address legal matters related to the qualification, or an exemption therefrom, for
the offer and sale of the Shares under applicable state securities laws and complete the Blue Sky
Survey and the Blue Sky Applications; (iv) the filing fees incident to securing any required review
by the NASD of the terms of the sale of the Shares; (v) the cost of preparing stock certificates;
(vi) all expenses related to prospective investor meetings; (vii) the costs or expenses of any
transfer agent or registrar; (viii) all reasonable out-of-pocket fees and expenses of the Agent
(including the reasonable fees and expenses of counsel for the Agent related to the Offering in an
amount not to exceed $25,000) and not otherwise specifically provided for in this Section 6; and
(ix) the expenses associated



18









 




with the use of the Agent’s on-site consultants, which, without your prior written consent,
will not exceed $6,000 per month for the use of one consultant and $9,000 per month for the use of
two consultants; and (x) 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 the Agent. The obligations of the Agent hereunder and
immediately prior to the initial Closing of the Offering and each subsequent Closing are subject to
the condition that all representations and warranties and other statements of the Company are, at
and as of the commencement of the Offering and at and as of each Closing 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) No Registration Statement or amendment or supplement thereto shall have distributed
to which the Agent shall have objected in writing.




     (b) Nelson Mullins Riley & Scarborough LLP, counsel for the Agent, shall have furnished
to the Agent such opinion or opinions, dated as of each Closing Date, with respect to such
matters as the Agent 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) Miller & Martin PLLC, counsel for the Company, shall have furnished to the Agent
its written opinion, dated as of each Closing Date, in a form reasonably satisfactory to the
Agent and Agent’s counsel and to such further effect as counsel to the Agent may reasonably
request:




     (d) At the time of the execution of this Agreement, the Agent shall have received from
Cherry, Bekaert & Holland, L.L.P. a letter dated such date, in form and substance
satisfactory to the Agent 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.




     (e) At each Closing Date, the Agent shall have received from Cherry, Bekaert & Holland,
L.L.P., a letter, dated as of Closing Date, to the effect that they reaffirm the statements
made in the letter furnished pursuant to subsection (d) of this Section, except that the
specified date referred to shall be a date not more than three business days prior to the
Closing Date.




     (f) At each Closing Date, the Agent shall receive a certificate of the Chief Executive
Officer and Chief Financial Officer of the Company, dated the Closing Date, solely in their
respective capacities as officers of the Company, to the effect that (i) they have carefully
examined Registration Statement and, as of its date, and the time of purchase, the
Registration Statement did not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; (ii) there has



19









 






not been, since the respective dates as of which information is given in the
Registration Statement, any material adverse change in the financial condition or in the
management, earnings, capital, properties, business prospects or business affairs of the
Company except as disclosed in the Registration Statement; (iii) the representations and
warranties contained in Section 3 of this Agreement are true and correct with the same force
and effect as though made at and as of the Closing Date; (iv) the Company has complied in
all material respects with all material agreements and satisfied all conditions on its part
to be performed or satisfied at or prior to the Closing Date including the conditions
contained in this Section 7; (v) no stop order has been issued or, to the best of their
knowledge, is threatened, by the Commission, a Regulatory Agency, or any other governmental
body; and (vi) no order suspending the Offering has been issued and to the best of their
knowledge, no proceedings for any such purpose have been initiated or threatened by any
Regulatory Agency or any other federal or state authority.




     (g) The Company shall not have sustained since the date of the latest audited financial
statements included in the Registration Statement, 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 in the Registration Statement, and since the respective dates as
of which information are given in the Registration Statement, there shall not have been any
material change in the long-term debt of the Company or any material change, or any
development, involving a prospective material change in or affecting the general affairs of
the management, financial position, stockholders’ equity or results of operations of the
Company, otherwise than as set forth or contemplated in the Registration Statement, the
effect of which, in any such case described above, is in the Agent’s reasonable judgment
sufficiently material and adverse as to make it impracticable or inadvisable to proceed with
the Offering or the delivery of the Shares on the terms and in the manner contemplated in
the Registration Statement.




