Exhibit 1.1
157,000 - 329,000 SHARES
NORTHERN STAR FINANCIAL, INC.
COMMON STOCK
AGENCY AGREEMENT
_________________, 1998
BANC STOCK FINANCIAL SERVICES, INC.
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxx 00000
ATTN: XX. XXXXXXX X. XXXXXX
PRESIDENT
Dear Sirs:
Northern Star Financial, Inc., a Minnesota corporation (the "Company"),
proposes to issue and sell a minimum of 157,000 and a maximum of 329,000 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-1
registered offering. The Shares will be offered to the public by the Company at
a price of $10.00 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 ("Banc Stock") to
participate in the sale of the Shares as the underwriter exercising its best
efforts to sell the Shares.
SECTION 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to and agrees with Banc Stock that:
(a) A registration statement on Form SB-1 (File No. 333-__________)
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 ______________________, 1998. 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.
(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 Banc Stock
expressly for use in the Registration Statement.
(c) Each of the Company and its subsidiary, Northern Star Bank (the
"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 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. Neither the Company nor the Bank have
any properties or conduct any business outside of the State of Minnesota which
would require either of them to be qualified as a foreign corporation or bank,
as the case may be, in any jurisdiction outside of Minnesota. Neither the
Company nor the Bank has any directly or indirectly held subsidiary other than
the Bank. 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
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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 0 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 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,
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. 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) The Common Stock purchase warrants to be issued to Banc Stock (the
"Warrants") and the Common Stock to be issued upon exercise of the Warrants are
duly authorized, and the Common Stock when issued and delivered pursuant to this
Agreement, will be duly authorized, validly issued, fully paid and
non-assessable and free of pre-emptive rights of any security holder of the
Company. 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
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described in the Registration Statement.
(i) This Agreement has been duly and validly authorized, executed and
delivered by the Company. The Company has full power and lawful authority to
issue and sell the shares of Common Stock to be sold by it upon exercise of the
Warrants (the "Warrant Shares") on the terms and conditions set forth herein,
and no consent, approval, authorization or other order of any governmental
authority is required in connection with such authorization, execution and
delivery or with the authorization, issue and sale of the Warrant Shares or the
Warrants, except such as may be required under the 1933 Act or state securities
laws.
(j) Ten (10) 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 for the Warrants and the stock options described in
the Registration Statement (the "Stock Options").
(k) 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 presents
the information shown therein and has 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-1
or otherwise to be included in the Registration Statement or the Prospectus. The
unaudited pro forma combined financial information (including the related notes)
included in the Prospectus complies as to form in all material respects to the
applicable accounting requirements of the 1933 Act and the 1933 Act Regulations
and management of the Company believes that the assumptions underlying the pro
forma adjustments are reasonable. Such pro forma adjustments have been properly
applied to the historical amounts in the compilation of the information and such
information fairly presents with respect to the Company the pro forma financial
position, results of operations and other information purported to be shown
therein at the respective dates and for the respective periods specified.
(l) Xxxxxxx Xxxxxx & Co., LLP, who have examined and are reporting upon
the audited financial statements and schedules included in the Registration
Statement, are, and were during the periods covered by their Reports included in
the Registration Statement and the
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Prospectus, independent public accountants, as required by the 1933 Act and the
1933 Act Regulations.
(m) 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 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.
(n) Neither the Company nor 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.
(o) Except as described in the Prospectus, there is not pending or, to
the best knowledge of the Company after reasonable investigation, 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.
(p) 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
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Registration Statement which are not described or filed as required. To the best
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 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.
(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 have 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 Company which if
determined adversely to the Company, could materially adversely
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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
not authorized or conducted nor has 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; to the knowledge of the Company, the Real
Property and the Company's operations with respect to the Real Property are in
compliance with all federal, state and local laws, ordinances, rules,
regulations and other governmental requirements relating to pollution, control
of chemicals, management of waste, discharges of materials into the environment,
health, safety, natural resources, and the environment (collectively,
"Environmental Laws"), and the Company has, and is in compliance with, all
licenses, permits, registrations and government authorizations necessary to
operate under all applicable Environmental Laws. Except as otherwise disclosed
in the Prospectus, the Company has not received any written or oral notice from
any governmental entity or any other person and there is no pending or
threatened claim, litigation or any administrative agency proceeding that:
alleges a violation of any Environmental Laws by the Company; alleges that the
Company is a liable party or a potentially responsible party under the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
S 9601, et seq., or any state superfund law; has resulted in or could result in
the attachment of an environmental lien on any of the Real Property; or, alleges
that the Company is liable for any contamination of the
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environment, contamination of the Real Property, damage to natural resources,
property damage, or personal injury based on their activities or the activities
of their predecessors or third parties (whether at the Real Property or
elsewhere) involving Hazardous Materials whether arising under the Environmental
Laws, common law principles or other legal standards.
