EXHIBIT 1.1
Up to 7,290,261 Shares
NCRIC Group, Inc.
(a Delaware corporation)
Common Stock
($.01 par value per share)
AGENCY AGREEMENT
May , 2003
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SANDLER O'NEILL & PARTNERS, L.P.
919 Third Avenue, 6th floor
New York, New York 10022
Ladies and Gentlemen:
NCRIC Group, Inc., a Delaware corporation and successor corporation to the
Company, as defined herein ("NCRIC Group"), NCRIC Group, Inc., a District of
Columbia corporation (the "Company"), NCRIC, A Mutual Holding Company, a
District of Columbia mutual insurance holding company (the "MHC"), NCRIC
Holdings, Inc., a District of Columbia corporation ("Holdings"), NCRIC MSO,
INC., a District of Columbia corporation ("MSO") and NCRIC, Inc., a District of
Columbia stock insurance company ("NCRIC"), hereby confirm their agreement with
Sandler O'Neill & Partners, L.P. ("Sandler O'Neill" or the "Agent") with respect
to the offer and sale by NCRIC Group of up to 4,364,250 shares of its Common
Stock, $.01 par value per share (the "Common Stock"). Additionally, NCRIC Group
will issue up to 2,926,011 shares of its common stock to existing shareholders
of the Company in exchange for their existing shares (the "Exchange Shares"), so
that, upon completion of the offerings, 100% of NCRIC Group's common stock will
be publicly owned. The shares of Common Stock to be sold by NCRIC Group are
hereinafter called the "Securities."
The MHC is the holding company for Holdings, which is the holding company
for the Company. The Company is the holding company for NCRIC and its
subsidiaries, as well as the holding company for MSO and its subsidiaries.
Following completion of the conversion, the Company will be succeeded by NCRIC
Group. Additionally, upon the completion of the conversion and offerings, the
MHC and Holdings will cease to exist.
The Securities are being offered for sale by the Company at $10.00 per
share (the "Purchase Price") in a subscription offering (the "Subscription
Offering") pursuant to nontransferable subscription rights in the following
order of priority: (1) members of the MHC (i.e. policy holders of NCRIC on
January 28, 2003 ("Eligible Members"); (2) NCRIC Group's tax-qualified employee
stock ownership plan (the "ESOP") and Stock Award Plan; and (3) directors,
officers and employees of NCRIC Group who are not Eligible Members.
Subject to the prior rights of holders of subscription rights, to the
extent Securities are not subscribed for in the Subscription Offering, such
securities may be offered to members of the general public at the Purchase Price
in a direct community offering (the "Community Offering," and
SANDLER O'NEILL & PARTNERS, L.P.
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together with the Subscription Offering, as each may be extended, the
"Subscription and Community Offering") to be commenced concurrently with the
Subscription Offering. Preference will be given in the: Community Offering to
(1) persons who are policyholders of NCRIC who are not members entitled to
purchase shares of common stock in category one (1) of the subscription
offering; (2) policyholders of Commonwealth Medical Liability Insurance Company;
and (3) existing shareholders of the Company.
It is currently anticipated by NCRIC Group and NCRIC that any Securities
not subscribed for in the Subscription and Community Offering will be offered,
subject to Section 5 hereof, in a syndicated community offering (the "Syndicated
Community Offering"). The Subscription and Community Offering and the Syndicated
Community Offering are hereinafter referred to collectively as the: "Offerings."
NCRIC Group has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333- ), including a
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related prospectus, for the registration of the Securities under the Securities
Act of 1933, as amended (the "Securities Act"), has filed such amendments
thereto and such amended prospectuses as may have been required to the date
hereof by the Commission in order to declare such registration statement
effective, and will file such additional amendments thereto and such amended
prospectuses and prospectus supplements as may hereafter be required. Such
registration statement (as amended to date, if applicable, and as from time to
time amended or supplemented hereafter) and the prospectuses constituting a part
thereof (including in each case all documents incorporated or deemed to be
incorporated by reference therein and the information, if any, deemed to be a
part thereof pursuant to the rules and regulations of the Commission under the
Securities Act, as from time to time amended or supplemented pursuant to the
Securities Act or otherwise (the "Securities Act Regulations"), are hereinafter
referred to as the "Registration Statement" and the "Prospectus," respectively,
except that if any revised prospectus shall be used by NCRIC Group in connection
with the Subscription and Community Offering or the Syndicated Community
Offering which differs from the Prospectus on file at the Commission at the time
the Registration Statement becomes effective (whether or not such revised
prospectus is required to be filed by NCRIC Group pursuant to Rule 424(b) of the
Securities Act Regulations), the term "Prospectus" shall refer to such revised
prospectus from and after the time it is first provided to the Agent for such
use.
Concurrently with the execution of this Agreement, NCRIC Group is
delivering to the Agent copies of the Prospectus of NCRIC Group to be used in
the Subscription and Community Offering. Such prospectus contains information
with respect to NCRIC Group, the Company, the MHC, NCRIC, the Subscription and
Community Offering, and the Common Stock.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) NCRIC Group, the Company, the MHC, Holdings, MSO, and NCRIC
jointly and severally represent and warrant to the Agent as of the date hereof
as follows:
(i) The Registration Statement has been declared effective by the
Commission, no stop order has been issued with respect thereto and no
proceedings therefor have been initiated or, to the knowledge of NCRIC
Group, the Company, the MHC, or NCRIC or any of their subsidiaries,
threatened by the Commission. At the time the Registration Statement became
effective and at the Closing Time referred to in Section 2
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hereof, the Registration Statement complied and will comply in all material
respects with the requirements of the Securities Act and the Securities Act
Regulations and did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. At the
date hereof the Prospectus does not, and at the Closing Time referred to in
Section 2 hereof, will not include an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that the representations and warranties in
this subsection shall not apply to statements in or omissions from the
Registration Statement or Prospectus made in reliance upon and in
conformity with information with respect to the Agent furnished to NCRIC
Group in writing by the Agent expressly for use in the Registration
Statement or Prospectus (the "Agent Information," which NCRIC Group, the
Company, the MHC, and NCRIC acknowledge appears in the Prospectus only in
the second, third, and fourth paragraph of the section captioned "The
Conversion - Plan of Distribution; Selling Agent Compensation.")
(ii) NCRIC has filed with the District of Columbia Department of
Insurance and Securities (the "Department") a letter requesting approval of
the terms of the Offerings, and has filed such amendments thereto and
supplementary materials as may have been required to the date hereof (such
application, as amended to date, if applicable, and as from time to time
amended or supplemented hereafter, is hereinafter referred to as the
"Offering Application"). The Department has, by written order dated
, 2003, approved the Offering Application, such approval remains
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in full force and effect and no order has been issued by the Department
suspending or revoking such approval and no proceedings therefor have been
initiated or, to the knowledge of NCRIC Group, the Company, the MHC, or
NCRIC threatened by the Department. At the date of such approval and at the
Closing Time referred to in Section 2, the Offering Application and the
Offerings complied and will comply in all material respects with the
applicable provisions of the Reciprocal Insurance Company Conversion Act of
1998 (the "Conversion Act") and regulations adopted thereunder.
(iii) NCRIC Group will promptly file the Prospectus and any
supplemental sales literature with the Commission. The Prospectus and all
supplemental sales literature authorized by the NCRIC Group, as of the date
the Registration Statement became effective and at the Closing Time
referred to in Section 2 complied and will comply in all respects with the
applicable requirements of the Commission and the Department, and, at or
prior to the time of their first use, will have received all required
authorizations for use in final form.
(iv) Neither the Commission nor the Department has, by order or
otherwise, prevented or suspended the use of the Prospectus or any
supplemental sales literature authorized by NCRIC Group or NCRIC for use in
connection with the Offerings.
(v) At the Closing Time referred to in Section 2, NCRIC Group and
NCRIC will have completed the conditions precedent to the Offerings in
accordance with all applicable laws, regulations, decisions and orders,
including all terms, conditions, requirements and provisions precedent to
the Offerings imposed upon NCRIC Group, the Company, the MHC, or NCRIC, by
any regulatory authority, other than those which the
SANDLER O'NEILL & PARTNERS, L.P.
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regulatory authority permits to be completed after the Closing Time, and
those under state securities laws of states in which the Company elects not
to sell the securities.
(vi) RP Financial, LC. ("RP Financial"), which prepared the
valuation of the Company as part of the Offerings, is independent of NCRIC
Group, the Company, the MHC, NCRIC, and each of their subsidiaries.
(vii) The accountants, Deloitte & Touche LLP, who audited the
consolidated financial statements and supporting schedules of the Company
included in the Registration Statement have advised the Company in writing
that they are independent public accountants within the meaning of the Code
of Ethics of the American Institute of Certified Public Accountants (the
"AICPA") and such accountants are, with respect to the Company and each of
its subsidiaries, independent certified public accountants as required by
the Securities Act and the Securities Act Regulations and such accountants
are not in violation of the auditor independence requirements of the
Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act").
(viii) The only direct subsidiary of the MHC is Holdings. The
only direct subsidiary of Holdings is the Company. The only direct
subsidiaries of the Company are NCRIC and MSO. The only direct subsidiaries
of NCRIC are National Capital Insurance Brokerage, Ltd., NCRIC Insurance
Agency, Inc. Commonwealth Medical Liability Insurance Company ("CML"), and
American Captive Corporation and the only direct subsidiary of MSO is NCRIC
Physicians Organization, Inc.
(ix) The consolidated financial statements and the related notes
thereto included in the Registration Statement and the Prospectus present
fairly the financial position of the Company and its consolidated
subsidiaries at the dates indicated and the related statements of
operations, equity, and cash flows for the periods specified, and comply as
to form in all material respects with the applicable accounting
requirements of the Securities Act Regulations; except as otherwise stated
in the Registration Statement, said financial statements have been prepared
in conformity with generally accepted accounting principles applied on a
consistent basis; and the supporting schedules and tables included in the
Registration Statement present fairly the information required to be stated
therein, except as otherwise stated in the Registration Statement, said
financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis; and the
supporting schedules and tables included in the Registration Statement
present fairly the information required to be stated therein. The pro forma
consolidated financial data of NCRIC Group included in the Registration
Statement have been prepared and compiled in all material respects on the
pro forma basis described therein, and the pro forma adjustments have in
all material respects been properly and fairly applied to the historical
consolidated financial statements of the Company for the periods to which
they relate. The financial information set forth in the Prospectus under
"Selected Consolidated Financial and Other Data" presents fairly, on the
basis stated in the Prospectus, the information set forth therein.
(x) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, except as otherwise
stated therein (A) there has been no material adverse change in the
financial condition, results of operations or business
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affairs of NCRIC Group, the Company, the MHC, NCRIC, and their subsidiaries
considered as one enterprise, whether or not arising in the ordinary course
of business, and (B) except for transactions specifically referred to or
contemplated in the Prospectus, there have been no transactions entered
into by NCRIC Group, the Company, the MHC, NCRIC, or any of their
subsidiaries which are material with respect to NCRIC Group, the Company,
the MHC, NCRIC, and their subsidiaries, considered as one enterprise.
