FIDELITY BANKSHARES, INC.
(a Delaware-chartered Stock Corporation)
Up to 8,250,151 Shares
(Subject to Increase Up to 9,487,674 Shares)
COMMON STOCK ($.01 Par Value)
Subscription Price $10.00 Per Share
AGENCY AGREEMENT
____________, 2000
▇▇▇▇, ▇▇▇▇ & Co., Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
Fidelity Bankshares, Inc., a Delaware-chartered stock corporation (the
"Mid-Tier Holding Company"), Fidelity Financial, M.H.C., a federally-chartered
mutual holding company (the "MHC"), and Fidelity Federal Bank & Trust, a
federally-chartered stock savings bank (the "Bank") (collectively, the "Primary
Parties") hereby confirm, jointly and severally, their agreement with ▇▇▇▇, ▇▇▇▇
& Co., Inc. (the "Agent"), as follows:
Section 1. The Offering. The MHC, in accordance with the Plan of
Conversion and Reorganization adopted November 21, 2000 (the "Plan"), intends to
convert from a federally-chartered mutual holding company to a newly formed
Delaware-chartered stock form corporation (the "Holding Company") which will
offer stock on a priority basis to (i) eligible account holders; (ii) Employee
Plans of the Holding Company; (iii) Supplemental Account Holders; and (iv) Other
Members. Pursuant to the Plan, the Holding Company is offering up to 8,250,151
shares of common stock, par value $.01 per share (the "Common Stock") (subject
to an increase up to 9,487,674 shares), in a subscription offering (the
"Subscription Offering"), and, if necessary, (i) a direct community offering
(the "Community Offering") and/or (ii) syndicated community offering
("Syndicated Community Offering").
Pursuant to the Plan, the Holding Company will offer and sell shares of
its Common Stock (the "Shares") in the Subscription Offering, Community
Offering, and Syndicated Community Offering (the "Offerings") so that, upon
completion of the Offerings, the purchasers of Shares in the Offerings will own
100% of the outstanding Common Stock of the Holding Company. The Holding Company
will issue the Shares at a purchase price of $10.00 per share (the "Purchase
Price"). If the number of Shares is increased or decreased in accordance with
the Plan, the term "Shares" shall mean such greater or lesser number, where
applicable.
Pursuant to the Plan, in the Subscription Offering, the Holding Company
will offer the Shares in descending order of priority to: (1) the Bank's
depositors with aggregate account balances of $50 or more on October 31, 1999
(the "Eligible Account Holders"), subject to the allocation procedures and
purchase limitations set forth in the Plan; (2) the Bank's depositors with
aggregate account balances of $50 or more on December 31, 2000 (the
"Supplemental Eligible Account Holders"); (3) the Tax-Qualified Employee Stock
Benefit Plans (as such term is defined in the Plan); and (4) Other Members. The
Holding Company may offer Shares, if any, remaining after the Subscription
Offering, in the Community Offering on a priority basis to the natural persons
residing within the Florida counties of ▇▇▇▇▇▇, ▇▇▇ Beach, Indian River and St.
Lucie, and then to the general public. In the event a Community Offering is
held, it may be held at any time during or immediately after the Subscription
Offering. Depending on market conditions, Shares not subscribed for in the
Subscription Offering or purchased in the Community Offering may be offered in
the Syndicated Community Offering to eligible members of the general public on a
best efforts basis, as described in subsection 4(c) below.
The Holding Company has filed with the U.S. Securities and Exchange
Commission (the "Commission") a Registration Statement on Form S-1 (File No.
____________) in order to register the Shares under the Securities Act of 1933,
as amended (the "1933 Act"), and has filed such amendments thereto as have been
required to the date hereof (the "Registration Statement"). The prospectus, as
amended, included in the Registration Statement at the time it initially became
effective is hereinafter called the "Prospectus," except that if any prospectus
is filed by the Holding Company pursuant to Rule 424(b) or (c) of the
regulations of the Commission under the 1933 Act differing from the prospectus
included in the Registration Statement at the time it initially becomes
effective, the term "Prospectus" shall refer to the prospectus filed pursuant to
Rule 424(b) or (c) from and after the time said prospectus is filed with the
Commission and shall include any supplements and amendments thereto from and
after their dates of effectiveness or use, respectively.
In connection with the Conversion, the MHC and the Mid-Tier Holding
Company filed with the Office of Thrift Supervision (the "OTS") an application
for conversion to a stock company (the "Conversion Application") and amendments
thereto as required by the OTS. The Holding Company has also filed with the OTS
its application on Form H-(e)1 (the "Holding Company Application") to become a
unitary savings and loan holding company under the Home Owners Loan Act of 1933,
as amended, and the regulations promulgated thereunder (the "HOLA").
Collectively, these may also be termed the "Applications."
Section 2. Appointment of Agent. Subject to the terms and conditions of
this Agreement, the Primary Parties hereby appoint the Agent to consult with,
advise and assist the Primary Parties with the solicitation of subscriptions and
purchase orders for the Shares in connection with the sale of the Shares in the
Offerings.
On the basis of the representations and warranties of the Primary
Parties contained in, and subject to the terms and conditions of, this
Agreement, the Agent accepts such appointment and agrees to use its best efforts
to assist the Primary Parties with the solicitation of subscriptions and
purchase orders for the shares and agrees to consult with and advise the Primary
Parties as to the matters set forth in Section 3 of the letter agreement (the
"Letter Agreement"), dated November 30, 2000, between the MHC, the Mid-Tier
Holding Company and Agent (a copy of which is attached hereto as Exhibit A). It
is acknowledged by the Primary Parties that the Agent shall not be obligated to
purchase any Shares and shall not be obligated to take any action which is
inconsistent with any applicable law, regulation, decision or order. The
appointment of the Agent to provide services hereunder shall terminate upon
consummation of the Offerings.
2
If requested by the MHC or the Mid-Tier Holding Company, Agent may also
assemble and manage a selling group of broker-dealers that are members of the
National Association of Securities Dealers, Inc. ("NASD") to participate in the
solicitation on a "best efforts" basis of purchase orders for the Shares (the
"Assisting Brokers") under a selected dealers' agreement ("Selected Dealers'
Agreement"), the form of which is set forth as Exhibit B to this Agreement. The
Agent will distribute the Shares among dealers in the Syndicated Community
Offering in a fashion which best meets the distribution objectives of the Bank
and the Plan. The Agent will not commence the Syndicated Community Offering
without the prior approval of the Primary Parties.
Section 3. Refund of Purchase Price. In the event that the Conversion
is not consummated for any reason, including but not limited to the inability to
sell 6,097,938 Shares during the Offerings (including any permitted extension
thereof) or such other minimum number of Shares as shall be established
consistent with the Plan and the Conversion Regulations, this Agreement shall
terminate and any persons who have subscribed for any of the Shares shall have
refunded to them the full amount which has been received from such person,
together with interest as provided in the Prospectus.
Section 4. Fees. In addition to the expenses specified in Section 9
hereof, as compensation for the Agent's services under this Agreement, the Agent
has received or will receive the following fees from the Primary Parties:
(a) Total fees for services (less any advance payments) shall be one
percent (1.00%) of the dollar amount of the Common Stock sold in the Offering
and will be paid at Closing. Advance payments and an advisory and management fee
of $100,000 shall be made as follows: $25,000 upon execution of the Letter
Agreement, $25,000 upon the initial filing of the Registration Statement and
$50,000 upon closing of the Offering of Common Stock. No fee shall be payable
for stock sold in the Offering to officers, directors, employees or immediate
family of such persons ("Insiders") and qualified and non-qualified employee
benefit plans of the Company or the Insiders.
(b) If any of the Shares remain available after the Subscription
Offering and Community Offering, at the request of the Holding Company, the
Agent will seek to form a group of approved broker-dealer firms in accordance
with Section 2 for purposes of the Syndicated Community Offering. The fees
payable to the Holding Company pursuant to this subsection to the Agent will not
exceed 6% of the aggregate dollar amount of the Shares sold in the Syndicated
Community Offering. Of such fee, the Agent will retain at least 1% of the
aggregate dollar amount of the shares sold pursuant to this subsection 4(b) as a
management fee, and will pass on to the Assisting Brokers, which may include the
Agent, the remainder of such fee relating to the Shares sold by such Assisting
Brokers pursuant to this subsection 4(b).
3
In the event that the Holding Company is required to resolicit
subscribers for Shares in the Subscription Offering and Community Offering and
the Agent is required to provide significant additional services in connection
with such a resolicitation, the Primary Parties and the Agent shall mutually
agree to the dollar amount of additional compensation due to the Agent and the
Primary Parties shall pay such amount, if any. Until any agreement called for by
this paragraph is reached, the Agent shall not incur expenses relating to any
resolicitation in an amount that would cause the total expenses incurred by the
Agent, that are reimbursable by the Bank pursuant to Section 9 hereof, to be
greater than those permitted without the prior written consent of the Holding
Company, which consent shall not be unreasonably withheld.
Section 5. Closing. If the minimum number of Shares permitted to be
sold in the Conversion on the basis of the most recently updated Appraisal (as
defined in Section 6(g)) are subscribed for at or before the termination of the
Offerings, and the other conditions to the completion of the Conversion are
satisfied, the Holding Company agrees to issue the Shares on the Closing Date
(as hereinafter defined) against payment therefor by the means authorized by the
Plan and to deliver certificates evidencing ownership of the Shares in such
authorized denominations and registered in such names as may be indicated on the
subscription order forms directly to the purchasers thereof as promptly as
practicable after the Closing Date. The closing (the "Closing") shall be held at
the offices of ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Washington, D.C., or at
such other place as shall be agreed upon among the Primary Parties and the
Agent, at 10:00 a.m., Eastern Standard Time, on the business day selected by the
Holding Company, which business day shall be no less than two business days
following the giving of prior notice by the Holding Company to the Agent or at
such other time as shall be agreed upon by the Primary Parties and the Agent. At
the Closing, the Primary Parties shall deliver to the Agent by wire transfer in
same-day funds the commissions, fees and expenses owing to the Agent as set
forth in Sections 4 and 9 hereof and the opinions required hereby and other
documents deemed reasonably necessary for the Agent shall be executed and
delivered to effect the sale of the Shares as contemplated hereby and pursuant
to the terms of the Prospectus; provided, however, that all out-of-pocket
expenses to which the Agent is entitled under this Section 4 and 9 hereof shall
be due and payable upon receipt by the Company or the Bank of a written
accounting therefor setting forth in reasonable detail the expenses incurred by
the Agent. The hour and date upon which the Holding Company shall release the
Shares for delivery in accordance with the terms hereof is referred to herein as
the "Closing Date."
Section 6. Representations and Warranties of the Primary Parties. The
Primary Parties jointly and severally represent and warrant to the Agent that:
(a) The MHC and the Mid-Tier Holding Company have all such power,
authority, authorizations, approvals and orders as may be required to enter into
this Agreement, and, as of the Closing Date, the MHC and the Holding Company
will have all such power, authority, authorizations, approvals and orders as may
be required to carry out the provisions and conditions hereof and to issue and
sell the Shares as provided herein and as described in the Prospectus. The
consummation of the Conversion, the execution, delivery and performance of this
Agreement and the Letter Agreement and the consummation of the transactions
contemplated herein have been duly and validly authorized by all necessary
corporate action on the part of the MHC and the Holding Company . This Agreement
has been validly executed and delivered by the Primary Parties, and is a valid,
legal and binding obligation of the Primary Parties, in each case enforceable in
accordance with its terms, except as the legality, validity, binding nature and
enforceability thereof may be limited by (i) bankruptcy, insolvency, moratorium,
reorganization, conservatorship, receivership or other similar laws relating to
or affecting the enforcement of creditors' rights generally, (ii) general equity
principles regardless of whether such enforceability is considered in a
proceeding in equity or at law, and (iii) the extent, if any, that the
provisions of Sections 11 or 12 hereof may be unenforceable as against public
policy.
