FIRST COMMUNITY FINANCIAL
CORPORATION
COMMON STOCK
1,530,000 TO 2,380,500
SHARES
$15.00 PER SHARE
SALES AGENCY AGREEMENT
----------------------
Trident Securities, Inc.
0000 Xxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Dear Sirs:
First Community Financial Corporation, a North Carolina corporation (the
"Company"), and Community Savings Bank SSB, a North Carolina-chartered and
federally-insured mutual savings bank (the "Bank"), hereby confirm, as of March
___, 1999, their respective agreements with Trident Securities, Inc.
("Trident"), a broker-dealer registered with the Securities and Exchange
Commission ("Commission") and a member of the National Association of Securities
Dealers, Inc. ("NASD"), as follows:
1. Introductory. The Bank intends to convert from a state-chartered mutual
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savings bank to a state-chartered stock savings bank as a wholly owned
subsidiary of the Company (which conversion, together with the Offerings, as
defined below, the issuance of shares of common stock of the Bank to the Company
and the incorporation of the Company, are referred to collectively herein as the
"Conversion") pursuant to a plan of conversion adopted on January 7, 1999 (as
amended, if amended, the "Plan"). In accordance with the Plan, the Company is
offering shares of its common stock (the "Shares" and the "Common Stock"),
pursuant to nontransferable subscription rights in a subscription offering (the
"Subscription Offering") to certain depositors and borrowers of the Bank and to
the Bank's tax-qualified employee stock benefit plans (i.e., the Bank's Employee
Stock Ownership Plan (the "ESOP")). Shares of the Common Stock not sold in the
Subscription Offering may be offered to the general public in a community
offering, with preference given to natural persons residing in Alamance County,
North Carolina (the "Community Offering"), subject to the right of the Company
and the Bank, in their absolute discretion, to reject orders in the Community
Offering in whole or in part. Shares not sold in the Subscription Offering or
otherwise in the Community Offering may be offered to certain members of the
general public as part of the Community Offering by a group of broker-dealers
(the "Syndicated Community Offering") (the Subscription Offering and, if any,
the Community and Syndicated Community Offerings are sometimes referred to
collectively as
the "Offerings"). In the Offerings, the Company is offering between 1,530,000
and 2,070,000 Shares, with the possibility of offering up to 2,380,500 Shares
without a resolicitation of subscribers. With the exception of the ESOP, no
person (or persons through a single account) may purchase in the Offerings more
than 15,000 Shares; no person, together with associates of and persons acting in
concert with such person, may purchase in the Offerings more than 20,000 Shares.
The Company and the Bank have been advised by Trident that it will utilize its
best efforts in assisting the Company and the Bank with the sale of the Shares
in the Offerings, including any Syndicated Community Offering. Prior to the
execution of this Agreement, the Company has delivered to Trident a prospectus
dated as of the date hereof and all supplements thereto to be used in the
Offerings. Such prospectus contains information with respect to the Company, the
Bank and the Shares.
2. Representations and Warranties.
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(a) The Company and the Bank jointly and severally represent and warrant
to Trident that:
(i) The Company has filed with the Commission a registration
statement, including exhibits and an amendment or amendments thereto,
on Form SB-2 (No. 333-70981), including a prospectus relating to the
Offerings, for the registration of the Shares under the Securities Act
of 1933, as amended (the "Act"); and such registration statement has
become effective under the Act and no stop order has been issued with
respect thereto and no proceedings therefor have been initiated or, to
the Company's best knowledge, threatened by the Commission. Except as
the context may otherwise require, such registration statement, as
amended or supplemented, on file with the Commission at the time the
registration statement became effective, including the prospectus,
financial statements, schedules, exhibits and all other documents
filed as part thereof, as amended and supplemented, is herein called
the "Registration Statement," and the prospectus, as amended or
supplemented, on file with the Commission at the time the Registration
Statement became effective is herein called the "Prospectus," except
that if the prospectus filed by the Company with the Commission
pursuant to Rule 424(b) of the general rules and regulations of the
Commission under the Act (together with the enforceable published
policies and actions of the Commission thereunder, the "SEC
Regulations") differs from the form of prospectus on file at the time
the Registration Statement became effective, the term "Prospectus"
shall refer to the Rule 424(b) prospectus from and after the time it
is filed with or mailed for filing to the Commission and shall include
any amendments or supplements thereto from and after their dates of
effectiveness or use, respectively. If any Shares covered by the
Registration Statement remain unsubscribed following completion of the
Subscription Offering and, if any, the
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Community Offering, the Company, if required by the SEC Regulations
(i) will promptly file with the Commission a post-effective amendment
to such Registration Statement relating to the results of the
Subscription Offering and, if any, the Community Offering, any
additional required information with respect to the proposed plan of
distribution and any required revised pricing information or (ii) if
no such post-effective amendment is required, will file with, or mail
for filing to, the Commission a prospectus or prospectus supplement
containing information relating to the results of the Subscription
Offering and, if any, the Community Offering and pricing information
pursuant to Rule 424(c) of the Regulations, in either case in a form
reasonably acceptable to the Company and Trident.
(ii) The Bank has filed an Application including exhibits (as amended
or supplemented, the "Stock Application" and which together with the
Acquisition Application and Form FR Y-3 referred to below, are
sometimes referred to collectively herein as the "Conversion
Application") with the Administrator of the Savings Institution
Division of the North Carolina Department of Commerce (the
"Administrator"), which has been approved by the Administrator; and
the Prospectus and the proxy statement for the solicitation of proxies
from members for the special meeting to approve the Plan (the "Proxy
Statement") included as part of the Stock Application have been
approved for use by the Administrator. No order has been issued by the
Administrator preventing or suspending the use of the Prospectus or
the Proxy Statement; and no action by or before the Administrator
revoking such approvals is pending or, to the Bank's best knowledge,
threatened. The Company has filed with the Administrator the Company's
Acquisition Application and with the Federal Reserve Bank of Richmond
(acting on behalf of the Board of Governors of the Federal Reserve
System, which is referred to herein together with the Federal Reserve
Bank of Richmond as the FRB) a Form FR Y-3, each requesting approval
for the Company to acquire all of the issued and outstanding common
shares of stock to be issued by the Bank, and has received approval of
such acquisition of the shares of the Bank from the Administrator and
FRB.
(iii) At the date of the Prospectus (i) the Registration Statement
and the Prospectus (as amended or supplemented, if amended or
supplemented) complied with the Act and the SEC Regulations, (ii) the
Registration Statement (as amended or supplemented, if amended or
supplemented) did not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and (iii) the
Prospectus (as amended or supplemented, if amended or supplemented)
did not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading.
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Representations or warranties in this subsection shall not apply to
statements or omissions made in reliance upon and in conformity with
written information furnished to the Company or the Bank relating to
Trident by or on behalf of Trident expressly for use in the
Registration Statement or Prospectus.
(iv) The Company has been duly organized as a North Carolina
corporation, and the Bank has been duly organized as a mutual savings
bank under the laws of North Carolina, and each of them is validly
existing and in good standing under the laws of the jurisdiction of
its organization with full power and authority to own its property and
conduct its business as described in the Registration Statement and
Prospectus; the Bank is a member in good standing of the Federal Home
Loan Bank of Atlanta; and the deposit accounts of the Bank are insured
by the Savings Association Insurance Fund ("SAIF") administered by the
Federal Deposit Insurance Corporation ("FDIC") up to the applicable
legal limits. Each of the Company and the Bank is not required to be
qualified to do business as a foreign corporation in any jurisdiction
where non-qualification would have a material adverse effect on the
Company and the Bank, taken as a whole. The Bank does not own equity
securities of or an equity interest in any business enterprise except
as described in the Prospectus. Upon amendment of the Bank's charter
and bylaws as provided in the rules and regulations of the
Administrator and completion of the sale by the Company of the Shares
as contemplated by the Prospectus, (i) the Bank will be converted
pursuant to the Plan to a North Carolina-chartered capital stock
savings bank with full power and authority to own its property and
conduct its business as described in the Prospectus, (ii) all of the
authorized and outstanding capital stock of the Bank will be owned of
record and beneficially by the Company, and (iii) the Company will
have no direct subsidiaries other than the Bank.