(xi) NCRIC Group, the Company, the MHC, NCRIC, and each of their
subsidiaries have been duly incorporated and each is validly existing as a
corporation in good standing under the laws of its respective jurisdiction
of incorporation or formation with full corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus; NCRIC Group, the Company, the MHC, NCRIC, and
each of their subsidiaries are duly qualified as a foreign corporation to
transact business and are in good standing in each jurisdiction in which
such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure to
so qualify would not have a material adverse effect on the financial
condition, results of operations or business affairs of NCRIC Group, the
Company, the MHC, NCRIC, and each of their subsidiaries, considered as one
enterprise. NCRIC has all requisite power and authority to carry on an
insurance business pursuant to and to the extent of the certificates of
authority issued under the laws of the District of Columbia and the State
of Maryland. CML has all requisite power and authority to carry on an
insurance business pursuant to and to the extent of the certificates of
authority issued under the laws of the District of Columbia and the States
of Maryland, Virginia, West Virginia and Delaware. Each of the NCRIC Group,
the Company, the MHC, and the other subsidiaries have has all requisite
power, authority and licenses to carry on their respective businesses.
Except as disclosed in the Prospectus, the authority of each of NCRIC and
CML to write the classes and lines of insurance authorized by such
licenses, certificates, permits and other authorizations and described in
the Prospectus is unrestricted and neither NCRIC Group, the Company, the
MHC, nor any of their subsidiaries is a party to any agreement, formal or
informal, with any regulatory official or other person limiting the ability
of any of NCRIC Group, the Company, the MHC, or their subsidiaries from
making full use of the licenses, certificates, permits and other
authorizations issued to them or requiring NCRIC Group, the Company, the
MHC, or any of their subsidiaries to comply with regulatory standards or
procedures or requirements different from those applicable to companies
with comparable or similar licenses, certificates, permits and other
authorizations, except where such restriction, limitation or requirement
would not have a material adverse effect on the financial condition,
results of operations or business affairs of NCRIC Group, the Company, the
MHC, and each of their subsidiaries, considered as one enterprise.
(xii) NCRIC Group, the Company, the MHC, NCRIC, and each of their
subsidiaries have obtained all licenses, permits and other governmental
authorizations currently required for the conduct of their respective
businesses or required for the conduct of their respective businesses as
described in the Prospectus, except where the failure to obtain such
licenses, permits or other governmental authorizations would not have a
material adverse effect on the financial condition, results of operations
or business affairs of the NCRIC Group, the Company, the MHC, NCRIC, and
their subsidiaries considered as one enterprise; all such licenses, permits
and other governmental authorizations are in full
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force and effect and the NCRIC Group, the Company, the MHC, NCRIC, and each
of their subsidiaries are in all material respects in compliance therewith;
neither the NCRIC Group, the Company, the MHC, nor any of their
subsidiaries has received notice of any proceeding or action relating to
the revocation or modification of any such license, permit or other
governmental authorization which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, might have a
material adverse effect on the financial condition, results of operations
or business affairs of NCRIC Group, the Company, the MHC, and their
subsidiaries, considered as one enterprise.
(xiii) At the Closing Time, the authorized, issued and
outstanding capital stock of NCRIC Group will be as set forth in the
Prospectus under "Capitalization" (except for subsequent issuances, if any,
pursuant to reservations, agreements or employee benefit plans referred to
in the Prospectus); no shares of Common Stock have been or will be issued
and outstanding prior to the Closing Time referred to in Section 2; at the
Closing Time, the Securities will have been duly authorized for issuance
and, when issued and delivered by the NCRIC Group against payment of the
consideration calculated as set forth on the cover page of the Prospectus,
will be duly and validly issued and fully paid and non-assessable; the
Exchange Shares have been duly authorized for issuance and, when issued,
will be duly and validly issued and fully paid and nonassessable; the terms
and provisions of the Common Stock and the capital stock of the NCRIC Group
conform in all material respects to all statements relating thereto
contained in the Prospectus; the certificates representing the shares of
Common Stock conform to the requirements of applicable law and regulations;
and the issuance of the Securities is not subject to preemptive or other
similar rights.
(xiv) The authorized capital stock of the Company consists of
10,000,000 shares of common stock, par value $0.01 per share (the "Company
Common Stock") and 3,708,399 shares are issued and outstanding as of the
date hereof; no additional shares of Company Common Stock will be issued
prior to the Closing Time referred to in Section 2; the issued and
outstanding shares of Company Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable and have been issued in
compliance with all federal and state securities laws; Holdings own
2,220,000 shares of Company Common Stock beneficially and of record free
and clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity; the terms and provisions of the Company Common Stock
conform to all statements relating thereto contained in the Prospectus; at
the time of the consummation of the Offerings the Exchange Shares will be
converted into shares of NCRIC Group based upon an exchange ratio and the
shares held by Holdings will be cancelled.
(xv) The authorized capital stock of NCRIC is 1,000 shares of
common stock, par value $.01 per share (the "NCRIC Common Stock"), and
1,000 shares of NCRIC Common Stock have been issued to the Company. No
other shares of NCRIC Common Stock will be issued prior to the Closing Time
referred to in Section 2. The shares of NCRIC Common Stock issued to the
Company have been duly authorized for issuance and are duly and validly
issued and fully paid and nonassessable, and all such NCRIC Common Stock is
owned beneficially and of record by the Company free and clear of any
security interest, mortgage, pledge lien encumbrance or legal or equitable
claim; the certificates representing the shares of NCRIC Common Stock
conform with the requirements of applicable laws and regulations; and the
issuance of NCRIC Common Stock was not subject
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to preemptive or similar rights. The authorized capital stock of MSO is
1,000 shares of common stock, par value $50 per share (the "MSO Common
Stock"), and 1,000 shares of MSO Common Stock have been issued to the
Company. No other shares of MSO Common Stock will be issued prior to the
Closing Time referred to in Section 2. The shares of MSO Common Stock
issued to the Company have been duly authorized for issuance and are duly
and validly issued and fully paid and nonassessable, and all such MSO
Common Stock is owned beneficially and of record by the Company free and
clear of any security interest, mortgage, pledge, lien, encumbrance or
legal or equitable claim, except that such securities are pledged to Sun
Trust Bank; the certificates representing the shares of MSO Common Stock
conform with the requirements of applicable laws and regulations; and the
issuance of MSO Common Stock was not subject to preemptive or similar
rights, upon consummation of the Offerings, all of the issued and
authorized capital stock of NCRIC and MSO respectively, will be duly
authorized and validly issued to NCRIC Group and fully paid and
nonassessable, and all such capital stock will be free and clear of any
security interest, mortgage, pledge, lien, encumbrance or legal or
equitable claim, except the shares of MSO will be pledged to Sun Trust
Bank.
(xvi) All of the issued and outstanding capital stock of Holdings
have been duly authorized and validly issued, is fully paid and
nonassessable and is owned by the MHC, free and clear of any security
interest, mortgage, pledge, lien, encumbrance or legal or equitable claim.
(xvii) NCRIC Group, the Company, the MHC, Holdings, MSO, and
NCRIC have the corporate power to enter into and to perform this Agreement
and have taken all corporate action necessary for them to execute, deliver
and perform this Agreement, and this Agreement has been duly executed and
delivered by, and is the valid and binding agreement of, NCRIC Group, the
Company, the MHC, and NCRIC, enforceable in accordance with its terms,
except as may be limited by bankruptcy, insolvency or other laws affecting
the enforceability of the rights of creditors generally and principles of
equity, whether considered in a proceeding in equity or at law, and except
as the enforceability of indemnification and contribution provisions may be
limited by applicable securities laws.
(xviii) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus and
prior to the Closing Time, except as otherwise may be indicated or
contemplated therein, none of NCRIC Group, the Company, the MHC, or any of
their subsidiaries will have (A) issued any securities or incurred any
material liability or obligation, direct or contingent, or borrowed money,
except borrowings in the ordinary course of business from the same or
similar sources and in similar amounts as indicated in the Prospectus, or
(B) entered into any transaction or series of transactions which is
material in light of the business of NCRIC Group, the Company, the MHC,
NCRIC, and their subsidiaries considered as one enterprise.
(xix) 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 Securities that has not been
obtained and a copy of which has been delivered to the Agent, except as may
be required under the securities laws of various jurisdictions.
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(xx) Neither NCRIC Group, the Company, the MHC, nor any of their
subsidiaries is in violation of their certificate of incorporation,
organization certificate, articles of incorporation or charter, as the case
may be, or bylaws; and neither NCRIC Group, the Company, the MHC, nor any
of their subsidiaries is in default (nor has any event occurred which, with
notice or lapse of time or both, would constitute a default) in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan agreement,
note, lease or other instrument to which NCRIC Group, the Company, the MHC,
or any of their subsidiaries is a party or by which it or any of them may
be bound, or to which any of the property or assets of NCRIC Group, the
Company, the MHC, or any of their subsidiaries is subject, except for such
defaults that would not, individually or in the aggregate, have a material
adverse effect on the financial condition, results of operations or
business of NCRIC Group, the Company, the MHC, NCRIC, and their
subsidiaries considered as one enterprise; and there are no contracts or
documents of NCRIC Group or NCRIC or any of their subsidiaries which are
required to be filed as exhibits to the Registration Statement or the
Offering Application which have not been so filed.
(xxi) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated herein do not and
will not 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 NCRIC Group, the Company, the MHC, or any of
their subsidiaries pursuant to any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which NCRIC Group, the
Company, the MHC, or any of their subsidiaries is a party or by which it or
any of them may be bound, or to which any of the property or assets of
NCRIC Group, the Company, the MHC, or any of their subsidiaries is subject,
except for such defaults that would not, individually or in the aggregate,
have a material adverse effect on the financial condition, results of
operations or business affairs of NCRIC Group, the Company, the MHC, NCRIC,
and its subsidiaries considered as one enterprise; nor will such action
result in any violation of the provisions of the certificate of
incorporation, organization certificate, articles of incorporation or
charter or bylaws of NCRIC Group, the Company, the MHC, or any of their
subsidiaries, or any applicable law, administrative regulation or
administrative or court decree.
(xxii) No labor dispute with the employees of NCRIC Group, the
Company, the MHC, or any of their subsidiaries exists or, to the knowledge
of NCRIC Group, the Company, the MHC, is imminent or threatened; and NCRIC
Group, the Company, the MHC, or any of its subsidiaries are not aware of
any existing or threatened labor disturbance by the employees of any of its
principal suppliers or contractors which might be expected to result in any
material adverse change in the financial condition, results of operations
or business affairs of NCRIC Group, the Company, the MHC, and their
subsidiaries considered as one enterprise.
(xxiii) Each of NCRIC Group, the Company, the MHC, and their
subsidiaries has good and marketable title to all properties and assets for
which ownership is material to the business of NCRIC Group, the Company,
the MHC, or any of their subsidiaries and to those properties and assets
described in the Prospectus as owned by them, free and clear of all liens,
charges, encumbrances or restrictions, except such as are described in the
Prospectus or are not material in relation to the business of NCRIC Group,
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the Company, the MHC, and their subsidiaries considered as one enterprise;
and all of the leases and subleases material to the business of NCRIC
Group, the Company, the MHC, or any of their subsidiaries under which they
hold properties, including those described in the Prospectus, are valid and
binding agreements of NCRIC Group, the Company, the MHC, and their
subsidiaries, enforceable in accordance with their terms, except as may be
limited by bankruptcy, insolvency or other laws affecting the
enforceability of the rights of creditors generally and principles of
equity, whether considered in a proceeding in equity or at law.