4
(b) The Registration Statement was declared effective by the Commission
on ___________, 2001. No stop order has been issued with respect to the
Prospectus. To the best knowledge of the Primary Parties, no proceedings related
to the Prospectus have been initiated or threatened by the Commission. At the
time the Registration Statement, including the Prospectus contained therein
(including any amendment or supplement thereto), became effective, the
Registration Statement complied as to form in all material respects with the
1933 Act and the regulations promulgated thereunder. The Registration Statement,
including the Prospectus contained therein (including any amendment or
supplement thereto) at the time such Registration Statement became effective,
did not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and at the time any Rule 424(b) or (c) Prospectus was filed with the
Commission and at the Closing Date referred to in Section 5, the Registration
Statement, including the Prospectus contained therein (including any amendment
or supplement thereto) and, when taken together with the Prospectus, any Blue
Sky Application or Sales Information authorized for use by any of the Primary
Parties in connection with the Offerings, will not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that the representations and warranties in this Section 6(b) shall not apply to
statements or omissions made in reliance upon and in conformity with written
information furnished to the Primary Parties by the Agent expressly regarding
the Agent for use under the captions "Market for the Common Stock", "The
Conversion and the Offering - Marketing Arrangements" and "The Conversion and
the Offering - Direct Community Offering and Syndicated Community Offering" or
with written statements or omissions from any Sales Information or information
filed pursuant to state securities or blue sky laws or regulations regarding the
Agent.
(c) The Conversion Application has been approved by the OTS. The
Conversion Application did, and will, as of the Closing Date comply as to form
in all material respects with the Conversion Regulations and any other
applicable rules and regulations of the OTS.
(d) No order has been issued by the Commission preventing or suspending
the use of the Prospectus and, except as disclosed in Schedule 6(d), no action
by or before any such government entity to revoke any approval, authorization or
order of effectiveness related to the Conversion is, to the best knowledge of
the Primary Parties, pending or threatened.
(e) The Plan has been duly adopted by the Board of the MHC. To the best
knowledge of the Primary Parties, except as disclosed in Schedule 6(d), no
person has, or at the Closing Date will have, sought to obtain review of the
final action of the OTS in approving the Plan or the Conversion Application or
the Holding Company Application, pursuant to the HOLA or any other statute or
regulation.
5
(f) The Holding Company has filed the Holding Company Application with
the OTS. As of the Closing Date the OTS will have approved of the Holding
Company's becoming a unitary savings and loan holding company with respect to
the Bank.
(g) RP Financial, LC, which prepared the appraisal of the aggregate pro
forma market value of the Common Stock on which the Offerings were based (the
"Appraisal"), has advised the Primary Parties in writing that it is independent
with respect to each of the Primary Parties.
(h) Deloitte & Touche, LLP, which certified the financial statements
filed as part of the Registration Statement and the Conversion Application, has
advised the Primary Parties that it is an independent certified public
accountant within the meaning of the Code of Ethics of the AICPA, and Deloitte &
Touche, LLP is, with respect to the Company, the Bank and each subsidiary of the
Bank, independent certified public accountants as required by the 1933 Act and
the 1933 Act Regulations.
(i) The financial statements and the notes thereto which are included
in the Registration Statement and which are a part of the Prospectus present
fairly in all material respects the financial condition and retained earnings of
the Bank as of the dates indicated and the results of operations and cash flows
for the periods specified. The financial statements comply in all material
respects with the applicable accounting requirements of Title 12 of the Code of
Federal Regulations, Regulation S-X of the Commission and generally accepted
accounting principles ("GAAP") applied on a consistent basis during the periods
presented, except as otherwise noted therein, and present fairly in all material
respects the information required to be stated therein. The other financial,
statistical and pro forma information and related notes included in the
Prospectus present fairly the information shown therein on a basis consistent
with the audited and unaudited financial statements included in the Prospectus,
and as to the pro forma adjustments, the adjustments made therein have been
consistently applied on the basis described therein.
(j) Since the respective dates as of which information is given in the
Registration Statement, including the Prospectus; (i) there has not been any
material adverse change in the financial condition or in the earnings, capital,
properties or business affairs of the Primary Parties considered as one
enterprise, whether or not arising in the ordinary course of business; (ii)
there have not been any material transactions entered into by any of the Primary
Parties, other than those in the ordinary course of business; and (iii) the
capitalization, liabilities, assets, properties and business of the Primary
Parties conform in all material respects to the descriptions thereof contained
in the Prospectus and, none of the Primary Parties has any material liabilities
of any kind, contingent or otherwise, except as disclosed in the Registration
Statement or the Prospectus.
6
(k) As of the Closing Date, the Holding Company will be a stock
corporation duly organized and in good standing under the laws of the State of
Delaware, with corporate power and authority to own its properties and to
conduct its business as described in the Prospectus, and will be qualified to
transact business and in good standing in Delaware and in each jurisdiction in
which the conduct of business requires such qualification, unless the failure to
qualify in one or more of such jurisdictions would not have a material adverse
effect on the financial condition, earnings, capital, properties or business
affairs of the Primary Parties taken as a whole. As of the Closing Date, the
Holding Company will have obtained all licenses, permits and other governmental
authorizations required for the conduct of its business, except those that
individually or in the aggregate would not materially adversely affect the
financial condition, earnings, or business of the Primary Parties taken as a
whole (a "Material Adverse Effect"); and as of the Closing Date, all such
licenses, permits and governmental authorizations will be in full force and
effect, and the Holding Company will be in compliance therewith in all material
respects.
(l) The Holding Company does not, and as of the Closing Date, will not
own any equity securities or any equity interest in any business enterprise
except as described in the Prospectus.
(m) The Bank is a duly organized and validly existing
federally-chartered savings bank in stock form, duly authorized to conduct its
business as described in the Prospectus; the activities of the Bank are
permitted by the rules, regulations and practices of the OTS; the Bank has
applied for and received the approval of the OTS to conduct a trust business;
the Bank has obtained all licenses, permits and other governmental
authorizations currently required for the conduct of its business, except those
that individually or in the aggregate would not have a Material Adverse Effect;
all such licenses, permits and other governmental authorizations are in full
force and effect and the Bank is in good standing under the laws of the United
States and is duly qualified as a foreign corporation to transact business in
each jurisdiction in which failure to so qualify would have a Material Adverse
Effect; all of the issued and outstanding capital stock of the Bank after the
Conversion will be duly and validly issued and fully paid and nonassessable; and
the Holding Company will directly own all of such capital stock free and clear
of any mortgage, pledge, lien, encumbrance, claim or restriction. The Bank does
not own equity securities or any equity interest in any other business
enterprise except as otherwise described in the Prospectus or as are immaterial
in amount and are not required to be described in the Prospectus.
(n) The deposit accounts of the Bank are insured by the FDIC up to
applicable limits. Upon consummation of the Conversion, the Bank will establish
a liquidation account for the benefit of the Bank's depositors, in accordance
with the Plan and the requirements of applicable Conversion Regulations.
(o) As of the Closing Date, the Bank will be a wholly owned subsidiary
of the Holding Company.
7
(p) Upon consummation of the Conversion, the authorized, issued and
outstanding equity capital of the Holding Company will be within the range set
forth in the Prospectus under the caption "Capitalization" and no shares of
Common Stock have been or will be issued and outstanding prior to the Closing
Date; and the shares of Common Stock to be subscribed for in the Offering have
been duly and validly authorized for issuance and, when issued and delivered by
the Holding Company pursuant to the Plan against payment of the consideration
calculated as set forth in the Plan and the Prospectus, will be duly and validly
issued and fully paid and nonassessable; the issuance of the Shares is not
subject to preemptive rights, except for the Subscription Rights granted
pursuant to the Plan; and the terms and provisions of the shares of Common Stock
will conform in all material respects to the description thereof contained in
the Prospectus. Upon issuance of the Shares, good title to the Shares will be
transferred from the Holding Company to the purchasers of Shares against payment
therefor in the Offering as set forth in the Plan and the Prospectus.
(q) The Primary Parties are not in violation of their respective
articles of incorporation or charter or their respective bylaws, or in material
default in the performance or observance of any obligation, agreement, covenant,
or condition contained in any contract, lease, loan agreement, indenture or
other instrument to which they are a party or by which they, or any of their
respective property, may be bound which would result in a Material Adverse
Effect. The consummation of the transactions herein contemplated will not (i)
conflict with or constitute a breach of, or default under, the Certificate of
Incorporation, charter or bylaws of any of the Primary Parties, or materially
conflict with or constitute a material breach of, or default under, any material
contract, lease or other instrument to which any of the Primary Parties has a
beneficial interest, or any applicable law, rule, regulation or order that is
material to the financial condition of the Bank; (ii) violate any authorization,
approval, judgment, decree, order, statute, rule or regulation applicable to the
Primary Parties except for such violations which would not have a material
adverse effect on the financial condition and results of operations of the Bank;
or (iii) result in the creation of any lien, charge or encumbrance upon any
property of the Primary Parties, except for such liens, changes or encumbrances
that would not individually or in the aggregate have a Material Adverse Effect.
(r) No material default exists, and no event has occurred which with
notice or lapse of time, or both, would constitute a material default on the
part of any of the Primary Parties, in the due performance and observance of any
term, covenant or condition of any indenture, mortgage, deed of trust, note,
bank loan or credit agreement or any other material instrument or agreement to
which any of the Primary Parties is a party or by which any of their property is
bound or affected in any respect which, in any such case, is material to the
Primary Parties taken as a whole, and such agreements are in full force and
effect; and no other party to any such agreements has instituted or, to the best
knowledge of any of the Primary Parties, threatened any action or proceeding
wherein any of the Primary Parties is alleged to be in default thereunder under
circumstances where such action or proceeding, if determined adversely to any of
the Primary Parties, would have a Material Adverse Effect.
(s) The Primary Parties have good and marketable title to all assets
which are material to the businesses of the Primary Parties, free and clear of
all liens, charges, encumbrances, restrictions or other claims, except such as
are described in the Prospectus or which do not have a Material Adverse Effect;
and all of the leases and subleases which are material to the businesses of the
Primary Parties, as described in the Registration Statement or Prospectus, are
in full force and effect.
8
(t) The Primary Parties are not in material violation of any directive
from the OTS, the FDIC, or any other agency to make any material change in the
method of conducting their respective businesses; the Primary Parties have
conducted and are conducting their respective businesses so as to comply in all
respects with all applicable statutes and regulations (including, without
limitation, regulations, decisions, directives and orders of the OTS, the
Commission and the FDIC), except where the failure to so comply would not
reasonably be expected to result in a Material Adverse Effect, and there is no
charge, investigation, action, suit or proceeding before or by any court,
regulatory authority or governmental agency or body pending or, to the best
knowledge of any of the Primary Parties, threatened, which would reasonably be
expected to materially and adversely affect the Conversion, the performance of
this Agreement, or the consummation of the transactions contemplated in the Plan
as described in the Registration Statement, or which would reasonably be
expected to result in a Material Adverse Effect.
