1
Exhibit 1.1
500,000 - 1,000,000 SHARES
NORTHERN STAR FINANCIAL, INC.
COMMON STOCK
AGENCY AGREEMENT
March _____, 2000
BANC STOCK FINANCIAL SERVICES, INC.
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxx 00000
ATTN: XX. XXXXXXX X. XXXXXXXXXX
VICE PRESIDENT
Dear Sirs:
Northern Star Financial, Inc., a Minnesota corporation (the "Company"),
proposes to issue and sell a minimum of 500,000 and a maximum of 1,000,000
shares of Common Stock, $0.01 par value per share (the "Common Stock") of the
Company (the "Shares").
The Company will be offering its common stock pursuant to an SB-2
registered offering. The Shares will be offered to the public by the Company at
a price of $_____ per share (the "Offering"). The purpose of this Agreement is
to set forth the understanding of the parties relating to the right of Banc
Stock Financial Services, Inc., an Ohio corporation ("BSFS") to participate in
the sale of the Shares as agent exercising its best efforts to sell the Shares.
SECTION 1. REPRESENTATIONS AND WARRANTIES OF BSFS. BSFS represents and
warrants that:
(a) BSFS is a corporation duly organized, validly existing and in good
standing under the laws of the State of Ohio with all requisite corporate power
to carry on its business.
(b) BSFS is licensed as a broker-dealer, authorized to conduct
offerings of the sort contemplated hereby by the Commission and the blue sky
authorities of each other state in which the Company and BSFS have agreed to
offer the Shares and is a member in good standing of the National Association of
Securities Dealers, Inc. (the "NASD"), and, to BSFS's best knowledge, no
proceedings are pending or threatened to revoke or limit any such status.
2
(c) This Agreement has been duly authorized, executed and delivered by
BSFS and will be a valid and binding agreement on the part of BSFS, enforceable
in accordance with its terms, except as enforceability may be limited by the
application of bankruptcy, insolvency, moratorium or similar laws affecting the
rights of creditors generally and by judicial limitations on the right of
specific performance, and except as the enforceability of the indemnification or
contribution provisions hereby may be affected by applicable federal or state
securities laws.
(d) BSFS hereby represents and warrants to, and agrees with, the
Company that in connection with the Offering: (i) BSFS has not distributed and
will not distribute any prospectus or any other offering material in connection
with the offering and sale of the Shares other than a preliminary prospectus
relating to the Offering and filed with the SEC (a "Preliminary Prospectus") or
the Prospectus (as defined in Section 2(a)) or other materials permitted by the
1933 Act and Rules and Regulations to be distributed by BSFS and consented to by
the Company or its counsel; (ii) neither BSFS nor any officer or other person
employed by BSFS will provide any information or make any representations to
purchasers of the Shares, other than such information and representations as are
either contained in a Preliminary Prospectus or the Prospectus or are not
inconsistent with the information set forth in such Preliminary Prospectus or
the Prospectus; and (iii) BSFS will endeavor to comply with Rule 2310, Conduct
Rules, of the National Association of Securities Dealers, Inc. Manual and
similar applicable state and federal securities laws regarding the suitability
of the Shares for its customers.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to and agrees with BSFS that:
(a) A registration statement on Form SB-2 (File No. 333-94189) with
respect to the Shares has been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "1933 Act"), and the
applicable rules and regulations (the "1933 Act Regulations") of the Securities
and Exchange Commission (the "Commission"), and has been filed with the
Commission; and such amendments to such registration statement as may have been
required prior to the date hereof have been filed with the Commission, and such
amendments have been similarly prepared. Such registration statement went
effective with the Commission on March ___, 2000. Copies of such registration
statement and amendment or amendments of each related preliminary prospectus,
and the exhibits, financial statements and schedules, as finally amended and
revised, have been delivered to you.
The term "Registration Statement" as used in this Agreement shall mean
such registration statement at the time such registration statement became
effective and, in the event any post-effective amendment thereto becomes
effective prior to the closing of the Offering, shall also mean such
registration statement as so amended. The term "Prospectus" as used in this
Agreement shall mean the prospectus relating to the Shares in the form in which
it is first filed with the Commission pursuant to Rule 424(b) of the 1933 Act
Regulations or, if no filing pursuant to Rule 424(b) of the 1933 Act Regulations
is required, shall mean the form of final prospectus included in the
Registration Statement at the time such Registration Statement becomes
effective.
-2-
3
(b) When the Registration Statement became effective, when the
Prospectus was first filed pursuant to Rule 424(b) of the 1933 Act Regulations,
when any amendment to the Registration Statement becomes effective, and when any
supplement to the Prospectus is filed with the Commission, (i) the Registration
Statement, the Prospectus and any amendments thereof and supplements thereto
will conform in all material respects with the applicable requirements of the
1933 Act and the 1933 Act Regulations, and (ii) neither the Registration
Statement, the Prospectus nor any amendment or supplement thereto will contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by BSFS or its
agents expressly for use in the Registration Statement.
(c) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the state of Minnesota with all
requisite corporate power and authority to own, lease and operate its properties
and the properties it proposes to own, lease and operate as described in the
Registration Statement and the Prospectus and to conduct its business as now
conducted and as proposed to be conducted as described in the Registration
Statement and the Prospectus. The Company does not have any properties nor does
it conduct any business outside of the State of Minnesota which would require it
to be qualified as a foreign corporation in any jurisdiction outside of
Minnesota. Except as otherwise described in the Prospectus, the Company does not
have any directly or indirectly held subsidiary. The Company has all power,
authority, authorizations, approvals, consents, orders, licenses, certificates
and permits needed to enter into, deliver and perform this Agreement and to
issue and sell the Shares.
(d) The Company has full legal right, power and authority to enter into
this Agreement, to issue, sell and deliver the Shares as provided herein and to
consummate the transactions contemplated herein. This Agreement has been duly
authorized, executed and delivered by the Company and constitutes a valid and
binding agreement of the Company, enforceable in accordance with its terms,
except to the extent that enforceability may be limited by bankruptcy,
insolvency, reorganization or other laws of general applicability relating to or
affecting creditors, rights, or by general equity principles and except to the
extent the indemnification provisions set forth in Section 6 of this Agreement
may be limited by federal or state securities laws or the public policy
underlying such laws.
(e) Each consent, approval, authorization, order, license, certificate,
permit, registration, designation or filing by or with any governmental agency
or body necessary for the valid authorization, issuance, sale and delivery of
the Shares, the execution, delivery and performance of this Agreement and the
consummation by the Company of the transactions contemplated hereby, has been
made or obtained and is in full force and effect.
(f) Neither the issuance, sale and delivery by the Company of the
Shares, nor the execution, delivery and performance of this Agreement nor the
consummation of the transactions contemplated hereby by the Company will
conflict with or result in a breach or violation of any of the terms and
provisions of, or (with or without the giving of notice or the passage of time
or both) constitute a default under, the articles of incorporation, by-laws of
the Company; any
-3-
4
indenture, mortgage, deed of trust, loan agreement, note, bond or other
agreement or instrument to which the Company, is a party or to which it, any of
its properties or other assets; or any applicable statute, law, judgment,
decree, order, rule or regulation of any court or governmental agency or body
applicable to the Company or its property; or result in the creation or
imposition of any lien, charge, claim or encumbrance upon any property or asset
of the Company.