     (h) Prior to or at each Closing Date: (i) in the reasonable opinion of the Agent,
there shall have been no material adverse change in the management, financial condition or
in the earnings, capital, properties or business affairs of the Company independently from
that as of the latest dates as of which such condition is set forth in the Registration
Statement, except as referred to therein; (ii) there shall have been no material transaction
entered into by the Company from the latest date as of which the financial condition of the
Company is set forth in the Registration Statement other than transactions referred to or
contemplated therein; (iii) the Company shall not have received from any Regulatory Agencies
any direction (oral or written) to make any material change in the method of conducting its
business with which it has not complied in all material respects (which direction, if any,
shall have been disclosed to the Agent) and which would reasonably be expected to have a
material and adverse effect on the management, condition (financial or otherwise) or on the
earnings, capital, properties or business affairs of the Company and its subsidiaries
considered as one enterprise; (iv) the Company shall not have been in default (nor shall an
event have occurred which, with notice or lapse of time or both, would constitute a default)
under any provision of any agreement or instrument relating to any material outstanding
indebtedness; (v) no action, suit or proceedings, at law or in equity or before or by any
federal or state commission,



20









 






board or other administrative agency, shall be pending or, to the knowledge of the
Company, threatened against the Company or affecting any of their properties wherein an
unfavorable decision, ruling or finding would reasonably be expected to have a material and
adverse effect on the management, financial condition or on the earnings, capital,
properties or business affairs of the Company; and (vi) the Shares have been qualified or
registered for offering and sale under the securities or blue sky laws of the jurisdictions
as to which the Company and the Agent shall have agreed.




     (i) Subsequent to the date hereof, there shall not have occurred any of the following:
(i) a general moratorium on the operations of commercial banks or other federally-insured
financial institutions or general moratorium on the withdrawal of deposits from commercial
banks or other federally-insured financial institutions declared by either federal or state
authorities; (ii) the engagement by the United States in hostilities which have resulted in
the declaration, on or after the date hereof, of a national emergency or war; or (iii) a
material decline in the price of equity or debt securities, if the effect of any of (i)
through (iii) herein, in the Agent’s reasonable judgment, makes it impracticable or
inadvisable to proceed with the Offering or the delivery of the Shares on the terms and in
the manner contemplated in the Registration Statement.




     (j) The NASD has confirmed that it has not raised any objection with respect to the
fairness and reasonableness of the terms of this Agreement and the Agent’s compensation
hereunder.



     8. Indemnification and Contribution.




     (a) The Company agrees to indemnify and hold harmless the Agent and its affiliates and
their respective members, partners, directors, officers, employees, agents and controlling
persons (the Agent and each such person being an “Indemnified Party”) from and against any
and all loss, claim, damage, judgment, assessment, cost and other liability (each a
“Claim”), joint or several, to which such Indemnified Party may become subject under any
applicable federal or state law, or otherwise, and related to or arising out of any
transaction contemplated by this Agreement or the engagement of the Agent pursuant to, and
the performance by the Agent of the services contemplated by this Agreement and will
reimburse any Indemnified Party for all reasonable fees and expenses (including reasonable
counsel fees and expenses) as they are incurred in connection with the investigation of,
preparation for, or defense of any pending or threatened Claim or any action or proceeding
arising therefrom, whether or not such Indemnified Party is a party and whether or not such
Claim, action or proceeding is initiated or brought by or on behalf of the Company. The
Company will not be liable under the foregoing indemnification and reimbursement provisions
to the extent that any Claim is found in a final judgment by a court of competent
jurisdiction to have resulted from an Indemnified Party’s willful misconduct, bad faith or
gross negligence or the breach of this Agreement. The Company agrees that no Indemnified
Party will have any liability (whether direct or indirect, in contract or tort or otherwise)
to the Company or its security holders or creditors related to or arising out of the
engagement of the Agent pursuant to, or the performance by the Agent of the services
contemplated by, this Agreement except to the extent that any loss, Claim, damage, judgment,
assessment, cost or any other liability, or related expenses, is found in a final judgment by a court of competent jurisdiction to
have resulted from an Indemnified Party’s willful misconduct, bad faith or gross negligence
or the breach of this Agreement.



21









 






     (b) If the indemnification of an Indemnified Party provided for in this Agreement is
for any reason held unenforceable (other than for a reason provided in the prior paragraph),
the Company agrees to contribute to the Claims for which such indemnification is held
unenforceable (i) in such proportion as is appropriate to reflect the relative benefits to
the Company and its security holders, on the one hand, and the Agent, on the other hand, of
the transaction as contemplated (whether or not the transaction is consummated) or (ii) if
(but only if) the allocation provided for in clause (i) is for any reason held
unenforceable, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) but also the relative fault of the Company on the one
hand, and the Agent, on the other hand, as well as any other relevant equitable
considerations; provided, however, that, to the extent permitted by applicable law, in no
event will the Indemnified Parties be required to contribute an aggregate amount in excess
of the aggregate fees actually paid to the Agent under this Agreement.




     (c) The Company agrees that, without the Agent’s prior written consent, which consent
will not be unreasonably withheld, it will not settle, compromise or consent to the entry of
any judgment in any pending or threatened Claim, action, or proceeding in respect of which
indemnification could be sought under the indemnification provisions of this Agreement,
whether or not the Agent or any other Indemnified Party is an actual or threatened party to
such Claim, action, or proceeding, unless such settlement, compromise or consent includes an
unconditional release of each Indemnified Party from all liability arising out of such
Claim, action or proceeding. The Company shall not be liable for any settlement of any
litigation or proceeding effected without its consent.




