EXHIBIT 1.3
KENTUCKY FIRST FEDERAL BANCORP
3,363,750 SHARES
(SUBJECT TO INCREASE UP TO 3,868,312 SHARES
IN THE EVENT OF AN OVERSUBSCRIPTION)
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
AGENCY AGREEMENT
November __, 2004
Capital Resources, Inc.
0000 Xxxxx Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Kentucky First Federal Bancorp, a to-be-formed federal subsidiary holding
company (the "Company"), First Federal Savings and Loan Association of Hazard
(the "Association"), a federal savings and loan association, and First Federal,
MHC (the "MHC") a to-be-formed federal mutual holding company ("Primary
Parties"), hereby confirm their agreement with Capital Resources, Inc. ("Capital
Resources") (the "Selling Agent") for Capital Resources to serve as agent of the
Company to assist the Company in the sale of the Company's common stock ("Common
Stock") in a subscription offering, and if necessary, a community offering
and/or a syndicated community offering. The Offering, as defined below, is part
of and is being conducted in connection with the Association's restructuring
into the mutual holding company form of organization (the "Reorganization").
Immediately after the completion of the Reorganization and Offering, the
Company will acquire Frankfort First Bancorp, Inc. ("Frankfort First Bancorp")
in a merger transaction (the "Merger") pursuant to an Agreement and Plan of
Merger dated as of July 15, 2004 (the "Merger Agreement"). Frankfort First
Bancorp is the holding company of First Federal Savings Bank of Frankfort (the
"Bank"). The Merger will be accomplished in accordance with the laws of the
United States and applicable regulations of the OTS (collectively, the "Merger
Regulations"). Capital Resources Group, Inc., an affiliate of Capital Resources,
is serving as financial advisor to the Company and the Association in connection
with the Merger. Pursuant to the terms of the Merger Agreement, upon
consummation of the Merger each outstanding share of common stock of Frankfort
First Bancorp ("Frankfort First Common Stock") will be converted into either
$23.50 in cash or 2.35 shares of Common Stock. Frankfort First Bancorp
shareholders may elect either of these options. However, the Merger Agreement
provides that the election Frankfort First Bancorp shareholders make is subject
to the requirement that no more than 45% of the total shares to be issued by the
Company to public shareholders be issued to Frankfort First Bancorp
shareholders. This percentage may be increased to 49% if the Company does not
receive enough orders for at least
the minimum number of shares of the offering range. As a result, if Frankfort
First Bancorp shareholders elect to receive more stock than the Company has
agreed to issue, then those shareholders would receive a combination of the
Company's Common Stock and cash in exchange for their shares of Frankfort First
Common Stock. The Merger is expected to close or immediately after completion of
the Reorganization. The Offering and the Merger are separate, distinct
transactions. The Offering and the Merger are sometimes collectively referred to
herein as the "Reorganization." The Company, the MHC, the Association, Frankfort
First Bancorp and the Bank are sometimes hereinafter collectively referred to as
the "Constituent Institutions."
The following applications have been filed with the OTS: (i) Holding
Company Applications on Forms H-(e)1 and H-(e)3 (together, the "Holding Company
Application"); (ii) a Form MHC-1 Notice of Mutual Holding Company Reorganization
(the "Form MHC-1 Notice"); and (iii) a Form MHC-2 Application for Approval of a
Minority Stock Issuance (the "Form MHC-2 Application"). All amendments to the
foregoing required to the date hereof have also been filed. The Holding Company
Application, the Form MHC-1 Notice and the Form MHC-2 Application are referred
to herein collectively as the "Reorganization Applications." The Reorganization
Applications have been filed pursuant to applicable laws of the United States
and regulations of the OTS (together with the Merger Regulations, the
"Reorganization Regulations").
The Company, in accordance with the Plan of Reorganization and Stock
Issuance (the "Plan"), is offering, in a subscription offering by way of
nontransferable subscription rights, shares of Common Stock ("Shares") for a
purchase price of $10.00 per share (the "Purchase Price") in descending order of
priority to (i) the Association's Eligible Account Holders (defined as holders
of deposit accounts totaling $50 or more as of June 30, 2003); (ii) the
Association's tax-qualified employee benefit plan (for a total of up to 10% of
the Shares issued in the Offering and the Merger) of which the Association's
employee stock ownership plan (the "ESOP") intends to subscribe for 3.92% of the
Shares issued in the offering and the Merger; (iii) the Association's
Supplemental Eligible Account Holders (defined as holders of deposit accounts
totaling $50 or more as of ____________, 2004; and (iv) other members with
accounts at the Association on ___________, 2004 who do not qualify as Eligible
Account Holders or Supplemental Eligible Account Holders (the "Subscription
Offering"). Shares not purchased in the Subscription Offering may be offered to
the general public in a community offering with priority given to natural
persons who maintain personal residences in Perry County, Kentucky, (the
"Community Offering"). It is acknowledged that the Company reserves the right,
in its absolute discretion, to accept or reject, in whole or in part, any or all
orders in the Community Offering. Depending on market conditions, shares not
subscribed for in the Subscription Offering or purchased in the Community
Offering may be offered in a syndicated community offering (the "Syndicated
Community Offering") to eligible members of the general public on a best efforts
basis by approved broker-dealer firms which may include the Agent ("Assisting
Brokers") which are members of the National Association of Securities Dealers,
Inc. ("NASD"). The Subscription Offering and any Community Offering and/or
Syndicated Community Offering are referred to collectively herein as the
"Offering." Except pursuant to employee stock benefit plans adopted by the
Company or the Association, generally no individual or persons acting in concert
may purchase in the Offering more than 30,000 Shares; provided that the Company
may, in its sole discretion and without further notice to or solicitation of
subscribers or other prospective purchasers, increase or decrease such maximum
purchase limitations.
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The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (File No. 333-_____________)
(the "Registration Statement") containing a prospectus relating to the Offering
for the registration of the Shares under the Securities Act of 1933, as amended
(the "1933 Act"), and has filed such amendments thereto and such amended
prospectuses as may have been required to the date hereof. The prospectus, as
amended, on file with the Commission at the time the Registration Statement
becomes effective is hereinafter called the "Subscription Prospectus," except
that if the Prospectus filed by the Company pursuant to Rule 424(b) of the rules
and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations") differs from the prospectus on file at the time the Registration
Statement becomes effective, the term "Subscription Prospectus" shall refer to
the prospectus filed pursuant to Rule 424(b) from and after the time such
prospectus is filed with or mailed to the Commission for filing.
The Company has also filed with the Commission a registration statement on
Form S-4 (File No. 333-_____________) (the "S-4 Registration Statement")
containing a proxy statement to be used to solicit proxies of the First
Frankfort Bancorp shareholders with respect to the approval of the Merger. The
Company has filed such amendments to the S-4 Registration Statement and such
amended prospectus, on file with the Commission at the time the S-4 Registration
Statement becomes effective is hereinafter called the "S-4 Prospectus," except
that if the S-4 Prospectus filed by the Company pursuant to Rule 424(b) of the
rules and regulations of the Commission under the 1933 Act Regulations differs
from the prospectus on file at the time the Registration Statement becomes
effective, the term "S-4 Prospectus" shall refer to the prospectus filed
pursuant to Rule 424(b) from and after the time such prospectus is filed with or
mailed to the Commission for filing.
The S-1 Registration Statement and the S-4 Registration Statement are
collectively referred to herein as the "Registration Statement." The S-1
Prospectus and the S-4 Prospectus are collectively referred to herein as the
"Prospectus."
Concurrently with the execution of this Agreement, the Company is
delivering to the Agent copies of the Prospectus to be used in the Subscription
and Community Offering. The Prospectus contains information with respect to the
Association, the Company and the Common Stock.
SECTION 1. Appointment of the Selling Agent; Compensation to the Selling
Agent. Subject to the terms and conditions set forth below, the Company hereby
appoints Capital Resources as its agent to consult with and advise the Company
and the Association, and to solicit subscriptions and purchase orders for Shares
on behalf of the Company, in connection with the Company's offering of Shares in
the Subscription and Community Offerings. On the basis of the representations,
warranties and agreements herein contained, and subject to the terms and
conditions herein set forth, Capital Resources accepts such appointment and
agrees to consult with and advise the Company and the Association as to the
matters set forth in the Engagement Letter between the Selling Agent and the
Association dated as of July 28, 2004, included as Exhibit A attached hereto,
and to use their best efforts to solicit subscriptions and purchase orders for
Shares in accordance with this Agreement; provided, however, that the Selling
Agent shall not be responsible for obtaining subscriptions or purchase orders
for any specific number of Shares, shall not be required to purchase any Shares
and shall not be obligated to take any action which is inconsistent with any
applicable law, regulation, decision or order.
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If selected broker-dealers are used to assist in the sale of Shares in the
Syndicated Community Offering, the Primary Parties hereby, subject to the terms
and conditions of this Agreement, appoint the Agent to manage such
broker-dealers in this Syndicated Community Offering. On the basis of the
representations and warranties of the Primary Parties contained in, and subject
to the terms and conditions of, this Agreement, the Agent accepts such
appointment and agrees to manage the selling group of broker-dealers in the
Syndicated Community Offering.
In addition to the reimbursement of the expenses specified in Sections 6,
7 and 8 hereof, the Selling Agent shall receive and the Primary Parties shall
pay the greater of a fee of (i) 1.5% of the total dollar amount of the stock
sold in the Subscription Offering and Community Offering, excluding shares
purchased by officers, directors, employees (and immediate household family
members thereof) and employee benefit plans of the Primary Parties, including
any shares that are issued as part of the Merger; or (ii) three percent (3%) of
the total dollar amount of stock sold in the Subscription and Community
Offerings, excluding shares purchased by officers, directors, employees (and
immediate household family members thereof) and employee benefit plans of the
Primary Parties (the "Marketing Fee). The Agent acknowledges receipt of $80,000
in payments for consulting work. Such payment is nonrefundable but shall be
applied to the total Marketing Fee, the balance of which shall be due at
closing. Assisting Brokers other than the Agent will also be paid 5.5% of the
aggregate Purchase Price of the Shares sold by them in the Syndicated Community
Offering. The Syndicated Community Offering will be conducted pursuant to a
Selected Dealer's Agreement set forth at Exhibit B. Assisting Brokers will not
be utilized without the prior approval of the Primary Parties, and it is agreed
that Agent will manage the Assisting Brokers in the Syndicated Offering.
If (i) the Plan is abandoned or terminated by the Company; (ii) the
Offering is not consummated by July 28, 2005; (iii) the Selling Agent terminates
this Agreement because there has been a material adverse change in the financial
condition or operations of the Association since June 30, 2004; or (iv)
immediately prior to the commencement of the Offering, the Selling Agent
terminates this Agreement because, in its reasonable judgment, the Primary
Parties have failed to satisfactorily disclose all relevant information in the
Registration Statement, the Subscription Prospectus and the Reorganization
Applications or the Selling Agent determines that market conditions exist which
might render the sale of the Shares by the Company inadvisable, the Selling
Agent, in addition to reimbursement of the Selling Agent's reasonable
out-of-pocket expenses as set forth in Section 6 hereof shall be entitled to
retain the $80,000 previously paid by the Association. If there is a
resolicitation of subscriptions for any reason, and the Selling Agent is
required to provide significant additional services or expend significant
additional time, the parties agree to negotiate in good faith an agreement to
cover the Selling Agent's additional fees and expenses in connection therewith,
including attorneys' fees and expenses.
The compensation specified above shall be payable (to the extent not
already paid) to the Selling Agent in next day clearinghouse funds on the
earlier of the Closing Date (as hereinafter defined), a determination by the
Primary Parties to terminate or abandon the Plan or the termination of this
Agreement by the Selling Agent or the Primary Parties in accordance with the
preceding paragraph. The Association and the Company agree to reimburse the
Selling Agent from time to time for the costs and expenses specified in Sections
6, 7 and 8 hereof, to the extent such costs and
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expenses are reasonably incurred by the Selling Agent, promptly upon receiving a
reasonable accounting of such costs and expenses.
SECTION 2. Closing Date; Release of Funds and Delivery of Certificates. If
all conditions precedent to the consummation of the Reorganization and the
Offering are satisfied, the Company agrees to issue or have issued the Shares
sold in the Offering and to release for delivery certificates evidencing such
Shares on the Closing Date against payment therefor by release of funds from the
special, interest-bearing account referred to in Section 5(p) hereof and by the
authorized withdrawal of funds from deposit accounts at the Association in
accordance with the Plan; provided, however, that no such funds shall be
released to the Company or withdrawn until the conditions specified in Section 9
hereof shall have been complied with to the reasonable satisfaction of the
Selling Agent and its counsel. Such release, withdrawal and payment shall be
made on the Closing Date, on a business day and at a time and place selected by
the Selling Agent, which date and place shall be acceptable to the Association
and the Company, on at least two business days prior notice to the Association
and the Company (it being understood that such business day shall not be more
than ten business days after the termination of the Offering), or such other
time or place as shall be agreed upon by the Selling Agent, the Association and
the Company. Certificates evidencing the Shares sold in the Offering shall be
delivered directly to the purchasers thereof or in accordance with their
directions. The hour and date upon which the Company shall release or deliver
the Shares sold in the Offering in accordance with the terms hereof are called
the "Closing Date."
