EXHIBIT 1.2
FIRST FEDERAL OF NORTHERN MICHIGAN BANCORP, INC.
(a Maryland-chartered Stock Corporation)
Up to 1,840,000 Shares
(Subject to Increase Up to 2,116,000 Shares)
COMMON STOCK ($0.01 Par Value)
Subscription Price $10.00 Per Share
AGENCY AGREEMENT
February ___, 2005
Ryan Beck & Co., Inc.
18 Columbia Turnpike
Florham Park, New Jersey 07932
Ladies and Gentlemen:
Alpena Bancshares, Inc., a federally-chartered stock corporation (the
"Mid-Tier Holding Company"), First Federal of Northern Michigan Bancorp, Inc., a
newly formed Maryland-chartered stock corporation organized to be the successor
to the Mid-Tier Holding Company (the "Holding Company"), Alpena Bancshares, MHC,
a federally-chartered mutual holding company which owns 55.4% of the outstanding
common stock of the Mid-Tier Holding Company (the "MHC"), and First Federal of
Northern Michigan, a federally-chartered savings association (together with its
subsidiaries, the "Bank") whose outstanding common stock is owned in its
entirety by the Mid-Tier Holding Company (collectively with the Holding Company,
the MHC and the Bank, the "Alpena Parties"), hereby confirm, jointly and
severally, their agreement with Ryan Beck & Co., Inc. (the "Agent"), as follows:
SECTION 1. THE OFFERING. The MHC, in accordance with the Plan of
Conversion and Reorganization adopted November 12, 2004 and amended on December
7, 2004 (the "Plan"), intends to convert from a federally-chartered mutual
holding company to a stock holding company (the "Conversion") in accordance with
the laws of the United States and the applicable regulations of the Office of
Thrift Supervision (the "OTS") (collectively, the "Conversion Regulations"). In
connection with the Conversion, the Holding Company, a newly formed
Maryland-chartered stock form corporation, will offer shares of Common Stock (as
defined below) on a priority basis to (i) Eligible Account Holders; (ii)
Employee Plans of the Holding Company; (iii) Supplemental Eligible Account
Holders; and (iv) Other Members (all capitalized terms used in this Agreement
and not defined in this Agreement shall have the meanings set forth in the
Plan). Pursuant to the Plan, the Holding Company is offering a minimum of
1,360,000 and a maximum of 1,840,000 shares of common stock, par value $0.01 per
share (the "Common Stock") (subject to an increase up to 2,116,000 shares) (the
"Shares"), in the Subscription Offering, and, if necessary, (i) the Community
Offering and/or (ii) Syndicated Community Offering.
Pursuant to the Plan, the Holding Company will offer and sell the Shares
in the Subscription Offering, Community Offering, and/or Syndicated Community
Offering (the
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"Offerings") and issue a minimum of 1,092,701 and a maximum of 1,478,360 shares
of its Common Stock (subject to increase up to 1,700,113 shares) (the "Exchange
Shares") to existing public shareholders of the Mid-Tier Holding Company in
exchange for their existing shares of the Mid-Tier Holding Company (the
"Exchange") so that, upon completion of the Offerings and the Exchange, 100% of
the outstanding Common Stock of the Holding Company will be publicly held, 100%
of the outstanding shares of common stock of the Bank will be held by the
Holding Company, and the MHC will cease to exist. The Holding Company will sell
the Shares in the Offerings at $10.00 per share (the "Purchase Price"). If the
number of Shares is increased or decreased in accordance with the Plan, the term
"Shares" shall mean such greater or lesser number, where applicable.
Pursuant to the Plan, in the Subscription Offering, the Holding Company
will offer the Shares, subject to the allocation procedures and purchase
limitations set forth in the Plan, in descending order of priority to: (1)
Eligible Account Holders; (2) Employee Plans of the Holding Company or the Bank;
(3) Supplemental Eligible Account Holders; and (4) Other Members. The Holding
Company may offer Shares, if any, remaining after the Subscription Offering, in
the Community Offering on a priority basis to natural persons residing within
the Michigan counties of Alpena, Alcona, Antrim, Charlevoix, Cheyboygan,
Crawford, Emmet, Iosco, Kalkaska, Montmorency, Ogemaw, Oscoda, Otsego and
Presque Isle, then to the Mid-Tier Holding Company's public stockholders at the
Voting Record Date, and then to the general public. In the event a Community
Offering is held, it may be held at any time during or immediately after the
Subscription Offering. Depending on market conditions, Shares available for sale
but not subscribed for in the Subscription Offering or purchased in the
Community Offering may be offered in the Syndicated Community Offering to the
general public on a best efforts basis, as described in subsection 4(b) below.
In connection with the Conversion and pursuant to the terms of the Plan
as described in the Prospectus (as defined below), immediately following the
consummation of the Conversion, subject to the approval of the members of the
MHC and the public stockholders of the Company and compliance with certain
conditions as may be imposed by regulatory authorities, the Holding Company will
contribute up to 37,500 shares of newly issued Common Stock (the "Foundation
Shares") and up to $375,000 in cash to First Federal Community Foundation (the
"Foundation").
The Holding Company has filed with the U.S. Securities and Exchange
Commission (the "Commission") Registration Statement on Form SB-2 (File No.
333-121178) in order to register the Shares, the Exchange Shares and the
Foundation Shares under the Securities Act of 1933, as amended (the "1933 Act"),
and the regulations promulgated thereunder (the "1933 Act Regulations"), and has
filed such amendments thereto as have been required to the date hereof (the
"Registration Statement"). The prospectus, as amended, included in the
Registration Statement at the time it initially became effective is hereinafter
called the "Prospectus," except that if any prospectus is filed by the Holding
Company pursuant to Rule 424(b) or (c) of the 1933 Act Regulations differing
from the prospectus included in the Registration Statement at the time it
initially becomes effective, the term "Prospectus" shall refer to the prospectus
filed pursuant to Rule 424(b) or (c) from and after the time said prospectus is
filed with the Commission and shall include any supplements and amendments
thereto from and after their dates of effectiveness or use, respectively.
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In connection with the Conversion, the MHC and the Mid-Tier Holding
Company each filed with the OTS an application for conversion to a stock company
(together with any interim merger applications and any other required ancillary
applications and/or notices, the "Conversion Application") and amendments
thereto as required by the OTS in accordance with the Home Owners Loan Act, as
amended (the "HOLA"), and 12 C.F.R. Parts 575 and 563b (collectively with the
HOLA, the Conversion Regulations"). The Holding Company has also filed with the
OTS its application on Form H-(e)1-S (together with any interim merger
applications and any other required ancillary applications and/or notices, the
"Holding Company Application") to become a unitary savings and loan holding
company under the HOLA and the regulations promulgated thereunder. Collectively,
the Conversion Application and the Holding Company Application may also be
termed the "Applications."
SECTION 2. APPOINTMENT OF AGENT. Subject to the terms and
conditions of this Agreement, the Alpena Parties hereby appoint the Agent to
consult with, advise and assist the Alpena Parties with the solicitation of
subscriptions and purchase orders for the Shares in connection with the sale of
the Shares in the Offerings.
On the basis of the representations and warranties of the Alpena Parties
contained in, and subject to the terms and conditions of, this Agreement, the
Agent accepts such appointment and agrees to use its best efforts to assist the
Alpena Parties with the solicitation of subscriptions and purchase orders for
the shares and agrees to consult with and advise the Alpena Parties as to the
matters set forth in Section 3 of the letter agreement, dated November 1, 2004,
between the MHC, the Mid-Tier Holding Company and Agent (the "Letter Agreement")
(a copy of which is attached hereto as EXHIBIT A). It is acknowledged by the
Alpena Parties that the Agent shall not be obligated to purchase any Shares and
shall not be obligated to take any action which is inconsistent with any
applicable law, regulation, decision or order. Except as set forth in Section 13
hereof, the appointment of the Agent to provide services hereunder shall
terminate upon consummation of the Offerings.
If requested by the MHC or the Mid-Tier Holding Company, Agent may also
assemble and manage a selling group of broker-dealers that are members of the
National Association of Securities Dealers, Inc. ("NASD") to participate in the
solicitation on a "best efforts" basis of purchase orders for the Shares (the
"Assisting Brokers") under a selected dealer agreement ("Selected Dealer
Agreement"), the form of which is set forth as EXHIBIT B to this Agreement. The
Agent will distribute the Shares among dealers in the Syndicated Community
Offering in a fashion which best meets the distribution objectives of the Bank
and the Plan. The Agent will not commence the Syndicated Community Offering
without the prior approval of the Alpena Parties.
SECTION 3. REFUND OF PURCHASE PRICE. In the event that the
Conversion is not consummated for any reason, including but not limited to the
inability to sell a minimum of 1,360,000 Shares during the Offerings (including
any permitted extension thereof) or such other minimum number of Shares as shall
be established consistent with the Plan and the Conversion Regulations, this
Agreement shall terminate and any persons who have subscribed for any of the
Shares shall have refunds placed in the mail to them promptly of the full amount
which has been received from such person, together with interest as provided in
the Prospectus.
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SECTION 4. FEES. In addition to the expenses specified in Section 9
hereof, as compensation for the Agent's services under this Agreement, the Agent
has received or will receive the following fees from the Alpena Parties:
(a) A reorganization and proxy vote advisory and
administrative services fee of $25,000 shall be paid as follows: (i) $12,500 was
paid upon execution of the Letter Agreement, and (ii) $12,500 was paid upon the
initial filing of the Registration Statement. Fees for sales of the Shares in
the Offerings shall be one percent (1.0%) of the dollar amount of the Shares
sold in the Offerings, other than for shares sold pursuant to 4(b), which will
be paid at Closing. No fee shall be payable for stock sold in the Offerings to
officers, directors, employees or immediate family of such persons ("Insiders")
and qualified and non-qualified employee benefit plans of the Company or the
Insiders. The term "immediate family" includes spouse, siblings, parents and
also children who reside within the same household as an officer, director or
employee. The $25,000 reorganization and proxy vote advisory and administrative
services fee shall be credited against such sales fees. In the event the
Conversion and the Offerings are not consummated, the Agent will be entitled
only to the reimbursement of its accountable out-of-pocket expenses and payments
for certain advisory and administrative services performed, as outlined in
Sections 3(a) and 3(b) of the engagement letter, as of the date of termination.
Any portion of the $25,000 fee that has been advanced to the Agent and for which
services have not been performed as described above shall be returned to the
Alpena Parties.
(b) If any of the Shares remain unsubscribed after the
Subscription Offering and Community Offering, at the request of the Holding
Company, the Agent will form a group of approved broker-dealer firms in
accordance with Section 2 for purposes of the Syndicated Community Offering. The
fees payable by the Holding Company pursuant to this Section 4(b) to the Agent
will not exceed six percent (6%) of the aggregate dollar amount of the Shares
sold in the Syndicated Community Offering. Of such fee, the Agent will receive
one percent (1%) of the aggregate dollar amount of the shares sold pursuant to
this Section 4(b) as a management fee, and the Alpena Parties will pay the
remainder to the Assisting Brokers, which may include the Agent, in amounts
relating to the number of Shares sold by such Assisting Brokers pursuant to this
Section 4(b). All such fees payable under this Section 4(b) shall be in addition
to all fees payable under Section 4(a) and shall be paid at Closing (as defined
below).
In the event that the Holding Company is required to resolicit
subscribers for Shares in the Subscription Offering and Community Offering and
the Agent is required to provide significant additional services in connection
with such a resolicitation, the Alpena Parties and the Agent shall mutually
agree to the dollar amount of additional compensation due to the Agent and the
Alpena Parties shall pay such amount, if any. Until any agreement called for by
this paragraph is reached, the Agent shall not incur expenses relating to any
resolicitation in an amount that would cause the total expenses incurred by the
Agent that are reimbursable by the Bank pursuant to Section 9 hereof to be
greater than those permitted without the prior written consent of the Holding
Company, which consent shall not be unreasonably withheld.
SECTION 5. CLOSING. If the minimum number of Shares permitted to be
sold in the Offerings on the basis of the most recently updated Appraisal (as
defined in Section 6(g)) are subscribed for at or before the termination date of
the Offerings (which may be extended), and the other conditions (including those
in Section 10) to the completion of the Conversion are
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satisfied, the Holding Company agrees to issue the Shares and the Exchange
Shares on the Closing Date (as hereinafter defined) against payment therefor by
the means authorized by the Plan and to deliver certificates evidencing
ownership of the Shares and the Exchange Shares in such authorized denominations
and registrations directly to the purchasers thereof or as instructed as
promptly as practicable after the Closing Date. The closing (the "Closing")
shall be held at the offices of Luse, Gorman, Pomerenk & Schick, P.C.,
Washington, D.C., or at such other place as shall be agreed upon among the
Alpena Parties and the Agent, at 10:00 a.m., Eastern Time, on the business day
selected by the Alpena Parties, which business day shall be no less than two
business days following the giving of prior notice by the Holding Company to the
Agent or at such other time as shall be agreed upon by the Alpena Parties and
the Agent. At the Closing, the Alpena Parties shall deliver to the Agent by wire
transfer in same-day funds the commissions, fees and expenses owing to the Agent
as set forth in Section 4 and Section 9 hereof and the opinions required hereby
and other documents deemed reasonably necessary for the Agent shall be executed
and delivered to effect the sale of the Shares as contemplated hereby and
pursuant to the terms of the Prospectus; provided, however, that all
out-of-pocket expenses to which the Agent is entitled under Section 9 hereof
shall be due and payable upon receipt by the Holding Company or the Bank of a
written accounting therefor setting forth in reasonable detail the expenses
incurred by the Agent. The hour and date upon which the Holding Company shall
release the Shares for delivery in accordance with the terms hereof is referred
to herein as the "Closing Date."
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE ALPENA PARTIES.