     (d) Upon receipt by an Indemnified Party of actual notice of a Claim as to which
indemnification may be sought hereunder, such Indemnified Party shall promptly notify the
Company of the nature and basis of the Claim. In addition, an Indemnified Party shall
promptly notify the Company after any action is commenced against the Indemnified Party (by
way of service with a summons or other legal process) and shall transmit a copy to the
business address of the Company (which shall constitute notice to the Company). The Company
may, and shall, if requested by any Indemnified Party, assume the defense of any Claim
against such Indemnified Party in respect of which indemnity may be sought hereunder,
including, without limitation, the employment of counsel reasonably satisfactory to such
Indemnified Party and the payment of the fees and expenses of such counsel and necessary
experts, in which event the Company shall not be liable for the fees and expenses of any
other counsel retained by such Indemnified Party in connection with such litigation or
proceeding.




     (e) The reimbursement, indemnity and contribution obligations of the Company under the
preceding paragraphs shall be in addition to any liability that the Company may otherwise
have, and shall be binding upon and inure to the benefit of the successors, assigns, heirs
and personal representatives of any Indemnified Party.



22









 






     (f) In the event that an Indemnified Party is requested or required to appear as a
witness in any action brought by or on behalf of or against the Company or any affiliate of
the Company in a transaction contemplated by this Agreement in which such Indemnified Party
is not named as a defendant, the Company agrees to reimburse the Agent for all reasonable
expenses incurred by it in connection with such Indemnified Party’s appearing and preparing
to appear as such a witness, including, without limitation, the reasonable fees and
disbursements of its legal counsel.



     9. Representations and Indemnities to Survive. All representations, warranties and
agreements contained in this Agreement or in certificates of officers of the Company, solely in
their capacities as officers of the Company, submitted pursuant hereto, 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 Agent, or any controlling
person of the 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. This Agreement shall become effective on the
date hereof and shall terminate on [Insert Date 90 Days from Effective Date], 2007. This Agreement
may be extended upon the mutual agreement of the Company and the Agent. However, this Agreement may
be terminated at any time, whether at the end of its term or otherwise, (i) at the option of either
the Agent or the Company upon ten (10) days written notice to the other, or (ii) immediately, at
the option of the Agent, if the Agent believes in its sole discretion that events have occurred at
the Company which may impair the viability of the Offering; provided, however, if the Company
terminates this Agreement, the Company shall remain obligated to pay the Agent for such
subscriptions for Shares accepted by the Company based on investors contacted during the term of
this Agreement in accordance with Section 2(b) hereof. If for any reason any Shares are not
delivered by or on behalf of the Company as provided herein, the Company shall then be under no
further liability to the Agent except as provided in Sections 2, 6, 8 and 10 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 Agent shall be sufficient in
all respects if delivered or sent by reliable courier, first class mail, or facsimile transmission
to:


Agent:



SAMCO Capital Markets, Inc.

1700 Pacific Avenue, Suite 2000

Dallas, Texas 75201

Attention: Joseph R. Mannes




23









 







With a copy to:



Nelson Mullins Riley & Scarborough LLP

999 Peachtree Street NE

Suite 1400

Atlanta, GA 30309

Attention: J. Brennan Ryan



Company or the Bank:



Mountain Valley Bancshares, Inc.

136 North Main Street

Cleveland, GA 30528

Attention: Marc J. Greene



With a copy to:



Miller & Martin PLLC

1170 Peachtree Street NE

Suite 800

Atlanta, GA 30309

Attention: Michael P. Marshall, Jr.



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 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 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 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 State of Texas.



     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.



24









 





     18. Pronouns. All pronouns used herein shall be deemed to refer to the masculine,
feminine or neuter gender as the context requires.



[Signatures on Following Page]




25









 







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,




Mountain Valley Bancshares, Inc.




	 	 	 	 	 
	By:
	 	 	 	 
	Name:

	 

	 	 
	 

	 

	 	 






Accepted as of the date hereof at Dallas, Texas:




SAMCO Capital Markets, Inc.




	 	 	 	 	 
	By:
	  

	 	 
	Name: Joseph R. Mannes	 	 
	Title: Chief Operating Officer	 	 






26









 





APPENDIX 1




Schedule of Consulting Fee Payments




	 	 	 	 	 
	     Payment Date	 	Amount
	                    , 2007

	 	$	20,000	 
	                    , 2007

	 	$	20,000	 
	                    , 2007

	 	$	20,000	 
	                    , 2007

	 	$	20,000	 







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