SECTION 3. Prospectus; Offering. The Shares are to be offered in the
Offering at $10.00 per share, as set forth on the cover page of the Prospectus.
There will be a maximum and minimum number of Shares offered. The number of
Shares offered may be changed by the Company after consultation with the Selling
Agent, subject to the provisions of the Plan, depending on market and financial
conditions.
SECTION 4A. Representations and Warranties; Certain Covenants of the
Primary Parties. The Primary Parties jointly and severally represent and warrant
to and covenant with the Selling Agent as follows:
a. The Registration Statement was declared effective by the Commission on
___________, 2004. At the time the Registration Statement, including the
Prospectus contained therein, became effective, the Registration Statement
complied in all material respects with the requirements of the 1933 Act and the
1933 Act Regulations and the Registration Statement, any preliminary or final
Prospectus or any Sales Information (as defined in Section 7 hereof) authorized
by any Primary Party for use in connection with the Offering did not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and at the time any
Rule 424(b) Prospectus is filed with the Commission for filing and at the
Closing Date referred to in Section 2, the Registration Statement, any
preliminary or final Prospectus or any Sales Information authorized by any
Primary Party for use in connection with the Offering will not contain an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that the representations and
warranties in this Section 4(a) shall not apply to statements in or omissions
from the Registration Statement, any preliminary or final Prospectus or
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any Sales Information made in reliance upon and in conformity with information
furnished in writing to the Primary Parties by the Selling Agent expressly
regarding the Selling Agent for use under the captions "The Reorganization and
Stock Offering -- Marketing Arrangements" in the Prospectus.
b. The Company has filed with the OTS the Reorganization Applications
including the Plan, the Registration Statement and the Prospectus, each of which
included exhibits and supplemental material, and has filed an amendment or
amendments thereto, as required, and has published notice of such filings, as
required. The Reorganization Applications have been or prior to the Closing Date
will be approved by the OTS; and the Plan has been adopted by the Board of
Directors of the Association, and prior to the completion of the Reorganization,
the Company, the MHC, and members of the Association.
c. At the Closing Date, (i) the Reorganization and the Offering will have
been effected in the manner described in the Prospectus and in accordance with
the Plan, the Reorganization Regulations and all other applicable material laws,
regulations, decisions and orders, including in compliance with all terms,
conditions, requirements and provisions precedent to the Reorganization and the
Offering imposed upon the Primary Parties by the Commission, the OTS, any state
regulatory or Blue Sky authority or any other regulatory authority; and (ii) the
Constituent Institutions will have completed the conditions precedent to the
Merger in accordance with the Merger Agreement, and all applicable laws,
regulations, decisions and orders, including all material terms, conditions,
requirements and provisions precedent to the Merger imposed upon the Constituent
Institutions by the OTS or any other regulatory authority, other than those
which the regulatory authority permits to be completed after the effective time
of the Merger ("Effective Time").
d. No order has been issued by the OTS or any state regulatory or Blue Sky
authority preventing or suspending the use of the Prospectus, and no action by
or before any such governmental entity to revoke any approval, authorization or
order of effectiveness related to the Reorganization or the Offering is pending
or threatened.
e. At the time of the approval of the Reorganization Applications by the
applicable regulatory authorities (including any amendment or supplement
thereto) and at all times subsequent thereto until the Closing Date, the
Reorganization Applications complied and will comply in all material respects
with the Reorganization Regulations. The Prospectus contained in the
Reorganization Applications (including any amendment or supplement thereto), at
the time of the approval of the Reorganization Applications by the OTS and at
all times subsequent thereto until the Closing Date and the Effective Time,
complied and will comply in all material respects with the Reorganization
Regulations.
x. Xxxxxx & Company ("Xxxxxx & Company"), which prepared the Independent
Valuation dated as of _____________, 2004, described in the Prospectus, is
independent with respect to the Primary Parties within the meaning of the Plan
and the Reorganization Regulations and is believed by the Primary Parties to be
experienced and expert in the valuation and the appraisal of business entities,
including savings institutions, and the Primary Parties believe that Xxxxxx &
Company has prepared the pricing information set forth in the Prospectus in
accordance with the requirements of the Reorganization Regulations. Xxxxxx &
Company has advised the Association in writing that it
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satisfies all requirements for an appraiser set forth in the Reorganization
Regulations and any interpretations or guidelines issued by the OTS with respect
thereto.
g. Xxxxx Xxxxxxxx LLP ("Xxxxx Xxxxxxxx"), the firm which certified the
financial statements of the Association filed as part of the Registration
Statement, is, with respect to the Primary Parties, an independent certified
public accountant as required by the 1933 Act and the 1933 Act Regulations, the
Reorganization Regulations and the Code of Ethics of the American Institute of
Certified Public Accountants. Xxxxx Xxxxxxxx, the firm which certified the
financial statements of Frankfort First Bancorp filed as part of the
Registration Statement, is, with respect to Frankfort First Bancorp and the
Bank, an independent certified public accountant as required by the 1933 Act and
the 1933 Act Regulations.
h. The consolidated financial statements, together with the related
schedules and notes thereto, included in the Registration Statement and which
are part of the Prospectus present fairly the financial condition, results of
operations, changes in retained earnings and cash flows of (i) the Association
and its consolidated subsidiaries and (ii) to the best knowledge of the Primary
Parties, Frankfort First Bancorp and its consolidated subsidiaries, at and for
the dates indicated and the periods specified and comply as to form in all
material respects with the applicable accounting requirements of the 1933 Act
Regulations and Reorganization Regulations. The Association's and, to the best
knowledge of the Primary Parties, Frankfort First Bancorp's financial statements
have been prepared in conformity with generally accepted accounting principles
applied on a consistent basis during the periods involved, present fairly in all
material respects the information required to be stated therein and are
consistent with financial statements and other reports filed by each of them
with the OTS, except to the extent that accounting principles employed in such
filings conform to the requirements of such authorities and not necessarily to
generally accepted accounting principles. The Association's and, to the best
knowledge of the Primary Parties, Frankfort First Bancorp's other financial,
statistical and pro forma information and related notes thereto included in the
Prospectus present fairly the information shown therein on a basis consistent
with the audited financial statements of the Association and/or Frankfort First
Bancorp included in the Registration Statement and which are part of the
Prospectus, and as to the pro forma adjustments, such adjustments have been
properly applied on the basis described therein.
i. With respect to the Primary Parties or their subsidiaries, and to the
best knowledge of the Primary Parties, with respect to Frankfort First Bancorp,
the Bank or their subsidiaries, since the respective dates as of which
information is given in the Registration Statement and Prospectus, except as may
otherwise be stated therein: (i) there has not been any material adverse change
in the financial condition, net income, capital, properties, affairs or
prospects of either the Primary Parties, taken as a whole entity, and the
Primary Parties, Frankfort First Bancorp, the Bank, or their respective
subsidiaries (the "combined institution"), taken as a whole, whether or not
arising in the ordinary course of business, (ii) there has not been any material
increase in the long-term debt of the combined institution, taken as a whole,
nor have the Primary Parties, taken as a whole entity, and the Primary Parties,
Frankfort First Bancorp, the Bank or their respective subsidiaries issued any
securities or incurred any liability or obligations for borrowing other than in
the ordinary course of business, (iii) there have not been any material
transactions entered into by the Primary Parties, Frankfort First Bancorp, the
Bank or their respective subsidiaries, except those transactions entered into in
the ordinary course of business and those specifically described in or
contemplated by the
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Prospectus, including the execution of loan documents pertaining to the ESOP,
and (iv) the capitalization, liabilities, assets, properties and business of the
Primary Parties, Frankfort First Bancorp, the Bank and their respective
subsidiaries conform in all material respects to the descriptions thereof
contained in the Prospectus. The Primary Parties, Frankfort First Bancorp, the
Bank and their subsidiaries have no material liability of any kind, contingent
or otherwise, except as reflected in the financial statements filed as part of
the Registration Statement or otherwise set forth in the Prospectus.
j. The Company will be formed as a federal subsidiary holding company, and
the MHC will be formed as a federal mutual holding company, both will be duly
organized and validly existing and in good standing under the laws of the United
States and regulations of the OTS with the corporate power and authority to
conduct the business and own the property as described in the Registration
Statement and Prospectus.
k. The Association is a federal savings and loan association, duly
organized and validly existing under the laws of the United States of America
with the corporate power and authority to conduct its business and own its
property as described in the Registration Statement and Prospectus under the
Home Owners' Loan Act ("HOLA") and the regulations thereunder.
l. Frankfort First Bancorp is a Delaware corporation, duly organized and
validly existing and in good standing under the laws of the State of Delaware
with the corporate power and authority to conduct its business and own its
property as described in the Registration Statement and Prospectus. The Bank is
a federally-chartered savings bank, duly organized and validly existing under
the laws of the United States of America with the corporate power and authority
to conduct its business and own its property as described in the Registration
Statement and Prospectus.
m. The Primary Parties and their subsidiaries, and, to the best knowledge
of the Primary Parties, Frankfort First Bancorp, the Bank and their
subsidiaries, have obtained all material licenses, permits and other
governmental authorizations currently required for the conduct of their
respective businesses; all such licenses, permits and governmental
authorizations are in full force and effect. The Primary Parties and their
subsidiaries and, to the best knowledge of the Primary Parties, Frankfort First
Bancorp, the Bank and their subsidiaries, are in all material respects complying
with all laws, rules, regulations and orders applicable to the operation of
their respective businesses; and none of the Primary Parties, Frankfort First
Bancorp, the Bank or their subsidiaries has received notice of any proceeding or
action relating to the revocation or modification of any such license, permit or
governmental authorization which, singly or in the aggregate, if subject to an
unfavorable decision, ruling or finding, might materially and adversely affect
the conduct of the business, the financial condition or the net income, affairs
or prospects of the combined institution taken as a whole.
n. The articles of incorporation, charter or similar instruments of the
Primary Parties and, to the best knowledge of the Primary Parties, Frankfort
First Bancorp and the Bank are in full force and effect; no conservator or
receiver has been appointed for any of the Primary Parties, or, to the best
knowledge of the Primary Parties, Frankfort First Bancorp or the Bank; and the
Association and the Bank are each operating as an insured depository
institution. Each of the Primary Parties, and, to the best knowledge of the
Primary Parties, Frankfort First Bancorp and the Bank is duly
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qualified to transact business and is in good standing in each jurisdiction in
which its ownership or leasing of property or the conduct of its business
(currently and as contemplated following the Reorganization) requires such
qualification unless the failure to be so qualified in one or more of such
jurisdictions would not have a material adverse effect on the financial
condition or the business, operations, net income or prospects of the combined
institution, taken as a whole.
o. Upon completion of the Reorganization, all of the outstanding capital
stock of the Association will be duly authorized and validly issued and fully
paid and nonassessable; and all such stock will be owned directly by the
Company, free and clear of all liens, encumbrances, claims or other
restrictions. Each of the Primary Parties, and, to the best knowledge of the
Primary Parties, Frankfort First Bancorp, and the Bank does not own equity
securities or any equity interest in any other business enterprise except as
described in the Prospectus; each of the subsidiaries of the Primary Parties
and, to the best knowledge of the Primary Parties, of Frankfort First Bancorp
and the Bank, has been duly organized and is validly existing and in good
standing under the laws of its jurisdiction of organization with the authority
to conduct its business and own its property as described in the Registration
Statement and the Prospectus; all of the outstanding stock of each subsidiary
has been duly authorized and validly issued and is fully paid and nonassessable;
all such stock is owned directly by the Company, Frankfort First Bancorp or the
Bank, as the case may be, free and clear of all liens, encumbrances, claims or
other restrictions; and each of the subsidiaries is duly qualified to transact
business and is in good standing in each jurisdiction in which its ownership or
leasing of property or the conduct of its business requires such qualification,
unless the failure to be so qualified would not have a material adverse effect
on the operations of the combined institution, taken as a whole. The activities
of the Association's subsidiaries are permitted to the subsidiaries of a
federally chartered savings and loan association, and to the best knowledge of
the Primary Parties, the activities of the Bank's subsidiaries are permitted to
be subsidiaries of a federally-chartered savings bank, in each case by the
rules, regulations, policies and practices of the OTS and any other state or
federal authority having jurisdiction over such matters.
p. The deposit accounts of the Association and, to the best knowledge of
the Primary Parties, the Bank are, and following the Closing Date of the
Reorganization the deposit accounts of the Association will be, insured by the
FDIC, up to the maximum amounts allowed by law.
q. Upon completion of the Reorganization, the authorized equity capital of
the Company will consist of ____________ shares of Common Stock and ____________
shares of preferred stock, and the issued and outstanding equity capital of the
Company will be consistent with that set forth in the Prospectus under the
caption "Historical and Pro Forma Capitalization"; no shares of Common Stock, or
securities exercisable into or exchangeable for shares of the Common Stock, will
have been issued prior to the Closing Date (other than shares received by the
Association in the formation of the Company, which shares will be cancelled upon
consummation of the Reorganization); the Shares will have been duly and validly
authorized for issuance and, when issued and delivered by the Company pursuant
to the Plan, will be duly and validly issued and fully paid and nonassessable,
the issuance of the Shares is not subject to any preemptive rights; and the
terms and provisions of the Common Stock will conform in all material respects
to the description thereof contained in the Prospectus. Upon the issuance of the
Shares, good title to the Shares will be transferred from the Company to the
purchasers thereof against payment therefor, subject to such claims as may be
asserted against the purchasers thereof by third-party claimants.