(g) The Shares to be issued and sold hereunder have been validly
authorized by the Company. When issued and delivered against payment therefor,
the Shares will be duly and validly issued, fully paid and non-assessable. No
preemptive rights of shareholders exist with respect to any of the Shares. No
person or entity holds a right to require or participate in the registration
under the 1933 Act of the Shares pursuant to the Registration Statement; and no
person holds a right to require registration under the 1933 Act of any shares of
Common Stock of the Company at any other time. No person or entity has a right
of participation or first refusal with respect to the sale of the Shares by the
Company. The form of certificates evidencing the Shares complies with all
applicable requirements of Minnesota law.
(h) Neither the filing of the Registration Statement nor the offering
or sale of the Shares gives rise to any rights, other than those which have been
waived or satisfied, for or relating to the registration of any shares of Common
Stock, except as described in the Registration Statement.
(i) Four Hundred Twenty Five Thousand Six Hundred (425,600) shares of
the Company's Common Stock are issued and outstanding. The Company has no other
issued and outstanding capital stock. The Company's authorized capitalization is
as set forth in the Prospectus under the caption "DESCRIPTION OF THE COMPANY'S
CAPITAL STOCK." Upon issuance, sale, and delivery thereof against payment
therefor pursuant to the subscription agreement, all of the capital stock of the
Bank will be duly authorized and validly issued, fully paid and nonassessable
and will be owned by the Company free and clear of all liens, encumbrances and
security interests. There is no outstanding option, warrant or other right
calling for the issuance of, and no commitment, plan or arrangement to issue,
any share of stock of the Company or the Bank or any security convertible into
or exchangeable for stock of the Company or the Bank, except as described in the
Registration Statement.
(j) The financial statements of the Company in the Registration
Statement and the Prospectus present fairly the financial position of the
Company as of the dates indicated and the results of operations and cash flows
for the periods specified, all in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods specified. The
financial statement schedule included in the Registration Statement and the
amounts in the Prospectus under the caption "Prospectus Summary" fairly present
the information shown therein and have been compiled on a basis consistent with
the financial statements included in the Registration Statement and the
Prospectus. No other financial statements or schedules are required by Form SB-2
or otherwise to be included in the Registration Statement or the Prospectus.
(k) To the Company's knowledge, Xxxxxxx Xxxxxx & Co., LLP, who have
examined and are reporting upon the Company's audited financial statements and
schedules included in the Registration Statement, are, and were during the
periods covered by their Reports included in the
-4-
5
Registration Statement and the Prospectus, independent public accountants, as
required by the 1933 Act and the 1933 Act Regulations.
(l) The Company has not sustained any material loss or interference
with its business from fire, explosion, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or from any labor dispute or
arbitrators' or court or governmental action, order or decree, otherwise than as
set forth or contemplated in the Prospectus; and, since the respective dates as
of which such information is given in the Registration Statement and the
Prospectus, and except as otherwise stated in the Registration Statement and
Prospectus, there has not been (i) any material adverse change, or any
development which could reasonably be seen as involving a prospective material
adverse change, in or affecting the business prospects, properties, assets,
results of operations or condition (financial or other) of the Company, (ii) any
liability or obligation, direct or contingent, incurred or undertaken by the
Company, which is material to the business or condition (financial or other) of
the Company, (iii) any declaration or payment of any dividend or distribution of
any kind on or with respect to the capital stock of the Company, (iv) any
material change in the capital stock of the Company, or (v) any transaction that
is material to the Company except as otherwise disclosed in the Registration
Statement and the Prospectus.
(m) Neither the Company nor Northern Star Bank (the "Bank") is in
violation of its articles of incorporation or charter, as applicable, or
by-laws, and no default exists, and no event has occurred, nor state of facts
exists, which, with notice or after the lapse of time to cure or both, would
constitute a default in the due performance and observance of any obligation,
agreement, term, covenant, consideration or condition contained in any
indenture, mortgage, deed of trust, loan agreement, note, lease or other
agreement or instrument to which the Company is a party or by which it or any of
its properties is subject. Neither the Company nor the Bank is in violation of,
or in default with respect to, any statute, law, rule, regulation, order,
judgment or decree, except as may be properly described in the Prospectus or
such as is in the aggregate does not now have and will not in the future have a
material adverse effect on the respective financial positions, results of
operations or businesses of the Company or the Bank.
(n) Except as described in the Prospectus, there is not pending or, to
the knowledge of the Company, threatened any action, suit, proceeding, inquiry
or investigation against the Company, its officers and directors or to which the
properties, assets or rights of the Company are subject, before or brought by
any court or governmental agency or body or board of arbitrators, which could
result in any material adverse change in the business, prospects, properties,
assets, results of operations or condition (financial or otherwise) of the
Company.
(o) The descriptions in the Registration Statement and the Prospectus
of the contracts, leases, and other legal documents therein described, present
fairly the information required to be shown, and there are no contracts, leases,
or other documents of a character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement which are not described or filed as required. To the knowledge of the
Company, there are no statutes or regulations applicable to the Company or
certificates, permits or other authorizations from governmental regulatory
officials or bodies required to be obtained
-5-
6
or maintained by the Company of a character required to be disclosed in the
Registration Statement or the Prospectus which have not been so disclosed and
properly described therein. All agreements between the Company and third parties
expressly referenced in the Prospectus are legal, valid and binding obligations
of the Company enforceable in accordance with their respective terms, except to
the extent enforceability may be limited by bankruptcy, insolvency,
reorganization or other laws of general applicability relating to or affecting
creditors' rights and by general equitable principles.
(p) Subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, neither the Company nor the
Bank has (1) issued any securities or incurred any material liability or
obligation, direct or contingent, (2) entered into any material transaction, or
(3) declared or paid any dividend or made any distribution on any of their
stock, except liabilities, obligations, and transactions reasonably expected
based on the disclosures in the Prospectus.
(q) Each of the Company and the Bank owns, possesses, or has obtained
all material permits, licenses, franchises, certificates, consents, orders,
approvals and other authorizations of governmental or regulatory authorities as
are necessary to own or lease, as the case may be, and to operate their
properties and to carry on their businesses as presently conducted, or as
contemplated in the Prospectus to be conducted, and neither the Company nor the
Bank has received any notice of proceedings relating to revocation or
modification of any such licenses, permits, certificates, consents, orders,
approvals or authorizations.
(r) The Company owns or possesses adequate license or other rights to
use all patents, trademarks, service marks, trade names, copyrights, software
and design licenses, trade secrets, manufacturing processes, other intangible
property rights and know-how (collectively "Intangibles") necessary to entitle
it to conduct its business now, and as proposed to be conducted or operated as
described in the Prospectus, and the Company has not received notice of
infringement or of conflict with (and knows of no such infringement of or
conflict with) asserted rights of others with respect to any Intangibles which
could materially and adversely affect its business, prospects, properties,
assets, results of operation or condition (financial or otherwise).
