COMMUNITY FIRST BANCORP, INC.
(a Maryland corporation)
_________ Shares
(Subject to an Increase Up to _________ Shares)
COMMON SHARES
(Par Value $.01 Per Share)
Subscription Price $_____ Per Share
AGENCY AGREEMENT
_____________, 2003
Keefe, Bruyette & Woods, Inc
211 Bradenton Drive
Dublin, Ohio 43017-5034
Ladies and Gentlemen:
Community First Bancorp, Inc., a newly formed Maryland corporation (the
"Company") and Community First Bank, a federally chartered mutual savings bank
(the "Bank"), hereby confirm, jointly and severally, their agreement with Keefe,
Bruyette & Woods, Inc. ("KBW" or the "Agent"), as follows:
Section 1. The Offering. In accordance with a Plan of Conversion from
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Mutual to Stock Organization (the "Plan" or "Plan of Conversion") adopted by the
Board of Directors of the Bank, the Bank will convert from a federally chartered
mutual savings bank to a federally chartered stock savings bank and issue all of
its outstanding capital stock to the Company.
Pursuant to the Plan, the Company will offer and sell up to _________
of its Common Shares in a subscription offering (the "Subscription Offering")
to: (1) depositors of the Bank with Qualifying Deposits, as defined in the Plan,
as of December 31, 2001 ("Eligible Account Holders"); (2) depositors of the Bank
with Qualifying Deposits as of March 31, 2003 ("Supplemental Eligible Account
Holders"); and (3) Members, as of the Voting Record Date (as defined in the
Plan), who are not Eligible Account Holders or Supplemental Eligible Account
Holders ("Other Members"). The Common Shares to be sold by the Company in the
Offering (as defined below) are hereinafter called the "Shares." Subject to the
prior subscription rights of the above-listed parties, the Company is offering
for sale in a direct community offering (the "Community Offering," or "Direct
Community Offering," and when referred to together with the Subscription
Offering, the "Subscription and Community Offering") which may be commenced
concurrently with, during, or after the Subscription Offering, the Shares not
subscribed for or ordered in the Subscription Offering to members of the general
public to whom a copy of the
Prospectus (as hereinafter defined) is delivered with a preference given to
natural persons residing in Hopkins County, Kentucky ("Preferred Subscribers").
Shares not subscribed for in the Subscription and Community Offering, at the
request of the Company and the Bank, will be offered to certain members of the
general public on a best efforts basis through a selected dealers agreement (the
"Syndicated Community Offering") (the Subscription Offering, Community Offering
and Syndicated Community Offering are collectively referred to as the
"Offering"). It is acknowledged that the purchase of Shares in the Offering is
subject to the maximum and minimum purchase limitations as described in the Plan
and that the Company may reject, in whole or in part, any orders received in the
Community Offering or Syndicated Community Offering. Collectively, the Offering
and the other activities described in the Plan are referred to herein as the
"Conversion."
The Company has filed with the United States Securities and Exchange
Commission (the "SEC") a registration statement on Form S-l (File No.
_____________) (the "Registration Statement") containing a prospectus relating
to the Offering for the registration of the Shares under the Securities Act of
1933 (the "1933 Act"), and has filed such amendments thereof and such amended
prospectuses as may have been required to the date hereof. The term
"Registration Statement" shall include any documents incorporated by reference
therein and all financial schedules and exhibits thereto, as amended, including
post-effective amendments. The prospectus, as amended, on file with the SEC at
the time the Registration Statement initially became effective is hereinafter
called the "Prospectus," except that if any Prospectus is filed by the Company
pursuant to Rule 424(b) or (c) of the rules and regulations of the SEC under the
1933 Act (the "1933 Act Regulations") differing from the prospectus on file at
the time the Registration Statement initially becomes effective, the term
"Prospectus" shall refer to the prospectus filed pursuant to Rule 424(b) or (c)
from and after the time such prospectus is filed with the SEC.
In accordance with Title 12, Parts 575 and 563b of the Code of Federal
Regulations (the "Conversion Regulations"), the Bank filed with the Office of
Thrift Supervision (the "OTS") an Application for Approval of Conversion on Form
AC, and has filed such amendments thereto and supplementary materials as may
have been required to the date hereof and amendments thereto as required by the
OTS (the "Conversion Application"). The Company has also filed with the OTS an
application for approval to acquire the Bank and to become a registered savings
and loan holding company on Form H-(e)1-S (the "Holding Company Application")
under the Home Owners' Loan Act of 1933, as amended, and the regulations
promulgated thereunder (the "HOLA").
Section 2. Retention of Agent; Compensation; Sale and Delivery of the
------------------------------------------------------------
Shares. Subject to the terms and conditions herein set forth, the Company and
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the Bank hereby appoint the Agent as their exclusive financial advisor and
marketing agent to utilize its best efforts to solicit subscriptions for Shares
and to advise and assist the Company and the Bank with respect to the Company's
sale of the Shares in the Offering.
On the basis of the representations, warranties, and agreements herein
contained, but subject to the terms and conditions herein set forth, the Agent
accepts such appointment and agrees to consult with and advise the Company and
the Bank as to the matters set forth in the letter agreement, dated November 26,
2002, between the Bank and KBW. It is acknowledged by
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the Company and the Bank that the Agent shall not be required to purchase any
Shares or be obligated to take any action that is inconsistent with any or all
applicable laws, regulations, decisions or orders.
The obligations of the Agent pursuant to this Agreement shall terminate
upon the completion, termination or abandonment of the Plan by the Company or
the Bank or upon termination of the Offering, but in no event later than 45 days
after the completion of the Subscription Offering (the "End Date"). All fees or
expenses due to the Agent hereunder but unpaid will be payable to the Agent in
next day funds at the earlier of the Closing Date (as hereinafter defined) or
the End Date. In the event the Offering is extended beyond the End Date, the
Company, the Bank and the Agent may agree to renew this Agreement under mutually
acceptable terms.
In the event the Company is unable to sell a minimum of _________
Shares within the period herein provided, this Agreement shall terminate and the
Company shall refund to any persons who have subscribed for any of the Shares
the full amount that it may have received from them plus accrued interest, as
set forth in the Prospectus, and none of the parties to this Agreement shall
have any obligation to the other parties hereunder, except as set forth in this
Section 2 and in Sections 6, 8 and 9 hereof.
In the event the Offering is terminated for any reason not attributable
to the action or inaction of the Agent, the Agent shall be paid the fees due to
the date of such termination pursuant to subparagraphs (a) and (d) below.
If all conditions precedent to the consummation of the Conversion,
including, without limitation, the sale of all Shares required by the Plan to be
sold, are satisfied, the Company agrees to issue, or have issued, the Shares
sold in the Offering and to release for delivery certificates for such Shares on
the Closing Date (as hereinafter defined) against payment to the Company by any
means authorized by the Plan; provided, however, that no funds shall be released
to the Company until the conditions specified in Section 7 hereof shall have
been complied with to the reasonable satisfaction of the Agent and its counsel.
The release of Shares against payment therefor shall be made on a date and at a
place acceptable to the Company, the Bank and the Agent. Certificates for Shares
shall be delivered directly to the purchasers in accordance with their
directions. The date upon which the Company shall release or deliver the Shares
sold in the Offering, in accordance with the terms herein, is called the
"Closing Date."
The Agent shall receive the following compensation for its services
hereunder:
(a) A management fee of $20,000, payable in four consecutive monthly
installments of $5,000, of which $_________ has been paid. Such
fees shall be deemed to have been earned when due. Should the
Conversion be terminated for any reason not attributable to the
action or inaction of the Agent, the Agent shall have earned and
be entitled to be paid fees accruing through the stage at which
the termination occurred, including any accrued legal fees
expended by the Agent.
(b) A Success Fee upon completion of the Offering of $50,000.
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(c) The Agent shall be reimbursed for reasonable out-of-pocket
expenses, including costs of travel, meals and lodging,
photocopying, telephone, facsimile and couriers. Reimbursement of
the Agent's total out-of-pocket expenses shall not exceed $5,000
without the prior consent of the Bank. In addition, the Bank will
reimburse KBW for the fees and expenses of its counsel, up to
$25,000. The Company and the Bank will bear the expenses of the
Offering customarily borne by issuers, including, without
limitation, regulatory filing fees, SEC, "Blue Sky," and NASD
filing and registration fees; the fees of the Company's and the
Bank's accountants, attorneys, appraiser, transfer agent and
registrar, printing, mailing and marketing and syndicate expenses
associated with the Conversion; the fees set forth under this
Section 2; and fees for "Blue Sky" legal work. The Company and
the Bank will reimburse KBW for such expenses incurred by KBW on
their behalf.
Full payment of Agent's fees and expenses, as described above, shall be
made in next day funds on the earlier of the Closing Date or a determination by
the Company or the Bank to terminate or abandon the Plan.
Section 3. Prospectus; Offering. The Shares are to be initially offered
--------------------
in the Offering at the purchase price set forth on the cover page of the
Prospectus.
Section 4. Representations and Warranties.
------------------------------
(a) The Company and the Bank jointly and severally represent and
warrant to and agree with the Agent as follows:
(i) The Registration Statement, which was prepared by the Company and
the Bank and filed with the SEC, was declared effective by the
SEC on _________, 2003. At the time the Registration Statement,
including the Prospectus contained therein (including any
amendment or supplement), became effective, the Registration
Statement contained all statements that were required to be
stated therein in accordance with the 1933 Act and the 1933 Act
Regulations, complied in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations; and
the Registration Statement, including the Prospectus contained
therein (including any amendment or supplement thereto), and any
information regarding the Company or the Bank contained in Sales
Information (as such term is defined in Section 8 hereof)
authorized by the Company or the Bank for use in connection with
the Offering, did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; and
at the time any Rule 424(b) or (c) Prospectus was filed with the
SEC and at the Closing Date referred to in Section 2, the
Registration Statement, including the Prospectus contained
therein (including any amendment or supplement thereto), will
contain all statements that are required to be stated therein in
accordance with the 1933 Act and the 1933 Act Regulations and
such Registration Statement and any information regarding the
Company or the Bank contained in the Sales Information authorized
by the Company or the Bank for
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use in connection with the Offering will not contain an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading;
provided, however, that the representations and warranties in
this Section 4(a)(i) shall not apply to statements or omissions
made in reliance upon and in conformity with written information
furnished to the Company or the Bank by the Agent or its counsel
expressly regarding the Agent for use in the Prospectus under the
caption "The Conversion - Marketing Arrangements" or in any Sales
Information.
