CODDLE CREEK FINANCIAL CORP.
433,500 TO 674,475 SHARES
COMMON STOCK
(NO PAR VALUE)
$50.00 PER SHARE
SALES AGENCY AGREEMENT
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Trident Securities, Inc.
0000 Xxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Dear Sirs:
Coddle Creek Financial Corp., a North Carolina-chartered corporation (the
"Company"), and Mooresville Savings Bank, SSB, a North Carolina-chartered and
federally insured mutual savings bank (the "Bank"), hereby confirm, as of
November ___, 1997, their respective agreements with Trident Securities, Inc.
("Trident"), a broker-dealer registered with the Securities and Exchange
Commission ("Commission") and a member of the National Association of Securities
Dealers, Inc. ("NASD"), as follows:
1. Introductory. The Bank intends to convert from a North Carolina-
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chartered mutual savings bank to a North Carolina-chartered stock savings bank
as a wholly owned subsidiary of the Company (together with the Offerings, as
defined below, the issuance of shares of common stock of the Bank to the Company
and the incorporation of the Company, the "Conversion") pursuant to a plan of
conversion adopted on July 14, 1997, as amended, if amended (the "Plan"). In
accordance with the Plan, the Company is offering shares of its common stock, no
par value (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 the Bank's tax-qualified
employee benefit plan (i.e., the Bank's Employee Stock Ownership Plan (the
"ESOP")) and to the Bank's directors, officers and employees. Subsequent to 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 (the
"Community Offering") with priority being given to natural persons and trusts of
natural persons residing in Iredell, Mecklenburg, Lincoln, Rowan and Cabarrus
Counties, North Carolina (the "Local Community"), including individual
retirement accounts ("IRAs"), Xxxxx accounts and similar retirement accounts
established for the benefit of natural persons who are residents of the Local
Community and/or in a syndicated community offering, subject to the right of the
Company and the Bank, in their absolute
discretion, to reject orders in the Community Offering, if any, or any
syndicated community offering in whole or in part. (The Subscription Offering,
the Community Offering, if any, and any syndicated community offering are
sometimes referred to collectively as the "Offerings.")
In the Offerings, the Company is offering between 433,500 and 586,500
Shares, with the possibility of offering up to 674,475 Shares without a
resolicitation of subscribers. With the exception of the ESOP, no individual
person (or persons exercising subscription rights through a single account) or
other entity, together with associates of and persons acting in concert with
such person or other entity, may purchase in the Offerings more than 6,000
Shares issued in the Conversion in the aggregate.
The Company and the Bank have been advised by Trident that it will utilize
its best efforts in assisting the Company and the Bank with the sale of the
Shares in the Offerings. Prior to the execution of this Agreement, the Company
has delivered to Trident the Prospectus dated November ___, 1997 (as hereinafter
defined) and all supplements thereto to be used in the Offerings. Such
Prospectus contains information with respect to the Company, the Bank and the
Shares.
2. Representations and Warranties.
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a. The Company and the Bank jointly and severally represent and
warrant to Trident that:
(i) The Company has filed with the Commission a registration
statement, including exhibits and an amendment or amendments thereto,
on Form S-1 (No. 333-35497), including a Prospectus relating to the
Offerings, for the registration of the Shares under the Securities Act
of 1933, as amended (the "Securities Act"); and such registration
statement has become effective under the Securities 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 Securities 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, 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, 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 such prospectus or prospectus
supplement containing information relating to the results of the
Subscription Offering and pricing information as may be required by
Rule 424(c) of the SEC Regulations, in either case in a form
reasonably acceptable to the Company and Trident.
(ii) The Bank has filed conversion applications, including
exhibits (as amended or supplemented, the "Conversion Applications")
with both the Administrator of the Savings Institutions Division of
the North Carolina Department of Commerce (the "Administrator") under
Section 54C-33 of Chapter 54C of the General Statutes of North
Carolina, as amended, and the enforceable rules and regulations,
including published policies and actions, of the Administrator and
other applicable North Carolina law thereunder (collectively, the "NC
Conversion Laws") and the Federal Deposit Insurance Corporation (the
"FDIC") under the Federal Deposit Insurance Act, as amended, and the
enforceable rules and regulations, including published policies and
actions, of the FDIC and other applicable federal law thereunder
(collectively, the "FDIC Conversion Laws"), as to which the Bank has
received conditional approval and notice of intention not to object,
respectively; and 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
Conversion Applications are conditionally approved by the
Administrator and are the subject of a conditional notice of intention
not to object by the FDIC. No order has been issued by the
Administrator or the FDIC preventing or suspending the use of the
Prospectus or the Proxy Statement; and no action by or before the
Administrator or the FDIC seeking the revocation of its conditional
approval or notice of intention not to object, respectively, is
pending or, to the Bank's best knowledge, threatened. The Company has
filed holding company applications, including exhibits (as amended or
supplemented, the "Holding Company Applications"), with the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board")
and the Administrator, which have been approved by them. No action by
or before the Federal Reserve Board or the Administrator revoking such
approval is pending or, to the Company's best knowledge,
threatened.
(iii) At the date of the Prospectus and at all times subsequent
thereto through and including the Closing Date (a) the Registration
Statement and the Prospectus (each as amended or supplemented, if
amended or supplemented) complied and will comply in all material
respects with the Securities Act and the SEC Regulations, the NC
Conversion Laws and the FDIC Conversion Laws, (b) 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 (c) 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 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 Trident by Trident expressly for use in the
Registration Statement or the Prospectus.
(iv) The Company has been duly incorporated as a North Carolina-
chartered corporation, and the Bank has been duly organized as a
mutual savings bank under the laws of North Carolina, and each of them
is validly existing and in good standing 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 Atlanta; and the deposit accounts of the
Bank are insured by the Savings Association Insurance Fund ("SAIF")
administered by the FDIC up to the applicable legal limits. Each of
the Company and the Bank is not required to be qualified to do
business as a foreign corporation in any jurisdiction where non-
qualification would have a material adverse effect on the condition
(financial or otherwise), operations, business, assets, earnings or
properties of the Company 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 and restatement of the Bank's articles of incorporation and
bylaws as provided in the rules and regulations of the Administrator
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 North Carolina-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, and (iii) the Company will
have no direct subsidiaries other than the Bank.