(xxiv) Neither NCRIC Group, the Company, the MHC, NCRIC nor any
of their subsidiaries is in violation of any directive from the Department
or any other regulatory authority to make any material change in the method
of conducting their respective businesses; NCRIC Group, the Company, the
MHC, NCRIC and their subsidiaries have conducted and are conducting their
business so as to comply in all material respects with all applicable
federal, state, local and foreign laws, statutes, regulations and
administrative and court decrees (including, without limitation, all
regulations, decisions, directives and orders of the Department), except
where the failure to be in compliance would not have a material adverse
effect on the financial condition, results of operations or business
affairs of NCRIC Group, the Company, NCRIC, and their subsidiaries
considered as one enterprise.
(xxv) There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now pending, or,
to the knowledge of NCRIC Group, the Company, the MHC, NCRIC threatened,
against or affecting NCRIC Group, the Company, the MHC, NCRIC or any of
their subsidiaries which is required to be disclosed in the Registration
Statement (other than as disclosed therein), or which might reasonably be
expected to result in any material adverse change in the financial
condition, results of operations or business affairs of NCRIC Group, the
Company, the MHC, NCRIC, and their subsidiaries considered as one
enterprise, or which might reasonably be expected to materially and
adversely affect the properties or assets thereof or which might reasonably
be expected to materially and adversely affect the consummation of the
Offerings; all pending legal or governmental proceedings to which NCRIC
Group, the Company, the MHC, NCRIC, or any of their subsidiaries is a party
or of which any of their respective property or assets is the subject which
are not described in the Registration Statement, including ordinary routine
litigation incidental to the business, are considered in the aggregate not
material to NCRIC Group, the Company, the MHC, NCRIC, and their
subsidiaries considered as one enterprise.
(xxvi) NCRIC Group has obtained opinions of its counsel, Luse
Gorman Pomerenk & Schick, P.C., with respect to the legality of the
Securities and Exchange Shares to be issued in the Offerings and the
federal and state income tax consequences, copies of which are filed as
exhibits to the Registration Statement. All material aspects of the
aforesaid opinions are accurately summarized in the Prospectus; the facts
and representations upon which such opinions are based are truthful,
accurate and complete in all material respects; and neither NCRIC Group,
the Company, the MHC, or their subsidiaries has taken or will take any
action inconsistent therewith.
(xxvii) NCRIC Group is not required to be registered under the
Investment Company Act of 1940, as amended.
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(xxviii) To the knowledge of NCRIC Group, the Company, the MHC,
and NCRIC, with the exception of the intended loan to NCRIC Group's ESOP by
NCRIC Group to enable the ESOP to purchase shares of Common Stock in an
amount up to 5% of the Common Stock issued in the Offerings, and the
intended loan to enable NCRIC Group's Stock Award Plan to purchase shares
of Common Stock in an amount up to 4% of the Common Stock issued in the
Offerings, none of NCRIC Group, the Company, the MHC, NCRIC or employees of
any of their subsidiaries has made any payment of funds of NCRIC Group or
any of its subsidiaries as a loan for the purchase of the Common Stock or
made any payment of funds prohibited by law, and no funds have been set
aside by NCRIC Group, the Company, the MHC, NCRIC or any of their
subsidiaries to be used for any payment prohibited by law.
(xxix) Neither NCRIC Group, the Company, the MHC, nor any of
their subsidiaries nor any properties owned or operated by NCRIC Group, the
Company, the MHC, or any of their subsidiaries is in violation of or liable
under any Environmental Law (as defined below), except for such violations
or liabilities that, individually or in the aggregate, would not have a
material adverse effect on the financial condition, results of operations
or business affairs of NCRIC Group, the Company, the MHC, Holdings, NCRIC,
MSO and their subsidiaries considered as one enterprise. There are no
actions, suits or proceedings, or demands, claims, notices or
investigations (including, without limitation, notices, demand letters or
requests for information from any environmental agency) instituted or
pending, or to the knowledge of NCRIC Group, the Company, the MHC, or any
of their subsidiaries, threatened, relating to the liability of any
property owned or operated by NCRIC Group, the Company, the MHC, or any of
their subsidiaries, under any Environmental Law. For purposes of this
subsection, the term "Environmental Law" means any federal, state, local or
foreign law, statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, order, judgment, decree, injunction or
agreement with any regulatory authority relating to (i) the protection,
preservation or restoration of the environment (including, without
limitation, air, water, vapor, surface water, groundwater, drinking water
supply, surface soil, subsurface soil, plant and animal life or any other
natural resource), and/or (ii) the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production,
release or disposal of any substance presently listed, defined, designated
or classified as hazardous, toxic, radioactive or dangerous, or otherwise
regulated, whether by type or by quantity, including any material
containing any such substance as a component.
(xxx) NCRIC Group, the Company, the MHC, and their subsidiaries
have filed all federal income and state and local franchise tax returns
required to be filed and have made timely payments of all taxes shown as
due and payable in respect of such returns, and no deficiency has been
asserted with respect thereto by any taxing authority.
(xxxi) NCRIC Group has received approval, subject to completion
of the Offerings and satisfaction of specified conditions, to have the
Securities quoted on the Nasdaq National Market effective as of the Closing
Time referred to in Section 2 hereof.
(xxxii) NCRIC Group will file a registration statement on Form
8-A to register the Common Stock under Section 12(g) of the Securities
Exchange Act of 1934, as
SANDLER O'NEILL & PARTNERS, L.P.
Page 11
amended (the "Exchange Act") and such registration statement will be
effective prior to the closing time.
(xxxiii) There is no contract or other document of a character
required to be described in the Registration Statement or the Prospectus
which is not described as required.
(xxxiv) NCRIC Group and each of its subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets, (iii) access to cash and other liquid assets is
permitted only in accordance with management's general or specific
authorization, and (iv) the recorded ledger assets are compared with
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(xxxv) Except as described in the Prospectus, there are no
contractual encumbrances or restrictions on the ability (i) of NCRIC Group
to pay dividends or make any other distributions on the NCRIC Group's
capital stock or (ii) of NCRIC Group or any of its subsidiaries (A) to pay
any indebtedness owed, or (B) to make any loans or advances to, or
investments in, any of its subsidiaries, or (C) to transfer any of its
property or assets to NCRIC Group or any of its subsidiaries.
(xxxvi) To the knowledge of NCRIC Group, there are no
affiliations or associations (as such terms are defined by the National
Association of Securities Dealers, Inc. ("NASD") between any member of the
NASD and any of NCRIC Group's officers or directors.
(xxxvii) NCRIC Group, the Company, the MHC, and each of their
Subsidiaries carries, or is covered by, insurance in such amounts and
covering such risks as is adequate for the conduct of their respective
businesses and the value of their respective properties as is customary for
companies engaged in similar industries.
(xxxviii)NCRIC Group, the Company, the MHC, and each of their
Subsidiaries is in compliance in all material respects with the applicable
financial record keeping and reporting requirements of the Currency and
Foreign Transaction Reporting Act of 1970, as amended, and the rules and
regulations thereunder.
(xxxix) NCRIC Group, the Company, the MHC, and each of their
subsidiaries have not relied on Agent or its counsel for any legal, tax or
accounting advice in connection with the Offerings.
(xl) The records of eligible members and directors, officers and
employees are accurate and complete in all material respects.
(xli) NCRIC Group and the Company is in compliance with the
applicable provisions of the Sarbanes-Oxley Act and NCRIC Group will comply
with those provisions of the Sarbanes-Oxley At that will become effective
in the future upon their effectiveness.
SANDLER O'NEILL & PARTNERS, L.P.
Page 12
(b) Any certificate signed by any officer of NCRIC Group, the Company,
the MHC, or NCRIC, or any of their subsidiaries and delivered to either of the
Agent or to counsel for the Agent shall be deemed a representation and warranty
by NCRIC Group, the Company, the MHC, or NCRIC, or the subsidiary, to the Agent
as to the matters covered thereby.
SECTION 2. APPOINTMENT OF SANDLER O'NEILL; SALE AND DELIVERY OF THE SECURITIES;
CLOSING.
On the basis of the representations and warranties herein contained and
subject to the terms and conditions herein set forth, NCRIC Group hereby
appoints Sandler O'Neill as its Agent to consult with and advise NCRIC Group and
to assist NCRIC Group with the solicitation of subscriptions and purchase orders
for Securities, in connection with NCRIC Group's sale of Common Stock in the
Subscription and Community Offering and the Syndicated Community Offering. On
the basis of the representations and warranties herein contained, and subject to
the terms and conditions herein set forth, Sandler O'Neill accepts such
appointment and agrees to use its best efforts to assist NCRIC Group with the
solicitation of subscriptions and purchase orders for Securities in accordance
with this Agreement; provided, however, that the Agent shall not be obligated to
take any action which is inconsistent with any applicable laws, regulations,
decisions or orders. The services to be rendered by Sandler O'Neill pursuant to
this appointment include the following: (i) reviewing with NCRIC Group the
independent appraiser's appraisal of the Common Stock; (ii) reviewing all
offering documents, including the Prospectus, stock order form and related
offering materials (it being understood that preparation and filing of such
documents is the sole responsibility of NCRIC Group, the Company, and NCRIC and
their counsel); (iii) assisting in the design and implementation of a marketing
strategy for the Offerings; (iv) assisting in obtaining all requisite regulatory
approvals; (v) assisting management in scheduling and preparing for meetings
with potential investors and broker-dealers; and (vi) providing such other
general advice and assistance as may be requested to promote the successful
completion of the Offerings.
The appointment of the Agent hereunder shall terminate upon the earlier to
occur of (a) forty-five (45) days after the last day of the Subscription and
Community Offering, unless NCRIC Group and the Agent agree in writing to extend
such period, or (b) the receipt and acceptance of subscriptions and purchase
orders for the Securities, or (c) the completion of the Syndicated Community
Offering.
If any of the Securities remain available after the expiration of the
Subscription and Community Offering, at the request of NCRIC Group, Sandler
O'Neill will seek to form a syndicate of registered brokers or dealers
("Selected Dealers") to assist in the solicitation of purchase orders of such
Securities on a best efforts basis, subject to the terms and conditions set
forth in a selected dealers' agreement (the "Selected Dealers' Agreement"),
substantially in the form set forth in Exhibit A to this Agreement. Sandler
O'Neill will endeavor to limit the aggregate fees to be paid by NCRIC Group
under any such Selected Dealers' Agreement to an amount competitive with gross
underwriting discounts charged at such time for underwritings of comparable
amounts of stock sold at a comparable price per share in a similar market
environment; provided, however, that the aggregate fees payable to Sandler
O'Neill and Selected Dealers shall not exceed 7% of the aggregate Purchase Price
of the Securities sold by such Selected Dealers. Sandler O'Neill will endeavor
to distribute the Securities among the Selected Dealers in a fashion which best
meets the distribution objectives of NCRIC Group, which may result in limiting
the allocation of stock to certain Selected
SANDLER O'NEILL & PARTNERS, L.P.
Page 13
Dealers. It is understood that in no event shall Sandler O'Neill be obligated to
act as a Selected Dealer or to take or purchase any Securities.
