EXHIBIT 1.2
PROVIDENT BANCORP, INC.
(a Federal Corporation - in Formation)
3,484,500 Shares
(Subject to Increase Up to 4,007,175 Shares)
COMMON STOCK ($.10 Par Value)
Subscription Price $10.00 Per Share
AGENCY AGREEMENT
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October ____, 1998
Xxxx, Xxxx & Co., Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
Ladies and Gentlemen:
Provident Bancorp, Inc., a federal corporation in formation (the "Holding
Company"), Provident Bancorp, MHC, a federal mutual holding company in formation
(the "MHC") and Provident Bank (the "Bank") (collectively, the "Primary
Parties") hereby confirm, jointly and severally their agreement with Xxxx, Xxxx
& Co., Inc. (the "Agent"), as follows:
SECTION 1. THE OFFERING. On April 23, 1998, the Board of Directors of the
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Bank adopted a Plan of Reorganization (the "Plan") which provides for the
reorganization of the Bank into a two-tier mutual holding company structure, the
issuance of all of the Bank's outstanding Common Stock to the Holding Company
(the "Reorganization"), and the issuance of a majority of the outstanding common
stock to the MHC. Upon completion of the Reorganization, the Bank will be a
wholly owned subsidiary of the Holding Company and the Holding Company will be a
majority owned subsidiary of the MHC. The Holding Company is offering up to
3,484,500 shares of common stock, par value $.10 per share (the "Common Stock")
(subject to an increase up to 4,007,175 shares), in (i) a subscription offering
(the "Subscription Offering"), and, if necessary, (ii) a direct community
offering (the "Direct Community Offering") and (iii) a syndicated community
offering (the "Syndicated Community Offering"), in connection with the
conversion and reorganization of the Bank from a mutual savings association to a
stock savings association and wholly-owned subsidiary of the Holding Company
(the "Reorganization"), all pursuant to the Plan of Reorganization from a Mutual
Savings Association to Mutual Holding Company and Stock Issuance Plan (the
"Plan"). References to the Bank herein shall include the Bank in its current
mutual form or post-Reorganization stock form as a wholly-owned subsidiary of
the Holding Company.
Pursuant to the Plan, the Holding Company will offer and sell shares of its
Common Stock (the "Conversion Shares" or "Shares") in the Subscription Offering,
Direct Community Offering, and Syndicated Community Offering (collectively, the
"Conversion Offerings" or "Offering") so that, upon completion of the Conversion
Offerings, the purchasers of Conversion Shares in the Conversion Offerings will
own 46.6% of the outstanding Common Stock and the MHC will own 53.4% of the
outstanding Common Stock. The Holding Company will issue the Shares at a
purchase price of $10.00 per share (the "Purchase Price"). If the number of
Conversion Shares is increased
or decreased in accordance with the Plan, the term "Shares" shall mean such
greater or lesser number, where applicable.
In the Subscription Offering, non-transferable rights to subscribe for
between 2,575,500 and 3,484,500 shares (subject to an increase up to 4,007,175
shares) of the Common Stock ("Subscription Rights") will be granted, in the
following priority: (1) the Bank's depositors with account balances of $50.00 or
more as of December 31, 1996 ("Eligible Account Holders"); (2) the Bank's tax-
qualified Employee Stock Ownership Plan ("ESOP"); (3) the Bank's depositors with
account balances of $50.00 or more as of September 30, 1998 ("Supplemental
Eligible Account Holders"); and (4) depositors (other than Eligible Account
Holders and Supplemental Eligible Account Holders) as of the date for
determining if members entitled to vote on the approval of the Plan (the "Voting
Record Date") and borrowers of the Bank as of July 9, 1998, whose borrowings
remain outstanding as of the Voting Record Date (collectively, "Other Members"),
subject to the priorities and purchase limitations set forth in the Plan. The
Holding Company may offer shares of Common Stock offered but not subscribed for
in the Subscription Offering to members of the general public, with first
preference given to residents of the Bank's local community of the New York
county of Rockland. In the event a Direct Community Offering is held, it may be
held at any time during or immediately after the Subscription Offering.
Depending on market conditions, shares not subscribed for in the Subscription
Offering or purchased in the Direct Community Offering may be offered in the
Syndicated Community Offering to eligible members of the general public on a
best efforts basis by approved broker-dealer firms ("Assisting Brokers") which
are members of the National Association of Securities Dealers, Inc. ("NASD").
It is acknowledged that the number of Shares to be sold in the Offering may
be increased or decreased as described in the Prospectus (as hereinafter
defined); that the purchase of Shares in the Offering is subject to maximum and
minimum purchase limitations as described in the Prospectus; and that the
Company and Holding Company may reject, in whole or in part, any subscription
received in the Community Offering. 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.
The Holding Company has filed with the U.S. Securities and Exchange
Commission (the "Commission") a Registration Statement on Form S-1 (File
No.__________) in order to register the Shares under the Securities Act of 1933,
as amended (the "1933 Act"), and has filed such amendments thereto as have been
required to the date hereof (the "Registration Statement"). The prospectus, as
amended, included in the Registration Statement at the time it initially became
effective is hereinafter called the "Prospectus", except that if any prospectus
is filed by the Holding Company pursuant to Rule 424(b) or (c) of the
regulations of the Commission under the 1933 Act differing from the prospectus
included in the Registration Statement at the time it initially becomes
effective, the term "Prospectus" shall refer to the prospectus filed pursuant to
Rule 424(b) or (c) from and after the time said prospectus is filed with the
Commission and shall include any supplements and amendments thereto from and
after their dates of effectiveness or use, respectively.
In connection with the Reorganization, the Bank filed with the Office of
Thrift Supervision (the "OTS"), pursuant to Title 12, Parts 575 and 563b of the
Code of Federal Regulations (the "Conversion Regulations"), a Notice of Mutual
Holding Company Reorganization and Application for Approval of an Issuance by a
Subsidiary of a Mutual Holding Company, including exhibits and
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the Prospectus, and has filed amendments thereto as required by the OTS (as so
amended, the "MHC Notice and Application"). The Holding Company filed with the
OTS its application on Form H-(e)1 (the "Holding Company Application") to
acquire the Bank under the Home Owners Loan Act and the regulations promulgated
thereunder ("HOLA"). The Bank's application with the OTS for approval of the
formation of an interim stock savings bank and the merger of the interim stock
savings bank with and into the Bank (the "Merger Application") was filed as an
exhibit to the Holding Company Application. The MHC Notice and Application and
the Holding Company Application (including the Merger Application) shall
collectively be hereinafter referred to as the "OTS Applications."
Concurrently with the execution of this Agreement, the Company is
delivering to the Agent copies of the Prospectus dated __________ of the Holding
Company to be used in the Subscription Offering and Community Offering (if any),
and, if necessary, will deliver copies of the Prospectus or prospectus
supplement for use in a Syndicated Community Offering and/or Public Offering, as
defined in the Prospectus (as hereinafter defined).
SECTION 2. APPOINTMENT OF AGENT. Subject to the terms and conditions of
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this Agreement, the Primary Parties hereby appoint Agent as their financial
advisor and marketing agent to utilize its best efforts to solicit subscriptions
for the Conversion Shares and to advise and assist the Primary Parties with
respect to the sale of the Conversion Shares in the Conversion Offerings.
On the basis of the representations and warranties of the Primary Parties
contained in, and subject to the terms and conditions of, this Agreement the
Agent accepts such appointment and agrees to consult with and advise the MHC,
the Holding Company and the Bank as to the matters set forth in the letter
agreement ("Letter Agreement"), dated June 12, 1998, between the Bank and Agent
(a copy of which is attached hereto as Exhibit A). It is acknowledged by the
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Primary Parties that the Agent shall not be obligated to purchase any Shares and
shall not be obligated to take any action which is inconsistent with any
applicable law, regulation, decision or order. Subscriptions for Conversion
Shares will be offered by means of order forms as described in the Prospectus.
Except as provided in the last paragraph of this Section 2, the appointment of
the Agent hereunder shall terminate upon consummation of the Offerings.
If selected broker-dealers are used to assist in the sale of Conversion
Shares in the Syndicated Community Offering, the Primary Parties hereby appoint,
subject to the terms and conditions of this Agreement, Agent to manage such
broker-dealers in this Syndicated Community Offering. On the basis of the
representations and warranties of the Primary Parties contained in, and subject
to the terms and conditions of, this Agreement, Agent accepts such appointment
and agrees to manage the selling group of broker-dealers in the Syndicated
Community Offering.
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Agent agrees to make available to the Bank, MHC and the Holding Company for
a period of 12 months following the consummation of the Reorganization its
Strategic Advisory Services ("STARS") program. If the Bank elects to participate
in the STARS program, the Agent will meet with the Bank at its request and will
render general advice on the financial matters listed in Section 9 of the Letter
Agreement (but not including (i) any in-depth merger and acquisition analyses or
studies which are available under Agent's normal fee schedule, or (ii) advice
with respect to a specific acquisition transaction by, or sale of, the Bank or
the Holding Company). If the Bank elects to participate in the STARS program,
the Agent will waive the regular retainer fee and hourly charges for the first
12 months of such participation. The Bank would be required, however, to
reimburse Agent for its reasonable out-of-pocket expenses incurred in
conjunction with the performance of these services. Such out-of-pocket expenses
include travel, legal and other miscellaneous expenses. Agent would not be
permitted to incur any single expense in excess of $1,000 pursuant to this
paragraph without the prior approval of the Bank. If negotiations for a
transaction conducted during the 12-month participation period result in the
execution of a definitive agreement and/or consummation of a transaction for
which Agent customarily would be entitled to a fee for its advisory or other
investment banking services, Agent shall receive a contingent advisory fee in
accordance with the terms of a separate engagement letter to be entered into
with respect to such transaction. Nothing in this Agreement shall require the
Holding Company or the Bank to obtain such financial advisory services from
Agent. After the completion of such 12-month participation period, if the
parties wish to continue the relationship, a fee will be negotiated and an
agreement with respect to specific advisory services will be entered into at
this time.
SECTION 3. REFUND OF PURCHASE PRICE. In the event that the Reorganization
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is not consummated for any reason, including but not limited to the inability to
sell the Conversion Shares during the Offerings (including any permitted
extension thereof), this Agreement shall terminate and any persons who have
subscribed for any of the Conversion Shares shall have refunded to them the full
amount which has been received from such person, together with interest at the
Bank's current annual passbook rate, from the date payment is received to the
date said refund is made as provided in the Prospectus. Upon termination of this
Agreement, neither the Agent nor the Primary Parties shall have any obligation
to the other except that (i) the Primary Parties shall remain liable for any
amounts due pursuant to Sections 4(a), 8, 10 and 11 hereof, unless the
transaction is not consummated due to the breach by the Agent of a warranty,
representation or covenant; and (ii) the Agent shall remain liable for any
amount due pursuant to Sections 10 and 11 hereof, unless the transaction is not
consummated due to the breach by the Primary Parties of a warranty,
representation or covenant.