(v) The Bank has good and marketable and, if applicable,
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 reasonably be expected to have a
material adverse effect upon the operations or financial condition of
the Company and the Bank, taken as a whole; 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 have been duly
and validly authorized by all necessary actions on the part of each of
the Company and the Bank, and this Agreement is a 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 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 Section
23A of the Federal Reserve Act, 12 U.S.C. Section 371c ("Section
23A")).
(vii) There is no litigation or governmental proceeding pending
or, to the best knowledge of the Company or the Bank, threatened
against or involving the Company, 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 and the Bank, taken as a whole,
except as referred to in the Prospectus.
(viii) The Company and the Bank have received the opinion of
Brooks, Pierce, XxXxxxxx, Xxxxxxxx & Xxxxxxx, L.L.P. with respect to
federal and North Carolina tax consequences of the Conversion, to the
effect that the Conversion 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
North Carolina, and the facts relied upon in such opinions are
accurate and complete.
(ix) Each of the Company 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, subject to
the limitations set forth herein and subject to the satisfaction of
post-Conversion conditions imposed by the Administrator, the FDIC
and/or the Federal Reserve Board in connection with their approvals
of, or notice of intention not to object to, as applicable, the
respective Conversion Applications and Holding Company Applications,
and except as may be required under the securities laws of various
jurisdictions, and in the case of the Company, as of the Closing Date,
will have such authorizations, 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
authorizations, 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 amended and restated articles of
incorporation in the form required for North Carolina-chartered stock
savings banks (the "Stock Articles of Incorporation"), the form of
which Stock Articles of Incorporation has been approved by the
Administrator.
(x) Neither the Company nor the Bank is in violation of any rule
or regulation of the Administrator or the FDIC that could reasonably
be expected to result in any enforcement action against the Company,
the Bank or their officers or directors that might have a material
adverse effect on the condition (financial or otherwise), operations,
businesses, assets or properties of the Company 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 in all material respects the consolidated
financial condition, results of operations, 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 in all
material respects with the applicable accounting requirements of the
SEC Regulations and the NC Conversion Laws and the FDIC Conversion
Laws. 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 appropriate 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 in all material respects 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 condition
(financial or otherwise), results of operations or business, including
assets and properties, of the Company 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. The capitalization,
assets, properties and business of each of the Company and the Bank
conform in all material respects to the descriptions thereof contained
in the
Prospectus. None of the Company or the Bank has any material
liabilities of any kind, contingent or otherwise, except as set forth
in the Prospectus as of the date specified, and, since such date,
there has been no material adverse effect on the Company or the Bank,
taken as a whole.
(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 or 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 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 condition (financial or otherwise),
operations, business, assets or properties of the Company and the
Bank, taken as a whole; all agreements which are material to the
condition (financial or otherwise), results of operations or
business of the Company 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 and the Bank, threatened any
action or proceeding wherein the Company or the Bank would or might be
alleged to be in default thereunder.
(xiv) None of the Company or the Bank is in violation of its
respective articles of incorporation or bylaws. The execution and
delivery hereof, the fulfillment of the terms set forth herein and the
consummation of the transactions contemplated hereby do not conflict
with or result in a breach of the articles of incorporation or bylaws
of the Company 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 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
post-Conversion conditions imposed by the Administrator, the FDIC
and/or the Federal Reserve Board in connection with their approvals
of, or notice of intention not to object to, as applicable, the
respective Conversion Applications and Holding Company Applications),
which breach, default, encumbrance or violation could reasonably be
expected to have a material adverse effect on the condition (financial
or otherwise), operations or
business of the Company 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), none of the Company or the Bank
has issued any securities or incurred any liability or obligation,
direct or contingent, or borrowed money, except liabilities,
obligations or 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 or the Bank, taken as a whole.
(xvi) Upon consummation of the Conversion, the authorized,
issued and outstanding equity capital of the Company shall be within
the range as set forth in the Prospectus under the caption
"Capitalization," and no Common Stock of the Company shall be
outstanding immediately prior to the Closing Date (except for one
share of Common Stock issued in connection with the organization of
the Company, which share shall be cancelled effective as of the
Closing); the issuance and the sale of the Shares of the Company have
been duly authorized by all necessary action of the Company and
approved or not objected to, as applicable, by the Administrator, the
FDIC and the Federal Reserve Board 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 is not subject
to preemptive rights; 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 will conform in all material respects with the requirements of
applicable laws and regulations. The issuance and sale of the capital
stock of the Bank to the Company has been duly authorized by all
necessary action of the Bank and the Company and appropriate
regulatory authorities (subject to the satisfaction of post-Conversion
conditions imposed by the Administrator, the FDIC and/or the Federal
Reserve Board in connection with their approvals or notice of
nonobjection, as applicable, with respect to the respective Conversion
Applications and Holding Company Applications), and such capital
stock, when issued in accordance with the terms of the Plan for the
consideration described in the Prospectus, will be fully paid and
nonassessable and will conform in all material respects to the
description thereof contained in the Prospectus.
(xvii) No approval, or notice of intention not to object, 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 or nonobjection thereto, as
applicable, by the Administrator and the FDIC, the issuance of the
Stock Articles of Incorporation by the Administrator and as may be
required under the securities laws of various jurisdictions.
(xviii) All contracts and other documents required to be filed
as exhibits to the Registration Statement, the Conversion Applications
or the Holding Company Applications have been filed with the
Commission, the Administrator, the FDIC and/or the Federal Reserve
Board, as the case may be.
(xix) McGladrey & Xxxxxx, which has audited the financial
statements of the Bank at December 31, 1996 and 1995 and for the years
ended December 31, 1996, 1995 and 1994 included in the Prospectus, 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
571.2(c)(3).
(xx) The Company 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 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 and the Bank, taken as a whole.
(xxi) To the best knowledge of the Company and the Bank, after
due inquiry, 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 12 C.F.R. Part 226
("Regulation Z")), real estate settlement procedures, consumer credit
protection, equal credit opportunity and all disclosure laws
applicable to such loans, except for violations which, if asserted,
would not have a material adverse effect on the Company and the Bank,
taken as a whole.