(v) The Bank has good and marketable title to all assets material to
its business and to those assets described in the Prospectus as owned
by it, free and clear of all material liens, charges, encumbrances or
restrictions, except for liens for taxes not yet due, except as
described in the Prospectus and except as could not in the aggregate
have a material adverse effect upon the operations or financial
condition of the Bank; and all of the leases and subleases material to
the operations or financial condition of the Bank, under which it
holds properties, including those described in the Prospectus, are in
full force and effect as described therein.
(vi) The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly
authorized by all necessary actions on the part of each of the Company
and the Bank, and this Agreement is a valid and binding obligation
with valid execution and delivery of each of the Company and the Bank,
enforceable in accordance with its terms (except as the enforceability
thereof may be limited by bankruptcy, insolvency,
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moratorium, reorganization or similar laws relating to or affecting
the enforcement of creditors' rights generally or the rights of
creditors of savings and loan holding companies the accounts of whose
subsidiaries are insured by the FDIC or by general equity principles,
regardless of whether such enforceability is considered in a
proceeding in equity or at law, and except to the extent that the
provisions of Sections 8 and 9 hereof may be unenforceable as against
public policy or pursuant to Sections 23A and 23B of the Federal
Reserve Act, 12 U.S.C. Sections 371c and 371c-1 (collectively,
"Section 23A")).
(vii) There is no litigation or governmental proceeding pending or,
to the best knowledge of the Company or the Bank, threatened against
or involving the Company, the Bank or any of their respective assets
which individually or in the aggregate would reasonably be expected to
have a material adverse effect on the condition (financial or
otherwise), results of operations and business, including the assets
and properties, of the Company and the Bank, taken as a whole.
(viii) The Company and the Bank have received the opinions of Brooks,
Pierce, XxXxxxxx, Xxxxxxxx & Xxxxxxx, L.L.P. with respect to federal
and North Carolina tax consequences of the Conversion, to the effect
that the Conversion will constitute a taxfree reorganization under the
Internal Revenue Code of 1986, as amended, and will not be a taxable
transaction for the Bank or the Company under the laws of North
Carolina and the facts relied upon in such opinions are accurate and
complete.
(ix) Each of the Company and the Bank has all such corporate power,
authority, authorizations, approvals and orders as may be required to
enter into this Agreement and to carry out the provisions and
conditions hereof, subject to the limitations set forth herein and
subject to the satisfaction of any conditions imposed by the
Administrator, FDIC or the FRB in connection with their approvals of
the Conversion Application, and except as may be required under the
securities laws of various jurisdictions, and in the case of the
Company, as of the Closing Date, will have such approvals and orders
to issue and sell the Shares to be sold by the Company as provided
herein, and in the case of the Bank, as of the Closing Date, will have
such approvals and orders to issue and sell the Shares of its Common
Stock to be sold to the Company as provided in the Plan, subject to
the issuance of an amended charter to the Bank in the form required
for North Carolina-chartered stock savings banks (the "Stock
Charter"), the form of which Stock Charter has been approved by the
Administrator.
(x) Neither the Company nor the Bank is in violation of any rule or
regulation of the Administrator or the FDIC that could reasonably be
expected to result in any
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enforcement action against the Company, the Bank or their officers or
directors that might have a material adverse effect on the condition
(financial or otherwise), operations, businesses, assets or properties
of the Company and the Bank, taken as a whole.
(xi) The financial statements and any related notes or schedules
which are included in the Registration Statement and the Prospectus
fairly present the financial condition, income, retained earnings and
cash flows of the Bank at the respective dates thereof and for the
respective periods covered thereby and comply as to form with the
applicable accounting requirements of the SEC Regulations. Such
financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the
periods involved, except as set forth therein, and such financial
statements are consistent with financial statements and other reports
filed by the Bank with supervisory and regulatory authorities except
as such generally accepted accounting principles may otherwise
require. The tables in the Prospectus accurately present the
information purported to be shown thereby at the respective dates
thereof and for the respective periods therein.
(xii) There has been no material change in the condition (financial
or otherwise), results of operations or business, including assets and
properties, of the Company and the Bank, taken as a whole, since the
latest date as of which such condition is set forth in the Prospectus,
except as set forth therein; and the capitalization, assets,
properties and business of each of the Company and the Bank conform in
all material respects to the descriptions thereof contained in the
Prospectus. None of the Company or the Bank has any material
liabilities of any kind, contingent or otherwise, except as set forth
in the Prospectus.
(xiii) Except as set forth in the Prospectus, there has been no breach
or default (or the occurrence of any event which, with notice or lapse
of time or both, would constitute a default) under, or creation or
imposition of any lien, charge or other encumbrance upon any of the
properties or assets of the Company or the Bank pursuant to any of the
terms, provisions or conditions of, any agreement, contract,
indenture, bond, debenture, note, instrument or obligation to which
the Company or the Bank is a party or by which any of them or any of
their respective assets or properties may be bound or is subject, or
violation of any governmental license or permit or any enforceable
published law, administrative regulation or order or court order,
writ, injunction or decree, which breach, default, encumbrance or
violation would have a material adverse effect on the condition
(financial or otherwise), operations, business, assets or properties
of the Company and the Bank, taken as a whole; all agreements which
are material to the condition (financial or otherwise), results of
operations or business of the Company and the
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Bank, taken as a whole are in full force and effect, and no party to
any such agreement has instituted or, to the best knowledge of the
Company and the Bank, threatened any action or proceeding wherein the
Company or the Bank would be alleged to be in default thereunder.
(xiv) None of the Company or the Bank is in violation of its
respective charter or bylaws. The execution and delivery hereof and
the consummation of the transactions contemplated hereby by the
Company and the Bank do not conflict with or result in a breach of the
charter or bylaws of the Company or the Bank (in either mutual or
stock form) or constitute a material breach of or default (or an event
which, with notice or lapse of time or both, would constitute a
default) under, give rise to any right of termination, cancellation or
acceleration contained in, or result in the creation or imposition of
any lien, charge or other encumbrance upon any of the properties or
assets of the Company or the Bank pursuant to any of the terms,
provisions or conditions of, any material agreement, contract,
indenture, bond, debenture, note, instrument or obligation to which
the Company or the Bank is a party or violate any governmental license
or permit or any enforceable published law, administrative regulation
or order or court order, writ, injunction or decree (subject to the
satisfaction of any conditions imposed by the Administrator, FDIC or
the FRB in connection with their approvals of the Conversion
Application), which breach, default, encumbrance or violation would
have a material adverse effect on the condition (financial or
otherwise), operations or business of the Company and the Bank, taken
as a whole.
(xv) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus and prior to the
Closing Date (as hereinafter defined), except as otherwise may be
indicated or contemplated therein, none of the Company or the Bank has
issued any securities which will remain issued at the Closing Date or
incurred any liability or obligation, direct or contingent, or
borrowed money, except borrowings in the ordinary course of business,
or entered into any other transaction not in the ordinary course of
business and consistent with prior practices, which is material in
light of the business of the Company and the Bank, taken as a whole.
(xvi) Upon consummation of the Conversion, the authorized, issued and
outstanding equity capital of the Company shall be within the range as
set forth in the Prospectus under the caption "Capitalization," and no
Common Stock of the Company shall be outstanding immediately prior to
the Closing Date; the issuance and the sale of the Shares of the
Company have been duly authorized by all necessary action of the
Company and approved by the Administrator and, when issued in
accordance with the terms of the Plan and paid for, shall be validly
issued, fully paid and nonassessable and shall conform to the
description thereof contained in the Prospectus; the issuance of the
Shares is not subject to
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preemptive rights, except as set forth in the Prospectus; and good
title to the Shares will be transferred by the Company upon issuance
thereof against payment therefor, free and clear of all claims,
encumbrances, security interests and liens against the Company
whatsoever. The certificates representing the Shares will conform in
all material respects with the requirements of applicable laws and
regulations. The issuance and sale of the capital stock of the Bank to
the Company has been duly authorized by all necessary action of the
Bank and the Company and appropriate regulatory authorities (subject
to the satisfaction of any conditions imposed by the Administrator,
FDIC or FRB in connection with their approval of the Conversion
Application), and such capital stock, when issued in accordance with
the terms of the Plan, will be fully paid and nonassessable and will
conform in all material respects to the description thereof contained
in the Prospectus.