The Alpena Parties jointly and severally represent and warrant to the Agent
that:
(a) The MHC, the Mid-Tier Holding Company and the Bank have
all such power, authority, authorizations, approvals and orders as may be
required to enter into this Agreement, and, as of the Closing Date, the MHC, the
Holding Company and the Bank will have all such power, authority,
authorizations, approvals and orders as may be required to carry out the
provisions and conditions hereof and to issue and sell the Shares and to issue
the Exchange Shares and the Foundation Shares as provided herein and as
described in the Prospectus. The consummation of the Conversion, the execution,
delivery and performance of this Agreement and the Letter Agreement and the
consummation of the transactions contemplated herein have been duly and validly
authorized by all necessary corporate action on the part of the MHC, the
Mid-Tier Holding Company, the Holding Company and the Bank. This Agreement has
been validly executed and delivered by the Alpena Parties, and is a valid, legal
and binding obligation of the Alpena Parties, in each case enforceable in
accordance with its terms, except as the legality, validity, binding nature and
enforceability thereof may be limited by (i) bankruptcy, insolvency, moratorium,
reorganization, conservatorship, receivership or other similar laws relating to
or affecting the enforcement of creditors' rights generally, (ii) general equity
principles regardless of whether such enforceability is considered in a
proceeding in equity or at law, and (iii) the extent, if any, that the
provisions of Sections 11 or 12 hereof may be unenforceable as against public
policy.
(b) The Registration Statement was declared effective by the
Commission on February ___, 2005. No stop order has been issued with respect to
the Prospectus. No proceedings related to the Prospectus have been initiated or,
to the knowledge of the Alpena Parties, threatened by the Commission. At the
time the Registration Statement, including the
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Prospectus contained therein (including any amendment or supplement thereto),
became effective, the Registration Statement complied as to form in all material
respects with the 1933 Act and the 1933 Act Regulations and the Registration
Statement and the Prospectus did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. At the time any Rule 424(b) or (c) Prospectus was
filed with the Commission and at the Closing Date referred to in Section 5, the
Registration Statement, including the Prospectus (including any amendment or
supplement thereto) and, when taken together with the Prospectus, any Blue Sky
Application or Sales Information authorized for use by any of the Alpena Parties
in connection with the Offerings, will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that the
representations and warranties in this Section 6(b) shall not apply to
statements or omissions made in reliance upon and in conformity with written
information furnished to the Alpena Parties by the Agent expressly regarding the
Agent for use under the caption " The Conversion - Plan of Distribution; Selling
Agent Compensation."
(c) The Conversion Application, including the Prospectus,
the proxy statement for the solicitation of proxies from the members of the MHC
for the special meeting to approve the Plan (the "Members' Proxy Statement") and
the proxy statement for the solicitation of proxies from the stockholders of the
Mid-Tier Holding Company for the special meeting to approve the Plan (the
"Stockholders' Proxy Statement"), has been approved by the OTS and the
Prospectus, Members' Proxy Statement and Shareholders' Proxy Statement have been
authorized for use by the OTS. At the time the Conversion Application, including
the Prospectus, Members' Proxy Statement and Stockholders' Proxy Statement
contained therein (including any amendment or supplement thereto), were approved
and authorized for use by the OTS and at the Closing Time, the Conversion
Application, including the Prospectus, Members' Proxy Statement and
Stockholders' Proxy Statement contained therein (including any amendment or
supplement thereto), complied, and as of the Closing Time will comply, as to
form in all material respects with the Conversion Regulations. The Conversion
Application, including the Prospectus, Members' Proxy Statement and
Stockholders' Proxy Statement contained therein (including any amendment or
supplement thereto), did not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the representations and warranties
in this Section 6(c) shall not apply to statements or omissions made in reliance
upon and in conformity with written information furnished to the Alpena Parties
by the Agent expressly regarding the Agent for use under the caption " The
Conversion - Plan of Distribution; Selling Agent Compensation."
(d) No order has been issued by the Commission preventing or
suspending the use of the Registration Statement or the Prospectus and no action
by or before any such government entity to revoke any approval, authorization or
order of effectiveness related to the Conversion is pending or, to the best
knowledge of the Alpena Parties, threatened.
(e) The Plan has been duly adopted by the Board of Directors
of the MHC. To the best knowledge of the Alpena Parties, no person has sought,
or at the Closing Date will
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have sought, to obtain review of the final action of the OTS in approving the
Plan or the Conversion Application or the Holding Company Application, pursuant
to the Conversion Regulations.
(f) The Holding Company has filed the Holding Company
Application with the OTS. As of the Closing Date, the OTS will have approved of
the Holding Company's becoming a unitary savings and loan holding company with
respect to the Bank.
(g) RP Financial, LC., which prepared the appraisal of the
aggregate pro forma market value of the Common Stock on which the Offerings were
based (the "Appraisal"), has advised the Alpena Parties in writing that it is
independent with respect to each of the Alpena Parties and the Alpena Parties
believe RP Financial, LC. to be expert in preparing appraisals of savings
institutions.
(h) Plante & Moran, PLLC, which certified the financial
statements filed as part of the Registration Statement and the Conversion
Application, has advised the Alpena Parties that it is an independent certified
public accountant within the meaning of the Code of Ethics of the AICPA, and
Plante & Moran, PLLC is, with respect to each of the Alpena Parties, independent
certified public accountants as required by the 1933 Act and the 1933 Act
Regulations and the regulations of the Public Company Accounting Oversight Board
(the "PCAOB Regulations").
(i) The financial statements and the notes thereto which are
included in the Registration Statement and which are a part of the Prospectus
present fairly in all material respects the financial condition and retained
earnings of the Mid-Tier Holding Company and the Bank as of the dates indicated
and the results of operations and cash flows for the periods specified. The
financial statements comply in all material respects with the applicable
accounting requirements of Title 12 of the Code of Federal Regulations,
Regulation S-X of the Commission and generally accepted accounting principles
("GAAP") applied on a consistent basis during the periods presented, except as
otherwise noted therein, and present fairly in all material respects the
information required to be stated therein. The other financial, statistical and
pro forma information and related notes included in the Prospectus present
fairly the information shown therein on a basis consistent with the audited and
any unaudited financial statements included in the Prospectus, and as to the pro
forma adjustments, the adjustments made therein have been consistently applied
on the basis described therein.
(j) Since the respective dates as of which information is
given in the Registration Statement, including the Prospectus: (i) there has not
been any material adverse change in the financial condition, results of
operation, capital, properties, business affairs or prospects of the Alpena
Parties considered as one enterprise, whether or not arising in the ordinary
course of business; (ii) there have not been any material transactions entered
into by any of the Alpena Parties, other than those in the ordinary course of
business; and (iii) the capitalization, liabilities, assets, properties and
business of the Alpena Parties conform in all material respects to the
descriptions thereof contained in the Prospectus and, none of the Alpena Parties
has any material liabilities of any kind, contingent or otherwise, except as
disclosed in the Registration Statement or the Prospectus.
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(k) As of the Closing Date, the Holding Company will be a
stock corporation duly organized and in good standing under the laws of the
State of Maryland, with corporate power and authority to own its properties and
to conduct its business as described in the Prospectus, and will be qualified to
transact business and will be in good standing in Maryland and in each
jurisdiction in which the conduct of business requires such qualification,
unless the failure to qualify in one or more of such jurisdictions would not
have a material adverse effect on the financial condition, results of operation,
capital, properties, business affairs or prospects of the Alpena Parties taken
as a whole (a "Material Adverse Effect"). As of the Closing Date, the Holding
Company will have obtained all licenses, permits and other governmental
authorizations required for the conduct of its business, except those that
individually or in the aggregate would not have a Material Adverse Effect; and
as of the Closing Date, all such licenses, permits and governmental
authorizations will be in full force and effect, and the Holding Company will be
in compliance therewith in all material respects.
(l) The Holding Company does not, and as of the Closing Date
will not, own any equity securities or any equity interest in any business
enterprise except as described in the Prospectus.
(m) The Bank is a duly organized and validly existing
savings association organized under the laws of the United States, duly
authorized to conduct its business as described in the Prospectus; the
activities of the Bank are permitted by the applicable rules, regulations and
practices of the OTS; the Bank has obtained all licenses, permits and other
governmental authorizations currently required for the conduct of its business,
except those that individually or in the aggregate would not have a Material
Adverse Effect; all such licenses, permits and other governmental authorizations
are in full force and effect and the Bank is in good standing under the laws of
the United States and the Bank is duly qualified as a foreign corporation to
transact business in each jurisdiction in which the failure to so qualify would
have a Material Adverse Effect; all of the issued and outstanding capital stock
of the Bank is duly and validly issued to the Mid-Tier Holding Company and is
fully paid and nonassessable; and all of the issued and outstanding capital
stock of the Bank after the Conversion will be duly and validly issued to the
Holding Company and will be fully paid and nonassessable; and the Holding
Company will directly own all of the capital stock of the Bank free and clear of
any mortgage, pledge, lien, encumbrance, claim or restriction of any kind. The
Bank does not own equity securities or any equity interest in any other business
enterprise except as otherwise described in the Prospectus or as are immaterial
in amount and are not required to be described in the Prospectus.
(n) The MHC is a duly organized and validly existing
federally-chartered mutual holding company, duly authorized to conduct its
business as described in the Prospectus; the activities of the MHC are permitted
by the rules, regulations and practices of the OTS; the MHC obtained all
licenses, permits and other governmental authorizations currently required for
the conduct of its business, except those that, individually or in the
aggregate, would not have a Material Adverse Effect; all such licenses, permits
and other governmental authorizations are in full force and effect and the MHC
is in good standing under the laws of United States and the MHC is duly
qualified as a foreign corporation to transact business in each jurisdiction in
which the failure to so qualify would have a Material Adverse Effect.
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(o) The Mid-Tier Holding Company is a duly organized and
validly existing federal-chartered stock corporation, duly authorized to conduct
its business as described in the Prospectus; the activities of the Mid-Tier
Holding Company are permitted by the rules, regulations and practices of the
OTS; the Mid-Tier Holding Company has obtained all licenses, permits and other
governmental authorizations currently required for the conduct of its business,
except those that, individually or in the aggregate, would not have a Material
Adverse Effect; all such licenses, permits and other governmental authorizations
are in full force and effect and the Mid-Tier Holding Company is in good
standing under the laws of United States and the Mid-Tier Holding Company is
duly qualified as a foreign corporation to transact business in each
jurisdiction in which the failure to so qualify would have a Material Adverse
Effect.
(p) The Bank is a member of the Federal Home Loan Bank (the
"FHLB") of Pittsburgh. The deposit accounts of the Bank are insured by the FDIC
up to applicable limits.
(q) As of the Closing Date, the Bank will be a wholly-owned
subsidiary of the Holding Company.
(r) The only subsidiaries of the Bank are Financial Services
and Mortgage Corporation ("FSMC") and InsuranCenter of Alpena ("ICA"). FSMC and
ICA are each duly organized, validly existing and in good standing under the
laws of the State of Michigan, with full power and authority to own its property
and conduct its business; FSMC and ICA are each duly qualified as a foreign
corporation to transact business in each jurisdiction in which failure to so
qualify would have a Material Adverse Effect; FSMC and ICA each hold all
licenses, certificates and permits from governmental authorities necessary to
conduct its business, except where the failure to hold such licenses, permits or
authorizations would not, individually or in the aggregate, have a Material
Adverse Effect; and the activities of FSMC and ICA are permitted to be conducted
by Michigan corporations and by subsidiaries of a federally-chartered savings
association.
(s) Upon consummation of the Conversion, the authorized,
issued and outstanding capital stock of the Holding Company will be within the
range set forth in the Prospectus under the caption "Capitalization" and no
shares of Common Stock have been or will be issued and outstanding prior to the
Closing Date; the Shares to be subscribed for in the Offerings have been duly
and validly authorized for issuance and, when issued and delivered by the
Holding Company pursuant to the Plan against payment of the consideration
calculated as set forth in the Plan and the Prospectus, will be duly and validly
issued and fully paid and nonassessable; the Exchange Shares to be issued in the
Exchange and the Foundation Shares have been duly and validly authorized for
issuance and, when issued and delivered by the Holding Company pursuant to the
Plan and the Prospectus, will be duly and validly issued and fully paid and
nonassessable; the issuance of the Shares is not subject to preemptive rights,
except for the subscription rights granted pursuant to the Plan; the issuance of
the Exchange Shares and the Foundation Shares is not subject to preemptive
rights; and the terms and provisions of the shares of Common Stock will conform
in all material respects to the description thereof contained in the Prospectus.
Upon issuance of the
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Shares sold, good title to the Shares will be transferred from the Holding
Company to the purchasers of Shares against payment therefor in the Offering as
set forth in the Plan and the Prospectus. Upon issuance of the Exchange Shares,
good title to the Exchange Shares will be transferred from the Holding Company
to the recipients thereof in the Exchange as set forth in the Plan and the
Prospectus.
(t) The Alpena Parties are not in violation of their
respective certificates of incorporation or charters or their respective bylaws,
or in material default in the performance or observance of any obligation,
agreement, covenant, or condition contained in any contract, lease, loan
agreement, indenture or other instrument to which they are a party or by which
they, or any of their respective properties, may be bound which would result in
a Material Adverse Effect. The consummation of the transactions contemplated
herein and in the Plan will not (i) conflict with or constitute a breach of, or
default under, the certificate of incorporation, charter or bylaws of any of the
Alpena Parties, or conflict with or constitute a breach of, or default under,
any material contract, lease or other instrument to which any of the Alpena
Parties has a beneficial interest, or any applicable law, rule, regulation or
order that is material to the financial condition of the Bank; (ii) violate any
authorization, approval, judgment, decree, order, statute, rule or regulation
applicable to the Alpena Parties except for such violations which would not have
a Material Adverse Effect; or (iii) result in the creation of any lien, charge
or encumbrance upon any property of the Alpena Parties, except for such liens,
changes or encumbrances that would not individually or in the aggregate have a
Material Adverse Effect.
(u) No default exists, and no event has occurred which with
notice or lapse of time, or both, would constitute a default on the part of any
of the Alpena Parties, in the due performance and observance of any term,
covenant or condition of any indenture, mortgage, deed of trust, note, bank loan
or credit agreement or any other instrument or agreement to which any of the
Alpena Parties is a party or by which any of their property is bound or affected
in any respect which, in any such case, would have a Material Adverse Effect on
the Alpena Parties taken as a whole, and such agreements are in full force and
effect; and no other party to any such agreements has instituted or, to the best
knowledge of any of the Alpena Parties, threatened any action or proceeding
wherein any of the Alpena Parties is alleged to be in default thereunder under
circumstances where such action or proceeding, if determined adversely to any of
the Alpena Parties, would have a Material Adverse Effect.
(v) The Alpena Parties have good and marketable title to all
assets which are material to the businesses of the Alpena Parties, free and
clear of all liens, charges, encumbrances, restrictions or other claims, except
such as are described in the Prospectus or which do not have a Material Adverse
Effect; and all of the leases and subleases which are material to the businesses
of the Alpena Parties, including those described in the Registration Statement
or Prospectus, are in full force and effect.