(u) Prior to the Closing Date, the Primary Parties will have received
an opinion of their special counsel, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, with
respect to the federal income tax consequences of the Conversion, as described
in the Registration Statement and the Prospectus, and an opinion from Deloitte &
Touche, LLP with respect to the tax consequences of the Conversion under the
laws of the State of Florida; and the facts and representations upon which such
opinions will be based, will be truthful, accurate and complete, and none of the
Primary Parties will take any action inconsistent therewith.
(v) The Mid-Tier Holding Company and the Bank have filed all required
federal and state tax returns, paid all taxes that have become due and payable
in respect of such returns, except where permitted to be extended, and no
deficiency has been asserted with respect thereto by any taxing authority.
(w) No approval, authorization, consent or other order of any
regulatory or supervisory or other public authority is required for the
execution and delivery by the Primary Parties of this Agreement, or the issuance
of the Shares, except for the approval of the OTS and the Commission and any
necessary qualification, notification, or registration or exemption under the
securities or blue sky laws of the various states in which the Shares are to be
offered.
(x) None of the Primary Parties has: (i) issued any securities within
the last 18 months (except for (a) notes to evidence bank loans or other
liabilities in the ordinary course of business or as described in the
Prospectus, and (b) shares of Common Stock issued with respect to the initial
capitalization of the Holding Company); (ii) had any dealings with respect to
sales of securities within the 12 months prior to the date hereof with any
member of the NASD, or any person related to or associated with such member,
other than discussions and meetings relating to the Offering and purchases and
sales of U.S. government and agency and other securities in the ordinary course
of business; or (iii) engaged any intermediary between the Agent and the Primary
Parties in connection with the Offering or the offering of shares of the common
stock of the Bank, and no person is being compensated in any manner for such
services.
(y) The Primary Parties have not made any payment of funds of the
Primary Parties as a loan to any person for the purchase of Shares, except for
the Holding Company's loan to the employee stock ownership plan the proceeds of
which will be used to purchase Shares, or has made any other payment of funds
prohibited by law, and no funds have been set aside to be used for any payment
prohibited by law.
9
(z) The Bank complies in all material respects with the applicable
financial record keeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, and the regulations and rules
thereunder.
(aa) The Primary Parties have not relied upon Agent or its counsel for
any legal, tax or accounting advice in connection with the Conversion.
(ab) The records of Eligible Account Holders and Supplemental Eligible
Account Holders are accurate and complete in all material respects.
(ac) The Primary Parties comply with all laws, rules and regulations
relating to environmental protection, and none of them has been notified or is
otherwise aware that any of them is potentially liable, or is considered
potentially liable, under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, or any other Federal, state or local
environmental laws and regulations except to the extent that any non-compliance
would not have a Material Adverse Effect; no action, suit, regulatory
investigation or other proceeding is pending, or to the knowledge of the Primary
Parties, threatened against the Primary Parties relating to environmental
protection, nor do the Primary Parties have any reason to believe any such
proceedings may be brought against any of them; and, to the knowledge of the
Primary Parties, no disposal, release or discharge of hazardous or toxic
substances, pollutants or contaminants, including petroleum and gas products, as
any of such terms may be defined under federal, state or local law, has occurred
on, in, at or about any facilities or properties owned or leased by any of the
Primary Parties or in which the Bank has a security interest, except to the
extent such disposal, release or discharge would not have a Material Adverse
Effect.
(ad) All of the loans represented as assets on the recent developments
or financial information of the MHC included in the Prospectus meet or are
exempt from all requirements of federal, state and local law pertaining to
lending, including, without limitation, truth in lending (including the
requirements of Regulations Z and 12 C.F.R. Part 226), real estate settlement
procedures, consumer credit protection, equal credit opportunity and all
disclosure laws applicable to such loans, except for violations which, if
asserted, would not result in a Material Adverse Effect.
(ae) None of the Primary Parties are required to be registered as an
investment company under the Investment Company Act of 1940.
Any certificates signed by an officer of any of the Primary Parties and
delivered to the Agent or its counsel that refer to this Agreement shall be
deemed to be a representation and warranty by the Primary Parties to the Agent
as to the matters covered thereby with the same effect as if such representation
and warranty were set forth herein.
10
Section 7. Representations and Warranties of the Agent. Agent
represents and warrants to the Primary Parties that:
(a) Agent is a corporation and is validly existing and in good standing
under the laws of the State of New Jersey with full power and authority to
provide the services to be furnished to the Primary Parties hereunder.
(b) The execution, delivery and performance of this Agreement and the
Letter Agreement and the consummation of the transactions contemplated herein
have been duly and validly authorized by all necessary corporate action on the
part of Agent, and this Agreement is the legal, valid and binding agreement of
Agent, enforceable in accordance with its terms, except as the legality,
validity, binding nature and enforceability thereof may be limited by (i)
bankruptcy, insolvency, moratorium, reorganization, conservatorship,
receivership or other similar laws relating to or affecting the enforcement of
creditors' rights generally, (ii) general equity principles regardless of
whether such enforceability is considered in a proceeding in equity or at law,
and (iii) the extent, if any, that the provisions of Sections 11 or 12 hereof
may be unenforceable as against public policy.
(c) Each of Agent and its employees, agents and representatives who
shall perform any of the services hereunder shall have, and until the Conversion
is completed or terminated shall maintain, all licenses, approvals and permits
necessary to perform such services and shall comply in all material respects
with all applicable laws and regulations in connection with the performance of
such services.
(d) No action, suit, charge or proceeding before the Commission, the
NASD, any state securities commission or any court is pending, or to the
knowledge of Agent threatened, against Agent which, if determined adversely to
Agent, would have a material adverse effect upon the ability of Agent to perform
its obligations under this Agreement.
(e) Agent is registered as a broker/dealer pursuant to Section 15(b) of
the Securities Exchange Act of 1934, as amended (the "1934 Act") and is a member
of the National Association of Securities Dealers, Inc.
(f) Any funds received in the Offering by the Agent will be handled by
the Agent in accordance with Rule 15c2-4 under the 1934 Act to the extent
applicable.
Section 8. Covenants of the Primary Parties. The Primary Parties hereby
jointly and severally covenant with the Agent as follows:
(a) The Holding Company will not, at any time after the date the
Registration Statement is declared effective, file any amendment or supplement
to the Registration Statement without providing the Agent and its counsel an
opportunity to review such amendment or file any amendment or supplement to
which amendment the Agent or its counsel shall reasonably object. The Holding
Company will furnish promptly to the Agent and its counsel copies of all
correspondence from the Commission with respect to the Registration Statement
and the Holding Company's responses thereto.
11
(b) The Primary Parties will not, at any time after the date any
Application is approved, file any amendment or supplement to such Application
without providing the Agent and its counsel an opportunity to review such
amendment or supplement or file any amendment or supplement to which amendment
or supplement the Agent or its counsel shall reasonably object. The Primary
Parties will furnish promptly to the Agent and its counsel copies of all
correspondence from the OTS with respect to the Applications and the Primary
Parties' responses thereto.
(c) The Primary Parties will use their best efforts to cause the OTS to
approve the Holding Company's acquisition of the Bank, and will use their best
efforts to cause any post-effective amendment to the Registration Statement to
be declared effective by the Commission and any post-effective amendment to the
Conversion Application to be approved by the OTS, as applicable, and will
promptly upon receipt of any information concerning the events listed below
notify the Agent (i) when the Registration Statement, each as amended, has
become effective; (ii) when the Conversion Application as amended, has received
the approval of the OTS; (iii) when the Holding Company Application, as amended,
has been approved by the OTS; (iv) of the receipt of any comments from the OTS
or any other governmental entity with respect to the Conversion or the
transactions contemplated by this Agreement; (v) of any request by the
Commission, the OTS, or any other governmental entity for any amendment or
supplement to the Registration Statement or the Applications or for additional
information; (vi) of the issuance by the Commission or the OTS, or any other
governmental agency of any order or other action suspending the Offerings or the
use of the Registration Statement or the Prospectus or any other filing of the
Primary Parties under the Conversion Regulations or other applicable law, or the
threat of any such action; (vii) of the issuance by the Commission or the OTS,
or any other state authority of any stop order suspending the effectiveness of
the Registration Statement or of the initiation or threat of initiation or
threat of any proceedings for that purpose; or (viii) of the occurrence of any
event mentioned in subsection (f) below. The Primary Parties will make every
reasonable effort to prevent the issuance by the Commission, the OTS, or any
other state authority of any order referred to in (vi) and (vii) above and, if
any such order shall at any time be issued, to obtain the lifting thereof at the
earliest possible time.
(d) The Primary Parties will deliver to the Agent and to its counsel
conformed copies of each of the following documents, with all exhibits: the
Applications as originally filed and of each amendment or supplement thereto,
and the Registration Statement, as originally filed and each amendment thereto.
Further, the Primary Parties will deliver such additional copies of the
foregoing documents to counsel to the Agent as may be required for any NASD
filings. In addition, the Primary Parties will also deliver to the Agent such
number of copies of the Prospectus, as amended or supplemented, as the Agent may
reasonably request.
(e) The Primary Parties will comply in all material respects with any
and all terms, conditions, requirements and provisions with respect to the
Conversion and the transactions contemplated thereby imposed by the Commission,
by applicable state law and regulations, and by the 1933 Act, the 1934 Act, and
the rules and regulations of the Commission promulgated under such Acts, to be
complied with prior to the Closing Date; and when the Prospectus is required to
be delivered, the Primary Parties will comply in all material respects, at their
own expense, with all material requirements imposed upon them by the OTS, the
Conversion Regulations (except as modified or waived in writing by the OTS), the
Commission, by applicable state law and regulations and by the 1933 Act, the
1934 Act and the rules and regulations of the Commission promulgated under such
statutes, in each case as from time to time in force, so far as necessary to
permit the continuance of sales or dealing in shares of Common Stock during such
period in accordance with the provisions hereof and the Prospectus.
12
(f) During any period when the Prospectus is required to be delivered,
each of the Primary Parties will inform the Agent of any event or circumstance
of which it is or becomes aware as a result of which the Registration Statement
and/or Prospectus, as then supplemented or amended, would include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein not misleading. If it is necessary, in the
reasonable opinion of counsel for the Primary Parties, to amend or supplement
the Registration Statement or the Prospectus in order to correct such untrue
statement of a material fact or to make the statements therein not misleading in
light of the circumstances existing at the time of their use, the Primary
Parties will, at their expense, prepare, file with the Commission and the OTS,
and furnish to the Agent, a reasonable number of copies of an amendment or
amendments of, or a supplement or supplements to, the Registration Statement and
the Prospectus (in form and substance reasonably satisfactory to counsel for the
Agent after a reasonable time for review) which will amend or supplement the
Registration Statement and/or the Prospectus so that as amended or supplemented
it will not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in light of the
circumstances existing at the time, not misleading. For the purpose of this
subsection, each of the Primary Parties will furnish such information with
respect to itself as the Agent may from time to time reasonably request.
