Document:

Guarantee Agreement between Registrant and Wilmington Trust Co.

 EXHIBIT 10.16 
  

  
 GUARANTEE AGREEMENT 
  
 between 
  
 SOUTHCOAST FINANCIAL CORPORATION, 
 As Guarantor, 
  
 and 
  
 WILMINGTON TRUST COMPANY, 
 As Guarantee Trustee 
  
 Dated as of August 5, 2005 
  
  
 SOUTHCOAST CAPITAL TRUST III 
  

 TABLE OF CONTENTS 
  

					
	ARTICLE I	  	INTERPRETATION AND DEFINITIONS	 	2
	SECTION 1.1	  	Interpretation.	 	2
	SECTION 1.2	  	Definitions.	 	2
			
	ARTICLE II	  	REPORTS	 	6
	SECTION 2.1	  	List of Holders.	 	6
	SECTION 2.2	  	Periodic Reports to the Guarantee Trustee.	 	6
	SECTION 2.3	  	Event of Default; Waiver.	 	6
	SECTION 2.4	  	Event of Default; Notice.	 	7
			
	ARTICLE III	  	POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE	 	7
	SECTION 3.1	  	Powers and Duties of the Guarantee Trustee.	 	7
	SECTION 3.2	  	Certain Rights of the Guarantee Trustee.	 	8
	SECTION 3.3	  	Compensation.	 	10
	SECTION 3.4	  	Indemnity.	 	10
	SECTION 3.5	  	Securities.	 	11
			
	ARTICLE IV	  	GUARANTEE TRUSTEE	 	11
	SECTION 4.1	  	Guarantee Trustee; Eligibility.	 	11
	SECTION 4.2	  	Appointment, Removal and Resignation of the Guarantee Trustee.	 	12
			
	ARTICLE V	  	GUARANTEE	 	12
	SECTION 5.1	  	Guarantee.	 	12
	SECTION 5.2	  	Waiver of Notice and Demand.	 	13
	SECTION 5.3	  	Obligations Not Affected.	 	13
	SECTION 5.4	  	Rights of Holders.	 	14
	SECTION 5.5	  	Guarantee of Payment.	 	14
	SECTION 5.6	  	Subrogation.	 	14
	SECTION 5.7	  	Independent Obligations.	 	14
	SECTION 5.8	  	Enforcement.	 	15
			
	ARTICLE VI	  	COVENANTS AND SUBORDINATION	 	15
	SECTION 6.1	  	Dividends, Distributions and Payments.	 	15
	SECTION 6.2	  	Subordination.	 	16
	SECTION 6.3	  	Pari Passu Guarantees.	 	16
			
	ARTICLE VII	  	TERMINATION	 	16
	SECTION 7.1	  	Termination.	 	16
			
	ARTICLE VIII	  	MISCELLANEOUS	 	17
	SECTION 8.1	  	Successors and Assigns.	 	17
	SECTION 8.2	  	Amendments.	 	17
	SECTION 8.3	  	Notices.	 	17
	SECTION 8.4	  	Benefit.	 	18

  

 i 

					
	SECTION 8.5	  	Governing Law.	 	18
	SECTION 8.6	  	Submission to Jurisdiction.	 	18
	SECTION 8.7	  	Counterparts.	 	19

  
  

 ii 

 GUARANTEE AGREEMENt, dated as of August 5, 2005, executed and delivered by
SOUTHCOAST FINANCIAL CORPORATION, a South Carolina corporation (the “Guarantor”) having its principal office at 530 Johnnie Dodds Boulevard, Mt. Pleasant, South Carolina 29464, and
WILMINGTON TRUST COMPANY, a Delaware banking corporation, as trustee (in such capacity, the “Guarantee Trustee”), for the benefit of the Holders (as defined herein) from time to time of
the Preferred Securities (as defined herein) of Southcoast Capital Trust III, a Delaware statutory trust (the “Issuer”). 
  
 W I T N E S S E T H
: 
  
 WHEREAS, pursuant to an Amended and Restated
Trust Agreement, dated as of the date hereof (the “Trust Agreement”), among the Guarantor, as Depositor, the Property Trustee, the Delaware Trustee and the Administrative Trustees named therein and the holders from time to time of
the Preferred Securities (as hereinafter defined), the Issuer is issuing $10,000,000 aggregate Liquidation Amount (as defined in the Trust Agreement) of its Floating Rate Preferred Securities (Liquidation Amount $1,000 per preferred security) (the
“Preferred Securities”) representing preferred undivided beneficial interests in the assets of the Issuer and having the terms set forth in the Trust Agreement; 
  
 WHEREAS, the Preferred Securities will be issued by the Issuer and the proceeds thereof, together with the
proceeds from the issuance of the Issuer’s Common Securities (as defined below), will be used to purchase the Notes (as defined in the Trust Agreement) of the Guarantor; and 
  
 WHEREAS, as incentive for the Holders to purchase Preferred Securities the Guarantor desires irrevocably and
unconditionally to agree, to the extent set forth herein, to pay to the Holders of the Preferred Securities the Guarantee Payments (as defined herein) and to make certain other payments on the terms and conditions set forth herein. 
  
 NOW, THEREFORE, in consideration of the
purchase by each Holder of Preferred Securities, which purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers this Guarantee Agreement to provide as follows for the benefit of the Holders from time to
time of the Preferred Securities: 

 ARTICLE I 
  
 INTERPRETATION AND DEFINITIONS 
  
 SECTION 1.1 Interpretation. 
  

In this Guarantee Agreement, unless the context otherwise requires: 
  
 (a) capitalized terms used in this Guarantee Agreement but not defined in the preamble hereto have the
respective meanings assigned to them in Section 1.2; 
  
 (b) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”; 
  
 (c) all references to “the Guarantee Agreement” or
“this Guarantee Agreement” are to this Guarantee Agreement as modified, supplemented or amended from time to time; 
  
 (d) all references in this Guarantee Agreement to Articles and Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified; 
  
 (e) the words
“hereby”, “herein”, “hereof” and “hereunder” and other words of similar import refer to this Guarantee Agreement as a whole and not to any particular Article, Section or other subdivision; 
  
 (f) a reference to the singular includes the plural and vice
versa; and 
  
 (g) the masculine, feminine or
neuter genders used herein shall include the masculine, feminine and neuter genders. 
  
 SECTION 1.2 Definitions. 
  
 As used in this Guarantee Agreement, the terms set forth below shall, unless the context otherwise requires, have the following meanings: 
  
 “Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person; provided, that the Issuer shall not be deemed to be an Affiliate of the Guarantor. For the purposes of this definition, “control” when used with respect to any
specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and
“controlled” have meanings correlative to the foregoing. 
  
 “Beneficiaries” means any Person to whom the Issuer is or hereafter becomes indebted or liable. 
  

 2 

 “Board of Directors” means either the board of directors of the
Guarantor or any duly authorized committee of that board. 
  
 “Common Securities” means the securities representing common undivided beneficial interests in the assets of the Issuer. 
  
 “Debt” means with respect to any Person, whether recourse is to all or a portion of the
assets of such Person, whether currently existing or hereafter incurred, and whether or not contingent and without duplication, (i) every obligation of such Person for money borrowed; (ii) every obligation of such Person evidenced by bonds,
debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (iii) every reimbursement obligation of such Person with respect to letters of credit, bankers’
acceptances or similar facilities issued for the account of such Person; (iv) every obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable arising in the ordinary
course of business); (v) every capital lease obligation of such Person; (vi) all indebtedness of such Person, whether incurred on or prior to the date of this Guarantee Agreement or thereafter incurred, for claims in respect of derivative products,
including interest rate, foreign exchange rate and commodity forward contracts, options, swaps and similar arrangements; (vii) every obligation of the type referred to in clauses (i) through (vi) of another Person and all dividends of another Person
the payment of which, in either case, such Person has guaranteed or is responsible or liable for, directly or indirectly, as obligor or otherwise; and (viii) any renewals, extensions, refundings, amendments or modifications of any obligation of the
type referred to in clauses (i) through (vii). 
  
 “Event of Default” means a default by the Guarantor on any of its payment or other obligations under this Guarantee Agreement; provided, that except with respect to a default in payment of any Guarantee Payments, the
Guarantor shall have received notice of default from the Guarantee Trustee and shall not have cured such default within thirty (30) days after receipt of such notice. 
  
 “Guarantee Payments” means the following payments or distributions, without duplication,
with respect to the Preferred Securities, to the extent not paid or made by or on behalf of the Issuer: (i) any accumulated and unpaid Distributions (as defined in the Trust Agreement) required to be paid on the Preferred Securities, to the extent
the Issuer shall have funds on hand available therefor at such time, (ii) the Redemption Price with respect to any Preferred Securities to the extent the Issuer shall have funds on hand available therefor at such time, and (iii) upon a voluntary or
involuntary termination, winding up or liquidation of the Issuer, unless Notes are distributed to the Holders, the lesser of (a) the aggregate of the Liquidation Amount of $1,000 per Preferred Security plus accumulated and unpaid Distributions on
the Preferred Securities to the date of payment, to the extent that the Issuer shall have funds available therefor at such 
  

 3 

 time and (b) the amount of assets of the Issuer remaining available for distribution to Holders in
liquidation of the Issuer after satisfaction of liabilities to creditors of the Issuer in accordance with applicable law (in either case, the “Liquidation Distribution”). 
  
 “Guarantee Trustee” means Wilmington Trust
Company in its capacity as trustee hereunder, until a Successor Guarantee Trustee, as defined below, has been appointed and has accepted such appointment pursuant to the terms of this Guarantee Agreement, and thereafter means each such Successor
Guarantee Trustee. 
  
 “Holder”
means any holder, as registered on the books and records of the Issuer, of any Preferred Securities; provided, that, in determining whether the holders of the requisite percentage of Preferred Securities have given any request, notice,
consent or waiver hereunder, “Holder” shall not include the Guarantor, the Guarantee Trustee or any Affiliate of the Guarantor or the Guarantee Trustee. 
  
 “Indenture” means the Junior Subordinated Indenture, dated as of the date hereof, as
supplemented and amended, between the Guarantor and Wilmington Trust Company, as trustee. 
  
 “List of Holders” has the meaning specified in Section 2.1. 
  
 “Majority in Liquidation Amount of the Preferred
Securities” means a vote by the Holder(s), voting separately as a class, of more than fifty percent (50%) of the aggregate Liquidation Amount of all then outstanding Preferred Securities issued by the Issuer. 
  
 “Obligations” means any costs, expenses or
liabilities (but not including liabilities related to taxes) of the Issuer, other than obligations of the Issuer to pay to holders of any Trust Securities the amounts due such holders pursuant to the terms of the Trust Securities. 
  
 “Officers’ Certificate” means, with
respect to any Person, a certificate signed by the Chief Executive Officer, Chief Financial Officer, President or a Vice President of such Person, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of such Person,
and delivered to the Guarantee Trustee. Any Officers’ Certificate delivered with respect to compliance with a condition or covenant provided for in this Guarantee Agreement (other than the certificate provided pursuant to Section 2.4)
shall include: 
  
 (a) a statement that each
officer signing the Officers’ Certificate has read the covenant or condition and the definitions relating thereto; 
  
 (b) a brief statement of the nature and scope of the examination or investigation undertaken by each officer in rendering the
Officers’ Certificate; 
  

 4 

 (c) a statement that each officer has made such examination or investigation as, in such
officer’s opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and 
  
 (d) a statement as to whether, in the opinion of each officer, such condition or covenant has been complied
with. 
  
 “Person” means a legal
person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, government or any agency or political subdivision thereof or any other
entity of whatever nature. 
  
 “Responsible Officer” means, with respect to the Guarantee Trustee, any Senior Vice President, any Vice President, any Assistant Vice President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant
Treasurer, any Trust Officer or Assistant Trust Officer or any other officer in the Corporate Trust Office of the Guarantee Trustee with direct responsibility for the administration of this Guarantee Agreement and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is referred because of that officer’s knowledge of and familiarity with the particular subject. 
  
 “Senior Debt” means the principal of and any premium and interest on (including interest
accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Guarantor whether or not such claim for post-petition interest is allowed in such proceeding) all Debt of the Guarantor, whether incurred on or prior
to the date of the Indenture or thereafter incurred, unless it is provided in the instrument creating or evidencing the same or pursuant to which the same is outstanding, that such obligations are not superior in right of payment to the Preferred
Securities; provided, however, that if the Guarantor is subject to the regulation and supervision of an “appropriate Federal banking agency” within the meaning of 12 U.S.C. 1813(q), the Guarantor shall have received the approval of
such appropriate Federal banking agency prior to issuing any such obligation if not otherwise generally approved; provided further, that Senior Debt shall not include any other debt securities, and guarantees in respect of such debt
securities, issued to any trust other than the Issuer (or a trustee of such trust), partnership or other entity affiliated with the Guarantor that is a financing vehicle of the Guarantor (a “financing entity”), in connection with the
issuance by such financing entity of equity securities or other securities that are treated as equity capital for regulatory capital purposes guaranteed by the Guarantor pursuant to an instrument that ranks pari passu with or junior in right
of payment to this Guarantee Agreement, including, without limitation, securities issued by Southcoast Capital Trust I and Southcoast Capital Trust II. 
  

“Successor Guarantee Trustee” means a successor Guarantee Trustee possessing the qualifications to act as Guarantee
Trustee under Section 4.1. 
  

 5 

 “Trust Indenture Act” means the Trust Indenture Act of 1939, as amended
and as in effect on the date of this Guarantee Agreement. 
  
 Capitalized or
otherwise defined terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Trust Agreement as in effect on the date hereof. 
  
 ARTICLE II 
  
 REPORTS 
  
 SECTION 2.1 List of Holders. 
  
 The Guarantor shall furnish or cause to be furnished to the Guarantee Trustee at such times as the Guarantee Trustee may request in writing, within thirty
(30) days after the receipt by the Guarantor of any such request, a list, in such form as the Guarantee Trustee may reasonably require, of the names and addresses of the Holders (the “List of Holders”) as of a date not more than
fifteen (15) days prior to the time such list is furnished, in each case to the extent such information is in the possession or control of the Guarantor and is not identical to a previously supplied list of Holders or has not otherwise been received
by the Guarantee Trustee in its capacity as such. The Guarantee Trustee may destroy any List of Holders previously given to it on receipt of a new List of Holders. 
  
 SECTION 2.2 Periodic Reports to the Guarantee Trustee. 
  
 The Guarantor shall deliver to the Guarantee Trustee, within one hundred and twenty (120) days after the end of each fiscal
year of the Guarantor ending after the date of this Guarantee Agreement, an Officers’ Certificate covering the preceding fiscal year, stating whether or not to the knowledge of the signers thereof the Guarantor is in default in the performance
or observance of any of the terms or provisions or any of the conditions of this Guarantee Agreement (without regard to any period of grace or requirement of notice provided hereunder) and, if the Guarantor shall be in default thereof, specifying
all such defaults and the nature and status thereof of which they have knowledge. 
  
 SECTION 2.3 Event of Default; Waiver. 
  
 The Holders of a Majority in Liquidation Amount of the Preferred Securities may, on behalf of the Holders, waive any past Event of Default and its consequences. Upon such waiver, any such Event of Default shall cease
to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Guarantee Agreement, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right
consequent therefrom. 
  

 6 

 SECTION 2.4 Event of Default; Notice. 
  
 (a) The Guarantee Trustee shall, within ninety (90) days
after the occurrence of a default, transmit to the Holders notices of all defaults actually known to the Guarantee Trustee, unless such defaults have been cured or waived before the giving of such notice, provided, that, except in the case of
a default in the payment of a Guarantee Payment, the Guarantee Trustee shall be protected in withholding such notice if and so long as the Board of Directors, the executive committee or a trust committee of directors and/or Responsible Officers of
the Guarantee Trustee in good faith determine that the withholding of such notice is in the interests of the Holders. For the purpose of this Section 2.4, the term “default” means any event that is, or after notice or lapse
of time or both would become, an Event of Default. 
  