SECTION 4. FEES. In addition to the expenses specified in Section 8
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hereof, as compensation for the Agent's services under this Agreement, the Agent
has received or will receive the following fees from the Primary Parties:
(a) An advisory and marketing fee in the amount of $450,000.
(b) A fee not to exceed 5.5% of the aggregate Purchase Price of the
Conversion Shares sold by Assisting Brokers in any Syndicated Community
Offering. The Agent will pay the Assisting Brokers that assist in the purchase
of Conversation Shares in the Syndicated Community Offering a fee competitive
gross underwriting discounts charged at such time for comparable amounts of
stock sold at a comparable price per share in a similar market environment.
Assisting
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Brokers will not be utilized without the prior approval of the Primary Parties,
and it is agreed that Agent will manage the Assisting Brokers in the Syndicated
Offering.
The fees specified in clauses (a) and (b) above shall be payable to the
Agent by wire transfer of immediately available funds or a check in next-day
funds, as agreed to by the parties hereto, at the time so indicated above.
Notwithstanding anything to the contrary contained in this Agreement (but
subject to Section 10 hereof) the Agent reserves the right to renegotiate the
amount of fees (but only in those circumstances where the conduct of the Company
or the Bank triggers the need for renegotiations pursuant to this paragraph) and
expenses payable or reimbursable, as the case may be, by the Company and the
Bank in the event that (i) the Company and/or the Bank are required to resolicit
subscribers for Shares in the Subscription and Community Offering, or (ii) the
regulations governing the Reorganization are changed in a manner that materially
affects the ability of the Agent to perform its duties as set forth in this
Agreement. Until any renegotiation called for by this paragraph is completed,
the Agent shall not accrue expenses relating to any resolicitation or change in
regulations in an amount that would cause the total expenses incurred by the
Agent, that are reimbursable by the Bank pursuant to Section 6 hereof, to be
greater than without the prior written consent of the Company or the Bank, which
consent shall not be unreasonably withheld.
SECTION 5. CLOSING. If the minimum number of Conversion Shares permitted
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to be sold in the Reorganization on the basis of the most recently updated
Appraisal (as defined in Section 6(h)) are subscribed for at or before the
termination of the Offerings, and the other conditions to the completion of the
Reorganization are satisfied, the Holding Company agrees to issue the Shares on
the Closing Date (as hereinafter defined) against payment therefor by the means
authorized by the Plan and to deliver certificates evidencing ownership of the
Conversion Shares in such authorized denominations and registered in such names
as may be indicated on the subscription order forms directly to the purchasers
thereof as promptly as practicable after the Closing Date. The Closing shall be
held at the offices of special counsel to the Primary Parties, or at such other
place as shall be agreed upon among the Primary Parties and the Agent, at 10:00
a.m., Eastern Standard Time, on the business day selected by the Holding Company
which business day shall be no less than two business days following the giving
of prior notice by the Holding Company to the Agent or at such other time as
shall be agreed upon by the Primary Parties and the Agent. At the Closing, the
Primary Parties shall deliver to the Agent in same-day funds the commissions,
fees and expenses owing to the Agent as set forth in Sections 4 and 8 hereof and
the opinions required hereby and other documents deemed reasonably necessary by
the Agent shall be executed and delivered to effect the sale of the Shares as
contemplated hereby and pursuant to the terms of the Prospectus. The Holding
Company shall notify the Agent when funds shall have been received for the
minimum number of shares of the Common Stock. The hour and date upon which the
Holding Company shall release the Conversion Shares for delivery in accordance
with the terms hereof is referred to herein as the "Closing Date."
The Company and the Bank (or their respective agents) shall advise the
Agent whenever an allocation of the Shares does not strictly correspond to all
subscriptions for Shares, as to the allocation of the Shares. The Agent shall
have no liability to any party for the records or other information provided by
the Company and the Bank (or their respective agents) to the Agent for use in
allocating the Shares. The Company and the Bank shall indemnify and hold
harmless The Agent
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for any liability arising out of the allocation of the Shares in accordance with
the Plan of Conversion generally and the records or other information provided
to the Agent by the Company and the Bank (or their respective agents).
SECTION 6.A. REPRESENTATIONS AND WARRANTIES OF THE PRIMARY PARTIES. The
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Primary Parties jointly and severally represent and warrant to the Agent that:
(a) The Bank has, and as of the Closing Date, the MHC and the Holding
Company will have, all such power, authority, authorizations, approvals and
orders as may be required to enter into this Agreement, to carry out the
provisions and conditions hereof and to issue and sell the Shares as provided
herein and as described in the Prospectus. The consummation of the
Reorganization, the execution, delivery and performance of this Agreement and
the consummation of the transactions herein contemplated have been duly and
validly authorized by all necessary corporate action on the part of the Bank
and, as of the Closing Date, will have been duly and validly authorized by all
necessary corporate action on the part of the MHC and the Holding Company. This
Agreement had been validly executed and delivered by the Holding Company, the
MHC and the Bank, and is a valid, legal and binding obligation of the Bank, the
Holding Company and the MHC, in each case enforceable in accordance with its
terms, except to the extent, if any, that the provisions of Sections 10 and 11
hereof may be unenforceable as against public policy, and except to the extent
that such enforceability may be limited by bankruptcy laws, insolvency laws, or
other laws affecting the enforcement of creditors' rights generally, or the
rights of creditors of savings institutions insured by the FDIC (including the
laws relating to the rights of the contracting parties to equitable remedies).
(b) The Plan has been approved by the OTS.
(c) The Registration Statement was declared effective by the
Commission on ___________, 1998; and no stop order has been issued with respect
thereto and no proceedings therefor have been initiated or to the best knowledge
of the Primary Parties threatened by the Commission. At the time the
Registration Statement, including the Prospectus contained therein (including
any amendment or supplement thereto), became effective, the Registration
Statement complied as to form in all material respects with the 1933 Act and the
regulations promulgated thereunder and the Registration Statement, including the
Prospectus contained therein (including any amendment or supplement thereto),
any Blue Sky Application or any Sales Information (as such terms are defined in
Section 10 hereof) authorized by the Primary Parties for use in connection with
the Offerings did not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and at the time any Rule 424(b) or (c) Prospectus was filed with
the Commission and at the Closing Date referred to in Section 5, the
Registration Statement, including the Prospectus contained therein (including
any amendment or supplement thereto), and any Blue Sky Application or any Sales
Information authorized by the Primary Parties for use in connection with the
Offerings will not contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided,
however, that the representations and warranties in this Section 6(c) shall not
apply to statements or omissions made in reliance upon and in conformity with
written information furnished to the Primary Parties by the Agent expressly
regarding the Agent for use under the captions "Market for the Common Stock" and
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"The Reorganization and Offering -- Plan of Distribution and Selling
Commissions" or written statements or omissions from any sales information or
information filed pursuant to state securities or blue sky laws or regulations
regarding the Agent.
(d) The MHC Notice and Application, including the Prospectus, was
approved by the OTS on ___________; and the Proxy Statement of the Bank relating
to the special meeting of the members of the Bank at which the Plan shall be
considered for approval by the Bank's eligible voting members (the "Proxy
Statement"), was authorized for use by the Notice and Application, including the
Prospectus, by the OTS (including any amendment or supplement thereto) and at
all times subsequent thereto until the Closing Date, the MHC Notice and
Application, including the Prospectus, did and will comply as to form in all
material respects with the Conversion Regulations and any other applicable rules
and regulations of the OTS (except as modified or waived in writing by the OTS).
At the time of the approval of the MHC Notice and Application, including the
Prospectus (including any amendment or supplement thereto), did not and does not
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
provided, however, that representations or warranties in this subsection
(d) shall not apply to statements or omissions made in reliance upon and in
conformity with written information furnished to the Primary Parties by the
Agent expressly regarding the Agent for use in Prospectus contained in the MHC
Notice and Application under the captions "Market for the Common Stock" and "The
Reorganization and Offering -- Plan of Distribution and Selling Commissions" or
written statements or omissions from any sales information or information filed
pursuant to state securities or blue sky laws or regulations regarding the
Agent.
(e) No order has been issued by the OTS, the Commission, or any state
regulatory authority, preventing or suspending the use of the Prospectus and no
action by or before any such government entity to revoke any approval,
authorization or order of effectiveness related to the Reorganization is pending
or, to the best knowledge of the Primary Parties, threatened.
(f) The Plan has been duly adopted by the Board of Directors of the
Bank. To the best knowledge of the Primary Parties, no person has, or at the
Closing Date will have, sought to obtain review of the final action of the OTS
in approving the Plan, the Reorganization, or the OTS Applications, pursuant to
the HOLA or any other statute or regulation.
(g) The Holding Company has filed with the OTS the Holding Company
Application (including the Merger Application) and as of the Closing Date the
OTS will have approved of the Holding Company's acquisition of the Bank.
(h) RP Financial, which prepared the appraisal of the aggregate pro
forma market value of the Holding Company and the Bank on which the Offerings
were based (the "Appraisal"), has advised the Primary Parties in writing that it
is independent with respect to each of the Primary Parties within the meaning of
the Conversion Regulations.
(i) KPMG Peat Marwick, LLP, which certified the financial statements
filed as part of the Registration Statement and the MHC Notice and Application,
has advised the Primary Parties that it is, with respect to each of the Primary
Parties, an independent certified public
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accountant within the meaning of 12 C.F.R. Sections 563c.3 and 571.2(c)(3) and
under the 1933 Act and the Regulations promulgated thereunder.
(j) The financial statements and the notes thereto which are included
in the Registration Statement and which are a part of the Prospectus present
fairly the financial condition and retained earnings of the Bank as of the dates
indicated and the results of operations and cash flows for the periods
specified. The financial statements comply in all material respects with the
applicable accounting requirements of Title 12 of the Code of Federal
Regulations, Regulation S-X of the Commission and generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods presented
except as otherwise noted therein, and present fairly in all material respects
the information required to be stated therein. The other financial, statistical
and pro forma information and related notes included in the Prospectus present
fairly the information shown therein on a basis consistent with the audited and
unaudited financial statements included in the Prospectus, and as to the pro
forma adjustments, the adjustments made therein have been properly applied on
the basis described therein.
(k) Since the respective dates as of which information is given in the
Registration Statement, including the Prospectus; (i) there has not been any
material adverse change in the financial condition or in the earnings, capital,
properties or business affairs of any of the Primary Parties or of the Primary
Parties considered as one enterprise, whether or not arising in the ordinary
course of business; (ii) there has not been any change in total assets of the
Bank in an amount greater than $50.0 million, any material increase in the
aggregate amount of loans past due ninety (90) days or more, or any real estate
acquired by foreclosure or loans characterized as "in substance foreclosure";
nor has the Bank issued any securities or incurred any liability or obligation
for borrowings other than in the ordinary course of business; (iii) there have
not been any material transactions entered into by any of the Primary Parties,
other than those in the ordinary course of business; and (iv) the
capitalization, liabilities, assets, properties and business of the Primary
Parties conform in all material respects to the descriptions thereof contained
in the Prospectus and, none of the Primary Parties has any material liabilities
of any kind, contingent or otherwise, except as disclosed in Registration
Statement or the Prospectus.