(g) Pursuant to the terms of the Plan, the Holding Company will
endeavor in good faith, in cooperation with the Agent, to register or to qualify
the Shares for offering and sale or to exempt such Shares from registration and
to exempt the Holding Company and its officers, directors and employees from
registration as broker-dealers, under the applicable securities laws of the
jurisdictions in which the Offering will be conducted; provided, however, that
the Holding Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation to do business in any
jurisdiction in which it is not so qualified. In each jurisdiction where any of
the Shares shall have been registered or qualified as above provided, the
Holding Company will make and file such statements and reports for a period of
not less than one year from the effective date of the Registration Statement.
(h) The Holding Company will not sell or issue, contract to sell or
otherwise dispose of, for a period of 90 days after the date hereof, any shares
of Common Stock, without the Agent's prior written consent, which consent shall
not be unreasonably withheld, other than in connection with any plan or
arrangement described in the Prospectus.
(i) For a period of three years from the date of this Agreement, the
Holding Company will furnish to the Agent, as soon as practical after such
information is available (i) a copy of each report of the Holding Company
furnished to or filed with the Commission under the 1934 Act or any national
securities exchange or system on which any class of securities of the Holding
Company is listed or quoted, (ii) a copy of each report of the Holding Company
mailed to holders of Common Stock, (iii) each press release and material news
item and article released by the Holding Company and/or Bank, and (iv) from
time-to-time, such other publicly available information concerning the Primary
Parties as the Agent may reasonably request.
13
(j) The Primary Parties will use the net proceeds from the sale of the
Common Stock in the manner set forth in the Prospectus under the caption "How We
Intend to Use the Proceeds from the Offering."
(k) The Holding Company and the Bank will distribute the Prospectus or
other offering materials in connection with the offering and sale of the Common
Stock only in accordance with the Conversion Regulations of the OTS, the 1933
Act and the 1934 Act and the rules and regulations promulgated under such
statutes, and the laws of any state in which the shares are qualified for sale.
(l) Prior to the Closing Date, the Holding Company shall register its
Common Stock under Section 12(b) or 12(g) of the 1934 Act, and will request that
such registration statement be effective no later than the completion of the
Conversion. The Holding Company shall maintain the effectiveness of such
registration for not less than three years.
(m) For so long as the Shares are registered under the 1934 Act, the
Holding Company will furnish to its stockholders as soon as practicable after
the end of each fiscal year such reports and other information as are required
to be furnished to its stockholders under the 1934 Act.
(n) The Holding Company will report the use of proceeds of the Offering
in accordance with Rule 463 under the ▇▇▇▇ ▇▇▇.
(o) The Primary Parties will maintain appropriate arrangements for
depositing all funds received from persons mailing subscriptions for or orders
to purchase Shares on an interest bearing basis at the rate described in the
Prospectus until the Closing Date and satisfaction of all conditions precedent
to the release of the Holding Company's obligation to refund payments received
from persons subscribing for or ordering Shares in the Offerings, in accordance
with the Plan as described in the Prospectus, or until refunds of such funds
have been made to the persons entitled thereto or withdrawal authorizations
canceled in accordance with the Plan and as described in the Prospectus. The
Primary Parties will maintain such records of all funds received to permit the
funds of each subscriber to be separately insured by the FDIC (to the maximum
extent allowable) and to enable the Primary Parties to make the appropriate
refunds of such funds in the event that such refunds are required to be made in
accordance with the Plan and as described in the Prospectus.
(p) The Holding Company will register as a unitary savings and loan
holding company under HOLA
14
(q) The Primary Parties will take such actions and furnish such
information as are reasonably requested by the Agent in order for the Agent to
ensure compliance with the "Interpretation of the Board of Governors of the NASD
on Free Riding and Withholding."
(r) The Primary Parties will conduct their businesses in compliance in
all material respects with all applicable federal and state laws, rules,
regulations, decisions, directives and orders, including all decisions,
directives and orders of the Commission, the FDIC and the OTS.
(s) The Primary Parties shall comply with any and all terms,
conditions, requirements and provisions with respect to the Conversion and the
transactions contemplated thereby imposed by the OTS, the HOLA, the Commission,
the 1933 Act, the Regulations, the 1934 Act and the regulations promulgated by
the Commission pursuant to the 1934 Act to be complied with subsequent to the
Closing Date. The Holding Company will comply with all provisions of all
undertakings contained in the Registration Statement.
(t) The Primary Parties will not amend the Plan without notifying the
Agent prior thereto.
(u) The Holding Company shall provide the Agent with any information
necessary to carry out the allocation of the Shares in the event of an
oversubscription, and such information shall be accurate and reliable in all
material respects.
(v) The Holding Company will not deliver the Shares until the Primary
Parties have satisfied or caused to be satisfied each condition set forth in
Section 10 hereof, unless such condition is waived in writing by the Agent.
(w) Immediately upon completion of the sale by the Holding Company of
the Shares contemplated by the Plan and the Prospectus and the completion of
certain transactions necessary to implement the Plan, (i) all of the issued and
outstanding shares of capital stock of the Bank shall be owned by the Holding
Company, (ii) the Holding Company shall have no direct subsidiaries other than
the Bank, and (iii) the Conversion shall have been effected in accordance with
all applicable statutes, regulations, decisions and orders; and all terms,
conditions, requirements and provisions with respect to the Conversion (except
those that are conditions subsequent) imposed by the Commission, the OTS or any
other governmental agency, if any, shall have been complied with by the Primary
Parties in all material respects or appropriate waivers shall have been obtained
and all notice and waiting periods shall have been satisfied, waived or elapsed.
(x) Prior to the Closing Date, the Plan shall have been approved by the
voting members of the MHC and the stockholders of the Mid-Tier Holding Company
in accordance with the Plan and the Conversion Regulations and the applicable
provisions, if any, of the MHC's charter and bylaws.
(y) On or before the Closing Date, the Primary Parties will have
completed all conditions precedent to the Conversion specified in the Plan and
the offer and sale of the Shares will have been conducted in all material
respects in accordance with the Plan, the Conversion Regulations (except as
modified or waived in writing by the OTS) and with all other applicable laws,
regulations, decisions and orders, including all terms, conditions, requirements
and provisions precedent to the Conversion imposed upon any of the Primary
Parties by the OTS, the Commission or any other regulatory authority and in the
manner described in the Prospectus.
15
(z) The Holding Company shall notify the Agent when funds shall have
been received for the minimum number of Shares set forth in the Prospectus.
Section 9. Payment of Expenses. Whether or not the Conversion is
completed or the sale and exchange of the Shares by the Holding Company is
consummated, the Primary Parties will pay for all expenses incident to the
performance of this Agreement, including without limitation: (a) the preparation
and filing of the Applications; (b) the preparation, printing, filing, delivery
and shipment of the Registration Statement, including the Prospectus, and all
amendments and supplements thereto; (c) all filing fees and expenses in
connection with the qualification or registration of the Shares for offer and
sale by the Holding Company or the Bank under the securities or "blue sky" laws,
including without limitation filing fees, reasonable legal fees and
disbursements of counsel in connection therewith, and in connection with the
preparation of a blue sky law survey; (d) the filing fees of the NASD related to
the Agent's fairness filing under NASD Rule 2710 and the application of the
Holding Company to list its shares; (e) fees and expenses related to the
preparation of the independent appraisal; (f) fees and expenses related to
auditing and accounting services; and (g) expenses relating to advertising,
temporary personnel, and the preparation of stock certificates. The Primary
Parties also agree to reimburse Agent for reasonable out-of-pocket expenses,
including legal fees and expenses, incurred by Agent in connection with the
services hereunder. Agent will not incur legal fees (excluding the out-of-pocket
expenses not to exceed $10,000 of counsel) in excess of $60,000 without the
approval of the Mid-Tier Holding Company. The Agent will not incur other
out-of-pocket expenses in excess of $65,000 without prior approval of the
Mid-Tier Holding Company. The Primary Parties acknowledge, however, that such
caps may be increased by the mutual consent of the Bank and Agent in the event
of any material delay in the Offering which would require the Agent to utilize a
Syndicated Community Offering or an update of the financial information in
tabular form contained in the Prospectus for a period later than that set forth
in the original Prospectus filing. Not later than two days prior to the Closing
Date, the Agent will provide the Bank with a detailed accounting of all
reimbursable expenses to be paid at the Closing.
Section 10. Conditions to the Agent's Obligations. The obligations of
the Agent hereunder and the occurrence of the Closing and the Conversion are
subject to the condition that all representations and warranties of the Primary
Parties herein contained are, at and as of the commencement of the Offering and
at and as of the Closing Date, true and correct, the condition that the Primary
Parties shall have performed, in all material respects, all of their obligations
hereunder to be performed on or before such dates and to the following further
conditions:
(a) The Registration Statement shall have been declared effective by
the Commission, the Conversion Application and Holding Company Application shall
have been approved by the OTS and no stop order or other action suspending the
effectiveness of the Registration Statement shall have been issued under the
1933 Act to any of the Primary Parties' best knowledge or proceedings therefor
initiated or threatened by the Commission or any state authority and no order or
other action suspending the authorization for use of the Prospectus or the
consummation of the Conversion shall have been issued to any of the Primary
Parties' best knowledge, or proceedings therefor initiated or threatened by the
OTS, the Commission, or any other governmental body.
16
(b) At the Closing Date, the Agent shall have received:
(1) The opinion, dated as of the Closing Date, of ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, and/or local counsel acceptable to the
Agent, in form and substance satisfactory to the Agent and counsel for
the Agent to the effect that:
(i) The Holding Company is a corporation duly organized and
validly existing and in good standing under the laws of the State
of Delaware, with corporate power and authority to own its
properties and to conduct its business as described in the
Prospectus, and is duly qualified to transact business and is in
good standing in Delaware and in each other jurisdiction in which
the conduct of its business requires such qualification and
except where the failure to qualify would have a Material Adverse
Effect.
(ii) On the date hereof, the Bank is a validly existing
federally-chartered stock savings bank, and upon consummation of
the Conversion, the Bank will continue to be a validly existing
federally-chartered stock savings bank, with full power and
authority to own its properties and to conduct its business as
described in the Prospectus and to enter into this Agreement and
perform its obligations hereunder; the activities of the Bank as
described in the Prospectus are permitted by federal law and the
rules, regulations and practices of the FDIC and the OTS; the
issuance and sale of the capital stock of the Bank to the Holding
Company in the Conversion has been duly and validly authorized by
all necessary corporate action on the part of the Holding Company
and the Bank and, upon payment therefor in accordance with the
terms of the Plan, will be validly issued, fully paid and
nonassessable and will be owned of record and beneficially by the
Holding Company, free and clear of any mortgage, pledge, lien,
encumbrance, claim or restriction.
(iii) The activities of the Mid-Tier Holding Company, the
MHC and the Bank, as described in the Prospectus, are permitted
for unitary savings and loan holding companies, mutual holding
companies and a federally-chartered stock holding company under
applicable federal law. To the best of such counsel's knowledge,
each of the MHC, the Mid-Tier Holding Company and the Bank has
obtained all licenses, permits, and other governmental
authorizations that are material for the conduct of its business,
and all such licenses, permits and other governmental
authorization are in full force and effect, and to the best of
such counsel's knowledge the Mid-Tier Holding Company and the
Bank are complying therewith in all material respects.