(s) To the best of the Company's knowledge, the Company's systems of
internal accounting controls taken as a whole are sufficient to meet the broad
objectives of internal accounting control insofar as those objectives pertain to
the prevention or detection of errors or irregularities in amounts that would be
material in relation to the Company's financial statements; and, to the best of
the Company's knowledge, neither the Company, nor any employee or agent thereof,
has made any payment of funds of the Company or received or retained any funds
and no funds of the Company have been set aside to be used for any payment, in
each case in violation of any law, rule or regulation.
(t) The Company has filed on a timely basis all necessary federal,
state, local and foreign income and franchise tax returns required to be filed
through the date hereof and has paid all taxes shown as due thereon; and no tax
deficiency has been asserted against the Company, nor does the Company know of
any tax deficiency which is likely to be asserted against the
-6-
7
Company which if determined adversely to the Company, could materially adversely
affect the business, prospects, properties, assets, results of operations or
condition (financial or otherwise) of the Company.
(u) The Company maintains insurance (issued by insurers of recognized
financial responsibility) of the types and in the amounts generally deemed
adequate for its business consistent with insurance coverage maintained by
similar companies in similar businesses, including, but not limited to,
insurance covering real and personal property owned or leased by the Company
against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and effect.
(v) The Company and its officers, directors or affiliates have not
taken and will not take, directly or indirectly, any action designed to, or that
might reasonably be expected to, cause or result in or constitute the
stabilization or manipulation of any security of the Company or to facilitate
the sale or resale of the Shares in violation of any law, rule or regulation.
(w) The Company has not incurred any liability for a fee, commission or
other compensation on account of the employment of a broker or finder in
connection with the transactions contemplated by this Agreement other than as
contemplated hereby.
(x) Except as otherwise disclosed in the Prospectus, the Company has no
knowledge of the generation, transportation, storage, presence, use, treatment,
disposal, release, or other handling of any hazardous substance, hazardous
waste, hazardous material, hazardous constituent, toxic substance, pollutant,
contaminant, asbestos, radon, polychlorinated biphenyls ("PCBs"), petroleum
product or waste (including crude oil or any fraction thereof), natural gas,
liquefied gas, synthetic gas or other material defined, regulated, controlled or
potentially subject to any remediation requirement under any environmental law
(collectively, "Hazardous Materials"), on, in, under or affecting any real
property currently leased or owned or by any means controlled by the Company
(the "Real Property") except as in material compliance with applicable laws.
(y) The Company will not become as a result of the transactions
contemplated hereby or will not conduct its business in a manner in which it
would become, "an investment company," or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended (the "Investment Company Act").
(z) No relationship, direct or indirect, exists between or among any of
the Company or any affiliate of the Company, on the one hand, and any director,
officer, stockholder, customer or supplier of the Company or any affiliate of
the Company, on the other hand, that is required by the 1933 Act or by the 1933
Act Regulations to be described in the Registration Statement or the Prospectus
which is not so described or is not adequately described.
(aa) All offers and sales by the Company of the Company's securities
prior to the date hereof were at all relevant times duly registered under or
exempt from the registration requirements of the 1933 Act and were duly
registered in accordance with or the subject of an available exemption from
registration under the applicable blue sky laws. The Company has not
-7-
8
effected any sales of securities that would be required to be disclosed in
response to Item 701 of Regulation S-B that are not disclosed in the
Registration Statement.
(ab) The application for permission to organize the Bank (the "DOC
Application") was approved by the Department of Commerce for the State of
Minnesota, (the "DOC") on January 25, 1999, pursuant to Bulletin No. 6799 (the
"DOC Order"). All conditions contained in the DOC Order have been satisfied. The
application to the Federal Deposit Insurance Corporation (the "FDIC") to become
an insured depository institution under the provisions of the Federal Deposit
Insurance Act (the "FDIC Application") was approved by order of the FDIC dated
December 24, 1998 (the "FDIC Order"), subject to certain conditions specified in
the Order. All conditions contained in the FDIC Order have been satisfied. The
Company's application to become a bank holding company and acquire all issued
capital stock of the Bank (the "Bank Holding Company Application") under the
Bank Holding Company Act of 1956, as amended, was approved on December 10, 1998
(the "Federal Reserve Board Approval"), subject to certain conditions specified
in the Federal Reserve Board Approval. All conditions in the Federal Reserve
Board Approval have been satisfied. Each of the DOC Application, FDIC
Application, and Bank Holding Company Application, at the time of their
respective filings, contained all required information and such information was
complete and accurate in all material respects and each of the approvals and/or
orders from the DOC, the FDIC, and the Federal Reserve Board are still in full
force and effect and have not been rescinded or revoked. The Company and the
Bank are in compliance in all material respects with the applicable rules and
regulations of each of such agencies. No authorization, approval, consent,
order, license, certificate or permit of and from any federal, state, or local
governmental or regulatory official, body, or tribunal, is required for the
Company or the Bank to conduct their respective businesses and own their
respective properties as described in the Prospectus, except such
authorizations, approvals, consents, orders, licenses, certificates, or permits
as are not material to the commencement or conduct of their respective
businesses or to the ownership of their respective properties.
Any certificate signed by any officer of the Company on behalf of the
Company and delivered to BSFS shall be deemed a representation and warranty of
the Company as to the matters covered thereby.
SECTION 3. CERTAIN COVENANTS OF THE COMPANY. The Company covenants and
agrees with BSFS as follows:
(a) The Company will use its best efforts to cause the Registration
Statement to become effective (if not yet effective at the date and time that
this Agreement is executed and delivered by the parties hereto). The Company
will notify you immediately, and confirm the notice in writing, (i) when the
Registration Statement, or any post-effective amendment to the Registration
Statement, shall have become effective, or any supplement to the Prospectus or
any amended Prospectus shall have been filed, (ii) of the receipt of any
comments from the Commission, (iii) of any request by the Commission to amend
the Registration Statement or amend or supplement the Prospectus or for
additional information, and (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
suspension of the qualification of the Shares for offering or sale in any
jurisdiction, or of the
-8-
9
institution or threatening of any proceeding for any such purposes. The Company
will use every reasonable effort to prevent the issuance of any such stop order
or of any order preventing or suspending such use and, if any such order is
issued, to obtain the withdrawal thereof at the earliest possible moment.
(b) The Company will not at any time file or make any amendment to the
Registration Statement, or any amendment or supplement to the Prospectus if you
shall not have previously been advised and furnished a copy thereof a reasonable
time prior to the proposed filing, or if you or your counsel reasonably object
to such amendment or supplement.
