▇▇▇▇▇▇ COUNTY BANCORP, INC.
814,249 to 1,101,631 Shares
Common Stock
(Par Value $0.10 Per Share)
$10.00 Per Share
SALES AGENCY AGREEMENT
October ___, 1998
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ & Co., Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs:
▇▇▇▇▇▇ County Bancorp, Inc., a Delaware corporation (the "Company"),
Green County Savings Bank, a New York chartered mutual savings bank (the
"Bank") and ▇▇▇▇▇▇ County Bancorp, MHC, a New York chartered mutual holding
company ("MHC"), hereby confirm, as of ________ ___, 1998, their respective
agreements with Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc. ("FBR"), a
broker-dealer registered with the Securities and Exchange Commission
("Commission") and members of the National Association of Securities Dealers,
Inc. ("NASD"), as follows:
1. Introductory. Under the Bank's plan of reorganization, adopted on July
1, 1998 (the "Plan"), the Company will be formed as a Delaware corporation, a
New York chartered mutual holding company will be formed, and the Bank will be
reorganized into the capital stock form of organization (together with the
Offerings, as defined below, the "Reorganization"). In accordance with the Plan,
the Company is offering shares of its common stock, par value $0.10 per share
(the "Shares" and the "Common Stock"), pursuant to nontransferable subscription
rights in a subscription offering (the "Subscription Offering") to certain
depositors and borrowers of the Bank, to employees, officers and Trustees of the
Bank, and to the Bank's tax-qualified employee benefit plans (i.e., the Bank's
Employee Stock Ownership Plan (the "ESOP")). Concurrently with, during or
promptly after the Subscription Offering, shares of the Common Stock not sold in
the Subscription Offering may be offered to the general public in a community
offering, with preference being given to natural persons residing in ▇▇▇▇▇▇
County, New York (the "Community Offering") (the Subscription and
Community Offerings are sometimes referred to collectively as the "Offerings"),
subject to the right of the Company and the Bank, in their absolute discretion,
to reject orders in the Community Offering in whole or in part. In the
Offerings, the Company is offering between 814,249 and 1,101,631 Shares, with
the possibility of offering up to 1,266,876 Shares without a resolicitation of
subscribers, as contemplated by Title 12 of the Code of Federal Regulations,
Part 303.15. Except for certain benefit plans, and certain larger depositors, no
person may purchase more than $100,000 of the Shares issued in the
Reorganization and no person, together with associates of and persons acting in
concert with such person, may purchase in the aggregate more than $200,000 of
the Shares issued in the Reorganization.
In connection with the Reorganization and pursuant to the terms of the Plan
as described in the Prospectus, immediately following the consummation of the
Reorganization, subject to the approval of the members of Bank and compliance
with certain conditions as may be imposed by regulatory authorities, the Company
will contribute an amount of Common Stock equal to 1.96% of the shares sold in
the Offerings to a charitable foundation (the "Foundation") such shares
hereinafter being referred to as the ("Foundation Shares").
The Company, MHC and the Bank have been advised by FBR that it will utilize
its best efforts in assisting the Company, MHC and the Bank with the sale of the
Shares in the Offerings and, if deemed necessary by the Company in a syndicated
public offering. Prior to the execution of this Agreement, the Company has
delivered to FBR the Prospectus dated September 18, 1998 (as hereinafter
defined) and all supplements thereto to be used in the Offerings. Such
Prospectus contains information with respect to the Company, MHC, the Bank and
the Shares.
2. Representations and Warranties.
(a) The Company, MHC and the Bank jointly and severally represent and
warrant to FBR that:
(i) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement, including exhibits and an
amendment or amendments thereto, on Form SB-2 (No. 333-63681), including a
Prospectus relating to the Offerings, for the registration of the Shares
and the Foundation Shares under the Securities Act of 1933, as amended (the
"Act"); and such registration statement has become effective under the Act
and no stop order has been issued with respect thereto and no proceedings
therefor have been initiated or, to the Company's best knowledge,
threatened by the Commission. Except as the context may otherwise require,
such registration statement, as amended or supplemented, on file with the
Commission at the time the registration statement became effective,
including the Prospectus, financial statements, schedules, exhibits and all
other documents filed as part thereof, as amended and supplemented, is
herein called the "Registration Statement," and the prospectus, as amended
or supplemented, on file with the Commission at the time the Registration
Statement became effective is herein called the "Prospectus," except that
if the prospectus filed by the Company with the Commission pursuant to Rule
424(b) of the general rules and regulations of the Commission under the
2
Act (together with the enforceable published policies and actions of the
Commission thereunder, the "SEC Regulations") differs from the form of
prospectus on file at the time the Registration Statement became effective,
the term "Prospectus" shall refer to the Rule 424(b) prospectus from and
after the time it is filed with or mailed for filing to the Commission and
shall include any amendments or supplements thereto from and after their
dates of effectiveness or use, respectively. If any Shares remain
unsubscribed following completion of the Subscription Offering and, if any,
the Community Offering, the Company (i) will promptly file with the
Commission a post-effective amendment to such Registration Statement
relating to the results of the Subscription Offering and, if any, the
Community Offering, any additional information with respect to the proposed
plan of distribution and any revised pricing information or (ii) if no such
post-effective amendment is required, will file with, or mail for filing
to, the Commission a prospectus or prospectus supplement containing
information relating to the results of the Subscription and the Community
Offerings and pricing information pursuant to Rule 424(c) of the
Regulations, in either case in a form reasonably acceptable to the Company,
and FBR.
(ii) The Bank has filed an application for approval to convert from
the mutual form of ownership to the stock form of ownership with the New
York State Bank Department (the "Department") and the Federal Deposit
Insurance Corporation ("FDIC"). The Department and the FDIC have approved
the Bank's application, including the waiver of certain provisions of
regulations specified in such approval with respect to the establishment of
and contribution to the Foundation. The Prospectus and the proxy statement
for the solicitation of proxies from members for the special meeting to
approve the Plan (the "Proxy Statement") included as part of the Bank's
application to convert have been approved for use by the Department and the
FDIC. No order has been issued by the Department or the FDIC preventing or
suspending the use of the Prospectus or the Proxy Statement; and no action
by or before the Department or the FDIC revoking such approvals is pending
or, to the Bank's best knowledge, threatened. Additionally, the MHC and the
Company have filed an application to register as a bank holding company
with the Federal Reserve Bank of New York ("FRB") and has received approval
from the FRB. (The Company, MHC and Bank applications are hereinafter
called the "Applications.")
(iii) At the date of the Prospectus and at all times subsequent
thereto through and including the Closing Date (i) the Registration
Statement and the Prospectus (as amended or supplemented, if amended or
supplemented) complied with the Act and the SEC Regulations, (ii) the
Registration Statement (as amended or supplemented, if amended or
supplemented) did not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and (iii) the Prospectus (as
amended or supplemented, if amended or supplemented) did not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in light
3
of the circumstances under which they were made, not misleading.
Representations or warranties in this subsection shall not apply to
statements or omissions made in reliance upon and in conformity with
written information furnished to the Company or the Bank relating to FBR by
or on behalf of FBR expressly for use in the Registration Statement or
Prospectus.
(iv) The Company has been duly incorporated and is in good standing as
a Delaware corporation, MHC has been duly incorporated and is in good
standing as a New York chartered mutual holding company, and the Bank has
been duly organized and has a corporate existence as a New York chartered
mutual savings bank, and each of them is validly existing under the laws of
the jurisdiction of its organization with full power and authority to own
its property and conduct its business as described in the Registration
Statement and Prospectus; the Bank is a member in good standing of the
Federal Home Loan Bank of New York; and the deposit accounts of the Bank
are insured up to applicable limits by the Bank Insurance Fund ("BIF") of
the Federal Deposit Insurance Corporation ("FDIC"). The Company, MHC and
the Bank are not required to be qualified to do business as a foreign
corporation in any jurisdiction except where non-qualification would have a
material adverse effect on the Company, the MHC and the Bank, taken as a
whole. The Bank does not own equity securities of or an equity interest in
any business enterprise except as described in the Prospectus. Upon
amendment of the Bank's mutual charter and bylaws to a stock charter and
bylaws, and completion of the sale by the Company of the Shares as
contemplated by the Prospectus, (i) the Bank will be converted pursuant to
the Plan to a New York chartered capital stock savings bank with full power
and authority to own its property and conduct its business as described in
the Prospectus, (ii) all of the authorized and outstanding capital stock of
the Bank will be owned of record and beneficially by the Company, (iii) the
Company will issue common stock to MHC and the public and (iv) the Company
will have no direct subsidiaries other than the Bank.