(xvii) No approval of any regulatory or supervisory or other public
authority is required in connection with the execution and delivery of
this Agreement or the issuance of the Shares, except for the
declaration of effectiveness of any required post-effective amendment
by the Commission and approval of the Stock Application by the
Administrator or FDIC and approval of the Company's Acquisition
Application and Form FR Y-3 filings by the Administrator and FRB,
respectively, the approval of the Stock Charter by the Administrator
and the filing of such Stock Charter with the North Carolina Secretary
of State, and as may be required under the securities laws of various
jurisdictions.
(xviii) All contracts and other documents required to be filed as
exhibits to the Registration Statement or the Conversion Application
have been filed with the Commission, the Administrator, FDIC and/or
the FRB, as the case may be.
(xix) PricewaterhouseCoopers LLP, which has audited the financial
statements of the Bank at December 31, 1998 and 1997 as included in
the Prospectus, is an independent public accountant within the meaning
of the Code of Professional Ethics of the American Institute of
Certified Public Accountants and Title 12 of the Code of Federal
Regulations, Section 571.2(c)(3).
(xx) For the past five years, the Company and the Bank have timely
filed all required federal, state and local franchise tax returns, and
no deficiency has been asserted with respect to such returns by any
taxing authorities, and the Company and the Bank have paid all taxes
that have become due and, to the best of their knowledge, have made
adequate reserves for similar future tax liabilities, except where any
failure to make such filings, payments and reserves, or the assertion
of such a deficiency, would not have a material adverse effect on the
condition of the Company and the Bank, taken as a whole.
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(xxi) All of the loans represented as assets of the Bank on the most
recent financial statements of the Bank included in the Prospectus
meet or are exempt from all applicable requirements of federal, state
or local law pertaining to lending and interest, 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 have a material adverse effect on the Company and the Bank,
taken as a whole.
(xxii) The records of account holders, depositors, borrowers and
other members of the Bank delivered to Trident by the Bank or its
agent for use during the Conversion have been prepared or reviewed by
the Bank and, to the best knowledge of the Company and the Bank, are
reliable and accurate.
(xxiii) None of the Company, the Bank or, to the best knowledge of the
Company and the Bank, the employees of the Company or the Bank, has
made any payment of funds of the Company or the Bank prohibited by
law, and no funds of the Company or the Bank have been set aside to be
used for any payment prohibited by law.
(xxiv) To the best knowledge of the Company and the Bank, the Company
and the Bank are in compliance with all laws, rules and regulations
relating to the discharge, storage, handling and disposal of hazardous
or toxic substances, pollutants or contaminants and neither the
Company nor the Bank believes that the Company or the Bank is subject
to liability under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, or any similar
law, except for violations which, if asserted, would not have a
material adverse effect on the Company and the Bank, taken as a whole.
There are no actions, suits, regulatory investigations or other
proceedings pending or, to the best knowledge of the Company or the
Bank, threatened against the Company or the Bank relating to the
discharge, storage, handling and disposal of hazardous or toxic
substances, pollutants or contaminants. To the best knowledge of the
Company and the Bank, no disposal, release or discharge of hazardous
or toxic substances, pollutants or contaminants, including petroleum
and gas products, as any of such terms may be defined under federal,
state or local law, has been caused by the Company or the Bank or, to
the best knowledge of the Company or the Bank, has occurred on, in or
at any of the facilities or properties of the Company or the Bank,
except such disposal, release or discharge which would not have a
material adverse effect on the Company and the Bank, taken as a whole.
(xxv) At the Closing Date, the Company and the Bank will have
completed the conditions precedent to, and shall have conducted the
Conversion in all material
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respects in accordance with the Plan and all applicable laws,
regulations, published decisions and orders, including any terms,
conditions, requirements and provisions precedent to the Conversion
imposed by the Administrator, FDIC or the FRB.
(b) Trident represents and warrants to the Company and the Bank that:
(i) Trident is registered as a broker-dealer with the Commission,
and is in good standing with the Commission and the NASD.
(ii) Trident is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation, with full
corporate power and authority to provide the services to be furnished
to the Company and the Bank hereunder.
(iii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
and validly authorized by all necessary action on the part of Trident,
and this Agreement is a legal, valid and binding obligation of
Trident, enforceable in accordance with its terms (except as the
enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization or similar laws relating to or affecting
the enforcement of creditors' rights generally or the rights of
creditors of registered broker-dealers accounts of whose may be
protected by the Securities Investor Protection Corporation or by
general equity principles, regardless of whether such enforceability
is considered in a proceeding in equity or at law, and except to the
extent that the provisions of Sections 8 and 9 hereof may be
unenforceable as against public policy or pursuant to Section 23A).
(iv) Each of Trident and, to Trident's knowledge, its employees,
agents and representatives who shall perform any of the services
required hereunder to be performed by Trident shall be duly authorized
and shall have all licenses, approvals and permits necessary to
perform such services, and Trident is a registered selling agent in
the jurisdictions listed in Exhibit A hereto and will remain
registered in such jurisdictions in which the Company is relying on
such registration for the sale of the Shares, until the Conversion is
consummated or terminated.
(v) The execution and delivery of this Agreement by Trident, the
fulfillment of the terms set forth herein and the consummation of the
transactions contemplated hereby shall not violate or conflict with
the corporate charter or bylaws of Trident or violate, conflict with
or constitute a breach of, or default (or an event which,
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with notice or lapse of time, or both, would constitute a default)
under, any material agreement, indenture or other instrument by which
Trident is bound or under any governmental license or permit or any
law, administrative regulation, authorization, approval or order or
court decree, injunction or order.
(vi) Any funds received by Trident to purchase Common Stock will be
handled in accordance with Rule 15c2-4 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act").
(vii) There is not now pending or, to Trident's knowledge, threatened
against Trident any action or proceeding before the Commission, the
NASD, any state securities commission or any state or federal court
concerning Trident's activities as a broker-dealer.
3. Employment of Trident; Sale and Delivery of the Shares. On the basis of
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the representations and warranties herein contained, but subject to the terms
and conditions herein set forth, the Company and the Bank hereby employ Trident
as their agent to utilize its best efforts in assisting the Company with the
Company's sale of the Shares in the Offering. The employment of Trident
hereunder shall terminate (a) forty-five (45) days after the Offerings close,
unless the Company and the Bank, with the approval of the Administrator, are
permitted to extend such period of time, or (b) upon consummation of the
Conversion, whichever date shall first occur.
In the event the Company is unable to sell a minimum of 1,530,000 Shares (or
such lesser amount as the Administrator may permit) within the period herein
provided, this Agreement shall terminate, and the Company and the Bank shall
refund promptly to any persons who have subscribed for any of the Shares, the
full amount which they may have received from them, together with interest as
provided in the Prospectus, and no party to this Agreement shall have any
obligation to the other party hereunder, except as set forth in Sections 6, 8(a)
and 9 hereof. Appropriate arrangements for placing the funds received from
subscriptions for Shares in special interest-bearing accounts with the Bank
until all Shares are sold and paid for were made prior to the commencement of
the Offerings, with provision for prompt refund to the purchasers as set forth
above, or for delivery to the Company if all Shares are sold. If all conditions
precedent to the consummation of the Conversion are satisfied, including the
sale of all Shares required by the Plan to be sold, the Company agrees to issue
or have issued such Shares and to release for delivery certificates to
subscribers thereof for such Shares on the Closing Date against payment to the
Company by any means authorized pursuant to the Prospectus, at the principal
office of the Company at 000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx
00000, or at such other place as shall be agreed upon between the parties
hereto. The date upon which Trident is paid the compensation due hereunder is
herein called the "Closing Date."
Trident agrees either (a) upon receipt of an executed order form of a subscriber
to forward to the Bank for deposit in a segregated account the offering price of
the Common Stock ordered on or
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before twelve noon on the next business day following receipt or execution of an
order form by Trident or (b) to solicit indications of interest in which event
(i) Trident will subsequently contact any potential subscriber indicating
interest to confirm the interest and give instructions to execute and return an
order form or to receive authorization to execute the order form on the
subscriber's behalf, (ii) Trident will mail acknowledgements of receipt of
orders to each subscriber confirming interest on the business day following such
confirmation, (iii) Trident will debit accounts of such subscribers on the third
business day ("debit date") following receipt of the confirmation referred to in
(i), and (iv) Trident will forward completed order forms together with such
funds to the Bank on or before twelve noon on the next business day following
the debit date for deposit in a segregated account. Trident acknowledges that if
the procedure in (b) is adopted, subscribers' funds are not required to be in
their accounts until the debit date.
