K-FED BANCORP
(a Federal Corporation)
Up to 3,967,500 Shares
(Subject to Increase Up to 4,562,625 Shares)
COMMON STOCK ($.01 Par Value)
Subscription Price $10.00 Per Share
AGENCY AGREEMENT
_____________, 2004
Xxxxx, Xxxxxxxx & Xxxxx, Inc.
000 Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxx 00000-0000
Ladies and Gentlemen:
K-Fed Bancorp, a federal corporation (the "Holding Company"), K-Fed Mutual
Holding Company, a federal mutual holding company (the "MHC"), and Kaiser
Federal Bank, a federally-chartered mutual savings bank (the "Bank")
(collectively, the "Kaiser Parties"), hereby confirm, jointly and severally,
their agreement with Xxxxx, Xxxxxxxx & Xxxxx, Inc. ("KBW" or the "Agent"), as
follows:
SECTION 1. THE OFFERING. On November 25, 2003, the Boards of Directors
of each of the Kaiser Parties adopted a Plan of Stock Issuance (the "Plan")
which provides for the issuance by the Holding Company of a minimum of 2,932,500
and a maximum of 3,967,500 shares (subject to an increase up to 4,562,625
shares) of its common stock, par value $.01 per share (the "Common Stock"), in
the Subscription Offering to: (i) Eligible Account Holders; (ii) Tax Qualified
Employee Plans; and (iii) Supplemental Eligible Account Holders (all capitalized
terms used in this Agreement and not defined herein shall have the meanings set
forth in the Plan).
Pursuant to the Plan, the Holding Company may offer shares of its Common
Stock ("Shares"), if any, remaining after the Subscription Offering in a Direct
Community Offering with a preference to natural persons residing in Los Angeles,
San Bernardino and Santa Xxxxx Counties. If 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 available for sale but not
subscribed for in the Subscription Offering or purchased in the Direct Community
Offering may be offered in a Syndicated Community Offering (together with the
Subscription Offering and the Direct Community Offering, the "Offering") to the
general public on a best efforts basis, as described in Section 4(c) below. Upon
completion of the Offering, pursuant to the Plan, the purchasers of the Shares
will own 46% of the outstanding Common Stock of the Holding Company and the MHC
will own 54% of the outstanding common stock of the Holding Company. The Holding
Company will sell the Shares in the Offering at $10.00 per share (the "Purchase
Price").
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
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Prospectus; and that the Holding Company may reject, in whole or in part, any
subscription received in the Direct 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" or the "SEC") a Registration Statement on Form S-1
(File No. 333-________) 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 rules and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations") differing from the prospectus included in the Registration
Statement at the time it initially becomes effective, the term "Prospectus"
shall refer to the prospectus filed pursuant to Rule 424(b) or (c) from and
after the time said prospectus is filed with the Commission and shall include
any supplements and amendments thereto from and after their dates of
effectiveness or use, respectively.
In connection with the Offering, the Bank and the Holding Company have
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"), an Application for Approval of Stock Issuance by a Subsidiary of
a Mutual Holding Company, including exhibits and the Prospectus, and has filed
amendments thereto as required by the OTS (as so amended, the "OTS
Application").
Concurrently with the execution of this Agreement, the Holding Company is
delivering to the Agent copies of the Prospectus dated ______, 2004 to be used
in the Subscription Offering and Direct Community Offering (if any), and, if
necessary, will deliver copies of the Prospectus or prospectus supplement for
use in a Syndicated Community Offering, as defined in the Prospectus.
SECTION 2. RETENTION OF AGENT. Subject to the terms and conditions
herein set forth, the Kaiser Parties hereby appoint the Agent as their financial
advisor and marketing agent to utilize its best efforts to solicit subscriptions
for Shares and to advise and assist the Kaiser Parties with respect to the
Holding Company's sale of the Shares in the Offering.
On the basis of the representations, warranties, and agreements herein
contained, but subject to the terms and conditions herein set forth, the Agent
accepts such appointment and agrees to consult with and advise the Kaiser
Parties as to the matters set forth in the letter agreement, dated July 28,
2003, between the Bank and KBW (the "Letter Agreement"). It is acknowledged by
the Kaiser Parties that the Agent shall not be required to purchase any Shares
or be obligated to take any action that is inconsistent with all applicable
laws, regulations, decisions or orders. Subscriptions for Shares will be offered
by means of order forms as described in the Prospectus.
If selected broker-dealers are used to assist in the sale of Shares in the
Syndicated Community Offering, the Kaiser Parties hereby, subject to the terms
and conditions of this Agreement, appoint the Agent to manage such
broker-dealers in the Syndicated Community
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Offering. On the basis of the representations and warranties of the Kaiser
Parties contained in, and subject to the terms and conditions of, this
Agreement, the Agent accepts such appointment and agrees to manage the selling
group of broker-dealers in the Syndicated Community Offering.
Except as described in Section 13(b) of this Agreement, the obligations of
the Agent pursuant to this Agreement shall terminate upon the completion or
termination or abandonment of the Plan by the Holding Company or upon
termination of the Offering, but in no event later than 90 days after the
completion of the Subscription Offering (the "End Date"). All fees or expenses
due to the Agent but unpaid will be payable to the Agent in next day funds at
the earlier of the Closing Date (as hereinafter defined) or the End Date. If the
Offering is extended beyond the End Date, the Kaiser Parties and the Agent may
agree to renew this Agreement under mutually acceptable terms and subject to the
approval of any governmental agency or regulatory authority having jurisdiction
over such matters.
If the Holding Company is unable to sell a minimum of 2,932,500 Shares by
the End Date, this Agreement shall terminate and the Holding Company shall
refund to any persons who have subscribed for any of the Shares the full amount
that it may have received from them plus accrued interest, as set forth in the
Prospectus, and none of the parties to this Agreement shall have any obligation
to the other parties hereunder, except as set forth in this Section 2 and in
Sections 9, 11 and 12 hereof.
If the Offering is terminated for any reason not attributable to the
action or inaction of the Agent, the Agent shall be paid the fees due to the
date of such termination pursuant to Section 4(a) below, and to the
reimbursement of expenses pursuant to Section 9 below.