(c) The Company will deliver to you, at the Company's expense, from
time to time as requested, such number of copies of the Prospectus (as
supplemented or amended) as you may reasonably request. If the delivery of a
Prospectus is required at any time prior to the expiration of nine (9) months
after the time of issue of the Prospectus in connection with the offering or
sale of the Shares and if at such time any events shall have occurred as result
of which the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made when such Prospectus is delivered not misleading, or, if for any
reason it shall be necessary during such same period to amend or supplement the
Prospectus in order to comply with the 1933 Act, the Company will notify you and
upon your request prepare and furnish without charge to you and to any dealer in
securities as many copies as you may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which will correct such
statement or omission or effect such compliance.
(d) The Company will use its best efforts to qualify the Shares for
offering and sale under the applicable securities laws of those states listed on
Exhibit A to this Agreement and to maintain such qualifications in effect for as
long as may be necessary to complete the distribution of the Shares. The Company
will file such statements and reports as may be required by the laws of each
jurisdiction in which the Shares have been qualified as above provided.
(e) Furnish its security holders as soon as practicable an earnings
statement (which need not be certified by independent certified public
accountants unless required by the Securities Act or the Rules) covering a
period of at least twelve months beginning after the effective date of the
Registration Statement, which shall satisfy the provisions of Section 11(a) of
the Securities Act and the Rules thereunder.
(f) The Company will furnish to its security holders of record, as soon
as practicable after the end of each respective period, annual reports
(including financial statements audited by independent public accountants) and
will make available unaudited quarterly reports of operations for each of the
first three quarters of the fiscal year. During a period of three (3) years
after the date hereof, the Company will furnish to you: (i) concurrently with
furnishing such reports to its security holders, statements of operations of the
Company for each of the first three (3) quarters in the form furnished to the
Company's security holders; (ii) concurrently with furnishing to its security
holders, a balance sheet of the Company as of the end of such fiscal year,
together with statements of operations, of cash flows and of security holders,
equity of the Company for such fiscal year, accompanied by a copy of the
certificate or report thereon of independent public
-9-
10
accountants; (iii) as soon as they are available, copies of all reports
(financial or otherwise) mailed to security holders; (iv) as soon as they are
available, copies of all reports and financial statements furnished to or filed
with the Commission, any securities exchange or the NASD; (v) every material
press release in respect of the Company or its affairs which is released or
prepared by the Company, and (vi) any additional information of a public nature
concerning the Company or its business that you may reasonably request. During
such three (3)-year period, the foregoing financial statements shall be on a
consolidated basis to the extent that the accounts of the Company are
consolidated with any subsidiaries, and shall be accompanied by similar
financial statements for any significant subsidiary that is not so consolidated.
(g) Except as contemplated by or described in the Prospectus, for a
period of one year from the date hereof, the Company and each of its executive
officers and directors will not, without your prior written consent, directly or
indirectly, sell, offer to sell, grant any option for the sale of, or otherwise
dispose of, any shares of Common Stock or securities convertible into Common
Stock. The Company has obtained from all of its executive officers and directors
their written agreement that for a period of one (1) year from the closing of
the Offering, they will not offer to sell, sell, transfer, contract to sell, or
grant any option for the sale of or otherwise dispose of, directly or
indirectly, any shares of Common Stock of the Company (or any securities
convertible into or exercisable for such shares of Common Stock), except for (1)
the exercise of stock options under the Stock Option Plan or (2) gifts of Common
Stock (or other securities) to a donee or donees who agree in writing to be
bound by this clause
(h) The Company will cooperate with BSFS and use its best efforts to
arrange to have the shares issued hereby quoted on the OTC Bulletin Board.
(i) The Company is familiar with the Investment Company Act and the
rules and regulations thereunder, and has in the past conducted its affairs, and
will in the future conduct its affairs, in such a manner so as to ensure that
the Company was not and will not be an "investment company" or an entity
"controlled" by an "investment company" within the meaning of the Investment
Company Act.
(j) The Company will not, and will use its best efforts to cause its
officers, directors and affiliates not to, (i) take, directly or indirectly
prior to termination of the distribution of the Shares contemplated by this
Agreement, any action designed to stabilize or manipulate the price of any
security of the Company, or which may cause or result in, or which might in the
future reasonably be expected to cause or result in, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of any of the Shares, (ii) sell, bid for, purchase or pay anyone any
compensation for soliciting purchases of the Shares or (iii) pay or agree to pay
to any person any compensation for soliciting any order to purchase any other
securities of the Company which, in any such case, is in violation of any law,
rule or regulation.
(k) Prior to the closing of the Offering, the Company will not, and
will use its best efforts to cause any affiliate of the Company not to issue a
press release or other official communication directly or indirectly, nor hold a
press conference with respect to the Company or with respect to the financial
condition, results of operations, business, properties, assets or
-10-
11
liabilities of the Company, or the offering of the Shares, without your prior
written input, if any, within 72 hours which input shall not be unreasonably
withheld.
(l) The Company will notify you promptly of any material adverse change
affecting any of its representations, warranties, agreements and indemnities
herein at any time prior to the closing of the Offering and take such steps as
may be reasonably requested by you either to remedy or publicize the same, or
both.
(m) For a period of five (5) years from the Effective Date, the
Company, at its expense, shall cause its regularly engaged independent certified
public accountants to review (but not audit and without issuing any opinion
thereon) the Company's financial statements for each of the first three (3)
fiscal quarters prior to the announcement of quarterly financial information,
the filing of the Company's 10-QSB quarterly report and the mailing of quarterly
financial information to Stockholders.
(n) As promptly as practicable after the closing of the Offering, the
Company will prepare, at its own expense, three (3) hard cover "bound volumes"
relating to the Offering, and will distribute such volumes to the individuals
designated by you.
(o) The Company shall apply the net proceeds from the Offering in the
manner set forth under "Use of Proceeds" in the Prospectus.
SECTION 4. ENGAGEMENT, COMPENSATION AND PAYMENT OF EXPENSES.
(a) (i) Subject to the terms and conditions of this Agreement, the
Company hereby engages BSFS from the date hereof until ________________, as the
Company's exclusive agent in connection with the sale on a "best efforts" basis,
of a minimum of 500,000 Shares up to a maximum of 1,000,000 Shares. Each of BSFS
and the Company agree to comply with the terms of that certain Escrow Agreement
(the "Escrow Agreement") by and among the Company, BSFS, and Firstar Bank, N.A.
(the "Escrow Agent") dated March 8, 2000. (The Escrow Agreement is attached
hereto as Exhibit B and is incorporated herein by this reference.) The minimum
amount of each sale shall be 100 Shares. The maximum amount of any sale shall
not exceed 45,000 shares, except with the Company's consent.
(ii) The price at which BSFS shall sell the Shares, as agent
for the Company, shall be $______ per share, and the Company shall pay to BSFS a
commission of (a) 2.5% of the offering price of the Shares sold to proposed
officers, directors, and employees of the Company in the Offering, (b) 5.5% of
the offering price of the Shares sold to certain individuals and entities
through the xxx.XXXxxxxx.xxx internet web site, and (c) 7.0% of the offering
price of the Shares sold to all other persons including those Shares sold
through other broker dealers. All subscriptions shall be subject to the
Company's and BSFS's acceptance, and BSFS shall have the right in its sole
discretion to accept or reject any subscription, and to allocate Shares among
subscribers. BSFS may form a group of securities dealers (the "Selected
Dealers"), who are members in good standing of the NASD, pursuant to a Selected
Dealer Agreement to find subscribers for the Shares. However, failure to engage
any Selected Dealers shall not constitute
-11-
12
a failure to discharge its duties under this Agreement. The allocation of Shares
among BSFS and the Selected Dealers shall be made by BSFS.