(l) As of the Closing Date, the Holding Company will be a corporation
duly organized and in good standing under the federal laws of the United States,
with corporate power authority to own its properties and to conduct its business
as described in the Prospectus, and will be qualified to transact business and
in good standing in each jurisdiction in which the conduct of business requires
such qualification unless the failure to qualify in one or more of such
jurisdictions would not have a material adverse effect on the financial
condition, earnings, capital, properties or business affairs of the Primary
Parties. As of the Closing Date, the Holding Company will have obtained all
licenses, permits and other governmental authorizations required for the conduct
of its business, except those that individually or in the aggregate would not
materially adversely affect the financial condition, earnings, capital, assets
or properties of the Primary Parties taken as a whole; 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.
(m) As of the Closing Date, the MHC will be duly organized and will be
validly existing as a federally chartered mutual holding company under the laws
of the United States, duly authorized to conduct its business and own its
property as described in the Registration Statement
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and the Prospectus; as of the Closing Date, the MHC will have obtained all
licenses, permits and other governmental authorizations required for the conduct
of its business except those that individually or in the aggregate would not
materially adversely affect the financial condition, earnings, capital, assets
or properties of the Primary Parties taken as a whole; as of the Closing Date,
all such licenses, permits and governmental authorizations will be in full force
and effect and the MHC will be in compliance therewith in all material respects;
as of the Closing Date, the MHC will be duly qualified as a foreign corporation
to transact business in each jurisdiction in which the failure to be so
qualified in one or more of such jurisdictions would have a material adverse
effect on the financial condition, earnings, capital, assets properties or
business of the Primary Parties.
(n) The MHC 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.
(o) The MHC is not authorized to issue any shares of capital stock.
(p) The Bank is duly organized and validly existing federally
chartered savings association in mutual form, duly authorized to conduct its
business as described in the Prospectus; the activities of the Bank are
permitted by the rules, regulations and practices of the OTS; the Bank has
obtained all licenses, permits and other governmental authorizations currently
required for the conduct of its business except those that individually or in
the aggregate would not materially adversely affect the financial condition of
the Primary Parties taken as a whole; all such licenses, permits and other
governmental authorizations are in full force and effect and the Bank is in good
standing under the laws of the United States and is duly qualified as a foreign
corporation to transact business in each jurisdiction in which failure to so
qualify would have a material adverse effect upon the financial condition,
earnings, capital, properties or business affairs of the Bank; all of the issued
and outstanding capital stock of the Bank after the Reorganization will be duly
and validly issued and fully paid and nonassessable; and the Holding Company
will directly own all of such capital stock free and clear of any mortgage,
pledge, lien, encumbrance, claim or restriction. The Bank does not own equity
securities or any equity interest in any other business enterprise except as
otherwise described in the Prospectus.
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(q) The Bank is a member of the Federal Home Loan Bank of New York
("FHLB of New York"); the deposit accounts of the Bank are insured by the FDIC
up to applicable limits. Upon consummation of the Reorganization, the rights of
the members of the Bank in its mutual form shall be transferred to MHC in
accordance with the Plan and the requirements of the Conversion Regulations.
(r) The Bank is not authorized to issue any shares of capital stock.
(s) Upon consummation of the Reorganization, the authorized, issued
and outstanding equity capital of the Holding Company will be within the range
set forth in the Prospectus under the caption "Capitalization" and, except for
the shares of Common Stock held by MHC, no shares of Common Stock have been or
will be issued and outstanding prior to the Closing Date; and the shares of
Common Stock to be subscribed for in the Offering have been duly and validly
authorized for issuance and, when issued and delivered by the Holding Company
pursuant to the Plan against payment of the consideration calculated as set
forth in the Plan and the Prospectus, will be duly and validly issued and fully
paid and nonassessable; the issuance of the Shares is not subject to preemptive
rights, except for the Subscription Rights granted pursuant to the Plan; and the
terms and provisions of the shares of Common Stock will conform in all material
respects to the description thereof contained in the Prospectus. Upon issuance
of the Shares, good title to the Shares will be transferred from the Holding
Company to the purchasers of Shares against payment therefor in the Offering as
set forth in the Plan and the Prospectus.
(t) The Bank is not, and as of the Closing Date neither the Holding
Company nor the MHC will be, in violation of their respective articles of
incorporation or charter or their respective bylaws, or in material default in
the performance or observance of any obligation, agreement, covenant, or
condition contained in any contract, lease, loan agreement, indenture or other
instrument to which they are a party or by which they, or any of their
respective property, may be bound which would result in a material adverse
change in the condition (financial or otherwise), earnings, capital, properties
or assets. The consummation of the transactions herein contemplated will not
(i) conflict with or constitute a breach of, or default under, the Articles of
Incorporation, charter or bylaws of the Bank or, as of the Closing Date, the
Holding Company or the MHC, or materially conflict with or constitute a material
breach of, or default under, any material contract, lease or other instrument to
which any of the Primary Parties has a beneficial interest, or any applicable
law, rule, regulation or order that is material to the financial condition of
the Bank; (ii) violate any authorization, approval, judgment, decree, order,
statute, rule or regulation applicable to the Primary Parties except for such
violations which would not have a material adverse effect on the financial
condition and results of operations of the Bank; or (iii) result in the creation
of any material lien, charge or encumbrance upon any property of the Primary
Parties.
(u) No material default exists, and no event has occurred which with
notice or lapse of time, or both, would constitute a material default on the
part of any of the Primary Parties, in the due performance and observance of any
term, covenant or condition of any indenture, mortgage, deed of trust, note,
bank loan or credit agreement or any other material instrument or agreement to
which any of the Primary
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Parties is a party or by which any of them or any of their property is bound or
affected in any respect which, in any such case, is material to the Primary
Parties individually or considered as one enterprise, 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 the Primary Parties, threatened any action or
proceeding wherein any of the Primary Parties is alleged to be in default
thereunder under circumstances where such action or proceeding, if determined
adversely to any of the Primary Parties, would have a material adverse effect
upon the Primary Parties individually or considered as one enterprise.
(v) The Primary Parties have good and marketable title to all assets
which are material to the businesses of the Primary Parties and to those assets
described in the Prospectus as owned by them, free and clear of all material
liens, charges, encumbrances, restrictions or other claims, except such as are
described in the Prospectus or which do not have a material adverse effect on
the businesses of the Primary Parties taken as a whole; and all of the leases
and subleases which are material to the businesses of the Primary Parties, as
described in the Registration Statement or Prospectus, are in full force and
effect.
(w) The Primary Parties are not in material violation of any directive
from the OTS, the FDIC, the Commission or any other agency to make any material
change in the method of conducting their respective businesses; the Primary
Parties have conducted and are conducting their respective businesses so as to
comply in all respects with all applicable statutes and regulations (including,
without limitation, regulations, decisions, directives and orders of the OTS,
the Commission and the FDIC), except where the failure to so comply would not
reasonably be expected to result in any material adverse change in the financial
condition, results of operations, capital, properties or business affairs of the
Primary Parties considered as one enterprise 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 any
of the Primary Parties, threatened, which would reasonably be expected to
materially and adversely affect the Reorganization, 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 any material adverse change in the financial condition results of
operations, capital, properties or business affairs of the Primary Parties
considered as one enterprise.
(x) Prior to the Closing Date, the Primary Parties will have received
an opinion of their special counsel, Xxxx Xxxxxx Xxxxxx Xxxxxxxx & Xxxxxx ("Xxxx
Xxxxxx"), with respect to the federal income tax consequences of the
Reorganization, as described in the Registration Statement and the Prospectus,
and an opinion from KPMG Peat Marwick, LLP with respect to the tax consequences
of the proposed transaction under the laws of the State of New York; and the
facts and representations upon which such opinions are based are truthful,
accurate and complete, and none of the Primary Parties will take any action
inconsistent therewith.
(y) The Bank has timely filed all required federal and state tax
returns, has paid all taxes that have become due and payable in respect of such
returns, except where permitted to be extended, has made adequate reserves for
similar future tax liabilities, 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 Primary Parties of this Agreement, or the issuance
of the Shares, except for the approval of the OTS and the Commission (which have
been received) and any necessary qualification, notification, or registration
-11-
or exemption under the securities or blue sky laws of the various states in
which the Shares are to be offered.
(aa) None of the Primary Parties has: (i) issued any securities within
the last 18 months (except for (a) notes to evidence bank loans or other
liabilities in the ordinary course of business or as described in the
Prospectus, and (b) shares of Common Stock issued with respect to the initial
capitalization of the Holding Company); (ii) had any dealings with respect to
sales of securities within the 12 months prior to the date hereof with any
member of the NASD, or any person related to or associated with such member,
other than discussions and meetings relating to the Offering and purchases and
sales of U.S. government and agency and other securities in the ordinary course
of business; (iii) entered into a financial or management consulting agreement
except for the Letter Agreement and as contemplated hereunder; or (iv) engaged
any intermediary between the Agent and the Primary Parties in connection with
the Offering or the offering of shares of the common stock of the Bank, and no
person is being compensated in any manner for such services.
(ab) Neither the Primary Parties nor, to the best knowledge of the
Primary Parties, any employee of the Primary Parties has made any payment of
funds of the Primary Parties as a loan to any person for the purchase of
Conversion Shares, except for the Holding Company's loan to the ESOP the
proceeds of which will be used to purchase Conversion Shares, or has made any
other payment of funds prohibited by law, and no funds have been set aside to be
used for any payment prohibited by law.
(ac) 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.
(ad) The Primary Parties have not relied upon Agent or its counsel for
any legal, tax or accounting advice in connection with the Reorganization.
(ae) The records of Eligible Account Holders, Supplemental Eligible
Account Holders and Other Members are accurate and complete in all material
respects.
(af) The Primary Parties comply with all laws, rules and regulations
relating to environmental protection, and none of them has been notified or is
otherwise aware that any of them is potentially liable, or is considered
potentially liable, under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, or any other Federal, state or local
environmental laws and regulations; no action, suit, regulatory investigation or
other proceeding is pending, threatened against the Primary Parties relating to
environmental protection, nor do the Primary Parties have any reason to believe
any such proceedings may be brought against any of them; and no disposal,
release or discharge of hazardous or toxic substances, pollutants or
contaminants, including petroleum and gas products, as any of such terms may be
defined under federal, state or local law, has occurred on, in, at or about any
facilities or properties owned or leased by any of the Primary Parties or, to
the best knowledge of the Bank, in which the Bank has a security interest.
(ag) All of the loans represented as assets on the most recent
financial statements or selected financial information of the Bank included in
the Prospectus meet or are exempt from
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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 on the financial condition, results of
operations or business of the Primary Parties taken as a whole.
(ah) None of the Primary Parties are required to be registered as an
investment company under the Investment Company Act of 1940.
(ai) As of the date hereof, the charters of the Holding Company and
the MHC have been filed with the OTS, but neither charter is effective or
otherwise in force.