In the event NCRIC Group is unable to sell at least the total minimum of
the Securities, as set forth on the cover page of the Prospectus, within the
period herein provided, this Agreement shall terminate and the Company shall
refund to any persons who have subscribed for any of the Securities the full
amount which it may have received from them, with interest, and no party to this
Agreement shall have any obligation to the others hereunder, except for the
obligations of NCRIC Group as set forth in Sections 4, 6 and 7 hereof and the
obligations of the Agent as provided in Sections 6 and 7 hereof. Arrangements
for placing the funds received from subscriptions for Securities or other offers
to purchase Securities in a separate escrow account with until
--------------
all Securities are sold and paid for were made prior to the commencement of the
Subscription Offering, with provision for refund to the purchasers as set forth
above, or for delivery to the Company if Securities are sold.
If at least the total minimum of Securities, as set forth on the cover page
of the Prospectus, are sold, NCRIC Group agrees to issue the Securities sold and
to release for delivery certificates for such Securities at the Closing Time
against payment therefor by release of funds from the escrow account referred to
above. The closing shall be held at the District of Columbia offices of Luse
Gorman Pomerenk & Schick, P.C. at a.m., Eastern time, or at such other
-----
place and time as shall be agreed upon by the parties hereto, on a business day
to be agreed upon by the parties hereto. NCRIC Group shall notify the Agent by
telephone, confirmed in writing, when funds shall have been received for all the
Securities. Certificates for Securities shall be delivered directly to the
purchasers thereof in accordance with their directions, subject to limitations
set forth in the Prospectus. Notwithstanding the foregoing, certificates for
Securities purchased through Selected Dealers shall be made available to the
Agent for inspection at least 48 hours prior to the Closing Time at such office
as the Agent shall designate. The hour and date upon which the Company shall
release for delivery all of the Securities, in accordance with the terms hereof,
is herein called the "Closing Time."
The Company will pay any stock issue and transfer taxes which may be
payable with respect to the: sale of the Securities.
In addition to the reimbursement of the expenses specified in Section 4
hereof, the Agent will receive (to the extent not previously paid) the following
compensation for its services hereunder:
(a) two percent (2%) of the aggregate purchase price as set forth in
the Prospectus (the "Purchase Price") of the Securities sold in the
Subscription and Community Offering; and
(b) with respect to any Securities sold by an NASD member firm
(including Sandler O'Neill) under the Selected Dealers' Agreement in the
Syndicated Community Offering, (i) sales commission payable to Selected
Dealers under any Selected Dealers' Agreement, (ii) any sponsoring dealer's
fees; and (iii) a management fee to Sandler O'Neill of two percent (2.0%).
If this Agreement is terminated by the Agent in accordance with the
provisions of Section 9(a) hereof or the offerings are terminated by the
Company, no fee shall be payable by the Company
SANDLER O'NEILL & PARTNERS, L.P.
Page 14
to Agent, provided, however, that the Company shall reimburse the Agent for all
of its reasonable out-of-pocket expenses (inclusive of fees and disbursements of
counsel) incurred prior to termination up to a maximum of $75,000. In addition,
the Company shall be obligated to pay the fees and expenses as contemplated by
the provisions of Section 4 hereof in the event of any such termination.
All fees payable to the Agent hereunder shall be payable in immediately
available funds at Closing Time, or upon the termination of this Agreement, as
the case may be. In recognition of the long lead times involved in the offering
process, the Company has made advance payments to the Agent in the aggregate
amount of $25,000, which shall be credited against any fees or reimbursement of
expenses payable hereunder. Additionally, Agent will also act as conversion
agent in connection with the Offerings and will receive a fee of $10,000, of
which the Company has made a nonrefundable payment of $5,000.
SECTION 3. COVENANTS OF NCRIC GROUP, THE COMPANY, THE MHC, HOLDINGS, NCRIC, AND
MSO.
NCRIC Group, the Company, the MHC, Holdings, NCRIC, and MSO covenant with
the Agent as follows:
(a) NCRIC Group will prepare and file such amendments or supplements
to the Registration Statement, the Prospectus and the Offering Application as
may hereafter be required by the Securities Act Regulations or the Department or
as may hereafter be reasonably requested by the Agent. Following the completion
of the Offerings, NCRIC Group will promptly prepare and file with the Commission
a post-effective amendment to the Registration Statement relating to the results
of the updated valuation of NCRIC Group prepared by RP Financial, LC. NCRIC
Group and NCRIC will notify the Agent immediately, and confirm the notice in
writing, (i) of the effectiveness of any post-effective amendment of the
Registration Statement, the filing of any supplement to the Prospectus and the
filing of any amendment to the Offering Application, (ii) of the receipt of any
comments from the Department or the Commission with respect to the transactions
contemplated by this Agreement, (iii) of any request by the Commission or the
Department for any amendment to the Registration Statement or the Offering
Application or any amendment or supplement to the Prospectus or for additional
information, (iv) of the issuance by the Department of any order suspending the
Offerings or the use of the Prospectus or the initiation of any proceedings for
that purpose, (v) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose, and (vi) of the receipt of any notice with respect
to the suspension of any qualification of the Securities for offering or sale in
any jurisdiction. NCRIC Group, the Company and NCRIC will make every reasonable
effort to prevent the issuance of any stop order by the Commission or the
Department and, if any such stop order is issued, to obtain the lifting thereof
at the earliest possible moment.
(b) NCRIC Group and NCRIC will give the Agent notice of its intention
to file or prepare any amendment to the Offering Application or Registration
Statement (including any post-effective amendment) or any amendment or
supplement to the Prospectus (including any revised prospectus which the Company
proposes for use in connection with the Syndicated Community Offering of the
Securities which differs from the prospectus on file at the Commission at the
time the Registration Statement becomes effective, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) of the Securities Act
Regulations), will furnish the Agent with
SANDLER O'NEILL & PARTNERS, L.P.
Page 15
copies of any such amendment or supplement a reasonable amount of time prior to
such proposed filing or use, as the case may be, and will not file any such
amendment or supplement or use any such prospectus to which the Agent or counsel
for the Agent may reasonably object.
(c) NCRIC Group and NCRIC will deliver to the Agent a signed copy and
as many conformed copies of the Offering Application and the Registration
Statement as originally filed and of each amendment thereto (including exhibits
filed therewith or incorporated by reference therein) as the Agent may
reasonably request, and from time to time such number of copies of the
Prospectus as the Agent may reasonably request.
(d) During the period when the Prospectus is required to be delivered,
NCRIC Group and NCRIC will comply, at their own expense, with all requirements
imposed upon them by the Department, by the Conversion Act, as from time to time
in force, and by the Securities Act, the Securities Act Regulations, the
Exchange Act, and the rules and regulations of the Commission promulgated
thereunder, including, without limitation, Regulation M under the Exchange Act,
so far as necessary to permit the continuance of sales or dealing in shares of
Common Stock during such period in accordance with the provisions hereof and the
Prospectus.
(e) If any event or circumstance shall occur as a result of which it
is necessary, in the opinion of counsel for the Agent, to amend or supplement
the Prospectus in order to make the Prospectus not misleading in the light of
the circumstances existing at the time it is delivered to a purchaser, NCRIC
Group and NCRIC will forthwith amend or supplement the Prospectus (in form and
substance reasonably satisfactory to counsel for the Agent) so that, as so
amended or supplemented, the Prospectus will not include an untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing at the time it is
delivered to a purchaser, not misleading, and NCRIC Group and NCRIC will furnish
to the Agent a reasonable number of copies of such amendment or supplement. For
the purpose of this subsection, NCRIC Group and NCRIC will each furnish such
information with respect to itself as the Agent may from time to time reasonably
request.
(f) NCRIC Group and NCRIC will take all necessary action, in
cooperation with the Agent, to qualify the Securities for offering and sale
under the applicable securities laws of such states of the United States and
other jurisdictions as may be required and as the Agent and NCRIC Group have
agreed; provided, however, that NCRIC Group and NCRIC shall not be obligated to
file any general consent to service of process or to qualify as a foreign
corporation in any jurisdiction in which it is not so qualified. In each
jurisdiction in which the Securities have been so qualified, NCRIC Group and
NCRIC will file such statements and reports as may be required by the laws of
such jurisdiction to continue such qualification in effect for a period of not
less than one year from the effective date of the Registration Statement.
(g) NCRIC Group authorizes Sandler O'Neill and any Selected Dealers to
act as agent of NCRIC Group in distributing the Prospectus to persons entitled
to receive subscription rights and other persons to be offered Securities having
record addresses in the states or jurisdictions set forth in the survey of the
securities or "blue sky" laws of the various jurisdictions in which the
Offerings will be made (the "Blue Sky Survey").
(h) NCRIC Group will make generally available to its security holders
as soon as practicable, but not later than 60 days after the close of the period
covered thereby, an earnings
SANDLER O'NEILL & PARTNERS, L.P.
Page 16
statement (in form complying with the provisions of Rule 158 of the Securities
Act Regulations) covering a twelve month period beginning not later than the
first day of NCRIC Group's fiscal quarter next following the "effective date"
(as defined in said Rule 158) of the Registration Statement.
(i) During the period ending on the fifth anniversary of the
expiration of the fiscal year during which the closing of the transactions
contemplated hereby occurs, NCRIC Group will furnish to its shareholders as soon
as practicable after the end of each such fiscal year an annual report
(including consolidated statements of financial condition and consolidated
statements of income, shareholders' equity and cash flows, audited by
independent public accountants) and, as soon as practicable after the end of
each of the first three quarters of each fiscal year (beginning with the fiscal
quarter ending after the effective date of the Registration Statement),
consolidated summary financial information of NCRIC Group and its subsidiaries
for such quarter in reasonable detail. In addition, such annual report and
quarterly consolidated summary financial information shall be made public in
summary form through the issuance of appropriate press releases at the same time
or prior to the time of the furnishing thereof to shareholders of NCRIC Group.
(j) During the period ending on the fifth anniversary of the
expiration of the fiscal year during which the closing of the transactions
contemplated hereby occurs, NCRIC Group will furnish to the Agent (i) as soon as
publicly available, a copy of each report or other document of NCRIC Group
furnished generally to shareholders of NCRIC Group or furnished to or filed with
the Commission under the Exchange Act or any national securities exchange or
system on which any class of securities of NCRIC Group is listed, and (ii) from
time to time, such other non-confidential information concerning NCRIC Group as
the Agent may reasonably request.
(k) NCRIC Group and NCRIC will conduct the Offerings in all material
respects in accordance with the Offering Application, the Conversion Act and all
other applicable regulations, decisions and orders, including all applicable
terms, requirements and conditions precedent to the Offerings imposed upon NCRIC
Group, the Company, the MHC or NCRIC by the Department.
(l) NCRIC Group and NCRIC will use the net proceeds received from the
sale of the Securities in the manner specified in the Prospectus under "Use of
Proceeds From the Offering."
(m) NCRIC Group will report the use of proceeds from the offerings on
its first periodic report filed with the Commission pursuant to Section 13(a) or
15(d) of the Exchange Act and on any subsequent periodic reports as may be
required pursuant to Rule 463 of the Securities Act Regulations.
(n) NCRIC Group will file with the Nasdaq Stock Market all documents
and notices required by the Nasdaq Stock Market of companies that have issued
securities that are traded in the Nasdaq National Market and quotations for
which are reported by the Nasdaq National Market.