(iii) The Company shall deliver certificates representing the
Shares to shareholders of the Company as soon as practicable after the
distribution of the escrowed funds in accordance with the terms of the Escrow
Agreement, and thereafter, as soon as practicable after acceptance of any
subscription.
(iv) BSFS shall use its best efforts to assist the Company in
making sales of the Shares pursuant to the Offering. BSFS makes no
representations as to the amount of Shares it will be able to sell. There is no
firm commitment to sell any certain amount of the Shares by BSFS. In the event
that the minimum 500,000 Shares are not subscribed and paid for by the
"Expiration Date" as such term is defined in the Prospectus, this Agreement
shall automatically be terminated and the proceeds received from the
subscriptions distributed in accordance with the terms of the Escrow Agreement.
(v) BSFS will only offer and sell the Shares in those states
listed on Exhibit A to this Agreement.
(b) BSFS shall offer the Shares pursuant to the Prospectus.
(c) The Company will pay and bear all costs, fees and expenses incident
to the performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits), as originally filed and as amended, the
Prospectus and any amendments or supplements thereto, and the cost of furnishing
copies thereof to you, (ii) the preparation of the certificates representing the
Shares, the Blue Sky Memoranda and any instruments relating to any of the
foregoing, (iii) the issuance and delivery of the Shares to the purchasers,
including any transfer taxes payable upon the sale of the Shares, (iv) the fees
and disbursements of the Company's counsel and accountants, (v) the
qualification of the Shares under the applicable securities laws in accordance
with Section 3.(d) of this Agreement and any filing for review of the offering
with the National Association of Securities Dealers, Inc., including filing fees
in connection therewith, (vi) all costs, fees and expenses in connection with
the application for quotation of the Shares on the OTC Bulletin Board, the
Nasdaq Stock Market or any exchange, if applicable, (vii) BSFS's out-of-pocket
expenses (up to a maximum of $35,000) and legal fees (up to a maximum of
$25,000; Company shall be informed if fees due to extenuating circumstances
exceed the stated amount) (viii) costs and expenses incident to the performance
of the Company's obligations under the Escrow Agreement, and (ix) all other
costs and expenses incident to the performance of the Company's obligations
hereunder that are not otherwise specifically provided for in this section.
SECTION 5. OPINION OF COUNSEL AND OTHER CONDITIONS. The obligations of
BSFS under this Agreement shall be subject to the accuracy of the
representations and warranties of the Company in this Agreement as of the date
of this Agreement and as of the Closing Date (which for purposes of this
Agreement, the term "Closing Date" is the date on which the terms of the Escrow
Agreement have been satisfied and the funds held thereby are to be disbursed to
the
-12-
13
Company in accordance therewith), to the performance by the Company of its
obligations under this Agreement, and to the following additional terms and
conditions:
(a) The Registration Statement shall have become effective not later
than 5:00 P.M., Minnesota time, on the date of this Agreement or on such later
date and time as shall be consented to in writing by BSFS; if the filing of the
Prospectus, or any supplement thereto, is required pursuant to Rule 424(b) of
the Rules, the Prospectus shall have been filed in the manner and within the
time period required by Rule 424(b) of the Rules; at the Closing Date, if any,
no stop order shall have been issued or proceedings therefor initiated or
threatened by the Commission; and any request of the Commission for inclusion of
additional information in the Registration Statement, or otherwise, shall have
been complied with to the reasonable satisfaction of BSFS.
(b) As a condition to the performance of your duties and obligations
hereunder, you shall have received a favorable opinion of Xxxxxxxxxx & Xxxxx,
P.A. counsel for the Company in form and substance satisfactory to counsel for
you, to the effect that:
(i) Each of the Company and its subsidiary, Northern Star
Bank, has been duly incorporated and is validly existing as a corporation, or
banking corporation, as applicable, in good standing under the laws of the State
of Minnesota with all requisite corporate power and authority to own, lease and
operate its properties as described in the Prospectus and to conduct its
business as described in the Prospectus. To such counsel's knowledge, neither
the Company or the Bank owns or controls, directly or indirectly, any
corporation, association or other entity (except as otherwise described in the
Prospectus).
(ii) The Company has full legal right, power and authority to
enter into, deliver and perform this Agreement, to issue, sell and deliver the
Shares as provided herein and to consummate the transactions contemplated
herein. This Agreement has been duly authorized, executed and delivered by the
Company and, assuming due authorization, execution and delivery by the other
parties hereto, constitutes a valid and binding agreement of the Company,
enforceable in accordance with its terms, except to the extent enforceability
may be limited by bankruptcy, insolvency, reorganization or other laws of
general applicability relating to or affecting creditors' rights and by general
equity principles and except to the extent that enforcement of the
indemnification provisions set forth in Section 6 of this Agreement may be
limited by federal or state securities laws or the public policy underlying such
laws.
(iii) To such counsel's knowledge, no authorization, approval
or consent of any governmental authority or agency (except as otherwise
described in the Prospectus) is necessary on the part of the Company in
connection with the issuance and sale of the Shares as contemplated under the
Agreement, except such as may be required under the Act or under state or other
securities laws in connection with the offer and sale of the Shares by BSFS.
(iv) Neither the issuance, sale and delivery by the Company of
the Shares to purchasers thereof, nor the execution, delivery and performance of
this Agreement, nor the consummation of the transactions contemplated hereby or
thereby by the Company will violate any of the terms and provisions of, or
constitute a default under, any of the articles of
-13-
14
incorporation or by-laws of the Company, or, to such counsel's knowledge, under
any material indenture, mortgage, trust, deed of trust, loan agreement, note,
lease or other agreement or instrument to which the Company is a party or to
which any of its properties or other assets is subject; or, to such counsel's
knowledge, violate any applicable statute, judgment, decree, order, rule or
regulation of any court or governmental agency or body; or, to such counsel's
knowledge, result in the creation or imposition of any lien, charge, claim or
encumbrance upon any property or asset of any of the foregoing.
(v) The description of the Company's authorized capital stock
contained in the Registration Statement and the Prospectus under the caption
"Description of the Company's Capital Stock" meets the requirements of Item 12
of Form SB-2 under the 1933 Act, and the Common Stock conforms in all material
respects as to legal matters to the description thereof contained in the
Registration Statement and the Prospectus.