17
(iv) The Bank is an insured depository institution under the
provisions of the Federal Deposit Insurance Act, as amended, and
to such counsel's knowledge, no proceedings for the termination
or revocation of the federal or state deposit insurance of the
Bank are pending or threatened.
(v) Upon consummation of the Conversion, (a) the authorized,
issued and outstanding capital stock of the Holding Company will
be within the range set forth in the Prospectus under the caption
"Capitalization," and no shares of Common Stock have been or will
be issued and outstanding prior to the Closing Date (except for
the shares issued upon incorporation of the Holding Company to
facilitate the Conversion); (b) the shares of Common Stock of the
Holding Company to be subscribed for in the Offering will have
been duly and validly authorized for issuance, and when issued
and delivered by the Holding Company pursuant to the Plan against
payment of the consideration calculated as set forth in the Plan,
will be fully paid and nonassessable; and (c) the issuance of the
Shares is not subject to preemptive rights under the charter,
articles of incorporation or bylaws of the Holding Company, or
arising or outstanding by operation of law or, to the best
knowledge of such counsel, under any contract, indenture,
agreement, instrument or other document, except for the
subscription rights under the Plan.
(vi) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of
the Primary Parties; and this Agreement constitutes a valid,
legal and binding obligation of each of the Primary Parties,
enforceable in accordance with its terms, except as rights to
indemnity and contribution thereunder may be limited under
applicable law, subject to the qualification that (i) enforcement
thereof may be limited by bankruptcy, insolvency, moratorium,
reorganization or other laws (including the laws of fraudulent
conveyance) or judicial decisions affecting the enforceability of
creditors' rights generally, the rights of creditors of savings
banks or other financial institutions, the accounts of which are
insured by the FDIC, or the reorganization of financial
institutions and (ii) enforcement thereof is subject to general
equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and to the effect
of certain laws and judicial decisions upon the availability of
injunctive relief and enforceability of equitable remedies,
including the remedies of specific performance and self-help.
(vii) The Plan has been duly adopted by the Board of
Directors of the MHC in the manner required by the Conversion
Regulations and the MHC's charter and bylaws.
(viii) The Conversion Application and the Holding Company
Application have been approved by the OTS, and subject to the
satisfaction of any conditions set forth in such approvals, no
further approval, registration, authorization, consent or other
order of any federal or state regulatory agency, public board or
body is required in connection with the execution and delivery of
this Agreement, the offer, sale and issuance of the Shares and
the consummation of the Conversion, except as may be required
under the securities or "blue sky" laws of various jurisdictions
as to which no opinion need be rendered.
18
(ix) The Registration Statement has become effective under
the 1933 Act and to such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has
been issued, or proceedings for that purpose have been instituted
or threatened by the Commission.
(x) The terms and provisions of the shares of Common Stock
conform to the description thereof contained in the Registration
Statement and the Prospectus, and the forms of certificates
proposed to be used to evidence the shares of Common Stock are in
due and proper form.
(xi) At the time the Conversion Application was approved,
the Conversion Application (as amended or supplemented), complied
as to form in all material respects with the requirements of the
Conversion Regulations and all applicable laws, rules and
regulations and decisions and orders of the OTS, except as
modified or waived in writing by the OTS (other than the
financial statements, notes to financial statements, financial
tables and other financial and statistical data included therein
and the appraisal valuation and the business plan as to which
counsel need express no opinion). To such counsel's knowledge, no
person has sought to obtain regulatory or judicial review of the
final action of the OTS in approving the Applications.
(xii) At the time that the Registration Statement became
effective the Registration Statement, including the Prospectus
contained therein (as amended or supplemented) (other than the
financial statements, notes to financial statements, financial
tables or other financial and statistical data included therein
and the appraisal valuation and the business plan as to which
counsel need express no opinion), complied as to form in all
material respects with the requirements of the 1933 Act and the
rules and regulations promulgated thereunder.
(xiii) To such counsel's knowledge, there are no legal or
governmental proceedings pending, or threatened (i) asserting the
invalidity of this Agreement or (ii) seeking to prevent the
Conversion or the offer, sale or issuance of the Shares.
(xiv) The information in the Prospectus under the captions
"Regulation," "Taxation," "Restrictions on the Acquisition of
Fidelity Bankshares, Inc.," "Description of Capital Stock of
Fidelity Bankshares, Inc.," and "The Conversion and the
Offering," to the extent that such information constitutes
matters of law, summaries of legal matters, documents or
proceedings, or legal conclusions, has been reviewed by such
counsel and is accurate in all material respects (other than the
financial statements, notes to financial statements, financial
tables and other financial and statistical data included therein
and the appraisal valuation and the business plan as to which
counsel need express no opinion).
19
(xvi) None of the Primary Parties are required to be
registered as an investment company under the Investment Company
Act of 1940.
(xvii) None of the Primary Parties is in violation of its
articles of incorporation or its charter, as the case may be, or
its bylaws or, to the best of such counsel's knowledge, any
material obligation, agreement, covenant or condition contained
in any material contract, indenture, mortgage, loan agreement,
note, lease or other instrument filed as an exhibit to, or
incorporated by reference in, the Registration Statement, which
violation would have a Material Adverse Effect. In addition, the
execution and delivery of and performance under this Agreement by
the Primary Parties, the incurrence of the obligations set forth
herein and the consummation of the transactions contemplated
herein will not result in any violation of the provisions of the
articles of incorporation or charter, as the case may be, or the
bylaws of any of the Primary Parties or any violation of any
applicable law, act, regulation, or to such counsel's knowledge,
order or court order, writ, injunction or decree.
The Agent's counsel may rely on the opinion for purposes of its own
opinion (▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ and/or local counsel shall
expressly authorize such reliance). The opinion may be limited to matters
governed by the laws of the United States and the corporate laws of the State of
Delaware and, in the case of local counsel, the State of Florida. In rendering
such opinion, such counsel may rely (A) as to matters involving the application
of laws of any jurisdiction other than the United States, to the extent such
counsel deems proper and specified in such opinion, upon the opinion of counsel
reasonably acceptable to the Agent, as long as such other opinion indicates that
the Agent may rely on the opinion, and (B) as to matters of fact, to the extent
such counsel deems proper, on certificates of responsible officers of the
Primary Parties and public officials; provided copies of any such opinion(s) or
certificates of public officials are delivered to Agent together with the
opinion to be rendered hereunder by special counsel to the Primary Parties. In
rendering such opinion, all statements contained therein "to our knowledge" or
"to our attention" means the actual knowledge of the attorneys who have worked
on the transactions contemplated herein. The opinion of such counsel for the
Primary Parties shall state that it has no reason to believe that the Agent is
not reasonably justified in relying thereon.
(2) The letter of ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ to the effect
that during the preparation of the Registration Statement and the
Prospectus, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ participated in
conferences with certain officers of and other representatives of the
Primary Parties, counsel to the Agent, representatives of the independent
public accountants for the Primary Parties and representatives of the Agent
at which the contents of the Registration Statement and the Prospectus and
related matters were discussed and has considered the matters required to
be stated therein and the statements contained therein and, although
(without limiting the opinions provided pursuant to Section 10(b)(1)), ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ has not independently verified the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and Prospectus, on the basis of the foregoing,
nothing has come to the attention of ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
that caused ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ to believe that the
Registration Statement at the time it was declared effective by the
Commission and as of the date of such letter, contained or contains any
untrue statement of a material fact or omitted 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
(it being understood that counsel need express no comment or opinion with
respect to statements, notes to financial statements, schedules and other
financial and statistical data included, or statistical or appraisal
methodology employed, in the Registration Statement or Prospectus, the
appraisal valuation or the business plan).
20
(3) The favorable opinion, dated as of the Closing Date, of ▇▇▇▇▇
Peabody LLP, counsel for the Agent, with respect to such matters as the
Agent may reasonably require; such opinion may rely, as to matters of fact,
upon certificates of officers and directors of the Primary Parties
delivered pursuant hereto or as such counsel may reasonably request.
(4) A Blue Sky Memorandum from ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
and/or local counsel relating to the offering, including Agent's
participation therein, and should be furnished to Agent with a copy thereof
addressed to Agent or upon which ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
and/or local counsel shall state Agent may rely. The Blue Sky Memorandum
will relate to the necessity of obtaining or confirming exemptions,
qualifications or the registration of the common stock under applicable
state securities law.
(c) Concurrently with the execution of this Agreement, the Agent shall
receive a letter from Deloitte & Touche, LLP, dated the date hereof and
addressed to the Agent, such letter (i) confirming that Deloitte & Touche, LLP
is a firm of independent public accountants within the meaning of the 1933 Act
and the regulations promulgated thereunder, and stating in effect that in
Deloitte & Touche LLP's opinion the financial statements of the Mid-Tier Holding
Company included in the Prospectus comply as to form in all material respects
with the applicable accounting requirements of the 1933 Act and the 1934 Act and
the related rules and regulations of the Commission thereunder; (ii) stating in
effect that, on the basis of certain agreed upon procedures (but not an audit
examination in accordance with generally accepted auditing standards) consisting
of a reading of the latest available unaudited interim financial statements of
the Mid-Tier Holding Company prepared by the Mid-Tier Holding Company, a reading
of the minutes of the meetings of the Board of Directors and Audit Committee of
the Mid-Tier Holding Company and the Bank, a review of interim financial
information in accordance with Statement on Auditing Standards No. 71, and
consultations with officers of the Mid-Tier Holding Company and the Bank
responsible for financial and accounting matters, nothing came to their
attention which caused them to believe that: (A) such unaudited financial
statements, including recent developments, if any, are not in conformity with
generally accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included in the
Prospectus; or (B) during the period from the date of the latest unaudited
consolidated financial statements included in the Prospectus to a specified date
not more than three business days prior to the date of the Prospectus, there was
any increase in borrowings (defined as securities sold under agreements to
repurchase and any other form of debt other than deposits) of the Bank or
decrease in the loan allowance or total assets or there was any change in
retained earnings of the Bank at the date of such letter as compared with
amounts shown in the latest unaudited statement of condition included in the
Prospectus or there was any decrease in net income, non-interest income or net
interest income or increase in non-interest expense of the Bank for the number
of full months commencing immediately after the period covered by the latest
audited income statement included in the Prospectus and ended on the latest
month end prior to the date of the Prospectus as compared to the corresponding
period in the preceding year; and (iii) stating that, in addition to the audit
examination referred to in its opinion included in the Prospectus and the
performance of the procedures referred to in clause (ii) of this subsection (c),
they have compared with the general accounting records of the Bank, which are
subject to the internal controls of the accounting system of the Bank and other
data prepared by the Primary Parties directly from such accounting records, to
the extent specified in such letter, such amounts and/or percentages set forth
in the Prospectus as the Agent may reasonably request, and they have found such
amounts and percentages to be in agreement therewith (subject to rounding).
21
(d) At the Closing Date, the Agent shall receive a letter from Deloitte
& Touche, LLP dated the Closing Date, addressed to the Agent, confirming the
statements made by its letter delivered by it pursuant to subsection (c) of this
Section 10, the "specified date" referred to in clause (ii)(B) thereof to be a
date specified in such letter, which shall not be more than three business days
prior to the Closing Date.