(o) NCRIC Group and NCRIC 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 National Association of Securities Dealers, Inc.'s
"Interpretation Relating to Free-Riding and Withholding."
SANDLER O'NEILL & PARTNERS, L.P.
Page 17
(p) Other than in connection with any employee benefit plan or
arrangement described in the Prospectus, NCRIC Group will not, without the prior
written consent of the Agent, sell or issue, contract to sell or otherwise
dispose of, any shares of Common Stock other than the Securities for a period of
180 days following the Closing Time.
(q) During the period beginning on the date hereof and ending on the
later of the fifth anniversary of the Closing Time or the date on which the
Agent receives full payment in satisfaction of any claim for indemnification or
contribution to which it may be entitled pursuant to Sections 6 or 7,
respectively, NCRIC Group and each of its subsidiaries shall not, without the
prior written consent of the Agent, which consent shall not be unreasonably
withheld, take or permit to be taken any action that could result in NCRIC Group
Common Stock becoming subject to any security interest, mortgage, pledge, lien
or encumbrance.
(r) NCRIC Group and NCRIC will comply with any conditions imposed by
or agreed to with the Department in connection with its approval of the Offering
Application.
(s) NCRIC Group shall not deliver the Securities or Exchange Shares
until NCRIC Group, the Company, the MHC, NCRIC and their subsidiaries have
satisfied each condition set forth in Section 5 hereof, unless such condition is
waived in writing by the Agent.
(t) NCRIC Group and the Company will furnish to Sandler O'Neill as
early as practicable prior to the delivery of the letters to be furnished by
Deloitte & Touche LLP pursuant to subsection (e) of Section 5 hereof, but no
later than two (2) full business days prior thereto, a copy of the latest
available unaudited interim consolidated financial statements of the Company,
and the Subsidiaries which have been read by Deloitte & Touche LLP, as stated in
their letters to be furnished pursuant to subsection (e) of Section 5 hereof.
(u) The Company and MHC will not amend the plan of conversion in any
manner that would affect the sale and issuance of the securities, the Exchange
Shares, or the terms of this Agreement.
(v) NCRIC Group, the Company, the MHC, and their subsidiaries, will
not, prior to the Closing Time, incur any liability or obligation, direct or
contingent, or enter into any material transaction, other than in the ordinary
course of business consistent with past practice, except as contemplated by the
Prospectus.
(w) NCRIC Group and the Company will use all reasonable efforts to
comply with, or cause to be complied with, the conditions precedent to the
obligations of the Agent specified in Section 5 hereof.
(x) NCRIC Group and the Company will provide the Agent with any
information necessary to carry out the allocation of the securities in the event
of any oversubscription, and such information will be accurate and reliable in
all material respects.
(y) NCRIC Group and the Company will notify the Agent when funds have
been received for the minimum number of Securities set forth in the Prospectus.
SANDLER O'NEILL & PARTNERS, L.P.
Page 18
SECTION 4. PAYMENT OF EXPENSES.
NCRIC Group, the Company, the MHC, NCRIC, and their subsidiaries jointly
and severally agree to pay all expenses incident to the performance of their
obligations under this Agreement, including but not limited to (i) the cost of
obtaining all securities and insurance regulatory approvals, (ii) the
duplication and filing of the Registration Statement as originally filed and of
each amendment thereto, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the purchasers in the Offerings, (iv) the
fees and disbursements of NCRIC Group's, the Company's, and NCRIC's counsel,
accountants, appraiser and other advisors, (v) the qualification of the
Securities under securities laws in accordance with the provisions of Section
3(f) hereof, including filing fees and the fees and disbursements of counsel in
connection therewith and in connection with the preparation of the Blue Sky
Survey, (vi) the duplication and delivery to the Agent of copies of the
Registration Statement as originally filed and of each amendment thereto and the
printing and delivery of the Prospectus and any amendments or supplements
thereto to the purchasers in the Offerings and the Agent, (vii) the duplication
and delivery to the Agent of copies of a Blue Sky Survey, and (viii) the fees
and expenses incurred in connection with the listing of the Securities on the
Nasdaq National Market. In the event the Agent incurs any such fees and expenses
on behalf of NCRIC Group, the Company, or NCRIC, NCRIC Group will reimburse the
Agent for such fees and expenses whether or not the Offerings are consummated;
provided, however, that the Agent shall not incur any substantial expenses on
behalf of NCRIC Group, the Company, or NCRIC pursuant to this Section without
the prior approval of NCRIC Group.
NCRIC Group, the Company, and NCRIC jointly and severally agree to pay
certain expenses incident to the performance of the Agent's obligations under
this Agreement, regardless of whether the Offerings are consummated, including
(i) the filing fees paid or incurred by the Agent in connection with all filings
with the National Association of Securities Dealers, Inc., and (ii) all
reasonable out of pocket expenses incurred by the Agent relating to the
Offerings, including, without limitation, fees and expenses of the Agent's
counsel, up to a maximum amount of $75,000, advertising, promotional,
syndication and travel expenses. All fees and expenses to which the Agent is
entitled to reimbursement under this paragraph of this Section 4 shall be due
and payable upon receipt by NCRIC Group, the Company, or NCRIC of a written
accounting therefor setting forth in reasonable detail the expenses incurred by
the Agent.
SECTION 5. CONDITIONS OF AGENT'S OBLIGATIONS.
NCRIC Group, the Company, the MHC, NCRIC and the Agent agree that the
issuance and the sale of Securities and the Exchange Shares, and all obligations
of the Agent hereunder are subject to the accuracy of the representations and
warranties of NCRIC Group, the Company, and NCRIC herein contained as of the
date hereof and the Closing Time, to the accuracy of the statements of officers
and directors of NCRIC Group, the Company, the MHC, and NCRIC made pursuant to
the provisions hereof, to the performance by NCRIC Group, the Company, the MHC
and NCRIC of their obligations hereunder, and to the following further
conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued under the Securities Act or proceedings
therefor initiated or threatened by the Commission, no order suspending the
Offerings shall have been issued or proceedings therefor initiated or threatened
by the Department, and no order suspending the sale of the Securities in any
jurisdiction shall have been issued.
SANDLER O'NEILL & PARTNERS, L.P.
Page 19
(b) At Closing Time, the Agent shall have received:
(1) The favorable opinion, dated as of Closing Time, of Luse Gorman
Pomerenk & Schick, P.C., counsel for NCRIC Group, the Company, the MHC, and
NCRIC in form and substance satisfactory to counsel for the Agent, to the
effect that:
(i) The Company, NCRIC, the MHC, have been duly incorporated and
are validly existing as corporations in good standing under the laws
of the District of Columbia and NCRIC Group under the laws of
Delaware, with the requisite corporate power and authority to own,
lease and operate their properties and to conduct their business as
described in the Registration Statement and Prospectus and to enter
into and perform their obligations under this Agreement; and NCRIC
Group, the Company, the MHC, and NCRIC, are duly qualified as foreign
corporations to transact business and are in good standing in each
other jurisdiction in which such qualification is required whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify would not have a
material adverse effect upon the financial condition, results of
operations or business affairs of NCRIC Group and its subsidiaries,
considered as one enterprise.
(ii) An opinion to the same effect as subsection (5)(b )(1 )(i)
in respect to Holdings, MSO, and each of the direct and indirect
subsidiaries of NCRIC Group, the Company, Holdings and the MHC.
(iii) NCRIC has all requisite power and authority to carry on an
insurance business pursuant to and to the extent of the certificates
of authority issued under the laws of the District of Columbia and the
State of Maryland. CML has all requisite power and authority to carry
on an insurance business pursuant to and to the extent of the
certificates of authority issued under the laws of the District of
Columbia and the States of Delaware, Maryland, Virginia, and West
Virginia. MSO and each of its subsidiaries has obtained all material
licenses, permits and other governmental authorizations currently
required for the conduct of their respective businesses.
(iv) The Securities have been duly and validly authorized for
issuance and sale, the Exchange Shares have been duly and validly
authorized for issuance; and, when issued and delivered by NCRIC Group
pursuant to the Prospectus against payment of the consideration
calculated as set forth in the Prospectus, will be duly and validly
issued and fully paid and non-assessable; and all corporate actions
required to be taken for the authorization, issue and sale of the
Securities have been validly and sufficiently taken.
(v) The issuance of the Securities and Exchange Shares are not
subject to preemptive or other similar rights arising by operation of
law or, to such counsel's knowledge, information, otherwise.
(vi) Upon consummation of the Offerings, the authorized, issued
and outstanding capital stock of NCRIC Group will be within the range
set forth in the
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Page 20
Prospectus under "Capitalization" and no shares of Common Stock have
been or will be issued and outstanding prior to the Closing Time.
(vii) All of the issued and outstanding capital stock of each of
the Subsidiaries has been duly authorized and validly issued and is
fully paid and non-assessable and is owned by the Company, the MHC,
NCRIC, Holdings, or MSO, respectively, directly or through
subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, or legal or equitable claim, except for the
shares of MSO which are pledged to Sun Trust Bank; and upon
consummation of the Offerings, all of the issued and capital stock of
NCRIC and MSO will be duly authorized and validly issued and fully
paid and nonassessable, and all such capital stock will be owned
beneficially and of record by NCRIC Group free and clear of any
security interest, mortgage, pledge, lien, encumbrance, or legal or
equitable claim, except for the shares of MSO which will be pledged to
Sun Trust Bank.
(viii) 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 each of
NCRIC Group, the Company, the MHC, and NCRIC, and this Agreement
constitutes the legal, valid and binding agreement of each of NCRIC
Group, the Company, the MHC, and NCRIC, enforceable in accordance with
its terms, except as rights to indemnity and contribution hereunder
may be limited under applicable law (it being understood that such
counsel may avail itself of customary exceptions concerning the effect
of bankruptcy, insolvency or similar laws and the availability of
equitable remedies); the execution and delivery of this Agreement, the
incurrence of the obligations herein set forth and the consummation of
the transactions contemplated herein, will not result in any violation
of the provisions of the charter or bylaws of NCRIC Group, the
Company, the MHC, NCRIC or any of their subsidiaries; and, to such
counsel's knowledge, the execution and delivery of this Agreement, the
incurrence of the obligations herein set forth and the consummation of
the transactions contemplated herein, will not conflict with or
constitute a breach of, or default under, and no event has occurred
which, with notice or lapse of time or both, would constitute a
default under, or result in the creation or imposition of any lien,
charge or encumbrance, that in the case of any such conflict, breach,
default, lien, charge or encumbrance, individually or in the
aggregate, would have a material adverse effect on the financial
condition, results of operations or business affairs of NCRIC Group,
the Company, the MHC, NCRIC, and their subsidiaries considered as one
enterprise, upon any property or assets of NCRIC Group, the Company,
the MHC, or any of their subsidiaries pursuant to any material
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which NCRIC Group, the Company, the MHC, or any of its
subsidiaries is a party or by which any of them may be bound, or to
which any of the property or assets of NCRIC Group, the Company, the
MHC, or any of its subsidiaries is subject.
(ix) The Registration Statement is effective under the Securities
Act and no stop order suspending the effectiveness of the Registration
Statement has been issued under the Securities Act or, to such
counsel's knowledge, proceedings therefor initiated or threatened by
the Commission.
SANDLER O'NEILL & PARTNERS, L.P.