(v) The Bank has good, marketable and insurable title to all assets
material to its business and to those assets described in the Prospectus as
owned by it, free and clear of all material liens, charges, encumbrances or
restrictions, except for liens for taxes not yet due, except as described
in the Prospectus and except as could not in the aggregate have a material
adverse effect upon the operations or financial condition of the Bank; and
all of the leases and subleases material to the operations or financial
condition of the Bank, under which it holds properties, including those
described in the Prospectus, are in full force and effect as described
therein.
(vi) The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby and all actions in connection with
the contribution to the Foundation have been duly and validly authorized by
all necessary actions on the part of each of the Company, MHC and the Bank,
and this Agreement is a valid and binding obligation with valid
4
execution and delivery of each of the Company, MHC and the Bank,
enforceable in accordance with its terms (except as the enforceability
thereof may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar laws relating to or affecting the enforcement of
creditors' rights generally or the rights of creditors of savings and loan
holding companies the accounts of whose subsidiaries are insured by the
FDIC or by general equity principles, regardless of whether such
enforceability is considered in a proceeding in equity or at law, and
except to the extent that the provisions of Sections 8 and 9 hereof may be
unenforceable as against public policy or pursuant to Sections 23A or 23B
of the Federal Reserve Act, 12 U.S. C. Sections 371c ("Section 23A" or
371c-1 ("Section 23B")).
(vii) There is no litigation or governmental proceeding pending or, to
the best knowledge of the Company, MHC or the Bank, threatened against or
involving the Company, MHC, the Bank, or any of their respective assets
which individually or in the aggregate would reasonably be expected to have
a material adverse effect on the condition (financial or otherwise),
results of operations and business, including the assets and properties, of
the Company, MHC and the Bank, taken as a whole.
(viii) The Company, MHC and the Bank have received the opinions of
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C. with respect to federal and New
York State income tax consequences of the Reorganization, to the effect
that the Reorganization will constitute a tax-free reorganization under the
Internal Revenue Code of 1986, as amended, and will not be a taxable
transaction for the Bank or the Company under the laws of New York, and the
facts relied upon in such opinion are accurate and complete.
(ix) Each of the Company, MHC and the Bank has all such corporate
power, authority, authorizations, approvals and orders as may be required
to enter into this Agreement and to carry out the provisions and conditions
hereof and to issue and sell the shares in the Offerings, and to issue and
contribute the Foundation Shares, subject to the limitations set forth
herein and subject to the satisfaction of certain conditions imposed by the
Department, FDIC and the FRB in connection with its approvals of the
Applications, and except as may be required under the securities, or "blue
sky," laws of various jurisdictions, and in the case of the Company, as of
the Closing Date, will have such approvals and orders to issue and sell the
Shares to be sold by the Company as provided herein, and in the case of the
Bank, as of the Closing Date, will have such approvals and orders to issue
and sell the Shares of its Common Stock to be sold to the Company as
provided in the Plan, subject to the issuance of an amended charter in the
form required for New York State chartered stock savings banks (the "Stock
Charter"), the form of which Stock Charter has been approved by the
Department.
(x) To the best of its knowledge, neither the Company, MHC nor the
Bank is in violation of any rule or regulation of the Department or the
FDIC that could reasonably be expected to result in any enforcement action
against the
5
Company, MHC, the Bank, or their officers or directors that might have a
material adverse effect on the financial condition, operations, businesses,
assets or properties of the Company, MHC and the Bank, taken as a whole.
(xi) The consolidated financial statements and any related notes or
schedules which are included in the Registration Statement and the
Prospectus fairly present the consolidated financial condition, income,
retained earnings and cash flows of the Bank at the respective dates
thereof and for the respective periods covered thereby and comply as to
form with the applicable accounting requirements of the Regulations and the
applicable accounting regulations of the Department. Such financial
statements have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved,
except as set forth therein, and such financial statements are consistent
with financial statements and other reports filed by the Bank with
supervisory and regulatory authorities except as such generally accepted
accounting principles may otherwise require. The tables in the Prospectus
accurately present the information purported to be shown thereby at the
respective dates thereof and for the respective periods therein.
(xii) There has been no material change in the financial condition,
results of operations or business, including assets and properties, of the
Company, MHC and the Bank, taken as a whole, since the latest date as of
which such condition is set forth in the Prospectus, except as set forth
therein; and the capitalization, assets, properties and business of each of
the Company, MHC and the Bank conform to the descriptions thereof contained
in the Prospectus. None of the Company, MHC nor the Bank has any material
liabilities of any kind, contingent or otherwise, except as set forth in
the Prospectus.
(xiii) There has been no breach or default (or the occurrence of any
event which, with notice or lapse of time or both, would constitute a
default) under, or creation or imposition of any lien, charge or other
encumbrance upon any of the properties or assets of the Company, MHC and
the Bank pursuant to any of the terms, provisions or conditions of, any
agreement, contract, indenture, bond, debenture, note, instrument or
obligation to which the Company, MHC or the Bank is a party or by which any
of them or any of their respective assets or properties may be bound or is
subject, or violation of any governmental license or permit or any
enforceable published law, administrative regulation or order or court
order, writ, injunction or decree, which breach, default, encumbrance or
violation would have a material adverse effect on the financial condition,
operations, business, assets or properties of the Company, MHC and the Bank
taken as a whole; all agreements which are material to the financial
condition, results of operations or business of the Company, MHC and the
Bank taken as a whole are in full force and effect, and no party to any
such agreement has instituted or, to the best knowledge of the Company, MHC
and the Bank, threatened any action or proceeding wherein the Company, MHC
or the Bank would be alleged to be in default thereunder.
6
(xiv) None of the Company, MHC or the Bank is in violation of its
respective charter or bylaws. The execution and delivery hereof and the
consummation of the transactions contemplated hereby by the Company, MHC
and the Bank do not conflict with or result in a breach of the charter or
bylaws of the Company, MHC or the Bank (in either mutual or stock form) or
constitute a material breach of or default (or an event which, with notice
or lapse of time or both, would constitute a default) under, give rise to
any right of termination, cancellation or acceleration contained in, or
result in the creation or imposition of any lien, charge or other
encumbrance upon any of the properties or assets of the Company, MHC or the
Bank pursuant to any of the terms, provisions or conditions of, any
material agreement, contract, indenture, bond, debenture, note, instrument
or obligation to which the Company, MHC or the Bank is a party or violate
any governmental license or permit or any enforceable published law,
administrative regulation, order or court order, writ, injunction or decree
(subject to the satisfaction of certain conditions imposed by the
Department in connection with its approval of the Reorganization
Application), which breach, default, encumbrance or violation would have a
material adverse effect on the financial condition, operations or business
of the Company, MHC and the Bank taken as a whole.
(xv) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus and prior to the Closing
Date (as hereinafter defined), except as otherwise may be indicated or
contemplated therein, none of the Company, MHC or the Bank has issued any
securities which will remain issued at the Closing Date or incurred any
liability or obligation, direct or contingent, or borrowed money, except
borrowings in the ordinary course of business, or entered into any other
transaction not in the ordinary course of business and consistent with
prior practices, which is material in light of the business of the Company,
MHC and the Bank, taken as a whole.
(xvi) Upon consummation of the Reorganization, the authorized, issued
and outstanding equity capital of the Bank shall be within the range as set
forth in the Prospectus under the caption "Capitalization," and no Common
Stock of the Bank shall be outstanding immediately prior to the Closing
Date; the issuance and the sale of the Shares of the Bank and the
Foundation Shares have been duly authorized by all necessary action of the
Bank and approved by the Department and, when issued in accordance with the
terms of the Plan and paid for, shall be validly issued, fully paid and
nonassessable and shall conform to the description thereof contained in the
Prospectus; the issuance of the Shares or the Foundation Shares are not
subject to preemptive rights, except as set forth in the Prospectus; and
good title to the Shares will be transferred by the Company upon issuance
thereof against payment therefor, free and clear of all claims,
encumbrances, security interests and liens against the Company whatsoever.