 (b) The Guarantee Trustee shall not be deemed to have knowledge of any default or Event of Default unless the Guarantee Trustee shall have received written notice, or a Responsible Officer charged with the administration of this Guarantee
Agreement shall have received written notice, of such default or Event of Default from the Guarantor or a Holder. 
  
 ARTICLE III 
  
 POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE 
  
 SECTION 3.1 Powers and Duties of the Guarantee Trustee. 
  
 (a) This Guarantee Agreement shall be held by the Guarantee
Trustee for the benefit of the Holders, and the Guarantee Trustee shall not transfer this Guarantee Agreement to any Person except a Holder exercising its rights pursuant to Section 5.4(d) or to a Successor Guarantee Trustee upon acceptance
by such Successor Guarantee Trustee of its appointment to act as Successor Guarantee Trustee. The right, title and interest of the Guarantee Trustee shall automatically vest in any Successor Guarantee Trustee, upon acceptance by such Successor
Guarantee Trustee of its appointment hereunder, and such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered pursuant to the appointment of such Successor Guarantee Trustee.

  
 (b) The rights, immunities, duties and
responsibilities of the Guarantee Trustee shall be as provided by this Guarantee Agreement and there shall be no other duties or obligations, express or implied, of the Guarantee Trustee. Notwithstanding the foregoing, no provisions of this
Guarantee Agreement shall require the Guarantee Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not herein expressly so provided, every provision of this Guarantee Agreement relating to
the conduct or affecting the liability of or affording protection to the Guarantee Trustee shall be 
  

 7 

 subject to the provisions of this Section 3.1. To the extent that, at law or in equity, the
Guarantee Trustee has duties and liabilities relating to the Guarantor or the Holders, the Guarantee Trustee shall not be liable to any Holder for the Guarantee Trustee’s good faith reliance on the provisions of this Guarantee Agreement. The
provisions of this Guarantee Agreement, to the extent that they restrict the duties and liabilities of the Guarantee Trustee otherwise existing at law or in equity, are agreed by the Guarantor and the Holders to replace such other duties and
liabilities of the Guarantee Trustee. 
  
 (c) No
provision of this Guarantee Agreement shall be construed to relieve the Guarantee Trustee from liability for its own negligent action, negligent failure to act or own willful misconduct, except that: 
  
 (i) the Guarantee Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer of the Guarantee Trustee, unless it shall be proved that the Guarantee Trustee was negligent in ascertaining the pertinent facts upon which such judgment was made; and 
  
 (ii) the Guarantee Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a Majority in Liquidation Amount of the Preferred Securities relating to the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee, or exercising any trust or power conferred upon the Guarantee Trustee under this Guarantee Agreement. 
  
 SECTION 3.2 Certain Rights of the Guarantee Trustee. 
  
 (a) Subject to the provisions of Section 3.1: 
  
 (i) the Guarantee Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting in good faith and in accordance with the terms hereof upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document reasonably believed by it to be genuine and to have been signed, sent or presented by the proper party or parties; 
  
 (ii) any direction or act of the Guarantor contemplated by this Guarantee Agreement shall be sufficiently
evidenced by an Officers’ Certificate unless otherwise prescribed herein; 
  
 (iii) the Guarantee Trustee may consult with counsel, and the advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted to be taken by it hereunder in good faith and in reliance thereon and in accordance with such advice. Such counsel may be counsel to the Guarantee Trustee, 
  

 8 

 the Guarantor or any of its Affiliates and may be one of its employees. The Guarantee Trustee shall have
the right at any time to seek instructions concerning the administration of this Guarantee Agreement from any court of competent jurisdiction; 
  
 (iv) the Guarantee Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Guarantee Agreement
at the request or direction of any Holder, unless such Holder shall have provided to the Guarantee Trustee reasonable security or indemnity against the costs, expenses (including reasonable attorneys’ fees and expenses) and liabilities that
might be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Guarantee Trustee; provided, that, nothing contained in this Section 3.2(a)(iv) shall be taken to
relieve the Guarantee Trustee, upon the occurrence of an Event of Default, of its obligation to exercise the rights and powers vested in it by this Guarantee Agreement; 
  
 (v) the Guarantee Trustee shall not be bound to make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Guarantee Trustee, in its discretion, may make
such further inquiry or investigation into such facts or matters as it may see fit, and if the Guarantee Trustee shall determine to make such inquiry or investigation, it shall be entitled to examine the books, records and premises of the Guarantor,
personally or by agent or attorney; 
  
 (vi) the
Guarantee Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through its agents, attorneys, custodians or nominees and the Guarantee Trustee shall not be responsible for any misconduct
or negligence on the part of any such agent, attorney, custodian or nominee appointed with due care by it hereunder; 
  
 (vii) whenever in the administration of this Guarantee Agreement the Guarantee Trustee shall deem it desirable to receive instructions
with respect to enforcing any remedy or right hereunder, the Guarantee Trustee (A) may request instructions from the Holders of a Majority in Liquidation Amount of the Preferred Securities, (B) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received and (C) shall be protected in acting in accordance with such instructions; 
  
 (viii) except as otherwise expressly provided by this Guarantee Agreement, the Guarantee Trustee shall not be under any obligation to take
any action that is discretionary under the provisions of this Guarantee Agreement; 
  

 9 

 (ix) whenever, in the administration of this Guarantee Agreement, the Guarantee Trustee
shall deem it desirable that a matter be proved or established before taking, suffering or omitting to take any action hereunder, the Guarantee Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its
part, request and rely upon an Officers’ Certificate which, upon receipt of such request from the Guarantee Trustee, shall be promptly delivered by the Guarantor; and 
  
 (x) the Guarantee Trustee shall have no duty to see to any recording, filing or registration of any
instrument or other writing (or any rerecording, refilling or reregistration thereof). 
  
 (b) No provision of this Guarantee Agreement shall be deemed to impose any duty or obligation on the Guarantee Trustee to perform any act
or acts or exercise any right, power, duty or obligation conferred or imposed on it in any jurisdiction in which it shall be illegal, or in which the Guarantee Trustee shall be unqualified or incompetent in accordance with applicable law, to perform
any such act or acts or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Guarantee Trustee shall be construed to be a duty to act in accordance with such power and authority. 
  
 SECTION 3.3 Compensation. 
  
 The Guarantor agrees to pay to the Guarantee Trustee from time to time
reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provisions of law in regard to the compensation of a trustee of an express trust) and to reimburse the Guarantee Trustee upon request
for all reasonable expenses, disbursements and advances (including the reasonable fees and expenses of its attorneys and agents) incurred or made by the Guarantee Trustee in accordance with any provisions of this Guarantee Agreement. 
  
 SECTION 3.4 Indemnity. 
  
 The Guarantor agrees to indemnify and hold harmless the Guarantee Trustee
(including in its individual capacity) and any of its Affiliates and any of their officers, directors, shareholders, employees, representatives or agents from and against any loss, damage, liability, tax (other than income, franchise or other taxes
imposed on amounts paid pursuant to Section 3.3), penalty, expense or claim of any kind or nature whatsoever incurred without negligence, bad faith or willful misconduct on its part, arising out of or in connection with the acceptance or
administration of this Guarantee Agreement, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its rights, powers or duties hereunder. The Guarantee Trustee
will not claim or exact any lien or charge on any Guarantee Payments as a result of any amount due to it under this Guarantee Agreement. This indemnity shall survive the termination of this Agreement or the resignation or removal of the Guarantee
Trustee. 
  

 10 

 In no event shall the Guarantee Trustee be liable for any indirect, special, punitive or consequential
loss or damage of any kind whatsoever, including, but not limited to, lost profits, even if the Guarantee Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action. 
  
 In no event shall the Guarantee Trustee be liable for any failure or delay in
the performance of its obligations hereunder because of circumstances beyond its control, including, but not limited to, acts of God, flood, war (declared or undeclared), terrorism, fire, riot, embargo or government action, including any laws,
ordinances, regulations, governmental action or the like which delay, restrict or prohibit the providing of the services contemplated by this Guarantee Agreement. 
  
 SECTION 3.5 Securities. 
  
 The Guarantee Trustee or any other agent of the Guarantee Trustee, in its individual or any other capacity, may become the owner or pledgee of Common or
Preferred Securities. 
  
 ARTICLE IV 
  
 GUARANTEE TRUSTEE 
  
 SECTION 4.1 Guarantee Trustee; Eligibility. 
  
 (a) There shall at all times be a Guarantee Trustee which
shall: 
  
 (i) not be an Affiliate of the
Guarantor; and 
  
 (ii) be a corporation
organized and doing business under the laws of the United States or of any State thereof, authorized to exercise corporate trust powers, having a combined capital and surplus of at least fifty million dollars ($50,000,000), subject to supervision or
examination by Federal or State authority and having an office within the United States. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of such supervising or examining authority, then,
for the purposes of this Section 4.1, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. 
  
 (b) If at any time the Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Guarantee Trustee shall immediately resign in the manner and with the effect set out in Section 4.2(c). 
  
 (c) If the Guarantee Trustee has or shall acquire any “conflicting interest” within the meaning of
Section 310(b) of the Trust Indenture Act, the Guarantee Trustee shall either eliminate such interest or resign in the manner and with the effect set out in Section 4.2(c). 
  

 11 

 SECTION 4.2 Appointment, Removal and Resignation of the Guarantee Trustee. 
  
 (a) Subject to Section 4.2(b), the Guarantee Trustee
may be appointed or removed without cause at any time by the Guarantor, except during an Event of Default. 
  
 (b) The Guarantee Trustee shall not be removed until a Successor Guarantee Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Guarantee Trustee and delivered to the Guarantor. 
  
 (c) The Guarantee Trustee appointed hereunder shall hold office until a Successor Guarantee Trustee shall have been appointed or until its
removal or resignation. The Guarantee Trustee may resign from office (without need for prior or subsequent accounting) by an instrument in writing executed by the Guarantee Trustee and delivered to the Guarantor, which resignation shall not take
effect until a Successor Guarantee Trustee has been appointed and has accepted such appointment by instrument in writing executed by such Successor Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee Trustee. 
  
 (d) If no Successor Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within thirty (30) days after delivery to the Guarantor of an instrument of resignation, the resigning Guarantee Trustee may petition, at the expense of the Guarantor, any
court of competent jurisdiction for appointment of a Successor Guarantee Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Successor Guarantee Trustee. 
  
 ARTICLE V 
  
 GUARANTEE 
  
 SECTION 5.1 Guarantee. 
  
 (a) The Guarantor irrevocably and unconditionally agrees to pay in full to the Holders the Guarantee Payments (without duplication of
amounts theretofore paid by or on behalf of the Issuer), as and when due, regardless of any defense (except for the defense of payment by the Issuer), right of set-off or counterclaim which the Issuer may have or assert. The Guarantor’s
obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by the Guarantor to the Holders or by causing the Issuer to pay such amounts to the Holders. The Guarantor shall give prompt written notice to the
Guarantee Trustee in the event it makes any direct payment to the Holders hereunder. 
  

 12 

 (b) The Guarantor hereby also agrees to assume any and all Obligations of the Issuer,
and, in the event any such Obligation is not so assumed, subject to the terms and conditions hereof, the Guarantor hereby irrevocably and unconditionally guarantees to each Beneficiary the full payment, when and as due, of any and all Obligations to
such Beneficiaries. This Guarantee is intended to be for the Beneficiaries who have received notice hereof. 
  
 SECTION 5.2 Waiver of Notice and Demand. 
  
 The Guarantor hereby waives notice of acceptance of the Guarantee Agreement and of any liability to which it applies or may apply, presentment, demand for
payment, any right to require a proceeding first against the Guarantee Trustee, Issuer or any other Person before proceeding against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and
demands. 
  
 SECTION 5.3 Obligations Not Affected.

  
 The obligations, covenants, agreements and duties of the
Guarantor under this Guarantee Agreement shall in no way be affected or impaired by reason of the happening from time to time of any of the following: 
  
 (a) the release or waiver, by operation of law or otherwise, of the performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Preferred Securities to be performed or observed by the Issuer; 
  
 (b) the extension of time for the payment by the Issuer of all or any portion of the Distributions (other than an extension of time for
payment of Distributions that results from the extension of any interest payment period on the Notes as provided in the Indenture), Redemption Price, Liquidation Distribution or any other sums payable under the terms of the Preferred Securities or
the extension of time for the performance of any other obligation under, arising out of, or in connection with, the Preferred Securities; 
  
 (c) any failure, omission, delay or lack of diligence on the part of the Holders to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Holders pursuant to the terms of the Preferred Securities, or any action on the part of the Issuer granting indulgence or extension of any kind; 
  
 (d) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Issuer or any of the assets of the Issuer; 
  
 (e) any invalidity of, or defect or deficiency in, the
Preferred Securities; 
  

 13 

 (f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred;
or 
  
 (g) any other circumstance whatsoever that
might otherwise constitute a legal or equitable discharge or defense of a guarantor, it being the intent of this Section 5.3 that the obligations of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances.

  
 There shall be no obligation of the Holders to give notice to,
or obtain the consent of, the Guarantor with respect to the happening of any of the foregoing. 
  
 SECTION 5.4 Rights of Holders. 
  
 The Guarantor expressly acknowledges that: (a) this Guarantee Agreement will be deposited with the Guarantee Trustee to be held for the benefit of the Holders; (b) the Guarantee Trustee has the right to enforce this Guarantee Agreement on
behalf of the Holders; (c) the Holders of a Majority in Liquidation Amount of the Preferred Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee in respect of
this Guarantee Agreement or exercising any trust or power conferred upon the Guarantee Trustee under this Guarantee Agreement; and (d) any Holder may institute a legal proceeding directly against the Guarantor to enforce its rights under this
Guarantee Agreement, without first instituting a legal proceeding against the Guarantee Trustee, the Issuer or any other Person. 
  
 SECTION 5.5 Guarantee of Payment. 
  
 This Guarantee Agreement creates a guarantee of payment and not of collection. This Guarantee Agreement will not be discharged except by payment of the
Guarantee Payments in full (without duplication of amounts theretofore paid by the Issuer) or upon distribution of Notes to Holders as provided in the Trust Agreement. 
  
 SECTION 5.6 Subrogation. 
  
 The Guarantor shall be subrogated to all (if any) rights of the Holders against the Issuer in respect of any amounts paid to the Holders by the Guarantor
under this Guarantee Agreement and shall have the right to waive payment by the Issuer pursuant to Section 5.1; provided, that, the Guarantor shall not (except to the extent required by mandatory provisions of law) be entitled to
enforce or exercise any rights it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this Guarantee Agreement, if, at the time of any such payment, any amounts are due and
unpaid under this Guarantee Agreement. If any amount shall be paid to the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such amount in trust for the Holders and to pay over such amount to the Holders. 
  

 14 

 SECTION 5.7 Independent Obligations. 
  
 The Guarantor acknowledges that its obligations hereunder are independent of
the obligations of the Issuer with respect to the Preferred Securities and that the Guarantor shall be liable as principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Guarantee Agreement notwithstanding the
occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 5.3. 
  
 SECTION 5.8 Enforcement. 
  
 A Beneficiary may enforce the Obligations of the Guarantor contained in Section 5.1(b) directly against the Guarantor, and the Guarantor waives any
right or remedy to require that any action be brought against the Issuer or any other person or entity before proceeding against the Guarantor. 
  
 ARTICLE VI 
  
 COVENANTS AND SUBORDINATION 
  
 SECTION 6.1 Dividends, Distributions and Payments. 
  