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r. As of the date hereof and as of the Closing Date, none of the Primary
Parties or any subsidiary, or, to the best knowledge of the Primary Parties,
Frankfort First Bancorp, the Bank, or any subsidiary is or will be in violation
of its charter or By- Laws or in default in the performance or observance of any
material obligation, agreement, covenant or condition contained in any material
contract, lease, loan agreement, indenture or other instrument to which it is a
party or by which it or any of its property may be bound; the consummation of
the Reorganization, the execution, delivery and performance of this Agreement
and the completion of the transactions herein contemplated have been duly and
validly authorized by all necessary corporate action on the part of the Primary
Parties, and this Agreement has been validly executed and delivered by the
Primary Parties and is the valid, legal and binding obligation of the Primary
Parties, enforceable in accordance with its terms, except to the extent that
rights to indemnity hereunder may be limited under applicable law and subject to
bankruptcy, insolvency, reorganization or other laws related to or affecting the
enforcement of creditors' rights generally and equitable principles limiting the
right to obtain specific enforcement or similar equitable relief. The execution
and delivery of this Agreement, the fulfillment of the terms herein set forth
and the consummation of the transactions herein contemplated will not (i)
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, the charter
or Bylaws of the Primary Parties, Frankfort First Bancorp, the Bank, or any
subsidiary, or any material contract, lease or other instrument to which the
Primary Parties, Frankfort First Bancorp, the Bank, or any subsidiary is a party
or in which the Primary Parties, Frankfort First Bancorp, the Bank, or any
subsidiary has a beneficial interest, or any applicable law, rule, regulation or
order; (ii) violate any authorization, approval, judgment, decree, order,
statute, rule or regulation applicable to the Primary Parties, Frankfort First
Bancorp, the Bank, or any subsidiary; or (iii) result in the creation of any
lien, charge or encumbrance upon any property of the Primary Parties, Frankfort
First Bancorp, the Bank, or any subsidiary.
s. The Primary Parties have all such 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 the Company has all such
power, authority, authorizations and orders as may be required to issue and sell
the Shares as provided in the Plan and described in the Prospectus, subject to
the approval of the applicable regulatory authorities and the satisfaction of
any conditions of such approval.
t. The Primary Parties, Frankfort First Bancorp, the Bank, and their
respective subsidiaries have good and marketable title to all properties and
assets which are material to the business of the combined institution taken as a
whole, including those properties and assets described in the Prospectus as
owned by them, free and clear of all liens, except such liens as are described
in the Prospectus or are not materially significant or important in relation to
the business of the combined institution and its subsidiaries on a consolidated
basis; and all leases and subleases which are material to the business of the
combined institution taken as a whole under which the Primary Parties, Frankfort
First Bancorp, the Bank, or any subsidiary holds properties, including those
leases and subleases described in the Prospectus, are in full force and effect.
u. As of the date hereof and as of the Closing Date and the Effective
Date, the Primary Parties, Frankfort First Bancorp, and the Bank, are not and
will not be in violation of any directive from the Commission, the OTS or any
other agency to make any material change in the method of conducting their
respective businesses so as to comply in all material respects with all
applicable
10
statutes and regulations (including, without limitation, regulations, decisions,
directives and orders of such governmental agencies), and no suit or proceeding,
charge, investigation or action before or by any court, regulatory authority or
governmental agency or body is or will be pending or, to the knowledge of the
Primary Parties, threatened, which might materially and adversely affect the
Reorganization or the Merger, the performance of this Agreement or the
completion of the transactions contemplated in the Plan and as described in the
Prospectus, or which might result in any material adverse change in the
financial condition, net income, capital, properties, affairs or prospects of
the combined institution taken as a whole, or which would materially affect its
respective properties and assets.
v. The Primary Parties have received an opinion of their counsel, Xxxxxxx
Xxxxxx Xxxxxxxx & Xxxxxxx LLP, Washington, D.C., with respect to the federal
income tax consequences of the Reorganization and Xxxxx Xxxxxxxx with respect to
the Kentucky state income tax consequences of the Reorganization; the tax
opinions of Xxxxxxx Xxxxxx Xxxxxxxx & Xxxxxxx LLP and Xxxxx Xxxxxxxx are
accurately summarized in the Reorganization Applications and the Prospectus. The
facts and representations upon which such opinions are based are truthful,
accurate and complete, and no Primary Party will take any action inconsistent
therewith.
w. No default exists, and no event has occurred which, with notice or
lapse of time or both, would constitute a default, on the part of any Primary
Party or any subsidiary in the due performance and observance of any term,
covenant or condition of any indenture, mortgage, deed of trust, note, bank loan
or credit agreement or any other instrument or agreement to which any Primary
Party or subsidiary thereof is a party or by which any of them or any of their
respective property is bound or affected which, in any such case, is material to
the Primary Parties and their subsidiaries taken as a whole; such agreements are
in full force and effect and no other party to any such agreement has instituted
or, to the knowledge of the Primary Parties, threatened any action or proceeding
wherein the Primary Parties or any subsidiary would or might be alleged to be in
default thereunder. No default exists, and no event has occurred which with
notice or lapse of time, or both, would constitute a default, on the part of
Frankfort First Bancorp, the Bank or any subsidiary in the due performance and
observance of any term, covenant or condition of any indenture, mortgage, deed
of trust, note, bank loan or credit agreement or any other instrument or
agreement to which Frankfort First Bancorp, the Bank or any subsidiary is a
party or by which any of them or any of their respective property is bound or
affected which, in any such case, is material to Frankfort First Bancorp, the
Bank and its subsidiaries, taken as a whole; such agreements are in full force
and effect and no other party to any such agreement has instituted or, to the
knowledge of Frankfort First Bancorp or the Bank, threatened any action or
proceeding wherein Frankfort First Bancorp, the Bank or any subsidiary would or
might be alleged to be in default thereunder.
x. Subsequent to the date the Registration Statement is declared effective
by the Commission and prior to the Closing Date, except as otherwise may be
indicated or contemplated therein, none of the Primary Parties or any subsidiary
has or will have: (i) issued any securities or incurred any liability or
obligation, direct or contingent, for borrowed money, except borrowings from the
same or similar sources indicated in the Prospectus in the ordinary course of
its business, or (ii) entered into any transaction which is material in light of
the business and properties of the Primary Parties taken as a whole. Subsequent
to the date the Registration Statement is declared effective by the Commission
and prior to the Closing Date, except as otherwise may be indicated or
11
contemplated therein, none of Frankfort First Bancorp, the Bank or any
subsidiary has or will have: (i) issued any securities or incurred any liability
or obligation, direct or contingent, for borrowed money, except borrowings from
the same or similar sources indicated in the Prospectus in the ordinary course
of its business, or (ii) entered into any transaction which is material in light
of the business and properties of Frankfort First Bancorp and the Bank taken as
a whole. For purposes of this paragraph, obligations for borrowed money do not
include deposits.
y. The Primary Parties, Frankfort First Bancorp, the Bank and their
subsidiaries have filed all federal, state and local tax returns required to be
filed and have made timely payment of all taxes due and payable in respect of
such returns and no deficiency has been asserted with respect thereto by any
taxing authority.
z. Except as disclosed in the Prospectus with respect to the ESOP, none of
the Primary Parties, Frankfort First Bancorp, the Bank or any subsidiary has
made any payment of funds of the Primary Parties, Frankfort First Bancorp, the
Bank or any subsidiary as a loan for the purchase of the Shares or made any
other payment of funds prohibited by law, and no funds have been set aside to be
used for any payment prohibited by law.
aa. Prior to the Reorganization, the Association is not authorized to
issue capital stock. Prior to the completion of the Reorganization none of the
Primary Parties will have: (i) other than as described in the Prospectus issued
any securities within the last 18 months (except for notes to evidence other
bank loans and reverse repurchase agreements); (ii) had any material dealings
within the 12 months prior to the date hereof with any member of the NASD, or
any person related to or associated with such member, other than discussions and
meetings relating to the Offering and the Merger and routine purchases and sales
of securities for or from its portfolio; (iii) entered into a financial or
management consulting agreement relating to the sale of stock, except as
contemplated hereunder and in connection with the Merger; or (iv) engaged any
intermediary between the Selling Agent and any Primary Party in connection with
any offering of shares of its capital stock, and no person is being compensated
in any manner for such service.
bb. Neither the Primary Parties, Frankfort First Bancorp, or the Bank is
required to be registered under the Investment Company Act of 1940, as amended.
cc. To the knowledge of the Primary Parties, the Company has taken all
necessary action to make such filings and/or to qualify or register the Shares
for offer and sale in the Offering and the Merger under the securities or Blue
Sky laws of all jurisdictions wherein such Shares will be offered which require
such filings and/or qualification or registration.
dd. All Sales Information used by the Company in connection with the
Offering that is required by the Reorganization Regulations to be filed has been
filed with and approved by the applicable regulatory authority.
ee. Except for information provided in writing to the Primary Parties by
the Selling Agent for use in the Prospectus, the Primary Parties have not relied
upon the Selling Agent or its legal or other advisors for any legal, tax or
accounting advice in connection with the Reorganization.
12
ff. To the knowledge of the Primary Parties on the one hand and to the
knowledge of Frankfort First Bancorp and the Bank on the other hand, each of the
Primary Parties, Frankfort First Bancorp, the Bank and their respective
subsidiaries is in compliance with all laws, rules and regulations relating to
environmental protection, except where such failure would not have a material
adverse effect on the financial condition of the combined institution taken as a
whole, and none of the Primary Parties, Frankfort First Bancorp, the Bank or any
subsidiary has been notified or is otherwise aware that any of them is
potentially liable, or is considered potentially liable, under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, or
any similar state law. No actions, suits, regulatory investigations or other
proceedings are pending, or, to the knowledge of the Primary Parties, threatened
against any Primary Party, Frankfort First Bancorp, the Bank or any subsidiary
relating to environmental protection, nor does any Primary Party have any reason
to believe any such proceedings may be brought against any of such entities. To
the knowledge of the Primary Parties on the one hand and to the knowledge of
Frankfort First Bancorp and the Bank, on the other hand, 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 occurred on, in, at or about any of the
facilities or properties owned, operated or leased by, or pledged to, any
Primary Party, Frankfort First Bancorp, the Bank or any subsidiary, except such
disposal, release or discharge which would not have a material adverse effect on
the combined institution taken as a whole.
gg. No labor dispute with the employees of any Primary Party, Frankfort
First Bancorp, the Bank or any subsidiary exists or, to the knowledge of the
Primary Parties, is imminent.
hh. All of the loans represented as assets on the most recent financial
statements or selected financial information of the Association and Frankfort
First Bancorp included in the Prospectus meet or are exempt from all
requirements of federal, state and local law pertaining to lending, including,
without limitation, truth in lending (including the requirements of Regulation Z
and 12 C.F.R. Part 226), 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 result in a material
adverse effect on the financial condition, results of operations or business of
the combined institution taken as a whole.
ii. Any certificate signed by an officer of any Primary Party and
delivered to the Selling Agent or their counsel that refers to this Agreement
shall be deemed to be a representation and warranty by such Primary Party to the
Selling Agent as to the matters covered thereby with the same effect as if such
representation and warranty were set forth herein.
jj. To the knowledge of the Company and the Association, with the
exception of the intended loan to the Association's ESOP by the Company to
enable the ESOP to purchase shares of Common Stock in an amount of up to 10.0%
of the Common Stock issued in the Reorganization, none of the Company, the
Association or employees of the Association has made any payment of funds of the
Company or the Association as a loan for the purchase of the Common Stock or
made any other payment of funds prohibited by law, and no funds have been set
aside to be used for any payment prohibited by law.