The certificates representing the Shares and the Foundation Shares will
conform in all material respects with the requirements of applicable laws
and regulations. The issuance
7
and sale of the capital stock of the Bank to the Company and from the
Company to MHC and the public and the Foundation Shares has been duly
authorized by all necessary action of the Bank and the Company and
appropriate regulatory authorities (subject to the satisfaction of various
conditions imposed by the Department in connection with its approval of the
Reorganization Application), and such capital stock and Foundation Shares,
when issued in accordance with the terms of the Plan, will be fully paid
and nonassessable and will conform in all material respects to the
description thereof contained in the Prospectus.
(xvii) No approval of any regulatory or supervisory or other public
authority is required in connection with the execution and delivery of this
Agreement or the issuance of the Shares, except for the declaration of
effectiveness of any required post-effective amendment by the Commission
and approval thereof by the Department and the FDIC, and approval of MHC's
and Company's applications by the FRB, the issuance of the Stock Charter by
the Department and as may be required under the securities laws of various
jurisdictions.
(xiii) All material contracts and other documents required to be filed
as exhibits to the Registration Statement or the Reorganization Application
have been filed with the Commission and/or the Department or the FRB, as
the case may be.
(xix) Price Waterhouse Coopers LLP ("Pricewaterhouse"), which has
certified the financial statements of the Bank included in the Prospectus
as of June 30, 1998 and for each of the years in the two year period ended
June 30, 1998, is an independent public accountant within the meaning of
the Code of Professional Ethics of the American Institute of Certified
Public Accountants and Title 12 of the Code of Federal Regulations, Section
303.15.
(xx) For the past five years, the Company, MHC and the Bank have
timely filed all required federal, state and local franchise tax returns,
and no deficiency has been asserted with respect to such returns by any
taxing authorities, and the Company, MHC and the Bank have paid all taxes
that have become due and, to the best of their knowledge, have made
adequate reserves for similar future tax liabilities, except where any
failure to make such filings, payments and reserves, or the assertion of
such a deficiency, would not have a material adverse effect on the
condition of the Company, MHC and the Bank taken as a whole.
(xxi) All of the loans represented as assets of the Bank on the most
recent financial statements of the Bank included in the Prospectus meet or
are exempt from all requirements of federal, state or local law pertaining
to lending, including without limitation truth in lending (including the
requirements of Regulation Z and 12 C.F.R. Part 226 and Section 563.99),
real estate settlement procedures, consumer credit protection, equal credit
opportunity and all disclosure
8
laws applicable to such loans, except for violations which, if asserted,
would not have a material adverse effect on the Company, MHC and the Bank
taken as a whole.
(xxii) The records of account holders, depositors, borrowers and other
members of the Bank delivered to FBR by the Bank or its agent for use
during the Reorganization have been prepared or reviewed by the Bank and,
to the best knowledge of the Company, MHC and the Bank, are reliable and
accurate.
(xxiii) To the knowledge of the Company, MHC and the Bank, none of the
Company, the Bank nor directors or employees of the Company, MHC or the
Bank have made any payment of funds of the Company, MHC or the Bank as a
loan to any person other than the Employee Stock Ownership Plan Trust for
the purchase of the Shares.
(xxiv) To the best knowledge of the Company, MHC and the Bank, the
Company, MHC and the Bank are in compliance with all laws, rules and
regulations relating to the discharge, storage, handling and disposal of
hazardous or toxic substances, pollutants or contaminants and neither the
Company, MHC nor the Bank believes that the Company, MHC or the Bank is
subject to liability under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, or any similar law,
except for violations which, if asserted, would not have a material adverse
effect on the Company, MHC and the Bank, taken as a whole. There are no
actions, suits, regulatory investigations or other proceedings pending or,
to the best knowledge of the Company, MHC or the Bank, threatened against
the Company or the Bank relating to the discharge, storage, handling and
disposal of hazardous or toxic substances, pollutants or contaminants. To
the best knowledge of the Company, MHC and the Bank, no disposal, release
or discharge of hazardous or toxic substances, pollutants or contaminants,
including petroleum and gas products, as any of such terms may be defined
under federal, state or local law, has been caused by the Company, MHC or
the Bank or, to the best knowledge of the Company, MHC or the Bank, has
occurred on, in or at any of the facilities or properties of the Company,
MHC or the Bank, except such disposal, release or discharge which would not
have a material adverse effect on the Company, MHC and the Bank, taken as a
whole.
(xxv) At the Closing Date, the Company, MHC and the Bank will have
completed the conditions precedent to, and shall have conducted the
Reorganization in all material respects in accordance with, the Plan, the
Department Regulations, FRB and all other applicable laws, regulations,
published decisions and orders, including all terms, conditions,
requirements and provisions precedent to the Reorganization imposed by the
Department and FRB.
(xxvi) The Foundation has been duly incorporated and is validly
existing as a private charitable foundation in good standing under the laws
of the State of Delaware with corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Prospectus; the
9
Foundation will not be a savings and loan holding company within the
meaning of 12 C.F.R. Section 574.2(q) as a result of the issuance of the
Foundation Shares to it in accordance with the terms of the Plan and in the
amounts as described in the Prospectus to the knowledge of the Bank, MHC
and the Company, all approvals required to establish the Foundation and to
contribute the Foundation Shares thereto have been performed as described
in the Prospectus; except as specifically disclosed in the Prospectus and
the Proxy Statement, there are no agreements and/or understandings, written
or oral or otherwise, between the Company, MHC and/or the Bank and the
Foundation with respect to the control, directly or indirectly, over the
voting and the acquisition or disposition of the shares of Common Stock to
be contributed by the Company to the Foundation; the Foundation Shares to
be issued to the Foundation in accordance with the Plan and as described in
the Prospectus will have been duly authorized for issuance and, when issued
and contributed by the Company pursuant to the Plan, will be duly and
validly issued and fully paid and non-assessable.
(b) FBR represents and warrants to the Company, MHC and the Bank that:
(i) FBR is registered as a broker-dealer with the Commission, and is
in good standing with the Commission and the NASD.
(ii) FBR is validly existing as a corporation in good standing under
the laws of Delaware, with full corporate power and authority to provide
the services to be furnished to the Company and the Bank hereunder.
(iii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary action on the part of FBR, and this
Agreement is a legal, valid and binding obligation of FBR, enforceable in
accordance with its terms (except as the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, reorganization or similar
laws relating to or affecting the enforcement of creditors' rights
generally or the rights of creditors of registered broker-dealers accounts
of whose may be protected by the Securities Investor Protection Corporation
or by general equity principles, regardless of whether such enforceability
is considered in a proceeding in equity or at law, and except to the extent
that the provisions of Sections 8 and 9 hereof may be unenforceable as
against public policy or pursuant to Section 23A or Section 23B).
(iv) To FBR's knowledge, its employees, agents and representatives who
shall perform any of the services required hereunder to be performed by FBR
shall be duly authorized and shall have all licenses, approvals and permits
necessary to perform such services, and FBR is a registered selling agents
in the jurisdictions listed in Exhibit A hereto and will remain registered
in such jurisdictions in which the Company is relying on such registration
for the sale of the Shares, until the Reorganization is consummated or
terminated.
10
(v) The execution and delivery of this Agreement by FBR, the
fulfillment of the terms set forth herein and the consummation of the
transactions contemplated hereby shall not violate or conflict with the
corporate charter or bylaws of FBR or violate, conflict with or constitute
a breach of, or default (or an event which, with notice or lapse of time,
or both, would constitute a default) under, any material agreement,
indenture or other instrument by which FBR is bound or under any
governmental license or permit or any law, administrative regulation,
authorization, approval or order or court decree, injunction or order.
(vi) Any funds received by FBR to purchase Common Stock will be
handled in accordance with Rule 15c2-4 under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
(vii) There is not now pending or, to FBR's knowledge, threatened
against FBR any action or proceeding before the Commission, the NASD, any
state securities commission or any state or federal court concerning FBR's
activities as broker-dealers.
3. Employment of FBR: Sale and Delivery of the Shares. On the basis of the
representations and warranties herein contained, but subject to the terms and
conditions herein set forth, the Company, MHC and the Bank hereby employ FBR as
its agents to utilize their efforts in assisting the Company with the Company's
sale of the Shares in the Subscription Offering and Community Offering.