In addition to the expenses specified in Section 6 hereof, Trident shall receive
the following compensation for its services hereunder:
(a)(i) a commission equal to 1.75% of the aggregate dollar amount of Common
Stock sold in the Subscription Offering and any Community Offering, except
no commissions shall be payable on shares purchased by directors, executive
officers, the employee stock ownership plan and "associates" of directors
and executive officers as defined in the Plan, and (ii) a commission to be
agreed upon by Trident and the Company for Shares sold by other member
firms of the NASD through a selected dealers arrangement in any Syndicated
Community Offering. All commissions shall be based on the amount of Common
Stock sold. All such commissions are to be payable in same-day funds to
Trident on the Closing Date.
(b) Trident shall be reimbursed for allocable expenses, including but not
limited to travel, communications and postage and legal fees and expenses,
whether or not the Offerings are successfully completed; provided, however,
that neither the Company nor the Bank shall pay or reimburse Trident for
any of the foregoing expenses accrued after Trident shall have notified the
Company or the Bank of its election to terminate this Agreement pursuant to
Section 11 hereof or after such time as the Company or the Bank shall have
given notice in accordance with Section 12 hereof that Trident is in breach
of this Agreement. Trident's out-of-pocket expenses will not exceed $7,500,
and its legal fees and expenses will not exceed $27,500, without the
consent of the Company and the Bank. Full payment to defray Trident's
reimbursable expenses shall be made in same-day funds on the Closing Date
or, if the Conversion is not completed and is terminated for any reason,
within ten (10) business days of receipt by the Company of a written
request from Trident for reimbursement of its expenses. Trident
acknowledges receipt of $2,500 advance payment from the Bank which shall be
credited against the total reimbursement due Trident hereunder.
(c) Notwithstanding the limitations on reimbursement of Trident for
allocable expenses provided in the immediately preceding paragraph (b), in
the event that a resolicitation or
12
other event causes the Offerings to be extended beyond their original
expiration date, the Company and the Bank shall reimburse Trident for its
reasonable expenses incurred during such extended period, even if the
allowances for reimbursable expenses provided for paragraph (b) above have
been exhausted, provided that any reimbursements in excess of the
limitations in paragraph (b) would not exceed an amount equal to the
product obtained by dividing $35,000 (the original reimbursable out-of-
pocket expense limit), respectively, by the total number of days of the
unextended Subscription Offering (calculated from the date of the
Prospectus to the intended close of the Subscription Offering as stated in
the Prospectus) and multiplying such product by the number of days of the
extension (that number of days from the date of the supplemental prospectus
used in the extended offering to the closing of the extension of the
offering(s) described in such supplemental prospectus).
The Company shall pay any stock issue and transfer taxes which may be payable
with respect to the sale of the Shares. The Company and the Bank shall also pay
all expenses of the Conversion incurred by them or on their prior approval
including but not limited to their attorneys' fees, NASD filing fees, and
attorneys' fees relating to any required state securities laws research and
filings, telephone charges, air freight, rental equipment, supplies, transfer
agent charges, fees relating to auditing and accounting and costs of printing
all documents necessary in connection with the Conversion.
4. Offering. Subject to the provisions of Section 7 hereof, Trident is
--------
assisting the Company on a best efforts basis in offering a minimum of 1,530,000
and a maximum of 2,070,000 Shares, with the possibility of offering up to
2,380,500 Shares (except as the Adminstrator may permit to be decreased or
increased) in the Offerings. The Shares are to be offered to the public at the
price set forth on the cover page of the Prospectus and the first page of this
Agreement.
5. Further Agreements. The Company and the Bank jointly and severally
------------------
covenant and agree that:
(a) The Company shall deliver to Trident, from time to time, such number
of copies of the Prospectus as Trident reasonably may request. The Company
authorizes Trident to use the Prospectus in any lawful manner in connection
with the offer and sale of the Shares.
(b) The Company will notify Trident immediately upon discovery, and
confirm the notice in writing, (i) when any post-effective amendment to the
Registration Statement becomes effective or any supplement to the
Prospectus has been filed, (ii) of the issuance by the Commission of any
stop order relating to the Registration Statement or of the initiation or
the threat of any proceedings for that purpose, (iii) of the receipt of any
notice with respect to the suspension of the qualification of the Shares
for offering or sale in any jurisdiction, and (iv) of the receipt of any
comments from the staff of the
13
Commission relating to the Registration Statement. If the Commission enters
a stop order relating to the Registration Statement at any time, the
Company will make every reasonable effort to obtain the lifting of such
order at the earliest possible moment.
(c) During the time when a prospectus is required to be delivered under
the Act, the Company will comply so far as it is able with all requirements
imposed upon it by the Act, as now in effect and hereafter amended, and by
the Regulations, as from time to time in force, so far as necessary to
permit the continuance of offers and sales of or dealings in the Shares in
accordance with the provisions hereof and the Prospectus. If during the
period when the Prospectus is required to be delivered in connection with
the offer and sale of the Shares any event relating to or affecting the
Company and the Bank, taken as a whole, shall occur as a result of which it
is necessary, in the opinion of counsel for Trident, with the concurrence
of counsel to the Company, to amend or supplement the Prospectus in order
to make the Prospectus not false or misleading in light of the
circumstances existing at the time it is delivered to a purchaser of the
Shares, the Company forthwith shall prepare and furnish to Trident a
reasonable number of copies of an amendment or amendments or of a
supplement or supplements to the Prospectus (in form and substance
satisfactory to counsel for Trident) which shall amend or supplement the
Prospectus so that, as amended or supplemented, the Prospectus shall not
contain an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the
circumstances existing at the time the Prospectus is delivered to a
purchaser of the Shares, not misleading. The Company will not file or use
any amendment or supplement to the Registration Statement or the Prospectus
of which Trident has not first been furnished a copy or to which Trident
shall reasonably object after having been furnished such copy. For the
purposes of this subsection the Company and the Bank shall furnish such
information with respect to themselves as Trident from time to time may
reasonably request.
(d) The Company and the Bank have taken or will take all reasonably
necessary action as may be required to qualify or register the Shares for
offer and sale by the Company under the securities laws of such
jurisdictions as Trident and either the Company or its counsel may agree
upon; provided, however, that the Company shall not be obligated to qualify
as a foreign corporation to do business under the laws of any such
jurisdiction. In each jurisdiction where such qualification or registration
shall be effected, the Company, unless Trident agrees that such action is
not necessary or advisable in connection with the distribution of the
Shares, shall file and make such statements or reports as are, or
reasonably may be, required by the laws of such jurisdiction.
(e) Appropriate entries will be made in the financial records of the Bank
sufficient to establish a liquidation account for the benefit of eligible
account holders and supplemental eligible account holders in accordance
with the requirements of the Administrator.
14
(f) The Company will file a registration statement for the Common Stock
under Section 12(g) of the Exchange Act, prior to completion of the stock
offering pursuant to the Plan and shall request that such registration
statement be effective upon or before completion of the Conversion. The
Company shall maintain the effectiveness of such registration for a minimum
period of three years or for such shorter period as may be required by
applicable law.
(g) The Company will make generally available to its security holders as
soon as practicable, but not later than 90 days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 of the regulations promulgated under the Act)
covering a twelve-month period beginning not later than the first day of
the Company's fiscal quarter next following the effective date (as defined
in said Rule 158) of the Registration Statement.
(h) For a period of three (3) years from the date of this Agreement
(unless the Common Stock shall have been deregistered under the Exchange
Act), the Company will furnish to Trident, as soon as publicly available
after the end of each fiscal year, a copy of its annual report to
shareholders for such year; and the Company will furnish to Trident (i) as
soon as publicly available, a copy of each report or definitive proxy
statement of the Company filed with the Commission under the Exchange Act
or mailed to shareholders, and (ii) from time to time, such other public
information concerning the Company as Trident may reasonably request.
(i) The Company shall use the net proceeds from the sale of the Shares
consistently with the manner set forth in the Prospectus.