(xxii) The records of account holders, depositors, borrowers and
other members of the Bank delivered to Trident by the Bank or its
agent for use during the Conversion have been prepared or reviewed by
or for the Bank and are reliable and accurate.
(xxiii) None of the Company or the Bank or, to the best
knowledge of the Company and the Bank, the employees of the Company or
the Bank, has made any payment of funds of the Company or the Bank
prohibited by law, and
no funds of the Company or the Bank have been set aside to be used for
any payment prohibited by law.
(xxiv) The Company and the Bank are in compliance with all
federal, state, local and foreign laws, statutes, ordinances, rules,
regulations, codes, licenses, permits, authorizations, approvals,
consents, orders, judgments, decrees, injunctions and agreements with
all agencies (e.g., all federal, state and local agencies responsible
for regulating or enforcing the matters identified herein) relating to
(i) the protection, preservation and/or restoration of the environment
(including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface soil, subsurface soil,
plant and animal life or any other natural resource) and/or (ii) the
usage, storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal of any
substance presently listed, defined, designated or classified as
hazardous, toxic, radioactive or dangerous, or otherwise regulated,
whether by type or by quantity, including any material containing any
such substance as a component (collectively, "Environmental Laws"),
and neither the Company nor the Bank has any reason to believe that
the Company or the Bank is subject to liability under the
Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended, or any similar Environmental Law, except for
violations which, if asserted, could not reasonably be expected to
have a material adverse effect on the Company 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 or
the Bank, threatened against the Company or the Bank relating to
environmental protection, including the discharge, storage, handling
and disposal of hazardous or toxic substances, pollutants or
contaminants. 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 or the Bank or, to the best
knowledge of the Company or the Bank, has occurred on, in or at any of
the facilities or properties of the Company or the Bank, except such
disposal, release or discharge which would not have a material adverse
effect on the Company and the Bank, taken as a whole.
(xv) At the Closing Date, the Company and the Bank will have
completed all pre-Conversion conditions to, and shall have conducted
the Conversion in all material respects in accordance with, the Plan,
the Prospectus, the SEC Regulations, the NC Conversion Laws and the
FDIC Conversion Laws and all other applicable laws, regulations,
published decisions and orders, including all terms, conditions,
requirements and provisions precedent to the
Conversion imposed by the Administrator, the FDIC and/or the Federal
Reserve Board.
(b) Trident represents and warrants to the Company and the Bank that:
(i) Trident is registered as a broker-dealer with the Commission,
and is in good standing with the Commission and the NASD.
(ii) Trident is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation, 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 corporate action on the part
of Trident, and this Agreement is a legal, valid and binding
obligation of Trident, 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 whom 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).
(iv) Each of Trident and, to Trident's knowledge, its employees,
agents and representatives who shall perform any of the services
required hereunder to be performed by Trident shall be duly authorized
and shall have all licenses, approvals and permits necessary to
perform such services, and Trident is a registered selling agent as
set forth in the jurisdictions listed in Exhibit A hereto and will
remain so registered in such jurisdictions as to which the Company
duly notifies Trident that it is relying on such registration for the
sale of the Shares, until the Conversion is consummated or terminated.
(v) The execution and delivery of this Agreement by Trident, the
fulfillment of the terms set forth herein and the consummation of the
Conversion shall not violate or conflict with the corporate charter or
bylaws of Trident 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 to which Trident is a party or, to Trident's
actual knowledge, under any governmental license or permit or any law,
administrative regulation, authorization, approval or order or court
decree, injunction or order by which Trident is bound.
(vi) Any funds received by Trident 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 Trident's actual
knowledge, threatened against Trident any action or proceeding before
the Commission, the NASD, any state securities commission or any state
or federal court concerning Trident's activities as a broker-dealer
which is expected to have a materially adverse impact upon Trident's
ability to perform its obligations hereunder.
3. Employment of Trident; Sale and Delivery of the Shares. On the basis
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of the representations and warranties herein contained, but subject to the terms
and conditions herein set forth, the Company and the Bank hereby employ Trident
as their agent to utilize its best efforts in assisting the Company with the
Company's sale of the Shares in the Subscription Offering and, if any, the
Community Offering or any syndicated community offering. The employment of
Trident hereunder shall terminate (a) forty-five (45) days after the Offerings
close, unless the Company and the Bank, with the approval of the Administrator,
are permitted to extend such period of time, or (b) upon consummation of the
Conversion, whichever date shall first occur.
Subscriptions shall be offered in the Subscription Offering only during the
subscription period by means of Order Forms as described in the Prospectus and
may be offered in the Syndicated Community Offering by means of solicitation of
indications of interest from customers of Trident or Selected Dealers (as
defined in the Prospectus) residing in those states in which the Shares may be
qualified for offer and sale.
In the event the Company is unable to sell a minimum of 433,500 Shares (or
such lesser amount as the Administrator and the FDIC may permit) within the
period herein provided, this Agreement shall terminate, and the Company 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 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 Conversion 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 as soon as practicable after
the Closing Date against payment to the Company by any
means authorized pursuant to the Prospectus, at the principal office of the
Company at 000 Xxxxx Xxxx Xxxxxx, Xxxxxxxxxxx, Xxxxx Xxxxxxxx 00000 or at such
other place as shall be agreed upon between the parties hereto. The date upon
which Trident is paid the compensation due hereunder is herein called the
"Closing Date."
The Bank and the Company shall notify Trident promptly after the expiration
of the Subscription Offering of the number of Shares sold in the Subscription
Offering and the aggregate number of Shares remaining available to be sold in
the Syndicated Community Offering.
In the event of a syndicated community offering, Trident 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 following receipt or execution of an order form by Trident to the Bank for
deposit in a segregated account or (b) to solicit indications of interest in
which event (i) Trident 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 subscriber's behalf, (ii) Trident will mail acknowledgements of receipt of
orders to each subscriber confirming interest on the business day following such
confirmation, (iii) Trident will debit accounts of such subscribers by the date
prescribed by applicable law ("debit date") following receipt of the
confirmation referred to in (i), and (iv) Trident 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.