(ii) The Conversion Application, including the Prospectus and the
proxy statement for the solicitation of proxies from members of
the Bank for the special meeting to approve the Plan (the
"Members' Proxy Statement") which was prepared by the Company and
the Bank and filed with the OTS, was approved by the OTS on
_________, 2003 and the Prospectus and Members' Proxy Statement
have been authorized for use by the OTS. At the time of the
approval of the Conversion Application, including the Prospectus
and the Members' Proxy Statement (including any amendment or
supplement thereto), by the OTS and at all times subsequent
thereto until the Closing Date, the Conversion Application,
including the Prospectus and the Members' Proxy Statement
(including any amendment or supplement thereto ), complied and
will comply in all material respects with the Conversion
Regulations, except to the extent waived in writing by the OTS
and with all applicable provisions of the Securities Exchange Act
of 1934, as amended (the "1934 Act") and the regulations of the
SEC under the 1934 Act (the "1934 Act Regulations"). The
Conversion Application, including the Prospectus and the Members'
Proxy Statement (including any amendment or supplement thereto),
does not include any 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 4(a)(ii) shall not apply to statements or omissions
made in reliance upon and in conformity with written information
furnished to the Company or the Bank by the Agent or its counsel
expressly regarding the Agent for use in the Prospectus contained
in the Conversion Application under the caption "The Conversion -
Marketing Arrangements" or in any Sales Information.
(iii)The Holding Company Application has been prepared by the Company
in material conformity with the requirements of the OTS and
approved by the OTS. At the time of the approval of the Holding
Company Application and as of the date hereof, the Holding
Company Application complied in all material respects with all
applicable regulations. A conformed copy of the Holding Company
Application has been delivered to the Agent and its counsel,
receipt of which is hereby acknowledged by the Agent.
(iv) No order has been issued by the OTS, the SEC, any state
securities administrator or the Federal Deposit Insurance
Corporation (the "FDIC") or any other governmental agency
preventing or suspending the use of the Prospectus or any
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supplemental sales literature authorized by the Company or the
Bank for use in connection with the offering and no action by or
before any such governmental entity to revoke any approval,
authorization or order of effectiveness related to the Conversion
is pending or, to the best knowledge of the Company or the Bank,
threatened.
(v) The Plan complies with the Conversion Regulations, and pursuant
to the Conversion Regulations, the Plan has been approved by the
Boards of Directors of the Bank and the Company; at the Closing
Date, the offer and sale of the Shares will have been conducted
in accordance with the Plan, the Conversion Regulations, and all
other applicable laws, regulations, decisions and orders,
including all terms, conditions, requirements and provisions
precedent to the Conversion imposed upon the Company or the Bank
by the OTS, the SEC or any other regulatory authority, other than
those which the regulatory authority permits to be completed
after the Conversion and in the manner described in the
Prospectus. No person has sought to obtain review of the final
action of the OTS in approving the Plan or in approving the
Conversion or the Holding Company Application pursuant to HOLA or
any other statute or regulation.
(vi) The Bank has been duly organized and is a validly existing
federally chartered savings bank in the mutual form of
organization in good standing under the laws of the United States
and upon the Conversion will become a wholly-owned subsidiary of
the Company, in both instances duly authorized to conduct its
business and own its property as described in the Registration
Statement and the Prospectus; 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 materially adversely affect the
financial condition, earnings, capital, assets, properties or
business of the Company and the Bank, taken as a whole; all such
licenses, permits and governmental authorizations are in full
force and effect, and the Bank is in material compliance with all
laws, rules, regulations and orders applicable to the operation
of its business; the Bank is existing under the laws of the
federal government and is duly qualified as a foreign corporation
to transact business and is in good standing in each jurisdiction
in which its ownership of property or leasing of property or the
conduct of its business requires such qualification, unless the
failure to be so qualified in one or more of such jurisdictions
would not individually or in the aggregate have a material
adverse effect on the financial condition, earnings, capital,
assets, properties or business of the Bank.
(vii)The Bank does not own equity securities or any equity interest
in any other active business enterprise except as described in
the Prospectus. Upon completion of the Conversion, (a) all of the
authorized and outstanding capital stock of the Bank will be
owned by the Company and (b) the Company will have no direct
subsidiaries other than the Bank.
(viii) At the Closing Date, the Conversion will have been effected in
accordance with all applicable statutes, regulations, decisions
and orders; and, except with respect
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to the filing of certain post-sale, post-Conversion reports, and
documents in compliance with the 1933 Act Regulations, all terms,
conditions, requirements and provisions with respect to the
Conversion imposed by the OTS, if any, will have been complied
with by the Company and the Bank or appropriate waivers will have
been obtained and all notice and waiting periods will have been
satisfied, waived or elapsed.
(ix) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of
Maryland with corporate power and authority to own, lease and
operate its properties and to conduct its business as described
in the Registration Statement and the Prospectus; the Company is
qualified to do business as a foreign corporation in each
jurisdiction in which the conduct of its business requires such
qualification, except where the failure to so qualify would not
have a material adverse effect on the financial condition,
earnings, capital, assets, properties or business of the Company.
The Company 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 materially adversely affect the financial condition,
earnings, capital, assets, properties or business of the Company
and the Bank, taken as a whole; all such licenses, permits and
governmental authorizations are in full force and effect, and the
Company is in all material respects complying with all laws,
rules, regulations and orders applicable to the operation of its
business.
(x) The Bank is a member of the Federal Home Loan Bank of Cincinnati
("FHLB-Cincinnati"). The deposit accounts of the Bank are insured
by the FDIC up to the applicable limits, and no proceedings for
the termination or revocation of such insurance are pending or,
to the best knowledge of the Company or the Bank, threatened.
Upon consummation of the Conversion, the liquidation account for
the benefit of Eligible Account Holders and Supplemental Eligible
Account Holders will be duly established in accordance with the
requirements of the Conversion Regulations.
(xi) The Company and the Bank have good and marketable title to all
real property and good title to all other assets material to the
business of the Company and the Bank, taken as a whole, and to
those properties and assets described in the Registration
Statement and Prospectus as owned by them, in each case free and
clear of all liens, charges, encumbrances or restrictions, except
such as are described in the Registration Statement and
Prospectus, or are not, in the aggregate, material to the
business of the Company and the Bank, taken as a whole; and all
of the leases and subleases under which the Company or the Bank
hold properties, including those described in the Registration
Statement and Prospectus, are in full force and effect.
(xii)The Company and the Bank have received an opinion of their
special counsel, Malizia, Spidi & Fisch, PC, with respect to the
federal income tax consequences of the Conversion and an opinion
from EKW & Associates, llp ("EKW"), with respect to the Kentucky
income tax consequences of the Conversion; all material
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aspects of the opinions of Malizia, Spidi & Fisch, PC, and EKW
are accurately summarized in the Registration Statement and
Prospectus; the facts upon which such opinions are based are
truthful, accurate and complete and neither the Company nor the
Bank has taken any action inconsistent therewith.
(xiii) The Company and the Bank have all such power, authority,
authorizations, approvals and orders as may be required to enter
into this Agreement, to carry out the provisions and conditions
hereof and to issue and sell the Shares to be sold by the Company
as provided herein and as described in the Prospectus. The
consummation of the Conversion, the execution, delivery and
performance of this Agreement and the consummation of the
transactions herein contemplated have been duly and validly
authorized by all necessary corporate action on the part of the
Company and the Bank and this Agreement has been validly executed
and delivered by the Company and the Bank and is the valid, legal
and binding agreement of the Company and the Bank enforceable
against each in accordance with its terms (except as the
enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, the Conversion or similar laws relating to or
affecting the enforcement of creditors' rights generally or the
rights of creditors of bank holding companies, the accounts of
whose subsidiaries are insured by the FDIC, or by general equity
principles, regardless of whether such enforceability is
considered in a proceeding in equity or at law, and except to the
extent, if any, that the provisions of Sections 8 and 9 hereof
may be unenforceable as against public policy).
(xiv)Neither the Company nor the Bank is in violation of any
directive received from OTS, the SEC, or any other governmental
agency to make any change in the method of conducting their
businesses so as to comply with all applicable statutes and
regulations (including, without limitation, regulations,
decisions, directives and orders of the OTS or the SEC) and,
except as set forth in the Registration Statement and the
Prospectus, there is no suit, proceeding, charge or action before
or by any court, regulatory authority or governmental agency or
body, pending or, to the best knowledge of the Company or the
Bank, threatened, which might materially and adversely affect the
Conversion, the performance of this Agreement or the consummation
of the transactions contemplated in the Plan and as described in
the Registration Statement and the Prospectus or which might
result in any material adverse change in the financial condition,
earnings, capital, assets, properties or business of the Company
and the Bank, taken as a whole.
(xv) The financial statements, schedules and notes related thereto
that are included in the Registration Statement, the Conversion
Application and the Prospectus fairly present the financial
condition, results of operations, equity and cash flows of the
Company and the Bank at the respective dates indicated and for
the respective periods covered thereby and comply as to form in
all material respects with the applicable accounting requirements
of Title 12 of the Code of Federal Regulations, Regulation S-X of
the SEC and generally accepted accounting principles (including
those requiring the recording of certain assets at their current
market value). Such financial statements, schedules and notes
related thereto
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have been prepared in accordance with generally accepted
accounting principles consistently applied through the periods
involved (except as noted in the Notes to the financial
statements), present fairly in all material respects the
information required to be stated therein and are consistent with
the most recent financial statements and other reports filed by
the Company and the Bank with the OTS, the SEC, and any other
applicable regulatory authority, except that accounting
principles employed in such regulatory filings conform to the
requirements of the OTS and the SEC and not necessarily to GAAP.