Page 21
(x) The Offering Application has been approved by the Department
and no order suspending the effectiveness of the Offering Application
has been issued by the Department or, to such counsel's knowledge,
proceeding therefor initiated or threatened by the Department.
(xi) No further approval, authorization, consent or other order
of any public board or body is required in connection with the
execution and delivery of this Agreement, the issuance of the
Securities and Exchange Shares and the consummation of the Offerings,
except as may be required under the securities or Blue Sky laws of
various jurisdictions as to which no opinion need be rendered.
(xii) At the time the Registration Statement became effective,
the Registration Statement (other than the financial statements and
schedules, the appraisal and other financial or statistical data
included therein, as to which no opinion or statement need be
rendered) complied as to form in all material respects with the
requirements of the Securities Act and the Securities Act Regulations
and the Conversion Act.
(xiii) The Common Stock conforms to the description thereof
contained in the Prospectus, and the form of certificate used to
evidence the Common Stock is in due and proper form and complies with
all applicable statutory requirements.
(xiv) There are no legal or governmental proceedings pending or,
to such counsel's knowledge, threatened against or affecting the
business or properties of NCRIC Group, the Company, the MHC, NCRIC or
any of their subsidiaries which are required, individually or in the
aggregate, to be disclosed in the Registration Statement and
Prospectus, other than those disclosed therein, and all pending legal
or governmental proceedings to which NCRIC Group, the Company, the
MHC, NCRIC, or any of their subsidiaries is a party or to which any of
their property is subject which are not described in the Registration
Statement, including ordinary routine litigation incidental to the
business, are, considered in the aggregate, not material to NCRIC
Group, the Company, the MHC, NCRIC, and their subsidiaries considered
as one enterprise.
(xv) The information in the Prospectus under "Business of NCRIC
Group - Insurance Activities; "---Insurance Company Regulation,"
"---Legal Proceedings," "The Conversion," "Comparison of Stockholder's
Rights," and "Description of Capital Stock of NCRIC Group Following
the Conversion," to the extent that it constitutes matters of law,
summaries of legal matters, documents or proceedings, or legal
conclusions, has been reviewed by them and is complete and accurate in
all material respects.
(xvi) There are no contracts, indentures, mortgages, loan
agreements, notes, leases or other instruments required to be
described in the Registration Statement or to be filed as exhibits
thereto other than those described therein or filed as exhibits
thereto, the descriptions thereof or references thereto are correct in
all material respects, and no default exists, and no event has
occurred which, with notice or lapse of time or both, would constitute
a default, in the due performance or observance of
SANDLER O'NEILL & PARTNERS, L.P.
Page 22
any obligation, agreement, covenant or condition contained in any
material contract, indenture, mortgage, loan agreement, note, lease or
other instrument so described, referred to or filed as an exhibit to
the Registration Statement.
(xvii) The Offering Application complies with the applicable
requirements of the Conversion Act, and, to such counsel's knowledge,
includes all documents required to be filed as exhibits thereto. NCRIC
Group and NCRIC have conducted the Offerings in all material respects
in accordance with applicable requirements of the Conversion Act and
all other applicable regulations, decisions and orders thereunder,
including all material applicable terms, conditions, requirements and
conditions precedent to the Offerings imposed upon NCRIC Group or
NCRIC by the Department and, no order has been issued by the
Department to suspend the Offerings and no action for such purpose has
been instituted or threatened by the Department; and, no person has
sought to obtain review of the final action of the Department in
approving the Offerings.
(xviii) Neither NCRIC Group, the Company, the MHC, NCRIC, nor any
of their subsidiaries is in violation of its certificate of
incorporation, organization certificate, articles of incorporation or
charter, as the case may be, or bylaws or, to such counsel's
knowledge, in default (nor has any event occurred which, with notice
or lapse of time or both, would constitute a default) in the
performance or observance of any obligation, agreement, covenant or
condition contained in any material contract, indenture, mortgage,
loan agreement, note, lease or other instrument to which NCRIC Group,
the Company, the MHC, NCRIC, or any of their subsidiaries is a party
or any of their property may be bound, which event or default is
reasonably likely to have a material adverse effect upon the financial
condition or results of operations of NCRIC Group and its
subsidiaries, considered as one enterprise.
(xix) NCRIC Group is not required to be registered as an
investment company under the Investment Company Act of 1940.
(xx) NCRIC Group and the Company is in compliance with the
applicable provisions of the Sarbanes-Oxley Act.
(2) The favorable opinion, dated as of Closing Time, of Patton Boggs
LLP, counsel for the Agent, with respect to such matters as the Agent may
reasonably require.
(3) In giving their opinions required by subsections (b )(1) and (b
)(2), respectively, of this Section, Luse Gorman Pomerenk & Schick, P .C.
and Patton Boggs LLP, shall each additionally state that nothing has come
to their attention that caused them to believe that the Registration
Statement (except for financial statements and schedules, the appraisal,
and other financial or statistical data included therein, as to which
counsel need make no statement), at the time it became effective, contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus (except for financial statements and
schedules, the appraisal and other financial or statistical data included
therein, as to which counsel need make no statement), at the time the
Registration Statement became effective or
SANDLER O'NEILL & PARTNERS, L.P.
Page 23
at the Closing Time, included an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. In giving their opinions, Luse Gorman Pomerenk & Schick, P .C.
and Patton Boggs LLP, may rely as to matters of fact on certificates of
officers and directors of NCRIC Group, the Company, the MHC and NCRIC and
certificates of public officials, which opinions shall be in form and
substance satisfactory to counsel for the Agent.
(c) At Closing Time referred to in Section 2, NCRIC Group and NCRIC
shall have completed in all material respects the conditions precedent to the
Offerings in accordance with the Conversion Act and all other applicable laws,
regulations, decisions and orders, including all terms, conditions, requirements
and provisions precedent to the Offerings imposed upon NCRIC Group or NCRIC by
the Department, or any other regulatory authority (excluding Blue Sky or state
securities regulators), other than those which the Department or such other
regulatory authority permits to be completed after the Closing Time.
(d) At Closing Time, there shall not have been, since the date hereof
or since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change in the
financial condition, results of operations or business affairs of NCRIC Group,
the Company, and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Agent shall have received a
certificate of the President and Chief Executive Officer of the NCRIC Group, the
Company, the MHC, and NCRIC and the chief financial or chief accounting officer
of NCRIC Group, the Company, the MHC, and of NCRIC, dated as of Closing Time, to
the effect that (i) there has been no such material adverse change, (ii) there
shall have been no material transaction entered into by NCRIC Group, the
Company, the MHC or NCRIC from the latest date as of which the financial
condition of NCRIC Group, the Company, the MHC or NCRIC as set forth in the
Registration Statement and the Prospectus other than transactions referred to or
contemplated therein and transactions in the ordinary cause of business, (iii)
neither NCRIC Group, the Company, nor NCRIC shall have received from the
Department any direction (oral or written) to make any material change in the
method of conducting its 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, financial condition or results of
operations of NCRIC Group, the Company, the MHC, or NCRIC, (iv) the
representations and warranties in Section 1 hereof are true and correct with the
same force and effect as though expressly made at and as of the Closing Time,
(v) NCRIC Group, the Company, the MHC, and NCRIC have complied with all
agreements and satisfied all conditions on their part to be performed or
satisfied at or prior to Closing Time,(vi) no stop order suspending the
effectiveness of the Registration Statement has been issued and, to the
knowledge of the signers, no proceedings for that purpose have been initiated or
threatened by the Commission and (vii) no order suspending any of the Offerings
or the authorization for final use of the Prospectus has been issued and no
proceedings for that purpose have been initiated or threatened by the Department
and no person has sought to obtain regulatory or judicial review of the action
of the Department in approving the Offerings in accordance with the Conversion
Act.
(e) At the time of the execution of this Agreement, the Agent shall
have received from Deloitte & Touche LLP a letter dated such date, in form and
substance satisfactory to the Agent, to the effect that (i) they are independent
public accountants with respect to NCRIC Group, the Company, the MHC, and NCRIC,
and each of its subsidiaries within the meaning of the Code of
SANDLER O'NEILL & PARTNERS, L.P.
Page 24
Ethics of the American Institute of Certified Public Accountants, the Securities
Act, the Securities Act Regulations and the Conversion Act and they are not in
violation of the auditor independence requirements under the Sarbanes-Oxley Act;
(ii) it is their opinion that the consolidated financial statements and
supporting schedules included in the Registration Statement and covered by their
opinions therein comply as to form in all material respects with the applicable
accounting requirements of the Securities Act and the Securities Act
Regulations; (iii) based upon limited procedures as agreed upon by the Agent and
Deloitte & Touche LLP set forth in detail in such letter, nothing has come to
their attention which causes them to believe that (A) the unaudited financial
statements, if any, and supporting schedules of NCRIC Group, and the Company,
and included in the Registration Statement do not comply as to form in all
material respects with the applicable accounting requirements of the Securities
Act, the Securities Act Regulations and the Conversion Act or are not presented
in conformity with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements included
in the Registration Statement and the Prospectus, (B) the unaudited pro forma
consolidated financial data of NCRIC Group included in the Registration
Statement is not fairly presented on a basis substantially consistent with that
of the audited financial statements included in the Registration Statement, or
that such unaudited pro forma consolidated financial data has not been properly
compiled on the pro forma basis described therein, or that the pro forma
adjustments were not properly applied to the applicable historical combined
financial statements, (C) at a specified date not more than five days prior to
the date of this Agreement, there has been any increase in the consolidated long
term or short term debt of its subsidiaries or any decrease in consolidated
total assets: or net worth of its subsidiaries, in each case as compared with
the amounts shown in the December 31, 2002 balance sheet included in the
Registration Statement or, (D) during the period from the date of such balance
sheet to a specified date not more than five days prior to the date of this
Agreement, there were any decreases, as compared with the corresponding period
in the preceding year, in consolidated net income of the Company, except in all
instances for increases or decreases which the Registration Statement and the
Prospectus disclose have occurred or may occur; and (iv) in addition to the
examination referred to in their opinions and the limited procedures referred to
in clause (iii) above, they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages and
financial information which are included in the Registration Statement and
Prospectus and which are specified by the Agent, and have found such amounts,
percentages and financial information to be in agreement with the relevant
accounting, financial and other records of NCRIC Group, the Company, and its
subsidiaries identified in such letter.
(f) At Closing Time, the Agent shall have received from Deloitte &
Touche LLP a letter, dated as of Closing Time, to the effect that they reaffirm
the statements made in the letter furnished pursuant to subsection (d) of this
Section, except that the specified date referred to shall be a date not more
than five days prior to Closing Time.
(g) At Closing Time, the Securities and the Exchange Shares shall have
been approved for listing on the Nasdaq National Market upon notice of issuance.
(h) At Closing Time, the Agent shall have received a letter from RP
Financial, LC., dated as of the Closing Time, confirming its appraisal.
(i) At Closing Time, counsel for the Agent shall have been furnished
with such documents as they may require for the purpose of enabling them to pass
upon the issuance and sale
SANDLER O'NEILL & PARTNERS, L.P.