 So long as any Preferred Securities remain outstanding, if there shall have occurred and be continuing an Event of Default or the Guarantor shall have
entered into an Extension Period as provided for in the Indenture and such period, or any extension thereof, shall have commenced and be continuing, then the Guarantor may not (a) declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make liquidation payment with respect to, any of the Guarantor’s capital stock or (b) make any payment of principal of or any interest or premium on or repay, repurchase or redeem any debt securities of the Guarantor that
rank pari passu in all respects with or junior in interest to the Preferred Securities (other than (i) repurchases, redemptions or other acquisitions of shares of capital stock of the Guarantor in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of any one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase plan or in connection with the issuance of
capital stock of the Guarantor (or securities convertible into or exercisable for such capital stock) as consideration in an acquisition transaction entered into prior to the occurrence of such Event of Default or the applicable Extension Period,
(ii) as a result of an exchange or conversion of any class or series of the Guarantor’s capital stock (or any capital stock of a subsidiary of the Guarantor) for any class or series of the Guarantor’s capital stock or any class of series
of the Guarantor’s indebtedness for any class or series of the Guarantor’s capital stock, (iii) the purchase of fractional interests in shares of the Guarantor’s capital stock pursuant to the conversions or exchange provisions of such
capital stock or the security being converted or exchanged, (iv) any declaration of a dividend in connection with any rights plan, the issuance of rights, stock or other property under any rights plan or the redemption or repurchase of rights
pursuant thereto, or (v) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is
being paid or ranks pari passu with or junior to such stock). 
  

 15 

 SECTION 6.2 Subordination. 
  
 The obligations of the Guarantor under this Guarantee Agreement will constitute unsecured obligations of the Guarantor and
will rank subordinate and junior in right of payment to all Senior Debt of the Guarantor. 
  
 SECTION 6.3 Pari Passu Guarantees. 
  
 (a) The obligations of the Guarantor under this Guarantee Agreement shall rank pari passu with the obligations of the Guarantor under any similar guarantee agreements issued by the Guarantor with respect to
preferred securities (if any) similar to the Preferred Securities, issued by trusts other than the Issuer established or to be established by the Guarantor (if any), in each case similar to the Issuer, including, without limitation, the Guarantee
Agreement, dated as of May 3, 2002, issued by the Guarantor with respect to the preferred securities issued by Southcoast Capital Trust I and the Guarantee Agreement, dated as of December 16, 2002, issued by the Guarantor with respect to the
preferred securities issued by Southcoast Capital Trust II. 
  
 (b) The right of the Guarantor to participate in any distribution of assets of any of its subsidiaries upon any such subsidiary’s liquidation or reorganization or otherwise is subject to the prior claims of
creditors of that subsidiary, except to the extent the Guarantor may itself be recognized as a creditor of that subsidiary. Accordingly, the Guarantor’s obligations under this Guarantee will be effectively subordinated to all existing and
future liabilities of the Guarantor’s subsidiaries, and claimants should look only to the assets of the Guarantor for payments thereunder. This Guarantee does not limit the incurrence or issuance of other secured or unsecured debt of the
Guarantor, including Senior Debt of the Guarantor, under any indenture or agreement that the Guarantor may enter into in the future or otherwise. 
  
 ARTICLE VII 
  
 TERMINATION 
  
 SECTION 7.1 Termination. 
  
 This Guarantee Agreement shall terminate and be of no further force and effect upon (a) full payment of the Redemption Price of all Preferred Securities, (b) the distribution of Notes to the Holders in exchange for all of the Preferred
Securities or (c) full payment of the amounts payable in accordance with the Trust Agreement upon liquidation of the Issuer. Notwithstanding the foregoing, this Guarantee Agreement will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder must restore payment of any sums paid with respect to Preferred Securities or this Guarantee Agreement. The obligations of the Guarantor under Sections 3.3 and 3.4 shall survive any such termination or the
resignation and removal of the Guarantee Trustee. 
  

 16 

 ARTICLE VIII 
  
 MISCELLANEOUS 
  
 SECTION 8.1 Successors and Assigns. 
  
 All guarantees and agreements contained in this Guarantee Agreement shall bind the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders of the Preferred Securities then outstanding. Except in connection with a consolidation, merger or sale involving the Guarantor that is permitted under Article VIII of the Indenture and
pursuant to which the successor or assignee agrees in writing to perform the Guarantor’s obligations hereunder, the Guarantor shall not assign its rights or delegate its obligations hereunder without the prior approval of the Holders of a
Majority in Liquidation Amount of the Preferred Securities. 
  
 SECTION 8.2 Amendments. 
  
 Except with respect
to any changes that do not adversely affect the rights of the Holders in any material respect (in which case no consent of the Holders will be required), this Guarantee Agreement may only be amended with the prior approval of the Guarantor, the
Guarantee Trustee and the Holders of not less than a Majority in Liquidation Amount of the Preferred Securities. The provisions of Article VI of the Trust Agreement concerning meetings or consents of the Holders shall apply to the giving of such
approval. 
  
 SECTION 8.3 Notices. 
  
 Any notice, request or other communication required or permitted to be given
hereunder shall be in writing, duly signed by the party giving such notice, and delivered, telecopied or mailed by first class mail as follows: 
  
 (a) if given to the Guarantor, to the address or facsimile number set forth below or such other address, facsimile number or to the
attention of such other Person as the Guarantor may give notice to the Guarantee Trustee and the Holders: 
  
 Southcoast Financial Corporation 
 530 Johnnie Dodds Boulevard 
 Mt. Pleasant, South Carolina 29464 
 Facsimile No.: (843) 216-3072 
 Attention: Chief Financial Officer 
  
 (b) if given to the Issuer, at the Issuer’s address or facsimile number set forth below or such other address, facsimile number or to the attention of such other Person as the Issuer may give notice to the
Guarantee Trustee and the Holders: 
  

 17 

 Southcoast Capital Trust III 
 c/o Southcoast Financial Corporation 
 530 Johnnie Dodds Boulevard 
 Mt. Pleasant, South Carolina 29464 
 Facsimile No.: (843) 216-3072 
 Attention: Administrative Trustee 
  
 (c) if given to the Guarantee Trustee, at the address or facsimile number set forth below or such other address, facsimile number or to the attention of such other Person as the Guarantee Trustee may give notice to
the Guarantor and the Holders: 
  
 Wilmington
Trust Company 
 Rodney Square North, 1100 North Market Street 
 Wilmington, Delaware 19890-0001 
 Facsimile No.: (302) 636-4140 
 Attention: Corporate Capital Markets 
  
 (d) if given to any Holder, at the address set forth on the
books and records of the Issuer. 
  
 All notices hereunder shall
be deemed to have been given when received in person, telecopied with receipt confirmed, or mailed by first class mail, postage prepaid, except that if a notice or other document is refused delivery or cannot be delivered because of a changed
address of which no notice was given, such notice or other document shall be deemed to have been delivered on the date of such refusal or inability to deliver. 
  

SECTION 8.4 Benefit. 
  
 This Guarantee Agreement is solely for the benefit of the Holders and is not separately transferable from the Preferred Securities. 
  
 SECTION 8.5 Governing Law. 
  
 This Guarantee Agreement and the rights and obligations of each party
hereto, shall be construed and enforced in accordance with and governed by the laws of the State of New York without reference to its conflict of laws provisions (other than Section 5-1401 of the General Obligations Law). 
  
 SECTION 8.6 Submission to Jurisdiction. 
  
 ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH
RESPECT TO OR ARISING OUT OF THIS GUARANTEE AGREEMENT MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE
SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF THIS GUARANTEE AGREEMENT, EACH 
  

 18 

 PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTEE AGREEMENT. 
  
 SECTION 8.7 Counterparts. 
  
 This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument. 
  
 [THE
NEXT PAGE IS THE SIGNATURE PAGE] 
  

 19 

 IN WITNESS WHEREOF, the undersigned have executed this Guarantee Agreement as of the date first above
written. 
  

			
	SOUTHCOAST FINANCIAL CORPORATION
		
	By:	 	  

	Name	 	 
	Title:	 	 
	
	 WILMINGTON TRUST COMPANY,
     not in its individual capacity, but solely as
 Guarantee Trustee

		
	By:	 	  

	Name	 	 
	Title:Placement Agreement among Registrant, Southcoast Cap Trust III and Credit Suisse

 EXHIBIT 10.17 
  
 PLACEMENT AGREEMENT 
  
 AMONG 
  
  
 SOUTHCOAST FINANCIAL CORPORATION,  
  
  
 SOUTHCOAST CAPITAL TRUST III 
  
  
 AND 
  
  
 CREDIT SUISSE FIRST BOSTON LLC 
  
  

  
  
 Dated as of August 5, 2005 
  
  

  
  

 Southcoast Financial Corporation 
 $10,000,000 Preferred Securities 
  
 Floating Rate Preferred Securities 
 (Liquidation Amount $1,000 per Preferred Security) 
  
 PLACEMENT AGREEMENT 
  

  
 August 5, 2005 
  
 Credit Suisse First Boston LLC 
 Eleven Madison Avenue 
 New York, New York 10010 
  
 Ladies and Gentlemen: 
  
 Southcoast Financial Corporation, a South Carolina corporation (the “Company”), and its financing subsidiary, Southcoast Capital Trust III, a Delaware statutory trust (the “Trust,” and hereinafter together with the
Company, the “Offerors”), hereby confirm their agreement (this “Agreement”) with you as placement agent (the “Placement Agent”), as follows: 
  
 Section 1. Issuance and Sale of Securities. 
  

1.1 Introduction. The Offerors propose to issue and sell at the Closing (as defined in Section 2.3.1 hereof) TEN MILLION ($10,000,000) DOLLARS
of the Trust’s Floating Rate Preferred Securities, with a liquidation amount of $1,000 per preferred security, bearing a variable rate of interest per annum, reset quarterly, equal to LIBOR (as defined in the Indenture (as defined below)) plus
1.50% (the “Preferred Securities”), directly or indirectly, to Credit Suisse First Boston, acting through its Cayman Islands branch, a Swiss banking corporation (the “Purchaser”), pursuant to the terms of the Preferred Securities
Subscription Agreement entered into, or to be entered into on or prior to the Closing Date (as defined in Section 2.3.1 hereof), between the Offerors and the Purchaser (the “Subscription Agreement”), the form of which is attached hereto as
Exhibit A and incorporated herein by this reference. 
  
 1.2 Operative Agreements. The Preferred Securities shall be fully and unconditionally guaranteed on a subordinated basis by the Company with respect to distributions and amounts payable upon liquidation, redemption or repayment (the
“Guarantee”) pursuant and subject to the Guarantee Agreement (the “Guarantee Agreement”), to be dated as of the Closing Date and executed and delivered by the Company and Wilmington Trust Company, as guarantee trustee (the
“Guarantee Trustee”), for the benefit from time to time of the holders of the Preferred Securities. The entire proceeds from the sale by the Trust to the holders of the Preferred Securities shall be combined with the entire proceeds from
the sale by the Trust to the Company of its common securities (the “Common Securities”), and shall be used by the Trust to purchase TEN MILLION THREE HUNDRED TEN THOUSAND ($10,310,000) DOLLARS in principal amount of the Floating Rate
Junior Subordinated Notes (the “Junior Subordinated Notes”) of the Company. The Preferred Securities and the Common Securities of the Trust shall 
  

 2 

 be issued pursuant to an Amended and Restated Trust Agreement among Wilmington Trust Company, as property trustee (the
“Property Trustee”), and as Delaware trustee (the “Delaware Trustee”) the Administrative Trustees named therein and the Company, to be dated as of the Closing Date and in substantially the form heretofore delivered to the
Placement Agent (the “Trust Agreement”). The Junior Subordinated Notes shall be issued pursuant to an Indenture (the “Indenture”), to be dated as of the Closing Date, between the Company and Wilmington Trust Company, as indenture
trustee (the “Indenture Trustee”). The documents identified in this Section 1.2 and in Section 1.1 are referred to herein as the “Operative Documents.” The Preferred Securities, the Common Securities and the Junior
Subordinated Notes are collectively referred to as the “Securities.” All other capitalized terms used but not defined in this Agreement shall have the meanings ascribed to them in the Indenture. 
  
 1.3 Rights of Purchaser. The Preferred Securities shall be offered and
sold by the Trust, directly or indirectly, to the Purchaser without registration of any of the Preferred Securities, the Junior Subordinated Notes or the Guarantee under the Securities Act of 1933, as amended (the “Securities Act”), or any
other applicable securities laws in reliance upon exemptions from the registration requirements of the Securities Act and other applicable securities laws. The Offerors agree that this Agreement shall be incorporated by reference into the
Subscription Agreement and the Purchaser shall be entitled to each of the benefits of the Placement Agent and the Purchaser under this Agreement and shall be entitled to enforce obligations of the Offerors under this Agreement as fully as if the
Purchaser were a party to this Agreement. The Offerors and the Placement Agent have entered into this Agreement to set forth their understanding as to their relationship and their respective rights, duties and obligations. 
  
 1.4 Legends. Upon original issuance thereof, and until such time as
the same is no longer required under the applicable requirements of the Securities Act, the Preferred Securities and Junior Subordinated Notes certificates shall each contain a legend as required pursuant to any of the Operative Documents.

  
 Section 2. Purchase of Preferred Securities. 
  
 2.1 Exclusive Rights; Purchase Price. From the date hereof until the
Closing Date (which date may be extended by mutual agreement of the Offerors and the Placement Agent), the Offerors hereby grant to the Placement Agent the exclusive right to arrange for the sale to the Purchaser of the Preferred Securities at a
purchase price equal to $1,000 per Preferred Security. The aggregate purchase price shall be TEN MILLION ($10,000,000) DOLLARS (the “Purchase Price”), which Purchase Price is equal to 100% of the stated liquidation amount of the Preferred
Securities. 
  
 2.2 Subscription. The Offerors hereby agree
to evidence their acceptance of the subscription by countersigning a copy of the Subscription Agreement and returning the same to the Placement Agent. 
  
 2.3 Closing and Delivery of Payment. 
  
 2.3.1 Closing; Closing Date. The closing (the “Closing”) for the sale and purchase of the Preferred Securities by the Offerors to the
Purchaser shall occur at the offices of Thacher 
  

 3 

 Proffitt & Wood LLP, Two World Financial Center, New York, New York 10281, or such other place as the parties hereto
shall agree at 11:00 a.m. (New York time) on August 5, 2005, or such other later date (not later than September 4, 2005) as the parties may designate (such date and time of delivery and payment for the Preferred Securities being herein called the
“Closing Date”). The Preferred Securities shall be transferred and delivered to the Purchaser or its designee against the payment of the Purchase Price to the Offerors in immediately available funds on the Closing Date to a U.S. account
designated in writing by the Company at least two (2) business days prior to the Closing Date. 
  
 2.3.2 Delivery. Delivery of the Preferred Securities shall be made at such location, and in such names and denominations, as the Purchaser shall designate at least two (2) business days in advance of the
Closing Date. The Company and the Trust agree to have the Preferred Securities available for inspection and checking by the Purchaser in New York, New York not later than 1:00 P.M., New York time, on the business day prior to the Closing Date.

  
 2.4 Placement Agents’ Fees and Expenses.

  
 2.4.1 Placement Agents’ Compensation. The Trust
shall use the proceeds from the sale of the Preferred Securities, together with the proceeds from the sale of the Common Securities, to purchase the Junior Subordinated Notes. The Company shall pay no fees or commissions (the “Commission”)
to the Placement Agent. The Placement Agent shall be responsible for the following expenses: (i) rating agency costs and expenses and (ii) any fee payable to the Company’s introducing agent; provided, that such introducing agent has an
agreement with the Placement Agent, but excluding the fees and expenses set forth in Section 2.4.2 hereof. 
  