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 of the Bank included in the
Prospectus, and as to the pro forma adjustments, the adjustments
made therein have been properly applied on the basis described
therein.
(xvi)Since the respective dates as of which information is given in
the Registration Statement, the Conversion Application and the
Prospectus: (a) there has not been any material adverse change in
the financial condition, earnings, capital, assets, properties or
business of the Company and the Bank, taken as a whole, whether
or not arising in the ordinary course of business; (b) there has
not been any material increase in the long-term debt of the Bank
or in the principal amount of the Bank's assets that are
classified by the Bank as substandard, doubtful or loss or in
loans past due 90 days or more or real estate acquired by
foreclosure, by deed-in-lieu of foreclosure or deemed
in-substance foreclosure or any decrease in equity capital or
total assets of the Bank, nor has the Company or the Bank issued
any securities or incurred any liability or obligation for
borrowing other than in the ordinary course of business; (c)
there have not been any material transactions entered into by the
Company or the Bank; (d) there has not been any material decrease
in the aggregate dollar amount of the Bank's deposits; (e) there
has not been any material decrease in the consolidated net worth
of the Bank; (f) there has been no material adverse change in the
Company's or the Bank's relationship with its insurance carriers,
including, without limitation, cancellation or other termination
of the Company's or the Bank's fidelity bond or any other type of
insurance coverage; (g) except as disclosed in the Prospectus,
there has been no material change in management of the Company or
the Bank; (h) neither the Company nor the Bank has any material
liability of any kind, contingent or otherwise, not disclosed in
the Prospectus; (i) neither the Company nor the Bank has
sustained any material loss or interference with its respective
business or properties from fire, flood, windstorm, earthquake,
accident or other calamity, whether or not covered by insurance;
(j) neither the Company nor the Bank is in default in the payment
of principal or interest on any outstanding debt obligations; and
(k) the capitalization, liabilities, assets, properties and
business of the Company and the Bank conform in all material
respects to the descriptions thereof contained in the Prospectus.
(xvii) All documents made available to or delivered or to be made
available to or delivered by the Company or the Bank or their
representatives in connection with the issuance and sale of the
Shares, including records of account holders,
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depositors and borrowers of the Bank, or in connection with the
Agent's exercise of due diligence, were on the dates on which
they were delivered, or will be on the dates on which they are to
be delivered, true, complete and correct in all material
respects.
(xviii) Neither the Company nor the Bank is (a) in violation of their
articles of incorporation, charter or bylaws, as applicable or
(b) in default in the performance or observance of any material
obligation, agreement, covenant, or condition contained in any
material contract, lease, loan agreement, indenture or other
instrument to which it is a party or by which it or any of its
property may be bound. The execution and delivery of this
Agreement and the consummation of the transactions herein
contemplated will not: (x) conflict with or constitute a breach
of, or default under, or result in the creation of any material
lien, charge or encumbrance upon any of the assets of the Company
or the Bank pursuant to their articles of incorporation, charter
or bylaws, as applicable, or any material contract, lease or
other instrument in which the Company or the Bank has a
beneficial interest, or any applicable law, rule, regulation or
order; (y) violate any authorization, approval, judgment, decree,
order, statute, rule or regulation applicable to the Company or
the Bank, except for violations that would not have a material
adverse effect on the financial condition and results of
operations of the Company and the Bank on a consolidated basis;
or (z) result in the creation of any material lien, charge or
encumbrance upon any property of the Company or the Bank.
(xix)No default exists, and no event has occurred which with notice
or lapse of time, or both, would constitute a default on the part
of the Company or the Bank in the due performance and observance
of any term, covenant or condition of any indenture, mortgage,
deed of trust, note, bank loan or credit agreement or any other
instrument or agreement to which the Company or the Bank is a
party or by which any of them or any of their property is bound
or affected, except defaults that would not have a material
adverse effect on the financial condition or results of
operations of the Company and the Bank on a consolidated basis;
such agreements are in full force and effect; and no other party
to any such agreements has instituted or, to the best knowledge
of the Company and the Bank, threatened any action or proceeding
wherein the Company or the Bank would or might be alleged to be
in default thereunder.
(xx) Upon consummation of the Conversion, the authorized, issued and
outstanding equity capital of the Company will be within the
range set forth in the Prospectus under the captions
"Capitalization" and "Pro Forma Data" and no Common Shares have
been or will be issued and outstanding prior to the Closing Date,
except [describe shares issued in incorporation]; the Shares will
have been duly and validly authorized for issuance and, when
issued and delivered by the Company pursuant to the Plan upon
payment of the consideration calculated as set forth in the Plan
and in the Prospectus, will be duly and validly issued, fully
paid and non-assessable; except to the extent that subscription
rights and priorities pursuant thereto exist pursuant to the
Plan, no preemptive rights exist with respect to the
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Shares; and the terms and provisions of the Common Shares conform
in all material respects to the description thereof contained in
the Registration Statement and the Prospectus. To the best
knowledge of the Company and the Bank, upon the issuance of the
Shares, good title to the Shares will be transferred from the
Company to the purchasers thereof in exchange for payment
therefor, subject to such claims as may be asserted against the
purchasers thereof by third-party claimants.
(xxi)No approval of any regulatory or supervisory or other public
authority is required in connection with the execution and
delivery of this Agreement or the issuance of the Shares, except
for the approval of the OTS and the SEC, and any necessary
qualification, notification, registration or exemption under the
securities or blue sky laws of the various states in which the
Shares are to be offered, and except as may be required under the
rules and regulations of the National Association of Securities
Dealers, Inc. ("NASD") and The Nasdaq Stock Market.
(xxii) York, Neel & Co. - Madisonville, LLP ("York, Neel"), resigned
as the auditors of the Bank effective _____________, 2002. York,
Neel's reports on the consolidated financial statements of the
Bank for 2001 did not contain any adverse opinion or disclaimer
of opinion, nor was it qualified or modified as to uncertainty,
audit scope or accounting principles. During the last two fiscal
years, there were no disagreements between the Bank and York,
Neel on any matter of accounting principles or practices,
consolidated financial statement disclosure or audit scope or
procedure.
(xxiii) EKW, which has certified the 2002 and 2001 audited financial
statements and schedules of the Bank included in the Registration
Statement, the Conversion Application and the Prospectus, has
advised the Company and the Bank in writing that they are, with
respect to the Company and the Bank, independent public
accountants within the meaning of the Code of Professional Ethics
of the American Institute of Certified Public Accountants and
applicable regulations of the SEC and the OTS. EKW is not
currently performing for the Bank, and has not been engaged to
perform for the Bank or the Company in the future, any non-audit
services prohibited to be performed by auditors for public
companies by the Sarbanes-Oxley Act of 2002 and the regulations
of the SEC adopted pursuant thereto.
(xxiv) Feldman Financial Advisors, Inc., which has prepared the Bank's
Independent Appraisal as of ________________, 2003, and updated
on ____________, 2003 (as amended or supplemented, if so amended
or supplemented) (the "Appraisal"), has advised the Company in
writing that it is independent of the Company and the Bank within
the meaning of the Conversion Regulations.
(xxv)The Company and the Bank have timely filed all required federal,
state and local tax returns; the Company and the Bank have paid
all taxes that have become due and payable in respect of such
returns, except where permitted to be extended,
-11-
have made adequate reserves for similar future tax liabilities
and no deficiency has been asserted with respect thereto by any
taxing authority.
(xxvi) The Bank is in compliance 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.
(xxvii) None of the Company, the Bank or employees of the Company or
the Bank has made any payment of funds of the Company or the Bank
as a loan for the purchase of the Shares or made any other
payment of funds prohibited by law, and no funds have been set
aside to be used for any payment prohibited by law. (xxviii)
Neither the Company nor the Bank has: (i) issued any securities
within the last 18 months (except for (a) notes to evidence bank
loans and reverse repurchase agreements or other liabilities in
the ordinary course of business or as described in the
Prospectus, and (b) shares issued in connection with the
incorporation of the Company); (ii) had any dealings within the
12 months prior to the date hereof with any member of the NASD,
or any person related to or associated with such member, other
than discussions and meetings relating to the proposed Offering
and routine purchases and sales of United States government and
agency and other securities in the ordinary course of business;
(iii) entered into a financial or management consulting agreement
except as contemplated hereunder; and (iv) engaged any
intermediary between the Agent and the Company and the Bank in
connection with the offering of the Shares, and no person is
being compensated in any manner for such service. Appropriate
arrangements have been made for placing the funds received from
subscriptions for Shares in a special interest-bearing account
with the Bank until all Shares are sold and paid for, with
provision for refund to the purchasers in the event that the
Conversion is not completed for whatever reason or for delivery
to the Company if all Shares are sold.
(xxix) Neither the Company nor the Bank has relied upon the Agent or
its legal counsel or other advisors to the Agent for any legal,
tax or accounting advice in connection with the Conversion.
(xxx)The Company is not required to be registered under the
Investment Company Act of 1940, as amended.
(xxxi) Any certificates signed by an officer of the Company or the
Bank pursuant to the conditions of this Agreement and delivered
to the Agent or its counsel that refers to this Agreement shall
be deemed to be a representation and warranty by the Company or
the Bank to the Agent as to the matters covered thereby with the
same effect as if such representation and warranty were set forth
herein.
(xxxii) To the best knowledge of the Company and the Bank, the Company
and the Bank comply with all laws, rules and regulations relating
to environmental protection,
-12-
and neither the Company nor the Bank has been notified or is
otherwise aware that either 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
law or regulation; no action, suit, regulatory investigation or
other proceeding is pending, or to the best knowledge of the
Company and the Bank, threatened against the Company or the Bank
relating to environmental protection, nor does the Company or the
Bank have any reason to believe any such proceedings may be
brought against either of them; and to the best knowledge of the
Company and the Bank, no disposal, release or discharge of
hazardous or toxic substances, pollutants or contaminants,
including petroleum and gas products, as any of such terms may be
defined under federal, state or local law, has occurred on, in,
at or about any facilities or properties owned or leased by the
Company or the Bank or in which the Bank has a security interest.