(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 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.
(bb) 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 _____________, 1998, pursuant to Order No.
____________________ (the "DOC Order)." All conditions contained in the DOC
Order required to be satisfied before the date of this Agreement 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 ___________________, 1998 (the "FDIC Order"), subject to certain
conditions specified in the Order. All conditions contained in the FDIC Order
required to be satisfied before the date of this Agreement 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
_______________, 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 required to be satisfied before the date of
this Agreement 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. Other than the remaining
conditions to be fulfilled under the DOC Order, FDIC Order and the Federal
Reserve Board Approval specified above, no authorization, approval, consent,
order, license, certificate or permit of and from any federal, state, or local
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governmental or regulatory official, body, or tribunal, is required for the
Company or the Bank to commence and 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 Banc Stock shall be deemed a representation and
warranty of the Company as to the matters covered thereby.
SECTION 2. CERTAIN COVENANTS OF THE COMPANY. The Company covenants and
agrees with Banc Stock 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 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
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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 D 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) The Company will make generally available to its security holders
as soon as practicable, but in any event not later than the end of the fiscal
quarter first occurring after the first anniversary of the "effective date of
the Registration Statement" (as defined in Rule 158(c) of the 1933 Act
Regulations), an earnings statement complying with the provisions of Section
11(a) of the 1933 Act and Rule 158 thereunder and covering a period of at least
twelve (12) months beginning after the effective date of the Registration
Statement.
(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
unaudited quarterly reports of operations for each of the first three quarters
of the fiscal year. During a period of five (5) 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 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 five (5)-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
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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 use its best efforts to arrange to have its shares
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) The Company will file timely and accurate reports on Form SR with
the Commission in accordance with Rule 463 of the 1933 Act Regulations or any
successor provision.
(l) 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 liabilities of
the Company, or the offering of the Shares, without your prior written input
within 72 hours which consent shall not be unreasonably withheld.
(m) 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.
(n) The Company will reserve and keep available that maximum number of
its authorized but unissued shares of Common Stock which are issuable upon
exercise of the
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Warrants outstanding from time to time. The Warrants will be substantially in
the form attached hereto as Exhibit A.
(o) 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-Q quarterly report and the mailing of quarterly
financial information to Stockholders.
(p) As promptly as practicable after the closing of the Offering, the
Company will prepare, at its own expense, hard cover "bound volumes" relating to
the Offering, and will distribute such volumes to the individuals designated by
you.
(q) The Company shall acquire all of the Bank's outstanding capital
stock, free and clear of all liens, encumbrances, or other claims or
restrictions whatsoever, for not less than $1,570,000 from the proceeds of the
Offering and, in all other material respects, apply the net proceeds from the
Offering in the manner set forth under "Use of Proceeds" in the Prospectus.
(r) The Company shall cause the proper submission of such certificates
and notices necessary, and shall in all other respects use reasonable efforts,
to comply with the requirements of, and satisfy the conditions of, the DOC
Order, the FDIC Order and the Federal Reserve Board Approval, which are required
to be complied with prior to the Bank commencing the business of banking.
(s) For a period of one (1) year from the date of this Agreement, the
Company will provide Banc Stock with a right of first refusal to serve as a
managing underwriter on any public or private financing (debt or equity), or act
as an advisor on any merger, business combination, recapitalization or sale of
some or all of the equity or assets of the Company (collectively, the "future
services"). In the event Banc Stock is engaged by the Company to provide such
future services, Banc Stock will be compensated as is reasonable and customary
within the industry.
SECTION 3. ENGAGEMENT, COMPENSATION AND PAYMENT OF EXPENSES.
(a) (i) Subject to the terms and conditions of this Agreement, the
Company hereby engages Banc Stock from the date hereof until
__________, 1998, on a "best efforts" basis, as the
Company's exclusive agent in connection with the sale of a
minimum of 157,000 Shares up to a maximum of 329,000 Shares.