13
kk. To the knowledge of the Company, there are no affiliations or
associations (as such terms are defined by the National Association of
Securities Dealers, Inc. ("NASD")) between any member of the NASD and any of the
Company's officers or directors.
ll. Each of the Company, the Association, First Frankfort Bancorp, the
Bank and each of their respective subsidiaries carries, or is covered by,
insurance in such amounts and covering such risks as is adequate for the conduct
of their respective businesses and the value of their respective properties as
is customary for companies engaged in similar industries.
mm. Each of the Company, the Association, First Frankfort Bancorp, the
Bank and each of their respective subsidiaries maintains a system of internal
accounting controls sufficient to provide reasonable assurance that (a)
transactions are executed in accordance with management's general or specific
authorizations; (b) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (c) access to assets is
permitted only in accordance with management's general or specific
authorization; and (d) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
nn. Each of the Company, the Association, First Frankfort Bancorp, the
Bank and each of their respective subsidiaries is in compliance in all material
respects with the applicable financial record keeping and reporting requirements
of the Currency and Foreign Transaction Reporting Act of 1970, as amended, and
the rules and regulations thereunder.
oo. The records of eligible account holders, supplemental eligible account
holders and other members are accurate and complete in all material respects.
pp. Each of the Company, the Association, First Frankfort Bancorp, the
Bank and each of their respective subsidiaries is in compliance in all material
respects with all presently applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in ERISA) for
which the Company, the Association or any Subsidiary, respectively, would have
any liability; each of the Company, the Association and each Subsidiary has not
incurred and does not expect to incur liability under (1) Title IV of ERISA with
respect to termination of, or withdrawal from, any "pension plan" or (ii)
Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including
the regulations and published interpretations thereunder (the "Code"); and each
"pension plan" for which the Company, the Association and any Subsidiary would
have any liability that is intended to be qualified under Section 401 (a) of the
Code is so qualified in all material respects and nothing has occurred, whether
by action or by failure to act, which would cause the loss of such
qualification.
qq. Each of the Company, the Association, First Frankfort Bancorp, the
Bank and their respective subsidiaries have filed all federal income and state
and local income and franchise tax returns required to be filed and have made
timely payments of all taxes shown as due and payable in respect of such
returns, and no deficiency has been asserted with respect thereto by any taxing
authority. The Company and the Association have no knowledge of any tax
deficiency which has
14
been asserted or could be asserted against the Company, the Association, First
Frankfort Bancorp, the Bank or their respective subsidiaries.
rr. The Company has received approval, subject to regulatory approval to
consummate the Offerings and issuance, to have the Securities listed on the
Nasdaq Stock Market effective as of the Closing Time.
ss. The Company has filed a registration statement for the Common Stock
under Section 12(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and such registration statement was declared effective
concurrent with the effectiveness of the Registration Statement.
tt. The Association and the Bank have established compliance programs to
ensure compliance with the requirements of the USA Patriot Act and all
applicable regulations promulgated thereunder. None of the Association or the
Bank are in violation of the USA Patriot Act or any applicable regulations
promulgated thereunder, and there is no charge, investigation, action, suit or
proceeding before any court, regulatory authority or governmental agency or body
pending or, to the best knowledge of the Company and the Association, threatened
regarding the Association's and the Bank's compliance with the USA Patriot Act
or any regulations promulgated thereunder.
uu. The Company and First Frankfort Bancorp are in compliance with the
provisions of the Xxxxxxxx-Xxxxx Act and will comply with those provisions of
the Xxxxxxxx-Xxxxx Act that will become effective in the future upon their
effectiveness.
SECTION 4B. Representations and Warranties; Certain Covenants of the
Selling Agent. The Selling Agent represents and warrants to the Primary Parties
as follows:
a. The Selling Agent is registered as a broker-dealer with the Commission
and the NASD.
b. The Selling Agent is validly existing and in good standing as a
corporation under the laws of the District of Columbia with the corporate power
and authority to provide the services to be furnished to the Primary Parties
hereunder.
c. The execution and delivery of this Agreement and the completion of the
transactions herein contemplated have been duly and validly authorized by all
necessary corporate action on the part of the Selling Agent, and this Agreement
is a legal, valid and binding obligation of the Selling Agent, enforceable in
accordance with its terms, except to the extent that rights to indemnity
hereunder may be limited under applicable law and subject to bankruptcy,
insolvency, reorganization or other laws related to or affecting the enforcement
of creditors' rights generally and equitable principles limiting the right to
obtain specific enforcement or similar equitable relief.
d. The Selling Agent and, to the Selling Agent's knowledge, its employees,
agents and representatives who shall perform any of the services required
hereunder to be performed by the Selling Agent shall be duly authorized and
shall have all licenses, approvals and permits necessary to perform such
services, and Capital Resources is a registered selling agent in the
jurisdictions listed in
15
Exhibit C 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.
e. The execution and delivery of this Agreement by the Selling Agent, the
fulfillment of the terms set forth herein and the completion of the transactions
herein contemplated shall not violate or conflict with the corporate charter or
bylaws of the Selling Agent 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 the Selling Agent is bound or under any governmental license
or permit or any law, administrative regulation, authorization, approval or
order or court decree, injunction or order applicable to it.
f. Any funds received by the Selling Agent to purchase Shares will be
handled in accordance with Rule 15c2-4 under the Securities Exchange Act of 1934
(the A1934 Act"), if applicable.
g. There is not now pending or, to the Selling Agent's knowledge,
threatened against the Selling Agent any material action or proceeding before
the Commission, the NASD, any state securities commission or any state or
federal court concerning the Selling Agent's activities as a broker-dealer.
SECTION 5. Additional Covenants of the Primary Parties. The Primary
Parties hereby jointly and severally covenant with the Selling Agent as follows:
a. The Primary Parties will not file any amendment or supplement to the
Registration Statement or any Reorganization Application without notifying the
Selling Agent of its intention to do so and providing the Selling Agent and its
counsel an opportunity to review such amendment or supplement, nor will any
Primary Party file any such amendment or supplement to which the Selling Agent
or its counsel shall reasonably object.
b. The Primary Parties will use their best efforts to cause each
Reorganization Application not heretofore approved to be approved by the
applicable regulatory authority and will promptly upon receipt of any
information concerning the events listed below notify the Selling Agent: (i) of
the approval of any Reorganization Application not heretofore approved; (ii) of
the receipt of any comments from the OTS or any other governmental entity with
respect to the Reorganization, the Merger or the transactions contemplated by
this Agreement; (iii) of the request by the OTS or any other governmental entity
for any amendment or supplement to the Registration Statement, the Prospectus or
any Reorganization Application or for additional information; (iv) of the
issuance by the Commission, the OTS or any other governmental entity of any
order or other action suspending the Reorganization or the Merger or the use of
the Registration Statement or the Prospectus or any other filing of the Primary
Parties under the Reorganization Regulations, the 1933 Act, 1933 Act Regulations
or other applicable law, or the threat of any such action; (v) of the issuance
by the Commission, the OTS or any other state governmental authority of any stop
order suspending the effectiveness of the Registration Statement or any
Reorganization Application or of the initiation or threat of any proceedings for
such purpose; or (vi) of the occurrence of any event mentioned in paragraph (f)
below. The Primary Parties will make every reasonable effort to prevent the
issuance by the Commission, the OTS or any other governmental authority of any
such order and,
16
if any such order shall at any time be issued, to obtain the lifting thereof at
the earliest possible time. The Primary Parties will provide copies of the
foregoing comments, requests and orders to the Selling Agent upon receipt of
such items.
c. The Primary Parties will deliver to the Selling Agent and to its
counsel two conformed copies of each of the following documents, with all
exhibits: each Reorganization Application as originally filed and each amendment
or supplement thereto and the Registration Statement as originally filed and
each amendment thereto. In addition, the Primary Parties will also deliver to
the Selling Agent such number of copies of the closing documents with respect to
the Reorganization and the Offering as the Selling Agent may reasonably request.
d. The Primary Parties will furnish to the Selling Agent, from time to
time during the period when the Prospectus is required to be delivered under
federal or state securities laws or regulations or the applicable rules and
regulations of any other governmental entity, such number of copies of the
Prospectus (as amended or supplemented) as the Selling Agent may reasonably
request for the purposes contemplated by such federal or state securities laws
or regulations or the applicable rules and regulations of any other governmental
entity. The Company authorizes the Selling Agent to use the Prospectus (as
amended or supplemented) for any lawful manner in connection with the sale of
the Shares.
e. The Primary Parties will comply with any and all terms, conditions,
requirements and provisions with respect to the Reorganization and the
transactions contemplated thereby imposed by the Commission, the OTS, any state
regulatory or Blue Sky authority or any other governmental entity, including the
terms, conditions, requirements and provisions contained in the Reorganization
Regulations, the 1933 Act, the 1933 Act Regulations, the 1934 Act and the rules
and regulations of the Commission promulgated under the 1934 Act (the "1934 Act
Regulations").
f. If, at any time during the period when the Prospectus is required to be
delivered, any event relating to or affecting any Primary Party shall occur, as
a result of which it is necessary or appropriate, in the opinion of counsel for
the Primary Parties, to amend or supplement the Registration Statement or the
Prospectus in order to make the Registration Statement or Prospectus not
misleading in light of the circumstances existing at the time it is delivered to
a purchaser, the Primary Parties will, at their expense, forthwith prepare, file
with the Commission and furnish to the Selling Agent a reasonable number of
copies of an amendment or amendments of, or a supplement or supplements to, the
Registration Statement or Prospectus (in form and substance reasonably
satisfactory to the Selling Agent and its counsel after a reasonable time for
review) which will amend or supplement the Registration Statement or Prospectus
so that as amended or supplemented it will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances existing at the time the
Prospectus is delivered to a purchaser, not misleading.
g. The Primary Parties will take all necessary actions, in cooperation
with the Selling Agent, and furnish to whomever the Selling Agent may direct
such information as may be required to qualify or register the Shares for the
Offering and sale by the Company under the applicable securities or Blue Sky
laws of such jurisdictions as the Selling Agent may reasonably designate;
provided, however, that the Company shall not be obligated to file any general
consent to service of
17
process or to qualify to do business in any jurisdiction in which it is not
otherwise required to be so qualified. In each jurisdiction where any of the
Shares shall have been so qualified or registered, the Company will make and
file such statements and reports as are or may be required by the laws of such
jurisdiction.
h. The Company will not sell or issue, contract to sell or otherwise
dispose of, for a period of 180 days after the Closing Date, without the prior
written consent of the Selling Agent, any shares of, or any securities
convertible into or exercisable for shares of, Common Stock other than in
connection with the Merger or any other plan or arrangement described in the
Prospectus.
i. During the period in which the Company's Common Stock is registered
under the 1934 Act, the Company will furnish to its stockholders as soon as
practicable after the end of each fiscal year an annual report (including a
consolidated balance sheet and consolidated statements of income, stockholders'
equity and cash flows of the Primary Parties as at the end of and for such year,
certified by independent public accountants in accordance with Regulation S-X
under the 0000 Xxx) and make available as soon as practicable after the end of
each of the first three quarters of each fiscal year (beginning with the first
fiscal quarter ending after the Closing Date) financial information of the
Primary Parties for such quarter in reasonable detail.
j. During the period of three years from the date hereof, the Company will
furnish to the Selling Agent: (i) promptly after it becomes available, a copy of
each report of the Company furnished generally to stockholders of the Company or
furnished to or filed with the Commission under the 1934 Act or any national
securities exchange or system on which any class of securities of the Company is
listed or quoted (including, but not limited to, reports of Forms 10-K, 10-Q and
8-K and all proxy statements and annual reports to stockholders), a copy of each
other report of the Company mailed to its stockholders or filed with the
Commission or any other supervisory or regulatory authority or any national
securities exchange or system on which any class of securities of the Company is
listed or quoted and each press release and material news item and article
released by the Company or the Association, and (ii) from time to time, such
other public information concerning the Primary Parties as the Selling Agent may
reasonably request.
k. The Primary Parties will use the net proceeds from the sale of the
Shares substantially in the manner set forth in the Prospectus under the caption
"Use of Proceeds."
l. Other than as permitted by the Reorganization Regulations, the HOLA,
the 1933 Act, the 1933 Act Regulations and the laws of any jurisdiction in which
the Shares are qualified for sale, neither the Company nor the Association will
distribute any Prospectus or other Sales Information in connection with the
offer and sale of the Shares.
m. The Company will make generally available to its security holders as
soon as practicable, but not later than 60 days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 of the 1933 Act Regulations) 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 such Rule 158) of the Registration Statement.
18
n. The Company will register the Common Stock under Section 12(g) of the
1934 Act effective on or prior to the Closing Date.
o. The Company will use its best efforts to obtain approval for, effective
on or prior to the Closing Date, and maintain quotation of the Common Stock on
the Nasdaq National Market System.
p. The Primary Parties will maintain appropriate arrangements for
depositing all funds received from persons delivering orders to purchase Shares
in the Subscription and Community Offerings on an interest-bearing basis at the
rate described in the Prospectus until the Closing Date or until the Offering is
terminated in accordance with the Plan and as described in the Prospectus. The
Primary Parties will maintain such records of all funds received to permit the
funds of each subscriber to be separately insured by the FDIC and to enable the
Company to make appropriate refunds of such funds in the event that such refunds
are required to be made in accordance with the Plan and as described in the
Prospectus.
q. The Primary Parties will take such actions and furnish such information
as are reasonably requested by the Selling Agent in order for the Selling Agent
to ensure compliance with NASD Conduct Rule 2790.
r. The Primary Parties will conduct their respective businesses in
compliance in all material respects with all applicable federal and state laws,
rules, regulations, decisions, directives and orders including, all decisions,
directives and orders of the OTS.
s. The Primary Parties will not amend the Plan without the Selling Agent's
prior written consent in any manner that, in the opinion of the Selling Agent,
would affect the sale of the Shares or the terms of this Agreement, which
approval shall not be unreasonably withheld.
t. The Primary Parties will use all reasonable efforts to comply with, or
cause to be complied with, the conditions precedent to the several obligations
of the Selling Agent specified in Section 9 hereof.
u. Prior to the Closing Date, the Primary Parties shall have received
approval of each Reorganization Application required to consummate the Merger,
and all applicable waiting periods shall have expired.