(vi) The Shares to be issued pursuant to the Offering have
been validly authorized by the Company. When issued and delivered in accordance
with this Agreement, the Shares will be validly issued, fully paid and
nonassessable. To such counsel's knowledge, no preemptive rights of shareholders
exist with respect to any of the Shares. To such counsel's knowledge, no person
or entity holds a right to require or participate in the registration under the
1933 Act of the Shares pursuant to the Registration Statement; and, except as
set forth in the Prospectus, no person holds a right to require registration
under the 1933 Act of any shares of Common Stock of the Company at any other
time. To such counsel's knowledge, no person or entity has a right of
participation or first refusal with respect to the sale of the Shares by the
Company. The form of certificates evidencing the Shares comply with all
applicable requirements of Minnesota law.
(vii) The Company has an authorized capitalization as set
forth in the Prospectus under the caption "Description of the Company's Capital
Stock" as of the date therein. The Common Stock conforms in all material
respects to the description of the Common Stock contained in the Prospectus. To
the knowledge of such counsel, except as disclosed in the Prospectus, there is
no outstanding option, warrant or other right calling for the issuance of, and
no commitment, plan or arrangement to issue, any shares of capital stock of the
Company or any security convertible into or exchangeable for capital stock of
the Company.
(viii) To the knowledge of such counsel, relying solely on
certificates of appropriate officers of the Company, neither the Company nor the
Bank is in violation of its articles of incorporation or charter, as applicable,
or by-laws, and, relying solely on certificates of appropriate officers of the
Company, no material default exists and no event has occurred which, with notice
or after the lapse of time to cure or both, would constitute a material default
in the due performance and observance of any obligation, agreement, term,
covenant or condition contained in any indenture, mortgage, deed of trust, loan
agreement, note, lease or other agreement or instrument known to such counsel to
which any such entity is a party or by which any such entity or any of its
properties is subject. To the knowledge of such counsel, neither the Company nor
the Bank is in violation of, or in default with respect to, any statute, rule,
regulation, order, judgment or decree, except as may be properly described in
the Prospectus or such as in the aggregate does not now have and will not in the
future have a
-14-
15
material adverse effect on the financial position, results of operations or
business of each such entity, respectively.
(ix) To such counsel's knowledge, except as described in the
Prospectus, there is not pending or threatened, any action, suit, proceeding,
inquiry or investigation against the Company or any of its officers and
directors or to which the properties, assets or rights of the Company or such
persons are subject, which, if determined adversely to the Company or any such
persons, would individually or in the aggregate have a material adverse effect
on the financial position, results of operations or business of any such entity,
respectively.
(x) The descriptions in the Registration Statement and the
Prospectus of the contracts, leases and other legal documents therein described
present fairly the information required to be shown and there are no contracts,
leases or other documents known to such counsel of a character required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement which are not described or filed as
required. There are no statutes or regulations applicable to the Company or
certificates, permits or other authorizations from governmental regulatory
officials or bodies required to be obtained or maintained by the Company, known
to such counsel, of a character required to be disclosed in the Registration
Statement or the Prospectus which have not been so disclosed and properly
described therein. To such counsel's knowledge, all agreements between the
Company, and third parties expressly referenced in the Prospectus are legal,
valid and binding obligations of the Company, enforceable in accordance with
their respective terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization or other laws of general applicability
relating to or affecting creditors' rights and to general equitable principles.
(xi) The Commission has informed such counsel that the
Registration Statement has become effective under the 1933 Act and, to the
knowledge of such counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that purpose has
been instituted or is pending or contemplated under the 1933 Act. Other than
financial statements and other financial and operating data and schedules
contained therein, as to which counsel need express no opinion, the Registration
Statement, the Prospectus and any amendment or supplement thereto, conform as to
form in all material respects with the requirements of Form SB-2 under the 1933
Act Regulations.
(xii) The Company is not an "investment company," or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act.
(xiii) The descriptions in the Prospectus of statutes,
regulations, legal or governmental proceedings are accurate and present fairly a
summary of the information required to be shown under the 1933 Act and the 1933
Act Regulations. The information in the Prospectus under the caption "Shares
Eligible for Future Sale," to the extent that it constitutes matters of law or
legal conclusions, has been reviewed by such counsel, is correct and presents
fairly the information required to be disclosed therein under the 1933 Act and
the 1933 Act Regulations.
-15-
16
(xiv) In addition to the matters set forth above, such opinion
shall also include a statement to the effect that, although such counsel is not
opining as to, and does not assume responsibility for, and cannot guarantee the
accuracy, completeness or fairness of any of the statements contained in the
Registration Statement or Prospectus and such counsel makes no representation
that it has independently verified the accuracy, completeness or fairness of
such statements, and subject to all other assumptions, limitations and
qualifications set forth in such counsel's opinion, that in connection with such
counsel's representation of the Company in the preparation of the Registration
Statement and Prospectus, nothing has come to such counsel's attention that
causes it to conclude that, (1) as of its Effective Date, the Registration
Statement or any further amendment thereto made by the Company prior to today
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or (2), as of its date, the Prospectus or any further amendment
or supplement thereto made by the Company prior to today contained an untrue
statement of a material fact or omits to state a material fact necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading.
In rendering the foregoing opinion, such counsel may rely on the
following:
(A) as to matters involving the application of laws
other than the laws of the United States and
jurisdictions in which they are admitted, to the
extent such counsel deems proper and to the extent
specified in such opinion, upon an opinion or
opinions (in form and substance reasonably
satisfactory to Underwriters' counsel) of other
counsel familiar with the applicable laws,
(B) as to matters of fact, to the extent they deem
appropriate, on certificates of responsible officers
of the Company and certificates or other written
statements of officers or departments of various
jurisdictions having custody of documents respecting
the existence or good standing of the Company
provided that copies of all such opinions, statements
or certificates shall be delivered to your counsel.
The opinion of counsel for the Company shall state
that the opinion of any other counsel, or certificate
or written statement, on which such counsel is
relying is in form satisfactory to such counsel and
that you and they are justified in relying thereon.
(c) At the time this Agreement is executed and at the Closing Date, you
shall have received a letter, addressed to you and in form and substance
satisfactory to you in all respects (including the non-material nature of the
changes or decreases, if any, referred to in clause (iii) below), from Xxxxxxx
Xxxxxx & Co., dated as of the date of this Agreement and as of the Closing Date:
(i) confirming that they are independent
public accountants with respect to the Company and
the Bank within the meaning of the 1933 Act and the
1933 Act Regulations and stating that the response to
Item 13 of the Registration Statement is correct
insofar as it relates to them;
-16-
17
(ii) stating that, in their opinion, the
consolidated financial statements and schedules of
the Company audited by them and the selected
financial data to the extent derived from financial
statements examined by them included in the
Registration Statement comply as to form in all
material respects with the applicable accounting
requirements of the 1933 Act and the 1933 Act
Regulations;
(iii) stating that, on the basis of
procedures (but not an examination made in accordance
with generally accepted auditing standards), nothing
has come to their attention that would cause them to
believe that (A) the unaudited consolidated financial
statements of the Company included in the
Registration Statement and Prospectus (i) do not
comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act
and the 1933 Act Regulations, or (ii) were not fairly
presented in conformity with generally accepted
accounting principles applied on a basis
substantially consistent with that of the audited
consolidated financial statements included in the
Registration Statement and Prospectus, and (B) at a
specified date not more than five business days prior
to the date of such letter, there was any change in
the capital stock or long-term debt of the company or
decrease in shareholders' equity of the Company as
compared with the amounts shown on the consolidated
balance sheet of the company included in the
Registration Statement and Prospectus, other than as
set forth in or contemplated by the Registration
Statement and Prospectus, or if there was any change
or decrease, setting forth the amount of such change
or decrease; and
(iv) stating that they have compared
specific dollar amounts, numbers of shares,
percentages of revenues and income and other
financial information pertaining to the Company set
forth in the Prospectus, which have been specified by
you prior to the date of this Agreement, to the
extent that such amounts, numbers, percentages and
information may be derived from the general
accounting records of the Company, and excluding any
questions requiring an interpretation by legal
counsel, with the results obtained from the
application of specific readings, inquiries and other
appropriate procedures (which procedures do not
constitute an audit in accordance with generally
accepted auditing standards) set forth in the letter,
and found them to be in agreement.