Each of Banc Stock and the Company agree to comply with the
terms of that certain Escrow Agreement (the "Escrow
Agreement") by and among the Company, Banc Stock, and United
Bankers Bank (the "Escrow Agent") dated _________, 1998.
(The Escrow Agreement is attached hereto as Exhibit B and is
incorporated
-12-
herein by this reference.) The minimum amount of each sale
shall be 100 Shares. The maximum amount of any sale shall
not exceed 4.9% of the total number of Shares sold in the
Offering.
(ii) The price at which Banc Stock shall sell the Shares, as
agent for the Company, shall be $10.00 per share, and,
except with respect to the Company Directed Shares (as
defined hereinbelow), the Company shall pay to Banc Stock a
commission of $0.65 per share. The Company shall pay to Banc
Stock a commission of $0.55 per share for each Company
Directed Share (up to a maximum of 100,000 shares). All
subscriptions shall be subject to Banc Stock's acceptance,
and Banc Stock shall have the right in its sole discretion
to accept or reject any subscription, and to allocate Shares
among subscribers. Banc Stock may form a group of securities
dealers (the "Selected Dealers") pursuant to a Selected
Dealer Agreement to find subscribers for the Shares.
However, failure to engage any Selected Dealers shall not
constitute a failure to discharge its duties under this
Agreement. The allocation of Shares among Banc Stock and the
Selected Dealers shall be made by Banc Stock. "Company
Directed Shares" means those Shares subscribed to by the
persons listed on Exhibit C to this Agreement.
(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) Banc Stock shall use its best efforts to assist the Company
in making sales of the Shares pursuant to the Offering. Banc
Stock 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 Banc Stock. In the event
that the minimum 157,000 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) Banc Stock will only offer the Shares in those states listed
on Exhibit D to this Agreement.
(b) Banc Stock shall offer the Shares pursuant to the Prospectus.
(c) As an incentive for Banc Stock to perform its services in a timely
manner,
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Warrants shall be issued to Banc Stock or its designees as described in Section
0 hereof.
(d) 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 any Selected Dealers Agreement,
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 0 of this Agreement and any filing for review of
the offering with the National Association of Securities Dealers, Inc.,
including filing fees and fees and disbursements of your counsel in connection
therewith and in connection with the Blue Sky Memoranda, (vi) all costs, fees
and expenses in connection with the application for quotation of the Shares on
the OTC Bulletin Board, (vii) costs related to travel and lodging incurred by
the Company and its representatives relating to meetings with and presentations
to prospective purchasers of the Shares reasonably determined by you to be
necessary or desirable to effect the sale of the Shares to the public, (viii)
Banc Stock's out-of-pocket expenses (up to a maximum of $15,000) and legal fees
(up to a maximum of $20,000), (ix) costs and expenses incident to the
performance of the Company's obligations under the Escrow Agreement, and (x) 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 4. OPINION OF COUNSEL AND OTHER CONDITIONS.
As a condition to the performance of your duties and obligations
hereunder, you shall have received a favorable opinion of Xxxxxxxxxxx & Xxxxx,
P.A. counsel for the Company in form and substance satisfactory to counsel for
you, to the effect that:
(a) 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 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. To the best of such counsel's
knowledge after due inquiry and reasonable investigation, there are no other
jurisdictions in which the ownership or leasing of the Company's or Bank's
properties or the nature or conduct of their businesses as now conducted or
proposed to be conducted as described in the Registration Statement and the
Prospectus requires such qualification, except where the failure to do so would
not have a material adverse effect on the Company. To such counsel's best
knowledge after due inquiry and reasonable investigation, neither the Company or
the Bank owns or controls, directly or indirectly, any corporation,
-14-
association or other entity (except for the Bank in the case of the Company).
(b) 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 0 of this Agreement may be limited by federal or state
securities laws or the public policy underlying such laws.
(c) 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 and the execution, delivery and performance of this Agreement has
been made or obtained and is in full force and effect.
(d) 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 incorporation or by-laws of
the Company, or, to such counsel's best knowledge after due inquiry and
reasonable investigation, 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 best knowledge after due inquiry and reasonable
investigation, violate any applicable statute, judgment, decree, order, rule or
regulation of any court or governmental agency or body; or, to such counsel's
best knowledge after due inquiry and reasonable investigation, result in the
creation or imposition of any lien, charge, claim or encumbrance upon any
property or asset of any of the foregoing.