(j) The Company shall not deliver the Shares until each and every
condition set forth in Section 7 hereof has been satisfied, unless such
condition is waived in writing by Trident.
(k) The Company shall advise Trident, if necessary, as to the allocation
of deposits, in the case of eligible account holders and supplemental
eligible account holders, and votes, in the case of other members, and of
the Shares in the event of an oversubscription and shall, after
consultation with Trident, provide Trident final instructions as to the
allocation of the Shares ("Allocation Instructions") in such event and such
information shall be accurate and reliable. Trident shall be entitled to
rely on such instructions and shall have no liability in respect of its
reliance thereon, including without limitation, no liability for or related
to any denial or grant of a subscription in whole or in part.
(l) The Company and the Bank will take such actions and furnish such
information as are reasonably requested by Trident in order for Trident to
ensure compliance with the NASD's "Interpretation Relating to Free-Riding
and Withholding."
15
6. Payment of Expenses. Whether or not the Conversion is consummated, the
-------------------
Company and the Bank shall pay or reimburse Trident for (a) all filing fees paid
or incurred by Trident in connection with all filings with the NASD with respect
to the Offerings and, (b) in addition, if the Company is unable to sell a
minimum of 1,530,000 Shares or such lesser amount as the Administrator may
permit or the Conversion is otherwise terminated, the Company and the Bank shall
reimburse Trident for allocable expenses incurred by Trident relating to the
offering of the Shares as provided in Section 3 hereof; provided, however, that
neither the Company nor the Bank shall pay or reimburse Trident for any of the
foregoing expenses accrued after Trident shall have notified the Company or the
Bank of its election to terminate this Agreement pursuant to Section 11 hereof
or after such time as the Company or the Bank shall have given notice in
accordance with Section 12 hereof that Trident is in breach of this Agreement.
7. Conditions of Trident's Obligations. Except as may be waived in writing by
-----------------------------------
Trident, the obligations of Trident as provided herein shall be subject to the
accuracy of the representations and warranties contained in Section 2 hereof as
of the date hereof and as of the Closing Date, to the performance by the Company
and the Bank of their obligations hereunder and to the following conditions:
(a) At the Closing Date, Trident shall receive the favorable opinions of
Brooks, Pierce, XxXxxxxx, Xxxxxxxx & Xxxxxxx, L.L.P., special counsel for
the Company and the Bank, addressed to Trident, in form and substance
reasonably satisfactory to counsel for Trident, covering the matters
described in Exhibit B hereto.
(b) At the Closing Date, Trident shall receive the letter of Brooks,
Pierce, XxXxxxxx, Xxxxxxxx & Xxxxxxx, L.L.P., special counsel for the
Company and the Bank, dated the Closing Date, addressed to Trident, in form
and substance reasonably satisfactory to counsel for Trident, covering the
matters described in Exhibit C hereto.
(c) Counsel for Trident shall have been furnished such documents as they
reasonably may require for the purpose of enabling them to review or pass
upon the matters required by Trident, and for the purpose of evidencing the
accuracy, completeness or satisfaction of any of the representations,
warranties or conditions herein contained, including but not limited to,
resolutions of the Board of Directors of the Company and the Bank regarding
the authorization of this Agreement and the transactions contemplated
hereby.
(d) Prior to and at the Closing Date, in the reasonable opinion of
Trident, (i) there shall have been no material change in the condition,
financial or otherwise, business or results of operations of the Company
and the Bank, taken as a whole, since the latest date as of which such
condition is set forth in the Prospectus, except as referred to therein;
(ii) there shall have been no transaction entered into by the Company or
the Bank after the latest date as of which the financial condition of the
Company or the Bank is set forth in the Prospectus other than transactions
referred to or contemplated therein, transactions in the ordinary course of
business, and transactions which are not material to the Company and
16
the Bank, taken as a whole; (iii) none of the Company or the Bank shall
have received from the Administrator, FRB, FDIC, or Commission any
direction (oral or written) to make any change in the method of conducting
their respective businesses which is material to the business of the
Company and the Bank, taken as a whole, with which they have not complied;
(iv) no action, suit or proceeding, at law or in equity or before or by any
federal or state commission, board or other administrative agency, shall be
pending or threatened against the Company or the Bank or affecting any of
their respective assets, wherein an unfavorable decision, ruling or finding
would have a material adverse effect on the business, operations, financial
condition or income of the Company and the Bank, taken as a whole; and (v)
the Shares shall have been qualified or registered for offering and sale by
the Company under the securities laws of such jurisdictions as Trident and
the Company shall have agreed upon.
(e) At the Closing Date, Trident shall receive a certificate of the
principal executive, financial and accounting officer(s) of each of the
Company and the Bank, dated the Closing Date, to the effect that: (i) they
have examined the Prospectus and, at the time the Prospectus became
authorized by the Company for use, the Prospectus did not contain an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading with respect to the Company or the
Bank; (ii) since the date the Prospectus became authorized by the Company
for use, no event has occurred which should have been set forth in an
amendment or supplement to the Prospectus which has not been so set forth,
including specifically, but without limitation, any material change in the
business, condition (financial or otherwise) or results of operations of
the Company or the Bank and, the conditions set forth in clauses (ii)
through (iv) inclusive of subsection(d) of this Section 7 have been
satisfied; (iii) to the best knowledge of such officers, no order has been
issued by the Commission, the FDIC or the Administrator to suspend the
Offerings or the effectiveness of the Prospectus, and no action for such
purposes has been instituted or threatened by the Commission, the FDIC or
the Administrator; (iv) to the best knowledge of such officers, no person
has sought to obtain review of the final actions of the Administrator
approving the Plan; and (v) all of the representations and warranties
contained in Section 2 of this Agreement are true and correct, with the
same force and effect as though expressly made on the Closing Date.
(f) At the Closing Date, Trident shall receive, among other documents, (i)
copies of the letters from the Administrator authorizing the use of the
Prospectus and the Proxy Statement, (ii) a copy of the order of the
Commission declaring the Registration Statement effective; (iii) copies of
the letters from the appropriate North Carolina authority evidencing the
corporate existence of the Bank; (iv) a copy of the letter from the
appropriate North Carolina authority evidencing the incorporation (and, if
generally
17
available from such authority, good standing) of the Company; (v) a copy of
the Company's charter certified by the appropriate North Carolina
governmental authority; and, (vi) if available, a copy of the Certification
from the Administrator approving the Bank's Stock Charter.
(g) As soon as available after the Closing Date, Trident shall receive a
certified copy of the Bank's Stock Charter executed by the appropriate
North Carolina governmental authority.
(h) Concurrently with the execution of this Agreement, Trident
acknowledges receipt of a letter from PricewaterhouseCoopers LLP,
independent certified public accountants, addressed to Trident and the
Company, in substance and form satisfactory to counsel for Trident, with
respect to the financial statements and certain financial information
contained in the Prospectus.
(i) At the Closing Date, Trident shall receive a letter in form and
substance satisfactory to counsel for Trident from PricewaterhouseCoopers,
LLP, independent certified public accountants, dated the Closing Date and
addressed to Trident and the Company, confirming the statements made by
them in the letter delivered by them pursuant to the preceding subsection
as of a specified date not more than five (5) days prior to the Closing
Date.
All such opinions, certificates, letters and documents shall be in compliance
with the provisions hereof only if they are, in the reasonable opinion of
Trident and its counsel, satisfactory to Trident and its counsel. Any
certificates signed by an officer or director of the Company or the Bank
prepared for Trident's reliance and delivered to Trident or to counsel for
Trident shall be deemed a representation and warranty by the Company and the
Bank to Trident as to the statements made therein. If any condition to Trident's
obligations hereunder to be fulfilled prior to or at the Closing Date is not so
fulfilled, Trident may terminate this Agreement or, if Trident so elects, may
waive in writing any such conditions which have not been fulfilled, or may
extend the time of their fulfillment. If Trident terminates this Agreement as
aforesaid, the Company and the Bank shall reimburse Trident for its expenses as
provided in Section 3(b) hereof.