In the event the Company is unable to sell a minimum of 814,249 Shares (or
such lesser amount as the Department may permit) within the period herein
provided, this Agreement shall terminate, and the Company, MHC and the Bank
shall refund promptly to any persons who have subscribed for any of the Shares,
the full amount which it may have received from them, together with interest as
provided in the Prospectus, and no party to this Agreement shall have any
obligation to the other party hereunder, except as set forth in Sections 6, 8(a)
and 9 hereof. Appropriate arrangements for placing the funds received from
subscriptions for Shares in special interest-bearing accounts with the Bank
until all Shares are sold and paid for were made prior to the commencement of
the Subscription and Community Offering, with provision for prompt refund to the
purchasers as set forth above, or for delivery to the Company if all Shares are
sold.
If all conditions precedent to the consummation of the Reorganization are
satisfied, including the sale of all Shares required by the Plan to be sold, the
Company agrees to issue or have issued such Shares and to release for delivery
certificates to subscribers thereof for such Shares on the Closing Date against
payment to the Company by any means authorized pursuant to the Prospectus, at
the principal office of the Company at ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or at such other place as shall be agreed upon between the
parties hereto. The date upon which FBR is paid the compensation due hereunder
is herein called the "Closing Date."
FBR agrees either (a) upon receipt of an executed order form of a
subscriber to forward the offering price of the Common Stock ordered on or
before twelve noon on the next business day
11
following receipt or execution of an order form by FBR to the Bank for deposit
in a segregated account or (b) to solicit indications of interest in which event
(i) FBR will subsequently contact any potential subscriber indicating interest
to confirm the interest and give instructions to execute and return an order
form or to receive authorization to execute the order form on the subscribers
behalf, (ii) FBR will mail acknowledgments of receipt of orders to each
subscriber confirming interest on the business day following such confirmation,
(iii) FBR will debit accounts of such subscribers on the third business day
("debit date") following receipt of the confirmation referred to in M, and (iv)
FBR will forward completed order forms together with such funds to the Bank on
or before twelve noon on the next business day following the debit date for
deposit in a segregated account. FBR acknowledges that if the procedure in (b)
is adopted, subscribers, funds are not required to be in their accounts until
the debit date.
In addition to the expenses specified in Section 6 hereof, FBR shall
receive the following compensation for its services hereunder:
(a) A management fee of $25,000 payable as follows; $12,500 upon signing of
this letter and $25,000 upon receiving regulatory approval of the Plan
Application. Should the Plan be terminated for any reason not attributable to
the action or inaction of FBR, FBR shall have earned and be entitled to be paid
fees accruing through the stage at which point the termination occured.
(b) A fixed marketing fee of $110,000. The management fee of $25,000 will
be subtracted from the marketing fee.
(c) The balance of the foregoing commissions are to be payable to FBR at
closing as defined in the agreement to be entered into between FBR and Green
County
(d) FBR shall be reimbursed for allowable expenses, incurred by them
whether or not the Offerings are successfully completed; provided, however, that
reimbursable legal fees (non "Blue Sky" related matters) will not exceed $40,000
exclusive of disbursements, that other reimbursable expenses will not exceed
$25,000 and that neither the Company nor the Bank shall pay or reimburse FBR for
any of the foregoing expenses accrued after FBR shall have notified the Company
or the Bank of its election to terminate this Agreement pursuant to Section 11
hereof or after such time as the Company or the Bank shall have given notice in
accordance with Section 12 hereof that FBR is in breach of this Agreement. Full
payment to defray FBR's reimbursable expenses shall be made in next-day funds on
the Closing Date or, if the Reorganization is not completed and is terminated
for any reason, within ten (10) business days of receipt by the Company of a
written request from FBR for reimbursement of its expenses. FBR acknowledges
receipt of $12,500 advance payment from the Bank which shall be credited against
the total reimbursement due FBR hereunder.
(e) Notwithstanding the limitations on reimbursement of FBR for allocable
expenses provided in the immediately preceding paragraph (d), in the event that
a resolicitation or other event causes the Offerings to be extended beyond their
original expiration date, FBR shall be reimbursed for their allocable expenses
incurred during such extended period, provided that the
12
allowance for allowable expenses provided for in the immediately preceding
paragraph (d) above have been exhausted and subject to the following.
The Company shall pay any stock issue and transfer taxes which may be
payable with respect to the sale of the Shares. The Company and the Bank shall
also pay all expenses of the Reorganization incurred by them or on their prior
approval including but not limited to their attorneys' fees, NASD filing fees,
and attorneys' fees relating to any required state securities laws research and
filings, telephone charges, air freight, rental equipment, supplies, transfer
agent charges, fees relating to auditing and accounting and costs of printing
all documents necessary in connection with the Reorganization.
4. Offering. Subject to the provisions of Section 7 hereof, FBR is
assisting the Company on a best efforts basis in offering a minimum of 814,249
and a maximum of 1,101,631 Shares, with the possibility of offering up to
1,266,876 Shares (except as the Department and the FDIC may permit such amount
to be decreased or increased) in the Subscription and Community Offerings. The
Shares are to be offered to the public at the price set forth on the cover page
of the Prospectus and the first page of this Agreement.
5. Further Agreements. The Company, MHC and the Bank jointly and severally
covenant and agree that:
(a) The Company shall deliver to FBR, from time to time, such number of
copies of the Prospectus as FBR reasonably may request. The Company authorizes
FBR to use the Prospectus in any lawful manner in connection with the offer and
sale of the Shares.
(b) The Company will notify FBR immediately upon discovery, and confirm the
notice in writing, (i) when any post-effective amendment to the Registration
Statement becomes effective or any supplement to the Prospectus has been filed,
(ii) of the issuance by the Commission of any stop order relating to the
Registration Statement or of the initiation or the threat of any proceedings for
that purpose, (iii) of the receipt of any notice with respect to the suspension
of the qualification of the Shares for offering or sale in any jurisdiction, and
Uv) of the receipt of any comments from the staff of the Commission relating to
the Registration Statement. If the Commission enters a stop order relating to
the Registration Statement at any time, the Company will make every reasonable
effort to obtain the lifting of such order at the earliest possible moment.
(c) During the time when a prospectus is required to be delivered under the
Act, the Company will comply so far as it is able with all requirements imposed
upon it by the Act, as now in effect and hereafter amended, and by the
Regulations, as from time to time in force, so far as necessary to permit the
continuance of offers and sales of or dealings in the Shares in accordance with
the provisions hereof and the Prospectus. If during the period when the
Prospectus is required to be delivered in connection with the offer and sale of
the Shares any event relating to or affecting the Company, MHC and the Bank,
taken as a whole, shall occur as a result of which it is necessary, in the
opinion of counsel for FBR, with the concurrence of counsel to the Company, to
amend or supplement the Prospectus in order to make the Prospectus not false or
misleading in light of the circumstances existing at the time it is delivered to
a
13
purchaser of the Shares, the Company forthwith shall prepare and furnish to FBR
a reasonable number of copies of an amendment or amendments or of a supplement
or supplements to the Prospectus (in form and substance satisfactory to counsel
for FBR) which shall amend or supplement the Prospectus so that, as amended or
supplemented, the Prospectus shall not contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances existing at the time the Prospectus is
delivered to a purchaser of the Shares, not misleading. The Company will not
file or use any amendment or supplement to the Registration Statement or the
Prospectus of which FBR has not first been furnished a copy or to which FBR
shall reasonably object after having been furnished such copy. For the purposes
of this subsection the Company and the Bank shall furnish such information with
respect to themselves as FBR from time to time may reasonably request.
(d) The Company, MHC and the Bank have taken or will take all reasonably
necessary action as may be required to qualify or register the Shares for offer
and sale by the Company under the securities or blue sky laws of such
jurisdictions as FBR and either the Company or its counsel may agree upon;
provided, however, that the Company shall not be obligated to qualify as a
foreign corporation to do business under the laws of any such jurisdiction. in
each jurisdiction where such qualification or registration shall be effected,
the Company, unless FBR agrees that such action is not necessary or advisable in
connection with the distribution of the Shares, shall file and make such
statements or reports as are, or reasonably may be, required by the laws of such
jurisdiction.
(e) Appropriate entries will be made in the financial records of the Bank
sufficient to establish a liquidation account for the benefit of eligible
account holders as of June 30, 1997 and supplemental eligible account holders as
of September 30, 1998 in accordance with the requirements of the Department and
the FDIC.