SECTION 6. Payment of Expenses. Whether or not the Reorganization is
completed or the sale of the Shares by the Company is completed, the Primary
Parties jointly and severally agree to pay all expenses incident to the
performance of the obligations of any Primary Party under this Agreement,
including the following: (i) the preparation, printing, issuance and delivery of
the certificates evidencing the Shares sold to the purchasers in the Offering
and the printing and delivery of all other documents applicable to the
Reorganization and the Merger; (ii) the fees and disbursements of the Primary
Parties' counsel, accountants and other advisors; (iii) the qualification of the
Shares under all applicable securities or Blue Sky laws, including filing fees
and the reasonable fees and disbursements of counsel in connection therewith and
in connection with the preparation of a Blue Sky Survey concerning such
jurisdictions as the Selling Agent may reasonably
19
designate; (iv) the printing and delivery to the Selling Agent in such
quantities as the Selling Agent shall reasonably request of copies of the
Registration Statement, the Prospectus and the Reorganization Applications as
originally filed and as amended or supplemented and all other documents in
connection with the Reorganization and this Agreement; (v) the filing fees
incurred in connection with the review of the Registration Statement, the
Reorganization Applications and any other application, form or filing by the
Commission and the OTS; (vi) the filing fees and the fees and disbursements of
counsel incurred in connection with the review of the Offering by the NASD;
(vii) the fees for listing the Shares on the Nasdaq National Market; (viii) the
fees and expenses relating to the Independent Valuation; (ix) the fees and
expenses relating to advertising expenses, temporary personnel expenses,
expenses related to the Stock Information Center to be established, investor
meeting expenses and other miscellaneous expenses relating to the marketing of
the Shares; and (x) the fees and charges of any transfer agent, registrar or
other agent. In the event that the Selling Agent incurs any such expenses on
behalf of the Primary Parties, the Primary Parties will pay or reimburse the
Selling Agent for such expenses regardless of whether the Reorganization is
successfully completed, and such reimbursements will not be included in the
expense limitations set forth in the following paragraph.
In addition, the Primary Parties will reimburse the Selling Agent for all
reasonable out-of- pocket expenses, including legal fees and expenses, incurred
by the Selling Agent in connection with the services provided by the Selling
Agent to the Primary Parties pursuant to this Agreement. Such legal fees shall
not exceed $75,000 and such other reasonable out-of-pocket expenses incurred by
Capital Resources shall not exceed $50,000 without the consent of the Primary
Parties. The Selling Agent will provide a detailed accounting of the
out-of-pocket expenses referred to in this paragraph, which will be paid by the
Company and/or the Association on a monthly basis. The parties hereto
acknowledge that the expense limitations set forth in this paragraph may be
exceeded in the event of a material delay in the Offering that requires an
update of financial information contained in the Registration Statement.
SECTION 7. Indemnification.
a. The Primary Parties jointly and severally agree to indemnify and hold
harmless the Selling Agent, its officers, directors, agents and employees and
each person, if any, who controls the Selling 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, subject to the limitation in the last sentence of
paragraph (c) below), joint or several, that the Selling Agent or any of such
persons may suffer or to which the Selling Agent or any such persons may become
subject under all applicable federal and state laws or otherwise, and to
promptly reimburse the Selling Agent and any of such persons upon written demand
for any expenses (including reasonable fees and disbursements of counsel)
reasonably incurred by the Selling Agent or any of such persons in connection
with investigating, preparing or defending any actions, proceedings or claims
(whether commenced or threatened) to the extent such losses, claims, damages,
liabilities, expenses or actions: (i) arise out of or are based upon any untrue
statement, or alleged untrue statement, of any material fact contained in any
Reorganization Application (or any amendment or supplement thereto), the
Registration Statement (or any amendment or supplement thereto), the Prospectus
(or any amendment or supplement thereto), or any application or other document,
advertisement or communication prepared, made or executed by or on behalf of any
20
Primary Party or based upon written information or statements furnished or made
by any Primary Party or its representatives (including counsel) whether or not
filed in any jurisdiction in order to register or qualify any or all of the
Shares under the securities law thereof (the "Sales Information"); (ii) arise
out of or are 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 any
Reorganization Application (or any amendment or supplement thereto), the
Registration Statement (or any amendment or supplement thereto), the Prospectus
(or any amendment or supplement thereto), the Sales Information or other
documentation prepared by a Primary Party and distributed in connection with the
Offering; except 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 in, or omission or alleged omission of a material
fact from, any Reorganization Application (or any amendment or supplement
thereto), the Registration Statement (or any amendment or supplement thereto),
the Prospectus (or any amendment or supplement thereto), the Sales Information
or other documentation prepared by any Primary Party and distributed in
connection with the Offering made in reliance upon and in conformity with
information furnished in writing to any Primary Party by the Selling Agent or
their representatives (including counsel) regarding the Selling Agent expressly
for use in the Prospectus, which the Primary Parties acknowledge includes only
the information contained in the Prospectus under the caption "The
Reorganization and the Stock Offering -- Marketing Arrangements"; nor shall
indemnification be required for material oral misstatements to a purchaser of
Shares made by the Selling Agent which are not based upon information provided
by any Primary Party in writing or based upon information contained in any
Reorganization Application (or any amendment or supplement thereto), the
Registration Statement (or any amendment or supplement thereto), the Prospectus
(or any amendment or supplement thereto), or the Sales Information or other
documentation prepared by a Primary Party and distributed in connection with the
Reorganization. In addition, no Primary Party will be liable under the foregoing
indemnification provisions to the extent that any loss, claim, damage, liability
or action is found in a final judgment by a court to have resulted from the
Selling Agent's bad faith, misconduct or gross negligence in performing the
services to be performed by the Selling Agent under this Agreement.
Notwithstanding the foregoing, the indemnification provided for in this
paragraph (a) shall not apply to the Association to the extent that such
indemnification by the Association would constitute a covered transaction under
Section 23A of the Federal Reserve Act. For purposes of this Section 7, the term
"expense" shall include, but not be limited to, counsel fees and costs, court
costs and out-of-pocket costs. The foregoing agreement to indemnify shall be in
addition to any liability any Primary Party may otherwise have to the Selling
Agent or the persons entitled to the benefit of these indemnification
provisions.
b. The Selling Agent agrees to indemnify and hold harmless the Primary
Parties, their respective officers, directors, agents and employees and each
person, if any, who controls a Primary Party 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, subject to the limitation in the last sentence of paragraph
(c) below), joint or several, that they or any of such persons may suffer or to
which they or any such persons may become subject under all applicable federal
and state laws or otherwise, and to promptly reimburse the Primary
21
Parties and any of such persons upon written demand for any expenses (including
reasonable fees and disbursements of counsel) reasonably incurred by them or any
of such persons 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 any Reorganization Application (or any amendment or supplement
thereto), the Registration Statement (or any amendment or supplement thereto),
the Prospectus (or any amendment or supplement thereto), the Sales Information
or other documentation prepared by any Primary Party and distributed in
connection with the Offering; or (ii) arise out of or which are 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; provided, however, that obligations of the Selling Agent
under this paragraph shall exist only if and to the extent that such untrue
statement or alleged untrue statement was made in, or such omission or alleged
omission was from, any Reorganization Application (or any amendment or
supplement thereto), the Registration Statement (or any amendment or supplement
thereto), the Prospectus (or any amendment or supplement thereto), the Sales
Information or other documentation prepared by any Primary Party and distributed
in connection with the Offering in reliance upon and in conformity with
information furnished in writing to any Primary Party by the Selling Agent or
its representatives (including counsel) regarding the Selling Agent expressly
for use in the Prospectus, which the Primary Parties acknowledge includes only
the information contained in the Prospectus under the caption "The
Reorganization and the Stock Offering -- Marketing Arrangements." In addition,
the Selling Agent will not be liable under the foregoing indemnification
provisions to the extent that any loss, claim, damage, liability or action is
found in a final judgment by a court to have resulted from any Primary Party's
bad faith, misconduct or negligence. The foregoing agreement to indemnify shall
be in addition to any liability the Selling Agent may otherwise have to the
Primary Parties or the persons entitled to the benefit of these indemnification
provisions.
c. Each indemnified party shall give 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 7 and
Section 8 herein. 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 the defense of such
action with counsel chosen by it and reasonably acceptable to 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 firm of attorneys for the indemnified parties
(unless an indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from or
additional to those of the other indemnified parties) in
22
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. No indemnifying party shall be
liable for any settlement of any action, proceeding or suit effected without its
prior written consent.
d. The agreement contained in this Section 7 and in Section 8 hereof and
the representations and warranties of the Primary Parties 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 Selling Agent or its directors,
officers, agents, employees or controlling persons or by or on behalf of the
Primary Parties or their respective directors, officers, agents, employees or
controlling persons; (ii) delivery of and payment hereunder for the Shares; or
(iii) any termination of this Agreement.
SECTION 8. Contribution. If the indemnification of an indemnified party
provided for in Section 7 of this Agreement is for any reason held
unenforceable, the Primary Parties, on the one hand, and the Selling Agent, on
the other, agree to contribute to the losses, liabilities, claims, damages and
expenses for which such indemnification is held unenforceable: (i) in such
proportion as is appropriate to reflect the relative benefits to the Primary
Parties, on the one hand, and the Selling Agent, on the other, of the
Reorganization as contemplated (whether or not the Reorganization is
consummated), or (ii) if the application provided for in clause (i) is for any
reason held unenforceable, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) but also the relative fault
of the Primary Parties, on the one hand, and the Selling Agent, on the other, as
well as other equitable considerations. The Primary Parties agree that for the
purposes of this Section 8, the relative benefits to the Primary Parties and the
Selling Agent of the Reorganization as contemplated shall be deemed to be in the
same proportion that the total proceeds from the Reorganization and the Offering
received by the Association and the Company in connection with the
Reorganization bear to the total fees paid or to be paid to the Selling Agent
under this Agreement. No person found guilty of any fraudulent misrepresentation
(within the meaning of Section 11(f) of the 0000 Xxx) shall be entitled to
contribution from any person who was not found guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each of the Selling Agent's
officers and directors and each person, if any, who controls the Selling Agent
within the meaning of the 1933 Act and the 1934 Act shall have the same rights
to contribution as the Selling Agent, and each of the Primary Parties' officers
and directors and each person, if any, who controls the Primary Parties within
the meaning of the 1933 Act and the 1934 Act shall have the same rights to
contribution as the Primary Parties. Any party entitled to contribution shall,
promptly after receipt of notice of commencement of any action, suit, claim or
proceeding against such party in respect to which a claim for contribution may
be made against another party, notify such other party, but the omission to so
notify such party shall not relieve the party from whom contribution may be
sought from any other obligation it may have hereunder or otherwise than under
this Section 8. The Primary Parties and the Selling Agent agree that it would
not be just and equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation or by other method of allocation that does not
take into account the equitable considerations referred to in this Section 8.
SECTION 9. Conditions of the Selling Agent's Obligations. The obligations
of the Selling Agent hereunder as to the Shares to be delivered at the Closing
Date are subject, in the discretion of the Selling Agent, to the condition that
all representations and warranties and other statements of the Primary Parties
herein are, at and as of the commencement of the Offering and at and as of the
23
Closing Date, true and correct in all material respects, the condition that the
Primary Parties shall have performed in all material respects all of their
respective obligations hereunder to be performed on or before such dates and to
the following conditions:
a. The Registration Statement shall have been declared effective by the
Commission not later than 5:30 p.m. on the date of this Agreement, or with the
consent of the Selling Agent at a later time and date; and at the Closing Date
no stop order suspending the effectiveness of the Registration Statement or the
consummation of the Reorganization shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission or any state
securities or Blue Sky authority, and no order or other action suspending the
effectiveness of the Prospectus or the consummation of the Reorganization shall
have been issued or proceedings therefore initiated or threatened by the OTS.
b. At the Closing Date, the Selling Agent shall have received the
favorable opinion, dated as of the Closing Date addressed to the Selling Agent
and for their and their counsel's benefit, of Xxxxxxx Xxxxxx Xxxxxxxx & Xxxxxxx
LLP as to issues of federal law set forth below. The opinion of Xxxxxxx Xxxxxx
Xxxxxxxx & Xxxxxxx LLP shall be in form and substance to the effect that:
1. Prior to the Reorganization, the Association was duly
organized and validly existing under the laws of the United
States as a mutual savings and loan association, and had the
full power and authority to own its properties and to conduct
its business as described in the Prospectus and to enter into
this Agreement and perform its obligations hereunder, and the
activities of the Association as described in the Prospectus
are permitted by the rules, regulations and practices of the
OTS; the issuance and sale of the capital stock of the
Association to the Company in the Reorganization has been duly
and validly authorized by all necessary corporate action on
the part of the Company and the Association and, upon payment
therefor in accordance with the terms of the Plan, will be
validly issued, fully paid and nonassessable, and will be
owned of record and beneficially by the Company, free and
clear of any mortgage, pledge, lien, encumbrance, claim or
restriction.
2. The Company is a corporation duly organized and validly
existing and in good standing under the federal laws of the
United States of America, with corporate power and authority
to own its properties and to conduct its business as described
in the Prospectus, and is duly qualified to transact business
and is in good standing in each jurisdiction in which the
conduct of its business requires such qualification and in
which the failure to qualify would have a material adverse
effect on the financial condition, earnings, capital,
properties or business affairs of the Primary Parties.
3. Upon completion of the Reorganization, the MHC will have been
duly organized and will be validly existing as a federally
chartered mutual holding company, duly authorized to conduct
its business and own its properties as described in the
Registration Statement and Prospectus.
24
4. Each of the Primary Parties and their subsidiaries is duly
qualified as a foreign corporation to transact business and is
in good standing in each jurisdiction in which such
qualification is and, following consummation of the
Reorganization, will be required, unless the failure to be so
qualified in one or more of such jurisdictions would not have
a material adverse effect on the financial condition or the
business, operations, net income or prospects of the Primary
Parties taken as a whole.