 2.4.2 Costs and Expenses. The Company hereby covenants and agrees that it shall pay or cause to be paid (directly or by reimbursement) all costs
and expenses incident to the performance of the obligations of the Offerors under this Agreement, whether or not the transactions contemplated herein are consummated or this Agreement is terminated, including (i) all costs and expenses incident to
the authorization, issuance, sale and delivery of the Preferred Securities and any taxes payable in connection therewith; (ii) the fees and expenses of qualifying the Preferred Securities under the securities laws of the several jurisdictions as
provided in Section 6.4; (iii) the fees and expenses of the counsel, the accountants and any other experts or advisors retained by the Company or the Trust which counsel fees and expenses incurred in connection with the closing of the
transactions contemplated hereby, in an amount up to $10,000, shall be reimbursed by the Purchaser on the Closing Date; and (iv) the fees and all reasonable expenses of the Guarantee Trustee, the Property Trustee, the Delaware Trustee, the Indenture
Trustee and any other trustee or paying agent appointed under the Operative Documents, including the fees and disbursements of counsel for such trustees, except for any acceptance fee and annual administrative fees of any such trustee and the fees
and disbursements of counsel to such trustees incurred in connection with the closing of the transactions contemplated thereby, which shall be paid by the Purchaser. 
  
 2.4.3 Reimbursement of Expenses. If the sale of the Preferred Securities provided for in this Agreement is not
consummated because any condition set forth in Section 3 to be satisfied by either the Company or the Trust is not satisfied, because this Agreement is terminated pursuant to Section 10 or because of any failure, refusal or inability
on the part of the Company 
  

 4 

 or the Trust to perform all obligations and satisfy all conditions on its part to be performed or satisfied hereunder
other than by a reason of a default by the Placement Agent, the Company will reimburse the Placement Agent upon demand for all reasonable out-of-pocket expenses (including the fees and expenses of each of the Placement Agent’s or
Purchaser’s counsel) that shall have been incurred by the Placement Agent or Purchaser in connection with the proposed purchase and sale of the Preferred Securities. The Company shall not in any event be liable to the Placement Agent or
Purchaser for the loss of anticipated profits from the transactions contemplated by this Agreement. 
  
 2.5 Failure to Close. If any of the conditions to the Closing specified in this Agreement shall not have been fulfilled to the satisfaction of the
Placement Agent or if the Closing shall not have occurred on or before 11:00 a.m. (New York time) on September 4, 2005, then each party hereto, notwithstanding anything to the contrary in this Agreement, shall be relieved of all further obligations
under this Agreement without thereby waiving any rights it may have by reason of such nonfulfillment or failure; provided, however, that the obligations of the parties under Sections 2.4, and 8 shall not be so relieved and shall
continue in full force and effect. 
  
 Section 3. Closing Conditions. The
obligations of the parties under this Agreement on the Closing Date are subject to the following conditions: 
  
 3.1 Accuracy of Representations and Warranties. The representations and warranties contained in this Agreement, and the statements of the Offerors
made in any certificates pursuant to this Agreement, shall be accurate as of the date of delivery of the Preferred Securities: 
  
 3.2 Opinions of Counsel. On the Closing Date, the Placement Agent shall have received the following favorable opinions or certificate, as the case
may be, each dated as of the Closing Date: (a) from Thacher Proffitt & Wood LLP, special counsel for the Placement Agent and Purchaser and addressed to the Placement Agent and Purchaser in substantially the form set forth on Exhibit B-1
attached hereto and incorporated herein by this reference, (b) from Haynsworth Sinkler Boyd, P.A., counsel for the Offerors, or an Officers’ Certificate, addressed to the Purchaser and the Placement Agent in substantially the form set forth on
Exhibit B-2 attached hereto and incorporated herein by this reference, (c) from Thacher Proffitt & Wood LLP, special tax counsel for the Placement Agent and Purchaser and addressed to the Placement Agent and Purchaser in substantially the
form set forth on Exhibit B-3 attached hereto and incorporated herein by this reference, (d) from Morris, James, Hitchens & Williams LLP., special Delaware counsel to the Trust and addressed to the Purchaser, the Placement Agent and the
Offerors, in substantially the form set forth on Exhibit B-4 attached hereto and incorporated herein by this reference, and (e) from Morris, James, Hitchens & Williams LLP, special counsel to the Indenture Trustee, the Property Trustee,
the Delaware Trustee and the Guarantee Trustee and addressed to the Purchaser, the Placement Agent and the Offerors, in substantially the form set forth on Exhibit B-5 attached hereto and incorporated herein by this reference. Each opinion
addressed to the Purchaser shall state that the first entity, if any, to which the Purchaser transfers any of the Preferred Securities (each, a “Subsequent Purchaser”) shall be entitled to rely on such opinion. 

 5 

 3.3 Officer’s Certificate. The Company shall have furnished to the Placement Agent and the
Purchaser a certificate of the Company, signed by the Chief Executive Officer, President or an Executive Vice President and by the Chief Financial Officer, Treasurer or Assistant Treasurer of the Company, and the Trust shall have furnished to the
Placement Agent and the Purchaser a certificate of the Trust, signed by an Administrative Trustee of the Trust, in each case dated the Closing Date, and, in the case of the Company, as to 3.3.1 and 3.3.2 below and, in the case of the
Trust, as to 3.3.1 below: 
  
 3.3.1 the representations and
warranties in this Agreement are true and correct on and as of the Closing Date with the same effect as if made on the Closing Date, and the Company and the Trust have complied with all the agreements and satisfied all the conditions on either of
their part to be performed or satisfied at or prior to the Closing Date; and 
  
 3.3.2 since the date of the Interim Financial Statements (as defined below), there has been no material adverse change in the condition (financial or other), earnings, business, prospects or assets of the Company and
its subsidiaries, whether or not arising from transactions occurring in the ordinary course of business. 
  
 3.4 No Subsequent Change. Subsequent to the execution of this Agreement, there shall not have been any change, or any development involving a
prospective change, in or affecting the condition (financial or other), earnings, business, prospects or assets of the Company and its subsidiaries, whether or not occurring in the ordinary course of business, the effect of which is, in the
Placement Agent’s or Purchaser’s judgment, so material and adverse as to make it impractical or inadvisable to proceed with the purchase of the Preferred Securities. 
  
 3.5 Purchase Permitted by Applicable Laws; Legal Investment. The purchase of and payment for the Preferred Securities
as described in this Agreement and pursuant to the Subscription Agreement shall (a) not be prohibited by any applicable law or governmental regulation, (b) not subject the Purchaser or the Placement Agent to any penalty or, in the reasonable
judgment of the Purchaser and the Placement Agent, other onerous conditions under or pursuant to any applicable law or governmental regulation, and (c) be permitted by the laws and regulations of the jurisdictions to which the Purchaser and the
Placement Agent are subject. 
  
 3.6 Consents and Permits.
The Company and the Trust shall have received all consents, permits and other authorizations, and made all such filings and declarations, as may be required from any person or entity pursuant to any law, statute, regulation or rule (federal, state,
local and foreign), or pursuant to any agreement, order or decree to which the Company or the Trust is a party or to which either is subject, in connection with the transactions contemplated by this Agreement. 
  
 3.7 Information. Prior to or on the Closing Date, the Offerors shall
have furnished to the Placement Agent, the Purchaser and their respective counsel such further information, certificates, opinions and documents as the Placement Agent, Purchaser or their respective counsel may reasonably request. 
  
 If any of the conditions specified in this Section 3 shall not have
been fulfilled when and as required in this Agreement, or if any of the opinions, certificates and documents mentioned above or elsewhere in this Agreement shall not be reasonably satisfactory in form and substance 
  

 6 

 to the Placement Agent, the Purchaser or their respective counsel, this Agreement and all the Placement Agent’s
obligations hereunder may be canceled at, or any time prior to, the Closing Date by the Placement Agent. Notice of such cancellation shall be given to the Offerors in writing or by telephone or facsimile confirmed in writing. 
  
 Each certificate signed by any trustee of the Trust or any officer of the
Company and delivered to the Placement Agent, Purchaser or their respective counsel in connection with the Operative Documents and the transactions contemplated hereby and thereby shall be deemed to be a representation and warranty of the Trust
and/or the Company, as the case may be, and not by such trustee or officer in any individual capacity. 
  
 Section 4. Representations and Warranties of the Offerors. The Offerors jointly and severally represent and warrant to the Placement Agent and the Purchaser as of the date hereof and as of the Closing Date as
follows: 
  
 4.1 Securities Laws Matters.

  
 (i) Neither the Company nor the Trust, nor any of their
“Affiliates” (as defined in Rule 501(b) of Regulation D under the Securities Act (“Regulation D”)), nor any person acting on any of their behalf (except for the Placement Agent, as to which neither the Company nor the Trust make
any representation) has, directly or indirectly, made offers or sales of any security, or solicited offers to buy any security, under circumstances that would require the registration under the Securities Act of any of the Securities. 
  
 (ii) Neither the Company nor the Trust, nor any of their Affiliates, nor any
person acting on its or their behalf (except for the Placement Agent, as to which neither the Company nor the Trust make any representation) has (i) offered for sale or solicited offers to purchase the Securities, (ii) engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of any of the Securities, or (iii) engaged in any “directed selling efforts” within the meaning of Regulation S under the
Securities Act (“Regulation S”) with respect to the Securities. 
  
 (iii) The Securities (i) are not and have not been listed on a national securities exchange registered under section 6 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or quoted on a
U.S. automated interdealer quotation system and (ii) are not of an open-end investment company, unit investment trust or face-amount certificate company that are, or are required to be, registered under section 8 of the Investment Company Act of
1940, as amended (the “Investment Company Act”), and the Securities otherwise satisfy the eligibility requirements of Rule 144A(d)(3) promulgated pursuant to the Securities Act (“Rule 144A(d)(3)”). 
  
 (iv) Neither the Company nor the Trust is, and, immediately following
consummation of the transactions contemplated hereby and the application of the net proceeds therefrom, neither the Company nor the Trust will be, an “investment company” or an entity “controlled” by an “investment
company,” in each case within the meaning of section 3(a) of the Investment Company Act. 
  

 7 

 (v) Neither the Company nor the Trust has paid or agreed to pay to any person or entity, directly or
indirectly, any fees or other compensation for soliciting another to purchase any of the Securities. 
  
 4.2 Standing and Qualification of the Trust. The Trust has been duly created and is validly existing in good standing as a statutory trust under
the Delaware Statutory Trust Act, 12 Del. C. §3801, et seq. (the “Statutory Trust Act”) with all requisite power and authority to own property and to conduct the business it transacts and proposes to transact and to enter into
and perform its obligations under the Operative Documents to which it is a party. The Trust is duly qualified to transact business as a foreign entity and is in good standing in each jurisdiction in which such qualification is necessary, except
where the failure to so qualify or be in good standing would not have a material adverse effect on the condition (financial or otherwise), earnings, business, prospects or assets of the Trust, whether or not occurring in the ordinary course of
business. The Trust is not a party to, or otherwise bound by, any agreement other than the Operative Documents. The Trust is, and under current law will continue to be, classified for federal income tax purposes as a grantor trust and not as an
association or publicly traded partnership taxable as a corporation. 
  
 4.3 Trust Agreement. The Trust Agreement has been duly authorized by the Company and, on the Closing Date specified in Section 2.3.1, will have been duly executed and delivered by the Company and the Administrative Trustees of
the Trust, and, assuming due authorization, execution and delivery by the Property Trustee and the Delaware Trustee, will be a legal, valid and binding obligation of the Company and the Administrative Trustees, enforceable against them in accordance
with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity. Each of the Administrative Trustees of the Trust is an employee of the Company or one of
its subsidiary banks and has been duly authorized by the Company to execute and deliver the Trust Agreement. To the knowledge of the Administrative Trustees, the Trust is not in violation of any provision of the Statutory Trust Act. 
  
 4.4 Guarantee Agreement and the Indenture. Each of the Guarantee and
the Indenture has been duly authorized by the Company and, on the Closing Date, will have been duly executed and delivered by the Company, and, assuming due authorization, execution and delivery by the Guarantee Trustee, in the case of the
Guarantee, and by the Indenture Trustee, in the case of the Indenture, will be a legal, valid and binding obligation of the Company enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors’ rights generally and to general principles of equity. 
  
 4.5 Preferred Securities and Common Securities. The Preferred Securities and the Common Securities have been duly authorized by the Trust and, when issued and delivered against payment therefor on the Closing
Date to the Purchaser in accordance with this Agreement and the Subscription Agreement, in the case of the Preferred Securities, and to the Company in accordance with the Common Securities Subscription Agreement between the Company and the Trust,
dated as of the Closing Date, in the case of the Common Securities, will be validly issued, fully paid and nonassessable and will represent undivided beneficial interests in the assets of the Trust entitled to the benefits of the Trust Agreement,
enforceable against the Trust in accordance with their terms, subject to applicable bankruptcy, insolvency and similar 
  

 8 

 laws affecting creditors’ rights generally and to general principles of equity. The issuance of the Securities is
not subject to preemptive or other similar rights. On the Closing Date, all of the issued and outstanding Common Securities will be directly owned by the Company free and clear of any pledge, security interest, claim, lien or other encumbrance
(each, a “Lien”). 
  
 4.6 Junior Subordinated
Notes. The Junior Subordinated Notes have been duly authorized by the Company and, on the Closing Date, will have been duly executed and delivered to the Indenture Trustee for authentication in accordance with the Indenture and, when
authenticated in the manner provided for in the Indenture and delivered to the Trust against payment therefor in accordance with the Junior Subordinated Note Subscription Agreement between the Company and the Trust, dated as of the Closing Date,
will constitute legal, valid and binding obligations of the Company entitled to the benefits of the Indenture enforceable against the Company in accordance with their terms, subject to applicable bankruptcy, insolvency and similar laws affecting
creditors’ rights generally and to general principles of equity. 
  
 4.7 Placement Agreement. This Agreement has been duly authorized, executed and delivered by the Company and the Trust and constitutes the legal, valid and binding obligation of the Company and the Trust, enforceable against the
Company and the Trust in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity. 
  
 4.8 Defaults. Neither the issue and sale of the Common Securities, the
Preferred Securities or the Junior Subordinated Notes, nor the purchase of the Junior Subordinated Notes by the Trust, the execution and delivery of and compliance with the Operative Documents by the Company or the Trust, the consummation of the
transactions contemplated herein or therein, or the use of the proceeds therefrom, (i) will conflict with or constitute a breach of, or a default under, the Trust Agreement or the charter or bylaws of the Company or any subsidiary of the Company or
any applicable law, statute, rule, regulation, judgment, order, writ or decree of any government, governmental authority, agency or instrumentality or court, domestic or foreign, having jurisdiction over the Trust, or the Company or any of its
subsidiaries, or their respective properties or assets (collectively, “Governmental Entities”), (ii) will conflict with or constitute a violation or breach of, or a default or Repayment Event (as defined below) under, or result in the
creation or imposition of any Lien upon any property or assets of the Trust, the Company or any of the Company’s subsidiaries pursuant to any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which
(A) the Trust, the Company or any of its subsidiaries is a party or by which it or any of them may be bound, or (B) any of the property or assets of any of them is subject, or any judgment, order or decree of any court, Governmental Entity or
arbitrator, except, in the case of this clause (ii), for such conflicts, breaches, violations, defaults, Repayment Events (as defined below) or Liens which (X) would not, singly or in the aggregate, adversely affect the consummation of the
transactions contemplated by the Operative Documents and (Y) would not, singly or in the aggregate, have a material adverse effect on the condition (financial or otherwise), earnings, business, liabilities, prospects and assets (taken as a whole) or
business prospects of the Company and its subsidiaries taken as a whole, whether or not occurring in the ordinary course of business (a “Material Adverse Effect”) or (iii) require the consent, approval, authorization or order of any court
or Governmental Entity. 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 Trust or the Company or any of its subsidiaries prior to its scheduled maturity. 
  

 9 

 4.9 Organization, Standing and Qualification of the Company. The Company has been duly
incorporated and is validly existing as a corporation in good standing under the laws of South Carolina, with all requisite corporate power and authority to own, lease and operate its properties and conduct the business it transacts and proposes to
transact, and is duly qualified to transact business and is in good standing as a foreign corporation in each jurisdiction where the nature of its activities requires such qualification, except where the failure of the Company to be so qualified
would not, singly or in the aggregate, have a Material Adverse Effect. 
  