(f) The Company will file a registration statement for the Common Stock
under Section 12(g) of the Exchange Act, prior to completion of the stock
offering pursuant to the Plan and shall request that such registration statement
be effective upon completion of the Reorganization. The Company shall maintain
the effectiveness of such registration for a minimum period of three years or
for such shorter period as may be required by applicable law.
(g) The Company will make generally available to its security holders as
soon as practicable, but not later than 45 days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 of the regulations promulgated under the Act) covering a twelve-month
period beginning not later than the first day of the Company's fiscal quarter
next following the effective date (as defined in said Rule 158) of the
Registration Statement.
(h) For a period of three (3) years from the date of this Agreement (unless
the Common Stock shall have been deregistered under the Exchange Act), the
Company will furnish to FBR, as soon as publicly available after the end of each
fiscal year, a copy of its annual report to shareholders for such year; and the
Company will furnish to FBR was soon as publicly available, a copy of each
report or definitive proxy statement of the Company filed with the
14
Commission under the Exchange Act or mailed to shareholders, and (ii) from time
to time, such other public information concerning the Company as FBR may
reasonably request.
(i) The Company shall use the net proceeds from the sale of the Shares
consistently with the manner set forth in the Prospectus.
(j) The Company shall not deliver the Shares until each and every condition
set forth in Section 7 hereof has been satisfied, unless such condition is
waived by FBR.
(k) The Company shall advise FBR, if necessary, as to the allocation of
deposits, in the case of eligible account holders and supplemental eligible
account holders and votes, in the case of other members, and of the Shares in
the event of an oversubscription and shall provide FBR final instructions as to
the allocation of the Shares ("Allocation Instructions") in such event and such
information shall be accurate and reliable. FBR shall be entitled to rely on
such instructions and shall have no liability in respect of its reasonable
reliance thereon, including without limitation, no liability for or related to
any denial or grant of a subscription in whole or in part.
(1) The Company, MHC and the Bank will take such actions and furnish such
information as are reasonably requested by FBR in order for FBR to ensure
compliance with the NASD's "Interpretation Relating to Free-Riding and
withholding."
(m) The Company, MHC and the Bank shall use their best efforts to ensure
that the Foundation submits within the time frames required by applicable law a
request to the Internal Revenue Service to be recognized as a tax-exempt
organization under Section 501(c)(3) of the Internal Revenue Code of 1986, as
amended (the "Code"); the Company, MHC and the Bank will take no action which
will result in the possible loss of the Foundation's tax-exempt status; and
neither the Company, MHC nor the Bank will contribute any additional assets to
the Foundation until such time that such additional contributions will be
deductible for federal and state income tax purposes.
6. Payment of Expenses. Whether or not the Reorganization is consummated,
the Company, MHC and the Bank shall pay or reimburse FBR for (a) all filing fees
paid or incurred by FBR in connection with all filings with the NASD with
respect to the Subscription and Community Offerings and, (b) in addition, if the
Company is unable to sell a minimum of 814,249 Shares or such lesser amount as
the Department may permit or the Reorganization is otherwise terminated, the
Company and the Bank shall reimburse FBR for allowable expenses incurred by FBR
relating to the offering of the Shares as provided in Section 3 hereof;
provided, however, that neither the Company nor the Bank shall pay or reimburse
FBR for any of the foregoing expenses accrued after FBR shall have notified the
Company or the Bank of its election to terminate this Agreement pursuant to
Section 11 hereof or after such time as the Company or the Bank shall have given
notice in accordance with Section 12 hereof that FBR are in breach of this
Agreement.
7. Conditions of FBR Obligations. Except as may be waived by FBR, the
obligations of FBR as provided herein shall be subject to the accuracy of the
representations and
15
warranties contained in Section 2 hereof as of the date hereof and as of the
Closing Date, to the performance by the Company, MHC and the Bank of their
obligations hereunder and to the following conditions:
(a) At the Closing Date, FBR shall receive the favorable opinion of Luse,
Lehman, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, special counsel for the Company and the Bank,
dated the Closing Date, addressed to FBR, in form and substance reasonably
satisfactory to counsel for FBR substantially as set forth in Exhibit B hereto.
In rendering such opinions, such counsel may rely as to matters of fact on
certificates of officers and directors of the Company, MHC and the Bank and
certificates of public officials delivered pursuant hereto. Such counsel may
assume that any agreement is the valid and binding obligation of any parties to
such agreement other than the Company, MHC and the Bank. Such opinions may be
governed by, and interpreted in accordance with, the Legal Opinion Accord (the
"Accord") of the ABA Section of Business Law (1991), and, as a consequence,
references in such opinions to such counsel's "knowledge" may be limited to
"actual knowledge" as defined in the Accord (or knowledge based on
certificates). Such opinions may be limited to present statutes, regulations and
judicial interpretations and to facts as they presently exist; in rendering such
opinions, such counsel need assume no obligation to revise or supplement them
should the present laws be changed by legislative or regulatory action, judicial
decision or otherwise; and such counsel need express no view, opinion or belief
with respect to whether any proposed or pending legislation, if enacted, or any
regulations or any policy statements issued by any regulatory agency, whether or
not promulgated pursuant to any such legislation, would affect the validity of
the execution and delivery by the Company, MHC and the Bank of this Agreement or
the issuance of the Shares.
(b) At the Closing Date, FBR shall receive the letter of Luse, Lehman,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, dated the Closing Date, addressed to FBR, in form and
substance reasonably satisfactory to counsel for FBR substantially as set forth
in Exhibit C, hereto:
(c) Counsel for FBR shall have been furnished such documents as they
reasonably may require for the purpose of enabling them to review or pass upon
the matters required by FBR, and for the purpose of evidencing the accuracy,
completeness or satisfaction of any of the representations, warranties or
conditions herein contained, including but not limited to, resolutions of the
Board of Directors of the Company, MHC and the Bank regarding the authorization
of this Agreement and the transactions contemplated hereby.
(d) Prior to and at the Closing Date, in the reasonable opinion of FBR, (i)
there shall have been no material change in the financial condition, business or
results of operations of the Company, MHC and the Bank, taken as a whole, since
the latest date as of which such condition is set forth in the Prospectus,
except as referred to therein; (ii) there shall have been no transaction entered
into by the Company, MHC and the Bank after the latest date as of which the
financial condition of the Company, MHC or the Bank is set forth in the
Prospectus other than transactions referred to or contemplated therein,
transactions in the ordinary course of business, and transactions which are not
material to the Company, MHC and the Bank, taken as a whole; (iii) none of the
Company, MHC or the Bank shall have received from the Department, FRB or
16
Commission any direction (oral or written) to make any change in the method of
conducting their respective businesses which is material to the business of the
Company, MHC and the Bank, taken as a whole, with which they have not complied;
(iv) no action, suit or proceeding, at law or in equity or before or by any
federal or state commission, board or other administrative agency, shall be
pending or threatened against the Company, MHC or the Bank or affecting any of
their respective assets, wherein an unfavorable decision, ruling or finding
would have a material adverse effect on the business, operations, financial
condition or income of the Company, MHC and the Bank, taken as a whole; and (v)
the Shares shall have been qualified or registered for offering and sale by the
Company under the securities or blue sky laws of such jurisdictions as FBR and
the Company shall have agreed upon.
At the Closing Date, FBR shall receive a certificate of the principal
executive officer and the principal financial officer of each of the Company,
MHC and the Bank, dated the Closing Date, to the effect that: (i) they have
examined the Prospectus and, at the time the Prospectus became authorized by the
Company for use, the Prospectus did not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading with respect to the Company, MHC or the Bank; (ii) since the date
the Prospectus became authorized by the Company for use, no event has occurred
which should have been set forth in an amendment or supplement to the Prospectus
which has not been so set forth, including specifically, but without limitation,
any material change in the business, financial condition or results of
operations of the Company, MHC or the Bank and, the conditions set forth in
clauses (ii) through (iv) inclusive of subsection (d) of this Section 7 have
been satisfied; (iii) to the best knowledge of such officers, no order has been
issued by the Commission, FRB, FDIC or the Department to suspend the
Subscription Offering or the Community Offering or the effectiveness of the
Prospectus, and no action for such purposes has been instituted or threatened by
the Commission or the Department; (iv) to the best knowledge of such officers,
no person has sought to obtain review of the final actions of the FDIC,
Department or FRB approving the Plan; and (v) all of the representations and
warranties contained in Section 2 of this Agreement are true and correct, with
the same force and effect as though expressly made on the Closing Date.