(w) The Alpena Parties are not in violation of any material
directive from the OTS, the FDIC, or any other agency to make any material
change in the method of conducting their respective businesses; the Alpena
Parties have conducted and are conducting their respective businesses so as to
comply in all respects with all applicable statutes and regulations (including,
without limitation, regulations, decisions, directives and orders of the OTS,
the Commission and the FDIC), except where the failure to so comply would not
reasonably be expected to result in a Material Adverse Effect, and there is no
charge, investigation, action, suit or proceeding before or by any court,
regulatory authority or governmental agency or body pending or, to the best
knowledge of any of the Alpena Parties, threatened, which would
10
reasonably be expected to materially and adversely affect the Conversion, the
performance of this Agreement, or the consummation of the transactions
contemplated in the Plan as described in the Registration Statement, or which
would reasonably be expected to result in a Material Adverse Effect.
(x) Prior to the Closing Date, the Alpena Parties will have
received an opinion of their special counsel, Luse, Gorman, Pomerenk & Schick,
P.C., with respect to the federal income tax consequences of the Conversion, as
described in the Registration Statement and the Prospectus, and an opinion from
Plante Moran, PLLC with respect to the tax consequences of the Conversion under
the laws of the State of Michigan; and the facts and representations upon which
such opinions will be based, will be truthful, accurate and complete, and none
of the Alpena Parties will take any action inconsistent therewith.
(y) The Alpena Parties have filed all required federal and
state tax returns, paid all taxes that have become due and payable, except where
permitted to be extended or where the failure to pay such taxes would not have a
Material Adverse Effect, and no deficiency has been asserted with respect
thereto by any taxing authority.
(z) No approval, authorization, consent or other order of
any regulatory or supervisory or other public authority is required for the
execution and delivery by the Alpena Parties of this Agreement, or the sale and
issuance of the Shares and the issuance of the Exchange Shares and the
Foundation Shares, except for the approval of the OTS and the Commission and any
necessary qualification, notification, or registration or exemption under the
securities or blue sky laws of the various states in which the Shares are to be
offered for sale and the Exchange Shares and the Foundation Shares are to be
issued.
(aa) None of the Alpena Parties has: (i) issued any
securities within the last 18 months (except for (a) notes to evidence bank
loans or other liabilities in the ordinary course of business or as described in
the Prospectus, (b) shares of Common Stock issued with respect to the initial
capitalization of the Holding Company and (c) shares of common stock of the
Mid-Tier Holding Company issued upon the exercise of stock options); (ii) had
any dealings with respect to sales of securities within the 12 months prior to
the date hereof with any member of the NASD, or any person related to or
associated with such member, other than discussions and meetings relating to the
Offerings and purchases and sales of U.S. government and agency and other
securities in the ordinary course of business; or (iii) engaged any intermediary
between the Agent and the Alpena Parties in connection with the Offerings or the
offering of shares of the common stock of the Mid-Tier Holding Company, and no
person is being compensated in any manner for such services.
(bb) The Alpena Parties have not made any payment of funds of
the Alpena Parties as a loan to any person for the purchase of Shares, except
for the Holding Company's loan to the employee stock ownership plan the proceeds
of which will be used to purchase Shares, or has made any other payment or loan
of funds prohibited by law, and no funds have been set aside to be used for any
payment prohibited by law.
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(cc) The Bank complies in all material respects with the
applicable financial record keeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1970, as amended, and the regulations
and rules thereunder.
(dd) The Alpena Parties have not relied upon Agent or its
counsel for any legal, tax or accounting advice in connection with the
Conversion.
(ee) The records of Eligible Account Holders and Supplemental
Eligible Account Holders and Other Members are accurate and complete in all
material respects.
(ff) The Alpena Parties comply with all laws, rules and
regulations relating to environmental protection, and none of them has been
notified or is otherwise aware that any of them is potentially liable, or is
considered potentially liable, under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, or any other Federal, state
or local environmental laws and regulations except to the extent that any
non-compliance would not have a Material Adverse Effect; no action, suit,
regulatory investigation or other proceeding is pending, or to the knowledge of
the Alpena Parties, threatened against the Alpena Parties relating to
environmental protection, nor do the Alpena Parties have any reason to believe
any such proceedings may be brought against any of them; and, to the knowledge
of the Alpena Parties, no disposal, release or discharge of hazardous or toxic
substances, pollutants or contaminants, including petroleum and gas products, as
any of such terms may be defined under federal, state or local law, has occurred
on, in, at or about any facilities or properties owned or leased by any of the
Alpena Parties or in which the Bank has a security interest, except to the
extent such disposal, release or discharge would not have a Material Adverse
Effect.
(gg) All of the loans represented as assets on the recent
developments or financial information of the Alpena Parties included in the
Prospectus meet or are exempt from all requirements of federal, state and local
law pertaining to lending, including, without limitation, truth in lending
(including the requirements of Regulations Z and 12 C.F.R. Part 226), real
estate settlement procedures, consumer credit protection, equal credit
opportunity and all disclosure laws applicable to such loans, except for
violations which, if asserted, would not result in a Material Adverse Effect.
(hh) None of the Alpena Parties are required to be registered
as an investment company under the Investment Company Act of 1940.
(ii) The Alpena Parties have taken all actions necessary to
obtain at Closing a Blue Sky Memorandum from Luse, Gorman, Pomerenk & Schick,
P.C.
(jj) The Foundation has been duly organized and is validly
existing as a private charitable foundation in good standing under the laws of
the State of Delaware with corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus; the Foundation will not be a savings and loan holding company within
the meaning of 12 C.F.R. 574.2(q) as a result of the issuance of the Foundation
Shares to it in accordance with the terms of the Plan and in the amounts
described in the Prospectus; to the knowledge of the Alpena Parties, all
approvals required to establish the Foundation and contribute the Foundation
Shares and cash up $375,000 to it have been obtained; except as
12
disclosed in the Members' Proxy Statement and the Stockholders' Proxy Statement,
there are no agreements or understandings, written or oral or otherwise, between
any of the Alpena Parties and the Foundation with respect to the control,
directly or indirectly, over the voting and the acquisition or disposition of
the Foundation Shares; the Foundation Shares will have been duly authorized for
issuance and, when issued and contributed by the Holding Company pursuant to the
Plan, will be duly issued, fully paid and nonassessable.
(kk) Any certificates signed by an officer of any of the
Alpena Parties and delivered to the Agent or its counsel that refer to this
Agreement shall be deemed to be a representation and warranty by the Alpena
Parties to the Agent as to the matters covered thereby with the same effect as
if such representation and warranty were set forth herein.
SECTION 7. REPRESENTATIONS AND WARRANTIES OF THE AGENT. Agent represents
and warrants to the Alpena Parties that:
(a) Agent is a corporation and is validly existing and in
good standing under the laws of the State of New Jersey with full power and
authority to provide the services to be furnished to the Alpena Parties
hereunder.
(b) The execution, delivery and performance of this
Agreement and the Letter Agreement and the consummation of the transactions
contemplated herein and therein have been duly and validly authorized by all
necessary corporate action on the part of Agent, and each of this Agreement and
the Letter Agreement is the legal, valid and binding agreement of Agent,
enforceable in accordance with its terms, except as the legality, validity,
binding nature and enforceability thereof may be limited by (i) bankruptcy,
insolvency, moratorium, reorganization, conservatorship, receivership or other
similar laws relating to or affecting the enforcement of creditors' rights
generally, and (ii) general equity principles regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(c) Each of Agent and its employees, agents and
representatives who shall perform any of the services hereunder shall have, and
until the Offerings are consummated or terminated shall maintain, all licenses,
approvals and permits necessary to perform such services and shall comply in all
material respects with all applicable laws and regulations in connection with
the performance of such services.
(d) No action, suit, charge or proceeding before the
Commission, the NASD, any state securities commission or any court is pending,
or to the knowledge of Agent threatened, against Agent which, if determined
adversely to Agent, would have a material adverse effect upon the ability of
Agent to perform its obligations under this Agreement.
(e) Agent is registered as a broker/dealer pursuant to
Section 15(b) of the 1934 Act and is a member of the National Association of
Securities Dealers, Inc. (the "NASD").
(f) Any funds received in the Offerings by the Agent will be
handled by the Agent in accordance with Rule 15c2-4 under the 1934 Act to the
extent applicable.
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SECTION 8. COVENANTS OF THE ALPENA PARTIES. The Alpena Parties
hereby jointly and severally covenant with the Agent as follows:
(a) The Holding Company will not, at any time after the date
the Registration Statement is declared effective, file any amendment or
supplement to the Registration Statement without providing the Agent and its
counsel an opportunity to review and comment on such amendment or supplement.
The Holding Company will furnish promptly to the Agent and its counsel copies of
all correspondence from the Commission with respect to the Registration
Statement and the Holding Company's responses thereto.
(b) The Alpena Parties will not, at any time after the date
any Application is approved, file any amendment or supplement to such
Application without providing the Agent and its counsel an opportunity to review
and comment on such amendment or supplement. The Alpena Parties will furnish
promptly to the Agent and its counsel copies of all correspondence from the OTS
with respect to the Applications and the Alpena Parties' responses thereto.
(c) The Alpena Parties will use their best efforts to cause
the OTS to approve the Holding Company's acquisition of the Bank, and will use
their best efforts to cause any post-effective amendment to the Registration
Statement to be declared effective by the Commission and any post-effective
amendment to the Conversion Application to be approved by the OTS, as
applicable, and will promptly upon receipt of any information concerning the
events listed below notify the Agent (i) when the Registration Statement, as
amended, has become effective; (ii) when the Conversion Application as amended,
has received the approval of the OTS; (iii) when the Holding Company
Application, as amended, has been approved by the OTS; (iv) of the receipt of
any comments from the OTS or any other governmental entity with respect to the
Conversion or the transactions contemplated by this Agreement; (v) of any
request by the Commission, the OTS, or any other governmental entity for any
amendment or supplement to the Registration Statement or the Applications or for
additional information; (vi) of the issuance by the Commission or the OTS, or
any other governmental agency of any order or other action suspending the
Offerings or the use of the Registration Statement, the Prospectus, the Members'
Proxy Statement, the Stockholders' Proxy Statement or any other filing of the
Alpena Parties under the Conversion Regulations or other applicable law, or the
threat of any such action; (vii) of the issuance by the Commission or the OTS,
or any other state authority of any stop order suspending the effectiveness of
the Registration Statement or of the initiation or threat of initiation or
threat of any proceedings for that purpose; or (viii) of the occurrence of any
event mentioned in subsection (f) below. The Alpena Parties will make every
reasonable effort to prevent the issuance by the Commission, the OTS, or any
other state authority of any order referred to in (vi) and (vii) above and, if
any such order shall at any time be issued, to obtain the lifting thereof at the
earliest possible time.
(d) The Alpena Parties will deliver to the Agent and to its
counsel conformed copies of each of the following documents, with all exhibits:
the Applications as originally filed and of each amendment or supplement
thereto, and the Registration Statement, as originally filed and each amendment
thereto. Further, the Alpena Parties will deliver such additional copies of the
foregoing documents to counsel to the Agent as may be required for any NASD
filings. In addition, the Alpena Parties will also deliver to the Agent such
number of copies of the Prospectus, as amended or supplemented, as the Agent may
reasonably request.
14
(e) The Alpena Parties will comply in all material respects
with any and all terms, conditions, requirements and provisions with respect to
the Conversion and the transactions contemplated thereby imposed by the
Commission, by applicable state law and regulations, and by the 1933 Act, the
1933 Act Regulation, the 1934 Act and the 1934 Act Regulations to be complied
with prior to the Closing Date; and when the Prospectus is required to be
delivered, the Alpena Parties will comply in all material respects, at their own
expense, with all requirements imposed upon them by the OTS, the Conversion
Regulations (except as modified or waived in writing by the OTS), the
Commission, by applicable state law and regulations and by the 1933 Act, the
1934 Act and the rules and regulations of the Commission promulgated under such
statutes, in each case as from time to time in force, so far as is 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.
(f) During any period when the Prospectus is required to be
delivered, each of the Alpena Parties will inform the Agent of any event or
circumstance of which it is or becomes aware as a result of which the
Registration Statement and/or Prospectus, as then supplemented or amended, would
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading. If it is
necessary, in the reasonable opinion of counsel for the Alpena Parties, to amend
or supplement the Registration Statement or the Prospectus in order to correct
such untrue statement of a material fact or to make the statements therein not
misleading in light of the circumstances existing at the time of their use, the
Alpena Parties will, at their expense, prepare, file with the Commission and the
OTS, and furnish to the Agent, a reasonable number of copies of an amendment or
amendments of, or a supplement or supplements to, the Registration Statement and
the Prospectus (after a reasonable time for review by counsel for the Agent)
which will amend or supplement the Registration Statement and/or the Prospectus
so that as amended or supplemented it will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances existing at the time, not
misleading. For the purpose of this subsection, each of the Alpena Parties will
furnish such information with respect to itself as the Agent may from time to
time reasonably request.
(g) Pursuant to the terms of the Plan, the Holding Company
will endeavor in good faith, in cooperation with the Agent, to register or to
qualify the Shares for offering and sale or to exempt such Shares from
registration and to exempt the Holding Company and its officers, directors and
employees from registration as broker-dealers, under the applicable securities
laws of the jurisdictions in which the Offerings will be conducted; provided,
however, that the Holding Company shall not be obligated to file any general
consent to service of process or to qualify as a foreign corporation to do
business in any jurisdiction in which it is not so qualified. In each
jurisdiction where any of the Shares shall have been registered or qualified as
above provided, the Holding Company will make and file such statements and
reports as are required by the applicable regulatory authority in connection
with such registration or qualification for a period of not less than one year
from the effective date of the Registration Statement.
(h) Upon consummation of the Conversion, the Bank will
establish a liquidation account for the benefit of the Bank's depositors, in
accordance with the Plan and the requirements of the Conversion Regulations.
15
(i) The Holding Company will not sell or issue, contract to
sell or otherwise dispose of, for a period of 90 days after the date hereof, any
shares of Common Stock or securities into or exercisable for shares of Common
Stock, without the Agent's prior written consent other than in connection with
any plan or arrangement described in the Prospectus.