SECTION 3. SALE AND DELIVERY OF SHARES. If all conditions precedent to
the consummation of the Offering, including, without limitation, the sale of all
Shares required by the Plan to be sold, are satisfied, the Holding Company
agrees to issue, or have issued, the Shares sold in the Offering and to release
for delivery certificates for such Shares on the Closing Date (as hereinafter
defined) against payment to the Holding Company by any means authorized by the
Plan; provided, however, that no funds shall be released to the Holding Company
until the conditions specified in Section 10 hereof shall have been complied
with to the reasonable satisfaction of the Agent and its counsel. The release of
Shares against payment therefor shall be made on a date and at a place
acceptable to the Kaiser Parties and the Agent. Certificates for Shares shall be
delivered directly to the purchasers in accordance with their directions. The
date upon which the Holding Company shall release or deliver the Shares sold in
the Offering, in accordance with the terms herein, is called the "Closing Date."
SECTION 4. COMPENSATION. The Agent shall receive the following
compensation for its services hereunder:
(a) A management fee of $25,000, paid in accordance with the terms of
the Letter Agreement. Such fees shall be deemed to have been earned when due.
Should the Offering be terminated for any reason not attributable to the action
or inaction of the Agent, the Agent shall
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have earned and be entitled to be paid fees accruing through the stage at which
point the termination occurred.
(b) A Success Fee equal to 1.35% of the aggregate purchase price of the
common stock sold in the Subscription Offering and Direct Community Offering
(excluding shares purchased by the Bank's officers, directors or employees (or
their immediate family members) plus any employee stock ownership plan,
tax-qualified or stock-based compensation plans (except individual retirement
accounts) or similar plans created by the Bank for some or all of its directors
or employees) shall be charged upon consummation of the Offering. The management
fee described in Section 4(a) shall be applied against the Success Fee described
in this Section 4(b).
(c) If any of the Shares remain available after the Subscription Offering
and the Direct Community Offering, at the request of the Bank, KBW will seek to
form a syndicate of registered broker-dealers ("Selected Dealers") to assist in
the sale of such Shares on a best efforts basis, subject to the terms and
conditions set forth in the selected dealers agreement. KBW will endeavor to
distribute the Shares among the Selected Dealers in a fashion which best meets
the distribution objectives of the Bank and the Plan. KBW will be paid a fee not
to exceed 5.5% of the aggregate purchase price of the Shares sold by the
Selected Dealers. From this fee, KBW will pass on to the Selected Dealers who
assist in such offering an amount competitive with gross underwriting discounts
charged at such time for comparable amounts of stock sold at a comparable price
per share in a similar market environment. Fees with respect to purchases
effected with the assistance of Selected Dealers other than KBW shall be
transmitted by KBW to such Selected Dealers. The decision to utilize Selected
Dealers will be made by the Bank upon consultation with KBW. In the event, with
respect to any stock purchases, fees are paid pursuant to this Section 4(c),
such fees shall be in lieu of and not in addition to payment pursuant to Section
4(b).
Full payment of KBW's fees, as described above, shall be made in next day
funds on the earlier of the Closing Date or a determination by the Bank to
terminate or abandon the Plan.
SECTION 5. CLOSING. The closing for the sale of the Shares shall take
place on the Closing Date at such location as mutually agreed upon by the Agent
and the Kaiser Parties. At the closing, the Kaiser Parties shall deliver to the
Agent in next day funds the commissions, fees and expenses due and owing to the
Agent as set forth in Sections 4 and 9 hereof and the opinions and certificates
required hereby, and other documents deemed reasonably necessary by the Agent
shall be executed and delivered to effect the sale of the Shares as contemplated
hereby and pursuant to the terms of the Prospectus.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE KAISER PARTIES. The
Kaiser Parties jointly and severally represent and warrant to the Agent that:
(a) Each of the Kaiser Parties has all such power, authority,
authorizations, approvals and orders as may be required to enter into this
Agreement, and, as of the Closing Date, each of the Kaiser Parties will have all
such power, authority, authorizations, approvals and orders as may be required
to carry out the provisions and conditions hereof and to issue and sell the
Shares to be sold by the Holding Company, as provided herein and as described in
the Prospectus. The
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consummation of the Offering, the execution, delivery and performance of this
Agreement and the Letter Agreement and the consummation of the transactions
contemplated herein have been duly and validly authorized by all necessary
corporate action on the part of each of the Kaiser Parties. This Agreement has
been validly executed and delivered by each of the Kaiser Parties, and is a
valid, legal and binding obligation of each of the Kaiser Parties, in each case
enforceable in accordance with its terms, except as the legality, validity,
binding nature and enforceability thereof may be limited by (i) bankruptcy,
insolvency, moratorium, reorganization, conservatorship, receivership or other
similar laws relating to or affecting the enforcement of creditors' rights
generally, (ii) general equity principles regardless of whether such
enforceability is considered in a proceeding in equity or at law and (iii) the
extent, if any, that the provisions of Sections 11 or 12 hereof may be
unenforceable as against public policy.
(b) The Registration Statement was declared effective by the Commission on
_________, 2004. No stop order has been issued with respect to the Registration
Statement. No proceedings related to the Registration Statement have been
initiated or, to the knowledge of the Kaiser 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 1933 Act Regulations. The Registration
Statement and the Prospectus did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. At the time any Rule 424(b) or (c) Prospectus was
filed with the Commission and at the Closing Date referred to in Section 5, the
Registration Statement, including the Prospectus (including any amendment or
supplement thereto) and, when taken together with the Prospectus, any Blue Sky
Application or Sales Information (as such terms are defined in Section 11
hereof) authorized for use by any of the Kaiser Parties in connection with the
Offering, will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that the representations and warranties in
this Section 6(b) shall not apply to statements or omissions made in reliance
upon and in conformity with written information furnished to the Kaiser Parties
by the Agent expressly regarding the Agent for use in the Prospectus under the
caption "The Stock Offering - Marketing Arrangements."