(xxxii) Neither the Company nor the Bank has engaged in any
transaction in connection with which the Company or the Bank
could be subject to either a civil penalty assessed pursuant to
Section 502(i) of the Employee Retirement Income Security Act of
1974, as amended ("ERlSA"), or a tax imposed by Section 4975 of
the Internal Revenue Code of 1986, as amended. No material
liability to the Pension Benefit Guaranty Corporation has been or
is expected by the Company or the Bank to be incurred by the
Company or the Bank with respect to any pension plan subject to
ERISA (a "Pension Plan"). There has been no "reportable event"
(within the meaning of Section 4043(b) of ERISA) with respect to
any Pension Plan and no event or condition which presents a
material risk of the termination of any Pension Plan by the
Pension Benefit Guaranty Corporation. Full payment has been made
of all amounts which the Bank is required, under the terms of any
Pension Plan, to have paid as contributions to such Pension Plan
as of the date hereof, as no "accumulated funding deficiency" (as
defined in Section 302 of ERISA and Section 412 of the Code),
whether or not waived, exists with respect to any Pension Plan.
(b) The Agent represents and warrants to the Company that:
(i) KBW is a corporation validly existing in good standing under the
laws of the State of New York and licensed to conduct business in
the State of New York with full power and authority to provide
the services to be furnished to the Company and the Bank
hereunder.
(ii) The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and
validly authorized by all necessary action on the part of the
Agent, and this Agreement has been duly and validly executed and
delivered by the Agent and is a legal, valid and binding
agreement of the Agent, enforceable in accordance with its terms
(except as the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium, the Conversion or similar
laws relating to or affecting the enforcement of creditors'
rights generally, or by general equity principles, regardless of
whether such
-13-
enforceability is considered in a proceeding in equity or at law,
and except to the extent, if any, that the provisions of Sections
8 and 9 hereof may, with respect to the Agent, be unenforceable
as against public policy).
(iii)Each of the Agent and its employees, agents and representatives
who shall perform any of the services hereunder shall be duly
authorized and empowered, and shall have all licenses, approvals
and permits necessary to perform such services; and the Agent is
a registered selling agent in each of the jurisdictions in which
the Shares are to be offered by the Company in reliance upon the
Agent as a registered selling agent as set forth in the blue sky
memorandum prepared with respect to the Offering.
(iv) The execution and delivery of this Agreement by the Agent, the
consummation of the transactions contemplated hereby and
compliance with the terms and provisions hereof will not conflict
with, or result in a breach of, any of the terms, provisions or
conditions of, or constitute a default (or an event which with
notice or lapse of time or both would constitute a default)
under, the Certificate of Incorporation or Bylaws of the Agent or
any material agreement, indenture or other instrument to which
the Agent is a party or by which it or its property is bound.
(v) No approval of any regulatory or supervisory or other public
authority is required in connection with the Agent's execution
and delivery of this Agreement, except as may have been received.
(vi) There is no suit, proceeding, charge or action before or by any
court, regulatory authority or government agency or body or, to
the knowledge of the Agent, pending or threatened, which might
materially adversely affect the Agent's performance of this
Agreement.
Section 5. Covenants of the Company and the Bank. The Company and the
-------------------------------------
Bank hereby jointly and severally covenant with the Agent as follows:
(a) The Company will not file any amendment or supplement to the
Registration Statement without providing the Agent and its
counsel an opportunity to review such amendment or supplement,
and the Company will not file any amendment or supplement to
which the Agent or its counsel shall reasonably object.
(b) The Company will not file any amendment or supplement to the
Holding Company Application without providing the Agent and its
counsel an opportunity to review such amendment or supplement,
and the Company will not file any amendment or supplement to
which the Agent or its counsel shall reasonably object.
(c) The Bank will not file any amendment or supplement to the
Conversion Application without providing the Agent and its
counsel an opportunity to review such amendment or supplement,
and the Bank will not file any amendment or supplement to which
the Agent or its counsel shall reasonably object.
-14-
(d) As of the Closing Date, the Bank shall have all approvals and
authority to issue and sell the capital stock of the Bank to the
Company and the Company shall have such approvals and orders to
issue and sell the Shares as provided for herein and as described
in the Prospectus.
(e) The Company and the Bank will use their best efforts to cause any
post-effective amendment to the Registration Statement to be
declared effective by the SEC and any post-approval amendment to
the Conversion Application or the Holding Company Application to
be approved by the OTS and will immediately upon receipt of any
information concerning the events listed below notify the Agent:
(i) when the Registration Statement, as amended, has become
effective; (ii) when each of the Conversion Application, as
amended, and the Holding Company Application, as amended, has
been approved by the OTS; (iii) when the Company or the Bank
receives any comments from the OTS, the SEC, or any other
governmental entity with respect to the Conversion or the
transactions contemplated by this Agreement; (iv) when the OTS,
the SEC, or any other governmental entity requests any amendment
or supplement to the Registration Statement, the Conversion
Application or the Holding Company Application or any additional
information; (v) the issuance by the OTS, the SEC, or any other
governmental entity of any order or other action suspending the
Offering or the use of the Registration Statement or the
Prospectus or any other filing of the Company or the Bank under
the Conversion Regulations, or other applicable law, or the
threat of any such action; (vi) the issuance by the OTS, the SEC,
or any authority of any stop order suspending the effectiveness
of the Registration Statement or the approval of the Conversion
Application or the Holding Company Application or of the
initiation or threat of initiation or threat of any proceedings
for that purpose; or (vii) the occurrence of any event mentioned
in paragraph (j) below The Company and the Bank will make every
reasonable effort (x) to prevent the issuance by the OTS, the SEC
or any other regulatory authority of any such order and, if any
such order shall at any time be issued, (y) to obtain the lifting
thereof at the earliest possible time.
(f) The Company and the Bank will deliver to the Agent and to its
counsel two conformed copies of the Registration Statement, the
Conversion Application and the Holding Company Application, as
originally filed and of each amendment or supplement thereto,
including all exhibits. Further, the Company and the Bank will
deliver such additional copies of the foregoing documents to
counsel to the Agent as may be required for any NASD filings.
(g) The Company and the Bank will furnish to the Agent, from time to
time during the period when the Prospectus (or any later
prospectus related to this offering) is required to be delivered
under the 1933 Act or the 1934 Act, such number of copies of such
Prospectus (as amended or supplemented) as the Agent may
reasonably request for the purposes contemplated by the 1933 Act,
the 1933 Act Regulations, 1934 Act or the 1934 Act Regulations.
The Company authorizes the Agent to use the Prospectus (as
amended or supplemented, if amended or
-15-
supplemented) in any lawful manner contemplated by the Plan in
connection with the sale of the Shares by the Agent.
(h) The Company and the Bank will 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 SEC or the Conversion Regulations, and by the 1933
Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act
Regulations to be complied with prior to or subsequent to the
Closing Date and when the Prospectus is required to be delivered,
and during such time period, the Company and the Bank will
comply, at their own expense, with all requirements imposed upon
them by the OTS, the SEC or the Conversion Regulations, and by
the 1933 Act, the 1933 Act Regulations, the 1934 Act and the 1934
Act regulations, including, without limitation, Rule 10b-5 under
the 1934 Act, in each case as from time to time in force, so far
as necessary to permit the continuance of sales or dealing in the
Common Shares during such period in accordance with the
provisions hereof and the Prospectus.
(i) If, at any time during the period when the Prospectus is required
to be delivered, any event relating to or affecting the Company
or the Bank shall occur, as a result of which it is necessary or
appropriate, in the reasonable opinion of the Agent's counsel, to
amend or supplement the Registration Statement or Prospectus in
order to make the Registration Statement or Prospectus not
misleading in light of the circumstances existing at the time the
Prospectus is delivered, the Company and the Bank will, at their
own expense, prepare and file with the OTS and the SEC 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 or Prospectus (in form and substance
reasonably satisfactory to the Agent and its counsel after a
reasonable time for review) which will amend or supplement the
Registration Statement or Prospectus so that as amended or
supplemented it will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances
existing at the time the Prospectus is delivered to a purchaser,
not misleading. For the purpose of this Agreement, the Company
and the Bank each will timely furnish to the Agent such
information with respect to itself as the Agent may from time to
time reasonably request.
(j) The Company and the Bank will take all necessary actions in
cooperating with the Agent and furnish to whomever the Agent may
direct such information as may be required to qualify or register
the Shares for offering and sale by the Company or to exempt such
Shares from registration, or to exempt the Company as a
broker-dealer and its officers, directors and employees as
broker-dealers or agents under the applicable securities or blue
sky laws of such jurisdictions in which the Shares are required
under the Conversion Regulations to be sold or as the Agent, the
Company and the Bank may reasonably agree upon; provided,
however, that the Company shall not be obligated to file any
general consent to service of process, to qualify to do business
in any jurisdiction in which it is not so qualified, or to
register its directors or officers as brokers, dealers, salesmen
or agents in any
-16-
jurisdiction. In each jurisdiction where any of the Shares shall
have been qualified or registered as above provided, the Company
will make and file such statements and reports in each fiscal
period as are or may be required by the laws of such
jurisdiction.
(k) The Company and the Bank shall duly establish and maintain the
liquidation account for the benefit of Eligible Account Holders
and Supplemental Eligible Account Holders in accordance with the
requirements of the Conversion Regulations and such Eligible
Account Holders and Supplemental Eligible Account Holders who
continue to maintain their savings accounts in the Bank will have
an inchoate interest in their pro rata portion of the liquidation
account, which shall have a priority superior to that of the
holders of the Common Shares in the event of a complete
liquidation of the Company or the Bank.