Trident 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, Trident shall
receive the following compensation for its services hereunder:
(a) (i) a management fee of .40% of the aggregate dollar amount of
Common Stock sold in the Offerings, (ii) a commission equal to 2% of the
aggregate dollar amount of Common Stock sold in the Subscription Offering
and the Community Offering, excluding Shares sold to the Bank's directors
and executive officers and their "associates," as such term is defined in
the Plan, and the ESOP and excluding any Shares sold by other member firms
of the NASD through any selected dealer arrangement in any syndicated
community offering, for which Shares the commission shall not exceed a fee
to be agreed upon jointly by Trident and the Bank to reflect market
requirements at the time of the stock allocation in such offering. All
such fees are to be payable in next-day funds to Trident on the Closing
Date.
(b) Trident shall be reimbursed for all allocable expenses, including
but not limited to travel, communications, legal fees and expenses,
postage, etc., incurred by it whether or not the Offerings are successfully
completed. Unless otherwise agreed, and except as otherwise set forth
herein, Trident's out-of-pocket expenses will not exceed
$10,000 and its legal fees will not exceed $27,500. Full payment to defray
Trident's reimbursable expenses shall be made in next-day funds on the
Closing Date or, if the Conversion is not completed and is terminated for
any reason, within ten (10) business days of receipt by the Company of a
written request from Trident for reimbursement of its expenses, accompanied
by a reasonably detailed list thereof.
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 Conversion
incurred by them or on their prior approval, including but not limited to the
following: their attorneys' fees, NASD filing fees, 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, costs of printing all documents necessary in connection
with the Conversion, etc.
4. Offerings. Subject to the provisions of Section 7 hereof, Trident is
---------
assisting the Company on a best efforts basis in offering a minimum of 433,500
and a maximum of 586,500 Shares, with the possibility of offering up to 674,475
Shares (except as the Administrator and the FDIC may permit to be decreased or
increased) in the 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 and the Bank jointly and severally
------------------
covenant and agree that:
(a) The Company shall deliver to Trident, from time to time, such
number of copies of the Prospectus as Trident reasonably may request. The
Company authorizes Trident to use the Prospectus in any lawful manner in
connection with the offer and sale of the Shares.
(b) The Company will notify Trident 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 (iv) 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 Securities Act, the Company will comply so far as it is able with
all requirements imposed upon it by the Securities Act, as now in effect
and hereafter amended, and by the SEC 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 and the Bank, taken as a whole, shall
occur as a result of which it is necessary, in the opinion of counsel for
Trident, 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 purchaser of the Shares, the Company forthwith shall prepare
and furnish to Trident 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 Trident) 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 Trident has not first been furnished a copy or
to which Trident 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 Trident from time to
time may reasonably request.
(d) The Company and the Bank have taken or will take all reasonably
necessary action and furnish to whomever Trident may reasonably direct such
information as may be required to qualify or register the Shares for offer
and sale by the Company under the securities laws of such jurisdictions as
Trident 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 Trident 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 and supplemental eligible account holders in
accordance with the requirements of applicable law.
(f) The Company will file a registration statement for the Common
Stock if required under Section 12(b) or (g), as applicable, of the
Securities Exchange Act of
1934, as amended (the "Exchange Act"), prior to completion of the Offerings
and shall request that such registration statement be effective upon or
before completion of the Conversion. In such event, the Company shall
maintain the effectiveness of such registration for a minimum period of
three years or for such shorter period as may be permitted by applicable
law.
(g) [omitted]
(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 Trident, 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 Trident (i) as
soon as publicly available, a copy of each report or definitive proxy
statement of the Company filed with the Commission under the Exchange Act
or mailed to shareholders, and (ii) from time to time, such other public
information concerning the Company as Trident 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 in writing by Trident.
(k) The Company shall advise Trident, 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 shall provide Trident with any information (which shall be
accurate and reliable) necessary or appropriate for Trident to assist the
Company and the Bank in allocating the Shares, in the event of an
oversubscription, and the Company and the Bank shall provide Trident final
instructions as to the allocation of the Shares ("Allocation Instructions")
in such event, and such information shall be accurate and reliable.
Trident shall be entitled to rely on such instructions and shall have no
liability in respect of its reliance thereon, including without limitation,
no liability for or related to any denial or grant of a subscription in
whole or in part, and the Company and the Bank, jointly and severally,
shall indemnify and hold harmless each of Trident and the Selected Dealers
against any losses, claims, damages or liabilities resulting from reliance
under any records of depositors, borrowers and other members of the Bank
delivered to Trident
by the Bank or its agents for use during the Conversion.
(l) The Company and the Bank will take such actions and furnish such
information as are reasonably requested by Trident in order for Trident to
ensure compliance with the NASD's "Interpretation Relating to Free-Riding
and Withholding."
6. Payment of Expenses. Whether or not the Conversion is consummated, the
-------------------
Company and the Bank shall pay or reimburse Trident for (a) all filing fees paid
or incurred by Trident 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 433,500 Shares or such lesser amount as the
Administrator and the FDIC may permit or the Conversion is otherwise terminated,
the Company and the Bank shall reimburse Trident for allocable expenses incurred
by Trident relating to the offering of the Shares as provided in Section 3
hereof; provided, however, that the Company and the Bank shall not pay or
reimburse Trident for any of the foregoing expenses accrued after Trident shall
have notified the Company and the Bank of its election to terminate this
Agreement pursuant to Section 11 hereof or after such time as the Company and
the Bank shall have given notice in accordance with Section 11 hereof that
Trident is in breach of this Agreement.