(j) For a period of three years from the date of this
Agreement, the Holding Company will furnish to the Agent, as soon as practical
after such information is available (i) a copy of each report of the Holding
Company furnished to or filed with the Commission under the 1934 Act or any
national securities exchange or system on which any class of securities of the
Holding Company is listed or quoted, (ii) a copy of each report of the Holding
Company mailed to holders of Common Stock, (iii) each press release and material
news item and article released by the Holding Company and/or Bank, and (iv) from
time-to-time, such other publicly available information concerning the Alpena
Parties as the Agent may reasonably request.
(k) The Alpena Parties will use the net proceeds from the
sale of the Common Stock in the manner set forth in the Prospectus under the
caption "Use of Proceeds."
(l) The Holding Company and the Bank will distribute the
Prospectus or other offering materials in connection with the offering and
sale of the Common Stock only in accordance with the Conversion Regulations of
the OTS, the 1933 Act and the 1934 Act and the rules and regulations promulgated
under such statutes, and the laws of any state in which the shares are qualified
for sale.
(m) Prior to the Closing Date, the Holding Company shall
register its Common Stock under Section 12(g) of the 1934 Act, and will request
that such registration statement shall be effective no later than the completion
of the Conversion.
(n) For so long as the Shares are registered under the 1934
Act, the Holding Company will furnish to its stockholders as soon as practicable
after the end of each fiscal year such reports and other information as are
required to be furnished to its stockholders under the 1934 Act.
(o) The Holding Company will report the use of proceeds of
the Offering in accordance with Rule 463 under the 1933 Act Regulations.
(p) The Alpena Parties will maintain appropriate
arrangements for depositing all funds received from persons mailing
subscriptions for or orders to purchase Shares on an interest bearing basis as
described in the Prospectus until the Closing Date and satisfaction of all
conditions precedent to the release of the Holding Company's obligation to
refund payments received from persons subscribing for or ordering Shares in the
Offerings, in accordance with the Plan as described in the Prospectus, or until
refunds of such funds have been made to the persons entitled thereto or
withdrawal authorizations canceled in accordance with the Plan and as described
in the Prospectus. The Alpena Parties will maintain such records of all funds
received to permit the funds of each subscriber to be separately insured by the
FDIC (to the maximum extent allowable) and to enable the Alpena Parties to make
the appropriate refunds of such funds in the event that such refunds are
required to be made in accordance with the Plan and as described in the
Prospectus.
16
(q) The Holding Company will register as a unitary savings
and loan holding company under HOLA.
(r) The Alpena Parties will take such actions and furnish
such information as are reasonably requested by the Agent in order for the Agent
to ensure compliance with NASD Rule 2790 (Restrictions on the Purchase and Sale
of IPOs of Equity Securities).
(s) The Alpena Parties will conduct their businesses in
compliance in all material respects with all applicable federal and state laws,
rules, regulations, decisions, directives and orders, including all decisions,
directives and orders of the Commission, the FDIC and the OTS.
(t) The Alpena Parties shall comply with any and all terms,
conditions, requirements and provisions with respect to the Conversion and the
transactions contemplated thereby imposed by the OTS, the HOLA, the Commission,
the 1933 Act, the 1933 Act Regulations, the 1934 Act, the 1934 Act Regulations
to be complied with subsequent to the Closing Date. The Holding Company will
comply with all provisions of all undertakings contained in the Registration
Statement.
(u) The Alpena Parties will not amend the Plan without
notifying the Agent prior thereto.
(v) The Holding Company shall provide the Agent with any
information necessary to allow the Agent to manage the allocation process in
order to permit the Holding Company to carry out the allocation of the Shares in
the event of an oversubscription, and such information shall be accurate and
reliable in all material respects.
(w) The Holding Company will not deliver the Shares until
the Alpena Parties have satisfied or caused to be satisfied each condition set
forth in Section 10 hereof, unless such condition is waived in writing by the
Agent.
(x) Immediately upon completion of the sale by the Holding
Company of the Shares, the issuance of the Exchange Shares and the contribution
of the Foundation Shares contemplated by the Plan and the Prospectus and the
completion of certain transactions necessary to implement the Plan, (i) all of
the issued and outstanding shares of capital stock of the Bank shall be owned by
the Holding Company, (ii) the Holding Company shall have no direct subsidiaries
other than the Bank, and (iii) the Conversion shall have been effected in
accordance with all applicable statutes, regulations, decisions and orders; and
all terms, conditions, requirements and provisions with respect to the
Conversion (except those that are conditions subsequent) imposed by the
Commission, the OTS or any other governmental agency, if any, shall have been
complied with by the Alpena Parties in all material respects or appropriate
waivers shall have been obtained and all notice and waiting periods shall have
been satisfied, waived or elapsed.
(y) Prior to the Closing Date, the Plan shall have been
approved by the voting members of the MHC and the stockholders of the Mid-Tier
Holding Company in accordance with the Plan, the Conversion Regulations, the
applicable provisions, if any, of the MHC's charter and bylaws and the Members'
Proxy Statement and the Stockholders' Proxy Statement.
17
(z) On or before the Closing Date, the Alpena Parties will
have used their best efforts to obtain approval for quotation of shares of the
Common Stock on the NASDAQ National Market System by the Closing Date and will
use its best efforts to maintain such quotation and will have completed all
conditions precedent to the Conversion specified in the Plan and the offer and
sale of the Shares will have been conducted in all material respects in
accordance with the Plan, the Conversion Regulations (except as modified or
waived in writing by the OTS) and with all other applicable laws, regulations,
decisions and orders, including all terms, conditions, requirements and
provisions precedent to the Conversion imposed upon any of the Alpena Parties by
the OTS, the Commission or any other regulatory authority and in the manner
described in the Prospectus.
(aa) The Holding Company shall notify the Agent when funds
shall have been received for the minimum number of Shares set forth in the
Prospectus.
(bb) The officers and directors of the Alpena Parties, listed
in EXHIBIT C of this Agreement, shall not exercise any stock options providing
for the issuance of shares of common stock in the Mid-Tier Holding Company
during the Offering or otherwise sell or transfer any shares of Common Stock
commencing on the date hereof and continuing for a period of 90 days following
the Closing Date (the "Restricted Period"), and each such officer and director
shall execute the agreement in the form attached as EXHIBIT D to this Agreement
concurrently with the execution of this Agreement. The Alpena Parties shall not
honor the exercise of any stock options providing for the issuance of shares of
common stock in the Mid-Tier Holding Company by any such officer or director
during the Offering, nor shall the Company otherwise assist such officers or
directors in connection with the sale or transfer of shares of Common Stock
during the Restricted Period.
SECTION 9. PAYMENT OF EXPENSES. Whether or not the Conversion is
completed or the sale and exchange of the Shares by the Holding Company is
consummated, the Alpena Parties will pay for all their expenses incident to the
performance of this Agreement, including without limitation: (a) the preparation
and filing of the Application and Registration Statement; (b) the preparation,
printing, filing, delivery and mailing of the Registration Statement, including
the Prospectus, and all documents related to the Offerings and proxy
solicitation; (c) all filing fees and expenses in connection with the
qualification or registration of the Shares for offer and sale by the Holding
Company or the Bank under the securities or "blue sky" laws, including without
limitation filing fees, reasonable legal fees and disbursements of counsel in
connection therewith, and in connection with the preparation of a blue sky law
survey; (d) the filing fees of the NASD related to the Agent's fairness filing
under NASD Rule 2710 and the application of the Holding Company to list its
shares; (e) fees and expenses related to the preparation of the independent
appraisal; (f) fees and expenses related to auditing and accounting services;
(g) expenses relating to advertising, temporary personnel, investor meetings and
stock information center; (h) transfer agent fees and costs of preparation and
distribution of stock certificates; and (i) Nasdaq listing fees. The Alpena
Parties also agree to reimburse Agent for reasonable out-of-pocket expenses,
including legal fees and expenses, incurred by Agent in connection with the
services hereunder. Agent will not incur legal fees (including counsel's
out-of-pocket expenses) in excess of $40,000 without the approval of the
Mid-Tier Holding Company. The Agent will not incur other out-of-pocket expenses
in excess of $25,000 without prior approval of the Mid-Tier Holding Company. In
the event that the Agent incurs any expenses on behalf of the Alpena
18
Parties, the Alpena Parties will pay or reimburse the Agent for such expenses
regardless of whether the Conversion is successfully completed, and such
reimbursements will not be included in the expense limitations set forth in the
following paragraph. The Agent will not incur any single expense of more than
$1,000 pursuant to this paragraph without the prior approval of the Mid-Tier
Holding Company, MHC or the Bank. The Alpena Parties acknowledge, however, that
such limitations may be increased by the mutual consent of the Mid-Tier Holding
Company and Agent in the event of delay in the Offering requiring the Agent to
utilize a Syndicated Community Offering, a delay as a result of circumstances
requiring material additional work by Agent or its counsel or an update of the
financial information in tabular form contained in the Prospectus for a period
later than September 30, 2004, with a "Recent Developments" section as of
December 31, 2004. Not later than two days prior to the Closing Date, the Agent
will provide the Bank with a detailed accounting of all reimbursable expenses to
be paid at the Closing.
SECTION 10. CONDITIONS TO THE AGENT'S OBLIGATIONS. The obligations
of the Agent hereunder and the occurrence of the Closing and the Conversion are
subject to the condition that all representations and warranties of the Alpena
Parties herein contained are, at and as of the commencement of the Offerings and
at and as of the Closing Date, true and correct, the condition that the Alpena
Parties shall have performed, in all material respects, all of their obligations
hereunder to be performed on or before such dates and to the following further
conditions:
(a) The Registration Statement shall have been declared
effective by the Commission, the Conversion Application and Holding Company
Application shall have been approved by the OTS and no stop order or other
action suspending the effectiveness of the Registration Statement shall have
been issued under the 1933 Act or proceedings therefor initiated or, to the
knowledge of the Alpena Parties, threatened by the Commission or any state
authority and no order or other action suspending the authorization for use of
the Prospectus or the consummation of the Conversion shall have been issued, or
proceedings therefor initiated or, to the knowledge of the Alpena Parties,
threatened by the OTS, the Commission, or any other governmental body.
(b) At the Closing Date, the Agent shall have received:
(1) The opinion, dated as of the Closing Date, of
Luse, Gorman, Pomerenk & Schick, P.C. and/or local counsel
acceptable to the Agent, in form and substance satisfactory to
the Agent and counsel for the Agent to the effect that:
(i) The Holding Company is a corporation
duly organized and validly existing and in good standing
under the laws of the State of Maryland, with corporate
power and authority to own its properties and to conduct
its business as described in the Prospectus and is duly
qualified to transact business and is in good standing
in Maryland and in each other jurisdiction in which the
conduct of its business requires such qualification,
except where the failure to qualify would have a
Material Adverse Effect.
19
(ii) The MHC is a mutual holding company duly
organized and validly existing and in good standing
under the laws of the United States, with corporate
power and authority to own its properties and to conduct
its business as described in the Prospectus and is duly
qualified to transact business and is in each other
jurisdiction in which the conduct of its business
requires such qualification, except where the failure to
qualify would have a Material Adverse Effect.
(iii) The Bank is a duly organized and validly
existing federally-chartered stock savings association,
and upon consummation of the Conversion, the Bank will
continue to be a validly existing federally-chartered
stock savings association, with full power and authority
to own its properties and to conduct its business as
described in the Prospectus; the activities of the Bank
as described in the Prospectus are permitted by federal
law and the rules, regulations and practices of the FDIC
and the OTS; the issuance and sale of the capital stock
of the Bank to the Holding Company in the Conversion has
been duly and validly authorized by all necessary
corporate action on the part of the Holding Company and
the Bank and, upon payment therefor in accordance with
the terms of the Plan, will be validly issued, fully
paid and nonassessable and will be owned of record and
beneficially by the Holding Company, free and clear of
any mortgage, pledge, lien, encumbrance, claim or
restriction. FSMC and ICA are validly existing
corporations in good standing in the jurisdiction of
incorporation and authorized under state and applicable
federal law to conduct the businesses in which they now
engage.
(iv) The activities of the Mid-Tier Holding
Company, the MHC and the Bank, as described in the
Prospectus, are permitted under applicable federal law.
To the best of such counsel's knowledge, each of the
MHC, the Mid-Tier Holding Company and the Bank has
obtained all licenses, permits, and other governmental
authorizations that are material for the conduct of its
business, and all such licenses, permits and other
governmental authorizations are in full force and
effect, and to the best of such counsel's knowledge the
Mid-Tier Holding Company and the Bank comply therewith
in all material respects.
(v) The Bank is a member of the FHLB of
Pittsburgh. The Bank is an insured depository
institution under the provisions of the Federal Deposit
Insurance Act, as amended, and to such counsel's
knowledge, no proceedings for the termination or
revocation of the federal deposit insurance of the Bank
are pending or threatened.
(vi) Upon consummation of the Conversion and
the contribution of the Foundation Shares to the
Foundation, (a) the authorized, issued and outstanding
capital stock of the Holding Company will be within the
range set forth in the Prospectus under the caption
"Capitalization," and no shares of Common Stock have
been or will be
20
issued and outstanding prior to the Closing Date (except
for the shares issued upon incorporation of the Holding
Company to facilitate the Conversion); (b) the Shares to
be subscribed for in the Offerings will have been duly
and validly authorized for issuance, and when issued and
delivered by the Holding Company pursuant to the Plan
against payment of the consideration calculated as set
forth in the Plan, will be fully paid and nonassessable;
(b) the Exchange Shares to be issued in the Exchange
will have been duly and validly authorized for issuance,
and when issued and delivered by the Holding Company
pursuant to the Plan, will be fully paid and
nonassessable; (c) the Foundation Shares to be issued to
the Foundation will have been duly and validly
authorized for issuance, and when issued and contributed
by the Holding Company pursuant to the Plan, will be
fully paid and nonassessable; and (d) the issuance of
the Shares, the Exchange Shares and the Foundation
Shares is not subject to preemptive rights under the
charter, certificate of incorporation or bylaws of the
Holding Company, or arising or outstanding by operation
of law or under any contract, indenture, agreement,
instrument or other document known to such counsel,
except for the subscription rights under the Plan.