(l) The Company and the Bank will not sell or issue, contract to sell
or otherwise dispose of, for a period of 90 days after the
Closing Date, without the Agent's prior written consent, any of
their capital stock, other than in connection with any plan or
arrangement described in the Prospectus; or
(m) The Company shall register its Common Shares under Section 12(g)
of the 1934 Act during the Offering and shall request that such
registration be effective prior to or upon completion of the
Conversion. The Company shall maintain the effectiveness of such
registration for not less than three years or such shorter period
as may be required by applicable law.
(n) During the period during which the Common Shares are registered
under the 1934 Act or for three (3) years from the date hereof,
whichever period is greater, the Company will furnish to its
shareholders as soon as practicable after the end of each fiscal
year an annual report of the Company in accordance with the 1934
Act Regulations (including a consolidated balance sheet and
statements of consolidated income, shareholders' equity and cash
flows of the Company and its subsidiaries as at the end of and
for such year, certified by independent public accountants in
accordance with Regulation S-X under the 1933 Act and the 1934
Act).
(o) During the period of three years from the date hereof, the
Company will furnish to the Agent: (i) as soon as practicable
after such information is publicly available, a copy of each
report of the Company furnished to or filed with the SEC under
the 1934 Act or any national securities exchange or system on
which any class of securities of the Company is listed or quoted
(including, but not limited to, reports on Forms 10-KSB, 10-QSB
and 8-K and all proxy statements and annual reports to
stockholders), (ii) a copy of each other non-confidential report
of the Company mailed to its shareholders or filed with the OTS,
the SEC or any other supervisory or regulatory authority or any
national securities exchange or system on which any class of
securities of the Company is listed or quoted, each press release
and material news items and additional documents and information
with respect to the Company or the Bank as the Agent may
reasonably request; and (iii) from time to
-17-
time, such other nonconfidential information concerning the
Company or the Bank as the Agent may reasonably request.
(p) The Company and the Bank will use the net proceeds from the sale
of the Shares in the manner set forth in the Prospectus under the
caption "Use of Proceeds."
(q) Other than as permitted by the Conversion Regulations, the HOLA,
the 1933 Act, the 1933 Act Regulations and its rules and
regulations and the laws of any state in which the Shares are
registered or qualified for sale or exempt from registration,
neither the Company nor the Bank will distribute any prospectus,
offering circular or other offering material in connection with
the offer and sale of the Shares.
(r) The Company will use its best efforts to list and maintain its
listing of the Shares on the OTC Bulletin Board effective on or
prior to the Closing Date.
(s) The Bank will maintain appropriate arrangements for depositing
all funds received from persons mailing subscriptions for or
orders to purchase Shares in the Offering 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 Bank's obligation to refund payments received from persons
subscribing for or ordering Shares in the Offering in accordance
with the Plan and 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 Bank will maintain such
records of all funds received to enable the Bank 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.
(t) The Company will promptly take all necessary action to register
as a unitary savings and loan holding company under HOLA.
(u) The Company and the Bank 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 NASD's "Interpretation
Relating to Free Riding and Withholding."
(v) Neither the Company nor the Bank will amend the Plan of
Conversion without notifying the Agent prior thereto.
(w) The Company shall assist the Agent, if necessary, in connection
with the allocation of the Shares in the event of an
oversubscription and shall provide the Agent with any information
necessary to assist the Company in allocating the Shares in such
event and such information shall be accurate and reliable in all
material respects.
(x) Prior to the Closing Date, the Company and the Bank will inform
the Agent of any event or circumstances of which it is aware as a
result of which the Registration Statement and/or Prospectus, as
then amended or supplemented, or
-18-
the Conversion Application and/or the Holding Company
Application, as then amended or supplemented, would contain an
untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein not
misleading.
(y) Subsequent to the date the Registration Statement is declared
effective by the SEC and prior to the Closing Date, except as
otherwise may be indicated or contemplated therein or set forth
in an amendment or supplement thereto, neither the Company nor
the Bank will have: (i) issued any securities or incurred any
liability or obligation, direct or contingent, for borrowed
money, except borrowings from the same or similar sources
indicated in the Prospectus in the ordinary course of its
business, or (ii) entered into any transaction which is material
in light of the business and properties of the Company and the
Bank, taken as a whole.
Section 6. Payment of Expenses. Whether or not the Conversion is
--------------------
completed or the sale of the Shares by the Company is consummated, the Company
and the Bank jointly and severally agree to pay or reimburse the Agent for: (a)
all filing fees in connection with all filings related to the Offering with the
NASD; (b) any stock issue or transfer taxes which may be payable with respect to
the sale of the Shares; (c) all reasonable expenses of the Conversion, including
but not limited to the Company's, the Bank's and the Agent's attorneys' fees
(subject to Section 2 of this Agreement) and expenses, blue sky fees, transfer
agent, registrar and other agent charges, fees relating to auditing and
accounting or other advisors and costs of printing all documents necessary in
connection with the Conversion. In the event the Company is unable to sell a
minimum of __________ Shares or the Conversion is terminated or otherwise
abandoned, the Company and the Bank shall promptly reimburse the Agent in
accordance with Section 2(c) hereof.
Section 7. Conditions to the Agent's Obligations. The obligations of
--------------------------------------
the Agent hereunder are subject, to the extent not waived in writing by the
Agent, to the condition that all representations and warranties of the Company
and the Bank herein are, at and as of the commencement of the Offering and at
and as of the Closing Date, true and correct in all material respects, the
condition that the Company and the Bank shall have performed all of their
obligations hereunder to be performed on or before such dates, and to the
following further conditions:
(a) At the Closing Date, the Company and the Bank shall have
conducted the Conversion in all material respects in accordance
with the Plan, the Conversion Regulations and all other
applicable laws, regulations, decisions and orders, including all
terms, conditions, requirements and provisions precedent to the
Conversion imposed upon them by the OTS, the SEC or any other
governmental authority.
(b) The Registration Statement shall have been declared effective by
the SEC and the Conversion Application approved by the OTS not
later than 5:30 p.m. on the date of this Agreement, or with the
Agent's consent at a later time and date; and at the Closing
Date, no stop order suspending the effectiveness of the
Registration
-19-
Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the SEC or any
state authority, and no order or other action suspending the
authorization of the Prospectus or the consummation of the
Conversion shall have been issued or proceedings therefor
initiated or, to the Company's or the Bank's knowledge,
threatened by the OTS, the SEC or any other governmental
authority.
(c) At the Closing Date, the Agent shall have received:
(1) The favorable opinion, dated as of the Closing Date and
addressed to the Agent and for its benefit, of Malizia, Spidi
& Fisch, PC, special counsel for the Company and the Bank, in
form and substance to the effect that:
(i) The Company has been duly incorporated
and is validly existing and in good standing as a
corporation under the laws of the State of Maryland
and has full corporate power and authority to own,
lease and operate its respective properties and to
conduct its business as described in the Registration
Statement and the Prospectus, and the Company is
qualified to do business as a foreign corporation in
the Commonwealth of Kentucky.
(ii) The Bank is a validly existing
federally chartered savings bank in mutual form duly
authorized to conduct its business and own, lease and
operate its properties as described in the
Registration Statement and the Prospectus. All of the
capital stock of the Bank to be outstanding upon
completion of the Conversion will be duly authorized
and will be validly issued, fully paid and
non-assessable and will be owned by the Company, to
such counsel's knowledge, free and clear of any
liens, encumbrances, claims or other restrictions.
(iii) The Bank is a member in good standing
of the FHLB-Cincinnati. The deposit accounts of the
Bank are insured by the FDIC up to the maximum amount
allowed under law and no proceedings for the
termination or revocation of such insurance are
pending or, to such counsel's knowledge, threatened;
the description of the liquidation account as set
forth in the Prospectus under the captions "The
Conversion - Effects of Conversion to Stock Form on
Depositors and Borrowers of Community First Bank -
Liquidation Account" to the extent that such
information constitutes matters of law and legal
conclusions, has been reviewed by such counsel and is
accurately described in all material respects.
(iv) Immediately following the consummation
of the Conversion, the authorized, issued and
outstanding Common Shares of the Company will be
within the range set forth in the Prospectus under
the captions "Capitalization," and except for shares
issued upon incorporation of the Company, no Common
Shares have been issued prior to the Closing Date;
the Shares subscribed for pursuant to the Offering
have been duly
-20-
and validly authorized for issuance, and when issued
and delivered by the Company pursuant to the Plan in
exchange for payment of the consideration calculated
as set forth in the Plan and the Prospectus, will be
duly and validly issued and fully paid and
non-assessable; the issuance of the Shares is not
subject to preemptive rights; and the terms and
provisions of the Common Shares conform in all
material respects to the description thereof
contained in the Prospectus. The form of certificate
used to evidence the Common Shares complies with
applicable laws. To such counsel's knowledge, upon
the issuance of the Shares, good title to the Shares
will be transferred from the Company to the
purchasers thereof in exchange for payment therefor,
subject to such claims as may be asserted against the
purchasers thereof by third-party claimants.
(v) The Company and the Bank have full
corporate power and authority to enter into this
Agreement and to consummate the transactions
contemplated hereby and by the Plan. The execution
and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been
duly and validly authorized by all necessary action
on the part of the Company and the Bank; and this
Agreement is a valid and binding obligation of the
Company and the Bank, enforceable against the Company
and the Bank in accordance with its terms, except as
the enforceability thereof may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium,
conservatorship, receivership or other similar laws
now or hereafter in effect relating to or affecting
the enforcement of creditors' rights generally, (ii)
general equitable principles, (iii) laws relating to
the safety and soundness of insured depository
institutions, and (iv) applicable law or public
policy with respect to the indemnification and/or
contribution provisions contained herein, including
without limitation the provisions of Sections 23A and
23B of the Federal Reserve Act and except that no
opinion need be expressed as to the effect of
availability of equitable remedies or injunctive
relief (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(vi) The Conversion Application and Holding
Company Application have been approved by OTS and the
Prospectus and Members' Proxy Statement have been
authorized for use by the OTS, and no action has been
taken or is pending, or to the best of such counsel's
knowledge, none is pending or threatened to revoke
any such authorization or approval.