8. Indemnification.
---------------
(a) The Company and the Bank jointly and severally agree to indemnify and
hold harmless Trident, its officers, directors and employees and each
person, if any, who controls Trident within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act, against any and all loss,
liability, claim, damage and expense whatsoever and shall further promptly
reimburse such persons for any legal or other expenses reasonably incurred
by each or any of them in investigating, preparing to defend or defending
against any action, proceeding or claim (whether commenced or threatened)
arising out of or based upon (A) any misrepresentation by the Company or
the Bank in
18
this Agreement or any breach of warranty by the Company or the Bank with
respect to this Agreement or arising out of or based upon any untrue or
alleged untrue statement of a material fact or the omission or alleged
omission of a material fact required to be stated or necessary to make not
misleading any statements contained in (i) the Registration Statement or
the Prospectus or (ii) any application (including the Stock Application and
the Form FR Y-3) or other document or communication (in this Section 8
collectively called "Application") prepared or executed by or on behalf of
the Company or the Bank or based upon written information furnished by or
on behalf of the Company or the Bank, whether or not filed in any
jurisdiction, to effect the Conversion or qualify the Shares under the
securities laws thereof or filed with the Administrator or Commission,
unless such statement or omission was made in reliance upon and in
conformity with written information furnished to the Company or the Bank
with respect to Trident by or on behalf of Trident expressly for use in the
Prospectus or any amendment or supplement thereof or in any Application, as
the case may be, or (B) provided such loss, liability, claim, damage or
expense is not caused principally and directly by Trident's gross
negligence or willful misconduct, the participation by Trident in the
Conversion. This indemnity shall be in addition to any liability the
Company and the Bank may have to Trident otherwise.
(b) The Company shall indemnify and hold Trident harmless for any
liability whatsoever arising out of (i) the Allocation Instructions or (ii)
any records of account holders, depositors, borrowers and other members of
the Bank delivered to Trident by the Bank or its agents for use during the
Conversion.
(c) Trident agrees to indemnify and hold harmless the Company and the
Bank, their officers, directors and employees and each person, if any, who
controls the Company or the Bank within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act, to the same extent as the
foregoing indemnity from the Company and the Bank to Trident, but only with
respect to (A) statements or omissions, if any, made in the Prospectus or
any amendment or supplement thereof, in any Application or to a purchaser
of the Shares in reliance upon, and in conformity with, written information
furnished to the Company or the Bank with respect to Trident by or on
behalf of Trident expressly for use in the Prospectus or in any
Application; (B) any misrepresentation by Trident in Section 2(b) of this
Agreement; or (C) any liability of the Company or the Bank which is found
in a final judgment by a court of competent jurisdiction (not subject to
further appeal) to have principally and directly resulted from gross
negligence or willful misconduct of Trident.
(d) Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
this Section 8, notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it
from any liability which it may have to any indemnified party otherwise
than under this Section 8. In case any such action is brought against any
indemnified
19
party, and it notifies the indemnifying party of the commencement thereof,
the indemnifying party will be entitled to participate therein and, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof other than the reasonable cost of investigation except as
otherwise provided herein. In the event the indemnifying party elects to
assume the defense of any such action and retain counsel acceptable to the
indemnified party, the indemnified party may retain additional counsel, but
shall bear the fees and expenses of such counsel unless (i) the
indemnifying party shall have specifically authorized the indemnified party
to retain such counsel or (ii) the parties to such suit include such
indemnifying party and the indemnified party, and such indemnified party
shall have been advised by counsel that one or more material legal defenses
may be available to the indemnified party which may not be available to the
indemnifying party, in which case the indemnifying party shall not be
entitled to assume the defense of such suit notwithstanding the
indemnifying party's obligation to bear the fees and expenses of such
counsel. An indemnifying party against whom indemnity may be sought shall
not be liable to indemnify an indemnified party under this Section 8 if any
settlement of any such action is effected without such indemnifying party's
consent. To the extent required by law, this Section 8 is subject to and
limited by the provisions of Section 23A.
9. Contribution. In order to provide for just and equitable contribution in
------------
circumstances in which the indemnity agreement provided for in Section 8 above
is for any reason held to be unavailable to Trident, the Company and/or the Bank
other than in accordance with its terms, the Company or the Bank and Trident
shall contribute to the aggregate losses, liabilities, claims, damages, and
expenses of the nature contemplated by said indemnity agreement incurred by the
Company or the Bank and Trident (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Bank on the one
hand and Trident on the other from the offering of the Shares or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above, but also the relative fault of the Company or
the Bank on the one hand and Trident on the other hand in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Bank on
the one hand and Trident on the other shall be deemed to be in the same
proportions as the total net proceeds from the Conversion received by the
Company and the Bank bear to the total commissions received by Trident under
this Agreement. The relative fault of the Company or the Bank on the one hand
and Trident on the other shall be determined by reference to, among
20
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Bank or by Trident and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Bank and Trident agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by the indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 9, Trident shall not be required
to contribute any amount in excess of the amount by which commissions owed
Trident pursuant to this Agreement exceeds the amount of any damages which
Trident has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation. To the extent required by law, this Section 8 is subject to
and limited by the provisions of Section 23A.
10. Survival of Agreements, Representations and Indemnities. The respective
-------------------------------------------------------
indemnities of the Company and the Bank and Trident and the representations and
warranties of the Company and the Bank and of Trident set forth in or made
pursuant to this Agreement shall remain in full force and effect, regardless of
any termination or cancellation of this Agreement or any investigation made by
or on behalf of Trident or the Company or the Bank or any controlling person or
indemnified party referred to in Section 8 hereof, and shall survive any
termination or consummation of this Agreement and/or the issuance of the Shares,
and any legal representative of Trident, the Company, the Bank and any such
controlling persons shall be entitled to the benefit of the respective
agreements, indemnities, warranties and representations.
11. Termination. Trident may terminate this Agreement by giving the notice
-----------
indicated below in this Section at any time after this Agreement becomes
effective as follows:
(a) If any domestic or international event or act or occurrence has
materially disrupted the United States securities markets such as to make
it, in Trident's reasonable opinion, impracticable to proceed with the
offering of the Shares; or if trading on the New York Stock Exchange shall
have suspended; or if the United States shall have become involved in a war
or major hostilities; or if a general banking moratorium has been declared
by a state or federal authority which has a material effect on the Bank or
the Conversion; or if a moratorium in foreign exchange trading by major
international banks or persons has been declared; or if there shall have
been a material change in the capitalization, condition or business of the
Company, or if the Bank shall have sustained a material or
21
substantial loss by fire, flood, accident, hurricane, earthquake, theft,
sabotage or other calamity or malicious act, whether or not said loss shall
have been insured; or if there shall have been a material adverse change in
the condition or prospects of the Company or the Bank.
(b) If Trident elects to terminate this Agreement as provided in this
Section, the Company and the Bank shall be notified promptly by Trident by
telephone or telegram, confirmed by letter.
(c) If this Agreement is terminated by Trident for any of the reasons set
forth in subsection (a) above, and to fulfill its obligations, if any,
pursuant to Sections 3(b) and (c), 6, 8(a) and 9 of this Agreement and upon
demand, the Company and the Bank shall pay Trident the full amount so owing
thereunder.
(d) The Bank may terminate the Conversion in accordance with the terms of
the Plan. Such termination shall be without liability to any party, except
that the Company and the Bank shall be required to fulfill their
obligations, if any, pursuant to Sections 3(b) and (c), 6, 8(a) and 9 of
this Agreement.
12. Notices. All communications hereunder, except as herein otherwise
-------
specifically provided, shall be in writing and if sent to Trident shall be
mailed, delivered or telegraphed and confirmed to Trident Securities, Inc., 0000
Xxx Xxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxx Xxxxxxxx 00000, Attention: Mr. R. Xxx
Xxxxxxx, Xx. (with a copy to Xxxxxxx Xxxx & Friedrich LLP, 000 Xxxx Xxxxxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, Attention: W. Xxxxxxx Xxxxxxx, Esquire) and
if sent to the Company or the Bank, shall be mailed, delivered or telegraphed
and confirmed to First Community Financial Corporation, 000 Xxxxx Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000, Attention: Xx. Xxxxxxx X. Xxxxxxx, President
(with a copy to Brooks, Pierce, XxXxxxxx, Xxxxxxxx & Xxxxxxx, L.L.P., X.X. Xxx
00000, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxxxxx,
Esquire).