7. Conditions of Trident's Obligations. Except as may be waived in
-----------------------------------
writing by Trident, the obligations of Trident as provided herein shall be
subject to the accuracy of the representations and warranties contained in
Section 2 hereof as of the date hereof and as of the Closing Date, to the
performance by the Company and the Bank of their obligations hereunder and to
the following conditions:
(a) At the Closing Date, Trident shall receive the favorable opinion
of Brooks, Pierce, XxXxxxxx, Xxxxxxxx & Xxxxxxx, L.L.P., special counsel
for the Company and the Bank, dated the Closing Date, addressed to Trident,
in form and substance reasonably satisfactory to counsel for Trident and to
the effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation under the laws of its jurisdiction of
incorporation, and the Bank has been duly organized and is validly
existing as a mutual savings bank under the laws of North Carolina,
each with full power and authority to own its properties and conduct
its business as described in the Prospectus;
(ii) each of the Company and the Bank has been duly qualified to
do business and is in good standing as a foreign corporation in each
jurisdiction where the ownership or leasing of its properties of which
such counsel has actual knowledge, or the conduct of its business of
which such counsel has actual knowledge, requires such qualification
or, if not so qualified and in good standing, failure to so qualify
would not have any material adverse effect on the Company and the
Bank, taken as a whole;
(iii) the Bank is a member of the Federal Home Loan Bank of
Atlanta, and the deposit accounts of the Bank are insured by the SAIF
up to the applicable legal limits;
(iv) to the actual knowledge of such counsel, the activities of
the Bank are permitted under federal and North Carolina law to
subsidiaries of a North Carolina business corporation, and the Bank
does not have any subsidiaries;
(v) to the actual knowledge of such counsel, the Bank has
obtained all licenses, permits and other governmental authorizations
required for the conduct of its business, 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;
(vi) the Plan complies with, and, to the actual knowledge of such
counsel, the Conversion of the Bank from a North Carolina-chartered
mutual savings bank to a North Carolina-chartered stock savings bank
and the creation of the Company as a holding company for the Bank have
been effected in all material respects in accordance with all
applicable laws, rules, regulations, decisions and orders (except for
federal and state securities laws, as to which no opinion need be
rendered), with such modifications as were duly disclosed to and
approved by the Administrator and FDIC, as evidenced by their
conditional approval and conditional notice of intent not to object;
to such counsel's actual knowledge, all of the terms, conditions,
requirements and provisions with respect to the Plan and the
Conversion, except with respect to the filing or submission of
required post-Conversion reports by the Company or the Bank, have been
complied with in all material respects by the Company and the Bank or
appropriate waivers have been duly obtained; and, to the actual
knowledge of such counsel, no person has sought to obtain regulatory
or judicial review of the final actions of the Administrator and the
FDIC in approving, or not objecting to, as applicable, the Plan;
(vii) As of the Closing Date, the Company and Bank have
authorized Common Stock as set forth in the Registration Statement and
the Prospectus, and the description of such Common Stock in the
Registration Statement and the Prospectus is accurate and complete in
all material respects;
(viii) the issuance and sale of the Shares have been duly and
validly
authorized by all necessary corporate action on the part of the
Company; the 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;
(ix) the certificates for the Shares are in due and proper form
and comply with applicable North Carolina law;
(x) 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 approvals of the
Administrator and the Federal Reserve Board, 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 the actual knowledge of such counsel,
beneficially by the Company;
(xi) subject to the satisfaction of the post-Conversion
conditions to the Administrator's, the FDIC's and the Federal Reserve
Board's approvals of, or notice of intention not to object to, as
applicable, the respective Conversion Applications and Holding Company
Applications, no further approval, notice of intention not to object,
authorization, consent or other order of any public board or body is
required in connection with the execution and delivery of this
Agreement, the issuance of the Shares and the consummation of the
Conversion, except as may be required under the securities laws of the
various jurisdictions (as to which an opinion need not be expressed);
(xii) the execution and delivery of this Agreement and the
consummation of the transactions contemplated thereby have been duly
and validly authorized by all necessary action, corporate or
otherwise, on the part of each of the Company and the Bank; and this
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 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, as to which an opinion need not be expressed);
(xiii) except as set forth in the Prospectus, to the actual
knowledge of such counsel,
there are no material legal or governmental proceedings pending or
threatened against or involving the assets of the Company or the Bank
(provided that for this purpose such counsel need not regard any legal
or governmental proceedings to be "threatened" unless the potential
litigant or government authority has manifested to the management of
the Company or the Bank, or to such counsel, a present intention to
initiate such litigation or proceeding);
(xiv) the statements in the Prospectus and incorporated by
reference in the Proxy Statement under the captions "DIVIDEND POLICY,"
"BUSINESS OF THE BANK -- Lending Activities," "BUSINESS OF THE BANK --
Nonperforming Assets and Asset Classification," "TAXATION,"
"SUPERVISION AND REGULATION," "DESCRIPTION OF CAPITAL STOCK" and
"ANTI-TAKEOVER PROVISIONS AFFECTING THE COMPANY AND THE BANK," insofar
as they include, or refer to, statements of law or legal conclusions
(excluding financial data included therein, as to which an opinion
need not be expressed), have been prepared or reviewed by such counsel
and are correct in all material respects;
(xv) the Conversion Applications have been approved or not
objected to, as applicable, by the Administrator and the FDIC, and the
Prospectus and the Proxy Statement have been authorized or not
objected to by them; the Holding Company Applications have been
approved by the Administrator and the Federal Reserve Board; 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, as to which no opinion
need be rendered herein, no further approval or notice of intention
not to object, as applicable, of any governmental authority is
required for the issuance and sale of the Shares (subject to the
satisfaction of post-Conversion conditions imposed by the
Administrator, the FDIC and/or the Federal Reserve Board in connection
with their approval or notice of intention not to object, as
applicable, with respect to the respective Conversion Applications and
Holding Company Applications), and, to the actual knowledge of such
counsel, no proceedings are pending by or before the Administrator,
the FDIC or the Federal Reserve Board or the Commission seeking
revocation or rescission of the orders approving or not objecting to
the Conversion Applications and the Holding Company Applications or
declaring the Registration Statement effective or are contemplated or
threatened (provided that for this purpose such counsel need not
regard any litigation or governmental proceeding to be "threatened"
unless the potential litigant or government authority has manifested
to the management of
the Company or the Bank, or to such counsel, a present intention to
initiate such litigation or proceeding);
(xvi) the execution and delivery of this Agreement, the
incurrence of the obligations herein set forth and the consummation of
the transactions contemplated hereby by the Company and the Bank do
not conflict with or result in a breach of the articles of
incorporation or bylaws of the Company or the Bank (in either mutual
or stock form), or, to the actual knowledge of such counsel,
constitute a material breach of or default (or an event which, with
notice or lapse of time or both, would constitute a material breach or
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 by which it or its assets or
properties may be bound or is subject or violate any governmental
license or permit or any law, administrative regulation or order or