Page 25
of the Securities and the Exchange Shares, as herein contemplated and related
proceedings, or in order to evidence the accuracy of any of the representations
or warranties, or the fulfillment of any of the conditions, herein contained;
and all proceedings taken by NCRIC Group in connection with the issuance and
sale of the Securities and the Exchange Shares, as herein contemplated, shall be
reasonably satisfactory in form and substance to the Agent and counsel for the
Agent.
(j) At any time prior to Closing Time,(i) there shall not have
occurred any material adverse change in the financial markets in the United
States or any outbreak of hostilities or escalation thereof or other calamity or
crisis the effects of which, in the reasonable judgment of the Agent, are so
material and adverse as to make it impracticable to market the Securities or to
enforce contracts, including subscriptions or orders, for the sale of the
Securities, and (ii) trading generally on either the American Stock Exchange,
New York Stock Exchange or the NASDAQ Stock Market shall not have been
suspended, and minimum or maximum prices for trading shall not have been fixed,
or maximum ranges for prices for securities have been required, by any of said
Exchanges or by order of the: Commission or any other governmental authority,
and a banking moratorium shall not have been declared by either Federal or New
York authorities.
SECTION 6. INDEMNIFICATION.
(a) NCRIC Group, the Company, the MHC, and NCRIC jointly and
severally, agree to indemnify and hold harmless the Agent, each person, if any,
who controls the Agent, within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, and its respective partners, directors,
officers, employees and agents as follows:
(i) from and against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, related to or arising out of the
Offerings or any action taken by the Agent where acting as agent of NCRIC
Group, the Company, the MHC, or NCRIC or otherwise as described in Section
2 hereof; provided, however, that this indemnity agreement shall not apply
to any loss, liability, claim, damage or expense found in a final judgment
by a court of competent jurisdiction to have resulted primarily from the
bad faith, willful misconduct or gross negligence of the Agent seeking
indemnification hereunder.
(ii) from and against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, based upon or arising out of any
untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement (or any amendment thereto), or the omission
or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact contained in the Prospectus (or any amendment or supplement
thereto) or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(iii) from and against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, relating to the
Offerings or of any claim whatsoever described in clauses (i) or (ii)
above, if such settlement is effected with the prior written consent of
SANDLER O'NEILL & PARTNERS, L.P.
Page 26
NCRIC Group, the Company, the MHC, or NCRIC, which consent shall not be
unreasonably withheld; and
(iv) from and against any and all expense whatsoever, as incurred
(including, subject to Section 6 hereof, the fees and disbursements of
counsel chosen by the Agent), reasonably incurred in investigating,
preparing for or defending against any litigation, or any investigation,
proceeding or inquiry by any governmental agency or body, commenced or
threatened, related to the offerings or any claim whatsoever described in
clauses (i) or (ii) above, to the extent that any such expense is not paid
under (i), (ii) or (iii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or alleged untrue statement of a material fact contained in the
Prospectus (or any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading which was made in reliance upon and in conformity with the Agent
Information furnished to NCRIC Group or NCRIC by the Agent expressly for use in
the Prospectus (or any amendment or supplement thereto).
(b) The Agent agrees to indemnify and hold harmless NCRIC Group, the
Company, the MHC, NCRIC, their directors, each of their officers who signed the
Registration Statement, and each person, if any, who controls NCRIC Group, the
Company, the MHC, NCRIC, within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act against any and all loss, liability, claim,
damage and expense described in the indemnity contained in subsection (a) of
this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, of a material fact made in
the Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with the Agent Information.
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
which it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of any such
action. In no event shall the indemnifying parties be liable for fees and
expenses of more than one counsel (in addition to no more than one local counsel
in each separate jurisdiction in which any action or proceeding is commenced)
separate from their own counsel for all indemnified parties in connection with
anyone action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances.
(d) NCRIC Group, the Company, the MHC, and NCRIC also agree that the
Agent shall not have any liability (whether direct or indirect, in contract or
tort or otherwise) to NCRIC Group, the Company, the MHC, NCRIC, its security
holders, or NCRIC Group, the Company's, or MHC's, or NCRIC's creditors relating
to or arising out of the engagement of the Agent pursuant to, or the performance
by the Agent of the services contemplated by, this Agreement, except to the
extent that any loss, claim, damage or liability is found in a final judgment by
a court of competent jurisdiction to have resulted primarily from the Agent's
bad faith, willful misconduct or gross negligence.
SANDLER O'NEILL & PARTNERS, L.P.
Page 27
(e) In addition to, and without limiting, the provisions of Section
(6)(a)(iv) hereof, in the event that the Agent, any person, if any, who controls
the Agent within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act or any of its partners, directors, officers, employees or
agents is requested or required to appear as a witness or otherwise give
testimony in any action, proceeding, investigation or inquiry brought by or on
behalf of or against NCRIC Group, the Company, the MHC, NCRIC, the Agent or any
of its respective affiliates or any participant in the transactions contemplated
hereby in which the Agent or such person or agent is not named as a defendant,
NCRIC Group, the Company, the MHC, and NCRIC jointly and severally agree to
reimburse the Agent for all reasonable and necessary out-of-pocket expenses
incurred by it in connection with preparing or appearing as a witness or
otherwise giving testimony and to compensate the Agent in an amount to be
mutually agreed upon.
SECTION 7. CONTRIBUTION.
In order to provide for just and equitable contribution in circumstances in
which the indemnity agreement provided for in Section 6 hereof is for any reason
held to be unenforceable by the indemnified parties although applicable in
accordance with its terms, NCRIC Group, the Company, the MHC, NCRIC and the
Agent shall contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by said indemnity agreement incurred by
NCRIC Group, the Company, the MHC, or NCRIC, and the Agent, as incurred, in the
following proportions: (i) that the Agent is responsible for that portion
represented by the percentage that the maximum aggregate marketing fees bears to
the maximum aggregate gross proceeds appearing on the cover page of the
Prospectus and NCRIC Group, the Company, the MHC, and NCRIC are jointly and
severally responsible for the balance, or (ii) if, but only if, the allocation
provided for in clause (i) is for any reason held unenforceable, in such
proportion as is appropriate to reflect not only the relative benefits to NCRIC
Group, the Company, the MHC, and NCRIC on the one hand and the Agent on the
other, as reflected in clause (i), but also the relative fault of NCRIC Group,
the Company, the MHC, and NCRIC on the one hand and the Agent on the other, as
well as any other relevant equitable considerations; provided, however, that no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
Section, each person, if any, who controls the Agent within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act shall have
the same rights to contribution as the Agent, and each director of NCRIC Group,
the Company, the MHC, and of NCRIC, each officer of NCRIC Group who signed the
Registration Statement, and each person, if any, who controls NCRIC Group, the
Company, the MHC, or NCRIC within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act shall have the same rights to contribution
as NCRIC Group, the Company, the MHC, and NCRIC. Notwithstanding anything to the
contrary set forth herein, to the extent permitted by applicable law, in no
event shall the Agent be required to contribute an aggregate amount in excess of
the aggregate marketing fees to which the Agent is entitled and actually paid
pursuant to this Agreement.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this Agreement,
or contained in certificates of officers of NCRIC Group, the Company, the MHC,
or NCRIC submitted pursuant hereto, shall remain operative and in full force and
effect, regardless of any investigation made by or
SANDLER O'NEILL & PARTNERS, L.P.
Page 28
on behalf of any Agent or controlling person, or by or on behalf of NCRIC Group,
the Company, the MHC, or NCRIC, and shall survive delivery of the Securities.
SECTION 9. TERMINATION OF AGREEMENT.
(a) The Agent may terminate this Agreement, by notice to NCRIC Group,
at any time at or prior to Closing Time (i) if there has been, since the date of
this Agreement or since the respective dates as of which information is given in
the Registration Statement, any material adverse change in the financial
condition, results of operations or business affairs of NCRIC Group, the
Company, the MHC, or NCRIC, and their subsidiaries, considered as one
enterprise, whether or not arising in the ordinary course of business, (ii) if
there has occurred any material adverse change in the financial markets in the
United States or elsewhere or any outbreak of hostilities or escalation thereof
or other calamity or crisis the effects of which, in the judgment of the Agent,
are so material and adverse as to make it impracticable to market the Securities
or to enforce contracts, including subscriptions or orders, for the sale of the
Securities, (iii) if trading generally on either the American Stock Exchange,
the Nasdaq Stock Market or the New York Stock Exchange has been suspended, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices for securities have been required, by any of said Exchanges or by order
of the Commission or any other governmental authority, or if a banking
moratorium has been declared by either Federal or New York authorities, (iv) if
any condition specified in Section 5 shall not have been fulfilled when and as
required to be fulfilled or waived by the Agent; (v) if there shall have been
such material adverse change in the condition or prospects of the Company or
NCRIC or the prospective market for the Company's securities as in the Agent's
good faith opinion would make it inadvisable to proceed with the offering, sale
or delivery of the Securities; (vi) if in the Agent's good faith opinion, the
aggregate value for the securities established by RP Financial is not reasonable
or equitable under then prevailing market condition; or (vii) if the Offerings
are not consummated on or prior to June 30, 2003.
(b) If this Agreement is terminated pursuant to this Section 9, such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof relating to the reimbursement of expenses and
except that the provisions of Sections 6 and 7 hereof shall survive any
termination of this Agreement.
SECTION 10. NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Agent shall be directed to the Agent
at 919 Third Avenue, 6th Floor, New York, New York 10022, attention of Catherine
A. Lawton, Principal (with a copy to Joseph G. Passaic, Esq. Patton Boggs LLP,
2550 M Street, N.W., Washington, DC 20037-1350; notices to NCRIC Group, the
Company, the MHC, NCRIC, and their subsidiaries, shall be directed to any of
them at 1115 30th Street, N. W., Washington, D.C. 20007, attention of R. Ray
Pate, Jr., President (with a copy to John J. Gorman, Esq., Luse Gorman Pomerenk
& Schick, P.,C., 5335 Wisconsin Avenue, N.W., Suite 400, Washington, DC 20015.
SANDLER O'NEILL & PARTNERS, L.P.
Page 29
SECTION 11. PARTIES.
This Agreement shall inure to the benefit of and be binding upon the Agent,
NCRIC Group, the Company, the MHC, Holdings, MSO, and NCRIC and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Agent, NCRIC Group, the Company, the MHC, Holdings, MSO, and NCRIC and their
respective successors and the controlling persons and officers, partners and
directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein or therein contained. This
Agreement and all conditions and provisions hereof and thereof are intended to
be for the sole and exclusive benefit of the Agent, NCRIC Group, the Company,
the MHC, Holdings, MSO and NCRIC and their respective successors, and said
controlling persons and officers, partners and directors and their heirs and
legal representatives, and for the benefit of no other person, firm or
corporation.
SECTION 12. ENTIRE AGREEMENT; AMENDMENT.
This Agreement represents the entire understanding of the parties hereto
with reference to the transactions contemplated hereby and supersedes any and
all other oral or written agreements heretofore made, except for the engagement
letter dated January 17, 2003, by and between the Agent, the Company, the MHC,
and NCRIC, relating to the Agent's providing conversion agent services to the
Company, the MHC, and NCRIC in connection with the Offerings. No waiver,
amendment or other modification of this Agreement shall be effective unless in
writing and signed by the parties hereto.
SECTION 13. GOVERNING LAW AND TIME.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed
in said State without regard to the conflicts of laws provisions thereof. Unless
otherwise noted, specified times of day refer to Eastern time.