5. Each of the Association's subsidiaries is validly existing and
in good standing under the laws of its jurisdiction of
organization, and each has the corporate power and authority
to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and
Prospectus; the activities of each subsidiary of the
Association as described in the Registration Statement and
Prospectus are permitted to subsidiaries of a
federally-chartered savings and loan association and savings
and loan holding company by the rules, regulations, policies
and practices of the OTS and any other federal or state
authority having jurisdiction over such matters; all of the
outstanding stock of each subsidiary of the Association has
been duly authorized and validly issued and is fully paid and
nonassessable; and upon consummation of the Reorganization all
such stock will be owned of record and beneficially by the
Association, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity.
6. Upon completion of the Reorganization, the authorized equity
capital of the Company will consist of ___________ shares of
common stock and ___________ shares of preferred stock, and
the issued and outstanding equity capital of the Company will
be consistent with that set forth in the Registration
Statement and the Prospectus under the caption
"Capitalization"; no shares of the Company's common stock, or
securities exercisable into or exchangeable for common stock,
will have been issued prior to the Closing Date (other than
shares issued to the Association in connection with the
formation of the Company, which shares will be cancelled upon
consummation of the Reorganization); at the time of the
Reorganization the Shares will have been duly and validly
authorized for issuance, and when issued and delivered by the
Company pursuant to the Plan, will be duly authorized and
validly issued and fully paid and nonassessable; the issuance
of the Shares is not subject to any preemptive rights. Upon
the issuance of the Shares, against payment therefor in
accordance with the Prospectus, the purchasers will have full
legal title to the shares, subject to such claims as may be
asserted against the purchasers thereof by third-party
claimants.
7. Each Reorganization Application has been approved by the
applicable regulatory authority pursuant to the Reorganization
Regulations and the Prospectus has been authorized for use by
the OTS, and, to such counsel's knowledge, no action has been
taken or is pending or threatened to revoke any such
authorization or approval.
25
8. Each Reorganization Application, as amended or supplemented,
if amended or supplemented, as filed with the applicable
regulatory authority complied as to form in all material
respects with the requirements of the Reorganization
Regulations.
9. The OTS's approval of the Plan remains in full force and
effect; the Primary Parties have conducted the Reorganization
in all material respects in accordance with the requirements
of the Reorganization Regulations, federal law, all other
applicable regulations, decisions and orders and the Plan,
including all material applicable terms, conditions,
requirements and conditions precedent to the Reorganization
imposed by the OTS; no order has been issued by the OTS to
suspend the Reorganization or the Merger and no action for
such purpose has been instituted or, to such counsel's
knowledge, threatened by the OTS; and, to such counsel's
knowledge, no person has sought to obtain review of the final
action of the OTS in approving any Reorganization Application
or the Plan.
10. This Agreement has been duly authorized, executed and
delivered by each of the Primary Parties and is the legal,
valid and binding agreement of the Association, the Company,
and the MHC, subject, as to enforceability, to bankruptcy,
insolvency, reorganization, moratorium, conservatorship,
receivership and other laws of general applicability relating
to or affecting creditors' rights or the rights of creditors
of depository institutions the deposits of which are insured
by the FDIC, to general principles of equity (whether
considered in an action at law or in equity) and to the extent
that rights to indemnity and contribution thereunder may be
limited under applicable laws or under considerations of
public policy.
11. The Registration Statement is effective under the 1933 Act and
no stop order suspending effectiveness has been issued under
the 1933 Act and, to such counsel's knowledge, no proceedings
therefor have been initiated or threatened by the Commission
or any state securities or Blue Sky authority.
12. All conditions imposed by the OTS in connection with its
approvals of the Reorganization Applications have been
satisfied, and no further approval, authorization, consent or
other order of any federal or state 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 Reorganization, except as may be required under the
securities or Blue Sky laws of various jurisdictions.
13. At the time the Registration Statement became effective, (i)
the Registration Statement (as amended or supplemented, if so
amended or supplemented) (other than the financial statements,
stock valuation information and other financial and
statistical data included therein, as to which no opinion need
be rendered), complied as to form in all material respects
with the requirements
26
of the 1933 Act and the 1933 Act Regulations and (ii) the
Prospectus (other than the financial statements, stock
valuation information and other financial and statistical data
included therein, as to which no opinion need be rendered)
complied as to form in all material respects with the
requirements of the Reorganization Regulations.
14. The information in the Registration Statement and Prospectus
under the captions "Restrictions on Acquisition of Kentucky
First, First Federal of Hazard and First Federal of
Frankfort," "Description of Kentucky First Capital Stock,"
"Description of Frankfort First Capital Stock," "Regulation
and Supervision," "Federal and State Taxation, "Legal and Tax
Opinions" and "The Reorganization and Stock Offering," to the
extent that it constitutes matters of law, summaries of legal
matters, documents or proceedings or legal conclusions, has
been reviewed by such counsel and is correct in all material
respects.
15. The terms and provisions of the Common Stock conform in all
material respects to the description thereof contained in the
Prospectus, and the form of certificate used to evidence the
Shares is in due and proper form.
16. There are no legal or governmental proceedings pending or to
counsel's knowledge threatened against any Primary Party or
any subsidiary which are required to be disclosed in the
Registration Statement and Prospectus other than those
disclosed therein, and all pending legal and governmental
proceedings to which any Primary Party or any subsidiary is
the subject which are not disclosed in the Registration
Statement, including ordinary routine litigation, are,
considered in the aggregate, not material.
17. To such counsel's knowledge, there are no material contracts,
indentures, mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to in the
Registration Statement and Prospectus or to be filed as
exhibits thereto other than those described or referred to
therein or filed as exhibits thereto, and the description
thereof or references thereto are correct in all material
respects.
18. To such counsel's knowledge, the Association and its
subsidiaries, and the Company and the MHC have obtained all
material licenses, permits and other governmental
authorizations currently required for the conduct of their
respective businesses, taken as a whole, as described in the
Registration Statement and Prospectus; all such licenses,
permits and other governmental authorizations are in full
force and effect; and the Association and its subsidiaries,
the Company, and the MHC are in all material respects
complying therewith.
27
19. The Plan has been duly adopted by the required votes of the
Board of Directors of the Association, the Company, the MHC,
and the Association's members.
20. The Association's Charter and bylaws comply in all material
respects with federal law and regulations of the OTS. The
Association is not in violation of its Charter or bylaws; the
execution and delivery of this Agreement, the incurrence of
the obligations herein set forth and the consummation of the
transactions contemplated herein will not result in any
violation of the provisions of the Charter or Bylaws of the
Company.
21. The charters and bylaws of the Company, the MHC and the
Association comply in all material respects with the HOLA and
the rules and regulations of the OTS. None of the Association,
the Company or the MHC is in violation of its charter or
bylaws; the execution and delivery of this Agreement, the
incurrence of the obligations herein set forth and the
consummation of the transactions contemplated herein will not
result in any violation of the provisions of the Charter or
Bylaws of the Association, the Company or the MHC.
22. To such counsel's knowledge, none of the Association's
subsidiaries is in violation of its charter or bylaws; the
execution and delivery of this Agreement, the incurrence of
the obligations herein set forth and the consummation of the
transactions contemplated herein will not result in any
violation of the provisions of the charter or bylaws of such
subsidiary.
23. None of the Primary Parties is in violation of any directive
from the OTS to make any material change in the method of
conducting its business, and the Primary Parties have
conducted and are conducting their respective businesses so as
to comply in all material respect with all applicable statutes
and regulations (including, without limitation, regulations,
decisions, directives and orders of the OTS).
24. Neither the Association, the Company nor the MHC is required
to be registered as an investment company under the Investment
Company Act of 1940.
25. The Primary Parties have the power and authority to consummate
the transactions contemplated by the Merger Agreement.
26. The Merger Agreement has been duly authorized, executed and
delivered by each of the Primary Parties and constitutes the
valid and binding obligation of each of them, enforceable in
accordance with its terms subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to
general principles of equity, whether applied in a court of
law or a court of equity.
28
27. To such counsel's knowledge, all corporate acts and other
proceedings required to be taken by or on the part of the
Primary Parties to complete the Merger have been properly
taken; neither the execution and delivery of the Merger
Agreement, nor the completion of the transactions contemplated
thereby, with and without the giving of notice or the lapse of
time, or both, will violate any provision of the Articles,
Charter or Bylaws of any Primary Party.
28. There are no actions, suits, proceedings or investigations
(public or private) of any nature pending or to such counsel's
knowledge threatened that challenge the validity or propriety
of the transactions contemplated by the Merger Agreement or
which seek or threaten to restrain, enjoin or prohibit or to
obtain substantial damages in connection with the consummation
of such transactions.
29. All regulatory and governmental approvals and consents which
are necessary to be obtained by the Primary Parties and their
subsidiaries to permit the execution, delivery and performance
of the Merger Agreement have been obtained.
30. All conditions precedent to completion of the Merger have been
satisfied or waived, including but not limited to those
referenced in the Merger Agreement, and all statutory waiting
periods with respect to all regulatory and governmental
approvals of the Merger have expired.
31. The Association's deposits are insured by the FDIC to the
fullest amount permitted by law.
32. The Association is a member in good standing of the
FHLB-Cincinnati.
c. At the Closing Date, the Selling Agent shall have received the
favorable opinion, dated as of the Closing Date addressed to the Selling Agent
and for their and their counsel's benefit, of Xxxxxxx Xxxxxx Xxxxxxxx & Xxxxxxx
LLP, counsel to Frankfort First Bancorp and the Bank, concerning the following
matters:
1. Frankfort First Bancorp is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware, and the Bank is a federally chartered
savings bank duly organized in stock form, validly existing
under the laws of the United States.
2. Frankfort First Bancorp and the Bank have the corporate power
and authority to carry on their respective businesses as such
businesses are described in the Prospectus and, and Frankfort
First Bancorp has the corporate power and authority to
complete the Merger.
3. The Bank and its subsidiaries is duly qualified as a foreign
corporation to transact business and is in good standing in
each jurisdiction in which such
29
qualification is and, following consummation of the
Reorganization, will be required, unless the failure to be so
qualified in one or more of such jurisdictions would not have
a material adverse effect on the financial condition or the
business, operations, net income or prospects of the Bank.
4. Each of the Bank's subsidiaries is validly existing and in
good standing under the laws of its jurisdiction of
organization, and each has the corporate power and authority
to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and
Prospectus; the activities of each subsidiary of the Bank as
described in the Registration Statement and Prospectus are
permitted to subsidiaries of a federally-chartered savings and
loan association and savings and loan holding company by the
rules, regulations, policies and practices of the OTS and any
other federal or state authority having jurisdiction over such
matters; all of the outstanding stock of each subsidiary of
the Bank has been duly authorized and validly issued and is
fully paid and nonassessable; and upon consummation of the
Reorganization all such stock will be owned of record and
beneficially by the Bank, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or
equity.
5. To such counsel's knowledge, there are no material contracts,
indentures, mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to in the
Registration Statement and Prospectus or to be filed as
exhibits thereto other than those described or referred to
therein or filed as exhibits thereto, and the description
thereof or references thereto are correct in all material
respects.
6. To such counsel's knowledge, the Bank and its subsidiaries
have obtained all material licenses, permits and other
governmental authorizations currently required for the conduct
of their respective businesses, taken as a whole, as described
in the Registration Statement and Prospectus; all such
licenses, permits and other governmental authorizations are in
full force and effect; and the Bank and its subsidiaries are
in all material respects complying therewith.
7. The Bank's Charter and bylaws comply in all material respects
with federal law and regulations of the OTS. The Bank is not
in violation of its Charter or bylaws; the execution and
delivery of this Agreement, the incurrence of the obligations
herein set forth and the consummation of the transactions
contemplated herein will not result in any violation of the
provisions of the Charter or Bylaws of the Company.
8. The charters and bylaws of the Bank comply in all material
respects with the HOLA and the rules and regulations of the
OTS. The Bank is not in violation of its charter or bylaws;
the execution and delivery of this Agreement, the incurrence
of the obligations herein set forth and the consummation of
the
30
transactions contemplated herein will not result in any
violation of the provisions of the Charter or Bylaws of the
Bank.
9. To such counsel's knowledge, none of the Bank's subsidiaries
is in violation of its charter or bylaws; the execution and
delivery of this Agreement, the incurrence of the obligations
herein set forth and the consummation of the transactions
contemplated herein will not result in any violation of the
provisions of the charter or bylaws of such subsidiary.
10. The Bank is not in violation of any directive from the OTS to
make any material change in the method of conducting its
business, and the Primary Parties have conducted and are
conducting their respective businesses so as to comply in all
material respect with all applicable statutes and regulations
(including, without limitation, regulations, decisions,
directives and orders of the OTS).
11. The Bank is not required to be registered as an investment
company under the Investment Company Act of 1940.
12. The Bank's deposits are insured by the FDIC to the fullest
amount permitted by law.
13. The Bank is a member in good standing of the FHLB- Cincinnati.
14. All conditions precedent to completion of the Merger have been
satisfied or waived, including but not limited to those
referenced in the Merger Agreement, and all statutory waiting
periods with respect to all regulatory and governmental
approvals of the Merger Agreement have expired.