(d) Prior to the Closing Date, (i) there shall have been no material
adverse change in the condition or prospects, financial or otherwise, of the
Company or the Bank; (ii) there shall have been no material transaction, not in
the ordinary course of business, entered into by the Company or the Bank except
as set forth in the Registration Statement and Prospectus, other than
transactions referred to or contemplated therein; (iii) neither the Company nor
the Bank shall be in default (nor shall an event have occurred which, with
notice or lapse of time, or both, would
-17-
18
constitute a default) under any provision of any material agreement,
understanding or instrument relating to any outstanding indebtedness that is
material in amount; (iv) no action, suit or proceeding, at law or in equity,
shall be pending or threatened against the Company or the Bank before or by any
court or Federal, state or other commission, board or other administrative
agency having jurisdiction over the Company or the Bank, as the case may be,
which is expected to have a material adverse effect on the Company or the Bank;
and (v) no stop order shall have been issued under the 1933 Act and no
proceedings therefor shall have been initiated or be threatened by the
Commission.
(e) At the Closing Date, BSFS shall have received a certificate signed
by the President and the Secretary of the Company dated the Closing Date, to the
effect that the conditions set forth in subsection (d) above have been satisfied
and as to the accuracy, as of the Closing Date of the representations and
warranties of the Company set forth in Section 1 hereof.
(f) At or prior to the Closing Date, BSFS shall have received a "blue
sky" memorandum of Xxxxxxxxxx & Xxxxx, P.A., counsel for the Company, addressed
to BSFS and in form and scope reasonably satisfactory to BSFS, concerning
compliance with the blue sky or securities laws of the states listed in EXHIBIT
A attached to this Agreement and the Shares shall have been qualified or
registered for offering and sale by the Company under the blue sky or securities
laws of such states.
(g) All proceedings taken in connection with the sale of the Shares as
herein contemplated shall be reasonably satisfactory in form and substance to
BSFS and to counsel for BSFS.
(h) No order suspending the sale of the Shares prior to the Closing
Date, in any jurisdiction listed in EXHIBIT A, shall have been issued on the
Closing Date, and no proceedings for that purpose shall have been instituted or,
to BSFS's knowledge or that of the Company, shall be contemplated.
(i) The NASD, upon review of the terms of the public offering of the
Shares, shall not have objected to BSFS's participation in the same.
If any condition to BSFS's obligations hereunder to be
fulfilled prior to the Closing Date, is not so fulfilled, BSFS may terminate
this Agreement pursuant to Section 8(b) hereof or, if BSFS so elects, waive any
such conditions which have not been fulfilled or extend the time of their
fulfillment.
SECTION 6. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company will indemnify and hold harmless BSFS (including
officers, directors, employees, counsel for BSFS, and Selected Dealers or any
affiliate of any of the foregoing) and each person, if any, who controls BSFS,
and each Selected Dealer and their affiliates, within the meaning of the 1933
Act or the 1934 Act against any losses, claims, damages or liabilities, joint or
several (which shall, for all purposes of this Agreement, include, but not be
limited to, all reasonable costs of defense and investigation and all attorneys'
fees), to
-18-
19
which it or such controlling person may become subject under the 1933 Act or
otherwise insofar as such losses, claims, damages or liabilities in respect
thereof arise out of or are based upon or by reason of any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein 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 will reimburse BSFS, and each Selected Dealer and their
affiliates, for any legal or other expenses reasonably incurred by it in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in the Registration Statement or the
Prospectus, or any such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company by BSFS or the
Selected Dealer seeking indemnification, as the case may be, expressly for use
therein; and, provided further, the Company shall not be liable in any such case
to the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement or the Prospectus, or any
such statement or supplement (a "Defective Offering Document"), where a
subsequent Registration Statement or Prospectus curing or remedying such untrue
statement or alleged untrue statement or omission or alleged omission has been
filed with the Commission and sufficient copies thereof made available to BSFS
and the Selected Dealers (the "Cured Offering Document") if either (i) BSFS or
the Selected Dealer fail to deliver the Cured Offering Document; or (ii) BSFS or
the Selected Dealer negligently deliver only the Defective Offering Document, in
each case where BSFS or the Selected Dealer have a duty to deliver the Cured
Offering Document.
The indemnity agreement in this Section 6(a) shall extend upon the same
terms and conditions to, and shall inure to the benefit of, each person, if any,
who controls BSFS, and each Selected Dealer and their affiliates, within the
meaning of the 1933 Act or the 1934 Act to the same extent as such agreement
applies to BSFS, and each Selected Dealer and their affiliates, and shall be in
addition to any liabilities that the Company may otherwise have.
(b) BSFS will indemnify and hold harmless the Company against any
losses, claims, damages or liabilities to which the Company may become subject,
under the 1933 Act, the 1934 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein 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, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in the Registration Statement or the Prospectus or
any such amendment or supplement thereto in reliance upon and in conformity with
written information furnished to the Company by BSFS or its agents expressly for
use therein; and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or defending
any such loss, claim, damage, liability or action.
-19-
20
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; no indemnification provided for in Section 6(a) or 6(b)
shall be available to any party who shall fail to give notice as provided in
this Section 6(c) if the party to whom notice was not given was unaware of the
proceeding to which such notice would have related and was prejudiced by the
failure to give such notice, but the omission so to notify the indemnifying
party will not relieve the indemnifying party from any liability that it may
have to any indemnified party otherwise than under Section 6. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation, except
that if the indemnified party has been advised by counsel in writing that there
are one (1) or more defenses available to the indemnified party which are
different from or additional to those available to the indemnifying party, then
the indemnified party shall have the right to employ separate counsel and in
that event the reasonable fees and expenses of such separate counsel for the
indemnified party shall be paid by the indemnifying party. The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment.