(e) 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-1
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.
(f) The Warrants and the Shares to be issued pursuant to the Offering
have been validly authorized by the Company. When issued and delivered, the
Shares and Warrant Shares will be validly issued, fully paid and nonassessable.
No preemptive rights of shareholders exist with respect to any of the Shares. To
such counsel's best knowledge after due inquiry and reasonable investigation, 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
-15-
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 best knowledge after due inquiry and reasonable
investigation, 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.
(g) 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. At the date of this Agreement, the Company has ten (10) issued
and outstanding shares of capital stock, all of which are Common Stock. The
Common Stock conforms in all material respects to the description of the Common
Stock contained in the Prospectus. To the best knowledge of such counsel after
due inquiry and reasonable investigation, 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.
(h) To the best knowledge of such counsel after due inquiry and
reasonable investigation, neither the Company nor the Bank is in violation of
its articles of incorporation or charter, as applicable, or by-laws, and 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 best knowledge of such counsel after due inquiry and reasonable
investigation, 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 material adverse
effect on the financial position, results of operations or business of each such
entity, respectively.
(i) To such counsel's best knowledge after due inquiry and reasonable
investigation and 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.
(j) 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
-16-
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 best knowledge after due inquiry and reasonable justification,
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.
(k) The Registration Statement has become effective under the 1933 Act
and 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-1 under the 1933 Act Regulations.
(l) The Registration Statement, or any further amendment thereto made
prior to the date hereof, on its effective date, contained or contains no untrue
statement of a material fact and did not omitted or does not 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,
or neither the Prospectus nor any amendment or supplement thereto, as of its
issue date, contained or contains any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading (provided that such counsel need express no belief regarding the
financial statements and related schedules and other financial data contained in
the Registration Statement, any amendment thereto, or the Prospectus, or any
amendment or supplement thereto).
(m) The Company is not an "investment company," or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act.
(n) 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.
(o) To such counsel's best knowledge after due inquiry and reasonable
investigation, no relationship, direct or indirect, exists between or among any
of the Company or any affiliate
-17-
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.
(p) All sales by the Company of the Company's securities prior to the
date hereof were at all relevant times duly registered under or effected in a
manner which was exempt from the registration requirements of the 1933 Act and
were duly registered in accordance with or the subject of an available exemption
from the registration requirements of the applicable blue sky laws. The Company
has not 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.
In rendering the foregoing opinion, such counsel may rely on the
following:
(i) 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,
(ii) 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.
SECTION 5. WARRANTS. The Company will issue one (1) warrant certificate
(a "Certificate") in favor of Banc Stock in the amount of 10,000 Warrants
substantially in the form attached hereto as Exhibit A. Each Warrant entitles
the holder thereof to purchase one (1) fully paid and nonassessable share of
Common Stock of the Company at any time from _________________, 1998 through
____________________,2003. With regard to the Warrants, the parties agree as
follows:
(a) Payment of Taxes. The Company will pay all documentary stamp taxes,
if any, attributable to the issuance and delivery of the shares upon the
exercise of the Warrants; provided, however, that the Company shall not be
required to pay any taxes which may be
-18-
payable in respect of any transfer involved in the issuance or delivery of any
Warrant or any shares in any name other than that of Banc Stock, which transfer
taxes shall be paid by the holder thereof.
(b) Compliance with Securities Laws. The Warrants and the shares
issuable upon the exercise of the Warrants have not been and will not be
registered under the 1933 Act, or under any state or blue sky laws, and the
Warrants may not be exercised unless the Warrants and the shares issuable upon
the exercise of the Warrants have been registered under the 1933 Act and any
applicable state or blue sky laws or exemptions from the registration
requirements under the 1933 Act and any applicable state or blue sky laws are
available.
(c) Transfer of Warrants. The Warrants shall be transferrable only on
the books of the Company maintained at the Company's principal office upon
delivery of the Certificate with a form of assignment attached thereto duly
completed and signed by Banc Stock (or any subsequent registered holder of the
Warrants) or by its duly authorized attorney or representative, or accompanied
by proper evidence of succession, assignment or authority to transfer.
(d) Exchange and Replacement of Certificate; Loss or Mutilation of
Certificate.