At the Closing Date, FBR shall receive, among other documents, (i) copies
of the letters from the FDIC and the Department authorizing the use of the
Prospectus and the Proxy Statement, (ii) a copy of the order of the Commission
declaring the Registration Statement effective; (iii) copies of the letters from
the Department evidencing the corporate existence of the Bank and MHC; (iv) a
copy of the letter from the appropriate Delaware authority evidencing the
incorporation (and, if generally available from such authority, good standing)
of the Company; (v) a copy of the Company's corporate charter certified by the
appropriate Delaware governmental authority; and, (vi) if available, a copy of
the letter from the Department approving the Bank's Stock Charter.
(g) As soon as available after the Closing Date, FBR shall receive a copy
of the Bank's certified New York State Stock Charter executed by the appropriate
state governmental authority.
17
(h) Concurrently with the execution of this Agreement, FBR acknowledges
receipt of a letter from Pricewaterhouse LLP, independent certified public
accountants, addressed to FBR and the Company, in substance and form
satisfactory to counsel for FBR, with respect to the financial statements and
certain financial information contained in the Prospectus.
(i) At the Closing Date, FBR shall receive a letter in form and substance
satisfactory to counsel for FBR from Pricewaterhouse, LLP, independent certified
public accountants, dated the Closing Date and addressed to FBR and the
.Company, confirming the statements made by them in the letter delivered by them
pursuant to the preceding subsection as of a specified date not more than five
(5) days prior to the Closing Date.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are, in the reasonable
opinion of FBR and their counsel, satisfactory to FBR and their counsel. Any
certificates signed by an officer or director of the Company or the Bank
prepared for FBR's reliance and delivered to FBR or to counsel for FBR shall be
deemed a representation and warranty by the Company, MHC and the Bank to FBR as
to the statements made therein. If any condition to FBR's obligations hereunder
to be fulfilled prior to or at the Closing Date is not so fulfilled, FBR may
terminate this Agreement or, if FBR so elects, may waive any such conditions
which have not been fulfilled, or may extend the time of their fulfillment. If
FBR terminate this Agreement as aforesaid, the Company, MHC and the Bank shall
reimburse FBR for their expenses as provided in Section 3(b) hereof.
8. Indemnification.
(a) The Company, the MHC, and the Bank jointly and severally agree to
indemnify and hold harmless the Agent, its officers, directors, agents, servants
and employees and each person, if any, who controls the Agent within the meaning
of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act, against any and
all loss, liability, claim, damage or expense whatsoever (including but not
limited to settlement expenses), joint or several, that the Agent or any of them
may suffer or to which the Agent and any such persons may become subject under
all applicable federal or state laws or otherwise, and to promptly reimburse the
Agent and any such persons upon written demand for any expense (including fees
and disbursements of counsel) incurred by the Agent or any of them in connection
with investigating, preparing or defending any actions, proceedings or claims
(whether commenced or threatened) to the extent such losses, claims, damages,
liabilities or actions: (i) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment or supplement thereto), preliminary or final
Prospectus (or any amendment or supplement thereto), the Conversion Application
(or any amendment or supplement thereto), the Holding Company Application or any
blue sky application or other instrument or document executed by the Company, or
the Bank based upon written information supplied by the Company, the MHC, or the
Bank filed in any state or jurisdiction to register or qualify any or all of the
Shares or to claim an exemption therefrom, or provided to any state or
jurisdiction to exempt the Company as a broker-dealer or its officers, directors
and employees as -broker-dealers-or agents, under the securities laws thereof
(collectively, the "Blue Sky Application"), or any application or other
document, advertisement, oral statement or communication ("Sales Information")
prepared, made or executed by or on behalf of the Company, the MHC, or the
18
Bank with their consent or based upon written or oral information furnished by
or on behalf of the Company, the MHC, or the Bank, whether or not filed in any
jurisdiction, in order to qualify or register the Shares or to claim an
exemption therefrom under the securities laws thereof, (ii) arise out of or
based upon the omission or alleged omission to state in any of the foregoing
documents or information, a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; or (iii) arise from any theory of
liability whatsoever relating to or arising from or based upon the Registration
Statement (or any amendment or supplement thereto), preliminary or final
Prospectus (or any amendment or supplement thereto), the Conversion Application
(or any amendment or supplement thereto), any Blue Sky Application or Sales
Information or other documentation distributed in connection with the
Conversion; provided, however, that no indemnification is required under this
paragraph (a) to the extent such losses, claims, damages, liabilities or actions
arise out of or are based upon any untrue material statement or alleged untrue
material statements in, or material omission or alleged material omission from,
the Registration Statement (or any amendment or supplement thereto), preliminary
or final Prospectus (or any amendment or supplement thereto), the Conversion
Application, any Blue Sky Application or Sales Information made in reliance upon
and in conformity with information furnished in writing to the Company or the
Bank by the Agent regarding the Agent and provided further that such
indemnification shall be to the extent permitted by the FRB and the FDIC. The
Bank will not be liable to any indemnified party under the foregoing
indemnification and reimbursement provisions, (i) for any settlement by an
indemnified party effected without its prior written consent; or (ii) to the
extent that any loss, claim, damage or liability is found in a final judgment by
a court to have resulted primarily from the Agent's gross negligence or willful
misconduct. The Agent shall repay to the Bank any amounts paid by the Bank for
reimbursement of the Agent's and any indemnified party's expenses in the event
that such expenses were incurred in relation to an act or omission with respect
to which it is finally determined that the Agent has acted in gross negligence
or with willful misconduct. The Bank also agrees that no indemnified party shall
have any liability (whether direct or indirect, in contract or tort or
otherwise) to the Bank or its security holders or creditors related to or
arising out of the engagement of the Agent pursuant to, or the performance by
the Agent of the services contemplated by, this Agreement except to the extent
that any loss, claim, damage or liability is found in a final judgment by a
court to have resulted primarily from the Agent's gross negligence or willful
misconduct.
(b) The Agent agrees to indemnify and hold harmless the Company, the MHC,
and the Bank, their directors and officers and each person, if any, who controls
the Company, the MHC, or the Bank within the meaning of Section 15 of the 1933
Act or Section 20(a) of the 1934 Act against any and all loss, liability, claim,
damage or expense whatsoever (including but-not limited to settlement expenses),
joint or several, which they, or any of them, may suffer or to which they, or
any of them may become subject under all applicable federal and state laws or
otherwise, and to promptly reimburse the Company, the MHC, the Bank, and any
such persons upon written demand for any expenses (including reasonable fees and
disbursements of counsel) incurred by them, or any of them, in connection with
investigating, preparing or defending any actions, proceedings or claims
(whether commenced or threatened) to the extent such losses, claims, damages,
liabilities or actions arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any
19
amendment or supplement thereto), the Conversion Application (or any amendment
or supplement thereto) or the preliminary or final Prospectus (or any amendment
or supplement thereto), or are based upon the omission or alleged omission to
state in any of the foregoing documents a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the Agent's obligations under this Section 8(b) shall exist only if and
only to the extent (i) that such untrue statement or alleged untrue statement
was made in, or such material fact or alleged material fact was omitted from,
the Registration Statement (or any amendment or supplement thereto), the
preliminary or final Prospectus (or any amendment or supplement thereto) or the
Conversion Application (or any amendment or supplement thereto), any Blue Sky
Application or Sales Information in reliance upon and in conformity with
information furnished in writing to the Company or the Bank by the Agent
regarding the Agent. In no case shall the Agent be liable or responsible for any
amount in excess of the fees received by the Agent pursuant to Section 2 of this
Agreement.
(c) Each indemnified party shall given prompt written notice to each
indemnifying party of any action, proceeding, claim (whether commenced or
threatened), or suit instituted against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve it from any liability which it may have on account of this Section 8 or
otherwise. An indemnifying party may participate at its own expense in the
defense of such action. In addition, if it so elects within a reasonable time
after receipt of such notice, an indemnifying party, jointly with any other
indemnifying parties receiving such notice, may assume defense of such action
with counsel chosen by it and approved by the indemnified parties that are
defendants in such action, unless such indemnified parties reasonably object to
such assumption on the ground that there may be legal defenses available to them
that are different from or in addition to those available to such indemnifying
party. If an indemnifying party assumes the defense of such action, the
indemnifying parties shall not be liable for any fees and expenses of counsel
for the indemnified parties incurred thereafter in connection with such action,
proceeding or claim, other than reasonable costs of investigation. In no event
shall the indemnifying parties be liable for the fees and expenses of more than
one separate firm of attorneys (and any special counsel that said firm may
retain) for each indemnified party in connection with any one action, proceeding
or claim or separate but similar or related actions, proceedings or claims in
the same jurisdiction arising out of the same general allegations or
circumstances.