(d) In order to provide for just and equitable contribution in
circumstances under which the indemnity provided for in this Section 6 is for
any reason judicially determined (by the entry of a final judgment or decree by
a court of competent jurisdiction and the expiration of time to appeal or the
denial of the right of appeal) to be unenforceable by the indemnified parties
although applicable in accordance with its terms, the Company on the one hand,
and BSFS, or the Selected Dealer seeking indemnification, on the other shall
contribute to the aggregate losses, liabilities, claims, damages and expenses of
the nature contemplated by such indemnity incurred by the Company and BSFS, or
the Selected Dealer seeking indemnification, as incurred, in such proportions
that (i) BSFS, or the Selected Dealer seeking indemnification, is responsible
pro rata for that portion represented by the commissions earned by it as a
percentage of the aggregate public offering price (before deducting expenses)
appearing on the cover page of the Prospectus, and (ii) the Company is
responsible for the balance, provided, however, that no person guilty of
fraudulent misrepresentations (within the meaning of Section 12(f) of the 0000
Xxx) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation; provided, further, that if the allocation
provided above is not permitted by applicable law, the Company, on the one hand
and BSFS, or the Selected Dealer seeking indemnification, on the other shall
contribute to the aggregate losses in such proportion as is appropriate to
reflect not
-20-
21
only the relative benefits referred to above but also the relative fault of the
Company on the one hand, and BSFS, or the Selected Dealer seeking
indemnification, on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. Relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission to state a material fact relates to
information supplied by the Company on the one hand, or by BSFS, or the Selected
Dealer seeking indemnification, on the other hand, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and BSFS agree that it would not be just
and equitable if contributions pursuant to this Section 6(d) were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 6(d).
The amount paid or payable by a party as a result of the losses, claims, damages
or liabilities referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending such action or claim.
SECTION 7. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. The representations, warranties, indemnities, agreements and other
statements of the Company and BSFS or their respective officers set forth in or
made pursuant to this Agreement will remain operative and in full force and
effect and will survive the termination of this Agreement.
SECTION 8. EFFECTIVE DATE OF AGREEMENT AND TERMINATION.
This Agreement shall become effective immediately and may be terminated
only as follows:
(a) In the event that the minimum number of Shares are not sold by the
Expiration Date as described in Section 4(a)(iv) hereof.
(b) This Agreement may be terminated by BSFS by notice to the Company
in the event that the Company shall have failed or been unable to comply with
any of the material terms, conditions or provisions of this Agreement on the
part of the Company to be performed, complied with or fulfilled within the
respective times herein provided for, unless compliance therewith or performance
or satisfaction thereof shall have been expressly waived by BSFS in writing.
(c) This Agreement may be terminated by BSFS by notice to the Company
if BSFS believes in its sole judgment that any adverse changes have occurred in
the management of the Company, that material adverse changes have occurred in
the financial condition, prospects or obligations of the Company or if the
Company shall have sustained a loss by strike, fire, flood, accident or other
calamity of such a character as, in the sole judgment of BSFS, may interfere
materially with the conduct of the Company's business and operations regardless
of whether or not such loss shall have been insured.
(d) This Agreement may be terminated by BSFS by notice to the Company
at any time if, in the sole judgment of BSFS, payment for and delivery of the
Shares is rendered
-21-
22
impracticable or inadvisable because (i) additional material governmental
restrictions not in force and effect on the date hereof shall have been imposed
upon the trading in securities generally, or minimum or maximum prices shall
have been generally established on the New York or American Stock Exchange or
the over-the-counter market, or trading in securities generally on either such
Exchange or over-the-counter market shall have been suspended, or a general
moratorium shall have been established by federal or state authorities, or (ii)
a war or other national calamity shall have occurred, or (iii) substantial and
material changes in the condition of the market (either generally or with
reference to the sale of the Shares to be offered hereby) beyond normal
fluctuations are such that it would be undesirable, impracticable or inadvisable
in the sole judgment of BSFS to proceed with this Agreement or with the public
offering, (iv) the DOC Order, the FDIC Order, or the Federal Reserve Board
Approval shall have been withdrawn, rescinded, revoked or materially altered, or
(v) of any matter materially adversely affecting the Company.
(e) In the event any action or proceeding shall be instituted or
threatened against BSFS, either in any court of competent jurisdiction, before
the Commission or any state securities commission concerning its activities as a
broker or dealer that would prevent BSFS from acting as such, at any time prior
to the effective date hereunder, or in any court pursuant to any federal, state,
local or municipal statute, a petition in bankruptcy or insolvency or for
reorganization or for the appointment of a receiver or trustee of BSFS's assets
or if BSFS makes an assignment for the benefit of creditors, the Company shall
have the right on three (3) days' written notice to BSFS to terminate this
Agreement.
(f) Any termination of this Agreement pursuant to this Section 8 shall
be without liability of any character (including, but not limited to, loss of
anticipated profits or consequential damages) on the part of any party thereto,
except that in the event of a termination pursuant to paragraphs (a), (b), (c),
or (d) of this Section 8, the Company will be responsible for BSFS's accountable
expenses up to the maximum amount stated in Section 4(c), which shall include,
but are not limited to, BSFS's counsel fees, consultants' fees, entertainment
expenses, travel expenses, postage expenses, office costs, advertising costs,
clerical costs, due diligence meeting expenses, duplication expenses,
long-distance telephone expenses, and general and administrative expenses
incurred in connection with the Offering whether or not the sale of the Shares
by the Company is consummated.
SECTION 9. NOTICES.
All notices or communications required or permitted hereunder shall be
in writing and shall be mailed or delivered as follows:
If to the Company: Northern Star Financial, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxxx
With a Copy to: Xxxxxxxxxx & Xxxxx, P.A.
-22-
23
1100 International Centre
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
If to BSFS: Banc Stock Financial Services, Inc.
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxx
With a Copy to: Xxxxxx & Xxxxxx Attorneys, P.C.
One Technology Plaza
000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, XX 00000-0000
Attention: Xxxxxxxx X. Xxxxxxxxx
SECTION 10. MISCELLANEOUS. This Agreement contains and constitutes the
entire agreement between the parties hereto and supersedes all prior written or
oral and all contemporaneous agreements or negotiations with respect to the
subject matter hereof. The Agreement may only be amended, modified or waived in
writing signed by both parties hereto.
SECTION 11. GOVERNING LAW AND TIME. This Agreement shall be governed by
the laws of the State of Minnesota without reference to the conflict of law
provisions thereof. Specified time of the day refers to United States Eastern
Standard Time. Time shall be of the essence in this Agreement.
SECTION 12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and when a counterpart has been executed by each party, all such
counterparts taken together shall constitute one and the same agreement.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement among the Company and BSFS in
accordance with its terms.
Very truly yours,
NORTHERN STAR FINANCIAL, INC.
By:
-----------------------------
Name: Xxxxxx Xxxxxxxxxx
Title: President
Confirmed and accepted as of the date first above written:
BANC STOCK FINANCIAL SERVICES. INC.
By:
-----------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Vice President
-23-
24
LIST OF EXHIBITS
Exhibit A States
Exhibit B Escrow Agreement
-24-