(i) The Certificate is exchangeable without expense, upon the
surrender thereof by the holder thereof at the principal
office of the Company for a new certificate of like tenor
and date representing in the aggregate the right to purchase
the same number of shares in such denomination as shall be
designated by the holder thereof at the time of such
surrender.
(ii) Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or
mutilation of the Certificate and, in case of such loss,
theft or destruction of indemnity and security reasonably
satisfactory to it, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender
and cancellation of the Certificate, if mutilated, the
Company will make and deliver a new Certificate of like
tenor, in lieu thereof.
(e) Subdivision and Combination. In the event that the Company shall at
any time after the initial issuance date of the Warrants and before the exercise
or expiration of all the Warrants, subdivide or combine the outstanding shares
of Common Stock or declare a dividend consisting solely of shares of Common
Stock, the Purchase Price (as defined in the Certificate) shall forthwith be
proportionately (based on the change in the fully-diluted number of shares of
Common stock outstanding assuming the grant of all available options under then
existing stock option plans, and the exercise and conversion of all outstanding
options, warrants and convertible securities immediately before such subdivision
or combination) decreased in the case of a subdivision or increased in the case
of a combination.
-19-
(f) Adjustment in Number of Shares. (i) Upon each adjustment of the
Purchase Price pursuant to the provisions of this Section 0, the number of
shares issuable upon the exercise of the Warrants held of record by the holder
thereof shall be adjusted to the nearest full share by multiplying a number
equal to the Purchase Price in effect immediately prior to such adjustment by
the number of shares issuable upon exercise of the Warrants immediately prior to
such adjustment and dividing the product so obtained by the adjusted Purchase
Price. (ii) On the happening of an event requiring an alteration or adjustment
of the shares purchasable upon exercise of the Warrants, or an alteration or
adjustment of their number of designation, the Company shall give written notice
to the registered holder or holders of the Warrants stating the adjusted number,
designation and kind of securities or other property obtainable upon exercise of
the Warrants as a result of and following the event. The notice shall set forth
in reasonable detail the method of calculation determining the securities or
property obtainable after the event, and the facts upon which the calculation is
based. The Company's Board of Directors, acting in good faith, shall determine
the calculation.
(g) Adjustment for Reclassification, Consolidation, Merger, Sale or
Conveyance.
(i) In the event of any reclassification or change in the kind
of the outstanding shares of Common Stock into different
securities (other than a change in the number of outstanding
shares or a change in par value to no par value, or from no
par value to par value, or as a result of a subdivision or
combination), or in the event of any consolidation of the
Company with, or merger of the Company into, another
corporation (other than a consolidation or merger in which
the Company is the surviving corporation and which does not
result in any reclassification or change in the kind of the
outstanding shares of Common stock into different
securities, except a change as a result of a subdivision or
combination of such shares or a change in the number of
outstanding shares or a change in par value, as aforesaid),
or in the case of a sale or conveyance to another
corporation of all or substantially all of the assets of the
Company, or in the event of a statutory share exchange
pursuant to which outstanding shares of Common Stock are
exchanged for different securities, after the initial
issuance date of the Warrants and before the Expiration Date
(as defined in the Certificate), the holder thereof shall
thereafter have the right to convert into and to purchase
the kind and respective number of shares of stock and other
securities and property receivable upon such
reclassification, change, consolidation, merger, statutory
share exchange, sale or conveyance as if the holder thereof
were the owner of the shares underlying the Warrants
immediately prior to any such events at a price equal to the
product of (x) the number of shares issuable upon exercise
of the Warrants, and (y) the Purchase Price, both as in
effect immediately prior to the record date for such
reclassification, change, consolidation,
-20-
merger, statutory share exchange, sale or conveyance.
(ii) Appropriate provisions shall be made in connection with any
reorganization, reclassification, consolidation, merger,
share exchange or sale or conveyance of assets with respect
to the rights and interests of Banc Stock (or any subsequent
registered holder of the Warrants) to the end that the
provisions of this Section 0 (including, without limitation,
the provisions for adjustments of the Purchase Price and the
number of shares purchasable on exercise of the Warrants)
shall immediately after the transaction be applicable as
nearly as possible to any shares of stock, securities or
assets deliverable immediately after the transaction upon
the exercise of the Warrants. The Company shall not effect
any consolidation, merger, share exchange or sale or
conveyance of assets unless, prior to the consummation of
the transaction, the successor corporation (if other than
the Company) resulting from the consolidation, merger or
share exchange, or the corporation purchasing the assets,
assumes by written instrument executed and delivered to Banc
Stock (or each subsequent registered holder of the Warrants)
the obligation to deliver thereto the shares of stock,
securities or assets in accordance with the foregoing
provisions that Banc Stock (or each subsequent registered
holder of the Warrants) may be entitled to purchase.