15. The Merger Agreement has been duly authorized and approved by
the Boards of Directors of Frankfort First Bancorp and the
Bank, the Merger Agreement and the Merger have been approved
by the requisite vote of Frankfort First Bancorp's
shareholders, the Merger Agreement has been duly executed and
delivered by Frankfort First Bancorp and the Bank and the
Merger Agreement constitutes the valid and binding obligation
of Frankfort First Bancorp and the Bank, enforceable in
accordance with its terms subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to
general principles of equity, whether applied in a court of
law or a court of equity. To such counsel's actual knowledge,
no other corporate acts or proceedings are required to be
taken by Frankfort First Bancorp or the Bank in order to
consummate the Merger.
16. All federal and state banking agency approvals, consents,
authorizations or notifications required to be received or
made by Frankfort First Bancorp or the Bank prior to
consummation of the Merger have been properly obtained
31
or made; neither the execution and delivery of the Merger
Agreement nor the consummation of the Merger, with or without
the giving of notice or the lapse of time, or both, will (i)
violate any provision of the Articles of Incorporation,
Charter or Bylaws of Frankfort First Bancorp or the Bank; or
(ii) to the actual knowledge of such counsel, violate any
federal or state banking statute, rule or regulation
applicable to Frankfort First Bancorp and the Bank, which
would have a material adverse effect on the financial
condition, assets, liabilities, or business of Frankfort First
Bancorp and the Bank; to the actual knowledge of such counsel,
no consent, approval, authorization, order, registration or
qualification of or with any court, federal or state banking
regulatory authority or other federal or state banking
governmental body other than as specifically contemplated by
the Merger Agreement is required for the consummation by
Frankfort First Bancorp and the Bank of the Merger.
17. There are no actions, suits, proceedings, or investigations of
any nature pending or to such counsel's actual knowledge
threatened that challenge the validity or legality of the
Merger or which seek or threaten to restrain, enjoin or
prohibit (or obtain substantial damages in connection with)
the consummation of the Merger.
18. There is no litigation, appraisal or other judicial or
administrative proceeding or governmental investigation
pending or to such counsel's actual knowledge threatened
against or relating to the business or property of Frankfort
First Bancorp or the Bank which would have a materially
adverse effect on the consolidated financial condition of
Frankfort First Bancorp, or any legal impediment to the
continued operation of the properties and business of
Frankfort First Bancorp and the Bank in the ordinary course
after the consummation of the Merger.
Counsel may expressly exclude any opinions as to choice of law and
anti-trust matters and may add other qualifications and explanations of the
basis of its opinions as are consistent with the Legal Opinion Accord prepared
by the Section of Business Law of the American Bar Association.
d. At the Closing Date, the Selling Agent shall have received a letter of
Xxxxxxx Xxxxxx Xxxxxxxx & Xxxxxxx LLP addressed to the Selling Agent, dated the
Closing Date, in form and substance to the effect that during the preparation of
the Reorganization Applications, the Registration Statement and the Prospectus,
such counsel participated in conferences with management of and the independent
certified public accountants for the Primary Parties. Based upon such
conferences and such review of corporate records of the Primary Parties as such
counsel conducted in connection with the preparation of the Registration
Statement and Reorganization Applications, nothing has come to their attention
that would lead them to believe that any Reorganization Application, the
Registration Statement, the Prospectus or any amendment or supplement thereto
(other than financial statements, stock valuation information and other
financial and statistical data included therein, as to which such counsel need
express no view), contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or
32
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. Such opinions may rely upon certificates
of officers and directors of the Primary Parties delivered pursuant hereto or as
such counsel shall reasonably request.
e. At the Closing Date, the Selling Agent shall have received the
favorable opinion, dated as of the Closing Date, of Xxxx Xxxxxx Xxxxxxxx &
Xxxxxx, P.C., counsel for the Selling Agent, with respect to such matters as the
Selling Agent may reasonably require. Such opinion may rely upon certificates of
officers and directors of the Primary Parties delivered pursuant hereto or as
such counsel shall reasonably request.
f. At the Closing Date, the Selling Agent shall receive a certificate of
the Chief Executive Officer and the Chief Financial Officer of each of the
Primary Parties, dated the Closing Date, to the effect that: (i) since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, there has been no material adverse change in the financial
condition or in the net income, capital, properties, affairs or prospects of the
Primary Parties taken as a whole, whether or not arising in the ordinary course
of business; (ii) the representations and warranties in Section 4 of this
Agreement are true and correct with the same force and effect as though
expressly made at and as of the Closing Date; (iii) the Primary Parties have
complied with all agreements and satisfied all conditions on their part to be
performed or satisfied at or prior to the Closing Date and will comply with all
obligations to be satisfied by them after the Reorganization; (iv) no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been initiated or threatened by the
Commission or any state securities or Blue Sky authority; and (v) no order
suspending the Offering, the Reorganization or the effectiveness of the
Prospectus has been issued and no proceedings for that purpose have been issued
and no proceedings for that purpose have been initiated or threatened by the
OTS.
g. Prior to and at the Closing Date: (i) there shall have been no material
adverse change in the financial condition or in the net income, affairs or
prospects of the Primary Parties taken as a whole since the respective dates as
of which information is given in the Prospectus, except as referred to therein;
(ii) there shall have been no material transaction entered into by any Primary
Party since the latest dates as of which the financial condition of the Primary
Parties is set forth in the Prospectus, other than transactions referred to or
contemplated therein; (iii) no Primary Party shall have received from the OTS or
any other government agency any direction (oral or written) to make any material
change in the method of conducting its business with which it has not complied
(which direction, if any, shall have been disclosed to the Selling Agent) or
which would materially and adversely affect its business, operations, financial
condition or net income; (iv) no Primary Party shall have been in default (nor
shall an event have occurred which, with notice or lapse of time or both, would
constitute a default) under any provision of any agreement or instrument
relating to any outstanding indebtedness; (v) 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, to the knowledge of any Primary
Party, threatened against any Primary Party or subsidiary or affecting any of
their respective properties wherein an unfavorable decision, ruling or finding
would materially and adversely affect the business, operations, financial
condition or net income of the Primary Parties taken as a whole; and (vi) the
Shares shall have been qualified or registered for offering and sale under the
securities or Blue Sky laws of the jurisdictions set forth in the Blue Sky
Survey prepared by Xxxxxxx Xxxxxx Xxxxxxxx & Xxxxxxx LLP.
33
h. Concurrently with the execution of this Agreement, the Selling Agent
and the Primary Parties shall receive a letter from Xxxxx Xxxxxxxx dated the
date hereof and addressed to the Selling Agent: (i) confirming that Xxxxx
Xxxxxxxx is a firm of independent certified public accountants with respect to
the Association within the meaning of the 1933 Act and the 1933 Act Regulations
and the Code of Ethics of the American Institute of Certified Public Accountants
and no information concerning its relationship with or interests in any Primary
Party is required to be disclosed in the Prospectus, and stating in effect that
in its opinion the consolidated financial statements of the Association included
in the Prospectus and covered by its opinion included therein comply as to form
in all material respects with the applicable accounting requirements of the 1933
Act, the 1934 Act, the 1933 Act Regulations, the 1934 Act Regulations and
generally accepted accounting principles; (ii) stating in effect that, on the
basis of certain agreed upon procedures (but not an examination in accordance
with generally accepted auditing standards) consisting of a reading of the
latest available unaudited interim consolidated financial statements of the
Association prepared by the Association, a reading of the minutes of the
meetings of the Board of Directors and members of the Association and
consultations with officers of the Association responsible for financial and
accounting matters, nothing has come to its attention which causes it to believe
that: (A) the unaudited consolidated financial statements of the Association
included in the Prospectus do not comply as to form in all material respects
with applicable accounting requirements; (B) such unaudited consolidated
financial statements are not in conformity with generally accepted accounting
principles applied on a basis substantially consistent with that of the audited
consolidated financial statements included in the Prospectus; (C) during the
period from the date of the latest audited consolidated financial statements
included in the Prospectus to a specified date not more than five business days
prior to the date hereof, there was any material increase in borrowings by the
Association; or (D) there was any material decrease in retained earnings of the
Association at the date of such letter as compared with amounts shown in the
latest audited consolidated balance sheet included in the Prospectus or any
material decrease in net income or net interest income of the Association for
the number of full months commencing immediately after the period covered by the
latest audited consolidated income statement included in the Prospectus and
ended on the latest month end prior to the date of the Prospectus as compared to
the corresponding period in the preceding year; and (iii) stating that, in
addition to the examination referred to in its opinion included in the
Prospectus and the performance of the procedures referred to in clause (ii) of
this paragraph (e), it has compared with the general accounting records of the
Association's accounting system and other data prepared by the Association
directly from such accounting records, to the extent specified in such letter,
such amounts and/or percentages set forth in the Prospectus as the Selling Agent
may reasonably request; and they have found such amounts and percentages to be
in agreement therewith (subject to rounding).
i. Concurrently with the execution of this Agreement, the Selling Agent,
and the Primary Parties shall receive a letter from Xxxxx Xxxxxxxx dated the
date hereof and addressed to the Selling Agent: (i) confirming that Xxxxx
Xxxxxxxx is a firm of independent certified public accountants with respect to
Frankfort First Bancorp and the Bank within the meaning of the 1933 Act and the
1933 Act Regulations and the Code of Ethics of the American Institute of
Certified Public Accountants and no information concerning its relationship with
or interests in the Bank or Frankfort First Bancorp is required to be disclosed
in the Prospectus, and stating in effect that in its opinion the consolidated
financial statements of Frankfort First Bancorp included in the Prospectus and
covered
34
by its opinion included therein comply as to form in all material respects with
the applicable accounting requirements of the 1933 Act, the 1934 Act, the 1933
Act Regulations, the 1934 Act Regulations and generally accepted accounting
principles; (ii) stating in effect that, on the basis of certain agreed upon
procedures (but not an examination in accordance with generally accepted
auditing standards) consisting of a reading of the latest available unaudited
interim consolidated financial statements of Frankfort First Bancorp prepared by
Frankfort First Bancorp, a reading of the minutes of the meetings of the Board
of Directors and stockholders of Frankfort First Bancorp and consultations with
officers of Frankfort First Bancorp responsible for financial and accounting
matters, nothing has come to its attention which causes it to believe that: (A)
the unaudited consolidated financial statements of Frankfort First Bancorp
included in the Prospectus do not comply as to form in all material respects
with applicable accounting requirements; (B) such unaudited consolidated
financial statements are not in conformity with generally accepted accounting
principles applied on a basis substantially consistent with that of the audited
consolidated financial statements included in the Prospectus; (C) during the
period from the date of the latest audited consolidated financial statements
included in the Prospectus to a specified date not more than five business days
prior to the date hereof, there was any material increase in borrowings by
Frankfort First Bancorp or the Bank; or (D) there was any material decrease in
retained earnings of Frankfort First Bancorp at the date of such letter as
compared with amounts shown in the latest audited consolidated balance sheet
included in the Prospectus or any material decrease in net income or net
interest income of Frankfort First Bancorp for the number of full months
commencing immediately after the period covered by the latest audited
consolidated income statement included in the Prospectus and ended on the latest
month end prior to the date of the Prospectus as compared to the corresponding
period in the preceding year; and (iii) stating that, in addition to the
examination referred to in its opinion included in the Prospectus and the
performance of the procedures referred to in clause (ii) of this paragraph (e),
it has compared with the general accounting records of Frankfort First Bancorp
and/or the Bank, as applicable, accounting system and other data prepared by
Frankfort First Bancorp and/or the Bank, as applicable, directly from such
accounting records, to the extent specified in such letter, such amounts and/or
percentages set forth in the Prospectus as the Selling Agent may reasonably
request; and they have found such amounts and percentages to be in agreement
therewith (subject to rounding).
j. At the Closing Date, the Selling Agent shall receive letters from Xxxxx
Xxxxxxxx, dated the Closing Date, addressed to the Selling Agent, confirming the
statements made by them in the letters delivered by it pursuant to paragraphs h
and i of this Section 9, the "specified date" referred to shall not be more than
five business days prior to the Closing Date.
k. At the Closing Date, the Selling Agent shall have received a letter
from Xxxxxx & Company, dated as of the Closing Date, confirming the Independent
Valuation.
l. At the Closing Date, counsel to the Selling Agent shall have been
furnished with such documents and opinions as they may reasonably require for
the purpose of enabling them to pass upon the sale of the Shares as herein
contemplated and related proceedings or in order to evidence the accuracy or
completeness of any of the representations and warranties, or the fulfillment of
any of the conditions, herein contained; and all proceedings taken by the
Primary Parties in connection with the Reorganization and the sale of the Shares
as herein contemplated shall be satisfactory in form and substance to the
Selling Agent and counsel to the Selling Agent.