Any certificates signed by an officer of any of the Primary Parties and
delivered to the Agent or its counsel that refer to this Agreement shall be
deemed to be a representation and warranty by the Primary Parties to the Agent
as to the matters covered thereby with the same effect as if such representation
and warranty were set forth herein.
Section 6.B. REPRESENTATIONS AND WARRANTIES OF THE AGENT. Agent
-------------------------------------------
represents and warrants to the Primary Parties that:
(a) Agent is a corporation and is validly existing in good standing
under the laws of the State of New Jersey with full power and authority to
provide the services to be furnished to the Primary Parties hereunder.
(b) The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly authorized by
all necessary action on the part of Agent, and this Agreement and is the legal,
valid and binding agreement of Agent, enforceable in accordance with its terms
except as the legality, validity, binding nature and enforceability thereof may
be limited by (i) bankruptcy, insolvency, moratorium, reorganization,
conservatorship, receivership or other similar laws relating to or affecting the
enforcement of creditors' rights generally, (ii) general equity principles
regardless of whether such enforceability is considered in a proceeding in
equity or at law, and (iii) the extent, if any, that the provisions of Sections
10 or 11 hereof may be unenforceable as against public policy.
(c) Except for licenses, approvals and permits required by the State
of ________ or required by another jurisdiction solely because the Offering is
being made in such jurisdiction, each of Agent and its employees, agents and
representatives who shall perform any of the services hereunder shall have, and
until the Reorganization is completed or terminated shall maintain all licenses,
approvals and permits necessary to perform 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.
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(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.
(f) Any funds received in the Offering by the Agent will be handled by
the Agent in accordance with Rule 15c2-4 under the 1934 Act to the extent
applicable.
SECTION 7. COVENANTS OF THE PRIMARY PARTIES. The Primary Parties hereby
--------------------------------
jointly and severally covenant with the Agent as follows:
(a) The Holding Company will not, at any time after the date the
Registration Statement is declared effective, file any amendment or supplement
to the Registration Statement without providing the Agent and its counsel an
opportunity to review such amendment or file any amendment or supplement to
which amendment the Agent or its counsel shall reasonably object.
(b) The Primary Parties will not, at any time after the date any OTS
Application is approved, file any amendment or supplement to such OTS
Application without providing the Agent and its counsel an opportunity to review
such amendment or supplement or file any amendment or supplement to which
amendment or supplement the Agent or its counsel shall reasonably object.
(c) The Primary Parties will use their best efforts to cause the OTS
to approve the Holding Company's acquisition of the Bank, and will use their
best efforts to cause any post-effective amendment to the Registration Statement
to be declared effective by the Commission and any post-effective amendment to
the OTS Applications to be approved by the OTS, and will immediately upon
receipt of any information concerning the events listed below notify the Agent
(i) when the Registration Statement, as amended, has become effective; (ii) when
the MHC Notice and Application, as amended, has been approved by the OTS;
(iii) when the Holding Company Application, as amended, has been approved by
the OTS; (iv) when the Merger Application has been approved by the OTS; (v) of
the receipt of any comments from the Commission, the OTS, or any other
governmental entity with respect to the Reorganization or the transactions
contemplated by this Agreement; (vi) of any request by the Commission, the OTS,
any other governmental entity for any amendment or supplement to the
Registration Statement or the OTS Applications or for additional information;
(vii) of the issuance by the Commission, the OTS, or any other governmental
agency of any order or other action suspending the Offerings or the use of the
Registration Statement or the Prospectus or any other filing of the Primary
Parties under the Conversion Regulations or other applicable law, or the threat
of any such action; (viii) of the issuance by the Commission, the OTS, the FDIC
or any 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 (ix) of the occurrence of any event
mentioned in paragraph (f) below. The Primary Parties will make every reasonable
effort to prevent the issuance by the Commission, the OTS, the FDIC or any state
authority of any order referred to in (vii) and (viii) above and, if any such
order shall at any time be issued, to obtain the lifting thereof at the earliest
possible time.
(d) The Primary Parties will deliver to the Agent and to its counsel
conformed copies of each of the following documents, with all exhibits: each of
the OTS Applications as originally filed and of each amendment or supplement
thereto, and the Registration Statement, as originally filed and each amendment
thereto. Further, the Primary Parties will deliver such additional
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copies of the foregoing documents to counsel to the Agent as may be required for
any NASD filings. In addition, the Primary Parties will also deliver to the
Agent such number of copies of the Prospectus, as amended or supplemented, as
the Agent may reasonably request.
(e) The Primary Parties will comply in all material respects with any
and all terms, conditions, requirements and provisions with respect to the
Reorganization and the transactions contemplated thereby imposed by the
Commission, by applicable state law and regulations, and by the 1933 Act, the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the rules and
regulations of the Commission promulgated under such statutes, to be complied
with prior to or subsequent to the Closing Date; and when the Prospectus is
required to be delivered, the Primary Parties will comply in all material
respects, at their own expense, with all material requirements imposed upon them
by the OTS, the Conversion Regulations (except as modified or waived in writing
by the OTS), the Commission, by applicable state law and regulations and by the
1933 Act, the 1934 Act and the rules and regulations of the Commission
promulgated under such statutes, in each case as from time to time in force, so
far as necessary to permit the continuance of sales or dealing in shares of
Common Stock during such period in accordance with the provisions hereof and the
Prospectus.
(f) Each of the Primary Parties will inform the Agent of any event or
circumstances of which it is or becomes aware as a result of which the
Registration Statement and/or Prospectus, as then supplemented or amended, would
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading. If it is
necessary, in the reasonable opinion of counsel for the Primary Parties, to
amend or supplement the Registration Statement or the Prospectus in order to
correct such untrue statement of a material fact or to make the statements
therein not misleading in light of the circumstances existing at the time of
their use, the Primary Parties will, at their expense, prepare, file with the
Commission and the OTS, and furnish to the Agent, a reasonable number of copies
of an amendment or amendments of, or a supplement or supplements to, the
Registration Statement and the Prospectus (in form and substance reasonably
satisfactory to counsel for the Agent after a reasonable time for review) which
will amend or supplement the Registration Statement and/or the Prospectus so
that as amended or supplemented it will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances existing at the time, not
misleading. For the purpose of this subsection, each of the Primary Parties will
furnish such information with respect to itself as the Agent may from time to
time reasonably request.
(g) Pursuant to the terms of the Plan, the Holding Company will
endeavor in good faith, in cooperation with the Agent, to register or to qualify
the Shares for offering and sale or to exempt such Shares from registration and
to exempt the Holding Company and its officers, directors and employees from
registration as broker-dealers, under the applicable securities laws of the
jurisdictions in which the Offering will be conducted; provided, however, that
the Holding Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation to do business in any
jurisdiction in which it is not so qualified. In each jurisdiction where any of
the Shares shall have been registered or qualified as above provided, the
Holding Company will make and file such statements and reports in each year as
are or may be required by the laws of such jurisdictions.
-15-
(h) The Holding Company will not sell or issue, contract to sell or
otherwise dispose of, for a period of 90 days after the date hereof, without the
Agent's prior written consent, which consent shall not be unreasonably withheld,
any shares of Common Stock other than in connection with any plan or arrangement
described in the Prospectus.
(i) For the period of three years from the date of this Agreement, the
Holding Company will furnish to the Agent upon request (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 or non-
confidential report filed with the Commission or the OTS or any other
supervisory or regulatory authority or any national securities exchange or
system on which any class of the securities of the Holding Company is listed or
quoted, (iii) each press release and material news item and article released by
the Holding Company and/or Bank, and (iv) from time-to-time, such other publicly
available information concerning the Primary Parties as the Agent may reasonably
request.
(j) The Primary Parties will use the net proceeds from the sale of the
Common Stock in the manner set forth in the Prospectus under the caption "Use of
Proceeds."
(k) The Holding Company and the Bank will distribute the Prospectus or
other offering materials in connection with the offering and sale of the Common
Stock only in accordance with the Conversion Regulations, the 1933 Act and the
1934 Act and the rules and regulations promulgated under such statutes, and the
laws of any state in which the shares are qualified for sale.
(l) Prior to the Closing Date, the Holding Company shall register its
Common Stock under Section 12(g) of the 1934 Act, as amended, and will request
that such registration statement be effective upon completion of the
Reorganization. The Holding Company shall maintain the effectiveness of such
registration for not less than three years or such shorter period as permitted
by the OTS.
(m) For so long as the Common Stock is 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 (including
consolidated financial statements of the Holding Company and its subsidiaries,
certified by independent public accountants).
(n) The Holding Company will report the use of proceeds of the
Offering in accordance with Rule 463 under the 1933 Act, and apply the proceeds
from the sale of the shares in the manner set forth in the Prospectus under the
caption "Use of Proceeds."
(o) The Primary Parties will maintain appropriate arrangements for
depositing all funds received from persons mailing subscriptions for or orders
to purchase Conversion Shares on an interest bearing basis at the rate described
in the Prospectus until the Closing Date and satisfaction of all conditions
precedent to the release of the Holding Company's obligation to refund payments
received from persons subscribing for or ordering Conversion Shares in the
Conversion 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
-16-
with the Plan and as described in the Prospectus. The Primary Parties will
maintain such records of all funds received to permit the funds of each
subscriber to be separately insured by the FDIC (to the maximum extent
allowable) and to enable the Primary Parties to make the appropriate refunds of
such funds in the event that such refunds are required to be made in accordance
with the Plan and as described in the Prospectus.
(p) Within 90 days following the Closing Date, the MHC and the Holding
Company will each register as a savings and loan holding company under the HOLA.
(q) The Primary Parties will take such actions and furnish such
information as are reasonably requested by the Agent in order for the Agent to
ensure compliance with the "Interpretation of the Board of Governors of the NASD
on Free Riding and Withholding."
(r) The Primary Parties will conduct their businesses in compliance in
all material respects with all applicable federal and state laws, rules,
regulations, decisions, directives and orders including, all decisions,
directives and orders of the Commission, the OTS and the FDIC.
(s) The Holding Company and the Bank shall comply with any and all
terms, conditions, requirements and provisions with respect to the
Reorganization and the transactions contemplated thereby imposed by the OTS, the
HOLA, the Commission, the 1933 Act, the Regulations, the Exchange Act and the
regulations promulgated by the Commission pursuant to the Exchange Act to be
complied with subsequent to the Closing Date. The Company will comply with all
provisions of all undertakings contained in the Registration Statement. The
liquidation account for the benefit of Eligible Account Holders and Supplemental
Eligible Account Holders (as defined in the Prospectus) of the Bank shall be
duly established and maintained in accordance with the requirements of the OTS.
(t) The Primary Parties will not amend the Plan without notifying, the
Agent prior thereto.
(u) The Holding Company shall provide the Agent with any information
necessary to carry out the allocation of the Conversion Shares in the event of
an oversubscription, and such information shall be accurate and reliable in all
material respects.
(v) The Holding Company will not deliver the Shares until the Primary
Parties have satisfied or caused to be satisfied each condition set forth in
Section 9 hereof, unless such condition is waived in writing by the Agent.