 4.10 Subsidiaries of the Company. The Company has no subsidiaries that are material to its business, financial condition or earnings other than those subsidiaries listed in Schedule 1 attached hereto (the “Significant
Subsidiaries”). Each Significant Subsidiary has been duly organized and is validly existing and in good standing under the laws of the jurisdiction in which it is chartered or organized, with all requisite power and authority to own its
properties and conduct the business it transacts and proposes to transact. Each Significant Subsidiary is duly qualified to transact business and is in good standing as a foreign entity in each jurisdiction where the nature of its activities
requires such qualification, except where the failure of any such Significant Subsidiary to be so qualified would not, singly or in the aggregate, have a Material Adverse Effect. 
  
 4.11 Government Licenses. Each of the Trust, the Company and each of its subsidiaries hold all necessary approvals,
authorizations, orders, licenses, certificates and permits (collectively, “Government Licenses”) of and from Governmental Entities necessary to conduct its respective business as now being conducted, and neither the Trust, the Company nor
any of the Company’s subsidiaries has received any notice of proceedings relating to the revocation or modification of any such Government License, except where the failure to be so licensed or approved or the receipt of an unfavorable
decision, ruling or finding, would not, singly or in the aggregate, have a Material Adverse Effect; all of the Government Licenses are valid and in full force and effect, except where the invalidity or the failure of such Government Licenses to be
in full force and effect, would not, singly or in the aggregate, have a Material Adverse Effect; and the Company and its subsidiaries are in compliance with all applicable laws, rules, regulations, judgments, orders, decrees and consents, except
where the failure to be in compliance would not, singly or in the aggregate, have a Material Adverse Effect. 
  
 4.12 Stock. All of the issued and outstanding shares of capital stock of the Company and each of its subsidiaries are validly issued, fully paid
and nonassesssable; all of the issued and outstanding capital stock of each subsidiary of the Company is owned by the Company, directly or through subsidiaries, free and clear of any Lien, claim or equitable right; and none of the issued and
outstanding capital stock of the Company or any subsidiary was issued in violation of any preemptive or similar rights arising by operation of law, under the charter or by-laws of such entity or under any agreement to which the Company or any of its
subsidiaries is a party. 
  
 4.13 Property. Each of the
Trust, the Company and each subsidiary of the Company has good and marketable title to all of its respective real and personal properties, in each case 
  

 10 

 free and clear of all Liens and defects, except for those that would not, singly or in the aggregate, have a Material
Adverse Effect; and all of the leases and subleases under which the Trust, the Company or any subsidiary of the Company holds properties are in full force and effect, except where the failure of such leases and subleases to be in full force and
effect would not, singly or in the aggregate, have a Material Adverse Effect and none of the Trust, the Company or any subsidiary of the Company has any notice of any claim of any sort that has been asserted by anyone adverse to the rights of the
Trust, the Company or any subsidiary of the Company under any such leases or subleases, or affecting or questioning the rights of such entity to the continued possession of the leased or subleased premises under any such lease or sublease, except
for such claims that would not, singly or in the aggregate, have a Material Adverse Effect. 
  
 4.14 Conflicts, Authorizations and Approvals. Neither the Company nor any of its subsidiaries is (i) in violation of its respective charter, bylaws or similar organizational documents or (ii) in default in the
performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which either the Company or any such subsidiary is a party
or by which it or any of them may be bound or to which any of the property or assets of any of them is subject, except, in the case of clause (ii), where such default would not, singly or in the aggregate, have a Material Adverse Effect. No filing
with, or authorization, approval, consent, license, order, registration, qualification or decree of, any Governmental Entity, other than those that have been made or obtained, is necessary or required for the performance by the Trust or the Company
of their respective obligations under the Operative Documents, as applicable, or the consummation by the Trust and the Company of the transactions contemplated by the Operative Documents. 
  
 4.15 Holding Company Registration and Deposit Insurance. The Company is duly registered as a bank holding company
under the Bank Holding Company Act of 1956, as amended (the “Bank Holding Company Act”), and the regulations of the Board of Governors of the Federal Reserve System (the “Federal Reserve”), and the deposit accounts
of the Company’s subsidiary depository institutions are insured by the Federal Deposit Insurance Corporation (“FDIC”) to the fullest extent permitted by law and the rules and regulations of the FDIC, and no proceeding for the
termination of such insurance are pending or, to the knowledge of the Company or the Trust after due inquiry, threatened. 
  
 4.16 Financial Statements. 
  
 (a) The audited consolidated financial statements (including the notes thereto) and schedules of the Company and its consolidated subsidiaries at and for
the fiscal year ended December 31, 2004 (the “Financial Statements”) and the interim unaudited consolidated financial statements of the Company and its consolidated subsidiaries at and for the quarter ended June 30, 2005 (the “Interim
Financial Statements”) provided to the Placement Agent are the most recently available audited and unaudited consolidated financial statements of the Company and its consolidated subsidiaries, respectively, and fairly present in all material
respects, in accordance with U.S. generally accepted accounting principles (“GAAP”), the financial position of the Company and its consolidated subsidiaries, and the results of operations and changes in financial condition as of the dates
and for the periods therein specified, subject, in the case of Interim Financial Statements, to year-end adjustments (which 

 11 

 are expected to consist solely of normal recurring adjustments). Such consolidated financial statements and schedules
have been prepared in accordance with GAAP consistently applied throughout the periods involved (except as otherwise noted therein). 
  
 (b) The Company’s report on FRY-9C, dated June 30, 2005 (the “FRY-9C”), provided to the Placement Agent is the most recently available such
report, and the information therein fairly presents in all material respects the financial position of the Company and its subsidiaries. None of the Company or any of its subsidiaries has been requested by a Governmental Entity to republish, restate
or refile any regulatory or financial report. 
  
 (c) Since the
respective dates of the Financial Statements, Interim Financial Statements and the FRY-9C, there has not been (A) any material adverse change or development with respect to the condition (financial or otherwise), earnings, business, assets or
business prospects of the Company and its subsidiaries, taken as a whole, whether or not occurring in the ordinary course of business or (B) any dividend or distribution of any kind declared, paid or made by the Company on any class of its capital
stock other than regular quarterly dividends on the Company’s common stock. 
  
 (d) The accountants of the Company who certified the Financial Statements are independent public accountants of the Company and its subsidiaries within the meaning of the Securities Act and the rules and regulations
of the Securities and Exchange Commission (“SEC”) thereunder. 
  
 4.17 Regulatory Enforcement Matters. None of the Trust, the Company nor any of its subsidiaries, nor any of their respective officers, directors, employees or representatives, is subject or is party to, or has received any notice
from any Regulatory Agency (as defined below) that any of them will become subject or party to any investigation with respect to, any cease-and-desist order, agreement, civil monetary penalty, 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 or suggestion of, any Regulatory Agency that, in any such case, currently restricts in any material respect the conduct of their business or that in any material manner relates to their capital adequacy, their credit
policies, their management or their business (each, a “Regulatory Action”), nor has the Trust, the Company or any of its subsidiaries been advised by any Regulatory Agency that it is considering issuing or requesting any such Regulatory
Action; and 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 Trust, the Company or any of its subsidiaries, except where such unresolved
violation, criticism or exception would not, singly or in the aggregate, have a Material Adverse Effect. If the Company is a bank holding company that is subject to the Bank Holding Company Act, it is a “well-run” bank holding company that
satisfies the criteria of the Federal Reserve’s regulations at 12 C.F.R. §225.14(c). Each of the Company’s subsidiaries that is a depository institution, the accounts of which are insured by the FDIC (i) is
“well-capitalized” within the meaning of 12 U.S.C. §1831o and applicable implementing regulations thereunder; and (ii) is not, and has not been notified by any Regulatory Agency that it is, in “troubled condition” within the
meaning of 12 U.S.C. §1831i and applicable implementing regulations thereunder. As used herein, the term “Regulatory Agency” means any 
  

 12 

 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, or any court, administrative agency or commission or other governmental agency, authority or instrumentality having supervisory or regulatory authority with
respect to the Trust, the Company or any of its subsidiaries. 
  
 4.18 No Undisclosed Liabilities. None of the Trust, the Company nor any of its subsidiaries has any material liability, whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become due, including any liability for taxes (and there is no past or present fact, situation, circumstance, condition or other basis for any present or future action, suit,
proceeding, hearing, charge, complaint, claim or demand against the Company or its subsidiaries that could give rise to any such liability), except for (i) liabilities set forth in the Financial Statements or the Interim Financial Statements and
(ii) normal fluctuations in the amount of the liabilities referred to in clause (i) above occurring in the ordinary course of business of the Trust, the Company and all of its subsidiaries since the date of the most recent balance sheet included in
such Financial Statements. 
  
 4.19 Litigation. There is no
action, suit or proceeding before or by any Governmental Entity, arbitrator or court, domestic or foreign, now pending or, to the knowledge of the Company or the Trust after due inquiry, threatened against or affecting the Trust or the Company or
any of the Company’s subsidiaries, except for such actions, suits or proceedings that, if adversely determined, would not, singly or in the aggregate, adversely affect the consummation of the transactions contemplated by the Operative Documents
or have a Material Adverse Effect; and the aggregate of all pending legal or governmental proceedings to which the Trust or the Company or any of its subsidiaries is a party or of which any of their respective properties or assets is subject,
including ordinary routine litigation incidental to the business, are not expected to result in a Material Adverse Effect. 
  
 4.20 No Labor Disputes. No labor dispute with the employees of the Trust, the Company or any of its subsidiaries exists or, to the knowledge of the
executive officers of the Trust or the Company, is imminent, except those which would not, singly or in the aggregate, have a Material Adverse Effect. 
  
 4.21 Filings with the SEC. The documents of the Company filed with the SEC in accordance with the Exchange Act, from and including the commencement
of the fiscal year covered by the Company’s most recent Annual Report on Form 10-K, at the time they were or hereafter are filed by the Company with the SEC (collectively, the “1934 Act Reports”), complied and will comply in all
material respects with the requirements of the Exchange Act and the rules and regulations of the SEC thereunder (the “1934 Act Regulations”), and, at the date of this Agreement and on the Closing Date, do not and will not include 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 the light of the circumstances under which they were made, not misleading; and other than such instruments,
agreements, contracts and other documents as are filed as exhibits to the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, there are no instruments, agreements, contracts or documents of a
character described in Item 601 of Regulation S-K promulgated by the SEC to which the 
  

 13 

 Company or any of its subsidiaries is a party. The Company is in compliance with all currently applicable requirements of
the Exchange Act that were added by the Sarbanes-Oxley Act of 2002. 
  
 4.22 Deferral of Interest Payments on Junior Subordinated Notes. The Company has no present intention to exercise its option to defer payments of interest on the Junior Subordinated Notes as provided in the Indenture. The Company
believes that the likelihood that it would exercise its rights to defer payments of interest on the Junior Subordinated Notes as provided in the Indenture at any time during which the Junior Subordinated Notes are outstanding is remote because of
the restrictions that would be imposed on the Company’s ability to declare or pay dividends or distributions on, or to redeem, purchase, acquire or make a liquidation payment with respect to, any of the Company’s capital stock and on the
Company’s ability to make any payments of principal, interest or premium on, or repay, repurchase or redeem, any of its debt securities that rank pari passu in all respects with or junior in interest to the Junior Subordinated Notes.

  
 4.23 Information. The information provided by the
Company and the Trust pursuant to this Agreement does not, as of the date hereof, and will not, as of the Closing Date, contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading. 
  
 Section 5. Representations and Warranties of the Placement Agent. The Placement Agent represents and warrants to, and agrees with, the Company and the Trust as follows: 
  
 5.1 General Solicitation. Neither the Placement Agent, nor any of the Placement Agent’s affiliates, nor any
person acting on the Placement Agent’s or the Placement Agent’s Affiliate’s behalf has engaged, or will engage, in any form of “general solicitation or general advertising” (within the meaning of Regulation D under the
Securities Act) in connection with any offer or sale of the Preferred Securities. 
  
 5.2 Purchaser. The Placement Agent has made such reasonable inquiry as is necessary to determine that the Purchaser is acquiring the Preferred Securities for its own account, the Purchaser does not intend to
distribute the Preferred Securities in contravention of the Securities Act or any other applicable securities laws. 
  
 5.3 Qualified Purchasers. The Placement Agent has not offered or sold, and will not arrange for the offer or sale of, the Preferred Securities
except (i) to those the Placement Agent reasonably believes are institutional “accredited investors” (within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 of Regulation D), (ii) in an offshore transaction complying with
Rule 903 of Regulation S or (iii) in any other manner that does not require registration of the Preferred Securities under the Securities Act. In connection with each such sale, the Placement Agent has taken or will take reasonable steps to ensure
that the Purchaser is aware that (a) such sale is being made in reliance on an exemption under the Securities Act and (b) future transfers of the Preferred Securities may not be made except in compliance with applicable securities laws. 

 

 14 

 5.4 Offering Circulars. Neither the Placement Agent nor its representatives will include any
nonpublic information about the Company, the Trust or any of their affiliates in any registration statement, prospectus, offering circular or private placement memorandum used in connection with any purchase of Preferred Securities without the prior
written consent of the Trust and the Company. 
  
 Section 6. Covenants of the
Offerors. The Offerors covenant and agree with the Placement Agent and the Purchaser as follows: 
  
 6.1 Compliance with Representations and Warranties. During the period from the date of this Agreement to the Closing Date, the Offerors shall use
their best efforts and take all action necessary or appropriate to cause their representations and warranties contained in Section 4 hereof to be true as of the Closing Date, after giving effect to the transactions contemplated by this
Agreement, as if made on and as of the Closing Date. 
  
 6.2
Sale and Registration of Securities. Neither the Company nor the Trust will, nor will either of them permit any of its Affiliates to, nor will either of them permit any person acting on its or their behalf (other than the Placement Agent and
the Purchaser and their respective affiliates) to, directly or indirectly, (i) resell any Preferred Securities that have been acquired by any of them, (ii) sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the Securities Act) that would or could be integrated with the sale of the Preferred Securities in any manner that would require the registration of the Securities under the Securities Act or (iii) make offers or sales of any
such Security, or solicit offers to buy any such Security, under any circumstances that would require the registration of any of such Securities under the Securities Act. 
  
 6.3 Lock Up. Neither the Company nor the Trust will, until one hundred eighty (180) days following the Closing Date,
without the Purchaser’s prior written consent, offer, sell, contract to sell, grant any option to purchase or otherwise dispose of, directly or indirectly, (i) any Preferred Securities or other securities of the Trust other than as contemplated
by this Agreement or (ii) any other securities convertible into, or exercisable or exchangeable for, any Preferred Securities or other securities of the Trust. 
  

6.4 Qualification of Securities. The Company and the Trust will arrange for the qualification of the Preferred Securities for sale under the
laws of such jurisdictions as the Placement Agent may designate and will maintain such qualifications in effect so long as required for the sale of the Preferred Securities. The Company or the Trust, as the case may be, will promptly advise the
Placement Agent of the receipt by the Company or the Trust, as the case may be, of any notification with respect to the suspension of the qualification of the Preferred Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose. 
  
 6.5 Use of Proceeds. The
Trust shall use the proceeds from the sale of the Preferred Securities and the Common Securities to purchase the Junior Subordinated Notes from the Company. 
  

 15 

 6.6 Investment Company. So long as any of the Securities are outstanding, (i) the Securities shall
not be listed on a national securities exchange registered under section 6 of the Exchange Act or quoted in a U.S. automated interdealer quotation system, (ii) neither the Company nor the Trust shall be an open-end investment company, unit
investment trust or face-amount certificate company that is, or is required to be, registered under section 8 of the Investment Company Act, and, the Securities shall otherwise satisfy the eligibility requirements of Rule 144A(d)(3) and (iii)
neither of the Offerors shall engage, or permit any subsidiary to engage, in any activity which would cause it or any subsidiary to be an “investment company” under the provisions of the Investment Company Act. 
  