(vii) The execution and delivery of this
Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Alpena
Parties; and this Agreement constitutes a valid, legal
and binding obligation of each of the Alpena Parties,
enforceable in accordance with its terms, except as
rights to indemnity and contribution thereunder may be
limited under applicable law, subject to the
qualification that (i) enforcement thereof may be
limited by bankruptcy, insolvency, moratorium,
reorganization or other laws (including the laws of
fraudulent conveyance) or judicial decisions affecting
the enforceability of creditors' rights generally, the
rights of creditors of savings banks or financial
institutions, the accounts of which are insured by the
FDIC, and (ii) enforcement thereof is subject to general
equity principles (regardless of whether such
enforceability is considered in a proceeding in equity
or at law) and to the effect of certain laws and
judicial decisions upon the availability of injunctive
relief and enforceability of equitable remedies,
including the remedies of specific performance and
self-help.
(viii) The Plan has been duly adopted by the
Board of Directors of the MHC in the manner required by
the Conversion Regulations and the MHC's charter and
bylaws.
(ix) The Conversion Application and the
Holding Company Application have been approved by the
OTS, and subject to the satisfaction of any conditions
set forth in such approvals, no further approval,
registration, authorization, consent or other order of
any federal or state regulatory agency, public board or
body is required in connection with the execution and
delivery of this Agreement, the offer, sale and
21
issuance of the Shares, the issuance of the Exchange
Shares, the contribution of the Foundation Shares and
the consummation of the Conversion, except as may be
required under the securities or "blue sky" laws of
various jurisdictions as to which no opinion need be
rendered.
(x) The Registration Statement has become
effective under the 1933 Act and to such counsel's
knowledge, no stop order suspending the effectiveness of
the Registration Statement has been issued, or
proceedings for that purpose have been instituted or
threatened by the Commission.
(xi) The terms and provisions of the shares
of Common Stock conform to the description thereof
contained in the Registration Statement and the
Prospectus, and the form of certificate to be used to
evidence the shares of Common Stock are in due and
proper form.
(xii) At the time the Conversion Application
was approved and as of the Closing Date, the Conversion
Application (as amended or supplemented), the Prospectus
(as amended or supplemented), the Members' Proxy
Statement (as amended or supplemented) and the
Stockholders' Proxy Statement (as amended or
supplemented), complied as to form in all material
respects with the requirements of the Conversion
Regulations and all applicable laws, rules and
regulations and decisions and orders of the OTS, except
as modified or waived in writing by the OTS (other than
the financial statements, notes to financial statements,
financial tables and other financial and statistical
data included therein and the appraisal valuation and
the business plan as to which counsel need express no
opinion). To such counsel's knowledge, no person has
sought to obtain regulatory or judicial review of the
final action of the OTS in approving the Applications.
(xiii) At the time that the Registration
Statement became effective and as of the Closing Date,
the Registration Statement, including the Prospectus (as
amended or supplemented) (other than the financial
statements, notes to financial statements, financial
tables or other financial and statistical data included
therein and the appraisal valuation and the business
plan as to which counsel need express no opinion),
complied as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act
Regulations.
(xiv) To such counsel's knowledge, there are
no legal or governmental proceedings pending, or
threatened (i) asserting the invalidity of this
Agreement or (ii) seeking to prevent the Conversion or
the offer, sale or issuance of the Shares or the
issuance of the Exchange Shares or the Foundation
Shares.
(xv) The information in the Prospectus under
the captions
22
"Regulation," "Taxation," "Restrictions on Acquisition
of Alpena Bancshares, Inc.," "Description of Capital
Stock of Alpena Bancshares, Inc.," and "The Conversion,"
to the extent that such information constitutes matters
of law, summaries of legal matters, documents or
proceedings, or legal conclusions, has been reviewed by
such counsel and is accurate in all material respects.
(xvi) None of the Alpena Parties are required
to be registered as an investment company under the
Investment Company Act of 1940.
(xvii) None of the Alpena Parties is in
violation of its articles of incorporation or its
charter, as the case may be, or its bylaws or, to the
best of such counsel's knowledge, any obligation,
agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note,
lease or other instrument filed as an exhibit to, or
incorporated by reference in, the Registration
Statement, which violation would have a Material Adverse
Effect. In addition, the execution and delivery of and
performance under this Agreement by the Alpena Parties,
the incurrence of the obligations set forth herein and
the consummation of the transactions contemplated herein
will not result in (i) any violation of the provisions
of the articles of incorporation or charter, as the case
may be, or the bylaws of any of the Alpena Parties, (ii)
any violation of any applicable law, act, regulation, or
to such counsel's knowledge, order or court order, writ,
injunction or decree, and (iii) any violation of any
obligation, agreement, covenant or condition contained
in any contract, indenture, mortgage, loan agreement,
note, lease or other instrument filed as an exhibit to,
or incorporated by reference in, the Registration
Statement or otherwise known by such counsel which
should have otherwise been filed as an exhibit to the
Registration Statement, which violation would have a
Material Adverse Effect.
(xviii) The Foundation has been duly
incorporated and is validly existing as a non-stock
corporation in good standing under the laws of the State
of Delaware with corporate power and authority to own,
lease and operate its properties and to conduct its
business as described in the Prospectus; the Foundation
is not a savings and loan holding company within the
mean of 12 C.F.R. Section 574.2(q) as a result of the
issuance of the Foundation Shares to it in accordance
with the terms of the Plan and in the amounts as
described in the Prospectus; no approvals are required
to establish the Foundation and to contribute the
Foundation Shares and cash amounts thereto as described
in the Prospectus other than those set forth in the OTS'
approval order; the Foundation Shares to be issued to
the Foundation in accordance with the Plan and as
described in the Prospectus will have been duly
authorized for issuance and, when issued and contributed
by the Company pursuant to the Plan, will be duly and
validly issued, fully paid and nonassessable.
23
The Agent's counsel may rely for purposes of its own opinion on the
opinion(s) of Luse, Gorman, Pomerenk & Schick, P.C. and/or local counsel, whose
opinion(s) shall expressly authorize such reliance. The opinion may be limited
to matters governed by the laws of the United States, the corporate laws of the
State of Maryland, the non-stock corporation law of the State of Delaware and,
in the case of local counsel, the State of Michigan. In rendering such opinion,
such counsel may rely (A) as to matters involving the application of laws of any
jurisdiction other than the United States, to the extent such counsel deems
proper and specified in such opinion, upon the opinion of counsel reasonably
acceptable to the Agent, as long as such other opinion indicates that the Agent
may rely on the opinion, and (B) as to matters of fact, to the extent such
counsel deems proper, on certificates of responsible officers of the Alpena
Parties and public officials; provided copies of any such opinion(s) or
certificates of public officials are delivered to Agent together with the
opinion to be rendered hereunder by special counsel to the Alpena Parties. In
rendering such opinion, all statements contained therein "to our knowledge" or
"to our attention" or "known to us" means the actual knowledge, following
reasonable investigation, of the attorneys who have worked on the transactions
contemplated herein and, in the case of the opinion rendered in Section
10(b)(1)(xiii), including a docket search in the counties in which the Alpena
Parties are located. The opinion of such counsel for the Alpena Parties shall
state that it has no reason to believe that the Agent is not reasonably
justified in relying thereon.
(2) The letter of Luse, Gorman, Pomerenk & Schick,
P.C. shall also state that during the preparation of the
Registration Statement and the Prospectus, Luse, Gorman,
Pomerenk & Schick, P.C. participated in conferences with certain
officers of and other representatives of the Alpena Parties,
counsel to the Agent, representatives of the independent public
accountants for the Alpena Parties and representatives of the
Agent at which the contents of the Registration Statement and
the Prospectus and related matters were discussed and has
considered the matters required to be stated therein and the
statements contained therein and, although (without limiting the
opinions provided pursuant to Section 10(b)(1)), Luse, Gorman,
Pomerenk & Schick, P.C. has not independently verified the
accuracy, completeness or fairness of the statements contained
in the Registration Statement and Prospectus, on the basis of
the foregoing, nothing has come to the attention of Luse,
Gorman, Pomerenk & Schick, P.C. that caused Luse, Gorman,
Pomerenk & Schick, P.C. to believe that the Registration
Statement at the time it was declared effective by the
Commission and as of the Closing Date, contained or contains any
untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make
the statements therein in light of the circumstances under which
they were made not misleading (it being understood that counsel
need express no comment or opinion with respect to statements,
notes to financial statements, schedules and other financial and
statistical data included, or statistical or appraisal
methodology employed, in the Registration Statement or
Prospectus, the appraisal valuation or the business plan).
(3) The favorable opinion, dated as of the Closing
Date, of Muldoon Murphy Faucette & Aguggia LLP, counsel for the
Agent, with respect to such matters as the Agent may reasonably
require; such opinion may rely, as to matters
24
of fact, upon certificates of officers and directors of the
Alpena Parties delivered pursuant hereto or as such counsel may
reasonably request.
(4) A Blue Sky Memorandum from Luse, Gorman,
Pomerenk & Schick, P.C. relating to the offering, including
Agent's participation therein, and should be furnished to Agent
with a copy thereof addressed to Agent or upon which Luse,
Gorman, Pomerenk & Schick, P.C. shall state Agent may rely. The
Blue Sky Memorandum will relate to the necessity of obtaining or
confirming exemptions, qualifications or the registration of the
common stock under applicable state securities law.
(c) Concurrently with the execution of this Agreement, the
Agent shall receive a letter from Plante & Moran, PLLC, dated the date hereof
and addressed to the Agent, such letter (i) confirming that Plante & Moran, PLLC
is a firm of independent public accountants within the meaning of the 1933 Act,
the 1933 Act Regulations and the PCAOB Regulations, and stating in effect that
in Plante & Moran, PLLC's opinion the consolidated financial statements of the
Mid-Tier Holding Company included in the Prospectus comply as to form in all
material respects with generally accepted accounting principles, the 1933 Act
and the 1933 Act Regulations, and the 1934 Act and the 1934 Act Regulations;
(ii) stating in effect that, on the basis of certain agreed upon procedures (but
not an audit examination in accordance with the auditing standards of the PCAOB)
consisting of a review (in accordance with Statement of Auditing Standards No.
100, Interim Financial Information) of the unaudited consolidated interim
financial statements of the Mid-Tier Holding Company prepared by the Alpena
Parties as of and for the interim period ended September 30, 2004 and quarter
ended December 31, 2004, a reading of the minutes of the meetings of the Board
of Directors, Executive Committee, Audit Committee and stockholders of the
Mid-Tier Holding Company and the Bank and consultations with officers of the
Mid-Tier Holding Company and the Bank responsible for financial and accounting
matters, nothing came to their attention which caused them to believe that: (A)
such unaudited consolidated financial statements and any "Recent Developments"
information in the Prospectus are not in conformity with generally accepted
accounting principles applied on a basis substantially consistent with that of
the audited financial statements included in the Prospectus; or (B) during the
period from the date of the recent development financial information included in
the Prospectus to a specified date not more than five (5) business days prior to
the date of the Prospectus, there was any material increase in borrowings
(defined as securities sold under agreements to repurchase and any other form of
debt other than deposits), or non-performing loans, special mention loans or
decrease in the deposits or loan allowance, total assets, stockholders' equity
or there was any change in common stock outstanding (other than for stock option
plans) at the date of such letter as compared with amounts shown in the
September 30, 2004 unaudited statement of condition included in the Prospectus
or there was any decrease in net income, non-interest income, provision for loan
losses or net income after provision or increase in non-interest expense of the
Bank for the period commencing immediately after the recent development date and
ended not more than five (5) business days prior to the date of the Prospectus
as compared to the corresponding period in the preceding year; and (iii) stating
that, in addition to the audit examination referred to in its opinion included
in the Prospectus and the performance of the procedures referred to in clause
(ii) of this subsection (c), they have compared with the general accounting
records of the Mid-Tier Holding Company, which are subject to the internal
controls of the accounting system of the Bank and other data
25
prepared by the Alpena Parties from accounting records, to the extent specified
in such letter, such amounts and/or percentages set forth in the Prospectus as
the Agent may reasonably request, and they have found such amounts and
percentages to be in agreement therewith (subject to rounding).
(d) At the Closing Date, the Agent shall receive a letter
from Plante & Moran, PLLC dated the Closing Date, addressed to the Agent,
confirming the statements made by its letter delivered by it pursuant to
subsection (c) of this Section 10, the "specified date" referred to in clause
(ii)(B) thereof to be a date specified in such letter, which shall not be more
than three (3) business days prior to the Closing Date.
(e) At the Closing Date, counsel to the Agent shall have
been furnished with such documents and opinions as counsel for the Agent may
require for the purpose of enabling them to advise the Agent with respect to the
issuance and sale of the Common Stock as herein contemplated and related
proceedings, or in order to evidence the accuracy of any of the representations
and warranties, or the fulfillment of any of the conditions herein contained.
(f) At the Closing Date, the Agent shall receive a
certificate of the Chief Executive Officer and Chief Financial Officer of each
of the Alpena Parties, dated the Closing Date, to the effect that: (i) they have
examined the Registration Statement and at the time the Registration Statement
became authorized for final use, the Prospectus did not contain an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein not misleading; (ii) there has not been, since
the respective dates as of which information is given in the Registration
Statement, any Material Adverse Effect otherwise than as set forth or
contemplated in the Registration Statement; (iii) the representations and
warranties contained in Section 6 of this Agreement are true and correct with
the same force and effect as though made at and as of the Closing Date; (iv) the
Alpena Parties have complied in all material respects with all material
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to the Closing Date including the conditions contained in this
Section 10; (v) no stop order has been issued or, to the best of their
knowledge, is threatened, by the Commission or any other governmental body; (vi)
no order suspending the Offering, the Conversion, the acquisition of all of the
shares of the Bank by the Holding Company, the transactions required under the
Plan to consummate the conversion or the effectiveness of the Prospectus has
been issued and to the best of their knowledge, no proceedings for any such
purpose have been initiated or threatened by the OTS, the Commission, or any
other federal or state authority; (vii) to the best of their knowledge, no
person has sought to obtain regulatory or judicial review of the action of the
OTS in approving the Plan or to enjoin the Conversion, and (viii) that the
officers and directors of the Alpena Parties have agreed to abide by the
restrictions on the exercise of options and sale of Common Stock set forth in
Section 8(aa).
(g) At the Closing Date, the Agent shall receive a letter
from RP Financial, LC., dated as of the Closing Date, (i) confirming that said
firm is independent of the Alpena Parties and is experienced and expert in the
area of corporate appraisals, (ii) stating in effect that the Appraisal complies
in all material respects with the applicable requirements of the Conversion
Regulations, and (iii) further stating that its opinion of the aggregate pro
forma market value of the Alpena Parties, as converted, expressed in the
appraisal as most recently updated, remains in effect.