court order, writ, injunction or decree (subject to the satisfaction
of post-Conversion conditions imposed by the Administrator, the FDIC
and/or the Federal Reserve Board in connection with their approval of,
or notice of intention not to object to, as applicable, the respective
Conversion Applications and Holding Company Applications), which
breach, default, encumbrance or violation would have a material
adverse effect on the condition (financial or otherwise), operations,
business, assets or properties of the Company and the Bank, taken as a
whole;
(xvii) to the actual knowledge of such counsel, there has been
no material breach of any provision of the Company's or the Bank's
articles of incorporation or bylaws or material breach or default (or
the occurrence of any event which, with notice or lapse of time or
both, would constitute a material breach or 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 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 condition (financial or otherwise),
operations, business, assets or properties of the Company and the
Bank, taken as a whole; and,
(xviii) the Conversion Applications, the Holding Company
Applications, 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 NC Conversion Laws, the FDIC
Conversion Laws, the Securities Act and the SEC Regulations, as the
case may be (except as to financial statements,
notes to financial statements, financial tables and other financial
and statistical data, including the appraisal, included therein, and
except as to any statement or omission made in reliance upon and in
conformity with written information furnished to the Company or the
Bank with respect to Trident by or on behalf of Trident expressly for
use in the Prospectus or any amendment or supplement thereof or in any
Application, as the case may be, as to which an opinion need not be
expressed); to such counsel's actual knowledge, all documents and
exhibits required to be filed with the Conversion Applications, the
Holding Company Applications and the Registration Statement have been
so filed, and the descriptions in the Conversion Applications, the
Holding Company Applications and the Registration Statement of such
documents and exhibits are accurate and complete in all material
respects and present fairly the information required to be shown; to
such counsel's actual knowledge, there are no contracts or other
documents of a character required to be described which are not
described, and there are no statutes or regulations applicable to,
certificates, permits or other authorizations from governmental
regulatory officials or bodies required to be obtained or maintained
by, or legal or governmental proceedings, past, pending or threatened
(provided that for this purpose such counsel need not regard any legal
or governmental proceedings to be "threatened" unless the potential
litigant or government authority has manifested to the management of
the Company or the Bank, or to such counsel, a present intention to
initiate such litigation or proceeding) against, the Company or the
Bank of a character required to be disclosed in the Conversion
Applications, the Holding Company Applications, the Registration
Statement, the Prospectus or the Proxy Statement which have not been
so disclosed and properly described therein.
In rendering such opinions, such counsel may rely as to matters of
fact on certificates of officers and directors of the Company 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 and the Bank. As
used in such counsel's opinion, the phrase "actual knowledge" shall mean
the conscious awareness of facts or other information by Xxxxxx X. Xxxxxxx,
III, Xxxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxx, Xxxxx X. Xxxxxxx, Xxxx X. Xxxxx
or Xxxxxx X. Xxxxxxx, who are all the lawyers employed by such counsel who
have had active involvement with such counsel's representation of the
Company and the Bank. 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 and the Bank of
this Agreement or the issuance of the Shares. In such opinion, such counsel
may state that, except to the extent stated therein, such counsel has not
undertaken any independent investigation or inquiry to determine the
existence or absence of any facts.
(b) At the Closing Date, Trident shall receive the letter of Brooks,
Pierce, XxXxxxxx, Xxxxxxxx & Xxxxxxx, L.L.P., dated the Closing Date,
addressed to Trident, in form and substance reasonably satisfactory to
counsel for Trident and to the effect that, 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, Trident and its counsel, review of documents and understanding
of applicable law (including the requirements of Form S-1 and the character
of the Registration Statement contemplated thereby), nothing has come to
such counsel's attention that would lead it to believe that the
Registration Statement (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 need express no comment),
at the time it became effective, and at the time any post-effective
amendment thereto 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 not misleading, or
that the Prospectus (except as to financial statements, notes to
financial statements, financial tables and other financial and statistical
data contained therein as to which such counsel need express no comment),
as of the date of the Prospectus, at the time the Prospectus or any
amendment or supplement thereto was filed with the Commission or
transmitted to the Commission for filing 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).
(c) Counsel for Trident 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 Trident, 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 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
Trident, (i) there shall have been no material change in the condition,
financial or otherwise, business or results of operations of the Company
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 or
the Bank after the latest date as of which the financial condition of the
Company 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 and the
Bank, taken as a whole; (iii) none of the Company or the Bank shall have
received from the Administrator, the FDIC or the Federal Reserve Board or
the 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 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
and 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 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 laws of such jurisdictions as Trident and the Company shall have
agreed upon.
(e) At the Closing Date, Trident shall receive a certificate of the
principal executive officer and the principal financial officer of each of
the Company 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 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, condition (financial or otherwise) or results of operations of
the Company 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 or the Administrator, the FDIC or the Federal
Reserve Board to suspend the Offerings or the effectiveness of the
Prospectus, and no action for such purposes has been instituted or
threatened by the Commission or the Administrator, the FDIC or the Federal
Reserve Board; (iv) to the best knowledge of such officers, no person has
sought to obtain review of the final actions of the Administrator, the FDIC
and the Federal Reserve Board approving or not objecting to, as applicable,
the respective Conversion Applications and Holding Company Applications;
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.
(f) At the Closing Date, Trident shall receive, among other documents,
copies of all governmental authorizations, approvals, notices of intention
not to object and certificates obtained in connection with the Conversion,
including (i) a copy of the
letter from the Administrator 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) a copy of the letter from the
Administrator evidencing the corporate existence of the Bank; (iv) a copy
of the letter from the appropriate North Carolina authority evidencing the
incorporation (and, if generally available from such authority, good
standing) of the Company; (v) a copy of the Company's articles of
incorporation certified by the appropriate North Carolina governmental
authority; and, (vi) if available, a copy of the letter from the
Administrator approving the Bank's Stock Articles of Incorporation.
(g) As soon as available after the Closing Date, Trident shall receive
a certified copy of the Bank's Stock Articles of Incorporation executed or
endorsed by the appropriate governmental authority.
(h) Concurrently with the execution of this Agreement, Trident
acknowledges receipt of letters from McGladrey & Xxxxxx, independent
certified public accountants, addressed to Trident and the Company, in
substance and form satisfactory to counsel for Trident, with respect to the
financial statements and certain financial information contained in the
Prospectus.