(w) Immediately upon completion of the sale by the Holding Company of
the Shares contemplated by the Plan and the Prospectus, (i) the MHC shall have
been formed pursuant to the Plan and shall own at all times more than 50% of the
issued and outstanding shares of Common Stock, (ii) all of the issued and
outstanding shares of capital stock of the Bank shall be owned by the Holding
Company, (iii) the Holding Company shall have no direct subsidiaries other than
the Bank, and (iv) the Reorganization 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 Reorganization
(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
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the Primary Parties in all material respects or appropriate waivers shall have
been obtained and all notice and waiting periods shall have been satisfied,
waived or elapsed.
(x) Prior to the Closing Date, the Plan shall have been approved by
the eligible voting members of the Bank in accordance with the Conversion
Regulations and the provisions of the Bank's charter and bylaws.
(y) As of the Closing Date, the Primary Parties shall have completed
all conditions precedent to the Reorganization in accordance with the Plan and
shall have complied in all material respects with applicable laws, regulations
(except as modified or waived in writing by the OTS), decisions and orders,
including all terms, conditions, requirements and provisions precedent to the
Reorganization imposed upon it by the OTS as set forth in correspondence
received from the OTS.
(z) On or before the Closing Date, the Primary Parties will have
completed all conditions precedent to the Reorganization 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 Reorganization imposed upon any of the Primary
Parties by the OTS, the Commission or any other regulatory authority and in the
manner described in the Prospectus.
SECTION 8. PAYMENT OF EXPENSES. Whether or not the Reorganization is
-------------------
completed or the sale and exchange of the Shares by the Holding Company is
consummated, the Primary Parties will pay for all expenses incident to the
performance of this Agreement, including without limitation: (a) the preparation
and filing of the OTS Applications; (b) the preparation, printing, filing,
delivery and shipment of the Registration Statement, including the Prospectus,
and all amendments and supplements thereto; (c) all filing fees and expenses in
connection with the qualification or registration of the Shares for offer and
sale by the Holding Company or the Bank under the securities or "blue sky" laws,
including without limitation filing fees, reasonable legal fees and
disbursements of counsel in connection therewith, and in connection with the
preparation of a blue sky law survey; (d) the filing fees of the NASD; (e) fees
and expenses related to the preparation of the independent appraisal; and
(f) the reasonable expenses of the Agent. Notwithstanding the foregoing, the
Primary Parties shall not be required to reimburse Agent for more than $40,000
in legal fees (other than such fees as shall be related to "blue sky" matters)
and $20,000 in non-legal out-of-pocket expenses, except in the event of any
material delay in the Offering that would require an update of the financial
information in tabular form contained in the Registration Statement, as amended
or supplemented, to reflect a period later than that set forth in the original
Registration Statement. Not later than three 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 9. CONDITIONS TO THE AGENT'S OBLIGATIONS. The obligations of the
-------------------------------------
Agent hereunder and the occurrence of the Closing and the Reorganization are
subject to the condition that all representations and warranties and other
statements of the Primary Parties herein contained are, at and as of the
commencement of the Offering and at and as of the Closing Date, true and
correct, the condition that the Primary Parties shall have performed all of
their obligations hereunder to be performed on or before such dates and to the
following further conditions:
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(a) The Registration Statement shall have been declared effective by
the Commission and the prospectus and proxy statement contained in the MHC
Notice and Application shall have been approved by the OTS for mailing prior to
the commencement of the Offering, the Holding Company Application shall have
been approved, 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 any of the Primary Parties' best
knowledge, 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 Reorganization shall have been issued or proceedings
therefor initiated or, to any of the Primary Parties' best knowledge, threatened
by the OTS, the Commission, or any other governmental body.
(b) At the Closing Date, the Agent shall have received:
(1) The favorable opinion, dated as of the Closing Date, of Xxxx
Xxxxxx, and/or local counsel acceptable to the Agent in form and substance
satisfactory to 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 federal laws of the United
States of America, 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 each jurisdiction in which the
conduct of its business requires such qualification and in which the failure to
qualify would have a material adverse effect on the financial condition,
earnings, capital, properties or business affairs of the Primary Parties.
(ii) The Bank is a duly organized and validly existing
federally chartered mutual savings association with full power and authority to
own its properties and to conduct its business as described in the Prospectus
and to enter into this Agreement and perform its obligations hereunder; the
activities of the Bank as described in the Prospectus are permitted by the
rules, regulations and practices of the OTS; the issuance and sale of the
capital stock of the Bank to the Holding Company in the Reorganization has been
duly and validly authorized by all necessary corporate action on the part of the
Holding Company and the Bank and, upon payment therefor in accordance with the
terms of the Plan, will be validly issued, fully paid and nonassessable; and
will be owned of record and beneficially by the Holding Company, free and clear
of any mortgage, pledge, lien, encumbrance, claim or restriction.
(iii) The Bank is a member of the FHLB of New York and 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 such insurance are pending or
threatened.
(iv) Upon consummation of the Reorganization, the MHC will
have been duly organized and will be validly existing as a federally chartered
mutual holding company, duly authorized to conduct its business and own its
properties as described in the Registration Statement and Prospectus.
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(v) Upon consummation of the Reorganization, (a) the
authorized, issued and outstanding capital stock of the Holding Company will be
within the range set forth in the Prospectus under the caption "Capitalization,"
and no shares of Common Stock have been or will be issued and outstanding prior
to the Closing Date (except for the shares issued upon incorporation of the
Holding Company); (b) the shares of Common Stock of the Holding Company issued
to the MHC will have been duly and validly authorized for issuance and will be
fully paid and nonassessable; (c) the shares of Common Stock of the Holding
Company to be subscribed for in the Offering will have been duly and validly
authorized for issuance, and when issued and delivered by the Holding Company
pursuant to the Plan against payment of the consideration calculated as set
forth in the Plan, will be fully paid and nonassessable; and (d) the issuance of
the shares of Common Stock is not subject to preemptive rights under the
charter, articles of incorporation or bylaws of any of the Primary Parties, or
arising or outstanding by operation of law or, to the best knowledge of such
counsel, under any contract, indenture, agreement, instrument or other document,
except for the subscription rights under the Plan.
(vi) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Primary Parties; and this
Agreement constitutes a valid, legal and binding obligation of each of the
Primary Parties, enforceable in accordance with its terms, except to the extent
that the provisions of Sections 10 and 11 hereof may be unenforceable as against
public policy, and except to the extent that such enforceability may be limited
by bankruptcy laws, insolvency laws, or other laws affecting the enforcement of
creditors' rights generally, or the rights of creditors of savings institutions
insured by the FDIC (including the laws relating to the rights of the
contracting parties to equitable remedies).
(vii) The Plan has been duly adopted by the board of
directors of the Bank and by the members of the Bank, in the manner required by
the Conversion Regulations and the Bank's charter and bylaws.
(viii) The OTS Applications have been approved by the OTS and
the Prospectus and the Proxy Statement have been authorized for use by the OTS,
and subject to the satisfaction of any conditions set forth in such OTS
approvals, no further approval, registration, authorization, consent or other
order of any federal or state regulatory agency, public board or body is
required in connection with the execution and delivery of this Agreement, the
offer, sale and issuance of the Shares and the consummation of the
Reorganization.
(ix) The purchase by the Holding Company of all of the
issued and outstanding capital stock of the Bank has been authorized by the OTS
and no action has been taken, or, to such counsel's knowledge, is pending or
threatened, to revoke any such authorization or approval.
(x) The Registration Statement has become effective under the
1933 Act, no stop order suspending the effectiveness of the Registration
Statement has been issued, and, to the best of such counsel's knowledge, no
proceedings for that purpose have been instituted or threatened.
(xi) The material tax consequences of the Reorganization are
set forth in the Prospectus under the caption "The Reorganization and Offering -
- Tax Effects of the
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Reorganization." The information in the Prospectus under the caption "The
Reorganization and Offering -- Tax Effects of the Reorganization" has been
reviewed by such counsel and fairly describes such opinions rendered by such
counsel and KPMG Peat Marwick, LLP to the Primary Parties with respect to such
matters.
(xii) The terms and provisions of the shares of Common Stock
conform to the description thereof contained in the Registration Statement and
the Prospectus, and the forms of certificates proposed to be used to evidence
the shares of Common Stock are in due and proper form.
(xiii) At the time the MHC Notice and Application was
approved, the MHC Notice and Application (as amended or supplemented) including
the Prospectus contained therein, 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 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 approving the OTS
Applications.
-21-
(xiv) At the time that the Registration Statement became
effective the Registration Statement, including the Prospectus contained therein
(as amended or supplemented) (other than the financial statements, notes to
financial statements, financial tables or other financial and statistical data
included therein and the appraisal valuation as to which counsel need express no
opinion), complied as to form in all material respects with the requirements of
the 1933 Act and the rules and regulations promulgated thereunder.
(xv) To the best of 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 Reorganization or
the offer, sale or issuance of the Shares.
(xvi) The information in the Prospectus under the captions
"Regulation," "Taxation," "Restrictions on the Acquisition of the Company and
the Bank -- Provisions of the Company's Charter and Bylaws -- Authorization of
Preferred Stock," "Description of Capital Stock of the Company," and "The
Reorganization and Offering," to the extent that it 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 (except
as to the financial statements and other financial data included therein as to
which such counsel need express no opinion).
(xvii) None of the Primary Parties are required to be
registered as an investment company under the Investment Company Act of 1940.
(xviii) The Bank has duly adopted a federal stock charter and
bylaws effective upon consummation of the Reorganization, and none of the
Primary Parties is in violation of its articles of incorporation or its charter,
as the case may be, or its bylaws or, to the best of such counsel's knowledge,
any material obligation, agreement, covenant or condition contained in any
material contract, indenture, mortgage, loan agreement, note, lease or other
instrument filed as an exhibit to, or incorporated by reference in, the
Registration Statement, which violation would have a material adverse effect on
the financial condition of the Primary Parties considered as one enterprise, or
on the earnings, capital, properties or business affairs of the Primary Parties
considered as one enterprise. In addition, the execution and delivery of and
performance under this Agreement by the Primary Parties, the incurrence of the
obligations set forth herein and the consummation of the transactions
contemplated herein will not result in any material violation of the provisions
of the articles of incorporation or charter, as the case may be, or the bylaws
of any of the Primary Parties or any material violation of any applicable law,
act, regulation, or to such counsel's knowledge, order or court order, writ,
injunction or decree.
The opinion may be limited to matters governed by the laws of the United
States, and in the case of local counsel, the State of New York. 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 other
counsel of good standing, as long as such other opinion indicates that the Agent
may rely on the opinion, and (B) as to matters of fact, to the extent such
counsel deems proper, on certificates of responsible officers of the Primary
Parties and public officials; provided copies of any such opinion(s) or
certificates of public officials are delivered to Agent together with the
opinion to be rendered
-22-
hereunder by special counsel to the Primary Parties. The opinion of such counsel
for the Primary Parties shall state that it has no reason to believe that the
Agent is not justified in relying thereon.