26
(h) None of the Alpena Parties shall have sustained, since
the date of the latest financial statements included in the Registration
Statement and Prospectus, any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth in the Registration Statement and the
Prospectus, and since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there shall not have been any
Material Adverse Effect, is in the Agent's reasonable judgment sufficiently
material and adverse as to make it impracticable or inadvisable to proceed with
the Offering or the delivery of the Shares on the terms and in the manner
contemplated in the Prospectus.
(i) Prior to and at the Closing Date, in the reasonable
opinion of the Agent there shall have been no material adverse change in the
financial condition or in the earnings, business affairs or prospects of any of
the Alpena Parties independently, or the Alpena Parties taken as a whole, from
and as of the latest dates as of which such condition is set forth in the
Prospectus, except as referred to therein.
(j) At or prior to the Closing Date, the Agent shall receive
(i) a copy of the Conversion Application and a copy of the letters from the OTS
approving the Conversion Application and authorizing the Prospectus, Members'
Proxy Statement and Stockholders' Proxy Statement for use, (ii) a copy of the
order from the Commission declaring the Registration Statement effective, (iii)
a certified copy of the certificate of incorporation of the Holding Company,
(iv) a copy of the letter from the OTS approving the Holding Company
Application, (v) a certificate from the FDIC evidencing the Bank's insurance of
accounts, and (vi) any other documents that Agent shall reasonably request.
(k) Subsequent to the date hereof, there shall not have
occurred any of the following: (i) a suspension or limitation in trading in
securities generally on the New York Stock Exchange or American Stock Exchange
or in the over-the-counter market, or quotations halted generally on the Nasdaq
Stock Market, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices for securities have been required by either of such
exchanges or the NASD or by order of the Commission or any other governmental
authority other than temporary trading halts or limitation (A) imposed as a
result of intraday changes in the Dow Jones Industrial Average, (B) lasting no
longer than until the regularly scheduled commencement of trading on the next
succeeding business-day and (C) which when combined with all other such halts
occurring during the previous five (5) business days, total less than two (2);
(ii) a general moratorium on the operations of federally-insured financial
institutions or a general moratorium on the withdrawal of deposits from
commercial banks or other federally-insured financial institutions declared by
either federal or state authorities; or (iii) there shall not have occurred any
material adverse change in the financial markets in the United States or
elsewhere or any outbreak of hostilities or escalation thereof or other calamity
or crisis, including, without limitation, terrorist activities after the date
hereof, the effect of which, in the judgment of the Agent, is so material and
adverse as to make it impracticable to market the Shares or to enforce
contracts, including subscriptions or purchase orders, for the sale of the
Shares.
27
(l) All such opinions, certificates, letters and documents
will be in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to the Agent and to counsel for the Agent.
Any certificate signed by an officer of the Mid-Tier Holding Company, the
Holding Company or the Bank and delivered to the Agent or to counsel for the
Agent shall be deemed a representation and warranty by the Mid-Tier Holding
Company, the Holding Company or the Bank, as the case may be, to the Agent as to
the statements made therein.
SECTION 11. INDEMNIFICATION.
(a) The Alpena Parties jointly and severally agree to
indemnify and hold harmless the Agent, its officers, directors, agents,
attorneys, servants and employees and each person, if any, who controls the
Agent within the meaning of Section 15 of the 1933 Act or Section 20(a) of the
1934 Act, against any and all loss, liability, claim, damage or expense
whatsoever (including but not limited to settlement expenses, subject to the
limitation set forth in the last sentence of subsection (c) below), joint or
several, that the Agent or any of such officers, directors, agents, attorneys,
servants, employees and controlling Persons (collectively, the "Related
Persons") may suffer or to which the Agent or the Related Persons may become
subject under all applicable federal and state laws or otherwise, and to
promptly reimburse the Agent and any Related Persons upon written demand for any
reasonable expenses (including reasonable fees and disbursements of counsel and
Agent's time spent according to normal hourly rates) incurred by the Agent or
any Related Persons in connection with investigating, preparing or defending any
actions, proceedings or claims (whether commenced or threatened) to the extent
such losses, claims, damages, liabilities or actions: (i) arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement (or any amendment or supplement
thereto), the Prospectus (or any amendment or supplement thereto), the
Applications, or other instrument or document of the Alpena Parties or based
upon written information supplied by any of the Alpena Parties filed in any
state or jurisdiction to register or qualify any or all of the Shares under the
securities laws thereof (collectively, the "Blue Sky Applications"), or any
application or other document, advertisement, or communication ("Sales
Information") prepared, made or executed by or on behalf of any of the Alpena
Parties with its consent or based upon information furnished by or on behalf of
any of the Alpena Parties, in order to qualify or register the Shares under the
securities laws thereof, (ii) arise out of or are based upon the omission or
alleged omission to state in any of the foregoing documents or information, a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; (iii) arise from any theory of liability whatsoever relating to or
arising from or based upon the Registration Statement (or any amendment or
supplement thereto), the Prospectus (or any amendment or supplement thereto),
the Applications, any Blue Sky Applications or Sales Information or other
documentation distributed in connection with the Offerings; or (iv) result from
any claims made with respect to the accuracy, reliability and completeness of
the records of Eligible Account Holders and Supplemental Eligible Account
Holders or Other Members or for any denial or reduction of a subscription or
order to purchase Common Stock, whether as a result of a properly calculated
allocation pursuant to the Plan or otherwise, based upon such records; provided,
however, that no indemnification is required under this subsection (a) to the
extent such losses, claims, damages, liabilities or actions arise out of or are
based upon any untrue material statements or alleged untrue material statements
in, or material omission or alleged
28
material omission from, the Registration Statement (or any amendment or
supplement thereto) or the Prospectus (or any amendment or supplement thereto),
the Applications, the Blue Sky Applications or Sales Information or other
documentation distributed in connection with the Conversion made in reliance
upon and in conformity with information furnished to the Alpena Parties by the
Agent or its representatives (including counsel) with respect to the Agent
expressly for use in the Registration Statement (or any amendment or supplement
thereto) or Prospectus (or any amendment or supplement thereto) under the
caption "The Conversion -- Plan of Distribution; Selling Agent Compensation"
except for information derived from the Prospectus. Provided further, that the
Alpena Parties will not be responsible for any loss, liability, claim, damage or
expense to the extent a court of competent jurisdiction finds they result
primarily from material oral misstatements by the Agent to a purchaser of Shares
which are not based upon information in the Registration Statement or
Prospectus, or from actions taken or omitted to be taken by the Agent in bad
faith or from the Agent's gross negligence or willful misconduct and the Agent
agrees to repay to the Alpena Parties any amounts advanced to it by the Alpena
Parties in connection with matters as to which it is found by a court of
competent jurisdiction not to be entitled to indemnification hereunder.
(b) The Agent agrees to indemnify and hold harmless the
Alpena Parties, their directors and officers, agents, servants and employees and
each person, if any, who controls any of the Alpena Parties within the meaning
of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act against any and
all loss, liability, claim, damage or expense whatsoever (including but not
limited to settlement expenses, subject to the limitation set forth in the last
sentence of subsection (c) below), joint or several, which they, or any of them,
may suffer or to which they, or any of them, may become subject under all
applicable federal and state laws or otherwise, and to promptly reimburse the
Alpena Parties and any such persons upon written demand for any reasonable
expenses (including out-of-pocket expenses, fees and disbursements of counsel)
incurred by them in connection with investigating, preparing or defending any
actions, proceedings or claims (whether commenced or threatened) to the extent
such losses, claims, damages, liabilities or actions arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement (or any amendment or supplement
thereto), the Applications or any Blue Sky Applications or Sales Information or
are based upon the omission or alleged omission to state in any of the foregoing
documents a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the Agent's obligations under this
Section 11(b) shall exist only if and only to the extent that such untrue
statement or alleged untrue statement was made in, or such material fact or
alleged material fact was omitted from, the Applications, Registration Statement
(or any amendment or supplement thereto) or the Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with information
furnished to the Alpena Parties by the Agent or its representatives (including
counsel) expressly for use under the caption "The Conversion - Plan of
Distribution; Selling Agent Compensation."
(c) Each indemnified party shall give prompt written notice
to each indemnifying party of any action, proceeding, claim (whether commenced
or threatened), or suit instituted against it in respect of which indemnity may
be sought hereunder, but failure to so notify an indemnifying party shall not
relieve it from any liability which it may have on account of this Section 11,
Section 12 or otherwise, unless the failure to give such notice promptly results
29
in material prejudice to the indemnifying party. An indemnifying party may
participate at its own expense in the defense of such action. In addition, if it
so elects within a reasonable time after receipt of such notice, an indemnifying
party, jointly with any other indemnifying parties receiving such notice, may
assume the defense of such action with counsel chosen by it reasonably
acceptable to the indemnified parties that are defendants in such action, unless
such indemnified parties reasonably object to such assumption on the ground that
there may be legal defenses available to them that are different from or in
addition to those available to such indemnifying party. If an indemnifying party
assumes the defense of such action, the indemnifying parties shall not be liable
for any fees and expenses of counsel for the indemnified parties incurred
thereafter in connection with such action, proceeding or claim, other than
reasonable costs of investigation. In no event shall the indemnifying parties be
liable for the fees and expenses of more than one separate firm of attorneys
(unless an indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from or in
addition to those of other indemnified parties) for all indemnified parties in
connection with any one action, proceeding or claim or separate but similar or
related actions, proceedings or claims in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party, shall be
liable for any settlement of any action, proceeding or suit, which settlement is
effected without its prior written consent. The Alpena Parties shall not,
without the written consent of the Agent, settle or compromise any claim against
them based upon circumstances giving rise to an indemnification claim against
the Alpena Parties hereunder unless such settlement or compromise provides that
the Agent and the other indemnified parties shall be unconditionally and
irrevocably released from all liability in respect to such claim.
(d) The agreements contained in this Section 11 and in
Section 12 hereof and the representations and warranties of the Alpena Parties
set forth in this Agreement shall remain operative and in full force and effect
regardless of (i) any investigation made by or on behalf of the Agent or its
officers, directors, controlling persons, agents, attorneys, servants or
employees or by or on behalf of any of the Alpena Parties or any officers,
directors, controlling persons, agents, attorneys , servants or employees of any
of the Alpena Parties; (ii) delivery of and payment hereunder for the Shares; or
(iii) any termination of this Agreement. Notwithstanding the prior sentence,
Sections 11 and 12 hereof are subject to and limited by Section 23A of the
Federal Reserve Act, as applicable.
SECTION 12. CONTRIBUTION.
(a) In order to provide for just and equitable contribution
in circumstances in which the indemnification provided for in Section 11 is due
in accordance with its terms but is for any found in a final judgment by a court
to be unavailable from the Alpena Parties or the Agent, the Alpena Parties and
the Agent shall contribute to the aggregate losses, claims, damages and
liabilities of the nature contemplated by such indemnification (including any
investigation, legal and other expenses incurred in connection therewith and any
amount paid in settlement of any action, suit, or proceeding of any claims
asserted, but after deducting any contribution received by the Alpena Parties or
the Agent from persons other than the other party thereto, who may also be
liable for contribution) in such proportion so that (i) the Agent is responsible
for that portion represented by the percentage that the fees paid to the Agent
pursuant to Section 4 of this Agreement (not including expenses) ("Agent's
Fees"), less any portion of Agent's Fees paid by
30
Agent to Assisting Brokers, bear to the total proceeds received by the Alpena
Parties from the sale of the Shares in the Offering, net of all expenses of the
Offering, except Agent's fees and (ii) the Alpena Parties shall be responsible
for the balance. If, however, the allocation provided above is not permitted by
applicable law or if the indemnified party failed to give the notice required
under Section 11 above, then each indemnifying party shall contribute to such
amount paid or payable to such indemnified party in such proportion as is
appropriate to reflect not only such relative fault of the Alpena Parties on the
one hand and the Agent on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions, proceedings or claims in respect thereof), but also the relative
benefits received by the Alpena Parties on the one hand and the Agent on the
other from the Offering, as well as any other relevant equitable considerations.
The relative benefits received by the Alpena Parties on the one hand and the
Agent on the other hand shall be deemed to be in the same proportion as the
total proceeds from the Offering, except Agent's fees, net of all expenses of
the Offering, received by the Alpena Parties bear, with respect to the Agent, to
the total fees (not including expenses) received by the Agent less the portion
of such fees paid by the Agent to Assisting Brokers. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Alpena Parties on the one
hand or the Agent on the other and the parties relative intent, good faith,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Alpena Parties and the Agent agree that it would not
be just and equitable if contribution pursuant to this Section 12 were
determined by pro-rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to above in this
Section 12. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages or liabilities (or action, proceedings or claims in
respect thereof) referred to above in this Section 12 shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action, proceeding or claim.
It is expressly agreed that the Agent shall not be liable for any loss,
liability, claim, damage or expense or be required to contribute any amount
which in the aggregate exceeds the amount paid (excluding reimbursable expenses)
to the Agent under this Agreement less the portion of such fees paid by the
Agent to Assisting Brokers. It is understood and agreed that the above-stated
limitation on the Agent's liability is essential to the Agent and that the Agent
would not have entered into this Agreement if such limitation had not been
agreed to by the parties to this Agreement. No person found guilty of any
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution with respect to any loss or liability
arising from such misrepresentation from any person who was not found guilty of
such fraudulent misrepresentation. The duties, obligations and liabilities of
the Alpena Parties and the Agent under this Section 12 and under Section 11
shall be in addition to any duties, obligations and liabilities which the Alpena
Parties and the Agent may otherwise have. For purposes of this Section 12, each
of the Agent's and the Alpena Parties' officers, directors and, controlling
persons within the meaning of the 1933 Act and the 1934 Act shall have the same
rights to contribution as the Alpena Parties and the Agent. Any party entitled
to contribution, promptly after receipt of notice of commencement of any action,
suit, claim or proceeding against such party in respect of which a claim for
contribution may be made against another party under this Section 12, will
notify such party from whom contribution may be sought, but the omission to so
31
notify such party shall not relieve the party from whom contribution may be
sought from any other obligation it may have hereunder or otherwise than under
this Section 12.
SECTION 13. SURVIVAL.