(h) Dissolution. In the event that a voluntary or involuntary
dissolution, liquidation or winding up of the Company (other than in connection
with a merger where the Company is the surviving corporation, or a merger or
consolidation with or into another corporation or a sale or lease of all or
substantially all of the assets of the Company) is at any time proposed during
the term of the Warrants, the Company shall give written notice to the
registered holder or holders of the Warrants at least thirty (30) days prior to
the record date of the proposed transaction. The notice must contain: (i) the
date on which the transaction is to take place; (ii) the record date (which must
be at least thirty (30) days after the giving of the notice) as of which holders
of the common stock are entitled to receive distributions as a result of the
transaction shall be determined; (iii) a brief description of the transaction
(iv) a brief description of the distributions, if any to be made to holders of
the common stock as a result of the transaction; and (v) an estimate of the fair
market value of the distributions.
(i) Reservation of Stock. While the Warrants are exercisable, the
Company shall at all times reserve and keep available a number of its authorized
but unissued shares of Common Stock that will be sufficient to permit the
exercise in full of all outstanding Warrants. All shares of Common Stock that
may be issued upon exercise of the Warrants shall, upon issuance, be duly and
validly issued, fully paid and non-assessable, and free from all taxes, liens
and charges with respect to the purchase and the issuance of such shares.
SECTION 6. INDEMNIFICATION AND CONTRIBUTION.
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(a) The Company will indemnify and hold harmless Banc Stock (including
officers, directors, employees and agents thereof or an affiliate) and each
person, if any, who controls Banc Stock 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 which it or such controlling person may become subject under the 1933
Act, the 1934 Act or insofar as such losses, claims, damages or liabilities in
respect thereof arise out of or are based upon any breach of any warranty or
covenant of the Company herein contained 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 Banc Stock 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 Banc Stock expressly for use therein. In addition to its other
obligations under this Section 0, the Company agrees that, as an interim measure
during the pendency of any such claim, action, investigation, inquiry or other
proceeding arising out of or based upon any statement or omission, or any
alleged statement or omission, described in this Section 0, it will reimburse
Banc Stock on a monthly basis for all reasonable legal and other expenses
incurred in connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the Company's
obligation to reimburse Banc Stock for such expenses and the possibility that
such payments might later be held to have been improper by a court of competent
jurisdiction. Any such interim reimbursement payments that are not made to Banc
Stock within thirty (30) days of a request for reimbursement shall bear interest
at the prime rate (or reference rate or other commercial lending rate for
borrowers of the highest credit standing) published from time to time by The
Wall Street Journal (the "Prime Rate") from the date of such request. The
Company will not, without the prior written consent of Banc Stock, settle or
compromise or consent to the entry of any judgment in any pending or threatened
action or claim or related cause of action or portion of such cause of action in
respect of which indemnification may be sought hereunder (whether or not Banc
Stock is a party to such action or claim), unless such settlement, compromise or
consent includes an unconditional release of Banc Stock from all liability
arising out of such action or claim (or related cause of action or portion
thereof).
The indemnity agreement in this Section 0 shall extend upon the same
terms and conditions to, and shall inure to the benefit of, each person, if any,
who controls Banc Stock within the meaning of the 1933 Act or the 1934 Act to
the same extent as such agreement applies
-22-
to Banc Stock and shall be in addition to any liabilities that the Company may
otherwise have.
(b) Banc Stock 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 such Underwriter 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. In addition to its other
obligations under this Section 0, Banc Stock agrees that, as an interim measure
during the pendency of any such claim, action, investigation, inquiry or other
proceeding arising out of or based upon any statement or omission, or any
alleged statement or omission, described in this Section 0, it will reimburse
the Company on a monthly basis for all reasonable legal and other expenses
incurred in connection with investigating or defending any such claim, action
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of its obligation
to reimburse the Company for such expenses and the possibility that such
payments might later be held to have been improper by a court of competent
jurisdiction. Any such interim reimbursement payments that are not made to the
Company within thirty (30) days of a request for reimbursement shall bear
interest at the Prime Rate from the date of such request. This indemnity
agreement shall be in addition to any liabilities that Banc Stock may otherwise
have.