(2) The letter of Xxxx Xxxxxx in form and substance to the effect
that during the preparation of the Registration Statement and the Prospectus,
Xxxx Xxxxxx participated in conferences with certain officers of and other
representatives of the Primary Parties, counsel to the Agent, representatives of
the independent public accountants for the Primary Parties and representatives
of the Agent at which the contents of the Registration Statement and the
Prospectus and related matters were discussed and has considered the matters
required to be stated therein and the statements contained therein and, although
(without limiting the opinions provided pursuant to Section 9(b)(1)) Xxxx Xxxxxx
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 Xxxx Xxxxxx that caused
Xxxx Xxxxxx to believe that the Registration Statement at the time it was
declared effective by the SEC and as of the date of such letter, contained or
contains any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (it being understood that counsel need express no comment or opinion
with respect to the financial statements, schedules and other financial and
statistical data included, or statistical or appraisal methodology employed, in
the Registration Statement or Prospectus).
(3) The favorable opinion, dated as of the Closing Date, of
Xxxxxxx Xxxxxxxx & Xxxx, counsel for the Agent, with respect to such matters as
the Agent may reasonably require; such opinion may rely, as to matters of fact,
upon certificates of officers and directors of the Primary Parties delivered
pursuant hereto or as such counsel may reasonably request.
(c) Concurrently with the execution of this Agreement, the Agent shall
receive a letter from KPMG Peat Marwick, LLP, dated the date hereof and
addressed to the Agent, such letter confirming that KPMG Peat Marwick, LLP is a
firm of independent public accountants within the meaning of the Code of
Professional Ethics of the American Institute of Certified Public Accountants,
the 1933 Act and the regulations promulgated thereunder and 12 C.F.R. Section
571.2(c)(3), and no information concerning its relationship with or interests in
the Primary Parties is required by the OTS Applications or Item 13 of the
Registration Statement, and stating in effect that in KPMG Peat Marwick, LLP's
opinion the financial statements of the Bank included in the Prospectus comply
as to form in all material respects with the applicable accounting requirements
of the 1933 Act, the 1934 act and the related published rules and regulations of
the Commission thereunder and the Conversion Regulations and generally accepted
accounting principles consistently applied; (ii) stating in effect that, on the
basis of certain agreed upon procedures (but not an audit examination in
accordance with generally accepted auditing standards) consisting of a reading
of the latest available unaudited interim financial statements of the Bank
prepared by the Bank, a reading of the minutes of the meetings of the Board of
Directors of the Bank and the members of the Bank, a review of interim financial
information in accordance with Statement on Auditing Standards No. 71, and
consultations with officers of the Bank responsible for financial and accounting
matters, nothing came to their attention which caused them to believe that:
(A) such unaudited financial statements, including recent developments, if any,
are not in conformity with generally accepted accounting principles applied on a
basis substantially consistent with that of the audited financial statements
included in the Prospectus; or (B) during the period from the date of the
-23-
latest unaudited consolidated financial statements included in the Prospectus to
a specified date not more than three business days prior to the date hereof,
there was any increase in borrowings (defined as advances from the FHLB of New
York, securities sold under agreements to repurchase and any other form of debt
other than deposits) of the Bank or in nonperforming loans of the Bank; or
(C) there was any decrease in retained earnings of the Bank at the date of such
letter as compared with amounts shown in the latest unaudited statement of
condition included in the Prospectus or there was any decrease in net income or
net interest income of the Bank for the number of full months commencing
immediately after the period covered by the latest unaudited income statement
included in the Prospectus and ended on the latest month end prior to the date
of the Prospectus or in such letter as compared to the corresponding period in
the preceding year; and (iii) stating that, in addition to the audit examination
referred to in its opinion included in the Prospectus and the performance of the
procedures referred to in clause (ii) of this subsection (c), they have compared
with the general accounting records of the Bank, which are subject to the
internal controls of the accounting system of the Bank and other data prepared
by the Primary Parties directly from such accounting records, to the extent
specified in such letter, such amounts and/or percentages set forth in the
Prospectus as the Agent may reasonably request, and they have found such amounts
and percentages to be in agreement therewith (subject to rounding).
(d) At the Closing Date, the Agent shall receive a letter from KPMG
Peat Marwick, LLP dated the Closing Date, addressed to the Agent, confirming the
statements made by its letter delivered by it pursuant to subsection (c) of this
Section 9, the "specified date" referred to in clause (ii)(B) thereof to be a
date specified in such letter, which shall not be more than three business days
prior to the Closing Date.
(e) At the Closing Date, counsel to the Agent shall have been
furnished with such documents and opinions as counsel for the Agent may require
for the purpose of enabling them to advise the Agent with respect to the
issuance and sale of the Common Stock as herein contemplated and related
proceedings, or in order to evidence the accuracy of any of the representations
and warranties, or the fulfillment of any of the conditions herein contained.
(f) At the Closing Date, the Agent shall receive a certificate of the
Chief Executive Officer and Chief Financial Officer of each of the Primary
Parties, dated the Closing Date, to the effect that: (i) they have examined the
Prospectus and at the time the Prospectus became authorized for final use, the
Prospectus did not contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) there has not been, since the respective dates as of which information is
given in the Prospectus, any material adverse change in the financial condition
or in the earnings, capital, properties, business prospects or business affairs
of the Primary Parties, considered as one enterprise, whether or not arising in
the ordinary course of business; (iii) the representations and warranties
contained in Section 6 of this Agreement are true and correct with the same
force and effect as though made at and as of the Closing Date; (iv) the Primary
Parties have complied in all material respects with all material agreements and
satisfied all conditions on its part to be performed or satisfied at or prior to
the Closing Date including the conditions contained in this Section 9; (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 Reorganization, the acquisition of all of the shares of the Bank
by the Holding Company, the acquisition by the MHC of shares of the Common Stock
or the effectiveness
-24-
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 Reorganization.
(g) The activities of the Bank described in the Prospectus are
permitted under federal law to subsidiaries of a savings bank holding company
that is a federal corporation. To the best of such counsel's knowledge, each of
the Holding Company and the Bank has obtained all licenses, permits, and other
governmental authorizations that are material for the conduct of its business,
and all such licenses, permits and other governmental authorization are in full
force and effect, and to the best of such counsel's knowledge the Holding
Company and the Bank are complying therewith in all material respects.
(h) At the Closing Date, the Agent shall receive a letter from RP
Financial, dated as of the Closing Date, (i) confirming that said firm is
independent of the Primary Parties and is experienced and expert in the area of
corporate appraisals within the meaning of the Conversion Regulations,
(ii) stating in effect that the Appraisal complies in all material respects
with the applicable requirements of the Conversion Regulations, and
(iii) further stating that its opinion of the aggregate pro forma market value
of the Primary Parties, as converted, expressed in the Appraisal as most
recently updated, remains in effect.
(i) None of the Primary Parties shall have sustained, since the date
of the latest audited 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 change, or any development involving a prospective material change in,
or affecting the general affairs of, management, financial position, retained
earnings, long-term debt, stockholders' equity or results of operations of any
of the Primary Parties, otherwise than as set forth or contemplated in the
Registration Statement and the Prospectus, the effect of which, in any such case
described above, is in the Agent's reasonable judgment sufficiently material and
adverse as to make it impracticable or inadvisable to proceed with the Offering
or the delivery of the Shares on the terms and in the manner contemplated in the
Prospectus.
(j) Prior to and at the Closing Date: (i) in the reasonable opinion of
the Agent there shall have been no material adverse change in the financial
condition or in the earnings, capital, properties or business affairs of any of
the Primary parties independently, or the Primary Parties considered as one
enterprise, from and as of the latest dates as of which such condition is set
forth in the Prospectus, except as referred to therein; (ii) there shall have
been no material transaction entered into by the Primary Parties, independently
or considered as one enterprise, from the latest date as of which the financial
condition of the Primary Parties is set forth in the Prospectus, other than
transactions referred to or contemplated therein; (iii) none of the Primary
Parties shall have received from the OTS or the FDIC any direction (oral or
written) to make any material change in the method of conducting their business
with which it has not complied in all material respects (which direction, if
any, shall have been disclosed to the Agent) and which would reasonably be
expected to have a material and adverse effect on the condition (financial or
otherwise) or on the
-25-
earnings, capital, properties or business affairs of the Primary Parties
considered as one enterprise; (iv) none of the Primary Parties shall have been
in default (nor shall an event have occurred which, with notice or lapse of time
or both, would constitute a default) under any provision of any agreement or
instrument relating to any material outstanding indebtedness; (v) no action,
suit or proceeding, at law or in equity or before or by any federal or state
commission, board or other administrative agency, shall be pending or, to the
knowledge of the Primary Parties, threatened against any of the Primary Parties
or affecting any of their properties wherein an unfavorable decision, ruling or
finding would reasonably be expected to have a material and adverse effect on
the financial condition or on the earnings, capital, properties or business
affairs of the Primary Parties, considered as one enterprise; and (vi) the
Shares shall have been qualified or registered for offering and sale under the
securities or "blue sky" laws of the jurisdictions requested by the Agent.
(k) At or prior to the Closing Date, the Agent shall receive (i) a
copy of the letter from the OTS authorizing the use of the Prospectus and
approving the MHC Notice and Application, (ii) a copy of the order from the
Commission declaring the Registration Statement effective, (iii) a copy of a
certificate of existence for the Bank, (iv) a certificate of other writing, in
form and substance reasonably satisfactory to Agent evidencing the valid
existence, from the appropriate federal authority of the Holding Company as of
the Closing Date, (v) a copy of the letter from the OTS approving the Holding
Company Application, (vi) a certificate from the FDIC evidencing the Bank's
insurance of accounts, (vii) a certificate of the FHLB of New York evidencing
the Bank's membership therein, (viii) a certificate or other writing from the
OTS, in form and substance reasonably satisfactory to Agent, evidencing the
valid existence of the MHC as of the Closing Date, (ix) a copy of the letters
from the OTS approving the Merger Application and (x) any other documents that
Agent shall reasonably request.
(l) Subsequent to the date hereof, there shall not have occurred any
of the following: (i) a suspension or limitation in trading in securities
generally on the New York Stock Exchange or American Stock Exchange or in the
over-the-counter market, or quotations halted generally on the Nasdaq Stock
Market, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices for securities have been required by either of such exchanges
or the NASD or by order of the Commission or any other governmental authority
other than temporary trading halts (A) imposed as a result of intraday changes
in the Dow Xxxxx Industrial Average, (B) lasting no longer than until the
regularly scheduled commencement of trading on the next succeeding business-day,
and (C) which, when combined with all other such halts occurring during the
previous five business days, total less than three; (ii) a general moratorium on
the operations of commercial banks or other federally-insured financial
institutions or general moratorium on the withdrawal of deposits from commercial
banks or other federally-insured financial institutions declared by either
federal or state authorities; (iii) the engagement by the United States in
hostilities which have resulted in the declaration, on or after the date hereof,
of a national emergency or war; or (iv) a material decline in the price of
equity or debt securities if the effect of any of (i) through (iv) herein, in
the Agent's reasonable judgment, makes it impracticable or inadvisable to
proceed with the offering or the delivery of the Shares on the terms and in the
manner contemplated in the Registration Statement and the Prospectus.