(a) All representations, warranties and indemnities and
other statements contained in this Agreement (and in Paragraph 11 of the Letter
Agreement), or contained in certificates of officers of the Alpena Parties or
the Agent submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any termination or cancellation of this Agreement or
any investigation made by or on behalf of the Agent or its controlling persons,
or by or on behalf of the Alpena Parties and shall survive the issuance of the
Shares, and any legal representative, successor or assign of the Agent, any of
the Alpena Parties, and any indemnified person shall be entitled to the benefit
of the respective agreements, indemnities, warranties and representations.
(b) The provisions of Paragraph 9 of the Letter Agreement,
"Availability of `Stars' Program," shall survive the issuance of the Shares (but
not any termination or cancellation of this Agreement) for a period of five (5)
years, and any legal representative, successor or assign of the Agent, and any
of the Alpena Parties shall be entitled during such period to the benefit of the
agreements contained therein.
SECTION 14. TERMINATION. Agent may terminate this Agreement by
giving the notice indicated below in this Section at any time after this
Agreement becomes effective as follows:
(a) In the event (i) the Plan is abandoned or terminated by
the Holding Company; (ii) the Holding Company fails to consummate the sale of
the minimum number of Shares prior to December 31, 2005 in accordance with the
provisions of the Plan or as required by the Conversion Regulations and
applicable law; (iii) the Agent terminates this Agreement because there has been
a material adverse change in the financial condition or operations of the
Mid-Tier Holding Company since June 30, 2004; or (iv) immediately prior to
commencement of the Offering, the Agent terminates this relationship because in
its opinion, which shall have been formed in good faith after reasonable
determination and consideration of all relevant factors, there has been a
failure to satisfactorily disclose all relevant information in the Prospectus or
the existence of market conditions which might render the sale of the Shares
inadvisable, this Agreement shall terminate and the Alpena Parties shall refund
to each person who has subscribed for or ordered any of the Shares the full
amount which it may have received from such person, together with interest in
accordance with Section 3 hereof and any such termination shall be without
liability of any party to any other party except as otherwise provided in
Sections 3, 4, 9, 11 and 12 hereof and Paragraph 11 of the Letter Agreement,
"Indemnification."
(b) If any of the conditions specified in Section 10 hereof
shall not have been fulfilled when and as required by this Agreement, or by
December 31, 2005, or waived in writing by the Agent, this Agreement and all of
the Agent's obligations hereunder may be canceled by the Agent by notifying the
Bank of such cancellation in writing at any time at or prior to the Closing
Date, and any such cancellation shall be without liability of any party to any
other party except as otherwise provided in Sections 3, 4, 9, 11 and 12 hereof
and Paragraph 11 of the Letter Agreement, "Indemnification."
32
(c) If Agent elects to terminate this Agreement as provided
in this Section, the Alpena Parties shall be notified by the Agent as provided
in Section 15 hereof.
(d) If this Agreement is terminated in accordance with the
provisions of this Agreement, the Agent shall retain the advisory and management
fee paid to it pursuant to Section 4 and the Alpena Parties shall reimburse the
Agent for any of its other actual, accountable, reasonable out-of-pocket
expenses pursuant to Section 9, including without limitation, communication,
legal and travel expenses.
SECTION 15. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to Agent shall be
directed to Ryan Beck & Co., Inc., 18 Columbia Turnpike, Florham Park, New
Jersey 07932, Attention: Michael A. Schechter, Vice President (with a copy to
Muldoon Murphy Faucette & Aguggia LLP, 5101 Wisconsin Avenue, N.W., Washington,
D.C. 20016, Attention: Paul M. Aguggia, Esq.); notices to the Alpena Parties
shall be directed to Alpena Bancshares, Inc., 100 South Second Avenue, Alpena,
Michigan 49707, Attention: Martin A. Thomson, President and Chief Executive
Officer (with a copy to Luse, Gorman, Pomerenk & Schick, P.C., 5535 Wisconsin
Avenue, N.W., Washington, D.C. 20005, Attention: Robert B. Pomerenk, Esq.)
SECTION 16. PARTIES. This Agreement shall inure to the benefit of
and be binding upon the Agent and the Alpena Parties, and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
parties hereto and their respective successors and the controlling persons and
officers and directors referred to in Sections 11 and 12 and their heirs and
legal representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provisions herein contained. It is understood
and agreed that this Agreement is the exclusive agreement among the parties,
supersedes any prior Agreement among the parties and may not be varied except by
a writing signed by all parties, except for Paragraphs 4, 10, 11 and 17 of the
Letter Agreement, which are not hereby superseded.
SECTION 17. PARTIAL INVALIDITY. In the event that any term,
provision or covenant herein or the application thereof to any circumstances or
situation shall be invalid or unenforceable, in whole or in part, the remainder
hereof and the application of said term, provision or covenant to any other
circumstance or situation shall not be affected thereby, and each term,
provision or covenant herein shall be valid and enforceable to the full extent
permitted by law.
SECTION 18. CONSTRUCTION AND WAIVER OF JURY TRIAL. This Agreement
shall be construed in accordance with the laws of the State of New Jersey. EACH
OF THE ALPENA PARTIES AND THE AGENT WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) RELATED TO OR ARISING OUT OF THIS AGREEMENT.
[THE REMAINDER OF THIS PAGE IS LEFT BLANK INTENTIONALLY]
33
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon this instrument
along with all counterparts will become a binding agreement between you and us
in accordance with its terms.
Very truly yours,
ALPENA BANCSHARES, MHC
By:
---------------------------------------------
Martin A. Thomson
President and Chief Executive Officer
ALPENA BANCSHARES, INC.
By:
---------------------------------------------
Martin A. Thomson
President and Chief Executive Officer
FIRST FEDERAL OF NOTHERN MICHIGAN BANCORP, INC.
(in organization)
By:
---------------------------------------------
Martin A. Thomson
President and Chief Executive Officer
FIRST FEDERAL OF NORTHERN MICHIGAN
By:
---------------------------------------------
Martin A. Thomson
President and Chief Executive Officer
The foregoing Agency Agreement is
hereby confirmed and accepted as
of the date first set forth above.
RYAN BECK & CO., INC.
By:
------------------------------
Michael A. Schechter
Vice President
34
EXHIBIT A
LETTER AGREEMENT
EXHIBIT B
SELECTED DEALERS AGREEMENT
_____________, 2004
Ryan Beck & Co., Inc.
220 South Orange Avenue
Livingston, New Jersey 07039
Gentlemen:
(1) GENERAL. We understand that Ryan Beck & Co., Inc. ("Ryan Beck")
is entering into this Agreement with us and other firms who may be offered the
right to purchase as principal a portion of securities being distributed to the
public. The terms and conditions of this Agreement shall be applicable to any
public offering of securities ("Securities") pursuant to a registration
statement filed under the Securities Act of 1933 (the "Securities Act") or
exempt from registration thereunder (other than a public offering of Securities
effected wholly outside the United States of America), wherein Ryan Beck (acting
for its own account or for the account of any underwriting or similar group or
syndicate) is responsible for managing or otherwise implementing the sale of the
Securities to selected dealers ("Selected Dealers") and has informed us that
such terms and conditions shall be applicable. Any such offering of Securities
to us as a Selected Dealer is hereinafter called an "Offering." In the case of
any Offering in which you are acting for the account of any underwriting or
similar group or syndicate ("Underwriters"), the terms and conditions of this
Agreement shall be for the benefit of, and binding upon, such Underwriters,
including, in the case of any Offering in which you are acting with others as
representatives of Underwriters, such other representatives. The term
"preliminary prospectus" means any preliminary prospectus relating to an
Offering of Securities or any preliminary prospectus supplement together with a
prospectus relating to an Offering of Securities; the term "Prospectus" means
the prospectus, together with the final prospectus supplement, if any, relating
to an Offering of Securities, filed pursuant to Rule 424(b) or Rule 424(c) under
the Securities Act or any successor or similar rules.
This Agreement constitutes the entire agreement of the parties
with regard to the subject matter hereof and supersedes any prior oral or
written agreements or understanding between the parties hereto or their
predecessors with respect to the subject matter hereof.
(2) CONDITIONS OF OFFERING, ACCEPTANCE AND PURCHASE. Any Offering
will be subject to delivery of the Securities and their acceptance by you and
any other Underwriters, may be subject to the approval of all legal matters by
counsel and the satisfaction of other conditions, and may be made on the basis
of reservation of Securities or an allotment against subscription. You will
advise us by telegram, telex, facsimile, e-mail, or other form of written
communication ("Written Communication") of the particular method and
supplementary terms and conditions (including, without limitation, the
information as to prices and offering date referred to in Section 3(c)) of any
Offering in which we are invited to participate. To the extent such
supplementary terms and conditions are inconsistent with any provision herein,
such terms and conditions shall supersede any such provision. Unless otherwise
indicated in any such Written
Communication, acceptances and other communications by us with respect to any
Offering should be sent to Ryan Beck. You may close the subscription books at
any time in your sole discretion without notice, and you reserve the right to
reject any acceptance in whole or in part. Payment for Securities purchased by
us is to be made at such office as you may designate, at the public offering
price, or, if you shall so advise us, at such price less the concession to
dealers or at the price set forth or indicated in a Written Communication, on
such date as you shall determine, on one day's prior notice to us, by wire
transfer to a Ryan Beck account, against delivery of certificates or other forms
evidencing such Securities. If payment is made for Securities purchased by us at
the public offering price, the concession to which we shall be entitled will be
paid to us upon termination of the provisions of Section 3(c) with respect to
such Securities.
Unless we promptly give you written instructions otherwise, if
transactions in the Securities may be settled through the facilities of The
Depository Trust Company, delivery of Securities purchased by us will be made
through such facilities if we are a member, or if we are not a member,
settlement may be made through our ordinary correspondent who is a member.
(3) REPRESENTATIONS, WARRANTIES, AND AGREEMENTS.
(a) REGISTERED OFFERINGS. In the case of any Offering of Securities
that are registered under the Securities Act ("Registered Offering"), you shall
provide us with such number of copies of each preliminary prospectus, the
Prospectus and any supplement thereto relating to each Registered Offering as we
may reasonably request for the purposes contemplated by the Securities Act and
the Securities Exchange Act of 1934 (the "Exchange Act") and the applicable
Rules and regulations of the Securities and Exchange Commission thereunder. We
represent that we are familiar with Rule 15c2-8 under the Exchange Act relating
to the distribution of preliminary and final prospectuses and agree that we will
comply therewith. We agree to keep an accurate record of our distribution
(including dates, number of copies, and persons to whom sent) of copies of the
Prospectus or any preliminary prospectus (or any amendment or supplement to any
thereof), and promptly upon request by you, to bring all subsequent changes to
the attention of anyone to whom such material shall have been furnished. We
agree to furnish to persons who receive a confirmation of sale a copy of the
Prospectus filed pursuant to Rule 424(b) or Rule 424(c) under the Securities
Act. We agree that in purchasing Securities in a Registered Offering we will
rely upon no statements whatsoever, written or oral, other than the statements
in the Prospectus delivered to us by you. We will not be authorized by the
issuer or other seller of Securities offered pursuant to a Prospectus or by any
Underwriter to give any information or to make any representation not contained
in the Prospectus in connection with the sale of such Securities.
(b) OFFERINGS PURSUANT TO OFFERING CIRCULAR. In the case of any
Offering of Securities, other than a Registered Offering, which is made pursuant
to an offering circular or other document comparable to a prospectus in a
Registered Offering, including, without limitation, an Offering of "exempted
securities" as defined in Section 3(a)(2) of the Securities Act (an "Exempted
Securities Offering"), you shall provide us with such number of copies of each
preliminary offering circular, the final offering circular and any supplement
thereto relating to each Offering as we may reasonably request. We agree that we
will comply with the applicable federal and state laws, and the applicable rules
and regulations of any regulatory body
2
promulgated thereunder, governing the use and distribution of offering circulars
by brokers or dealers. We agree that in purchasing Securities pursuant to an
offering circular we will rely upon no statements whatsoever, written or oral,
other than the statements in the final offering circular delivered to us by you.
We will not be authorized by the issuer or other seller of Securities offered
pursuant to an offering circular or by any Underwriter to give any information
or to make any representation not contained in the offering circular in
connection with the sale of such Securities.
(c) OFFER AND SALE TO THE PUBLIC. With respect to any Offering of
Securities, you will inform us by a Written Communication of the public offering
price, the selling concession, the reallowance (if any) to dealers, and the time
when we may commence selling Securities to the public. After such public
offering has commenced, you may change the public offering price, the selling
concession, and the reallowance to dealers. With respect to each Offering of
Securities, until the provisions of this Section 3(c) shall be terminated
pursuant to Section 5, we agree to offer Securities to the public only at the
public offering price, except that if a reallowance is in effect, a reallowance
from the public offering price not in excess of such reallowance may be allowed
as consideration for services rendered in distribution to dealers who are
actually engaged in the investment banking or securities business, who execute
the written agreement prescribed by Rule 2740 of the Rules of Conduct of the
National Association of Securities Dealers, Inc. (the "NASD") and who are either
members in good standing of the NASD or foreign brokers or dealers not eligible
for membership in the NASD who represent to us that they will promptly reoffer
such Securities at the public offering price and will abide by the conditions
with respect to foreign brokers and dealers set forth in Section 3(f) hereof.
(d) STABILIZATION AND OVERALLOTMENT. You may, with respect to any
Offering, be authorized to over-allot in arranging sales to Selected Dealers, to
purchase and sell Securities, any other securities of the issuer of the
Securities of the same class and series and any other securities of such issuer
that you may designate for long or short account, and to stabilize or maintain
the market price of the Securities. We agree not to purchase and sell Securities
for which an order from a client has not been received without your consent in
each instance. We agree to advise you from time to time upon request, prior to
the termination of the provisions of Section 3(c) with respect to any Offering,
of the amount of Securities purchased by us hereunder remaining unsold and we
will, upon your request, sell to you, for the accounts of the Underwriters, such
amount of Securities as you may designate, at the public offering price thereof
less an amount to be determined by you not in excess of the concession to
dealers. In the event that prior to the later of (i) the termination of the
provisions of Section 3(c) with respect to any Offering, or (ii) the covering by
you of any short position created by you in connection with such Offering for
your account or the account of one or more Underwriters, you purchase or
contract to purchase for the account of any of the Underwriters, in the open
market or otherwise, any Securities theretofore delivered to us, you reserve the
right to withhold the above-mentioned concession to dealers on such Securities
if sold to us at the public offering price, or if such concession has been
allowed to us through our purchase at a net price, we agree to repay such
concession upon your demand, plus in each case any taxes on redelivery,
commissions, accrued interest, and dividends paid in connection with such
purchase or contract to purchase.