(d) The agreements contained in this Section 8 and in Section 9 hereof and
the representations and warranties of the Company, the MHC, and the Bank set
forth in this Agreement shall remain operative and in full force and effect
regardless of: (i) any investigation made by or on behalf of the Agent or its
officers, directors or controlling persons, agents or employees or by or on
behalf of the Company, the MHC or the Bank or any officers, directors or
controlling persons, agents or employees of the Company, the MHC, or the Bank;
(ii) deliver of and payment hereunder for the Shares; or (iii) any termination
of this Agreement.
(e) To the extent required by law, this Section 8 is subject to and limited
by the provisions of Sections 23A and 23B of the Federal Reserve Act, 12 U.S.C.
Sections 371c and 371c-1 ("Sections 23A and 2313").
20
9. Survival of Agreements, Representations and Indemnities. The respective
indemnities of the Company, MHC and the Bank and FBR and the representation and
warranties of the Company, MHC and the Bank and of FBR set forth in or made
pursuant to this Agreement shall remain in full force and effect, regardless of
any termination or cancellation of this Agreement or any investigation made by
or on behalf of FBR or the Company, MHC or the Bank or any controlling person or
indemnified party referred to in Section 8 hereof, and shall survive any
termination or consummation of this Agreement and/or the issuance of the Shares,
and any legal representative of FBR, the Company, MHC, the Bank and any such
controlling persons shall be entitled to the benefit of the respective
agreements, indemnities, warranties and representations.
10. Termination. FBR may terminate this Agreement by giving the notice
indicated below in this Section at any time after this Agreement becomes
effective as follows:
(a) If any domestic or international event or act or occurrence has
materially disrupted the United States securities markets such as to make it, in
FBR's reasonable opinion, impracticable to proceed with the offering of the
Shares; or if trading on the New York Stock Exchange shall have suspended; or if
the United States shall have become involved in a war or major hostilities; or
if a general banking moratorium has been declared by a state or federal
authority which has material effect on the Bank or the Reorganization; or if a
moratorium in foreign exchange trading by major international associations or
persons has been declared; or if there shall have been a material change in the
capitalization, condition or business of the Company, MHC or if the Bank shall
have sustained a material or substantial loss by fire, flood, accident,
hurricane, earthquake, theft, sabotage or other calamity or malicious act,
whether or not said loss shall have been insured; or if there shall have been a
material change in the condition or prospects of the Company, MHC or the Bank.
(b) If FBR elects to terminate this Agreement as provided in this Section,
the Company, MHC and the Bank shall be notified promptly by FBR by telephone or
telegram and confirmed by letter.
(c) If this Agreement is terminated by FBR for any of the reasons set forth
in subsection (a) above, and to fulfill its obligations, if any, pursuant to
Sections 3, 6, 8(a) and 9 of this Agreement and upon demand, the Company, MHC
and the Bank shall pay FBR the full amount so owing thereunder.
(d) The Bank may terminate the Reorganization in accordance with the terms
of the Plan. Such termination shall be without liability to any party, except
that the Company, MHC and the Bank shall be required to fulfill their
obligations, to the extent applicable, pursuant to Sections 3(b), 3(c), 6, 8(a)
and 9 of this Agreement.
11. Notices. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and if sent to FBR shall be mailed,
delivered or telegraphed and confirmed to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co., Inc.,
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ (with a
copy to: ▇▇▇▇▇▇ ▇▇▇▇▇ LLP, ▇▇▇▇ ▇ ▇▇▇▇▇▇,
▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and if sent to the Company or the
Bank shall be mailed, delivered or telegraphed and confirmed to ▇▇▇▇▇▇ County
Bancorp, Inc., ▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President and Chief Executive Officer (with a copy to Luse,
Lehman, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇, Esq.).
12. Parties. This Agreement shall inure solely to the benefit of, and shall
be binding upon, FBR, the Company, MHC, the Bank and the controlling and other
persons referred to in Section 8 hereof, and their respective successors, legal
representatives and assigns, and no other person shall have or be construed to
have any legal or equitable right, remedy or claim under or in respect of or by
virtue of this Agreement or any provision herein contained.
13. Construction. Unless governed by preemptive federal law, this Agreement
shall be governed by and construed in accordance with the substantive laws of
New York.
14. Counterparts. This Agreement may be executed in separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which together shall constitute but one and the same instrument.
22
Please acknowledge your agreement to the foregoing by signing below and
returning to the Company one copy of this letter.
▇▇▇▇▇▇ COUNTY ▇▇▇▇▇▇ COUNTY
By:__________________________ By:________________________
J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
President and Chief Executive President and Chief Executive
Officer Officer
Date:______________________ Date:____________________
▇▇▇▇▇▇ COUNTY BANCORP, MHC
By:__________________________
J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
President and Chief Executive
Officer
Date:______________________
Agreed to and accepted:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & CO., INC.
By:__________________________
Date:______________________
23
Exhibit A
Jurisdictions where ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co., Inc. is a Registered
Selling Agent ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co., Inc. is a registered selling agent
in the jurisdictions listed below.
24
Exhibit B
[▇▇▇▇, ▇▇▇▇▇▇ to insert introduction]
(i) the Company and the MHC have each been duly incorporated, and are
validly existing as corporations in good standing under the laws of their
jurisdiction of incorporation, and the Bank is validly existing as a mutual
savings association under the laws of the State of New York, each with full
power and authority to own its properties and conduct its business as described
in the Prospectus;
(ii) the Bank is a member of the Federal Home Loan Bank of New York, and
the deposit accounts of the Bank are insured by the BIF up to the applicable
legal limits;
(iii) to the best of our knowledge, the activities of the Bank as such
activities are described in the Prospectus are permitted under laws of the State
of New York State and the United States to subsidiaries of a Delaware business
corporation and the Bank does not have any subsidiaries;
(iv) The Plan complies with, and, to the best of our knowledge, the
Reorganization of the Bank from a New York chartered mutual savings bank to a
New York chartered stock savings bank and the creation of the Company and the
MHC as the holding companies for the Bank have been effected in all material
respects in accordance with, the Bank Holding Company Act of 1956, as amended
and the regulations of the Department and the FDIC; to the best of our
knowledge, all of the terms, conditions, requirements and provisions with
respect to the Plan and the Reorganization imposed by the Department and the
FDIC, except with respect to the filing or submission of certain required
post-Reorganization reports or other materials by the Company, the MHC or the
Bank, have been complied with by the Company, the MHC and the Bank; and, to the
best of our knowledge, no person has sought to obtain regulatory or judicial
review of the final action of the Department or the FDIC in approving the Plan;
(v) The Foundation, has been effected in all material respects in
accordance with the requirements of the Department and the FDIC; all the terms,
conditions, requirements and provisions with respect to the organization and
purpose of the Foundation imposed by the Department, except with respect to the
filing or submission of any required reports after the Foundation is formed or
other materials by the Foundation, have been complied with by the Foundation;
and, to the best of our knowledge, no person has sought to obtain regulatory or
judicial review of the final action of the Department or the FDIC in approving
the formation of the Foundation;
(vi) the Company has authorized Common Stock as set forth in the
Registration Statement and the Prospectus, and the description of such Conunon.