35
m. The Primary Parties shall not have sustained since the date of the
latest audited consolidated financial statements included in the Registration
Statement and Prospectus any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, other than
as set forth or contemplated in the Registration Statement, which is in the
judgment of the Selling Agent sufficiently material and adverse as to make it
impracticable or inadvisable to proceed with the Offering or the delivery of the
Shares on the terms and in the manner contemplated in the Prospectus.
n. Subsequent to the date hereof, there shall not have occurred any of the
following: (i) a suspension or limitation in trading in securities generally on
the New York Stock Exchange or American Stock Exchange or in the
over-the-counter market, or quotations halted generally on the Nasdaq Stock
Market, or minimum or maximum prices for trading fixed, or maximum ranges for
prices for securities required by either of such exchanges or the NASD or by
order of the Commission or any other governmental authority; (ii) a general
moratorium on the operation of commercial banks, federal or state savings and
loan associations or savings banks or a general moratorium on the withdrawal of
deposits from commercial banks, federal or state savings and loan associations
or savings banks declared by either federal or state authorities; (iii) the
engagement by the United States in hostilities which have resulted in the
declaration, on or after the date hereof, a national emergency or war; or (iv) a
material decline in the price of equity or debt securities, if the effect of
such a decline, in the judgment or the Selling Agent, makes it impracticable or
inadvisable to proceed with the Offering or the delivery of the Shares on the
terms and in the manner contemplated in the Prospectus.
o. If any of the conditions specified in this Section 9 shall not have
been fulfilled when and as required by this Agreement, or by June 28, 2005, this
Agreement and all of the Selling Agent's obligations hereunder may be canceled
by the Selling Agent by notifying the Association of such cancellation in
writing or by telegram at any time at or prior to the Closing Date, and any such
cancellation shall be without liability of any party to any other party except
as otherwise provided in Sections 1, 6, 7 and 8 hereof. Notwithstanding the
above, if this Agreement is canceled pursuant to this paragraph, the Primary
Parties jointly and severally agree to reimburse the Selling Agent for all of
the Selling Agent's out-of-pocket expenses reasonably incurred by the Selling
Agent, including any legal fees (and out-of- pocket expenses) to be paid to the
Selling Agent's counsel, subject to the limits expressed in Section 6 hereof,
the previously paid consulting fee of $80,000.
SECTION 10. Termination.
a. In the event the Company fails to sell the minimum number of Shares in
the Offering as set forth in the Prospectus and does not modify the Offering
within the period specified in, and in accordance with the provisions of, the
Plan or as required by the Reorganization Regulations, this Agreement shall
terminate upon refund by the Company to each person who has subscribed for or
ordered any of the Shares the full amount which it may have received from such
person, together with interest, as provided in the Prospectus, and no party to
this Agreement shall have any obligation to the other hereunder, except for
payment by the Primary Parties as set forth in Sections 1, 6, 7 and 8 hereof.
36
b. This Agreement may be terminated by the Selling Agent, with respect to
the Selling Agent's obligations hereunder, by notifying the Company at any time
or prior to the Closing Date, if any of the conditions specified in Section 9
hereof shall not have been fulfilled when and as required by this Agreement or
if the Reorganization has not been completed by June 28, 2005.
SECTION 11. Survival. The respective indemnities, agreements,
representations, warranties and other statements of the Primary Parties and the
Selling Agent, as set forth in this Agreement, shall remain in full force and
effect, regardless of any investigation (or any statement as to the results
thereof) made by or on behalf of the Selling Agent or any of the Selling Agent's
officers or directors or any person controlling the Selling Agent, or the
Primary Parties, or any of their respective officers or directors or any person
controlling the Primary Parties, and shall survive termination of this Agreement
and receipt or delivery of any payment for the Shares.
SECTION 12. Miscellaneous. Notices hereunder, except as otherwise provided
herein, shall be given in writing or by telegraph, addressed (a) to Capital
Resources at 0000 Xxxxx Xxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000 (Attention: Xxxxx
X. Rochester, Chairman), with a copy to Xxxx Xxxxxx Xxxxxxxx & Xxxxxx, 0000
Xxxxxxxxx Xxxxxx, XX, Xxxxx 000, Xxxxxxxxxx, XX 00000 (Attention: Xxx X.
Xxxxxxxx, Esq.) and (b) to the Primary Parties at the Association's principal
office (Attention: Xxxx X. Xxxxxxxx, President and Chief Executive Officer),
with a copy to Xxxxxxx Xxxxxx Xxxxxxxx & Xxxxxxx LLP, 0000 Xxxxxxxxx Xxxxxx, XX,
Xxxxxxxxxx, X.X. 00000 (Attention: Xxxx X. Xxxxxxxxx, Esq.).
This Agreement is made solely for the benefit of and will be binding upon
the parties hereto and their respective successors and the directors, officers
and controlling persons referred to in Section 7 hereof, and no other person
will have any right or obligation hereunder. The term "successors" shall not
include any purchaser of any of the Shares.
This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Virginia. Any suit arising between the parties to
this agreement shall be commenced in the County of Fairfax, Virginia in the
nearest U.S. District Court.
Time shall be of the essence of this Agreement.
This Agreement may be signed in various counterparts which together will
constitute one agreement.
37
If the foregoing correctly sets forth the arrangement among the Company,
the Association and the Selling Agent, please indicate acceptance thereof in the
space provided below for that purpose, whereupon this letter shall constitute a
binding agreement.
First Federal Savings and Loan Association Kentucky First Federal Bancorp
of Hazard (In formation)
By: By:
----------------------------- -----------------------------
Xxxx X. Xxxxxxxx, President Xxxx X. Xxxxxxxx, President
and Chief Executive Officer and Chief Executive Officer
First Federal, MHC (In formation)
By:
-----------------------------
Xxxx X. Xxxxxxxx, President
and Chief Executive Officer
Capital Resources, Inc.
By:
-----------------------------
Xxxxx X. Rochester, Chairman
38
EXHIBIT A
ENGAGEMENT LETTER
EXHIBIT B
[FORM OF SELECTED DEALERS' AGREEMENT]
EXHIBIT B
KENTUCKY FIRST FEDERAL BANCORP
___________________ SHARES
(MAXIMUM OFFERED IN MUTUAL HOLDING COMPANY REORGANIZATION)
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
SELECTED DEALER'S AGREEMENT
_______________, 2004
We have agreed to assist Kentucky First Federal Bancorp (the "Company") in
connection with the offer and sale of shares (the "Shares") of common stock, par
value $.01 per share (the "Common Stock"), of the Company, to be issued in
connection with the mutual holding company reorganization of First Federal
Savings and Loan Association of Hazard, a federally chartered savings and loan
association (the "Association"). The Company, in connection with its plan to
effect such a reorganization, offered ______________ Shares for subscription by
the Association's eligible depositors as of the eligibility record date and
supplemental eligibility record date, the Association's tax qualified employee
benefit plans and other persons who are members of the Association.
Concurrently, the Company will offer shares to certain members of the general
public in a direct community offering. The Shares which were not subscribed for
pursuant to such subscription and direct community offerings are being offered
to the public in a syndicated community offering (the "Syndicated Community
Offering") in accordance with federal law and Office of Thrift Supervision
("OTS"). The Shares, the bases on which the number of Shares to be issued may
change, and certain of the terms on which they are being offered are more fully
described in the enclosed Prospectus (the "Prospectus").
We are offering to Selected Dealers (of which you are one) the opportunity
to participate in the solicitation of offers to buy the Shares in the Syndicated
Community Offering and we will pay you a fee in the amount of __________________
percent (_____%) of the dollar amount of the Shares sold on behalf of the
Company by you. The number of Shares sold by you shall be determined based on
the authorized designation of your firm on the order form or forms for such
Shares accompanying the funds transmitted for payment therefor (whether in the
form of a check payable to the Association or a withdrawal from an existing
account at the Association) to the special account established by the Company
for the purpose of holding such funds. It is understood, of course, that payment
of your fee will be made only out of compensation received by us for the Shares
sold on behalf of the Company by you, as evidenced in accordance with the
preceding sentence. The Association has requested us to invite you to become a
"Sponsoring Dealer," that is, a Selected Dealer who solicits offers which result
in the sale on behalf of the Association of at least ____________ Shares. You
may become a Sponsoring Dealer (subject to your fulfillment of the
requirement in the preceding sentence) by checking the box on the confirmation
at the end of this letter. If you become a Sponsoring Dealer, you shall be
entitled to an additional fee in the amount of ____________ percent (_____%) of
the dollar amount of the Shares sold on behalf of the Company by you as
evidenced in the manner set forth above.
Each order form for the purchase of Shares must set forth the identity,
address and tax identification number of each person ordering Shares regardless
of whether the Shares will be registered in street name or in the purchaser's
name. Such order form should clearly identify your firm.
As soon as practicable after all the Shares are sold, we will remit to
you, out of our compensation as provided above, the fees to which you are
entitled hereunder, including your Sponsoring Dealer fee.
This offer is made subject to the terms and conditions herein set forth
and is made only to Selected Dealers which are (i) members in good standing of
the National Association of Securities Dealers, Inc. ("NASD") which agree to
comply with all applicable rules of the NASD, including, without limitation,
Rules 2740 and 2790 of the NASD's Conduct Rules, or (ii) foreign dealers not
eligible for membership in the NASD which agree (A) not to sell any Shares
within the United States, its territories or possessions or to persons who are
citizens therefor residents therein and (B) in making other sales to comply with
the above-mentioned NASD Rules, Rules 2730 and 2750 of the above-mentioned
Conduct Rules as if they were NASD members and Rule 2420 of such Conduct Rules
as it applies to non-member brokers or dealers in a foreign country.
Orders for Shares will be strictly subject to confirmation and we, acting
on behalf of the Company, reserve the right in our absolute discretion to reject
any order in whole or in part, to accept or reject orders in the order of their
receipt or otherwise, and to allot. Neither you nor any other person is
authorized by the Company, the Association or by us to give any information or
make any representations other than those contained in the Prospectus in
connection with the sale of any of the Shares. No Selected Dealer is authorized
to act as agent for us when soliciting offers to buy the Shares from the public
or otherwise. No Selected Dealer shall engage in any transaction prohibited by
Regulation M promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), with respect to the Common Stock during the offering.
We and each Selected Dealer assisting in selling Shares pursuant hereto
agree to comply with the applicable requirements of the Exchange Act and
applicable rules and regulations issued by the OTS. In addition, we and each
Selected Dealer confirm that the Securities and Exchange Commission (the
"Commission") interprets Rule 15c2-8 promulgated under the Exchange Act as
requiring that a prospectus be supplied to each person who is expected to
receive a confirmation of sale 48 hours prior to delivery of such person's order
form.
We and each Selected Dealer further agree to the extent that our customers
desire to pay for Shares with funds held by or to be deposited with us, in
accordance with the interpretation of the Commission of Rule 15c2-4 promulgated
under the Exchange Act either (a) upon receipt of an executed order form or
direction to execute an order form on behalf of a customer to forward the
syndicated community offering price for the Shares ordered on or before 12:00
noon on the business
2
day following receipt or execution of an order form by us to the Association for
deposit in a segregated account or (b) to solicit indications of interest, in
which event (i) we will subsequently contact any customers indicating interest
to confirm the interest and give instructions to execute and return an order
form or to receive authorization to execute an order form on their behalf, (ii)
we will mail acknowledgments of receipt of orders to each customer confirming
interest on the business day following such confirmation, (iii) we will debit
accounts of such customers on the fifth business day (the "debit date")
following receipt of the confirmation referred to in (i), and (iv) we will
forward completed order forms together with such funds to the Association on or
before 12:00 noon on the next business day following the debit date for deposit
in a segregated account. We acknowledge that if the procedure in (b) is adopted,
our customer's funds are not required to be in their accounts until the debit
date. We and each Selected Dealer further acknowledge that, in order to use the
foregoing "sweep arrangements," we comply with the net capital requirements for
broker/dealers under Rule 15c3-1(a)(1) of the Exchange Act.
Unless earlier terminated by us, this Agreement shall terminate 45 full
business days after the date hereof, but may be extended by us for an additional
period or periods not exceeding 30 full business days in the aggregate. We may
terminate this Agreement or any provisions hereof at any time by written or
telegraphic notice to you. Of course, our obligations hereunder are subject to
the successful completion of the offering, including the sale of all of the
Shares.
You agree that at any time or times prior to the termination of this
Agreement you will, upon our request, report to us the number of Shares sold on
behalf of the Company by you under this Agreement.
We shall have full authority to take such actions as we may deem advisable
in respect to all matters pertaining to the offering. We shall be under no
liability to you except for lack of good faith and for obligations expressly
assumed by us in this Agreement.
Upon application to us, we will inform you as to the states in which we
believe the Shares have been qualified for sale under, or are exempt from the
requirements of, the respective "blue sky" laws of such states, but we assume no
responsibility or obligation as to your rights to sell Shares in any state.
Additional copies of the Prospectus and any supplements thereto will be
supplied in reasonable quantities upon request.
Any notice from us to you shall be deemed to have been duly given if
mailed, telephoned or telegraphed to you at the address to which this Agreement
is mailed.
This Agreement shall be construed in accordance with the laws of the
Commonwealth of Virginia.
3
Please confirm your agreement hereto by signing and returning the
confirmation accompanying this letter at once to us at Capital Resources, Inc.,
0000 Xxxxx Xxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000. The enclosed duplicate copy
will evidence the agreement between us.
Very truly yours,
CAPITAL RESOURCES, INC.
By:
-----------------------------
Name:
Title:
CONFIRMED AND ACCEPTED
As of the date first above written:
[NAME OF SELECTED DEALER]
By:
-----------------------------
Name:
Title:
4
EXHIBIT C
[CAPITAL RESOURCES IS REGISTERED IN _______________.]