(m) All such options, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to the Agent and of counsel for the Agent. Any
certificate signed by an officer of the Holding Company or the
-26-
Bank and delivered to the Agent or to counsel for the Agent shall be deemed a
representation and warranty by the Holding Company or the Bank, as the case may
be, to the Agent as to the statements made herein. If any condition to the
Agent's obligations hereunder to be fulfilled prior to or at the Closing Date is
not fulfilled, the Agent may terminate this Agreement (provided that if this
Agreement is so terminated but the sale of Shares is nevertheless consummated,
the Agent shall be entitled to the compensation provided for in Section 3
hereof) or, if the Agent so elects, may waive any such conditions which have not
been fulfilled or may extend the time of their fulfillment.
SECTION 10. INDEMNIFICATION.
---------------
(a) The Primary Parties jointly and severally agree to indemnify and
hold harmless the Agent, its officers, directors, agents, attorneys, servants
and employees and each person, if any, who controls the Agent within the meaning
of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act, against any and
all loss, liability, claim, damage or expense whatsoever (including but not
limited to settlement expenses, subject to the limitation set forth in the last
sentence of paragraph (c) below), joint or several, that the Agent or any of
such officers, directors, agents, attorneys, servants, employees and controlling
Persons (collectively, the "Related Persons") may suffer or to which the Agent
or the Related Persons may become subject under all applicable federal and state
laws or otherwise, and to promptly reimburse the Agent and any Related Persons
upon written demand for any reasonable expenses (including reasonable fees and
disbursements of counsel) incurred by the Agent or any Related Persons in
connection with investigating, preparing or defending any actions, proceedings
or claims (whether commenced or threatened) to the extent such losses, claims,
damages, liabilities or actions: (i) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment or supplement thereto), preliminary or
final Prospectus (or any amendment or supplement thereto), the OTS Applications,
or any blue sky application or other instrument or document of the Primary
Parties or based upon written information supplied by any of the Primary Parties
filed in any state or jurisdiction to register or qualify any or all of the
Shares under the securities laws thereof (collectively, the "Blue Sky
Applications"), or any application or other document, advertisement, or
communication ("Sales Information") prepared, made or executed by or on behalf
of any of the Primary Parties with its consent or based upon written information
furnished by or on behalf of any of the Primary Parties, whether or not filed in
any Jurisdiction 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), preliminary or final Prospectus (or any amendment or supplement
thereto), the OTS Applications, any Blue Sky Applications or Sales Information
or other documentation distributed in connection with the Reorganization; or
(iv) result from any claims made with respect to the accuracy, reliability and
completeness of the records of Eligible Account Holders, Supplemental Eligible
Account Holders and 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
paragraph (a) to the extent such losses, claims, damages, liabilities or actions
arise out of or are based upon any untrue material statements or alleged untrue
material statements in, or material omission or alleged material omission from,
the Registration Statement (or any amendment or supplement thereto) or the
preliminary or final Prospectus (or any amendment or supplement thereto), the
OTS Applications, the Blue Sky Applications or Sales Information or other
documentation distributed in connection with the Reorganization made in reliance
upon and in conformity with written information furnished to the Primary Parties
by the Agent or its representatives (including counsel) with respect to the
Agent expressly for use in the Registration
-27-
Statement (or any amendment or supplement thereto) or Prospectus (or any
amendment or supplement thereto) under the captions "Market for the Common
Stock" and "The Reorganization and Offering Plan of Distribution and Selling
Commissions" or statistical information regarding the Holding Company prepared
by the Agent for use in the Sales Information, except for information derived
from the Prospectus. Provided further, that the Primary Parties will not be
responsible for any loss, liability, claim, damage or expense to the extent they
result primarily from material oral misstatements by the Agent to a purchaser of
Shares which are not based upon information in the Registration Statement or
Prospectus, or from actions taken or omitted to be taken by the Agent in bad
faith or from the Agent's gross negligence or willful misconduct, and the Agent
agrees to repay to the Primary Parties any amounts advanced to it by the Primary
Parties in connection with matters as to which it is found not to be entitled to
indemnification hereunder.
(b) The Agent agrees to indemnify and hold harmless the Primary
Parties, their directors and officers, agents, servants and employees and each
person, if any, who controls any of the Primary Parties within the meaning of
Section 15 of the 1933 Act or Section 20(a) of the 1934 Act against any and all
loss, liability, claim, damage or expense whatsoever (including but not limited
to settlement expenses, subject to the limitation set forth in the last sentence
of paragraph (c) below), joint or several which they, or any of them, may suffer
or to which they, or any of them, may become subject under all applicable
federal and state laws or otherwise, and to promptly reimburse the Primary
Parties and any such persons upon written demand for any reasonable expenses
(including fees and disbursements of counsel) incurred by them in connection
with investigating, preparing or defending any actions, proceedings or claims
(whether commenced or threatened) to the extent such losses, claims, damages,
liabilities or actions arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment of supplement thereto), the OTS 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 10(b) shall
exist only if and only to the extent that such untrue statement or alleged
untrue statement was made in, or such material fact or alleged material fact was
omitted from, the Registration Statement (or any amendment or supplement
thereto) or the Prospectus (or any amendment or supplement thereto) in reliance
upon and in conformity with written information furnished to the Primary Parties
by the Agent or its representatives (including counsel) expressly for use under
the captions "Market for the Common Stock" and "The Reorganization and Offering
-- Plan of Distribution and Selling Commissions" or statistical information
regarding the Holding Company prepared by the Agent for use in the Sales
information (except for statistical information derived from the Prospectus).
(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 10,
Section
-28-
11 or otherwise. An indemnifying party may participate at its own expense in the
defense of such action. In addition, if it so elects within a reasonable time
after receipt of such notice, an indemnifying party, jointly with any other
indemnifying parties receiving such notice, may assume defense of such action
with counsel chosen by it and approved by the indemnified parties that are
defendants in such action, unless such indemnified parties reasonably object to
such assumption on the ground that there may be legal defenses available to them
that are different from or in addition to those available to such indemnifying
party. If an indemnifying party assumes the defense of such action, the
indemnifying parties shall not be liable for any fees and expenses of counsel
for the indemnified parties incurred thereafter in connection with such action,
proceeding or claim, other than reasonable costs of investigation. In no event
shall the indemnifying parties be liable for the fees and expenses of more than
one separate firm of attorneys (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.
(d) The agreements contained in this Section 10 and in Section I I
hereof and the representations and warranties of the Primary Parties set forth
in this Agreement shall remain operative and in full force and effect regardless
of (i) any investigation made by or on behalf of the Agent or its officers,
directors, controlling persons, agents or employees or by or on behalf of any of
the Primary Parties or any officers, directors, controlling persons, agents or
employees of any of the Primary Parties; (ii) delivery of and payment hereunder
for the Shares; or (iii) any termination of this Agreement.
SECTION 11. CONTRIBUTION.
------------
(a) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 10 is due in
accordance with its terms but is for any reason held by a court to be
unavailable from the Primary Parties or the Agent, the Primary Parties and the
Agent shall contribute to the aggregate losses, claims, damages and liabilities
of the nature contemplated by such indemnification in such proportion so that
(i) the Agent is responsible for that portion represented by the percentage that
the fees paid to the Agent pursuant to Section 4 of this Agreement (not
including expenses) ("Agent's Fees"), less any portion of Agent's Fees paid by
Agent to Assisting Brokers, bear to the total proceeds received by the Primary
Parties from the sale of the Conversion Shares in the Conversion Offerings, net
of all expenses of the Offerings except Agent's Fees, and (ii) the Primary
Parties shall be responsible for the balance. If, however, the allocation
provided above is not permitted by applicable law or if the indemnified party
failed to give the notice required under Section 10 above, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative fault of the Primary Parties on the one hand and the Agent on the other
in connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions, proceedings or claims in respect
thereof), but also the relative benefits received by the Primary Parties on the
one hand and the Agent on the other from the Offering, as well as any other
relevant equitable considerations. The relative benefits received by the Primary
Parties on the one hand and the Agent on the other hand shall be deemed to be in
the same proportion as the total
-29-
proceeds from the Conversion Offerings, net of all expenses of the Conversion
Offerings except Agent's Fees, received by the Primary Parties bear, with
respect to the Agent, to the total fees (not including expenses) received by the
Agent less the portion of such fees paid by the Agent to Assisting Brokers. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Primary Parties on the one hand or the Agent on the other and the parties
relative intent, good faith, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Primary Parties and the Agent
agree that it would not be just and equitable if contribution pursuant to this
Section 11 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 11. 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 11
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 0000 Xxx) shall be entitled to contribution from any person who was
not found guilty of such fraudulent misrepresentation. The duties, obligations
and liabilities of the Primary Parties and the Agent under this Section 11 and
under Section 10 shall be in addition to any duties, obligations and liabilities
which the Primary Parties and the Agent may otherwise have. For purposes of this
Section 11, each of the Agent's and the Primary Parties' officers and directors
and each person, if any, who controls the Agent or any of the Primary Parties
within the meaning of the 1933 Act and the 1934 Act shall have the same rights
to contribution as the Primary Parties and the Agent. Any party entitled to
contribution, promptly after receipt of notice of commencement of any action,
suit, claim or proceeding against such party in respect of which a claim for
contribution may be made against another party under this Section 11, will
notify such party from whom contribution may be sought, but the omission to so
notify such party shall not relive the party from whom contribution may be
sought from any other obligation it may have hereunder or otherwise than under
this Section 11.
SECTION 12. REPRESENTATIONS, WARRANTIES AND INDEMNITIES TO SURVIVE
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DELIVERY. All representations, warranties and indemnities and other statements
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contained in this Agreement, or contained in certificates of officers of the
Primary Parties or the Agent submitted pursuant hereto, shall remain operative
and in full force and effect, regardless of any termination or cancellation of
this Agreement or any investigation made by or on behalf of the Agent or its
controlling persons, or by or on behalf of the Primary Parties and shall survive
the issuance of the Shares, and any legal representative, successor or assign of
the Agent, any of the Primary Parties, and any indemnified person shall be
entitled to the benefit of the respective agreements, indemnities, warranties
and representations.
SECTION 13. 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:
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(a) In the event the Holding Company fails to sell the minimum number
of the Conversion Shares within the period specified in accordance with the
provisions of the Plan or as required by the Conversion Regulations and
applicable law, this Agreement shall terminate upon refund by the Primary
Parties to each person who has subscribed for or ordered any of the Conversion
Shares the full amount which it may have received from such person, together
with interest in accordance with Section 3, and no party to this Agreement shall
have any obligation to the other hereunder, except as set forth in Sections 3,
4, 8, 10 and 11 hereof.