(i) At the Closing Date, Trident shall receive a letter in form and
substance satisfactory to counsel for Trident from McGladrey & Xxxxxx,
independent certified public accountants, dated the Closing Date and
addressed to Trident 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 Trident and its counsel, satisfactory to Trident and its counsel.
Any certificates signed by an officer or director of the Company or the Bank
prepared for Trident's reliance and delivered to Trident or to counsel for
Trident shall be deemed a representation and warranty by the Company and the
Bank to Trident as to the statements made therein. If any condition to
Trident's obligations hereunder to be fulfilled prior to or at the Closing Date
is not so fulfilled, Trident may terminate this Agreement or, if Trident so
elects, may waive in writing any such conditions which have not been fulfilled,
or may extend the time of their fulfillment. If Trident terminates this
Agreement as aforesaid, the Company and the Bank shall reimburse Trident for its
expenses as provided in Section 3(b) hereof.
8. Indemnification.
---------------
(a) The Company and the Bank jointly and severally agree to indemnify
and hold harmless Trident, its officers, directors and employees and each
person, if any, who controls Trident within the meaning of Section 15 of
the Securities Act or Section 20(a) of the Exchange Act, against any and
all loss, liability, claim, damage and
expense whatsoever and shall further promptly reimburse such persons for
any legal or other expenses reasonably incurred by each or any of them in
investigating, preparing to defend or defending against any such action,
proceeding or claim (whether commenced or threatened) arising out of or
based upon (A) any misrepresentation by the Company or the Bank in this
Agreement or any breach of warranty by the Company or the Bank with respect
to this Agreement or arising out of or based upon any untrue or alleged
untrue statement of a material fact or the omission or alleged omission of
a material fact required to be stated or necessary to make not misleading
any statements contained in (i) the Registration Statement, the Prospectus
or the Proxy Statement or (ii) any application (including the Conversion
Applications and Holding Company Applications) or other document or
communication (in this Section 8 collectively called "Application")
prepared or executed by or on behalf of the Company or the Bank or based
upon information furnished by or on behalf of the Company or the Bank,
whether or not filed in any jurisdiction, to effect the Conversion or
qualify the Shares under the securities laws thereof or filed with the
Administrator, the FDIC or the Federal Reserve Board or the Commission,
unless such statement or omission was made in reliance upon and in
conformity with written information furnished to the Company or the Bank
with respect to Trident by or on behalf of Trident expressly for use in the
Prospectus or any amendment or supplement thereof or in any Application, as
the case may be, or (B) the participation by Trident in the Conversion,
unless it is determined by final judgment of a court having jurisdiction
over the matter that such loss, liability, claim, damage or expense is
primarily a result of Trident's gross negligence. This indemnity shall be
in addition to any liability the Company and the Bank may have to Trident
otherwise.
(b) The Company shall indemnify and hold Trident harmless for any
liability whatsoever arising out of (i) the Allocation Instructions or (ii)
any records of account holders, depositors, borrowers and other members of
the Bank delivered to Trident by the Bank or its agents for use during the
Conversion.
(c) Trident agrees to indemnify and hold harmless the Company and the
Bank, their officers, directors and employees and each person, if any, who
controls the Company or the Bank within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act, to the same extent and
subject to the same limitations as the foregoing indemnity from the Company
and the Bank to Trident, but only with respect to (A) statements or
omissions, if any, made in the Prospectus, the Proxy Statement or any
amendment or supplement thereof, in any Application or to a purchaser of
the Shares in reliance upon, and in conformity with, written information
furnished to the Company or the Bank with respect to Trident by or on
behalf of Trident expressly for use in the Prospectus, the Proxy Statement
or in any Application or (B) any misrepresentation or breach of warranty by
Trident in Section 2(b) of this Agreement.
(d) 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, notify the indemnifying party of the commencement thereof; but
the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than
under this Section 8. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party will not be liable to
such indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof other than the reasonable cost of investigation except as
otherwise provided herein. In the event the indemnifying party elects to
assume the defense of any such action and retain counsel acceptable to the
indemnified party, the indemnified party may retain additional counsel, but
shall bear the fees and expenses of such counsel unless (i) the
indemnifying party shall have specifically authorized the indemnified party
to retain such counsel or (ii) the parties to such suit include such
indemnifying party and the indemnified party, and such indemnified party
shall have been advised by counsel that one or more material legal defenses
may be available to the indemnified party which may not be available to the
indemnifying party, in which case the indemnifying party shall not be
entitled to assume the defense of such suit notwithstanding the
indemnifying party's obligation to bear the fees and expenses of such
counsel. An indemnifying party against whom indemnity may be sought shall
not be liable to indemnify an indemnified party under this Section 8 if any
settlement of any such action is effected without such indemnifying party's
consent. To the extent required by law, this Section 8 is subject to and
limited by the provisions of Section 23A.
9. Contribution. In order to provide for just and equitable contribution
------------
in circumstances in which the indemnity agreement provided for in Section 8
above is for any reason held to be unavailable to Trident, the Company and/or
the Bank other than in accordance with its terms, the Company or the Bank and
Trident shall contribute to the aggregate losses, liabilities, claims, damages,
and expenses of the nature contemplated by said indemnity agreement incurred by
the Company or the Bank and Trident (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Bank on the one
hand and Trident on the other from the offering of the Shares or (ii) if the
allocation provided by clause (i) above 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 Company or
the Bank on the one hand and Trident on the other hand in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Bank on
the one hand and Trident on the other shall be deemed to be in the same
proportions as the total net proceeds from the Conversion (before deducting
expenses) received by the Company and the Bank bear to the total fees received
by
Trident under this Agreement. The relative fault of the Company or the Bank
on the one hand and Trident on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Bank or by Trident and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Bank and Trident agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by the indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 9, Trident shall not be required
to contribute any amount in excess of the amount by which fees owed Trident
pursuant to this Agreement exceeds the amount of any damages which Trident has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation. To the extent required by law, this Section 9 is
subject to and limited by the provisions of Section 23A.