13. Parties. This Agreement shall inure solely to the benefit of, and shall be
-------
binding upon, Trident, the Company, the Bank and the controlling and other
persons referred to in Section 8 hereof, and their respective successors, legal
representatives and assigns, and no other person shall have or be construed to
have any legal or equitable right, remedy or claim under or in respect of or by
virtue of this Agreement or any provision herein contained; provided, however,
that the Bank and Company specifically consent to any assignment by Trident of
its rights and obligations hereunder to McDonald Investments, Inc.
14. Construction. Unless governed by preemptive federal law, this Agreement
------------
shall be governed by and construed in accordance with the substantive laws of
North Carolina.
22
15. Counterparts. This Agreement may be executed in separate counterparts,
------------
each of which when so executed and delivered shall be an original, but all of
which together shall constitute but one and the same instrument.
* * *
Please acknowledge your agreement to the foregoing by signing below and
returning to the Company one copy of this letter.
FIRST COMMUNITY FINANCIAL COMMUNITY SAVINGS BANK, SSB
CORPORATION
By:__________________________ By:________________________________
Xxxxxxx X. Xxxxxxx Xxxxxxx X. Xxxxxxx
President and Chief President and Chief
Executive Officer Executive Officer
Date: April ____, 1999 Date: April ___, 1999
Agreed to and accepted:
TRIDENT SECURITIES, INC.
By:__________________________
Date: April ____, 1999
23
Exhibit A
Trident Securities, Inc. is a registered selling agent in the jurisdictions
--
listed below:
Alabama Missouri
Alaska Montana
Arizona Nebraska
Arkansas Nevada
California New Hampshire
Colorado New Jersey
Connecticut New Mexico
Delaware New York
District of Columbia North Carolina
Florida North Dakota (Trident Inc. Georgia
Securities, only, no agents)
Ohio
Idaho Oklahoma
Illinois Oregon
Indiana Pennsylvania
Iowa Rhode Island
Kansas South Carolina
Kentucky Tennessee
Louisiana Texas
Maine Vermont
Maryland Virginia
Massachusetts Washington
Michigan Tennessee
Minnesota Utah
Mississippi Wisconsin
Wyoming
Trident Securities, Inc. is not a registered selling agent in the jurisdictions
listed below:
Hawaii
South Dakota
24
Exhibit B
Matters to be Addressed in Section 7(a) Opinion
-----------------------------------------------
(i) the Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of North Carolina;
the Bank has been duly organized and is validly existing as a mutual
savings bank under the laws of the State of North Carolina; Community
Financial Services, Inc. (the "Subsidiary") has been duly organized and is
validly existing as a corporation in good standing under the laws of the
State of North Carolina; and the Company, the Bank and the Subsidiary have
full power and authority to own their properties and conduct their
businesses as described in the Prospectus;
(ii) the Bank is a member of the Federal Home Loan Bank of Atlanta, and
the deposit accounts of the Bank are insured by the SAIF up to the
applicable legal limits, and to our Actual Knowledge, no actions or
proceedings are pending or threatened to revoke such membership or
insurance coverage;
(iii) to our Actual Knowledge, the Bank has no direct or indirect
subsidiary corporations, except for the Subsidiary;
(iv) neither the Company nor the Bank is required to be registered as an
investment company under the Investment Company Act of 1940;
(v) the Company, the Bank and the Subsidiary are each duly qualified to
do business and are in good standing as a foreign corporation in each
jurisdiction where the ownership or leasing of its properties or the
conduct of its business of which such we have Actual Knowledge requires
such qualification, unless the failure to be so qualified would not
reasonably be expected to have a material adverse effect on the business,
operations or financial condition of the Company and the Bank, taken as a
whole (a "Material Adverse Effect");
(vi) to our Actual Knowledge, each of the Company, the Bank and the
Subsidiary has obtained all licenses, permits and other governmental
authorizations required for the conduct of its business as described in the
Prospectus, except where the failure to obtain such licenses, permits or
governmental authorizations would not reasonably be expected to have a
Material Adverse Effect; to our Actual Knowledge, all of the leases and
subleases material to the business of the Company, the Bank or the
Subsidiary under which the Company, the Bank or the Subsidiary holds
properties are in full force and effect; to our Actual Knowledge, neither
the Company, the Bank, nor the Subsidiary is in violation of its charter or
bylaws;
25
(vii) the Plan has been duly adopted and approved by the Boards of
Directors of the Bank and the Company and the members of the Bank; the Plan
complies with, and to our Actual Knowledge, the Conversion has been
effected in all material respects in accordance with, applicable North
Carolina law, the regulations of the Administrator and the applicable
Administrator approvals issued thereunder; to our Actual Knowledge, all of
the terms, conditions, requirements and provisions with respect to the
filing or submission of certain required reports or other materials by the
Company or the Bank have been complied with by the Company and the Bank in
all material respects except for reports and items required to be filed or
submitted after the Closing Date; and, to our Actual Knowledge, no person
has sought to obtain regulatory or judicial review of the final action of
the Administrator in approving the Plan;
(viii) the Company has authorized Common Stock as set forth in the
Registration Statement and the Prospectus, the description thereof in the
Registration Statement and the Prospectus is accurate and complete in all
material respects, and, upon issuance of the Shares pursuant to the
Company' instructions, the outstanding capital stock of the Company will be
within the range set forth in the Registration Statement and Prospectus;
(ix) upon the filing of the Bank's Stock Charter in accordance with North
Carolina law and the completion of the sale by the Company of the Shares as
contemplated by the Prospectus and Plan, (a) the Bank will be converted
pursuant to the Plan to a North Carolina-chartered capital stock savings
bank with full power and authority to own its property and conduct its
business as described in the Prospectus, and (b) all of the outstanding
capital stock of the Bank will be owned of record and, to our Actual
Knowledge, beneficially by the Company free and clear of all liens,
charges, encumbrances and restrictions;
(x) the issuance and sale of the Shares have been duly authorized by all
necessary corporate action on the part of the Company; the Shares, upon
receipt of consideration and issuance in accordance with the terms of the
Plan and this Agreement, will be validly issued, fully paid, nonassessable
and free of preemptive rights; and purchasers of such shares from the
Company, upon issuance thereof against payment therefor, will acquire such
shares free and clear of all claims, encumbrances, security interests and
liens created by the Company;
(xi) the certificates for the Shares comply in all material respects with
the applicable law of North Carolina and the form of certificate used to
evidence the Shares is in due and proper form;
(xii) the issuance and sale of the capital stock of the Bank to the
Company have been duly authorized by all necessary corporate action of the
Bank and the Company and have received the approval of the Administrator
and FRB, and such capital stock, upon receipt of payment and issuance in
accordance with the terms of the Plan, will be validly issued,
26
fully paid and nonassessable and free of preemptive rights; the Company
upon issuance thereof against payment to the Bank of a portion of the net
proceeds from the sale of the Shares, will acquire such shares which, to
our Actual Knowledge, are free and clear of all claims, encumbrances,
security interests and liens whatsoever;
(xiii) subject to the satisfaction of the conditions to the Administrator
and FRB approval of the Conversion Application and the non-objection of the
FDIC to the Stock Application, no further approval, authorization, consent
or other order of any regulatory agency is required in connection with the
execution and delivery of this Agreement, the issuance and sale of the
Shares and the consummation of the Conversion, except for the
Administrator's approval of the Bank's Stock Charter and filing of the
Bank's Stock Charter with the North Carolina Secretary of State, and except
as may be required under the blue sky securities laws of various
jurisdictions and the regulations of the NASD (as to which no opinion need
be rendered in such letter);
(xiv) the execution and delivery of this Agreement and the consummation of
the Conversion have been duly authorized by all necessary corporate action
on the part of each of the Company and the Bank, and this Agreement is a
legal, valid and binding obligation of each of the Company and the Bank,
enforceable in accordance with its terms except as the enforceability
thereof may be limited by (i) bankruptcy, insolvency, moratorium,
reorganization, receivership, conservatorship or other similar laws
relating to or affecting the enforcement of creditors' rights generally or
the rights of creditors of depository institutions whose accounts are
insured by the FDIC or savings and loan holding companies the accounts of
whose subsidiaries are insured by the FDIC; (ii) general equity principles,
regardless of whether such enforceability is considered in a proceeding in
equity or at law, or (iii) laws relating to the safety and soundness of
insured depository institutions and their affiliates, and except to the
extent that the provisions of Sections 8 and 9 hereof may be unenforceable
as against public policy or applicable law, including but not limited to,
Section 23A;
(xv) except as set forth in the Prospectus, to our Actual Knowledge, the
Bank is not in violation of any directive from the FDIC or Administrator to
make any change in the method of conducting its business and there are no
legal or governmental proceedings pending or threatened against or