(c) The OTS Application, including the Prospectus, was prepared by the
Holding Company and the Bank and filed with the OTS. The OTS Application was
approved in writing by the OTS on ______, 2004. The Prospectus has been
authorized for use by the OTS. As of the date of the above-referenced letter
from the OTS and at all times subsequent thereto until the Closing Date, the OTS
Application, including the Prospectus (including any amendment or supplement
thereto), will comply in all material respects with the Conversion Regulations,
except to the extent waived in writing by the OTS, and with all applicable
provisions of the Securities Exchange Act of 1934, as amended (the "1934 Act")
and the rules and regulations of the SEC under the 1934 Act (the "1934 Act
Regulations"). The OTS Application, including the Prospectus (including any
amendment or supplement thereto), does not include any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in
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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 Kaiser Parties by the Agent expressly
regarding the Agent for use in the Prospectus contained in the OTS Application
under the caption "The Stock Offering - Marketing Arrangements."
(d) No order has been issued by the OTS, the SEC or any state securities
administrator preventing or suspending the use of the Prospectus or any
supplemental sales literature authorized by the Kaiser Parties for use in
connection with the offering and no action by or before any such government
entity to revoke any approval, authorization or order of effectiveness related
to the Offering is pending or, to the best knowledge of the Kaiser Parties,
threatened.
(e) Pursuant to the Conversion Regulations, the Plan has been approved by
the Boards of Directors of each of the Kaiser Parties; at the Closing Date, the
offer and sale of the Shares will have been conducted in all material respects
in accordance with the Plan, the Conversion Regulations and all other applicable
laws, regulations, decisions and orders, including all terms, conditions,
requirements and provisions precedent to the Offering imposed upon the Kaiser
Parties by the OTS, the SEC or any other regulatory authority, other than those
which the regulatory authority permits to be completed after the Offering and in
the manner described in the Prospectus. To the best knowledge of the Kaiser
Parties, no person has sought to obtain review of the final action of the OTS in
approving the Plan or the OTS Application pursuant to applicable statutes or
regulations.
(f) RP Financial, LC., which prepared the appraisal of the aggregate pro
forma market value of the Common Stock on which the Offering was based (the
"Appraisal"), has advised the Kaiser Parties in writing that it is independent
with respect to each of the Kaiser Parties within the meaning of the Conversion
Regulations and the Kaiser Parties believe RP Financial, LC. to be expert in
preparing appraisals of savings institutions.
(g) McGladrey & Xxxxxx, LLP, which certified the financial statements
filed as part of the Registration Statement and the OTS Application, has advised
the Kaiser Parties that it is an independent certified public accountant within
the meaning of the Code of Ethics of the American Institute of Certified Public
Accountants, and that McGladrey & Xxxxxx, LLP is, with respect to the Kaiser
Parties and each subsidiary thereof, independent certified public accountants
within the meaning of 12 C.F.R. Sections 563c.3 and 562.4(d) and as required by
the 1933 Act and the 1933 Act Regulations.
(h) The financial statements, schedules and notes related thereto that are
included in the Registration Statement which are part of the Prospectus fairly
present the financial condition, results of operations, equity and cash flows of
the Bank at the respective dates indicated and for the respective periods
covered thereby and comply as to form in all material respects with the
applicable accounting requirements of Title 12 of the Code of Federal
Regulations, Regulation S-X of the SEC and generally accepted accounting
principles ("GAAP") (including those requiring the recording of certain assets
at their current market value). Such financial statements, schedules and notes
related thereto have been prepared in accordance with GAAP consistently applied
through
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the periods involved (except as noted in the notes to the financial statements),
present fairly in all material respects the information required to be stated
therein and are consistent with the most recent financial statements and other
reports filed by the Bank with the OTS and the Federal Deposit Insurance
Corporation ("FDIC"), and any other applicable regulatory authority, except that
accounting principles employed in such regulatory filings conform to the
requirements of the OTS and the SEC and not necessarily to GAAP. The other
financial, statistical and pro forma information and related notes included in
the Prospectus present fairly the information shown therein on a basis
consistent with the audited and unaudited financial statements included in the
Prospectus, and as to the pro forma adjustments, the adjustments made therein
have been consistently applied on the basis described therein.
(i) Since the respective dates as of which information is given in the
Registration Statement including the Prospectus (including any amendment or
supplement thereto): (i) there has not been any material adverse change in the
financial condition, results of operations, capital, assets, properties or
business of the Kaiser Parties, taken as a whole, whether or not arising in the
ordinary course of business; (ii) there has not been any material increase in
the total assets of the Bank, long-term debt of the Bank or in the principal
amount of the Bank's assets that are classified by the Bank as substandard,
doubtful or loss or in loans past due 90 days or more or real estate acquired by
foreclosure, by deed-in-lieu of foreclosure or deemed in-substance foreclosure,
or any material decrease in equity capital or total assets of the Bank, nor have
the Kaiser Parties issued any securities or incurred any liability or obligation
for borrowing other than in the ordinary course of business; (iii) the Kaiser
Parties have not entered into any material transactions that have not been
disclosed in the Prospectus; (iv) there has not been any material adverse change
in the aggregate dollar amount of the Bank's deposits or its consolidated net
worth; (v) there has been no material adverse change in the Kaiser Parties'
relationships with their insurance carriers, including, without limitation,
cancellation or other termination of the Kaiser Parties' fidelity bond or any
other type of insurance coverage; (vi) except as disclosed in the Prospectus,
there has been no material change in executive management of the Kaiser Parties,
no member of which has any material undisclosed liability of any kind,
contingent or otherwise; (vii) none of the Kaiser Parties has sustained any
material loss or interference with its respective business or properties from
fire, flood, windstorm, earthquake, accident or other calamity, whether or not
covered by insurance; (viii) none of the Kaiser Parties is in default in the
payment of principal or interest on any outstanding debt obligations; (ix) the
capitalization, liabilities, assets, properties and business of the Kaiser
Parties conform in all material respects to the descriptions thereof contained
in the Prospectus; and (x) none of the Kaiser Parties has any material
contingent liabilities, except as set forth in the Prospectus.
(j) The Holding Company is a stock corporation duly organized, validly
existing and in good standing under the laws of the United States, with
corporate power and authority to own its properties and to conduct its business
as described in the Registration Statement and the Prospectus, and is qualified
to transact business in each jurisdiction in which the conduct of its business
requires such qualification, unless the failure to qualify in one or more of
such jurisdictions would not have a material adverse effect on the financial
condition, results of operation, capital, properties, business affairs or
prospects of the Kaiser Parties taken as a whole (a "Material Adverse Effect").