(e) At the Closing Date, counsel to the Agent shall have been furnished
with such documents and opinions as counsel for the Agent may require for the
purpose of enabling them to advise the Agent with respect to the issuance and
sale of the Common Stock as herein contemplated and related proceedings, or in
order to evidence the accuracy of any of the representations and warranties, or
the fulfillment of any of the conditions herein contained.
(f) At the Closing Date, the Agent shall receive a certificate of the
Chief Executive Officer and Chief Financial Officer of each of the Primary
Parties, dated the Closing Date, to the effect that: (i) they have examined the
Prospectus and at the time the Prospectus became authorized for final 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 the
light of the circumstances under which they were made, not misleading; (ii)
there has not been, since the respective dates as of which information is given
in the Prospectus, any Material Adverse Effect otherwise than as set forth or
contemplated in the Registration Statement and the Prospectus; (iii) the
representations and warranties contained in Section 6 of this Agreement are true
and correct with the same force and effect as though made at and as of the
Closing Date; (iv) the Primary Parties have complied in all material respects
with all material agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the Closing Date including the conditions
contained in this Section 10; (v) no stop order has been issued or, to the best
of their knowledge, is threatened, by the Commission or any other governmental
body; (vi) no order suspending the Offering, the Conversion, the acquisition of
all of the shares of the Bank by the Holding Company, the transactions required
under the Plan to consummate the conversion or the effectiveness of the
Prospectus has been issued and to the best of their knowledge, no proceedings
for any such purpose have been initiated or threatened by the OTS, the
Commission, or any other federal or state authority; (vii) to the best of their
knowledge, no person has sought to obtain regulatory or judicial review of the
action of the OTS in approving the Plan or to enjoin the Conversion.
22
(g) At the Closing Date, the Agent shall receive a letter from RP
Financial, LC., dated as of the Closing Date, (i) confirming that said firm is
independent of the Primary Parties and is experienced and expert in the area of
corporate appraisals, (ii) stating in effect that the Appraisal complies in all
material respects with the applicable requirements of the Conversion
Regulations, and (iii) further stating that its opinion of the aggregate pro
forma market value of the Primary Parties, as converted, expressed in the
appraisal as most recently updated, remains in effect.
(h) None of the Primary Parties shall have sustained, since the date of
the latest financial statements included in the Registration Statement and
Prospectus, any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth in the Registration Statement and the Prospectus, and since
the respective dates as of which information is given in the Registration
Statement and the Prospectus, there shall not have been any Material Adverse
Effect, otherwise than as set forth or contemplated in the Registration
Statement and the Prospectus, the effect of which, in any such case described
above, is in the Agent's reasonable judgment sufficiently material and adverse
as to make it impracticable or inadvisable to proceed with the Offering or the
delivery of the Shares on the terms and in the manner contemplated in the
Prospectus.
(i) Prior to and at the Closing Date, in the reasonable opinion of the
Agent (i) there shall have been no material adverse change in the financial
condition or in the earnings or business affairs of any of the Primary Parties
independently, or the Primary Parties taken as a whole, from and as of the
latest dates as of which such condition is set forth in the Prospectus, except
as referred to therein; or (ii) there shall have been no material transaction
entered into by the Primary Parties, independently or considered as one
enterprise, from the latest date as of which the financial condition of the
Primary Parties is set forth in the Prospectus, other than transactions referred
to or contemplated therein which is reasonably likely to result in a Material
Adverse Effect.
(j) At or prior to the Closing Date, the Agent shall receive (i) a copy
of the Conversion Application and a copy of the letter from the OTS approving
the Conversion Application, (ii) a copy of the order from the Commission
declaring the Registration Statement effective, (iii) a certified copy of the
certificate of incorporation of the Holding Company, (iv) a copy of the letter
from the OTS approving the Holding Company Application, (v) a certificate from
the FDIC evidencing the Bank's insurance of accounts, and (vi) any other
documents that Agent shall reasonably request.
23
(k) Subsequent to the date hereof, there shall not have occurred any of
the following: (i) a suspension or limitation in trading in securities generally
on the New York Stock Exchange or American Stock Exchange or in the
over-the-counter market, or quotations halted generally on the NASDAQ Stock
Market, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices for securities have been required by either of such exchanges
or the NASD or by order of the Commission or any other governmental authority
other than temporary trading halts (A) imposed as a result of intraday changes
in the Dow ▇▇▇▇▇ Industrial Average, (B) lasting no longer than until the
regularly scheduled commencement of trading on the next succeeding business-day,
and (C) which, when combined with all other such halts occurring during the
previous five business days, total less than three; (ii) a general moratorium on
the operations of federally-insured financial institutions or a general
moratorium on the withdrawal of deposits from commercial banks or other
federally-insured financial institutions declared by either federal or state
authorities; or (iii) there shall not have occurred any material adverse change
in the financial markets in the United States or elsewhere or any outbreak of
hostilities or escalation thereof or other calamity or crisis the effect of
which, in the judgment of the Agent, is so material and adverse as to make it
impracticable to market the Shares or to enforce contracts, including
subscriptions or orders, for the sale of the Shares.
(l) All such options, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to the Agent and to counsel for the Agent. Any certificate
signed by an officer of the Mid-Tier Holding Company, the Holding Company or the
Bank and delivered to the Agent or to counsel for the Agent shall be deemed a
representation and warranty by the Mid-Tier Holding Company, the Holding Company
or the Bank, as the case may be, to the Agent as to the statements made therein.
Section 11. Indemnification.
(a) The Primary Parties jointly and severally agree to indemnify and
hold harmless the Agent, its officers, directors, agents, attorneys, servants
and employees and each person, if any, who controls the Agent within the meaning
of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act, against any and
all loss, liability, claim, damage or expense whatsoever (including but not
limited to settlement expenses, subject to the limitation set forth in the last
sentence of subsection (c) below), joint or several, that the Agent or any of
such officers, directors, agents, attorneys, servants, employees and controlling
Persons (collectively, the "Related Persons") may suffer or to which the Agent
or the Related Persons may become subject under all applicable federal and state
laws or otherwise, and to promptly reimburse the Agent and any Related Persons
upon written demand for any reasonable expenses (including reasonable fees and
disbursements of counsel) incurred by the Agent or any Related Persons in
connection with investigating, preparing or defending any actions, proceedings
or claims (whether commenced or threatened) to the extent such losses, claims,
damages, liabilities or actions: (i) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment or supplement thereto), the Prospectus
(or any amendment or supplement thereto), the Applications, or any blue sky
application or other instrument or document of the Primary Parties or based upon
written information supplied by any of the Primary Parties filed in any state or
jurisdiction to register or qualify any or all of the Shares under the
securities laws thereof (collectively, the "Blue Sky Applications"), or any
application or other document, advertisement, or communication ("Sales
Information") prepared, made or executed by or on behalf of any of the Primary
24
Parties with its consent or based upon written information furnished by or on
behalf of any of the Primary Parties, in order to qualify or register the Shares
under the securities laws thereof, (ii) arise out of or are based upon the
omission or alleged omission to state in any of the foregoing documents or
information, a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; (iii) arise from any theory of liability whatsoever
relating to or arising from or based upon the Registration Statement (or any
amendment or supplement thereto), the Prospectus (or any amendment or supplement
thereto), the Applications, any Blue Sky Applications or Sales Information or
other documentation distributed in connection with the Conversion; or (iv)
result from any claims made with respect to the accuracy, reliability and
completeness of the records of Eligible Account Holders and Supplemental
Eligible Account Holders or for any denial or reduction of a subscription or
order to purchase Common Stock, whether as a result of a properly calculated
allocation pursuant to the Plan or otherwise, based upon such records; provided,
however, that no indemnification is required under this subsection (a) to the
extent such losses, claims, damages, liabilities or actions arise out of or are
based upon any untrue material statements or alleged untrue material statements
in, or material omission or alleged material omission from, the Registration
Statement (or any amendment or supplement thereto) or the Prospectus (or any
amendment or supplement thereto), the Applications, the Blue Sky Applications or
Sales Information or other documentation distributed in connection with the
Conversion made in reliance upon and in conformity with written information
furnished to the Primary Parties by the Agent or its representatives (including
counsel) with respect to the Agent expressly for use in the Registration
Statement (or any amendment or supplement thereto) or Prospectus (or any
amendment or supplement thereto) under the captions "Market for the Common
Stock," "The Conversion and the Offering - Marketing and Arrangements" except
for information derived from the Prospectus. Provided further, that the Primary
Parties will not be responsible for any loss, liability, claim, damage or
expense to the extent a court of competent jurisdiction finds they result
primarily from material oral misstatements by the Agent to a purchaser of Shares
which are not based upon information in the Registration Statement or
Prospectus, or from actions taken or omitted to be taken by the Agent in bad
faith or from the Agent's gross negligence or willful misconduct, and the Agent
agrees to repay to the Primary Parties any amounts advanced to it by the Primary
Parties in connection with matters as to which it is found by a court of
competent jurisdiction not to be entitled to indemnification hereunder.
(b) The Agent agrees to indemnify and hold harmless the Primary
Parties, their directors and officers, agents, servants and employees and each
person, if any, who controls any of the Primary Parties within the meaning of
Section 15 of the 1933 Act or Section 20(a) of the 1934 Act against any and all
loss, liability, claim, damage or expense whatsoever (including but not limited
to settlement expenses, subject to the limitation set forth in the last sentence
of subsection (c) below), joint or several which they, or any of them, may
suffer or to which they, or any of them, may become subject under all applicable
federal and state laws or otherwise, and to promptly reimburse the Primary
Parties and any such persons upon written demand for any reasonable expenses
(including fees and disbursements of counsel) incurred by them in connection
with investigating, preparing or defending any actions, proceedings or claims
(whether commenced or threatened) to the extent such losses, claims, damages,
liabilities or actions arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment or supplement thereto), the Applications or any Blue
Sky Applications or Sales Information or are based upon the omission or alleged
omission to state in any of the foregoing documents a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided, however,
that the Agent's obligations under this Section 11(b) shall exist only if and
only to the extent that such untrue statement or alleged untrue statement was
made in, or such material fact or alleged material fact was omitted from, the
Applications, Registration Statement (or any amendment or supplement thereto) or
the Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Primary Parties by the
Agent or its representatives (including counsel) expressly for use under the
captions "Market for the Common Stock", "The Conversion and the Offering -
Marketing Arrangements."
25
(c) Each indemnified party shall give prompt written notice to each
indemnifying party of any action, proceeding, claim (whether commenced or
threatened), or suit instituted against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve it from any liability which it may have on account of this Section 11,
Section 12 or otherwise, unless the failure to give such notice promptly results
in material prejudice to the indemnifying party. An indemnifying party may
participate at its own expense in the defense of such action. In addition, if it
so elects within a reasonable time after receipt of such notice, an indemnifying
party, jointly with any other indemnifying parties receiving such notice, may
assume the defense of such action with counsel chosen by it reasonably
acceptable to the indemnified parties that are defendants in such action, unless
such indemnified parties reasonably object to such assumption on the ground that
there may be legal defenses available to them that are different from or in
addition to those available to such indemnifying party. If an indemnifying party
assumes the defense of such action, the indemnifying parties shall not be liable
for any fees and expenses of counsel for the indemnified parties incurred
thereafter in connection with such action, proceeding or claim, other than
reasonable costs of investigation. In no event shall the indemnifying parties be
liable for the fees and expenses of more than one separate firm of attorneys
(unless an indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from or in
addition to those of other indemnified parties) for all indemnified parties in
connection with any one action, proceeding or claim or separate but similar or
related actions, proceedings or claims in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party, shall be
liable for any settlement of any action, proceeding or suit, which settlement is
effected without its prior written consent. The Primary Parties shall not,
without the written consent of the Agent, settle or compromise any claim against
them based upon circumstances giving rise to an indemnification claim against
the Primary Parties hereunder unless such settlement or compromise provides that
the Agent and the other indemnified parties shall be unconditionally and
irrevocably released from all liability in respect to such claim.