 6.7 Solicitation and Advertising. Neither the Company nor the Trust
will, nor will either of them permit any of their Affiliates or any person acting on their behalf to (other than the Placement Agent, the Purchaser or their respective affiliates), (i) engage in any “directed selling efforts” within the
meaning of Regulation S under the Securities Act or (ii) engage in any form of “general solicitation or general advertising” (within the meaning of Regulation D) in connection with any offer or sale of any of the Securities. 
  
 6.8 Compliance with Rule 144A(d)(4) under the Securities Act. So long
as any of the Securities are outstanding and are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, the Offerors will, during any period in which they are not subject to and in compliance with Section 13
or 15(d) of the Exchange Act, or the Offerors are not exempt from such reporting requirements pursuant to and in compliance with Rule 12g3-2(b) under the Exchange Act, provide to each holder of such restricted securities and to each prospective
purchaser (as designated by such holder) of such restricted securities, upon the request of such holder or prospective purchaser in connection with any proposed transfer, any information required to be provided by Rule 144A(d)(4) under the
Securities Act, if applicable. The information provided by the Offerors pursuant to this Section 6.8 will not, at the date thereof, contain any untrue statement of a material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made, not misleading. If the Company and the Trust are required to register under the Exchange Act, such reports filed in compliance with Rule 12g3-2(b) shall be sufficient
information as required above. This covenant is intended to be for the benefit of the Purchaser, the holders of the Securities, and the prospective purchasers designated by such holders, from time to time, of the Securities. 
  
 6.9 Reports. Each of the Company and the Trust shall furnish to (i)
the Placement Agent, (ii) the Purchaser and any subsequent holder of the Securities, and (iii) any beneficial owner of the Securities reasonably identified to the Company and the Trust (which identification may be made by either such beneficial
owner or by the Purchaser), a duly completed and executed certificate in the form attached hereto as Annex F, including the financial statements referenced in such Annex, which certificate and financial statements shall be so furnished by the
Company and the Trust not later than forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of the Company and not later than ninety (90) days after the end of each fiscal year of the Company. 

 
 Section 7. Covenants of the Placement Agent. The Placement Agent covenants and
agrees with the Offerors that, during the period from the date of this Agreement to the Closing Date, the Placement Agent shall use its best efforts and take all action necessary or appropriate to cause its 
  

 16 

 representations and warranties contained in Section 5 to be true as of the Closing Date, after giving effect to
the transactions contemplated by this Agreement, as if made on and as of the Closing Date. The Placement Agent further covenants and agrees not to engage in hedging transactions with respect to the Preferred Securities unless such transactions are
conducted in compliance with the Securities Act. 
  
 Section 8. Indemnification
& Contribution. 
  
 8.1 Indemnification.

  
 8.1.1 The Company and the Trust agree jointly and severally
to indemnify and hold harmless the Placement Agent, the Purchaser, the Placement Agent’s affiliates, a Subsequent Purchaser (collectively, the “Indemnified Parties”) and the Indemnified Parties’ respective directors, officers,
employees and agents and each person who “controls” the Indemnified Parties within the meaning of either the Securities Act or the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which they or
any of them may become subject under the Securities Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in any information or documents furnished or made available to the Purchaser or the Placement Agent by or on behalf of the Company, (ii) the
omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or (iii) the breach or alleged breach of any representation, warranty or agreement of either
Offeror contained herein, and agrees to reimburse each such Indemnified Party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action.
This indemnity agreement will be in addition to any liability which the Company or the Trust may otherwise have. 
  
 8.1.2 Promptly after receipt by an Indemnified Party under this Section 8 of notice of the commencement of any action, such Indemnified Party will,
if a claim in respect thereof is to be made against the indemnifying party under this Section 8, promptly notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will not
relieve the indemnifying party from liability under Section 8.1.1 above unless and to the extent that such failure results in the forfeiture by the indemnifying party of material rights and defenses and (ii) will not, in any event, relieve
the indemnifying party from any obligations to any Indemnified Party other than the indemnification obligation provided in Section 8.1.1 above. The Placement Agent shall be entitled to appoint counsel to represent the Indemnified Party in any
action for which indemnification is sought. An indemnifying party may participate at its own expense in the defense of any such action; provided, however, that counsel to the indemnifying party shall not (except with the consent of the Indemnified
Party) also be counsel to the Indemnified Party. In no event shall the indemnifying parties be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all Indemnified Parties in
connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. An indemnifying party will not, without the prior written consent of the Indemnified
Parties, settle or compromise or consent to the entry of any judgment with respect to 
  

 17 

 any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought hereunder
(whether or not the Indemnified Parties are actual or potential parties to such claim, action, suit 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, suit or proceeding. 
  
 8.2
Contribution. 
  
 8.2.1 In order to provide for just and
equitable contribution in circumstances under which the indemnification provided for in Section 8.1 hereof is for any reason held to be unenforceable for the benefit of an Indemnified Party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such Indemnified Party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Offerors, on the one hand, and the Placement Agent, on the other hand, from the offering of the Securities or (ii) if the allocation provided by clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above, but also the relative fault of the Offerors, on the one hand, and the Placement Agent, on the other hand, in connection with
the statements, omissions or breaches, which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. 
  
 8.2.2 The relative benefits received by the Offerors, on the one hand, and the Placement Agent, on the other hand, in
connection with the offering of the Securities shall be deemed to be in the same respective proportions as the total net proceeds from the offering of the Securities (before deducting expenses) received by the Offerors and the Commission received by
the Placement Agent bear to the aggregate of such net proceeds and Commission. 
  
 8.2.3 The Offerors and the Placement Agent agree that it would not be just and equitable if contribution pursuant to this Section 8.2 were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above in this Section 8.2. The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an Indemnified Party and referred to above in this
Section 8.2 shall be deemed to include any legal or other expenses reasonably incurred by such Indemnified Party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement, omission or alleged omission or breach or alleged breach. 
  
 8.2.4 Notwithstanding any provision of this Section 8 to the contrary, the Placement Agent shall not be required to
contribute any amount in excess of the amount of the Commission. 
  
 8.2.5 No person guilty of fraudulent misrepresentation (within the meaning of section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 
  

 18 

 8.2.6 For purposes of this Section 8.2, the Placement Agent, each person, if any, who controls the
Placement Agent within the meaning of section 15 of the Securities Act or section 20 of the Exchange Act and the respective partners, directors, officers, employees and agents of the Placement Agent or any such controlling person shall have the same
rights to contribution as the Placement Agent, while each officer and director of the Company, each trustee of the Trust and each person, if any, who controls the Company within the meaning of section 15 of the Securities Act or section 20 of the
Exchange Act shall have the same rights to contribution as the Offerors. 
  
 8.3 Additional Remedies. The indemnity and contribution agreements contained in this Section 8 are in addition to any liability that the Offerors may otherwise have to any Indemnified Party. 

 
 8.4 Additional Indemnification. The Company shall indemnify and
hold harmless the Trust against all loss, liability, claim, damage and expense whatsoever, as due from the Trust under Sections 8.1 through 8.3 hereof. 
  
 Section 9. Rights and Responsibilities of Placement Agent. 
  
 9.1 Reliance. In performing its duties under this Agreement, the Placement Agent shall be entitled to rely upon any
notice, signature or writing which it shall in good faith believe to be genuine and to be signed or presented by a proper party or parties. The Placement Agent may rely upon any opinions or certificates or other documents delivered by the Offerors
or their counsel or designees to either the Placement Agent or the Purchaser. 
  
 9.2 Rights of Placement Agent. In connection with the performance of its duties under this Agreement, the Placement Agent shall not be liable for any error of judgment or any action taken or omitted to be taken
unless the Placement Agent was grossly negligent or engaged in willful misconduct in connection with such performance or non-performance. No provision of this Agreement shall require the Placement Agent to expend or risk its own funds or otherwise
incur any financial liability on behalf of the Purchaser in connection with the performance of any of its duties hereunder. The Placement Agent shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement.

  
 Section 10. Termination. This Agreement shall be subject to termination
in the absolute discretion of the Placement Agent, by notice given to the Company and the Trust prior to delivery of and payment for the Preferred Securities, if prior to such time (i) a downgrading shall have occurred in the rating accorded the
Company’s debt securities or preferred stock by any “nationally recognized statistical rating organization,” as that term is used by the SEC in Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act, or such organization shall have publicly
announced that it has under surveillance or review, with possible negative implications, its rating of the Company’s debt securities or preferred stock, (ii) the Trust shall be unable to sell and deliver to the Purchaser at least $10,000,000
stated liquidation value of Preferred Securities, (iii) the Company or any of its subsidiaries that is an insured depository institution shall cease to be “adequately-capitalized” within the meaning of 12 U.S.C. Section 1831 and applicable
regulations adopted thereunder, or any formal administrative or judicial action is taken by any appropriate federal banking agency against the Company or any such insured subsidiary for 
  

 19 

 unsafe and unsound banking practices, or violations of law, (iv) a suspension or material limitation in trading in
securities generally shall have occurred on the New York Stock Exchange, (v) a suspension or material limitation in trading in any of the Company’s securities shall have occurred on the exchange or quotation system upon which the Company’s
securities are traded, if any, (vi) a general moratorium on commercial banking activities shall have been declared either by federal or South Carolina authorities or (vii) there shall have occurred any outbreak or escalation of hostilities, or
declaration by the United States of a national emergency or war or other calamity or crisis the effect of which on financial markets is such as to make it, in the Placement Agent’s or Purchaser’s judgment, impracticable or inadvisable to
proceed with the offering or delivery of the Preferred Securities. 
  
 Section 11.
Miscellaneous. 
  
 11.1 Disclosure Schedule. The
term “Disclosure Schedule,” as used herein, means the schedule, if any, attached to this Agreement that sets forth items the disclosure of which is necessary or appropriate as an exception to one or more representations or warranties
contained in Section 4 hereof. The Disclosure Schedule shall be arranged in paragraphs corresponding to the section numbers contained in Section 4. Nothing in the Disclosure Schedule shall be deemed adequate to disclose an exception to
a representation or warranty made herein unless the Disclosure Schedule identifies the exception with reasonable particularity and describes the relevant facts in reasonable detail. Without limiting the generality of the immediately preceding
sentence, the mere listing (or inclusion of a copy) of a document or other item in the Disclosure Schedule shall not be deemed adequate to disclose an exception to a representation or warranty made herein unless the representation or warranty has to
do with the existence of the document or other item itself. Information provided by the Company in response to any due diligence questionnaire shall not be deemed part of the Disclosure Schedule and shall not be deemed to be an exception to one or
more representations or warranties contained in Section 4 hereof unless such information is specifically included on the Disclosure Schedule in accordance with the provisions of this Section 11.1. 
  
 11.2 Notices. All communications hereunder will be in writing and
effective only on receipt, and will be mailed, delivered by hand or courier or sent by facsimile and confirmed: 
  
 If to the Placement Agent, to: 
  
 Credit Suisse First Boston LLC 
 Eleven
Madison Avenue 
 New York, New York 10010-3629 
 Facsimile: (212) 743-5043 
 Attention: The CDO Group 
  
 with a copy to: 
  
 Thacher Proffitt & Wood LLP 
 Two World Financial Center 
 New York, New York 10281 
  

 20 

 Facsimile: (212) 912-7751 
 Telephone: (212) 912-7400 
 Attention: Mark I. Sokolow, Esq. 
  
 if to the Offerors, to: 
  
 Southcoast Financial Corporation 
 530 Johnnie Dodds Boulevard 
 Mt. Pleasant, South Carolina 29464 
 Facsimile: (843) 216-3072 
 Telephone: (843)
216-3012 
 Attention: Chief Financial Officer 
  
 All such notices and communications shall be deemed to have been duly given (i) at the time delivered by hand, if personally delivered, (ii) five business
days after being deposited in the mail, postage prepaid, if mailed, (iii) when answered back, if telexed, (iv) the next business day after being telecopied, or (v) the next business day after timely delivery to a courier, if sent by overnight air
courier guaranteeing next-day delivery. From and after the Closing, the foregoing notice provisions shall be superseded by any notice provisions of the Operative Documents under which notice is given. The Placement Agent, the Company, and their
respective counsel, may change their respective notice addresses, from time to time, by written notice to all of the foregoing persons. 
  
 11.3 Parties in Interest, Successors and Assigns. This Agreement will inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person other than the parties hereto and the affiliates, directors, officers, employees, agents and
controlling persons referred to in Section 8 hereof, their successors, assigns, heirs and legal representatives, and any Subsequent Purchaser, any right or obligation hereunder. None of the rights or obligations of the Company or the Trust
under this Agreement may be assigned, whether by operation of law or otherwise, without the Placement Agent’s prior written consent. The rights and obligations of the Placement Agent and Purchaser under this Agreement may be assigned by such
party without the Company’s or the Trust’s consent; provided that the assignee assumes the obligations of such party under this Agreement. 
  
 11.4 Amendments. This Agreement may not be modified, amended, altered or supplemented, except upon the execution and delivery of a written
agreement by each of the parties hereto. 
  
 11.5 Counterparts
and Facsimile. This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same
instrument. This Agreement may be executed by any one or more of the parties hereto by facsimile. 
  
 11.6 Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

  

 21 

 11.7 Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW). 
  
 11.8 Submission to Jurisdiction. ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS AGREEMENT
MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT. 
  
 11.9 Entire Agreement.
This Agreement, together with the Operative Documents and the other documents delivered in connection with the transactions contemplated by this Agreement, is intended by the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein. There are no restrictions, promises, warranties or undertakings, other than those set forth or
referred to herein and therein. This Agreement, together with the Operative Documents and the other documents delivered in connection with the transaction contemplated by this Agreement, supersedes all prior agreements and understandings between the
parties with respect to such subject matter. 
  
 11.10
Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired or affected, it being intended that all of the Placement Agent’s and the Purchaser’s rights and privileges
shall be enforceable to the fullest extent permitted by law. 
  
 11.11 Survival. The respective agreements, representations, warranties, indemnities and other statements of the Company and the Trust and their respective officers or trustees and of the Placement Agent set forth in or made pursuant
to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of the Placement Agent, the Purchaser, the Company or the Trust or any of their respective officers, directors, trustees or controlling
persons, and will survive delivery of and payment for the Preferred Securities. The provisions of Sections 2.4 and 8 shall survive the termination or cancellation of this Agreement. 
  
 Signatures appear on the following page 
  

 22 

 If this Agreement is satisfactory to you, please so indicate by signing the acceptance of this Agreement
and deliver such counterpart to the Offerors whereupon this Agreement will become binding between us in accordance with its terms. 
  
 Very truly yours, 
  

			
	SOUTHCOAST FINANCIAL CORPORATION
		
	By:	 	  

	Name:	 	 
	Title:	 	 
	
	SOUTHCOAST CAPITAL TRUST III
		
	By:	 	 SOUTHCOAST FINANCIAL CORPORATION,
 as Depositor

		
	By:	 	  

	Name:	 	 
	Title:	 	 

  
 CONFIRMED AND ACCEPTED

 as of the date first set forth above 
  

			
	 CREDIT SUISSE FIRST BOSTON LLC,
 as Placement Agent

		
	By:	 	  

	Name:	 	 
	Title:	 	 

  

 23 

 Schedule 1 
  
 List of Significant Subsidiaries 
  
 Southcoast Community Bank 
  

 24 

 EXHIBIT A 
  
 FORM OF SUBSCRIPTION AGREEMENT 
  
 PREFERRED SECURITIES SUBSCRIPTION AGREEMENT 
  
 August 5, 2005 
  
 THIS PREFERRED SECURITIES SUBSCRIPTION AGREEMENT (this “Agreement”) made among Southcoast Capital Trust III (the “Trust”), a statutory
trust created under the Delaware Statutory Trust Act (12 Del. C. §3801, et seq.), Southcoast Financial Corporation, a South Carolina corporation, with its principal offices located at 530 Johnnie Dodds Boulevard, Mt. Pleasant,
South Carolina 29464 (the “Company” and, together with the Trust, the “Offerors”), Credit Suisse First Boston, acting through its Cayman Islands branch, a Swiss banking corporation (the “Purchaser”), and Credit Suisse
First Boston LLC (as to Sections 1.2, 1.3 and Article III). 
  