(vii) Pursuant to the Conversion
Regulations, the Plan has been approved by the Bank's
members and duly adopted by the required vote of the
directors of the Company and Bank.
(viii) Subject to the satisfaction of the
conditions to the OTS of the Conversion, no further
approval, registration, authorization, consent or
-21-
other order of any federal or state regulatory agency
is required in connection with the execution and
delivery of this Agreement, the issuance of the
Common 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) and except as may be
required under the rules and regulations of the NASD
and/or The Nasdaq Stock Market (as to which no
opinion need by rendered).
(ix) The Registration Statement is effective
under the 1933 Act and no stop order suspending the
effectiveness has been issued under the 1933 Act or
proceedings therefor initiated or, to such counsel's
knowledge, threatened by the SEC.
(x) At the time the Conversion Application,
including the Prospectus and Members' Proxy Statement
contained therein, was approved by the OTS, the
Conversion Application, including the Prospectus and
Members' Proxy Statement contained therein, complied
as to form in all material respects with the
requirements of the Conversion Regulations, the 1934
Act Regulations, federal and state law and all
applicable rules and regulations promulgated
thereunder (other than the financial statements, the
notes thereto, and other tabular, financial,
statistical and appraisal data included therein, as
to which no opinion need be rendered).
(xi) At the time that the Registration
Statement became effective, (i) the Registration
Statement (as amended or supplemented, if so amended
or supplemented) (other than the financial
statements, the notes thereto, and other tabular,
financial, statistical and appraisal data included
therein, as to which no opinion need be rendered),
complied as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act
Regulations, and (ii) the Prospectus (other than the
financial statements, the notes thereto, and other
tabular, financial, statistical and appraisal data
included therein, as to which no opinion need be
rendered) complied as to form in all material
respects with the requirements of the 1933 Act, the
1933 Act Regulations, the Conversion Regulations and
federal law.
(xii) To such counsel's knowledge, there are
no legal or governmental proceedings pending or
threatened which are required to be disclosed in the
Registration Statement and Prospectus, other than
those disclosed therein.
(xiii) To such counsel's knowledge, there
are no material contracts, indentures, mortgages,
loan agreements, notes, leases or other instruments
required to be described or referred to in the
Conversion Application, the Registration Statement or
the Prospectus or required to be filed as exhibits
thereto other than those described or referred to
therein or
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filed as exhibits thereto in the Conversion
Application, the Registration Statement or the
Prospectus. The description in the Conversion
Application, the Registration Statement and the
Prospectus of such documents and exhibits is accurate
in all material respects and fairly presents the
information required to be shown.
(xiv) The Plan complies in all material
respects with all applicable laws, rules,
regulations, decisions and orders including, but not
limited to, the Conversion Regulations; no order has
been issued by the OTS, the SEC or any other
governmental authority to suspend the Offering or the
use of the Prospectus, and no action for such
purposes has been instituted, or to such counsel's
knowledge, threatened by the OTS, the SEC or any
other governmental authority and, to such counsel's
knowledge, no person has sought to obtain regulatory
or judicial review of the final action of the OTS
approving the Plan, the Conversion Application, the
Holding Company Application or the Prospectus.
(xv) To such counsel's knowledge, the
Company and the Bank have obtained all material
licenses, permits and other governmental
authorizations currently required for the conduct of
their businesses and all such licenses, permits and
other governmental authorizations are in full force
and effect, and the Company and the Bank are in all
material respects complying therewith.
(xvi) To such counsel's knowledge, neither
the Company nor the Bank is in violation of its
articles of incorporation, charter or bylaws, as
appropriate or, to such counsel's knowledge, in
default or violation of any obligation, agreement,
covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or
other instrument to which it is a party or by which
it or its property may be bound, except for such
defaults or violations which would not have a
material adverse impact on the financial condition or
results of operations of the Company and the Bank on
a consolidated basis; the execution and delivery of
this Agreement, the incurrence of the obligations
herein set forth and the consummation of the
transactions contemplated herein do not (a) to such
counsel's knowledge, conflict with or constitute a
breach of, or default under, or result in the
creation or imposition of any lien, charge or
encumbrance upon any property or assets of the
Company or the Bank pursuant to any material
contract, indenture, mortgage, loan agreement, note,
lease or other instrument to which the Company or the
Bank is a party or by which any of them may be bound,
or to which any of the property or assets of the
Company or the Bank are subject (other than the
establishment of the liquidation account), (b) result
in any violation of the provisions of the articles of
incorporation, charter or bylaws, as appropriate, of
the Company or the Bank, or (c) result in any
violation of any applicable federal or state law,
act, regulation (except that no opinion with respect
to the securities and blue sky laws of various
jurisdictions or
-23-
the rules or regulations of the NASD and/or The
Nasdaq Stock Market need be rendered) or order or
court order, writ, injunction or decree.
(xvii) The Company's Articles of
Incorporation and Bylaws comply in all material
respects with the laws of the State of Maryland. The
Bank's Charter and Bylaws comply in all material
respects with federal law.
(xviii) To such counsel's knowledge, neither
the Company nor the Bank is in violation of any
directive from the OTS and the SEC to make any
material change in the method of conducting its
respective business.
(xix) The information in the Prospectus
under the captions "Dividends," "The Conversion,"
"Regulation," "Taxation," "Future Stock Benefit
Plans," "Restrictions on Acquisitions of the
Company," and "Description of Capital Stock," 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 correct in all material
respects. The description of the Conversion process
in the Prospectus under the caption "The Conversion"
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 fairly describes such
process in all material respects. The descriptions in
the Prospectus of statutes or regulations are
accurate summaries and fairly present the information
required to be shown. The information under the
caption "The Conversion - Effects of Conversion to
Stock Form on Depositors and Borrowers of Community
First Bank - Tax Effects" have been reviewed by such
counsel and fairly describes the opinions rendered by
them to the Company and the Bank with respect to such
matters.
In addition, such counsel shall state that
during the preparation of the Conversion Application,
the Registration Statement, the Prospectus, and the
Members' Proxy Statement, they participated in
conferences with certain officers of, the independent
public and internal accountants for, and other
representatives of, the Company and the Bank, at
which conferences the contents of the Conversion
Application, the Registration Statement, the
Prospectus and the Members' Proxy Statement, and
related matters were discussed and, while such
counsel have not confirmed the accuracy or
completeness of or otherwise verified the information
contained in the Conversion Application, the
Registration Statement, the Prospectus and Members'
Proxy Statement, and do not assume any responsibility
for such information, based upon such conferences and
a review of documents deemed relevant for the purpose
of rendering their opinion (relying as to materiality
as to factual matters on certificates of officers and
other factual representations by the Company and the
Bank), nothing has come to their attention that would
lead them to believe that the
-24-
Conversion Application, the Registration Statement,
the Prospectus or the Members' Proxy Statement,
or any amendment or supplement thereto (other than
the financial statements, the notes thereto, and
other tabular, financial, statistical and appraisal
data included therein, as to which no view need be
rendered) contained an untrue statement of a material
fact or omitted to state a material fact required to
be stated therein or necessary to make the
statements therein, in light of the circumstances
under which they were made, not misleading.
In giving such opinion, such counsel may
rely as to all matters of fact on certificates of
officers or directors of the Company and the Bank and
certificates of public officials. Such counsel's
opinion shall be limited to matters governed by
federal laws and by the laws of the State of
Maryland. For purposes of such opinion, no
proceedings shall be deemed to be pending, no order
or stop order shall be deemed to be issued, and no
action shall be deemed to be instituted unless, in
each case, a director or executive officer of either
of the Company or the Bank shall have received a copy
of such proceedings, order, stop order or action. In
addition, such opinion may be limited to present
statutes, regulations and judicial interpretations
and to facts as they presently exist; in rendering
such opinion, such counsel need assume no obligation
to revise or supplement it should the present laws be
changed by legislative or regulatory action, judicial
decision or otherwise; and such counsel need express
no view, opinion or belief with respect to whether
any proposed or pending legislation, if enacted, or
any proposed or pending regulations or policy
statements issued by any regulatory agency, whether
or not promulgated pursuant to any such legislation,
would affect the validity of the Conversion or any
aspect thereof. Such counsel may assume that any
agreement is the valid and binding obligation of any
parties to such agreement other than each of the
Company or the Bank.
(d) At the Closing Date, the Agent shall receive a certificate of the
Chief Executive Officer and the principal accounting officer of
each of the Company and the Bank in form and substance reasonably
satisfactory to the Agent's Counsel, dated as of such Closing
Date, to the effect that: (i) they have carefully reviewed the
Prospectus and the Members' Proxy Statement, and, in their
opinion, at the time the Prospectus and the Members' Proxy
Statement became authorized for final use, the Prospectus and the
Members' Proxy Statement did not contain any untrue statement of
a material fact or omit to state a material fact necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading; (ii)
since the date the Prospectus became authorized for final use, no
event has occurred which should have been set forth in an
amendment or supplement to the Prospectus which has not been so
set forth, including specifically, but without limitation, any
material adverse change in the condition, financial or otherwise,
or in the earnings, capital, properties or business of the
Company or the Bank and the conditions set forth in this Section
7 have been satisfied; (iii) since the respective dates as of
which information is given in
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the Registration Statement and the Prospectus, there has been no
material adverse change in the condition, financial or otherwise,
or in the earnings, capital or properties of the Company or the
Bank independently, or of the Company and the Bank considered as
one enterprise, whether or not arising in the ordinary course of
business; (iv) the representations and warranties in Section 4
are true and correct with the same force and effect as though
expressly made at and as of the Closing Date; (v) the Company and
the Bank have complied in all material respects with all
agreements and satisfied all conditions on their part to be
performed or satisfied at or prior to the Closing Date and will
comply in all material respects with all obligations to be
satisfied by them after the Conversion; (vi) no stop order
suspending the effectiveness of the Registration Statement has
been initiated or, to the best knowledge of the Company or the
Bank, threatened by the OTS, the SEC or any state authority;
(vii) no order suspending the Offering, the Conversion, the
acquisition of all of the outstanding capital stock of the Bank
by or the effectiveness of the Prospectus has been issued and no
proceedings for that purpose are pending or, to the best
knowledge of the Company, the Company or the Bank, threatened by
the SEC, or any governmental authority; and (viii) to the best
knowledge of the Company and the Bank, no person has sought to
obtain review of the final action of the OTS approving the Plan.