10. Survival of Agreements, Representations and Indemnities. The
-------------------------------------------------------
respective indemnities of the Company and the Bank and Trident and the
representation and warranties of the Company and the Bank and, if any, of
Trident 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 Trident or the Company 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 Trident, the
Company, the Bank and any such controlling persons shall be entitled to the
benefit of the respective agreements, indemnities, warranties and
representations.
11. Termination. Trident 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 Trident's 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
Conversion; or if a moratorium in foreign exchange trading by major
international
banks or persons has been declared; or if there shall have been a material
change in the capitalization, condition or business of the Company, 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 or the Bank or a material breach of this Agreement by the
Company or the Bank.
(b) If Trident elects to terminate this Agreement as provided in this
Section, the Company and the Bank shall be notified promptly by Trident by
telephone or telegram, confirmed by letter.
(c) If this Agreement is terminated by Trident 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 and the Bank shall pay Trident the full amount so owing
thereunder.
The Bank may terminate the Conversion in accordance with the terms of the
Plan. Such termination shall be without liability to any party, except that the
Company, the Bank and Trident shall be required to fulfill their obligations
pursuant to Sections 3(b), 3(c), 6, 8 and 9 of this Agreement.
The Bank may terminate this Agreement with respect to Trident if there
shall have been a material breach of this Agreement by Trident.
12. Notices. All communications hereunder, except as herein otherwise
-------
specifically provided, shall be in writing and if sent to Trident shall be
mailed, delivered or telegraphed and confirmed to Trident Securities, Inc., 0000
Xxx Xxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxx Xxxxxxxx 00000, Attention: Mr. R. Xxx
Xxxxxxx, Xx. (with a copy to Housley Kantarian & Xxxxxxxxx, P.C., 0000 00xx
Xxxxxx, X.X., Xxxxxxxxxx, XX 00000, Attention: K. Xxxxx Xxxx, Esquire) and if
sent to the Company or the Bank, shall be mailed, delivered or telegraphed and
confirmed to Coddle Creek Financial Corp., Mooresville Savings Bank, SSB, 000
Xxxxx Xxxx Xxxxxx, Xxxxxxxxxxx, Xxxxx Xxxxxxxx 00000, Attention: Xx. Xxxxxx X.
Xxxxxxx, Xx., President (with a copy to Brooks, Pierce, XxXxxxxx, Xxxxxxxx &
Xxxxxxx, L.L.P., 0000 Xxxxxxxxxxx Xxxxx, 000 Xxxxx Xxx Xxxxxx, Xxxxxxxxxx, Xxxxx
Xxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxxx, III, Esquire, with a copy to Xxxxx
X. Xxxxxxx, Esquire).
13. Parties. This Agreement shall inure solely to the benefit of, and
-------
shall be binding upon, Trident, the Company, 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.
14. Construction. Unless governed by preemptive federal law, this
------------
Agreement shall be governed by and construed in accordance with the substantive
laws of North Carolina.
15. Amendment. This Agreement may be amended only by a subsequent writing
---------
signed by all of the parties hereto.
16. 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.
17. Severability. Any provision of this Agreement found to be invalid,
------------
unenforceable, or otherwise limited by or regulation shall not affect the
validity or enforceability of the remaining terms of this Agreement.
Trident Securities, Inc.
Sales Agency Agreement
Page 32
Please acknowledge your agreement to the foregoing by signing below and
returning to the Company one copy of this letter.
CODDLE CREEK FINANCIAL CORP. MOORESVILLE SAVINGS BANK, SSB
By: By:
_____________________________ ________________________________
Xxxxxx X. Xxxxxxx, Xx. Xxxxxx X. Xxxxxxx, Xx.
President and Chief President and Chief
Executive Officer Executive Officer
Date: Date:
___________________________ _______________________________
Agreed to and accepted:
TRIDENT SECURITIES, INC.
By:
___________________________
Date:
________________________
Exhibit A
Trident Securities, Inc. is a registered selling agent in the jurisdictions
--
listed below:
Alabama Missouri
Arizona Nebraska
Arkansas Nevada
California New Hampshire
Colorado New Jersey
Connecticut New Mexico
Delaware New York
District of Columbia North Carolina
Florida North Dakota (Trident Securities, Inc. only, no agents)
Georgia Ohio
Idaho Oklahoma
Illinois Oregon
Indiana Pennsylvania
Iowa Rhode Island
Kansas South Carolina
Kentucky Tennessee
Louisiana Texas
Maine Vermont
Maryland Virginia
Massachusetts Washington
Michigan West Virginia
Minnesota Wisconsin
Mississippi Wyoming
Trident Securities, Inc. is not a registered selling agent in the jurisdictions
---
listed below:
Alaska
Hawaii
Montana
South Dakota
Utah
Trident Securities, Inc.
0000 Xxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Dear Sirs:
Coddle Creek Financial Corp., a North Carolina-chartered corporation (the
"Company"), and Mooresville Savings Bank, SSB, a North Carolina-chartered and
federally insured mutual savings bank (the "Bank"), hereby confirm, as of
November ___, 1997, their collective agreement that under Section 8(a) of the
Sales Agency Agreement entered into as of this date with Trident Securities,
Inc. ("Trident"), a broker-dealer registered with the Securities and Exchange
Commission and a member of the National Association of Securities Dealers, Inc.,
the Company and the Bank have jointly and severally agreed to indemnify and hold
harmless Trident, its officers, directors and employees and each person, if any,
who controls Trident within the meaning of Section 15 of the Securities Act of
1933, as amended, or Section 20(a) of the Securities Exchange Act of 1934, as
amended, against any and all loss, liability, claim, damage and expense
whatsoever and shall further promptly reimburse such persons for any legal or
other expenses reasonably incurred by each or any of them in investigating,
preparing to defend or defending against any such action, proceeding or claim
(whether commenced or threatened) arising out of or based upon any
_________________________________________________ by the Bank.
CODDLE CREEK FINANCIAL CORP. MOORESVILLE SAVINGS BANK, SSB
By: By:
__________________________ ______________________________
Xxxxxx X. Xxxxxxx, Xx. Xxxxxx X. Xxxxxxx, Xx.
President and Chief President and Chief
Executive Officer Executive Officer
Date: Date:
_________________________ ____________________________