(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 0 or 0 shall be
available to any party who shall fail to give notice as provided in this Section
0 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 0. 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,
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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) It is agreed that any controversy arising out of the operation of
the interim reimbursement arrangements set forth in Section 0 and 5(b) hereof,
including the amounts of any requested reimbursement payments, the method of
determining such amounts and the basis on which such amounts shall be
apportioned among the indemnifying parties, shall be settled by arbitration
conducted pursuant to the Code of Arbitration Procedure of the National
Association of Securities Dealers, Inc. Any such arbitration must be commenced
by service of a written demand for arbitration or a written notice of intention
to arbitrate, therein electing the arbitration tribunal. In the event the party
demanding arbitration does not make such designation of an arbitration tribunal
in such demand or notice, then the party responding to said demand or notice is
authorized to do so. Any such arbitration will be limited to the operation of
the interim reimbursement provisions contained in Sections 0 and 0 hereof and
will not resolve the ultimate propriety or enforceability of the obligation to
indemnify for expenses that is created by the provisions of Sections 0 and 0.
(e) In order to provide for just and equitable contribution in
circumstances under which the indemnity provided for in this Section 0 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 Banc Stock 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 Banc Stock, as incurred, in such
proportions that (i) Banc Stock is responsible pro rata for that portion
represented by the commission percentage appearing on the cover page of the
Prospectus bears to the initial public offering price (before deducting
expenses) appearing thereon, 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 Banc
Stock on the other shall contribute to the aggregate losses
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in such proportion as is appropriate to reflect not only the relative benefits
referred to above but also the relative fault of the Company on the one hand,
and Banc Stock 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 Banc Stock 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 Banc Stock agree that it would not be just and equitable if contributions
pursuant to this Section 0 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 0. 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 or their respective officers set forth in or made
pursuant to this Agreement will remain operative and in full force and effect
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 0 hereof.
(b) This Agreement may be terminated by Banc Stock by notice to the
Company in the event that the Company shall have failed or been unable to comply
with any of the 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 Banc Stock in writing.
(c) This Agreement may be terminated by Banc Stock by notice to the
Company if Banc Stock 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 Bank
Stock, may interfere materially with the conduct of the Company's business and
operations regardless of whether or not such loss shall have been insured.
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(d) This Agreement may be terminated by Banc Stock by notice to the
Company at any time if, in the sole judgment of Banc Stock, payment for and
delivery of the Shares is rendered 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 Banc Stock 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 or
materially altered, or notice shall have been received to the effect that any
such approvals will not be received, or if received, will be subject to
conditions that the Company would not be able to fulfill in a reasonable time in
Banc Stock's opinion, or (v) of any matter materially adversely affecting the
Company.
(e) In the event any action or proceeding shall be instituted or
threatened against Banc Stock, 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 Banc Stock 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 Banc Stock's assets or if Banc Stock makes an assignment
for the benefit of creditors, the Company shall have the right on three (3)
days' written notice to Banc Stock to terminate this Agreement.
(f) Any termination of this Agreement pursuant to this Section 0 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 such event the Company will be responsible for Banc Stock's
accountable expenses, which shall include, but are not limited to, Banc Stock'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:
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If to the Company: Northern Star Financial, Inc.
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxxx
With a Copy to: Xxxxxxxxxxx & Xxxxx, P.A.
1100 International Centre
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx
If to Banc Stock: Banc Stock Financial Services, Inc.
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx
With a Copy to: Xxxxxx & Xxxxxx Attorneys, P.C.
The Creve Coeur Building
Suite 200
321 Liberty Street
Peoria, IL 61602-1403
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 Ohio 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 of this Agreement.
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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 Banc Stock 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. Xxxxxx
Title: President
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LIST OF EXHIBITS
----------------
Exhibit A Warrant Certificate
Exhibit B Escrow Agreement
Exhibit C Company Directed Shares
Exhibit D States
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EXHIBIT D
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STATES
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Florida
Illinois
Iowa
Minnesota
Ohio
Pennsylvania
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