As of the Closing Date, the Holding Company will have obtained all
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licenses, permits and other governmental authorizations required for the conduct
of its business, except those that individually or in the aggregate would not
have a Material Adverse Effect; and as of the Closing Date, all such licenses,
permits and governmental authorizations will be in full force and effect, and
the Holding Company will be in compliance therewith in all material respects,
and the Holding Company will be in compliance in all material respects with all
laws, rules, regulations and orders applicable to the operation of its business.
(k) As of the date of this Agreement, the Holding Company does not own any
equity securities or any equity interest in any business enterprise.
(l) The MHC is duly organized and is validly existing as a
federally-chartered mutual holding company under the laws of the United States,
and is duly authorized to conduct its business and own its property as described
in the Registration Statement and the Prospectus; as of the Closing Date, the
MHC has all licenses, permits and other governmental authorizations required for
the conduct of its business except those that individually or in the aggregate
would not have a Material Adverse Effect; as of the Closing Date, all such
licenses, permits and governmental authorizations will be in full force and
effect; the MHC is 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.
(m) 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.
(n) The MHC is not authorized to issue any shares of capital stock.
(o) In connection with the MHC formation, the rights of the members of the
Bank in its mutual form were transferred to the MHC in accordance with the Plan
and the requirements of the OTS regulators.
(p) The Bank has been duly organized and is a validly existing
federally-chartered savings bank in the stock form of organization and, upon
consummation of the Offering, will be a wholly-owned subsidiary of the Holding
Company, duly authorized to conduct its business and own its property as
described in the Registration Statement and the Prospectus; the Bank has
obtained all licenses, permits and other governmental authorizations currently
required for the conduct of its business, except those that individually or in
the aggregate would not have a Material Adverse Effect; all such licenses,
permits and governmental authorizations are in full force and effect, and the
Bank is in compliance with all laws, rules, regulations and orders applicable to
the operation of its business; except where failure to be in compliance would
not, individually or in the aggregate, have a Material Adverse Effect. The Bank
does not own equity securities or any equity interest in any other active
business enterprise except Federal Home Loan Bank of San Francisco ("FHLB-San
Francisco") stock or as described in the Prospectus or as would not be material
to the operations of the Bank. Upon completion of the Offering, (i) all of the
authorized and outstanding capital stock of the Bank is owned by the Holding
Company free and clear of any mortgage, pledge, lien, encumbrance, claim or
restriction of any kind and (ii) the Holding Company has no direct subsidiaries
other than as disclosed in the Prospectus. At the Closing Date, the Offering
will have
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been effected in all material respects in accordance with all applicable
statutes, regulations, decisions and orders; and, except with respect to the
filing of certain post-sale, post-Offering reports, and documents in compliance
with the 1933 Act Regulations, all terms, conditions, requirements and
provisions with respect to the Offering imposed by the OTS or any other
governmental agency, if any, will have been complied with by the Kaiser Parties
in all material respects or appropriate waivers will have been obtained and all
material notice and waiting periods will have been satisfied, waived or elapsed.
(q) The authorized capital stock of the Bank consists of ______ shares of
common stock, of $____ par value per share (the "Bank Common Stock"), and _____
shares of preferred stock, no par value (the "Bank Preferred Stock"), of which
__ shares of Bank Common Stock and no shares of Bank Preferred Stock are issued
and outstanding as of the date hereof; no additional shares of Bank Common Stock
and no shares of Bank Preferred Stock will be issued.
(r) The Bank has no subsidiaries.
(s) The Bank is a member of the FHLB-San Francisco. The deposit accounts
of the Bank are insured by the FDIC up to the maximum legal limits, and no
proceedings for the termination or revocation of such insurance are pending or,
to the best knowledge of the Kaiser Parties, threatened.
(t) Upon completion of the Offering, 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 except for shares
held by the MHC, no shares of Common Stock have been or will be issued and
outstanding prior to the Closing Date; the Shares to be subscribed for in the
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 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 as set forth in the Plan and the Prospectus.
(u) None of the Kaiser Parties is (i) in violation of their respective
Articles of Incorporation, Charters or Bylaws, as applicable, or (ii) in 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 it is a party or by which it or any of its property may be
bound which would result in a Material Adverse Effect. The execution and
delivery of this Agreement and the consummation of the transactions herein
contemplated will not: (i) violate or conflict with the articles of
incorporation, charter or bylaws of any of the Kaiser Parties; (ii) conflict
with, or constitute a breach of or default under, any material contract, lease
or other instrument to which any of the Kaiser Parties is a party or by which
any of the properties of the Kaiser Parties may be bound, or any applicable law,
rule, regulation or order, except for such conflicts, breaches or defaults that
would not individually or in the aggregate result in a Material
9
Adverse Effect; (iii) violate any authorization, approval, judgment, decree,
order, statute, rule or regulation applicable to the Kaiser Parties, except for
such violations which would not have a Material Adverse Effect; or (iv) result
in the creation of any material lien, charge or encumbrance upon any property of
the Kaiser Parties, except for such liens, charges or encumbrances that would
not individually or in the aggregate have a Material Adverse Effect.
(v) All documents made available to or delivered or to be made available
to or delivered by the Kaiser Parties or their representatives in connection
with the issuance and sale of the Shares, including records of account holders
and depositors of the Bank, or in connection with the Agent's exercise of due
diligence, except for those documents which were prepared by parties other than
the Kaiser Parties or their representatives, to the best knowledge of the Kaiser
Parties, were on the dates on which they were delivered, or will be on the dates
on which they are to be delivered, true, complete and correct in all material
respects.
(w) No default exists, and no event has occurred which with notice or
lapse of time, or both, would constitute a default on the part of any of the
Kaiser Parties, in the due performance and observance of any term, covenant or
condition of any indenture, mortgage, deed of trust, note, bank loan or credit
agreement or any other instrument or agreement to which any of the Kaiser
Parties is a party or by which any of their property is bound or affected in any
respect which, in any such case, would have a Material Adverse Effect, and such
agreements are in full force and effect; and no other party to any such
agreements has instituted or, to the knowledge of any of the Kaiser Parties,
threatened any action or proceeding wherein any of the Kaiser Parties is alleged
to be in default thereunder under circumstances where such action or proceeding,
if determined adversely to any of the Kaiser Parties, would have a Material
Adverse Effect.