SECTION 14. SEVERABILITY.
Any term or provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement or affecting
the validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, the provision shall be interpreted to be only so
broad as is enforceable.
SECTION 15. HEADINGS.
Sections headings are not to be considered part of this Agreement, are for
convenience and reference only, and are not to be deemed to be full or accurate
descriptions of the contents of any paragraph or subparagraph.
SANDLER O'NEILL & PARTNERS, L.P.
Page 30
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Agent, NCRIC Group, the Company, the MHC, Holdings, NCRIC, and MSO in
accordance with its terms.
Very truly yours,
NCRIC GROUP, INC.
(Successor Corporation)
By:
------------------------------------
R. Ray Pate, Jr., President and
Chief Executive Officer
NCRIC GROUP, INC.
By:
------------------------------------
R. Ray Pate, Jr., President and
Chief Executive Officer
NCRIC, A MUTUAL HOLDING COMPANY
By:
------------------------------------
R. Ray Pate, Jr., President and
Chief Executive Officer
NCRIC HOLDINGS, INC.
By:
------------------------------------
R. Ray Pate, Jr., President and
Chief Executive Officer
NCRIC, INC.
By:
------------------------------------
R. Ray Pate, Jr., President and
Chief Executive Officer
NCRIC MSO, INC.
By:
------------------------------------
R. Ray Pate, Jr., President and
Chief Executive Officer
SANDLER O'NEILL & PARTNERS, L.P.
age 31
CONFIRMED AND ACCEPTED,
as of the date first above written:
SANDLER O'NEILL & PARTNERS, L.P.
By: Sandler O'Neill & Partners Corp.,
the sole general partner
By:
---------------------------------
NCRIC GROUP, INC.
7,290,261 Shares
Common Stock
(Par Value $0.01 Per Share)
SELECTED DEALER'S AGREEMENT
, 2003
---------------
Ladies and Gentlemen:
We have agreed to assist NCRIC GROUP, INC. ("NCRIC GROUP") in connection with
the offer for sale and issuance of shares (the "Shares") of common stock, par
value $0.01 per share, of NCRIC GROUP, to be issued in connection with the
conversion and reorganization of NCRIC, A Mutual Holdings Company, from the
mutual to stock holding company form of organization. NCRIC GROUP, in connection
with its plan to effect such conversion, offered for sale up to 4,364,250 shares
for subscription by (i) members of the MHC; policyholders of NCRIC on January
28, 2003 ("Eligible Members"); (ii) NCRIC Group's ESOP and Stock Award Plan; and
(iii) directors, officers, and employees of NCRIC Group who are not Eligible
Members, in a subscription offering, and certain policyholders of NCRIC and CML
and existing stockholders of the Company in a concurrent direct community
offering. The shares which were not subscribed for pursuant to such subscription
and direct community offerings are being offered to the public in a syndicated
community offering (the "Syndicated Community Offering"). The balance of the
shares to be issued in connection with the conversion represent the minority
ownership in the Company, the MHC's parent stock holding company, which will be
exchanged for up to 2,926,011 shares of NCRIC GROUP's common Stock (the
"Exchange Shares"). The Shares, the bases on which the number of Shares to be
issued may change, and certain of the terms on which they are being offered are
more fully described in the enclosed Prospectus (the "Prospectus").
We are offering to Selected Dealers (of which you are one) the opportunity to
participate in the solicitation of offers to buy the Shares in the Syndicated
Community Offering, and we will pay you a fee in the amount of percent ( %)
--- --
of the dollar amount of the Shares sold on behalf of NCRIC GROUP by you. The
number of Shares sold by you shall be determined based on the authorized
designation of your firm on the order form or forms for such Shares accompanying
the funds transmitted for payment therefor to the special account established by
NCRIC GROUP for the purpose of holding such funds. It is understood, of course,
that payment of your fee will be made only out of compensation received by us
for the Shares sold on behalf of NCRIC GROUP by you, as evidenced in accordance
with the preceding sentence. NCRIC GROUP has requested us to invite you to
become a "Sponsoring Dealer," that is, a Selected Dealer who solicits offers
which result in the sale on behalf of NCRIC GROUP of at least shares. You
---
may become a Sponsoring Dealer (subject to your fulfillment of the requirement
in the preceding sentence) by checking the box on the confirmation at the end of
this letter. If you become a Sponsoring Dealer, you shall be entitled to an
additional fee in the amount of percent ( %)
--- --
SANDLER O'NEILL & PARTNERS, L.P.
Page 33
of the dollar amount of the Shares sold on behalf of NCRIC GROUP by you as
evidenced in the manner set forth above.
Each order form for the purchase of Shares must set forth the identity, address
and tax identification number of each person ordering Shares regardless of
whether the Shares will be registered in street name or in the purchaser's name.
Such order form should clearly identify your firm.
As soon as practicable after all the Shares are sold, we will remit to you, out
of our compensation as provided above, the fees to which you are entitled
hereunder, including your Sponsoring Dealer fee.
This offer is made subject to the terms and conditions herein set forth and is
made only to Selected Dealers which are (i) members in good standing of the
National Association of Securities Dealers, Inc. ("NASD") which agree to comply
with all applicable rules of the NASD, including, without limitation, the NASD's
Interpretation with Respect to Free-Riding and Withholding and Section 24 of
Article III of the NASD's Rules of Fair Practice, or (ii) foreign dealers not
eligible for membership in the NASD which agree (A) not to sell any Shares
within the United States, its territories or possessions or to persons who are
citizens thereof or resident therein and (B) in making other sales to comply
with the above-mentioned NASD Interpretation, Sections 8, 24 and 36 of the
above-mentioned Article III as if they were NASD members and Section 25 of such
Article III as it applies to non-member brokers or dealers in a foreign country.
Orders for Shares will be strictly subject to confirmation and we, acting on
behalf of NCRIC GROUP, reserve the right in our absolute discretion to reject
any order in whole or in part, to accept or reject orders in the order of their
receipt or otherwise, and to allot. Neither you nor any other person is
authorized by NCRIC GROUP, or by us to give any information or make any
representations other than those contained in the Prospectus in connection with
the offering and sale of any of the Shares. No Selected Dealer is authorized to
act as agent for us when soliciting offers to buy the Shares from the public or
otherwise. No Selected Dealer shall engage in any stabilizing (as defined in
Regulation M promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) with respect to NCRIC GROUP's common stock during the
offering.
We and each Selected Dealer assisting in selling Shares pursuant hereto agree to
comply with the applicable requirements of the Exchange Act, and applicable
rules and regulations issued by the Department. In addition, we and each
Selected Dealer confirm that the Securities and Exchange Commission (the "SEC")
interprets Rule 15c2-8 promulgated under the Exchange Act as requiring that a
prospectus be supplied to each person who is expected to receive a confirmation
of sale at least 48 hours prior to delivery of such person's order form.
We and each Selected Dealer further agree to the extent that our customers
desire to pay for Shares with funds held by or to be deposited with us, in
accordance with the interpretation of the SEC Rule 15c2-4 promulgated under the
Exchange Act either (a) upon receipt of an executed order form or direction to
execute an order form on behalf of a customer to forward the Syndicated
Community Offering price for the Shares ordered on or before p.m. on the
------
business day following receipt or execution of an order form by us to
----------
for deposit in
SANDLER O'NEILL & PARTNERS, L.P.
Page 34
a segregated account as agent or trustee for the customer or (b) to solicit
indications of interest in which event (i) we will subsequently contact any
customers indicating interest to confirm the interest and give instructions to
execute and return an order form or to receive authorization to execute an order
form on their behalf, (ii) we will mail acknowledgments or receipt of orders to
each customer confirming interest on the business day following such
confirmation, (iii) we will debit accounts of such customers on the third
business day (the "debit date") following receipt of the confirmation referred
to in (i) and (iv) we will forward completed order forms together with such
funds to on or before p.m. on the next business day
---------- ---------
following the debit date for deposit in a segregated account. We acknowledge
that if the procedure in (b) is adopted, our customer's funds are not required
to be in their accounts until the debit date. We and each Selected Dealer
further acknowledge that, in order to use the foregoing "sweep arrangements," we
comply with the net capital requirements for broker/dealers under Rule
15c3-1(a)(I) of the Exchange Act.
Unless earlier terminated by us, this Agreement shall terminate full business
--
days after the date hereof, but may be extended by us for an additional period
or periods not exceeding full business days in the aggregate. We may
--
terminate this Agreement or any provisions hereof at any time by written or
telegraphic notice to you. Of course, our obligations hereunder are subject to
the successful completion of the offering, including the sale of all of the
Shares.
You agree that at any time or times prior to the termination of this Agreement
you will, upon our request, report to us the number of Shares sold on behalf of
NCRIC GROUP by you under this Agreement.
We shall have full authority to take such actions as we may deem advisable in
respect to all matters pertaining to the offering. We shall be under no
liability to you except for lack of good faith and for obligations expressly
assumed by us in this Agreement.
Upon application to us, we will inform you as to the states in which we believe
the Shares have been qualified for sale under, or are exempt from the
requirements of, the respective blue sky laws of such states, but we assume no
responsibility or obligation as to your rights to sell Shares in any state.
Additional copies of the Prospectus and any supplements thereto will be supplied
in reasonable quantities upon request.
Any notice from us to you shall be deemed to have been duly given if mailed,
telephoned or telegraphed to you at the address to which this Agreement is
mailed.
This Agreement shall be construed in accordance with the laws of New York.
Please confirm your agreement hereto by signing and returning the confirmation
accompanying this letter at once to us at Sandler O'Neill & Partners, L.P., 919
Third Avenue, 6th Floor, New York, New York 10022. The enclosed duplicate copy
will evidence the agreement between us.
SANDLER O'NEILL & PARTNERS, L.P.
Page 35
Very truly yours,
SANDLER O'NEILL & PARTNERS, L.P.
By:
------------------------------------
SANDLER O'NEILL & PARTNERS, L.P.
Page 36
Sandler O'Neill & Partners, L.P.
919 Third Avenue, 6th Floor
New York, New York 10022
Re: NCRIC GROUP, INC.
Ladies and Gentlemen:
We hereby confirm our agreement to all the terms and conditions stated in the
foregoing letter. We acknowledge receipt of the Prospectus relating to the
Shares and we further state that in agreeing thereto we have relied upon the
Prospectus and no other statement whatsoever, written or oral. We confirm that
we are (i) a member on good standing of the National Association of Securities
Dealers, Inc. ("NASD"), and agree to comply with all applicable rules of the
NASD, including, without limitation, the NASD's "Interpretation With Respect to
Free-Riding and Withholding" and Section 24 of Article III of the NASD's Rules
of Fair Practice, or (ii) a foreign dealer not eligible for membership in the
NASD and agree (A) not to sell any Shares of NCRIC GROUP, INC. within the United
States, its territories or possessions or to persons who are citizens thereof or
resident therein and (B) in making other sales to comply with the
above-mentioned NASD Interpretation, Section 8, 24 and 26 of the above-mentioned
Article III as if we were an NASD member and Section 25 of such Article III as
it applies to a non-member broker or dealer in a foreign country.
[ ] We wish to become a "Sponsoring Dealer."
--
Dated:
-------------------
----------------------------------------
(Please print or type name of firm)
By:
------------------------------------