 RECITALS: 
  
 A. The Trust desires to issue TEN MILLION
($10,000,000) DOLLARS of its Floating Rate Preferred Securities (the “Preferred Securities”), liquidation amount $1,000 per Preferred Security, representing an undivided beneficial interest in the assets of the Trust (the
“Offering”), to be issued pursuant to an Amended and Restated Trust Agreement (the “Trust Agreement”) by and among the Company, Wilmington Trust Company, as Property Trustee (the “Property Trustee”), Wilmington Trust
Company, as Delaware Trustee, the administrative trustees named therein and the Holders (as defined therein), which Preferred Securities are to be guaranteed by the Company with respect to distributions and payments upon liquidation, redemption and
otherwise pursuant to the terms of a Guarantee Agreement between the Company and Wilmington Trust Company, as Guarantee Trustee (the “Guarantee”); and 
  

B. The proceeds from the sale of the Preferred Securities will be combined with the proceeds from the sale by the Trust to the Company of its Common
Securities, and will be used by the Trust to purchase an equivalent amount of Floating Rate Junior Subordinated Notes of the Company (the “Notes”) to be issued by the Company pursuant to an indenture (the “Indenture”) to be
executed by the Company and Wilmington Trust Company, as Indenture Trustee; and 
  
 C. In consideration of the premises and the mutual representations and covenants hereinafter set forth, the parties hereto agree as follows: 
  
 Article I 
 PURCHASE AND SALE OF PREFERRED SECURITIES 
  
 1.1 Upon
the execution of this Agreement, the Purchaser hereby agrees to purchase, directly or indirectly, from the Trust, Preferred Securities at a price equal to $1,000 per Preferred Security for an aggregate purchase price equal to TEN MILLION
($10,000,000) DOLLARS (the “Purchase Price”), and the Trust agrees to sell such Preferred Securities to the Purchaser for said Purchase Price. The rights and preferences of the Preferred Securities are set forth in the Trust Agreement. The
closing of the sale and purchase of the Preferred Securities by the Offerors to the Purchaser shall occur on August 5, 2005, or such other later date (not later than September 4, 
  

 A-1 

 2005) as the parties may designate (the “Closing Date”) The Purchase Price is payable in immediately available
funds on the Closing Date. The Offerors shall provide the Purchaser payment instructions no later than two (2) days prior to the Closing Date. 
  
 1.2 The Placement Agreement, dated as of August 5, 2005 (the “Placement Agreement”), among the Offerors and the Placement Agent identified
therein (the “Placement Agent”) includes certain representations and warranties, covenants and conditions to closing and certain other matters governing the Offering. The Placement Agreement is hereby incorporated by reference into this
Agreement, and the Purchaser shall be entitled to each of the benefits of the Placement Agent and the Purchaser under the Placement Agreement and shall be entitled to enforce the obligations of the Offerors under such Placement Agreement as fully as
if the Purchaser were a party to such Placement Agreement. 
  
 1.3
The Purchaser is purchasing the Preferred Securities in its capacity as a warehouse lender, and Purchaser may resell the Preferred Securities to a subsequent purchaser (any such purchaser from the Purchaser being referred to hereinafter as a
“Subsequent Purchaser”). Upon transfer of the Preferred Securities to a Subsequent Purchaser, the Subsequent Purchaser shall be entitled to each of the benefits of the Placement Agent and the Purchaser under the Placement Agreement and
this Agreement, and shall be entitled to enforce the obligations of the Offerors under the Placement Agreement and this Agreement, as fully as if the Subsequent Purchaser were a party to the Placement Agreement and this Agreement. 
  
 Article II 
 REPRESENTATIONS AND WARRANTIES OF PURCHASER 
  
 2.1 The Purchaser understands and acknowledges that none of Preferred Securities, the Notes nor the Guarantee (i) have been registered under the
Securities Act of 1933, as amended (the “Securities Act”), or any other applicable securities law, (ii) are being offered for sale by the Trust in transactions not requiring registration under the Securities Act and (iii) may not be
offered, sold, pledged or otherwise transferred by the Purchaser except in compliance with the registration requirements of the Securities Act or any other applicable securities laws, pursuant to an exemption therefrom or in a transaction not
subject thereto. 
  
 2.2 The Purchaser represents and warrants
that it is purchasing the Preferred Securities for its own account and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act or other applicable securities laws, subject to any
requirement of law that the disposition of its property be at all times within its control and subject to its ability to resell such Preferred Securities pursuant to an effective registration statement under the Securities Act or under Rule 144A or
any other exemption from registration available under the Securities Act or any other applicable securities law. The Purchaser understands that no public market exists for any of the Preferred Securities, and that it is unlikely that a public market
will ever exist for the Preferred Securities. 
  
 2.3 The
Purchaser represents and warrants that (a) it has consulted with its own legal, regulatory, tax, business, investment, financial and accounting advisers in connection herewith to the extent it has deemed necessary; (b) it has had a reasonable
opportunity to ask questions of 
  

 A-2 

 and receive answers from officers and representatives of the Offerors concerning their respective financial condition and
results of operations and the purchase of the Preferred Securities and any such questions have been answered to its satisfaction; (c) it has had the opportunity to review all publicly available records and filings concerning the Offerors and it has
carefully reviewed such records and filings that it considers relevant to making an investment decision; and (d) it has made its own investment decisions based upon its own judgment, due diligence and advice from such advisers as it has deemed
necessary and not upon any view expressed by the Offerors or the Placement Agent. 
  
 2.4 The Purchaser represents and warrants that it is an institutional “accredited investor” within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 of Regulation D under the Securities Act.

  
 Article III 
 MISCELLANEOUS 
  
 3.1 Any notice or other communication given hereunder shall be deemed sufficient if in writing and sent by registered or certified mail, return receipt
requested, international courier or delivered by hand against written receipt therefor, or by facsimile transmission and confirmed by telephone, to the following addresses, or such other address as may be furnished to the other parties as herein
provided: 
  

			
	To the Offerors:	  	 Southcoast Financial Corporation

	 	  	 530 Johnnie Dodds Boulevard

	 	  	 Mt. Pleasant, South Carolina 29464

	 	  	 Fax: (843) 216-3072

	 	  	 Attention: Chief Financial Officer

		
	To the Purchaser:	  	 Credit Suisse First Boston, acting through its Cayman Islands branch

	 	  	 c/o Credit Suisse First Boston LLC

	 	  	 Eleven Madison Avenue

	 	  	 New York, New York 10010-3629

	 	  	 Fax: (212) 743-5043

	 	  	 Attention: The CDO Group

  
 Unless otherwise
expressly provided herein, notices shall be deemed to have been given on the date of mailing, except notice of change of address, which shall be deemed to have been given when received. 
  
 3.2 This Agreement shall not be changed, modified or amended except by a writing signed by the parties to be charged, and
this Agreement may not be discharged except by performance in accordance with its terms or by a writing signed by the party to be charged. 
  

 A-3 

 3.3 Upon the execution and delivery of this Agreement by the Purchaser, this Agreement shall become a
binding obligation of the Purchaser with respect to the purchase of Preferred Securities as herein provided. 
  
 3.4 NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND
PROVISIONS HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. 
  
 3.5 The parties agree to execute and deliver all such further documents, agreements and instruments and take such other and further action as may be
necessary or appropriate to carry out the purposes and intent of this Agreement. 
  
 3.6 This Agreement may be executed in one or more counterparts each of which shall be deemed an original, but all of which shall together constitute one and the same instrument. 
  
 3.7 In the event that any one or more of the provisions contained herein, or
the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof
shall not be in any way impaired or affected, it being intended that all of the Offerors’ and the Purchaser’s rights and privileges shall be enforceable to the fullest extent permitted by law. 
  
 Signatures appear on the following page 
  

 A-4 

 IN WITNESS WHEREOF, this Agreement is agreed to and accepted as of the day and year first written above.

  

							
	 CREDIT SUISSE FIRST BOSTON, acting through its
 Cayman Islands branch, as Purchaser
	 	 	 	 
				
	By:	 	  

	 	 	 	 
	Name:	 	 	 	 
	Title:	 	 	 	 
			
	 	 	 	 	SOUTHCOAST FINANCIAL CORPORATION
				
	 	 	 	 	By:	 	  

	 	 	 	 	Name:	 	 
	 	 	 	 	Title:	 	 
			
	 	 	 	 	SOUTHCOAST CAPITAL TRUST III
	 	 	 	 	 By: SOUTHCOAST FINANCIAL CORPORATION,
 as Depositor

				
	 	 	 	 	By:	 	  

	 	 	 	 	Name:	 	 
	 	 	 	 	Title:	 	 
			
	 	 	 	 	 CREDIT SUISSE FIRST BOSTON LLC
 (for purposes of the rights and obligations in
 Sections 1.2, 1.3 and Article
III only)

				
	 	 	 	 	By:	 	  

	 	 	 	 	Name:	 	 
	 	 	 	 	Title:	 	 

  
  

 A-5 

 EXHIBIT B-1 
  
 FORM OF THACHER PROFFITT & WOOD LLP OPINION 
  
 Pursuant to Section 3.2(a) of the Placement Agreement, Thacher Proffitt & Wood LLP, special counsel for the Placement Agent and Purchaser, shall
deliver an opinion to the effect that: 
  

	(i)	the Company and each Significant Subsidiary is validly existing as a corporation in good standing under the laws of the jurisdiction in which it is chartered or organized; the
Company has corporate power and authority to (a) execute and deliver, and to perform its obligations under, the Operative Documents to which it is a party and (b) issue and perform its obligations under the Notes; 

  

	(ii)	neither the issue and sale of the Common Securities, the Preferred Securities or the Junior Subordinated Notes, nor the purchase by the Trust of the Junior Subordinated Notes, nor
the execution and delivery of and compliance with the Operative Documents by the Company or the Trust nor the consummation of the transactions contemplated thereby will constitute a breach or violation of the Trust Agreement or the charter or
by-laws of the Company; 

  

	(iii)	the Amended and Restated Trust Agreement has been duly authorized, executed and delivered by the Company and duly executed and delivered by the Administrative Trustees;

  

	(iv)	each of the Guarantee and the Indenture has been duly authorized, executed and delivered by the Company and, assuming it has been duly authorized, executed and delivered by the
Guarantee Trustee and the Indenture Trustee, respectively, constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors’ rights generally and to general principles of equity; 

  

	(v)	the Junior Subordinated Notes have been duly authorized and executed by the Company and delivered to the Indenture Trustee for authentication in accordance with the Indenture and,
when authenticated in accordance with the provisions of the Indenture and delivered to the Trust against payment therefor, will constitute legal, valid and binding obligations of the Company entitled to the benefits of the Indenture and enforceable
against the Company in accordance with their terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity; 

  

	(vi)	the Trust is not, and, following the issuance of the Preferred Securities and the consummation of the transactions contemplated by the Operative Documents and the application of the
proceeds therefrom, the Trust will not be, an “investment company” or an entity “controlled” by an “investment company,” in each case within the meaning of Section 3(a) of the Investment Company Act;

  

	(vii)	assuming (a) the accuracy of the representations and warranties, and compliance with the agreements contained in the Placement Agreement and (b) that the Preferred Securities are
sold in a manner contemplated by, and in accordance with the Placement Agreement, Subscription Agreement and the Amended and Restated Trust Agreement, it is not 

  

 B-1-1 

	    	necessary in connection with the offer, sale and delivery of the Preferred Securities by the Trust to the Purchaser, to register any of the Securities under the Securities Act or to
require qualification of the Indenture under the Trust Indenture Act of 1939, as amended; 

  

	(viii)	the Placement Agreement and Subscription Agreement have been duly authorized, executed and delivered by the Company; 

  

	(ix)	the Subscription Agreement has been duly executed and delivered by the Administrative Trustees; and, 

  

	(x)	the Indenture constitutes the legal, valid and binding obligation of Wilmington Trust Company enforceable against Wilmington Trust Company in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity. 

  
 In rendering such opinions, such counsel may (A) state that its opinion is limited to the laws of the State of New York, the Delaware General Corporation
Law and the federal laws of the United States; (B) as to matters involving the application of laws of any jurisdiction other than the State of New York and the Delaware General Corporation Law or the federal laws of the United States, (i) rely, to
the extent deemed proper and specified in such opinion, upon the opinion of other counsel of good standing believed to be reliable and who are satisfactory to the Purchaser or (ii) assume such law is substantially similar to the law of the State of
New York and, (C) as to matters of fact, rely to the extent deemed proper, on certificates of responsible officers of the Company and public officials. 
  

 B-1-2 

 EXHIBIT B-2 
  
 FORM OF COMPANY COUNSEL OPINION 
 OR
OFFICERS’ CERTIFICATE 
  
 Pursuant to Section 3.2(b) of the
Placement Agreement, [General] counsel for the Company shall deliver an opinion, or the Company shall provide an Officers’ Certificate, to the effect that: 
  

	(xi)	all of the issued and outstanding shares of capital stock of each Significant Subsidiary are owned of record by the Company, and the issuance of the Preferred Securities and the
Common Securities is not subject to any contractual preemptive rights known to such [counsel/officer]; 

  

	(xii)	no consent, approval, authorization or order of any court or governmental authority is required for the issue and sale of the Common Securities, the Preferred Securities or the
Junior Subordinated Notes, the purchase by the Trust of the Junior Subordinated Notes, the execution and delivery of and compliance with the Operative Documents by the Company or the Trust or the consummation of the transactions contemplated in the
Operative Documents, except such approvals (specified in such [opinion/certificate]) as have been obtained; 

  

	(xiii)	to the knowledge of such [counsel/officer], there is no action, suit or proceeding before or by any government, governmental instrumentality, arbitrator or court, domestic or
foreign, now pending or threatened against or affecting the Trust or the Company or any Significant Subsidiary that could adversely affect the consummation of the transactions contemplated by the Operative Documents or could have a Material Adverse
Effect; 

  

	(xiv)	the Company is duly registered as a bank holding company under the Bank Holding Company Act and the regulations thereunder of the Federal Reserve Board, and the deposit accounts of
the Company’s banking subsidiary are insured by the FDIC to the fullest extent permitted by law and the rules and regulations of the FDIC, and no proceeding for the termination of such insurance are pending or, to such person’s knowledge,
threatened; 

  

	(xv)	The execution, delivery and performance of the Operative Documents, as applicable, by the Company and the Trust and the consummation by the Company and the Trust of the transactions
contemplated by the Operative Documents, as applicable, (a) will not result in any violation of the charter or bylaws of the Company, the charter or bylaws of the Bank, the Amended and Restated Trust Agreement or the Certificate of Trust, and (b)
will not conflict with, or result in a breach of any of the terms or provisions of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the creation or imposition of any
lien, charge and encumbrance upon any assets or properties of the Company or any Significant Subsidiary under, (A) any agreement, indenture, mortgage or instrument that the Company or any Significant Subsidiary of the Company is a party to or by
which it may be bound or to which any of its assets or properties may be subject, or (B) any existing applicable law, 

  

 B-2-1 

	    	rule or administrative regulation [for General Counsel only: except that I express no opinion with respect to the securities laws of the State of Delaware] of any court or
governmental agency or authority having jurisdiction over the Company or any Significant Subsidiary of the Company or any of their respective assets or properties, except in case of (b), where any such violation, conflict, breach, default, lien,
charge or encumbrance, would not have a material adverse effect on the assets, properties, business, results of operations or financial condition of the Company and its subsidiaries, taken as whole. 