(x) The Kaiser Parties have good and marketable title to all assets which
are material to the businesses of the Kaiser Parties, free and clear of all
liens, charges, encumbrances, restrictions or other claims, except such as are
described in the Prospectus or where the absence of good and marketable title
would not have a Material Adverse Effect; and all of the leases and subleases
which are material to the businesses of the Kaiser Parties, including those
described in the Registration Statement or Prospectus, are in full force and
effect.
(y) The Kaiser Parties are not in violation of any directive from the OTS,
the FDIC or any other agency to make any material change in the method of
conducting their respective businesses; the Kaiser 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 have a Material Adverse
Effect, and there is no charge, investigation, action, suit or proceeding before
or by any court, regulatory authority or governmental agency or body pending or,
to the knowledge of any of the Kaiser Parties, threatened, which might
materially and adversely affect the Offering, the performance of this Agreement
or the consummation of the transactions contemplated in the Plan as described in
the Registration Statement, or which might result in a Material Adverse Effect.
10
(z) Prior to the Closing Date, the Kaiser Parties will have received an
opinion of their special counsel, Xxxxxxx & Xxxxxxxxx, with respect to the
federal income tax consequences of the Offering, as described in the
Registration Statement and the Prospectus, an opinion of RSM McGladrey, Inc.
with respect to the state tax consequences of the Offering, as described in the
Registration Statement and the Prospectus; and the facts and representations
upon which such opinions will be based, will be truthful, accurate and complete,
and none of the Kaiser Parties will take any action inconsistent therewith.
(aa) The Bank has filed all required federal and state tax returns, paid
all taxes that have become due and payable, except where permitted to be
extended or where the failure to pay such taxes would not have a Material
Adverse Effect, have made adequate reserves for similar future tax liabilities
to the extent required by GAAP and no deficiency has been asserted with respect
thereto by any taxing authority.
(bb) 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 Kaiser Parties of this Agreement or the issuance of the Shares,
except for the approval of the OTS, the Commission (which has been received) and
the Nasdaq Stock Market, Inc. ("Nasdaq"), and any necessary qualification,
notification, or registration or exemption under the securities or blue sky laws
of the various states in which the Shares are to be offered.
(cc) None of the Kaiser 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 National
Association of Securities Dealers, Inc. ("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 as contemplated
hereunder; or (iv) engaged any intermediary between the Agent and the Kaiser
Parties in connection with the Offering or the offering of shares of the Common
Stock, and no person is being compensated in any manner for such services.
Appropriate arrangements have been made for placing the funds received from
subscriptions for Shares in a special interest-bearing account with the Bank
until all Shares are sold and paid for, with provision for refund to the
purchasers in the event that the Offering is not completed for whatever reason
or for delivery to the Holding Company if all Shares are sold.
(dd) To the best knowledge of the Kaiser Parties, the Kaiser Parties have
not made any payment of funds of the Kaiser Parties as a loan to any person for
the purchase of Shares, except for the Holding Company's or the Bank's loan to
the Tax Qualified Employee Plans, the proceeds of which may be used to purchase
Shares, or has made any other payment or loan of funds prohibited by law, and no
funds have been set aside to be used for any payment prohibited by law.
11
(ee) 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.
(ff) The Kaiser Parties have not relied upon Agent or its counsel for any
legal, tax or accounting advice in connection with the Offering.
(gg) The records used by the Kaiser Parties to determine the identity of
Eligible Account Holders and Supplemental Eligible Account Holders are accurate
and complete in all material respects.
(hh) None of the Kaiser Parties is required to be registered as an
investment company under the Investment Company Act of 1940.
(ii) The Kaiser 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 or regulations; no action, suit, regulatory investigation or
other proceeding is pending or threatened against the Kaiser Parties relating to
environmental protection, nor do the Kaiser 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 Kaiser Parties or, to the
best knowledge of the Bank, in which the Bank has a security interest.
(jj) 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 all requirements of federal, state and local
law pertaining to lending, including, without limitation, truth in lending
(including the requirements of Regulation 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.
(kk) The Kaiser Parties have taken all actions necessary to obtain at
Closing a Blue Sky Memorandum from Jenkens & Xxxxxxxxx.
(ll) Any certificates signed by an officer of any of the Kaiser 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 Kaiser Parties to the Agent as
to the matters covered thereby with the same effect as if such representation
and warranty were set forth herein.
SECTION 7. REPRESENTATIONS AND WARRANTIES OF THE AGENT. Agent represents
and warrants to the Kaiser Parties that:
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(a) Agent is a duly organized New York corporation and is validly existing
and in good standing under the laws of the State of New York with full power and
authority to provide the services to be furnished to the Kaiser Parties
hereunder.
(b) The execution and delivery of this Agreement and the Letter Agreement
and the consummation of the transactions contemplated herein and therein have
been duly and validly authorized by all necessary corporate action on the part
of Agent, and each of this Agreement and the Letter Agreement is the legal,
valid and binding agreement of Agent, enforceable in accordance with its terms,
except as the legality, validity, binding nature and enforceability thereof may
be limited by (i) bankruptcy, insolvency, moratorium, reorganization,
conservatorship, receivership or other similar laws relating to or affecting the
enforcement of creditors' rights generally, (ii) general equity principles
regardless of whether such enforceability is considered in a proceeding in
equity or at law and (iii) the extent, if any, that the provisions of Sections
11 or 12 hereof may be unenforceable as against public policy.
(c) Each of Agent and its employees, agents and representatives who shall
perform any of the services hereunder shall have, and until the Offering is
consummated or terminated shall maintain, all licenses, approvals and permits
necessary to perform such services and shall comply in all material respects
with all applicable laws and regulations in connection with the performance of
such services.
(d) The execution and delivery of this Agreement by the Agent, the
consummation of the transactions contemplated hereby and compliance with the
terms and provisions hereof will not conflict with, or result in a breach of,
any of the terms, provisions or conditions of, or constitute a default (or an
event which with notice or lapse of time or both would constitute a default)
under the Articles of Incorporation or Bylaws of the Agent or any material
agreement, indenture or other instrument to which the Agent is a party or by
which its property is bound.
(e) 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.
(f) Agent is registered as a broker/dealer pursuant to Section 15(b) of
the 1934 Act and is a member in good standing of the NASD.