involving the assets of the Company or the Bank, which violation or
proceedings would reasonably be expected to have a Material Adverse Effect
(provided that for this purpose we do not regard any litigation or
governmental proceeding to be "threatened" unless the potential litigant or
government authority has manifested to the management of the Company or the
Bank, or to us, a present intention to initiate such litigation or
proceeding);
(xvi) the statements in the Prospectus under the captions "Supervision and
Regulation," "Taxation," "Dividend Policy," "Anti-Takeover Provisions
Affecting First Community and Community Savings" "Historical and Pro Forma
Capital Compliance" and
27
"Description of Capital Stock," insofar as they are, or refer to,
statements of North Carolina or federal law or legal conclusions (excluding
financial or statistical data or stock valuation information included
therein, as to which an opinion need not be expressed), have been prepared
or reviewed by us and are accurate in all material respects; further, the
information under the caption "The Conversion - Income Tax Consequences"
has been reviewed by us and constitutes a correct summary, in all material
respects, of the opinion rendered by us to the Bank and Company with
respect to the federal and state tax consequences of the Conversion;
(xvii) the Stock Application and Acquisition Application have been
approved by the Administrator, the FR Y-3 has been approved by the FRB; the
FDIC has given its notice of non-objection to the Stock Application; the
Proxy Statement has been authorized for use by the Administrator; the
Registration Statement and any post-effective amendment thereto have been
declared effective by the Commission; and no proceedings are pending by or
before the Commission, the Administrator, the FRB or the FDIC seeking to
revoke or rescind the orders declaring the Registration Statement or any
post-effective amendment thereto effective or approving (or issuing a non-
objection with respect to) the Stock Application, Acquisition Application
or the FR Y-3 and, to our Actual Knowledge, no such proceedings are
contemplated or threatened (provided that for this purpose we do not regard
any litigation or governmental proceeding to be "threatened" unless the
potential litigant or government authority has manifested to the management
of the Company or the Bank, or to us, a present intention to initiate such
litigation or proceeding); the Employee Stock Ownership Plan is not
required to register as a holding company;
(xviii) the execution and delivery of this Agreement and the consummation
of the Conversion by the Company and the Bank do not (i) violate or
conflict with the charter, certificate of incorporation or bylaws of the
Company, the Bank (in either mutual or stock form) or the Subsidiary, (ii)
our Actual Knowledge, constitute a breach of or default (or an event which,
with notice or lapse of time or both, would constitute a default) under,
give rise to any right of termination, cancellation or acceleration
contained in, or result in the creation or imposition of any lien, charge
or other encumbrance upon any of the properties or assets of the Company,
the Bank or the Subsidiary pursuant to any of the terms, provisions or
conditions of, any agreement, contract, indenture, bond, lease, debenture,
note, instrument or obligation to which the Company, the Bank or the
Subsidiary is a party (other than the required establishment of the
liquidation account pursuant to the Plan) which in any such event would
reasonably be expected to result in a Material Adverse Effect or (iii)
violate the applicable North Carolina laws and regulations applicable to
the Conversion or FDIC regulations applicable to the Conversion or, to our
Actual Knowledge, any law, administrative regulation, court order, writ,
injunction or decree (subject to the satisfaction of certain post-closing
conditions imposed by the Administrator, FRB and FDIC in connection with
the approvals of, or notices of non-objection to, the Stock Application,
the Acquisition Application or the FRY-3);
28
(xix) to our Actual Knowledge, there has been no violation of any provision
of the Company's, the Bank's or the Subsidiary's charter, certificate of
incorporation, articles of incorporation or bylaws or breach or default (or
the occurrence of any event which, with notice or lapse of time or both,
would constitute a default) by the Company, the Bank or the Subsidiary
under any agreement, contract, indenture, lease, bond, debenture, note,
instrument or obligation to which the Company, the Bank or the Subsidiary
is a party or by which any of them or any of their respective assets or
properties may be bound, or violation of any license, permit, law,
administrative regulation or order, court order, injunction or decree which
violation, breach or default would reasonably be expected to have a
Material Adverse Effect;
(xx) The Stock Application, the Acquisition Application, the FR Y-3, the
Registration Statement, the Prospectus and the Proxy Statement, in each
case, as amended and supplemented, comply as to form in all material
respects with the requirements of the Act, the SEC Regulations and the
rules and regulations and written and published decisions and orders of the
Administrator, the FRB and the FDIC, as the case may be (except as to
information provided in writing by Trident with respect to Trident included
therein and financial statements, notes to financial statements, financial
tables and other financial and statistical data and appraisal information
included therein, as to which no opinion need be rendered); to our Actual
Knowledge, all documents and exhibits required to be filed with the
Conversion Application and the Registration Statement have been so filed;
and the descriptions in the Conversion Application and the Registration
Statement of such documents and exhibits are accurate and complete in all
material respects.
29
Exhibit C
Matters to be Addressed in Section 7(b) Opinion
-----------------------------------------------
You have asked us whether anything has come to our Actual Knowledge that
would lead us to believe (i) that the Registration Statement, as amended or
supplemented (except the financial statements, notes to financial statements,
financial tables and other financial and statistical data, including the
appraisal prepared by Xxxxxxxx & Company ("Xxxxxxxx") contained or described
therein, with respect to which we make no comment), at the time it became
effective, contained an untrue statement of material fact or omitted 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, or (ii) that the Prospectus, as amended or supplemented (except the
financial statements, notes to financial statements, financial tables and other
financial and statistical data, including the appraisal prepared by Xxxxxxxx,
contained or described therein, with respect to which we make no comment) as of
the date the Registration Statement became effective or as of the date thereof
or as of the Closing Date, contained or contains any untrue statement of a
material fact or omitted or omits 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.
While we cannot opine as to factual matters, we have participated, in the
course of serving as special counsel to the Bank and the Company, in discussions
and conferences with certain officers and other representatives of the Bank and
the Company, representatives of independent accountants of the Bank and the
Company, and your representatives and special counsel, at which times the
contents of the Registration Statement and the Prospectus were discussed and
drafts of those documents were reviewed and revised.
In response to your request, we can advise you that, although we have not
independently investigated or verified the correctness and completeness of all
of the information included in the Registration Statement, as amended or
supplemented, or the Prospectus, as amended or supplemented, nothing has come to
our Actual Knowledge in the course of our review of the Registration Statement
and the Prospectus and participation in the discussions in connection with the
preparation of those documents or otherwise which has caused us to believe that
the Registration Statement, as amended or supplemented, at the time it became
effective, contained an untrue statement of material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
made therein in light of the circumstances under which they were made not
misleading, or that the Prospectus, as amended or supplemented, at the date the
Registration Statement was declared effective or as of the date thereof or as of
the Closing Date, contained or contains any untrue statement of a material fact
or omitted or omits 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.
30
However, the character of the factual determinations involved in the
registration and offering processes is such that we do not assume any
responsibility for the accuracy, completeness, or fairness of such factual
statements as contained in the Registration Statement or the Prospectus. In
addition, we express no view or belief as to any information concerning or
provided by you or your affiliates, or as to any financial statements, notes to
financial statements, financial tables and other financial and statistical data,
including the appraisal prepared by Xxxxxxxx, contained or described in the
Registration Statement or the Prospectus.
We state no belief regarding whether the Conversion and/or any one or more
of the transactions or agreements contemplated in the Plan could or will be
affected in any way by any pending administrative or legal proceedings involving
the conversion of any other mutual savings institution to stock form under
applicable North Carolina laws and regulations. We note that the conversions of
certain North Carolina state savings banks from mutual to stock form and their
related mergers with commercial banks under North Carolina laws and regulations
have been challenged in administrative and legal proceedings by members of those
institutions as being improperly conducted, in breach of the duties of the
officers and directors of those institutions to the members of such institutions
and/or otherwise invalid or improper.
31