(d) The agreements contained in this Section 11 and in Section 12
hereof and the representations and warranties of the Primary Parties set forth
in this Agreement shall remain operative and in full force and effect regardless
of (i) any investigation made by or on behalf of the Agent or its officers,
directors, controlling persons, agents or employees or by or on behalf of any of
the Primary Parties or any officers, directors, controlling persons, agents or
employees of any of the Primary Parties; (ii) delivery of and payment hereunder
for the Shares; or (iii) any termination of this Agreement. Notwithstanding the
prior sentence, Sections 11 and 12 hereof are subject to and limited by Section
23A of the Federal Reserve Act, as applicable.
26
Section 12. Contribution.
(a) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 11 is due in
accordance with its terms but is for any found in a final judgment by a court to
be unavailable from the Primary Parties or the Agent, the Primary Parties and
the Agent shall contribute to the aggregate losses, claims, damages and
liabilities of the nature contemplated by such indemnification (including any
investigation, legal and other expenses incurred in connection therewith and any
amount paid in settlement of any action, suit, or proceeding of any claims
asserted, but after deducting any contribution received by the Primary Parties
or the Agent from persons other than the other party thereto, who may also be
liable for contribution) in such proportion so that (i) the Agent is responsible
for that portion represented by the percentage that the fees paid to the Agent
pursuant to Section 4 of this Agreement (not including expenses) ("Agent's
Fees"), less any portion of Agent's Fees paid by Agent to Assisting Brokers,
bear to the total proceeds received by the Primary Parties from the sale of the
Shares in the Offering, net of all expenses of the Offering, except Agent's fees
and (ii) the Primary Parties shall be responsible for the balance. If, however,
the allocation provided above is not permitted by applicable law or if the
indemnified party failed to give the notice required under Section 11 above,
then each indemnifying party shall contribute to such amount paid or payable to
such indemnified party in such proportion as is appropriate to reflect not only
such relative fault of the Primary Parties on the one hand and the Agent on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions, proceedings or claims in
respect thereof), but also the relative benefits received by the Primary Parties
on the one hand and the Agent on the other from the Offering, as well as any
other relevant equitable considerations. The relative benefits received by the
Primary Parties on the one hand and the Agent on the other hand shall be deemed
to be in the same proportion as the total proceeds from the Offering, except
Agent's fees, net of all expenses of the Offering, received by the Primary
Parties bear, with respect to the Agent, to the total fees (not including
expenses) received by the Agent less the portion of such fees paid by the Agent
to Assisting Brokers. The 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 or alleged omission to state a material fact relates to
information supplied by the Primary Parties on the one hand or the Agent on the
other and the parties relative intent, good faith, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Primary Parties and the Agent agree that it would not be just and equitable
if contribution pursuant to this Section 12 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 12. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or action, proceedings or claims in respect thereof)
referred to above in this Section 12 shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action, proceeding or claim. It is expressly
agreed that the Agent shall not be liable for any loss, liability, claim, damage
or expense or be required to contribute any amount which in the aggregate
27
exceeds the amount paid (excluding reimbursable expenses) to the Agent under
this Agreement less the portion of such fees paid by the Agent to Assisting
Brokers. It is understood and agreed that the above-stated limitation on the
Agent's liability is essential to the Agent and that the Agent would not have
entered into this Agreement if such limitation had not been agreed to by the
parties to this Agreement. No person found guilty of any fraudulent
misrepresentation (within the meaning of Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be
entitled to contribution with respect to any loss or liability arising from such
misrepresentation from any person who was not found guilty of such fraudulent
misrepresentation. The duties, obligations and liabilities of the Primary
Parties and the Agent under this Section 12 and under Section 11 shall be in
addition to any duties, obligations and liabilities which the Primary Parties
and the Agent may otherwise have. For purposes of this Section 12, each of the
Agent's and the Primary Parties' officers, directors and, in the case of the
Primary Parties, trustees and each person, if any, who controls the Agent or any
of the Primary Parties within the meaning of the 1933 Act and the 1934 Act shall
have the same rights to contribution as the Primary Parties and the Agent. Any
party entitled to contribution, promptly after receipt of notice of commencement
of any action, suit, claim or proceeding against such party in respect of which
a claim for contribution may be made against another party under this Section
12, will notify such party from whom contribution may be sought, but the
omission to so notify such party shall not relieve the party from whom
contribution may be sought from any other obligation it may have hereunder or
otherwise than under this Section 12.
Section 13. Survival.
(a) All representations, warranties and indemnities and other
statements contained in this Agreement (and in Paragraph 11 of the Letter
Agreement), or contained in certificates of officers of the Primary Parties or
the Agent submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any termination or cancellation of this Agreement or
any investigation made by or on behalf of the Agent or its controlling persons,
or by or on behalf of the Primary Parties and shall survive the issuance of the
Shares, and any legal representative, successor or assign of the Agent, any of
the Primary Parties, and any indemnified person shall be entitled to the benefit
of the respective agreements, indemnities, warranties and representations.
(b) The provisions of Paragraph 10 of the Letter Agreement,
"Availability of `Stars' Program," shall survive the issuance of the Shares (but
not any termination or cancellation of this Agreement) for a period of one (1)
year, and any legal representative, successor or assign of the Agent, and any of
the Primary Parties shall be entitled during such period to the benefit of the
agreements contained therein.
Section 14. Termination. Agent may terminate this Agreement by giving
the notice indicated below in this Section at any time after this Agreement
becomes effective as follows:
(a) In the event the Holding Company fails to consummate the sale of
the minimum number of the Shares prior to June 30, 2001, in accordance with the
provisions of the Plan or as required by the Conversion Regulations and
applicable law, upon notice by the Agent this Agreement shall terminate upon
refund by the Primary Parties to each person who has subscribed for or ordered
any of the Shares the full amount which it may have received from such person,
together with interest in accordance with Section 3 hereof and any such
termination shall be without liability of any party to any other party except as
otherwise provided in Sections 3, 4, 9, 11 and 12 hereof and Paragraph 11 of the
Letter Agreement, "Indemnification."
28
(b) If any of the conditions specified in Section 10 hereof shall not
have been fulfilled when and as required by this Agreement, or by the Closing
Date, or waived in writing by the Agent, this Agreement and all of the Agent's
obligations hereunder may be canceled by the Agent by notifying the Bank of such
cancellation in writing at any time at or prior to the Closing Date, and any
such cancellation shall be without liability of any party to any other party
except as otherwise provided in Sections 3, 4, 9, 11 and 12 hereof and Paragraph
11 of the Letter Agreement, "Indemnification."
(c) If Agent elects to terminate this Agreement as provided in this
Section, the Mid-Tier Holding Company and the MHC shall be notified by the Agent
as provided in Section 15 hereof.
(d) If this Agreement is terminated in accordance with the provisions
of this Agreement, the Primary Parties shall pay the Agent the fees earned
pursuant to Section 4 and will reimburse the Agent for its reasonable expenses
pursuant to Section 9, including without limitation accounting, communication,
legal and travel expenses.
Section 15. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to Agent shall be
directed to ▇▇▇▇, ▇▇▇▇ & Co., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, First Vice President (with a copy to ▇▇▇▇▇
▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇; Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.); notices to the Primary Parties shall be directed to
Fidelity Federal Bank & Trust, ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President and Chief Executive Officer (with a copy
to ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.,
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇, Esq.)
Section 16. Parties. This Agreement shall inure to the benefit of and
be binding upon the Agent and the Primary Parties, and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
parties hereto and their respective successors and the controlling persons and
officers and directors referred to in Sections 11 and 12 and their heirs and
legal representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provisions herein contained. It is understood
and agreed that this Agreement is the exclusive agreement among the parties,
supersedes any prior Agreement among the parties and may not be varied except by
a writing signed by all parties, except for Paragraphs 3, 9 and 11 of the Letter
Agreement, which are not hereby superseded.
Section 17. Partial Invalidity. In the event that any term, provision
or covenant herein or the application thereof to any circumstances or situation
shall be invalid or unenforceable, in whole or in part, the remainder hereof and
the application of said term, provision or covenant to any other circumstance or
situation shall not be affected thereby, and each term, provision or covenant
herein shall be valid and enforceable to the full extent permitted by law.
29
Section 18. Construction. This Agreement shall be construed in
accordance with the laws of the State of New Jersey.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
30
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
you and us in accordance with its terms.
Very truly yours,
FIDELITY FINANCIAL MHC.
By: __________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Executive Officer
FIDELITY BANKSHARES, INC.
By: __________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Executive Officer
The foregoing Agency Agreement is hereby confirmed and accepted as of the date
first set forth above.
▇▇▇▇, ▇▇▇▇ & CO., INC.
By: __________________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
First Vice President
31
NP DRAFT - 12/15/00
EXHIBIT B
MASTER SELECTED DEALER AGREEMENT
_______________, 2000
▇▇▇▇ ▇▇▇▇ & Co., Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
(1) General. We understand that ▇▇▇▇ ▇▇▇▇ & Co., Inc. ("▇▇▇▇ ▇▇▇▇") is
entering into this Agreement with us and other firms who may be offered the
right to purchase as principal a portion of securities being distributed to the
public. The terms and conditions of this Agreement shall be applicable to any
public offering of securities ("Securities") pursuant to a registration
statement filed under the Securities Act of 1933 (the "Securities Act") wherein
▇▇▇▇ ▇▇▇▇ (acting for its own account or for the account of any underwriting or
similar group or syndicate) is responsible for managing or otherwise
implementing the sale of the Securities to selected dealers ("Selected Dealers")
and has informed us that such terms and conditions shall be applicable. Any such
offering of Securities to us as a Selected Dealer is hereinafter called an
"Offering." In the case of any Offering in which you are acting for the account
of any underwriting or similar group or syndicate ("Underwriters"), the terms
and conditions of this Agreement shall be for the benefit of, and binding upon,
such Underwriters, including, in the case of any Offering in which you are
acting with others as representatives of Underwriters, such other
representatives. The term "preliminary prospectus" means any preliminary
prospectus relating to an Offering of Securities or any preliminary prospectus
supplement together with a prospectus relating to an Offering of Securities; the
term "Prospectus" means the prospectus, together with the final prospectus
supplement, if any, relating to an Offering of Securities, filed pursuant to
Rule 424(b) or Rule 424(c) under the Securities Act or any successor or similar
rules.