(g) Any funds received in the Offering by the Agent will be handled by the
Agent in accordance with Rule 15c2-4 under the 1934 Act to the extent
applicable.
SECTION 8. COVENANTS OF THE KAISER PARTIES. The Kaiser Parties hereby
jointly and severally covenant to the Agent as follows:
(a) The Holding Company will not, at any time after the date the
Registration Statement is initially filed, file any amendment or supplement to
the Registration Statement without providing the Agent and its counsel a
reasonable opportunity to review and comment on such amendment or supplement.
The Holding Company will furnish promptly to the Agent and its
13
counsel copies of all correspondence from the Commission with respect to the
Registration Statement and the Holding Company's responses thereto.
(b) The Kaiser Parties will not, at any time after the date any OTS
Application is approved, file any amendment or supplement to such Application
without providing the Agent and its counsel a reasonable opportunity to review
and comment on such amendment or supplement. The Kaiser Parties will furnish
promptly to the Agent and its counsel copies of all correspondence from the OTS
with respect to the OTS Application and the Kaiser Parties' responses thereto.
(c) The Kaiser Parties 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 Application to be
approved by the OTS, as applicable, 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 OTS
Application as amended, has received the approval of the OTS, (iii) of the
receipt of any comments from the OTS or any other governmental entity with
respect to the Offering or the transactions contemplated by this Agreement, (iv)
of any request by the Commission, the OTS, or any other governmental entity for
any amendment or supplement to the Registration Statement or the OTS Application
or for additional information, (v) of the issuance by the Commission or the OTS,
or any other governmental agency of any order or other action suspending the
Offering or the use of the Registration Statement or the Prospectus or any other
filing of the Kaiser Parties under the OTS Regulations or other applicable law,
or the threat of any such action, (vi) of the issuance by the Commission, the
OTS or any other state authority of any stop order suspending the effectiveness
of the Registration Statement or of the initiation or threat of initiation or
threat of any proceedings for that purpose or (vii) of the occurrence of any
event mentioned in subsection (g) below. The Kaiser Parties will make every
reasonable effort to prevent the issuance by the Commission, the OTS or any
other state authority of any order referred to in (vi) and (vii) above and, if
any such order shall at any time be issued, to obtain the lifting thereof at the
earliest possible time.
(d) The Kaiser Parties will deliver to the Agent and to its counsel two
conformed copies of each of the following documents, with all exhibits: the OTS
Application as originally filed and of each amendment or supplement thereto, and
the Registration Statement, as originally filed and each amendment thereto.
Further, the Kaiser Parties will deliver such additional copies of the foregoing
documents to counsel to the Agent as may be required for any NASD filings. In
addition, the Kaiser 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 Kaiser Parties will furnish to the Agent, from time to time during
the period when the Prospectus (or any later prospectus related to the Offering)
is required to be delivered under the 1933 Act or the 1934 Act, such number of
copies of such Prospectus (as amended or supplemented) as the Agent may
reasonably request for the purposes contemplated by the 1933 Act, the 1933 Act
Regulations, 1934 Act or the 1934 Act Regulations. The Holding Company
authorizes the Agent to use the Prospectus (as amended or supplemented, if
amended or supplemented) in any lawful manner contemplated by the Plan in
connection with the sale of the Shares by the Agent.
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(f) The Kaiser Parties will comply in all material respects with any and
all terms, conditions, requirements and provisions with respect to the Offering
and the transactions contemplated thereby imposed by the Commission, by
applicable state law and regulations, and by the 1933 Act, the 1934 Act, the
1933 Act Regulations and the 1934 Act Regulations, to be complied with prior to
the Closing Date; and when the Prospectus is required to be delivered, the
Kaiser Parties will comply in all material respects, at their own expense, with
all requirements imposed upon them by the OTS, the Conversion Regulations
(except as modified or waived in writing by the OTS), the Commission, by
applicable state law and regulations and by the 1933 Act, the 1934 Act, the 1933
Act Regulations and the 1934 Act Regulations, in each case as from time to time
in force, so far as is necessary to permit the continuance of sales or dealing
in shares of Common Stock during such period in accordance with the provisions
hereof and the Prospectus.
(g) During any period when the Prospectus is required to be delivered,
each of the Kaiser Parties will inform the Agent of any event or circumstance of
which it is or becomes aware as a result of which the Registration Statement
and/or Prospectus, as then supplemented or amended, would include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein not misleading. If it is necessary, in the
reasonable opinion of counsel for the Kaiser 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 Kaiser Parties
will, at their expense, prepare, file with the Commission and the OTS, and
furnish to the Agent, a reasonable number of copies of an amendment or
amendments of, or a supplement or supplements to, the Registration Statement and
the Prospectus (after a reasonable time for review by counsel for the Agent)
which will amend or supplement the Registration Statement and/or the Prospectus
so that as amended or supplemented, it will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances existing at the time, not
misleading. For the purpose of this subsection, each of the Kaiser Parties will
furnish such information with respect to itself as the Agent may from time to
time reasonably request.
(h) 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 as are required
by the applicable regulatory authority in connection with such registration or
qualification for a period of not less than one year from the effective date of
the Registration Statement.
(i) The Holding Company and the Bank will not sell or issue, contract to
sell or otherwise dispose of, for a period of 90 days after the date hereof, any
shares of their capital stock or securities convertible into or exercisable for
shares of their capital stock, without the Agent's
15
prior written consent other than in connection with any plan or arrangement
described in the Prospectus, including existing stock benefit plans.
(j) For a 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 the Bank and (iv) from time-to-time, such other
publicly available information concerning the Kaiser Parties as the Agent may
reasonably request.
(k) The Kaiser Parties will use the net proceeds from the sale of the
Common Stock in the manner set forth in the Prospectus under the caption "How We
Intend to Use the Proceeds."
(l) The Kaiser Parties 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, the 1934 Act, the 1933
Act Regulations and the 1934 Act Regulations, and the laws of any state in which
the shares are qualified for sale.
(m) Prior to the Closing Date, the Holding Company shall register its
Common Stock under Section 12(b) or 12(g) of the 1934 Act, and will request that
such registration statement shall be effective no later than the completion of
the Offering. The Holding Company shall maintain the effectiveness of such
registration for not less than three years.