(b) If any of the conditions specified in Section 9 shall not have
been fulfilled when and as required by this Agreement, or by the Closing Date,
or waived in writing by the Agent, this Agreement and all of the Agent's
obligations hereunder may be canceled by the Agent by notifying the Bank of such
cancellation in writing at any time at or prior to the Closing Date, and any
such cancellation shall be without liability of any party to any other party
except as otherwise provided in Sections 3, 4, 8, 10 and 11 hereof.
(c) If Agent elects to terminate this Agreement as provided in this
Section, the Bank shall be notified by the Agent as provided in Section 14
hereof.
(d) If this Agreement is terminated in accordance with the provisions
of Sections 3, 9, or 13, the Primary Parties shall pay the Agent the fees earned
pursuant to Section 4 and will reimburse the Agent for its reasonable expenses
pursuant to Section 8, including without limitation accounting, communication,
legal and travel expenses.
SECTION 14. NOTICES. All notices and other communications hereunder shall
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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 Xxxx, Xxxx & Co., 000 Xxxxxxxx Xxxx, Xxxxx 000, Xxxx Xxxxxx, XX
00000, Attention: Xxxxxxx Xxxxx (with a copy to V. Xxxxxx Xxxxxxx, Xxxxxxx
Xxxxxxxx & Xxxx, 0000 Xxxxxxxxxxxx Xxxxxx, X.X., Xxxxx 000, Xxxxxxxxxx, X.X.
00000; notices to the Primary Parties shall be directed to Provident Bank,
000 Xxxxx Xxxx., Xxxxxxxxxx, XX 00000 Attention: Xxxxxx Xxxxxxxx, President and
Chief Executive Officer (with a copy to Xxxxxxx X. Xxxxxx, Esquire, Xxxx Xxxxxx
Xxxxxx Xxxxxxxx & Xxxxxx, P.C., 0000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 000,
Xxxxxxxxxx, X.X. 20015).
SECTION 15. PARTIES. This Agreement shall inure to the benefit of and be
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binding upon the Agent and the Primary Parties, and their respective successors.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person, firm or corporation, other than the parties hereto
and their respective successors and the controlling persons and officers and
directors referred to in Sections 10 and 11 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.
SECTION 16. 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.
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SECTION 17. CONSTRUCTION. This Agreement shall be construed in
------------
accordance with the laws of the State of New Jersey.
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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,
PROVIDENT BANCORP, INC.
(In Formation)
By:
Xxxxxx Xxxxxxxx
President and
Chief Executive Officer
PROVIDENT BANCORP, MHC
(In Formation)
By:
Xxxxxx Xxxxxxxx
President and
Chief Executive Officer
PROVIDENT BANK
By:
Xxxxxx Xxxxxxxx
President and
Chief Executive Officer
The foregoing Agency Agreement is
hereby confirmed and accepted as
of the date first set and above written.
XXXX, XXXX & CO., INC.
By:
Xxx X. Xxxxxxx
President and Chief Executive Officer
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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,
PROVIDENT BANCORP, INC.
(In Formation)
By:
Xxxxxx Xxxxxxxx
President and
Chief Executive Officer
PROVIDENT BANCORP, MHC
(In Formation)
By:
Xxxxxx Xxxxxxxx
President and
Chief Executive Officer
PROVIDENT BANK
By:
Xxxxxx Xxxxxxxx
President and
Chief Executive Officer
The foregoing Agency Agreement is
hereby confirmed and accepted as
of the date first set and above written.
XXXX, XXXX & CO., INC.
By:
Xxx X. Xxxxxxx
President and Chief Executive Officer
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PROVIDENT BANCORP, INC.
(A Federal Corporation)
Up to 3,484,500,000 Shares
(Par Value $.10 Per Share)
______________, 1998
Ladies and Gentlemen:
We have agreed to assist Provident Bancorp, Inc. (the "Holding Company"), a
federal corporation, and Provident Bank ("Provident" or the "Bank"), a federally
chartered mutual savings association, in connection with the offer and sale by
the Holding Company of up to 3,484,500 shares of the common stock, $.10 par
value per share (the "Common Stock"). These shares are to be issued in
connection with the reorganization of the Bank from a mutual savings association
to a stock savings association and wholly owned subsidiary of the Holding
Company (the "Reorganization"), in accordance with the Plan of Reorganization
from a Mutual Savings Association to Mutual Holding Company and Stock Issuance
Plan (the "Plan"). Under the Plan, the Holding Company will become, upon
consummation of the Reorganization, a majority-owned subsidiary of Provident
Bancorp, MHC, a federally chartered mutual holding company. The offering price
per share of the Common Stock has been fixed at $10.00. The Common Stock and
certain of the terms on which it is being offered are more fully described in
the enclosed prospectus dated ______________, 1998 (the "Prospectus").
Capitalized terms not otherwise defined herein shall have the meaning ascribed
to them in the Prospectus.
In connection with the Reorganization, the Holding Company is offering the
Common Stock in a Subscription Offering to the Eligible Account Holders, the
ESOP, the Supplemental Eligible Account Holders and the Other Members. The
Holding Company is also offering all shares of Common Stock offered but not
subscribed for in the Subscription Offering in the Community Offering to members
of the general public, with preference given first to residents of the Bank's
local community of the New York county of Rockland. The Common Stock is also
being offered in accordance with the Plan by a selling group of broker-dealers
in the Syndicated Community Offering.
We are offering the selected dealers (of which you are one) the opportunity
to participate in the solicitation of offers to buy the Common Stock and we will
pay you a fee in the amount of _______ percent (_______%) of the dollar amount
of the Common Stock sold on behalf of the Holding Company by you, as evidenced
by the authorized designation of your firm on the order form or forms for such
Common Stock accompanying the funds transmitted for payment therefor to the
special account established by the Bank for the purpose of holding such funds.
Any purchase of Common Stock made pursuant to this Agreement is subject to the
maximum purchase limitations provided for in the Plan and described in the
Prospectus. It is understood, of course, that payment of your fee will be made
to you directly by the Holding Company for the Common Stock sold on behalf of
the Holding Company by you, as evidenced in accordance with the preceding
sentence. As soon as practicable after the closing date of the Offering, the
Holding Company will remit to you the fees to which you are entitled hereunder.
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Each order form for the purchase of Common Stock must set forth the identity
and address of each person to whom the certificates for such Common Stock should
be issued and delivered. Such order form should clearly identify your firm. You
shall instruct any subscriber who elects to send his order form to you to make
any accompanying check payable to the Bank.
This offer is made subject to the terms and conditions herein set forth and
contained in the Plan and is made only to selected dealers who are (i) members
in good standing of the National Association of Securities Dealers, Inc. (the
"NASD") who are to comply with all applicable rules of the NASD, including,
without limitation, the NASD's Interpretation With Respect to Free-Riding and
Withholding and Section 24 of Article III of the NASD's Rules of Fair Practice,
or (ii) foreign dealers not eligible for membership in the NASD who agree
(A) not to sell any Common Stock within the United States, its territories or
possessions or to persons who are citizens thereof or resident therein and
(B) in making other sales to comply with the above-mentioned NASD
Interpretation, Sections 8, 24 and 36 of the above-mentioned Article III as if
they were NASD members and Section 2S of such Article III as it applies to non-
member brokers or dealers in a foreign country.
Orders for Common Stock will be strictly subject to confirmation and we,
acting on behalf of the Holding Company, reserve the right in our unrestricted
discretion to reject any order in whole or in part, to accept or reject orders
in the order of their receipt or otherwise, and to allot. Neither you nor any
other person is authorized by the Holding Company or by us to give any
information or make any representations other than those contained in the
Prospectus in connection with the sale of any of the Common Stock. No selected
dealer is authorized to act as agent for us when soliciting offers to buy the
Common Stock from the public or otherwise. No selected dealer shall engage in
any stabilizing (as defined in Regulation M promulgated under the Securities
Exchange Act of 1934) with respect to the Common Stock during the offering.
We and each selected dealer assisting in selling Common Stock pursuant hereto
agree to comply with the applicable requirements of the Securities Exchange Act
of 1934 and applicable state rules and regulations. In addition, we and each
selected dealer confirm that the Securities and Exchange Commission interprets
Rule 15c2-8 promulgated under the Securities Exchange Act of 1934 as requiring
that a Prospectus be supplied to each person who is expected to receive a
confirmation of sale 48 hours prior to delivery of such person's order form.
We and each selected dealer within the meaning of Rule 15c3-1(a)(1) further
agree to the extent that our customers desire to pay for shares with funds held
by or to be deposited with us, in accordance with the interpretation of the
Securities and Exchange Commission of Rule 15c2-4 promulgated under the
Securities Exchange Act of 1934, either (a) upon receipt of an executed order
form or direction to execute an order form on behalf of a customer to forward
the offering price for the Common Stock ordered on or before twelve noon of the
business day following receipt or execution of an order form by us to the
Holding Company for deposit in a segregated account or (b) to solicit
indications of interest in which event (i) we will subsequently contact any
customer indicating interest to confirm the interest and give instructions to
execute and return an order form or to receive authorization to execute the
order form on the customer's behalf, (ii) we will mail acknowledgments of
receipt of orders to each customer confirming interest on the business day
following such confirmation, (iii) we will debit accounts of such customers on
the third business day (the "Debit Date") following receipt of the confirmation
referred to in (i), and (iv) we will forward
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completed order forms together with such funds to the Holding Company on or
before twelve noon on the next business day following the Debit Date for deposit
in a segregated account. We and each selected dealer acknowledge that if the
procedure in (b) is adopted, our customers' funds are not required to be in
their accounts until the Debit Date.
Unless earlier terminated by us, this Agreement shall terminate upon the
closing date of the Offering. We may terminate this Agreement or any provisions
hereof at any time by written or telegraphic notice to you. Of course, our
obligations hereunder are subject to the successful completion of the Offering.
You agree that at any time or times prior to the termination of this
Agreement you will, upon our request, report to us the number of shares of
Common Stock sold on behalf of the Holding Company by you under this Agreement.
We shall have full authority to take such actions as we may deem advisable in
respect of all matters pertaining to the offering. We shall be under no
liability to you except for lack of good faith and for obligations expressly
assumed by us in this Agreement.
Upon application to us, we will inform you as to the states in which we
believe the Common Stock has been qualified for sale under, or are exempt from
the requirements of, the respective blue sky laws of such states, but we assume
no responsibility or obligation as to your rights to sell Common Stock in any
state.
Additional copies of the Prospectus and any supplements thereto will be
supplied in reasonable quantities upon request.
Any notice from us to you shall be deemed to have been duly given if mailed,
telephoned, or telegraphed to you at the address to which this Agreement is
mailed.
This Agreement shall be construed in accordance with the laws of the State of
New Jersey.
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Please confirm your agreement hereto by signing and returning the
confirmation accompanying this letter at once to us at Xxxx, Xxxx & Co., Inc.,
000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000. The enclosed duplicate
copy will evidence the agreement between us.
XXXX, XXXX & CO., INC.
By:
----------------------------------------
Xxx X. Xxxxxxx
President and Chief Executive Officer
Agreed and accepted as of , 1998
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