(e) Prior to and at the Closing Date: (i) in the reasonable opinion
of the Agent, there shall have been no material adverse change in
the condition, financial or otherwise, or in the earnings or
business of the Company or the Bank independently, or of the
Company and the Bank considered as one enterprise, from that as
of the latest dates as of which such condition is set forth in
the Prospectus, other than transactions referred to or
contemplated therein; (ii) the Company or the Bank shall not have
received from the OTS any direction (oral or written) to make any
material change in the method of conducting their business with
which it has not complied (which direction, if any, shall have
been disclosed to the Agent) or which materially and adversely
would affect the business, operations or financial condition or
income of the Company and the Bank taken as a whole; (iii)
neither the Company nor the Bank shall have been in default (nor
shall an event have occurred which, with notice or lapse of time
or both, would constitute a default) under any provision of any
agreement or instrument relating to any outstanding indebtedness;
(iv) no action, suit or proceeding, at law or in equity or before
or by any federal or state commission, board or other
administrative agency, shall be pending or, to the knowledge of
the Company or the Bank, threatened against the Company or the
Bank or affecting any of their properties wherein an unfavorable
decision, ruling or finding would materially and adversely affect
the business, operations, financial condition or income of the
Company and the Bank taken as a whole; and (v) the Shares shall
have been qualified or registered for offering and sale or
exempted therefrom under the securities or blue sky laws of the
jurisdictions as the Agent shall have reasonably requested and as
agreed to by the Company and the Bank.
-26-
(f) Concurrently with the execution of this Agreement, the Agent
shall receive a letter from EKW dated as of the date of the
Prospectus and addressed to the Agent: (i) confirming that EKW is
a firm of independent public accountants within the meaning of
Rule 101 of the Code of Professional Ethics of the American
Institute of Certified Public Accountants and applicable
regulations of the SEC and that they have registered with the
Public Company Accounting Oversight Board (the "PCAOB"), if such
registration is at that time required; (ii) stating in effect
that in their opinion the financial statements, schedules and
related notes of the Bank as of December 31, 2002 and 2001, and
for each of the two years in the period ended December 31, 2002,
included in the Prospectus and covered by their opinion included
therein, comply as to form in all material respects with the
applicable accounting requirements and related published rules
and regulations of the 1933 Act; (iii) stating in effect that, on
the basis of certain agreed upon procedures (but not an audit in
accordance with generally accepted auditing standards) consisting
of a reading of the latest available unaudited interim financial
statements of the Bank prepared by the Bank, a reading of the
minutes of the meetings of the Boards of Directors of the Company
and the Bank and consultations with officers of the Company and
the Bank responsible for financial and accounting matters,
nothing came to their attention which caused them to believe
that: (A) the unaudited financial statements included in the
Prospectus are not in conformity with the 1933 Act, and 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 financial statements included in the Prospectus
to a specified date not more than three business days prior to
the date of the Prospectus, except as has been described in the
Prospectus, there was any increase in borrowings, other than
normal deposit fluctuations, by the Bank; or (C) there was any
decrease in the net assets or retained earnings of the Bank at
the date of such letter as compared with amounts shown in the
latest unaudited balance sheets included in the Prospectus or
there was any decrease in net income or net interest income 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 (iv) stating
that, in addition to the audit referred to in their opinion
included in the Prospectus and the performance of the procedures
referred to in clause (iii) of this subsection (f), they have
compared with the general accounting records of the Bank, which
are subject to the internal controls of the Bank, the accounting
system and other data prepared by the Bank, 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.
(g) At the Closing Date, the Agent shall receive a letter dated the
Closing Date, addressed to the Agent, confirming the statements
made by EKW in the letter delivered by it pursuant to subsection
(1) of this Section 7, the "specified date" referred to in clause
(ii) of subsection (1) to be a date specified in the letter
-27-
required by this subsection (g) which for purposes of such letter
shall not be more than three business days prior to the Closing
Date.
(h) At the Closing Date, the Agent shall receive a letter from EKW,
dated the Closing Date and addressed to the Agent (i) confirming
that said firm is independent of the Company and the Bank and is
experienced and expert in the area of corporate appraisals within
the meaning of the Conversion Regulations stating in effect that
the Appraisal prepared by such firm 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 Company and the Bank
expressed in its Appraisal, as most recently updated, remains in
effect.
(i) The Company and the Bank shall not have sustained since the date
of the latest financial statements included in the 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 or
contemplated in the Registration Statement and Prospectus. Since
the respective dates as of which information is given in the
Registration Statement and Prospectus, there shall not have been
any change in the long-term debt of the Company or the Bank other
than debt incurred in relation to the purchase of Shares by the
Bank's eligible plans, or any change, or any development
involving a prospective change, in or affecting the general
affairs, management, financial position, shareholders' equity or
results of operations of the Company or the Bank, otherwise than
as set forth or contemplated in the Registration Statement and
Prospectus, the effect of which, in any such case described
above, is in KBW's reasonable judgment sufficiently material and
adverse as to make it impracticable or inadvisable to proceed
with the Subscription Offering or the delivery of the Shares on
the terms and in the manner contemplated in the Prospectus.
(j) At or prior to the Closing Date, the Agent shall receive (i) a
copy of the letters from the OTS approving the Conversion
Application and authorizing the use of the Prospectus; (ii) a
copy of the order from the SEC declaring the Registration
Statement effective; (iii) certificates of good standing from
each of the Secretary of the State of Maryland and the Secretary
of State of the Commonwealth of Kentucky evidencing the good
standing of the Company; (iv) a certificate of good standing from
the OTS evidencing the good standing of the Bank; (v) a
certificate from the FDIC evidencing the Bank's insurance of
accounts; (vi) a certificate from the FHLB-Cincinnati evidencing
the Bank's membership in good standing therein; (viii) a copy of
the letter from the OTS approving the Company's Holding Company
Application; (ix) a certified copy of the Company's Articles of
Incorporation and Bylaws and the Bank's Charter and Bylaws and
(x) any other documents that the Agent shall reasonably request.
(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, American
Stock Exchange or in the over-the-counter market, or
-28-
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 SEC or any other
governmental authority; (ii) a general moratorium on the
operations of commercial banks, or federal savings institutions
or a general moratorium on the withdrawal of deposits from
commercial banks or federal savings institutions declared by
federal or state authorities; (iii) the engagement by the United
States in hostilities which have resulted in the declaration by
the U.S. Congress, on or after the date hereof, of a national
emergency or war; or (iv) a material decline in the price of
equity or debt securities if the effect of such a declaration or
decline, in the Agent's reasonable judgment, makes it
impracticable or inadvisable to proceed with the Offering or the
delivery of the Shares on the terms and in the manner
contemplated in the Registration Statement and the Prospectus.
(l) At or prior to the Closing Date, counsel to the Agent shall have
been furnished with such documents and opinions as they may
reasonably require for the purpose of enabling them to pass upon
the sale of the Shares as herein contemplated and related
proceedings or in order to evidence the occurrence or
completeness of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Company or the Bank in connection with
the Conversion and the sale of the Shares as herein contemplated
shall be satisfactory in form and substance to KBW and its
counsel.
Section 8. Indemnification.
(a) The Company and the Bank jointly and severally agree to indemnify
and hold harmless the Agent, its officers and directors,
employees and agents, 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), joint or several, that the Agent or any
of them may suffer or to which the Agent and any such persons may
become subject under all applicable federal or state laws or
otherwise, and to promptly reimburse the Agent and any such
persons upon written demand for any expenses (including
reasonable fees and disbursements of counsel) incurred by the
Agent or any of them in connection with investigating, preparing
to defend 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
related to the Conversion or any action taken by the Agent where
acting as agent of the Company and the Bank; (ii) 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), preliminary or final
Prospectus (or any amendment or supplement thereto), the
Conversion Application (or any amendment or supplement thereto),
the Holding Company Application or any instrument or document
executed by the Company or the Bank or based upon written
information supplied by the Company or the Bank filed in any
state or
-29-
jurisdiction to register or qualify any or all of the Shares or
to claim an exemption therefrom or provided to any state or
jurisdiction to exempt the Company as a broker-dealer or its
officers, directors and employees as broker-dealers or agents,
under the securities laws thereof (collectively, the "Blue Sky
Application"), or any document, advertisement, oral statement or
communication ("Sales Information") prepared, made or executed by
or on behalf of the Company or the Bank with their consent or
based upon written or oral information furnished by or on behalf
of the Company or the Bank, whether or not filed in any
jurisdiction, in order to qualify or register the Shares or to
claim an exemption therefrom under the securities laws thereof;
(iii) arise out of or are based upon the omission or alleged
omission to state in any of the foregoing documents or
information a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; or (iv)
arise from any theory of liability whatsoever relating to or
arising from or based upon the Registration Statement (or any
amendment or supplement thereto), preliminary or final Prospectus
(of any amendment or supplement thereto), the Conversion
Application, including the Members' Proxy Statement (or any
amendment or supplement thereto), any Blue Sky Application or
Sales Information or other documentation distributed in
connection with the Conversion; provided, however, that no
indemnification is required under this paragraph (a) to the
extent such losses, claims, damages, liabilities or actions arise
out of or are based upon any untrue material statement or alleged
untrue material statement in, or material omission or alleged
material omission from, the Registration Statement (or any
amendment or supplement thereto), preliminary or final Prospectus
(or any amendment or supplement thereto), the Conversion
Application, any Blue Sky Application or Sales Information made
in reliance upon and in conformity with information furnished in
writing to the Company or the Bank by the Agent or its counsel
regarding the Agent, provided, that it is agreed and understood
that the only information furnished in writing to the Company or
the Bank by the Agent regarding the Agent is set forth in the
Prospectus under the caption "The Conversion - Marketing
Arrangements;" and, provided further, that the Company and
-----------------
the Bank shall not be liable under clause (i) of the foregoing
indemnification provision to the extent that any loss, claim,
damage, liability or action is found in a final judgment by a
court of competent jurisdiction to have resulted from the Agent's
bad faith or gross negligence.