(n) For so long as the Shares are registered under the 1934 Act, the
Holding Company will furnish to its stockholders as soon as practicable after
the end of each fiscal year such reports and other information as are required
to be furnished to its stockholders under the 1934 Act (including consolidated
financial statements of the Holding Company and its subsidiaries, certified by
independent public accountants).
(o) 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 "How We Intend To
Use The Proceeds Of The Offering."
(p) The Kaiser Parties will maintain appropriate arrangements for
depositing all funds received from persons mailing subscriptions for, or orders
to purchase, Shares on an interest bearing basis as described in the Prospectus
until the Closing Date and satisfaction of all conditions precedent to the
release of the Holding Company's obligation to refund payments received from
persons subscribing for or ordering Shares in the Offering, in accordance with
the Plan as described in the Prospectus, or until refunds of such funds have
been made to the persons entitled thereto or withdrawal authorizations canceled
in accordance with the Plan and as described in the Prospectus. The Kaiser
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
16
enable the Kaiser 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.
(q) The Kaiser 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 Kaiser 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 Kaiser Parties shall comply with any and all terms, conditions,
requirements and provisions with respect to the Offering and the transactions
contemplated thereby imposed by the OTS, the Home Owners' Loan Act, the FDIC,
the Conversion Regulations, the Commission, the 1933 Act and the 1933 Act
Regulations, the 1934 Act and the 1934 Act Regulations to be complied with
subsequent to the Closing Date. The Holding Company will comply with all
provisions of all undertakings contained in the Registration Statement.
(t) The Kaiser 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 allow the Agent to manage the allocation process in order to permit
the Holding Company to carry out the allocation of the Shares in the event of an
oversubscription, and such information shall be accurate and reliable in all
material respects.
(v) Prior to the Closing Date, each of the Kaiser Parties will inform the
Agent of any event or circumstances of which it is aware as a result of which
the Registration Statement and/or Prospectus, as then amended or supplemented,
would contain an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein not misleading.
(w) The Holding Company will not deliver the Shares until the Kaiser
Parties have satisfied or caused to be satisfied each condition set forth in
Section 10 hereof, unless such condition is waived in writing by the Agent.
(x) On or before the Closing Date, the Kaiser Parties will have used their
best efforts to obtain approval for quotation of shares of the Common Stock on
the Nasdaq National Market System by the Closing Date and will use their best
efforts to maintain such quotation and will have completed all conditions
precedent to the Offering 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
Offering imposed upon any of the Kaiser Parties by the OTS, the Commission or
any other regulatory authority and in the manner described in the Prospectus.
17
(y) Immediately upon completion of the sale by the Holding Company of the
Shares contemplated by the Plan and the Prospectus, (i) the MHC 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
continue to be owned by the Holding Company, (iii) the Holding Company shall
have no direct subsidiaries other than the Bank and (iv) the Offering 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 Offering (except those that are conditions subsequent) imposed by the
Commission, the OTS or any other governmental agency, if any, shall have been
complied with by the Kaiser 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.
(z) On or before the Closing Date, the Kaiser Parties will have completed
all conditions precedent to the Offering 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 Offering imposed upon any of the Kaiser Parties by
the OTS, the Commission or any other regulatory authority and in the manner
described in the Prospectus.
SECTION 9. PAYMENT OF EXPENSES. Whether or not the Offering is completed
or the sale and issuance of the Shares by the Holding Company is consummated,
the Kaiser Parties will pay for all their expenses incident to the performance
of this Agreement customarily borne by issuers, including without limitation:
(a) the preparation and filing of the OTS Application; (b) the preparation,
printing, filing, delivery and mailing of the Registration Statement, including
the Prospectus, and all documents related to the Offering; (c) all filing fees
and expenses in connection with the qualification or registration of the Shares
for offer and sale by the Holding Company 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; (f) fees
and expenses related to auditing and accounting services; (g) expenses relating
to advertising, temporary personnel, investor meetings and the stock information
center; (h) transfer agent fees and costs of preparation and distribution of
stock certificates; and (i) Nasdaq application and listing fees. The Kaiser
Parties also agree to reimburse Agent for reasonable out-of-pocket expenses,
including costs of travel, meals and lodging, photocopying, telephone, facsimile
and couriers, as well as legal fees and expenses, incurred by Agent in
connection with the services hereunder. Agent will not incur legal fees in
excess of $40,000 (including counsel's out-of-pocket expenses) without the
approval of the Bank. If the Agent incurs any expenses on behalf of the Kaiser
Parties, the Kaiser Parties will pay or reimburse the Agent for such expenses
regardless of whether the Offering is successfully completed, and such
reimbursements will not be included in the expense limitations set forth above.
The Kaiser Parties acknowledge, however, that such limitations may be increased
by the mutual consent of the Bank and Agent in the event of delay in the
Offering requiring the Agent to utilize a Syndicated Community Offering, a delay
as a result of circumstances requiring material additional work by Agent or its
counsel or an update of the financial information in tabular form contained in
the
18
Prospectus for a period later than September 30, 2003. Not later than two
days prior to the Closing Date, the Agent will provide the Bank with a detailed
accounting of all reimbursable expenses to be paid at the Closing in next day
funds. In the event the Bank determines to abandon or terminate the Plan prior
to Closing, payment of such expenses shall be made in next day funds on the date
such determination is made.
SECTION 10. CONDITIONS TO THE AGENT'S OBLIGATIONS. The obligations of the
Agent hereunder and the occurrence of the Closing and the Offering are subject
to the condition that all representations and warranties of the Kaiser Parties
herein contained are, at and as of the commencement of the Offering and (except
to the extent such representations and warranties speak as of an earlier date)
at and as of the Closing Date, true and correct, the condition that the Kaiser
Parties shall have performed, in all material respects, all of their obligations
hereunder to be performed on or before such dates and to the following further
conditions:
(a) At the Closing Date, the Kaiser Parties shall have conducted the
Offering in all material respects in accordance with the Plan, the Conversion
Regulations and all other applicable laws, regulations, decisions and orders,
including all terms, conditions, requirements and provisions precedent to the
Offering imposed upon them by the OTS and the SEC or any other regulatory
authority.