  
 All terms used but not defined herein shall have the meanings assigned to
them in the Placement Agreement. A Subsequent Purchaser shall be entitled to rely on this [opinion/certificate]. 
  
 [Applies only to in-house counsel opinion] [In rendering such opinions, such counsel may (A) state that the above is limited to the laws of the States of
[Jurisdiction of bar admission], (B) rely as to matters of fact, to the extent deemed proper, on certificates of responsible officers of the Company and public officials.] 
  

 B-2-2 

 EXHIBIT B-3 
  
 FORM OF TAX COUNSEL OPINION 
  
 Pursuant to Section 3.2(c) of the Placement Agreement, Thacher Proffitt & Wood LLP, special tax counsel for the Placement Agent and Purchaser, shall
deliver an opinion to the effect that: 
  

	(i)	the Trust will be classified for United States federal income tax purposes as a grantor trust and not as an association or a publicly traded partnership taxable as a corporation;
and 

  

	(ii)	for United States federal income tax purposes, the Junior Subordinated Notes will constitute indebtedness of the Company. 

  
 In rendering such opinions, such counsel may (A) state that its opinion is
limited to the laws of the State of New York and the federal laws of the United States and (B) rely as to matters of fact, to the extent deemed proper, on certificates of responsible officers of the Company and public officials. 
  

 B-3-1 

 EXHIBIT B-4 
  
 FORM OF DELAWARE COUNSEL TRUST OPINION 
  
 Pursuant to Section 3.2(d) of the Placement Agreement, Morris, James, Hitchens & Williams LLP, special Delaware counsel for the Trust, shall deliver
an opinion to the effect that: 
  

	(i)	The Trust has been duly created and is validly existing in good standing as a statutory trust under the Delaware Statutory Trust Act, and all filings required under the laws of the
State of Delaware with respect to the creation and valid existence of the Trust as a statutory trust have been made. 

  

	(ii)	Under the Delaware Statutory Trust Act and the Amended and Restated Trust Agreement, the Trust has the trust power and authority (i) to own property and conduct its business, all as
described in the Amended and Restated Trust Agreement, (ii) to execute and deliver, and to perform its obligations under, each of the Placement Agreement, the Subscription Agreement, the Common Securities Subscription Agreement, the Junior
Subordinated Note Subscription Agreement and the Preferred Securities and the Common Securities and (iii) to purchase and hold the Junior Subordinated Notes. 

  

	(iii)	Under the Delaware Statutory Trust Act, the certificate attached to the Amended and Restated Trust Agreement as Exhibit C is an appropriate form of certificate to evidence ownership
of the Preferred Securities. The Preferred Securities have been duly authorized by the Amended and Restated Trust Agreement and, when issued in accordance with the Amended and Restated Trust Agreement and delivered against payment therefor in
accordance with the Amended and Restated Trust Agreement and the Subscription Agreement, the Preferred Securities will be validly issued and (subject to the qualifications set forth in this paragraph) fully paid and nonassessable and will represent
undivided beneficial interests in the assets of the Trust, and the Preferred Security Holders will be entitled to the benefits of the Amended and Restated Trust Agreement. The Preferred Security Holders as beneficial owners of the Trust, will be
entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware. The Preferred Security Holders may be obligated to make payments
or provide indemnity or security as set forth in the Amended and Restated Trust Agreement. 

  

	(iv)	The Common Securities have been duly authorized by the Amended and Restated Trust Agreement and, when issued in accordance with the Amended and Restated Trust Agreement and
delivered against payment therefor in accordance with the Amended and Restated Trust Agreement and the Common Securities Subscription Agreement, will be validly issued and will represent undivided beneficial interests in the assets of the Trust, and
the Common Security Holder will be entitled to the benefits of the Amended and Restated Trust Agreement. 

  

 B-4-1 

	(v)	Under the Delaware Statutory Trust Act and the Amended and Restated Trust Agreement, the issuance of the Preferred Securities and the Common Securities is not subject to preemptive
or other similar rights. 

  

	(vi)	Under the Delaware Statutory Trust Act and the Amended and Restated Trust Agreement, the execution and delivery by the Trust of the Placement Agreement, the Subscription Agreement,
the Common Securities Subscription Agreement and the Junior Subordinated Note Subscription Agreement, and the performance by the Trust of its obligations thereunder, have been duly authorized by all necessary trust action on the part of the Trust.

  

	(vii)	The Amended and Restated Trust Agreement constitutes a legal, valid and binding obligation of the Company and the Trustees, enforceable against the Company and the Trustees, in
accordance with its terms. 

  

	(viii)	The issuance and sale by the Trust of the Preferred Securities and the Common Securities, the purchase by the Trust of the Junior Subordinated Notes, the execution, delivery and
performance by the Trust of the Placement Agreement, the Subscription Agreement, the Common Securities Subscription Agreement and the Junior Subordinated Note Subscription Agreement, the consummation by the Trust of the transactions contemplated by
the Placement Agreement, the Subscription Agreement, the Common Securities Subscription Agreement and the Junior Subordinated Note Subscription Agreement and compliance by the Trust with its obligations thereunder are not prohibited by (i) the
Certificate of Trust or the Amended and Restated Trust Agreement or (ii) any law or regulation of the State of Delaware applicable to the Trust. 

  

	(ix)	No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any Delaware court or Delaware governmental authority or Delaware
agency is required solely in connection with the issuance and sale by the Trust of the Trust Securities, the purchase by the Trust of the Junior Subordinated Notes, the execution, delivery and performance by the Trust of the Placement Agreement, the
Subscription Agreement, the Common Securities Subscription Agreement and the Junior Subordinated Note Subscription Agreement, the consummation by the Trust of the transactions contemplated by the Placement Agreement and the Subscription Agreement
and compliance by the Trust with its obligations thereunder. 

  

	(x)	The Preferred Security Holders (other than those Preferred Security Holders who reside or are domiciled in the State of Delaware) will have no liability for income taxes imposed by
the State of Delaware solely as a result of their participation in the Trust and the Trust will not be liable for any income tax imposed by the State of Delaware. 

  
 In rendering such opinions, such counsel may (A) state that its opinion is limited to the laws of the State of Delaware and (B) rely as to
matters of fact, to the extent deemed proper, on certificates of responsible officers of the Company and the Trust and public officials. 
  

 B-4-2 

 EXHIBIT B-5 
  
 FORM OF TRUSTEE COUNSEL OPINION 
  
 Pursuant to Section 3.2(e) of the Placement Agreement, Morris, James, Hitchens & Williams LLP, special counsel for the Property Trustee, the Guarantee
Trustee, the Delaware Trustee and the Indenture Trustee, shall deliver an opinion to the effect that: 
  

	(i)	Wilmington Trust Company is duly incorporated and validly existing as a Delaware banking corporation in good standing under the laws of the State of Delaware with trust powers and
its principal place of business in the State of Delaware. 

  

	(ii)	Wilmington Trust Company has requisite corporate power and authority to execute and deliver, and to perform its obligations under, the Amended and Restated Trust Agreement, the
Guarantee Agreement and the Indenture. 

  

	(iii)	The execution, delivery, and performance by Wilmington Trust Company of the Amended and Restated Trust Agreement, the Guarantee Agreement and the Indenture have been duly authorized
by all necessary corporate action on the part of Wilmington Trust Company, and the Amended and Restated Trust Agreement, the Guarantee Agreement and the Indenture have been duly executed and delivered by Wilmington Trust Company.

  

	(iv)	The Amended and Restated Trust Agreement is a legal, valid and binding obligation of Wilmington Trust Company, enforceable against Wilmington Trust Company, in accordance with its
terms. 

  

	(v)	No approval, authorization or other action by, or filing with, any governmental authority or agency under any law or regulation of the State of Delaware or the United States of
America governing the trust powers of Wilmington Trust Company is required solely in connection with the execution, delivery and performance by Wilmington Trust Company of the Amended and Restated Trust Agreement, the Guarantee Agreement and the
Indenture, except for the filing of the Certificate of Trust with the Secretary of State, which Certificate of Trust has been duly filed with the Secretary of State. 

  

	(vi)	The execution, delivery and performance of the Amended and Restated Trust Agreement, the Guarantee Agreement and the Indenture by Wilmington Trust Company are not prohibited by (i)
the Charter or Bylaws of Wilmington Trust Company, (ii) any law or regulation of the State of Delaware or the United States of America governing the trust powers of Wilmington Trust Company, or (iii) to our knowledge (based and relying solely on the
Officer Certificates), any agreements or instruments to which Wilmington Trust Company is a party or by which Wilmington Trust Company is bound or any judgment or order applicable to Wilmington Trust Company. 

  

 B-5-1 

	(vii)	The Junior Subordinated Notes delivered on the date hereof have been authenticated by due execution thereof and delivered by Wilmington Trust Company, as Indenture Trustee, in
accordance with the Company Order. The Preferred Securities delivered on the date hereof have been authenticated by due execution thereof and delivered by Wilmington Trust Company, as Property Trustee, in accordance with the Trust Order.

  
 In rendering such opinions, such counsel may (A)
state that its opinion is limited to the laws of the State of Delaware and the federal laws of the United States governing the trust powers of Wilmington Trust Company and (B) rely as to matters of fact, to the extent deemed proper, on certificates
of responsible officers of Wilmington Trust Company and public officials. 
  

 B-6-2 

 Annex F 
 EXHIBIT F 
  
 OFFICER’S CERTIFICATE 
  
 The undersigned, the [Chief Financial Officer] [Treasurer] [Executive Vice
President] hereby certifies, pursuant to Section 6.9 of the Placement Agreement, dated as of August 5, 2005 among Southcoast Financial Corporation (the “Company”), Southcoast Capital Trust III (the “Trust”) and Credit Suisse
First Boston LLC that, as of [date], [20    ], the Company had the following ratios and balances: 
  
 BANK HOLDING COMPANY 
  
 As of [Quarterly Financial Dates] 
  

					
	 Tier 1 Risk Weighted Assets
	  	 	__________	%
		
	 Ratio of Double Leverage
	  	 	__________	%
		
	 Non-Performing Assets to Loans and OREO
	  	 	__________	%
		
	 Tangible Common Equity as a Percentage of Tangible Assets
	  	 	__________	%
		
	 Ratio of Reserves to Non-Performing Loans
	  	 	__________	%
		
	 Ratio of Net Charge-Offs to Loans
	  	 	__________	%
		
	 Return on Average Assets (annualized)
	  	 	__________	%
		
	 Net Interest Margin (annualized)
	  	 	__________	%
		
	 Efficiency Ratio
	  	 	__________	%
		
	 Ratio of Loans to Assets
	  	 	__________	%
		
	 Ratio of Loans to Deposits
	  	 	__________	%
		
	 Double Leverage (exclude trust preferred as equity)
	  	 	__________	%
		
	 Total Assets
	  	$	__________	 
		
	 Year to Date Income
	  	$	__________	 

	*	A table describing the quarterly report calculation procedures is attached. 

  
 [FOR FISCAL YEAR END: Attached hereto are the audited consolidated financial statements (including the balance sheet, income statement and statement of cash flows, and
notes thereto, together with the report of the independent accountants thereon) of the Company and its consolidated subsidiaries for the three years ended [date], 20    .] 
  
 [FOR FISCAL QUARTER END: Attached hereto are the unaudited consolidated and consolidating
financial statements (including the balance sheet and income statement) of the Company and its consolidated subsidiaries for the fiscal quarter ended [date], 20    .] 
  

 F-1 

 Annex F 
  
 The financial statements fairly present in all material respects, in accordance with U.S. generally accepted accounting principles (“GAAP”), the financial
position of the Company and its consolidated subsidiaries, and the results of operations and changes in financial condition as of the date, and for the [         quarter interim] [annual] period ended
[date], 20    , and such financial statements have been prepared in accordance with GAAP consistently applied throughout the period involved (expect as otherwise noted therein). 
  
 IN WITNESS WHEREOF, the undersigned has executed this Officer’s
Certificate as of this              day of                     ,
20     
  

	
	  

	Name:
	Title:
	
	Southcoast Financial Corporation
	530 Johnnie Dodds Boulevard
	Mt. Pleasant, South Carolina 29464
	(843) 216-3012

  

 F-2 

 FINANCIAL DEFINITIONS 
  
 BANK HOLDING COMPANY 
  

					
	 Report Item

	  	 Corresponding FRY-9C or LP Line Items with Line
Item corresponding Schedules

	  	 Description of Calculation

	Tier 1 Risk Weighted Assets	  	 BHCK7206
  
 Schedule HC-R
	  	Tier 1 Risk Ratio: Core Capital (Tier 1)/ Risk-Adjusted Assets
			
	Ratio of Double Leverage	  	 (BHCP0365)/(BCHCP3210)
  
 Schedule PC in the LP
	  	Total equity investments in subsidiaries divided by the total equity capital. This field is calculated at the parent company level. “Subsidiaries” include bank, bank holding company,
and non-bank subsidiaries.
			
	Non-Performing Assets to Loans and OREO	  	(BHCK5525-BHCK3506+BHCK5526-BHCK3507+BHCK2744/(BHCK2122+BHCK2744) Schedules HC-C, HC-M & HC-N	  	Total Nonperforming Assets (NPLs+Foreclosed Real Estate+Other Nonaccrual & Repossessed Assets)/Total Loans+Foreclosed Real Estate
			
	Tangible Common Equity as a Percentage of Tangible Assets	  	 (BHDM3210-BHCK3163)/(BHCK2170-BHCK3163)
  
 Schedule HC
	  	(Equity Capital – Goodwill)/(Total Assets – Goodwill)
			
	Ratio of Reserves to Non-Performing Loans	  	 (BHCK3123+BHCK3128)/(BHCK5525-BHCK3506+BHCK5526-BHCK3507)
  
 Schedules HC & HC-N & HC-R
	  	Total Loan Loss and Allocated Transfer Risk Reserves/ Total Nonperforming Loans (Nonaccrual + Restructured)
			
	Ratio of Net Charge-Offs to Loans	  	 (BHCK4635-BHCK4605)/(BHCK3516)
  
 Schedules HI-B & HC-K
	  	Net charge offs for the period as a percentage of average loans.
			
	Return on Average Assets (annualized)	  	 (BHCK4340/BHCK3368)
  
 Schedules HI & HC-K
	  	Net Income as a percentage of Assets.
			
	Net Interest Margin (annualized)	  	 (BHCK4519/(BHCK3515+BHCK3365+BHCK3516+
BHCK3401+BHCKB985)
  

Schedules HI Memorandum and HC-K
	  	(Net Interest Income Fully Taxable Equivalent, if available/Average Earning Assets)
			
	Efficiency Ratio	  	 (BHCK4093)/(BHCK4519+BHCK4079)
  
 Schedule HI
	  	(Non-interest Expense)/(Net Interest Income Fully Taxable Equivalent, if available, plus Non-interest Income)
			
	Ratio of Loans to Assets	  	 (BHCKB528+BHCK5369)/(BHCK2170)
  
 Schedule HC
	  	Total Loans & Leases (Net of Unearned Income & Gross of Reserve)/Total Assets
			
	Ratio of Loans to Deposits	  	 (BHCKB528+BHCK5369)/(BHDM6631+BHDM6636+BHFN6631+BHFN6636)
  
 Schedule HC
	  	Total Loans & Leases (Net of Unearned Income & Gross of Reserve)/Total Deposits (Includes Domestic and Foreign Deposits)
			
	Total Assets	  	 (BHCK2170)
  
 Schedule HC
	  	The sum of total assets. Includes cash and balances due from depository institutions; securities; federal funds sold and securities purchased under agreements to resell; loans and lease
financing receivables; trading assets; premises and fixed assets; other real estate owned; investments in unconsolidated subsidiaries and associated companies; customer’s liability on acceptances outstanding; intangible assets; and other
assets.

  

 1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00090-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00090-of-00352.parquet"}]]