(b) The Agent agrees to indemnify and hold harmless the Company and
the Bank, their directors and officers and each person, if any,
who controls the Company or the Bank 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),
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 Company or the Bank, and any such persons, upon
written demand for any expenses (including reasonable fees and
disbursements of counsel) incurred by them, or any of them, in
connection with investigating, preparing to defend or defending
any actions, proceedings or claims (whether commenced or
-30-
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 Conversion Application (or any amendment
or supplement thereto), the preliminary or final Prospectus (or
any amendment or supplement thereto), any Blue Sky Application or
Sales Information, (ii) 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, or (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), preliminary or final Prospectus (or any amendment or
supplement thereto), the Conversion Application (or any amendment
or supplement thereto), or any Blue Sky Application or Sales
Information or other documentation distributed in connection with
the Conversion; provided, however, that the Agent's obligations
under this Section 8(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 Registration Statement (or any amendment or
supplement thereto), the preliminary or final Prospectus (or any
amendment or supplement thereto), the Conversion Application (or
any amendment or supplement thereto), any Blue Sky Application or
Sales Information in reliance upon and in conformity with
information furnished in writing to the Company or the Bank by
the Agent or its counsel regarding the Agent, provided, that it
is agreed and understood that the only information furnished in
writing to the Company or the Bank by the Agent regarding the
Agent is set forth in the Prospectus under the caption "The
Conversion - Marketing Arrangements."
(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 8 or
otherwise. 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 defense of such action with
counsel chosen by it and approved by 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 (and any special counsel
that said firm may retain) for each indemnified party in
connection with any one
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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.
(d) The agreements contained in this Section 8 and in Section 9
hereof and the representations and warranties of the Company and
the Bank 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 or
controlling persons, agent or employees or by or on behalf of the
Company or the Bank or any officers, directors, trustees or
controlling persons, agent or employees of the Company or the
Bank; (ii) delivery of and payment hereunder for the Shares; or
(iii) any termination of this Agreement.
Section 9. Contribution. In order to provide for just and equitable
------------
contribution in circumstances in which the indemnification provided for in
Section 8 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Company, the Bank or the Agent, the Company,
the Bank and the Agent shall contribute to the aggregate losses, claims, damages
and liabilities (including any investigation, legal and other expenses incurred
in connection with, and any amount paid in settlement of, any action, suit or
proceeding, but after deducting any contribution received by the Company, the
Bank or the Agent from persons other than the other parties thereto, who may
also be liable for contribution) in such proportion so that the Agent is
responsible for that portion represented by the percentage that the fees paid to
the Agent pursuant to Section 2 of this Agreement (not including expenses) bears
to the gross proceeds received by the Company from the sale of the Shares in the
Offering, and the Company and the Bank shall be responsible for the balance. If,
however, the allocation provided above is not permitted by applicable law, then
each indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative fault of the Company and the Bank 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 thereto), but also the relative benefits received by the Company and the
Bank on the one hand and the Agent on the other from the Offering (before
deducting expenses). 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 Company and/or the Bank 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 Company, the Bank and the Agent agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro-rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to above in this Section 9. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions, proceedings or claims in respect thereof)
referred to above in this Section 9 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 pursuant to Section 8(b) or
this Section 9 which in the aggregate exceeds the amount paid (excluding
reimbursable expenses) to the Agent under this Agreement. It is understood that
the
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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
1933 Act) shall be entitled to contribution from any person who was not found
guilty of such fraudulent misrepresentation. The obligations of the Company, the
Bank and the Agent under this Section 9 and under Section 8 shall be in addition
to any liability which the Company, the Bank and the Agent may otherwise have.
For purposes of this Section 9, each of the Agent's, the Company's or the Bank's
officers and directors and each person, if any, who controls the Agent or the
Company or the Bank within the meaning of the 1933 Act and the 1934 Act shall
have the same rights to contribution as the Agent, the Company or the Bank. 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 9,
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 9.
Section 10. Survival of Agreements. Representations and Indemnities.
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The respective indemnities of the Company, the Bank and the Agent and the
representations and warranties and other statements of the Company, the Bank and
the Agent set forth in or made pursuant to this Agreement shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of the Agent, the Company,
the Bank or any controlling person referred to in Section 8 hereof, and shall
survive the issuance of the Shares, and any successor or assign of the Agent,
the Company, the Bank, and any such controlling person shall be entitled to the
benefit of the respective agreements, indemnities, warranties and
representations.
Section 11. Termination. The Agent may terminate this Agreement by
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giving the notice indicated below in this Section 11 at any time after this
Agreement becomes effective as follows:
(a) In the event the Company fails to sell the required minimum
number of the Shares by ___________________________ and in
accordance with the provisions of the Plan or as required by
the Conversion Regulations and applicable law. This Agreement
shall terminate upon refund by the Company to each person who
has subscribed for or ordered any of the Shares the full
amount which it may have received from such person, together
with interest as provided in the Prospectus, and no party to
this Agreement shall have any obligation to the other
hereunder, except as set forth in Sections 2(a), 6, 8 and 9
hereof.
(b) If any of the conditions specified in Section 7 shall not have
been fulfilled when and as required by this Agreement, unless
waived in writing, or by the Closing Date, this Agreement and
all of the Agent's obligations hereunder may be canceled by
the Agent by notifying the Company and the Bank of such
cancellation in writing or by telegram at any time at or prior
to the Closing Date, and any such cancellation shall be
without liability of any party to any other party except as
otherwise provided in Sections 2(a), 6, 8 and 9 hereof.
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(c) In the event that either the Company or the Bank is in
material breach of the representations and warranties or
covenants contained in Sections 4(a) and 5 and such breach has
not been cured after the Agent has provided the Company and
the Bank with notice of such breach.
If the Agent elects to terminate this Agreement as provided in this
Section, the Company and the Bank shall be notified promptly by telephone or
telegram, confirmed by letter.
The Company and the Bank may terminate this Agreement in the event the
Agent is in material breach of the representations and warranties or covenants
contained in Section 4(b) and such breach has not been cured after the Company
and the Bank have provided the Agent with notice of such breach.
This Agreement may also be terminated by mutual written consent of the
parties hereto.
Section 12. Notices. All communications hereunder, except as herein
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otherwise specifically provided, shall be mailed in writing and if sent to the
Agent shall be mailed, delivered or telegraphed and confirmed to Keefe, Bruyette
& Woods, Inc., 211 Bradenton Drive, Dublin, Ohio 43017-5034, Attention:_____
(with a copy to Vorys, Sater, Seymour and Pease LLP, Attention: John C. Vorys,
Esq.), and, if sent to the Company and the Bank, shall be mailed, delivered or
telegraphed and confirmed to the Company and the Bank at Community First Bank,
240 South Main Street, Madisonville, Kentucky 42431, Attention: William Tandy,
President (with a copy to James C. Stewart, Malizia Spidi & Fisch, PC, 1100 New
York Avenue, NW, Suite 340 West, Washington, DC 20005).
Section 13. Parties. The Company and the Bank shall be entitled to act
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and rely on any request, notice, consent, waiver or agreement purportedly given
on behalf of the Agent when the same shall have been given by the undersigned.
The Agent shall be entitled to act and rely on any request, notice, consent,
waiver or agreement purportedly given on behalf of the Company or the Bank, when
the same shall have been given by the undersigned or any other officer of the
Company or the Bank. This Agreement shall inure solely to the benefit of, and
shall be binding upon, the Agent, the Company, the Bank, and their respective
successors and assigns, and no other person shall have or be construed to have
any legal or equitable right, remedy or claim under or in respect of or by
virtue of this Agreement or any provision herein contained. It is understood and
agreed that this Agreement is the exclusive agreement among the parties hereto,
and supersedes any prior agreement among the parties (except for specific
references to the letter agreement with the Agent) and may not be varied except
in writing signed by all the parties.
Section 14. Closing. The closing for the sale of the Shares shall take
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place on the Closing Date at such location as mutually agreed upon by the Agent
and the Company and the Bank. At the closing, the Company and the Bank shall
deliver to the Agent in next day funds the commissions, fees and expenses due
and owing to the Agent as set forth in Sections 2 and 6 hereof and the opinions
and certificates required hereby and other documents deemed reasonably necessary
by 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.
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Section 15. Partial Invalidity. In the event that any term, provision
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or covenant herein or the application thereof to any circumstance 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 circumstances
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.
Section 16. Construction. This Agreement shall be construed in
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accordance with the laws of the State of New York.
Section 17. Counterparts. This Agreement may be executed in separate
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counterparts, each of which so executed and delivered shall be an original, but
all of which together shall constitute but one and the same instrument.
If the foregoing correctly sets forth the arrangement among the
Company, the Bank and the Agent, please indicate acceptance thereof in the space
provided below for that purpose, whereupon this letter and the Agent's
acceptance shall constitute a binding agreement.
Very truly yours,
Community First Bank Community First Bancorp, Inc.
(a Maryland corporation)
By Its Authorized By Its Authorized
Representative: Representative:
- ------------------------------------------- -------------------------------------
William Tandy William Tandy
President and Chief Executive Officer President and Chief Executive Officer
Accepted as of the date first above written
Keefe, Bruyette & Woods, Inc.
By Its Authorized
Representative:
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