(e) OPEN MARKET TRANSACTIONS. We agree to abide by Regulation M
under the Exchange Act and we agree not to bid for, purchase, attempt to
purchase, or sell, directly or
3
indirectly, any Securities, any other Reference Securities (as defined in
Regulation M) of the issuer, or any other securities of such issuer as you may
designate, except as brokers pursuant to unsolicited orders and as otherwise
provided in this Agreement. If the Securities are common stock or securities
convertible into common stock, we agree not to effect, or attempt to induce
others to effect, directly or indirectly, any transactions in or relating to any
stock of such issuer, except to the extent permitted by Rule 101 of Regulation M
under the Exchange Act.
(f) NASD. We represent that we are actually engaged in the
investment banking or securities business and we are either (i) a member in good
standing of the NASD, (ii) if not such a member, a foreign dealer not eligible
for membership, or (iii) solely in connection with an Exempted Securities
Offering, a bank, as defined in Section 3(a)(6) of the Exchange Act, that does
not otherwise fall within provision (i) or (ii) of this sentence (a "Bank"). If
we are a member as described in (i), we agree that in making sales of the
Securities we will comply with all applicable interpretative materials and
Conduct Rules of the NASD, including, without limitation, Conduct Rules 2740
(relating to Selling Concessions, Discounts and Other Allowances) and 2790
(relating to New Issues). If we are a foreign dealer as described in (ii), we
agree not to offer or sell any Securities in the United States of America, its
territories or its possessions or to persons who are citizens thereof or
residents therein (other than through you), and in making sales of Securities
outside the United States of America we agree to comply as though we were a
member with Conduct Rules 2730 (relating to Securities Taken in Trade), 2740
(relating to Selling Concessions), 2750 (relating to Transactions with Related
Persons) and 2790 (relating to New Issues) as though we were such a member and
to comply with Conduct Rule 2420 (relating to Dealing with Non-Members) as it
applies to a nonmember broker or dealer in a foreign country. In connection with
an Exempted Securities Offering, if we are a Bank, we agree to also comply, as
though we were an NASD member, with the provision of Rules 2730, 2740 and 2750
of the Conduct Rules. We further represent, by our participating in an Offering,
that we have provided to you all documents and other information required to be
filed with respect to us, any related person or any person associated with us or
any such related person pursuant to the supplementary requirements of the NASD's
interpretation with respect to review of corporate financing as such
requirements relate to such Offering.
We further agree that, in connection with any purchase of
Securities from you that is not otherwise covered by the terms of this Agreement
(whether you are acting as manager, as member of an underwriting syndicate or a
selling group or otherwise), if a selling concession, discount or other
allowance is granted to us, the preceding paragraph will be applicable.
(g) RELATIONSHIP AMONG UNDERWRITERS AND SELECTED DEALERS. You may
buy Securities from or sell Securities to any Underwriter or Selected Dealer
and, with your consent, the Underwriters (if any) and the Selected Dealers may
purchase Securities from and sell Securities to each other at the public
offering price less all or any part of the concession. We are not authorized to
act as agent for you or any Underwriter or the issuer or other seller of any
Securities in offering Securities to the public or otherwise. Nothing contained
herein or in any Written Communication from you shall constitute the Selected
Dealers partners with you or any Underwriter or with one another. If the
Selected Dealers, among themselves or with the Underwriters, should be deemed to
constitute a partnership for federal income tax purposes, then we elect to be
excluded from the application of Subchapter K, Chapter 1, Subtitle A of the
Internal Revenue Code of 1986 and agree not to take any position inconsistent
with that election.
4
We authorize you, in your discretion, to execute and file on our behalf such
evidence of that election as may be required by the Internal Revenue Service.
Neither you nor any Underwriter shall be under any obligation to us except for
obligations assumed hereby or in any Written Communication from you in
connection with any Offering. In connection with any Offering, we agree to pay
our proportionate share of any tax, claim, demand, or liability asserted against
us, and the other Selected Dealers or any of them, or against you or the
Underwriters, if any, based on any claim that such Selected Dealers or any of
them constitute an association, unincorporated business, or other separate
entity, including in each case our proportionate share of any expense incurred
in defending against any such tax, claim, demand, or liability.
(h) BLUE SKY LAWS. Upon application to you, you will inform us as to
the jurisdictions in which you believe the Securities have been qualified for
sale or are exempt under the respective securities or "blue sky" laws of such
jurisdictions. We understand and agree that compliance with the securities or
"blue sky" laws in each jurisdiction in which we shall offer or sell any of the
Securities shall be our sole responsibility and that you assume no
responsibility or obligations as to the eligibility of the Securities for sale
or our right to sell the Securities in any jurisdiction.
(i) COMPLIANCE WITH LAW. We agree that in selling Securities
pursuant to any Offering (which agreement shall also be for the benefit of the
issuer or other seller of such Securities), we will comply with the applicable
provisions of the Securities Act and the Exchange Act, the applicable Rules and
regulations of the Securities and Exchange Commission thereunder, the applicable
Rules and regulations of the NASD, the applicable Rules and regulations of any
securities exchange having jurisdiction over the Offering, and the applicable
laws, rules and regulations specified in Section 3(c) hereof. Without limiting
the foregoing, (a) we agree that, at all times since we were invited to
participate in an Offering of Securities, we have complied with the provisions
of Regulation M applicable to such Offering, in each case after giving effect to
any applicable exemptions and (b) we represent that our incurrence of
obligations hereunder in connection with any Offering of Securities will not
result in the violation by us of Rule 15c3-1 under the Exchange Act, if such
requirements are applicable to us. You shall have full authority to take such
action as you may deem advisable in respect of all matters pertaining to any
Offering. Neither you nor any Underwriter shall be under any liability to us,
except for lack of good faith and for obligations expressly assumed by you in
this Agreement; PROVIDED, HOWEVER, that nothing in this sentence shall be deemed
to relieve you from any liability imposed by the Securities Act.
(j) BEST EFFORTS OFFERINGS. If you communicate to us that a
particular offering is being made on a best efforts basis, then the terms in
this Section 3(j) apply and other inconsistent terms in this Agreement do not
apply.
(i) The offering will be a best efforts offering. The
offering also will be contingent and involve a closing only after receipt of
necessary documentation from the issuer and satisfaction of other conditions, if
any, specified in the prospectus or offering circular and the agency or
engagement agreement with you and the issuer. The offering is designed to comply
with applicable SEC rules, including Rules 15c2-4, 10b-9, and 15c6-1. See NASD
Notice to Members 98-4, 87-61 and 84-7.
5
(ii) We represent and agree that we shall take necessary
steps to comply with SEC Rules 15c2-4, 10b-9 and 15c6-1, including, but not
limited to, depositing funds in a complying special account if funds are
received before all closing conditions have been met. We also represent that we
are aware that those who purchase in this best efforts offering are subject to
the investor purchase limitations described in the prospectus or offering
circular.
(4) INDEMNIFICATION. We agree to indemnify and hold harmless Ryan
Beck, the issuer of the Securities, each person, if any, who controls (within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act) Ryan Beck or the issuer of the Securities, and their respective
directors, officers and employees from and against any and all losses,
liabilities, costs or claims (or actions in respect thereof) (collectively,
"Losses") to which any of them may become subject (including all reasonable
costs of investigating, disputing or defending any such claim or action),
insofar as such Losses arise out of or are in connection with the breach of any
representation, warranty or agreement made by us herein.
If any claim, demand, action or proceeding (including any
governmental investigation) shall be brought or alleged against an indemnified
party in respect of which indemnity is to be sought against an indemnifying
party, the indemnified party shall promptly notify the indemnifying party in
writing, and the indemnifying party, upon request of the indemnified party,
shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnified party may
designate in such proceeding and shall pay the reasonable fees and expenses of
such counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the reasonable fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel, (ii) the indemnifying party has failed
within a reasonable time to retain counsel reasonably satisfactory to such
indemnified party or (iii) the named parties to any such proceeding (including
any impleaded parties) include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It is
agreed that the indemnifying party shall not, in connection with any proceeding
or related proceedings in the same jurisdiction, be liable for the reasonable
fees and expenses of more than one separate law firm (in addition to local
counsel where necessary) for all such indemnified parties. Such firm shall be
designated in writing by the indemnified party. The indemnifying party shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened proceeding
in respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such proceeding.
The indemnity agreements contained in this Section and the
representations and warranties by us in this Agreement shall remain operative
and in full force and effect regardless of: (i) any termination of this
Agreement, (ii) any investigation made by an indemnified party or
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on such party's behalf or any person controlling an indemnified party or by or
on behalf of the indemnifying party, its directors or officers or any person
controlling the indemnifying party, and (iii) acceptance of and payment for any
Securities.
(5) TERMINATION; SUPPLEMENTS AND AMENDMENTS. This Agreement may be
terminated by either party hereto upon five business days' written notice to the
other party; provided that with respect to any Offering for which a Written
Communication was sent and accepted prior to such notice, this Agreement as it
applies to such Offering shall remain in full force and effect and shall
terminate with respect to such Offering in accordance with the last sentence of
this Section. This Agreement may be supplemented or amended by you by written
notice thereof to us, and any such supplement or amendment to this Agreement
shall be effective with respect to any Offering to which this Agreement applies
after the date of such supplement or amendment. Each reference to "this
Agreement" herein shall, as appropriate, be to this Agreement as so amended and
supplemented. The terms and conditions set forth in Sections 3(c) and (e) with
regard to any offering will terminate at the close of business on the thirtieth
day after the date of the initial public offering of the Securities to which
such Offering relates, but such terms and conditions, upon notice to us, may be
terminated by you at any time.
(6) SUCCESSORS AND ASSIGNS. This Agreement shall be binding on, and
inure to the benefit of, the parties hereto and other persons specified or
indicated in Section 1, and the respective successors and assigns of each of
them.
(7) GOVERNING LAW. This Agreement and the terms and conditions set
forth herein with respect to any Offering together with such supplementary terms
and conditions with respect to such Offering as may be contained in any Written
Communication from you to us in connection therewith shall be governed by, and
construed in accordance with, the laws of the State of New York without regard
to conflicts of laws principles.
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By signing this Agreement we confirm that our subscription to, or our
acceptance of any reservation of, any Securities pursuant to an Offering shall
constitute (i) acceptance of and agreement to the terms and conditions of this
Agreement (as supplemented and amended pursuant to Section 5) together with and
subject to any supplementary terms and conditions contained in any Written
Communication from you in connection with such Offering, all of which shall
constitute a binding agreement between us and you, individually, or as
representative of any Underwriters, (ii) in confirmation that our
representations and warranties set forth in Section 3 are true and correct at
that time and (iii) confirmation that our agreements set forth in Sections 2 and
3 have been and will be fully performed by us to the extent and at the times
required thereby.
Very truly yours,
----------------------
(Name of Firm)
By: ______________________
Confirmed, as of the date
first above written.
RYAN BECK & CO., INC.
By: ____________________________
Lisa J. Schultz
Executive Vice - President
Execution Date: _______________________
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EXHIBIT C
OFFICERS AND DIRECTORS OF ALPENA PARTIES
James C. Rapin
Martin A. Thomson
Thomas R. Townsend
Gary C. VanMassenhove
Keith D. Wallace
Michael W. Mahler
Amy E. Essex
Jerome W. Tracey
EXHIBIT D
LETTER AGREEMENT WITH OFFICERS AND DIRECTORS LISTED IN EXHIBIT C
Ryan Beck & Co., Inc.
18 Columbia Turnpike
Florham Park, New Jersey 07932
RE: Second-Step Conversion of Alpena Bancshares, MHC
Ladies and Gentlemen:
The undersigned is an officer, director and/or trustee of First Federal
of Northern Michigan (the "Bank"), Alpena Bancshares, Inc. (the "Holding
Company") and/or Alpena Bancshares, MHC (the "MHC"). It has been proposed that
the MHC, a federally chartered mutual holding company which owns 55.4% of the
common stock of the Holding Company ("Holding Company Common Stock"), undergo a
"second-step conversion," whereby First Federal of Northern Michigan Bancorp,
Inc. ("Bancorp"), a newly formed Maryland corporation, will offer and sell
shares of its common stock ("Bancorp Common Stock") in a subscription offering
and, if necessary, a community offering, and/or a syndicated community offering
(collectively, the "Offering"), and issue shares of Bancorp Common Stock to
existing shareholders of the Holding Company, other than the MHC, in exchange
for their existing shares of Holding Company Common Stock (the "Exchange"). The
undersigned is aware that you will be acting as financial advisor and marketing
agent to the Bank, the Holding Company, the MHC and Bancorp in connection with
the conversion, and recognizes that the Offering will benefit these parties by,
among other things, raising additional capital for their operations. The
undersigned acknowledges that you are relying on the representations and
agreements of the undersigned contained herein in carrying out the Offering and
in entering into marketing arrangements with respect thereto.
In consideration of the foregoing, the undersigned hereby agrees that,
without the prior written approval of Ryan Beck & Co., Inc., the undersigned,
during the period commencing on the effective date (the "Effective Date") of the
Registration Statement on Form S-1 relating to the Offering filed by Bancorp
with the Securities and Exchange Commission and terminating on the 91st day
following the Effective Date, will not directly or indirectly sell, offer to
sell, contract to sell, grant any option for the sale of, transfer, assign,
hypothecate, pledge or otherwise encumber or dispose of any shares of Holding
Company Common Stock or Bancorp Common Stock, or securities convertible into,
exchangeable for or exercisable for shares of Holding Company Common Stock or
Bancorp Common Stock, or any rights to purchase or acquire shares of Holding
Company Common Stock or Bancorp Common Stock, owned either of record or
beneficially by the undersigned. The foregoing restriction shall apply to all
shares of Bancorp Common Stock, regardless of whether issued in the Exchange or
the Offering.
The foregoing restriction is in addition to any and all restrictions to
which the undersigned is subject under the regulations of the Office of Thrift
Supervision with respect to the sale of shares of Bancorp Common Stock. This
agreement shall be binding upon the assigns, heirs and personal representatives
of the undersigned.
To ensure compliance with the foregoing, the undersigned authorizes the
transfer agent with respect to the Bancorp Common Stock to mark appropriate
legends on the face of any certificate representing shares of Bancorp Common
Stock owned by the undersigned and the placement of a "stop transfer" order with
respect to such securities on the Bancorp's stock ledger.
Date: _______________, 2005
Signature
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Printed Name:
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