(2) Conditions of Offering, Acceptance and Purchase. Any Offering will be
subject to delivery of the Securities and their acceptance by you and any other
Underwriters, may be subject to the approval of all legal matters by counsel and
the satisfaction of other conditions, and may be made on the basis of
reservation of Securities or an allotment against subscription. You will advise
us by telegram, telex, facsimile, e-mail, or other form of written communication
("Written Communication") of the particular method and supplementary terms and
conditions (including, without limitation, the information as to prices and
offering date referred to in Section 3(b)) of any Offering in which we are
invited to participate. To the extent such supplementary terms and conditions
are inconsistent with any provision herein, such terms and conditions shall
supersede any such provision. Unless otherwise indicated in any such Written
Communication, acceptances and other communications by us with respect to any
Offering should be sent to ▇▇▇▇ ▇▇▇▇. You reserve the right to reject any
acceptance in whole or in part. Payment for Securities purchased by us is to be
made at such office as you may designate, at the public offering price, or, if
you shall so advise us, at such price less the concession to dealers or at the
price set forth or indicated in a Written Communication, on such date as you
shall determine, on one day's prior notice to us, by wire transfer to a ▇▇▇▇
▇▇▇▇ account, against delivery of certificates or other forms evidencing such
Securities. If payment is made for Securities purchased by us at the public
offering price, the concession to which we shall be entitled will be paid to us
upon termination of the provisions of Section 3(b) with respect to such
Securities.
▇▇▇▇ ▇▇▇▇ & Co., Inc
______, 2000
Page 2
Unless we promptly give you written instructions otherwise, if
transactions in the Securities may be settled through the facilities of The
Depository Trust Company, delivery of Securities purchased by us will be made
through such facilities if we are a member, or if we are not a member,
settlement may be made through our ordinary correspondent who is a member.
(3) Representations, Warranties, and Agreements.
(a) Prospectuses. You shall provide us with such number of copies of
each preliminary prospectus, the Prospectus and any supplement thereto relating
to each Offering as we may reasonably request for the purposes contemplated by
the Securities Act and the Securities Exchange Act of 1934 (Exchange Act) and
the applicable Rules and regulations of the Securities and Exchange Commission
thereunder. We represent that we are familiar with Rule 15c2-8 under the
Exchange Act relating to the distribution of preliminary and final prospectuses
and agree that we will comply therewith. We agree to keep an accurate record of
our distribution (including dates, number of copies, and persons to whom sent)
of copies of the Prospectus or any preliminary prospectus (or any amendment or
supplement to any thereof), and promptly upon request by you, to bring all
subsequent changes to the attention of anyone to whom such material shall have
been furnished. We agree to furnish to persons who receive a confirmation of
sale a copy of the Prospectus filed pursuant to Rule 424(b) or Rule 424(c) under
the Securities Act. We agree that in purchasing Securities in an Offering we
will rely upon no statements whatsoever, written or oral, other than the
statements in the Prospectus delivered to us by you. We will not be authorized
by the issuer or other seller of Securities offered pursuant to a Prospectus or
by any Underwriters to give any information or to make any representation not
contained in the Prospectus in connection with the sale of such Securities.
▇▇▇▇ ▇▇▇▇ & Co., Inc
______, 2000
Page 3
(b) Offer and Sale to the Public. With respect to any Offering of
Securities, you will inform us by a Written Communication of the public offering
price, the selling concession, the reallowance (if any) to dealers, and the time
when we may commence selling Securities to the public. After such public
offering has commenced, you may change the public offering price, the selling
concession, and the reallowance to dealers. With respect to each Offering of
Securities, until the provisions of this Section 3(b) shall be terminated
pursuant to Section 4, we agree to offer Securities to the public only at the
public offering price, except that if a reallowance is in effect, a reallowance
from the public offering price not in excess of such reallowance may be allowed
as consideration for services rendered in distribution to dealers who are
actually engaged in the investment banking or securities business, who execute
the written agreement prescribed by Rule 2740 of the Rules of Conduct of the
National Association of Securities Dealers, Inc. (the "NASD") and who are either
members in good standing of the NASD or foreign brokers or dealers not eligible
for membership in the NASD who represent to us that they will promptly reoffer
such Securities at the public offering price and will abide by the conditions
with respect to foreign brokers and dealers set forth in Section 3(e).
(c) Stabilization and Overallotment. You may, with respect to any
Offering, be authorized to over-allot in arranging sales to Selected Dealers, to
purchase and sell Securities, any other securities of the issuer of the
Securities of the same class and series and any other securities of such issuer
that you may designate for long or short account, and to stabilize or maintain
the market price of the Securities. We agree to advise you from time to time
upon request, prior to the termination of the provisions of Section 3(b) with
respect to any Offering, of the amount of Securities purchased by us hereunder
remaining unsold and we will, upon your request, sell to you, for the accounts
of the Underwriters, such amount of Securities as you may designate, at the
public offering price thereof less an amount to be determined by you not in
excess of the concession to dealers. In the event that prior to the later of (i)
the termination of the provisions of Section 3(b) with respect to any Offering,
or (ii) the covering by you of any short position created by you in connection
with such Offering for your account or the account of one or more Underwriters,
you purchase or contract to purchase for the account of any of the Underwriters,
in the open market or otherwise, any Securities theretofore delivered to us, you
reserve the right to withhold the above-mentioned concessions to dealers on such
Securities if sold to us at the public offering price, or if such concession has
been allowed to us through our purchase at a net price, we agree to repay such
concession upon your demand, plus in each case any taxes on redelivery,
commissions, accrued interest and dividends paid in connection with such
purchase or contract to purchase.
▇▇▇▇ ▇▇▇▇ & Co., Inc
______, 2000
Page 4
(d) Open Market Transactions. We agree to abide by Regulation M under
the Exchange Act and we agree not to bid for, purchase, attempt to purchase, or
sell, directly of indirectly, any Securities, any other Reference Securities (as
defined in Regulation M) of the issuer, or any other securities of such issuer
as you may designate, except as brokers pursuant to unsolicited orders and as
otherwise provided in this Agreement. If the Securities are common stock or
securities convertible into common stock, we agree not to effect, or attempt to
induce others to effect, directly or indirectly, and transactions in or relating
to any stock of such issuer, except to the extent permitted by Rule 101 of
Regulation M under the Exchange Act.
(e) NASD. We represent that we are actually engaged in the investment
banking or securities business and we are either a member in good standing of
the NASD, or, if not such a member, a foreign dealer not eligible for
membership. If we are such a member we agree that in making sales of the
Securities we will comply with all applicable Rules of the NASD, including,
without limitation, the NASD's Interpretation with Respect to Free-Riding and
Withholding and Rule 274 of the Conduct Rules. If we are such a foreign dealer,
we agree not to offer or sell any Securities in the United States of America
except through you and in making sales of Securities outside the United States
of America we agree to comply as though we were a member with such
Interpretation and Rule 2730, 2740 and 2750 of the Conduct Rules of the NASD and
to comply with Rule 2420 of the conduct Rules of the NASD as it applies to a
nonmember broker or dealer in a foreign country.
(f) Relationship among Underwriters and Selected Dealers. You may buy
Securities from or sell Securities to any Underwriter or Selected Dealer and,
with your consent, the Underwriters (if any) and the Selected Dealers may
purchase Securities from and sell Securities to each other at the public
offering price less all or any part of the concession. We are not authorized to
act as agent for you or any Underwriter or the issuer or other seller of any
Securities in offering Securities to the public or otherwise. Nothing contained
herein or in any Written Communication from you shall constitute the Selected
Dealers partners with you or any Underwriter or with one another. Neither you
nor any Underwriter shall be under any obligation to us except for obligations
assumed hereby or in any Written Communication from you in connection with any
Offering. In connection with any Offering, we agree to pay our proportionate
share of any claim, demand, or liability asserted against us, and the other
Selected Dealers or any of them, or against you or the Underwriters, if any,
based on any claim that such Selected Dealers or any of them constitute an
association, unincorporated business, or other separate entity, including in
each case our proportionate share of any expense incurred in defending against
any such claim, demand, or liability.
▇▇▇▇ ▇▇▇▇ & Co., Inc
______, 2000
Page 5
(g) Blue Sky Laws. Upon application to you, you will inform us as to
the jurisdictions in which you believe the Securities have been qualified for
sale or are exempt under the respective securities or "blue sky" laws of such
jurisdictions We understand and agree that compliance with the securities of
"blue sky" laws in each jurisdiction in which we shall offer or sell any of the
Securities shall be our sole responsibility and that you assume no
responsibility or obligations as to the eligibility of the Securities for sale
or our right to sell the Securities in any jurisdiction.
(h) Compliance with Law. We agree that in selling Securities pursuant
to any Offering (which agreement shall also be for the benefit of the issuer or
other seller of such Securities), we will comply with the applicable provisions
of the Securities Act and the Exchange Act, the applicable Rules and regulations
of the Securities and Exchange Commission thereunder, the applicable Rules and
regulations of the NASD, and the applicable Rules and regulations of any
securities exchange having jurisdiction over the Offering. You shall have full
authority to take such action as you may deem advisable in respect of all
matters pertaining to any Offering. Neither you nor any Underwriter shall be
under any liability to us, except for lack of good faith and for obligations
expressly assumed by you in the Agreement; provided, however, that nothing in
this sentence shall be deemed to relieve you from any liability imposed by the
Securities Act.
(4) Termination; Supplements and Amendments. This Agreement may be
terminated by either party hereto upon five business days' written notice to the
other party; provided that with respect to any Offering for which a Written
Communication was sent and accepted prior to such notice, this Agreement as it
applies to such Offering shall remain in full force and effect and shall
terminate with respect to such offering in accordance with the last sentence of
this Section. This Agreement may be supplemented or amended by you by written
notice thereof to us, and any such supplement or amendment to this Agreement
shall be effective with respect to any Offering to which this Agreement applies
after the date of such supplement or amendment. Each reference to "this
Agreement" herein shall, as appropriate, be to this Agreement as so amended and
supplemented. The terms and conditions set forth in Sections 3(b) and (d) with
regard to any Offering will terminate at the close of the business on the
thirtieth day after the date of the initial public offering of the Securities to
which such Offering relates, but such terms and conditions, upon notice to us,
may be terminated by you at any time.
(5) Successors and Assigns. This Agreement shall be bind one, and inure to
the benefit of, the parties hereto and other persons specified or indicated in
Section 1, and the respective successors and assigns of each of them.
▇▇▇▇ ▇▇▇▇ & Co., Inc
______, 2000
Page 6
(6) Governing Law. This Agreement and the terms and conditions set forth
herein with respect to any Offering together with such supplementary terms and
conditions with respect to such Offering as may be contained in any Written
Communication from you to us in connection therewith shall be governed by , and
construed in accordance with, the laws of the State of New York.
By signing this Agreement we confirm that our subscription to, or our
acceptance of any reservation of, any Securities pursuant to an Offering shall
constitute (i) acceptance of any agreement to the terms and conditions of this
Agreement (as supplemented and amended pursuant to Section 4) together with and
subject to any supplementary terms and conditions contained in any Written
Communication from you in connection with such Offering, all of which shall
constitute a binding agreement between us and you, individually, or as
representative of any Underwriters, (ii) in confirmation that our
representations and warranties set forth in Section 3 are true and correct at
that time and (iii) confirmation that our agreements set forth in Sections 2 and
3 have been and will be fully performed by us to the extent and at the times
required thereby.
Very truly yours,
-------------------------------------
(Name of Firm)
By:
-------------------------------------
Confirmed, as of the date first above written.
▇▇▇▇, ▇▇▇▇ & CO., INC.
By:
-----------------------------------
-----------------------------------
Title
Execution Date:
-------------------