Stock in the Registration Statement and the Prospectus is accurate in all
material respects;
(vii) the issuance and sale of the Shares and contribution of Foundation
Shares have been duly and validly authorized by all necessary corporate action
on the part of the Company;
25
the Shares and Foundation Shares, upon receipt of payment and issuance in
accordance with the terms of the Plan and this Agreement, will be validly
issued, fully paid, nonassessable and, except as disclosed in the Prospectus,
free of preemptive rights, and good title thereto shall be transferred by the
Company free and clear of all claims, encumbrances, security interests and liens
created by the Company;
(viii) the form of certificate used to evidence the Shares is in proper
form and complies in all material respects with applicable Delaware law;
(ix) the issuance and sale of the capital stock of the Bank to the Company
have been duly authorized by all necessary corporate action of the Bank and the
Company and have received the approval of the FDIC and the Department, and such
capital stock, upon receipt of payment and issuance in accordance with the terms
of the Plan, will be validly issued, fully paid and nonassessable and owned of
record and, to our actual knowledge, beneficially by the Company;
(x) The Foundation has been duly incorporated and is validly existing as a
non-stock corporation in good standing under the laws of the State of Delaware
with corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Prospectus; the Foundation is not a
bank holding company within the meaning of 12 C.F.R. Part 225 as a result of the
issuance of the Foundation Shares to it in accordance with the terms of the Plan
and in the amounts as described in the Prospectus; no approvals are required to
establish the Foundation and to contribute the Foundation Shares thereto as
described in the Prospectus other than those set forth in the New York State
Banking Department's approval order; the Foundation Shares to be issued to the
Foundation in accordance with the Plan and as described in the Prospectus will
have been duly authorized for issuance and, when issued and contributed by the
Company pursuant to the Plan, will be duly and validly issued and fully paid and
non-assessable.
(xi) subject to the satisfaction of the conditions imposed by the FDIC, FRB
and Department, no further approval, authorization, consent or other order of
any federal government board or body is required in connection with the
execution and delivery of this Agreement, and the consummation of the
Reorganization, except with respect to the issuance to the Bank of the Stock
Charter by the Department and as may be required under the "blue sky" laws of
various jurisdictions;
(xii) the execution and delivery of this Agreement and the consummation of
the Reorganization (including the establishment of the Foundation and the
contribution thereto of the Foundation Shares and cash) have been duly and
validly authorized by all necessary corporate action on the part of each of the
Company and the Bank;
(xiii) the statements in the Prospectus and incorporated by reference in
the Proxy Statement under the captions "Regulation," "Dividends," "Restrictions
on Acquisitions of Stock and Related Takeover Defensive Provisions" and
"Description of Capital Stock," insofar as they are, or refer to, statements of
law or legal conclusions (excluding financial data included therein, as to which
no opinion is expressed), have been prepared or reviewed by us and are correct
in all material respects;
26
(xiv) the Application for a merger or other Transaction and the Form 86-AC
(including the establishment of the Foundation and the contribution thereto of
the Foundation Shares and cash) has been approved by the FDIC and the
Department, respectively, and the Prospectus and the Proxy Statement have been
authorized for use by the Department; the Registration Statement and any
post-effective amendment thereto has been declared effective by the Commission;
except as to any necessary qualifications or registration under the securities
laws of the jurisdictions in which the Shares were offered, no further approval
of any governmental authority is required for the issuance and Bale of the
Shares (subject to the satisfaction of various conditions subsequent imposed by
the FDIC and the Department in connection with its approval of the
Reorganization Application), and, to the best of our knowledge, no proceedings
are pending by or before the Commission or the Department seeking to revoke or
rescind the orders declaring the Registration Statement effective or approving
the Reorganization Application or, to the best of our knowledge, are
contemplated or threatened (provided that for this purpose we do not regard any
litigation or governmental procedure to be "threatened" unless the potential
litigant or government authority has manifested to the management of the Company
or the Bank, or to us, a present intention to initiate such litigation or
proceeding);
(xv) the execution and delivery of this Agreement and the consummation of
the Reorganization by the MHC, the Company and the Bank do not conflict with or
result in a breach of the charter or bylaws of the MHC, the Company or the Bank
(in either mutual or stock form)
(xvi) the Reorganization Application, the Registration Statement, the
Prospectus and the Proxy Statement, in each case as amended, comply as to form
in all material respects with the requirements of the Act, the Bank Holding
Company Act of 1956, as amended, the SEC Regulations, the FDIC regulations and
the Department Regulations, as the case may be (except as to information with
respect to FBR included therein and financial statements, notes to financial
statements, financial tables and other financial and statistical data, including
the appraisal, included therein, as to which no opinion is expressed); to the
best of our knowledge, all material documents and exhibits required to be filed
with the Reorganization Application and the Registration Statement have been so
filed and the descriptions in the Reorganization Application and the
Registration Statement of such documents and exhibits are accurate in all
material respects.
(xvii) to our actual knowledge, the Bank has obtained all licenses, permits
and other governmental authorizations currently required for the conduct of its
business as such business is described in the Prospectus, all such licenses,
permits and other governmental authorizations are in full force and effect and
the Bank is in all material respects complying therewith, except where the
failure to hold such licenses, permits or governmental authorizations or the
failure to so comply would not have a material adverse effect on the Company and
the Bank, taken as a whole;
(xviii) there are no material legal or governmental proceedings pending or,
to our actual knowledge, threatened against or involving the assets of the
Company, the Bank or the Foundation (provided that for this purpose we do not
regard any litigation or governmental
27
procedure to be "threatened" unless the potential litigant or government
authority has manifested to the management of the Company or the Bank, or to us,
a present intention to initiate such litigation or proceeding);
(xix) to our actual knowledge, the execution and delivery of the Agreement
and the consummation of the Reorganization by the Company and the Bank do not
constitute a material breach of or default (or an event which, with notice or
lapse of time or both, would constitute a default) under, give rise to any right
of termination, cancellation or acceleration contained in, or result in the
creation or imposition of any lien, charge or other encumbrance upon any of the
properties or assets of the Company or the Bank pursuant to any of the terms,
provisions or conditions of, any material agreement, contract, indenture, bond,
debenture, note, instrument or obligation to which the Company or the Bank is a
party or violate any governmental license or permit or any enforceable published
law, administrative regulation or order or court order, writ, injunction or
decree (subject to the satisfaction of certain conditions imposed by the
Department in connection with Department's approval of the Reorganization
Application), which breach, default, encumbrance or violation would have a
material adverse effect on the financial condition, operations, business, assets
or properties of the Company and the Bank taken as a whole;
(xx) to our actual knowledge, there has been no material breach of any
provision of the Company's or the Bank's charter or bylaws or breach or default
(or the occurrence of any event which, with notice or lapse of time or both,
would constitute a default) under any agreement, contract, indenture, bond,
debenture, note, instrument or obligation to which the Company or the Bank is a
party or by which any of them or any of their respective assets or properties
may be bound, or any governmental license or permit, or a violation of any
enforceable published law, administrative regulation or order, or court order,
writ, injunction or decree which breach, default, encumbrance or violation would
have a material adverse effect on the financial condition, operations, business,
assets or properties of the Company and the Bank taken as a whole; and,
(xxi) the Agreement is a legal, valid and binding obligation of each of the
Company and the Bank, enforceable in accordance with its terms (except as the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
reorganization, receivership, conservatorship or similar laws relating to or
affecting the enforcement of creditors, rights generally or the rights of
creditors of depository institutions whose accounts are insured by the FDIC or
savings and loan holding companies the accounts of whose subsidiaries are
insured by the FDIC or by general equity principles, regardless of whether such
enforceability is considered in a proceeding in equity or at law, and except to
the extent that the provisions of Sections 8 and 9 hereof may be unenforceable
as against public policy or pursuant to Section 23A or Section 23B, as to which
we render no opinion);
[▇▇▇▇, ▇▇▇▇▇▇ to insert conclusion]
28
Exhibit C
[▇▇▇▇, ▇▇▇▇▇▇ to insert introduction]
Based on such counsel's participation in conferences with representatives
of the Company, the Bank, its counsel, the independent appraiser, the
independent certified public accountants, FBR and its counsel, review of
documents and understanding of applicable law (including the requirements of
Form SB-2 and the character of the Registration Statement contemplated thereby)
and the experience such counsel has gained in its practice under the Act,
nothing has come to such counsel's attention that would lead it to believe that
the Registration Statement, as amended (except as to information in respect of
FBR contained therein and except as to the financial statements, notes to
financial statements, financial tables and other financial and statistical data
contained therein, as to which such counsel expresses no opinion), at the time
it became effective contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading, or that the Prospectus, as amended (except as to
information in respect of FBR contained therein and except as to financial
statements, notes to financial statements, financial tables and other financial
and statistical data contained therein as to which such counsel expresses no
opinion), as of the date of the Prospectus and at the Closing Date, contained
any untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading (in making this statement such counsel may
state that it has not undertaken to verify independently the information in the
Registration Statement or Prospectus and, therefore, does not assume any
responsibility for the accuracy or completeness thereof.
[▇▇▇▇, ▇▇▇▇▇▇ to insert conclusion]
29