(b) The Registration Statement shall have been declared effective by the
SEC, the OTS Application shall have been approved by the OTS for mailing prior
to the commencement of the Offering and no stop order or other action suspending
the effectiveness of the Registration Statement shall have been issued under the
1933 Act or proceedings therefor initiated or, to the knowledge of the Kaiser
Parties, threatened by the Commission or any state authority and no order or
other action suspending the authorization for use of the Prospectus or the
consummation of the Offering shall have been issued or proceedings therefor
initiated or, to the knowledge of the Kaiser Parties, threatened by the OTS, the
Commission or any other governmental body.
(c) At the Closing Date, the Agent shall have received:
(1) The favorable opinion, dated as of the Closing Date, of Xxxxxxx
& Xxxxxxxxx and/or local counsel acceptable to the Agent, in form and
substance satisfactory to the Agent and counsel for the Agent to the
effect that:
(i) The Holding Company is a stock corporation duly organized
and validly existing under the laws of the United States, with
corporate power and authority to own its properties and to conduct
its business as described in the Registration Statement and 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.
(ii) The Bank is a duly organized and validly existing
federally-chartered stock savings bank, with full power and
authority to own its
19
properties and to conduct its business as described in the
Registration Statement and 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
and regulations of the OTS; all of the capital stock of the Bank
outstanding is validly issued, fully paid and nonassessable and is
owned of record and beneficially by the Holding Company, free and
clear, to such counsel's Actual Knowledge, of any mortgage, pledge,
lien, encumbrance, claim or restriction.
(iii) The activities of the Bank described in the Prospectus
are permitted under federal law to subsidiaries of a savings
association holding company that is a federal corporation. To the best
of such counsel's knowledge, each of the Kaiser Parties 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.
(iv) The Bank is a member in good standing of the FHLB - San
Francisco. The Bank is an insured depository institution under the
provisions of the Federal Deposit Insurance Act, as amended, and to
such counsel's Actual Knowledge (as hereinafter defined), no
proceedings for the termination or revocation of the federal deposit
insurance of the Bank are pending or threatened.
(v) The MHC is duly organized and 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.
(vi) Upon consummation of the Offering, (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 issued to the MHC have been duly and validly
authorized for issuance will be fully paid and nonassessable; (c)
the Shares 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 duly and
validly issued and fully paid and nonassessable; and (d) the
issuance of the Shares is not subject to preemptive rights under the
Articles of Incorporation, Charter or Bylaws of any of the Kaiser
Parties, or arising or outstanding by operation of law or under any
contract, indenture, agreement, instrument or other document known
to such counsel, except for the subscription rights under the Plan.
To such counsel's Actual Knowledge, upon issuance of the Shares,
good title to the Shares will be transferred from the Holding
Company to the purchasers thereof against payment therefor,
20
subject to such claims as may be asserted against the purchasers
thereof by third-party claimants.
(vii) The Kaiser Parties have full corporate power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby and by the Plan. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Kaiser Parties; and this
Agreement constitutes a valid, legal and binding obligation of each
of the Kaiser Parties, enforceable in accordance with its terms,
except as rights to indemnity and contribution thereunder may be
limited under applicable law, and subject to the qualifications that
(i) enforcement thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization or other laws (including the laws of
fraudulent conveyance) or judicial decisions affecting the
enforceability of creditors' rights generally, the rights of
creditors of savings banks or financial institutions, the accounts
of which are insured by the FDIC, and (ii) enforcement thereof is
subject to general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law)
and to the effect of certain laws and judicial decisions upon the
availability of injunctive relief and enforceability of equitable
remedies, including the remedies of specific performance and
self-help.
(viii) The Plan complies in all material respects with the
Conversion Regulations, the OTS Application has been approved by the
OTS and the Prospectus has been authorized for use by the OTS and
SEC, and, to such counsel's Actual Knowledge, no action has been
taken and, to such counsel's Actual Knowledge, none is pending or
threatened by the OTS, SEC or any other governmental authority to
revoke such approval or to suspend the Offering or the use of the
Prospectus, and subject to the satisfaction of any conditions set
forth in such approvals, no further approval, registration,
authorization, consent or other order of any federal or state
regulatory agency, public board or body is required in connection
with the execution and delivery of this Agreement, the offer, sale
and issuance of the Shares and the completion of the Offering,
except as may be required under the securities or blue sky laws of
various jurisdictions as to which no opinion need be rendered. To
such counsel's Actual Knowledge, no person has sought to obtain
regulatory or judicial review of the final action of the OTS
approving the Plan, the OTS Application or the Prospectus.
(ix) The Registration Statement has become effective under the
1933 Act and to such counsel's Actual Knowledge, no stop order
suspending the effectiveness of the Registration Statement has been
issued, or proceedings for that purpose have been instituted or
threatened.
(x) The material tax consequences of the Offering are set
forth in the Prospectus under the caption "The Stock Offering -
Effects of the Stock Offering - Tax Effects of the Stock Offering."
The information in the Prospectus
21
under the caption "The Stock Offering - Effects of the Stock
Offering - Tax Effects of the Stock Offering" has been reviewed by
such counsel and fairly described such opinions rendered by such
counsel and RSM XxXxxxxxx, Inc. to the Kaiser Parties with respect
to such matters.
(xi) The terms and provisions of the Shares conform in all
material respects 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 are in due
and proper form in compliance with applicable laws.
(xii) At the time the OTS Application, including the Prospectus
contained therein, was approved by the OTS, the OTS Application,
including the Prospectus contained therein, as amended or
supplemented, complied as to form in all material respects with the
requirements of the Conversion Regulations, the 1933 Act Regulations
and the 1934 Act Regulations (other than the financial statements,
notes to financial statements, financial tables or other financial
and statistical data included therein and the appraisal valuation
and the business plan as to which counsel need express no opinion).
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 application.
(xiii) At the time that the Registration Statement became
effective and as of the Closing Date, the Registration Statement,
including the Prospectus (as amended or supplemented) (other than
the financial statements, notes to financial statements, financial
tables or other financial and statistical data included therein and
the appraisal valuation and the business plan as to which counsel
need express no opinion), complied as to form in all material
respects with the requirements of the 1933 Act and the 1933
Regulations.
(xiv) To such counsel's Actual Knowledge, there are no legal or
governmental proceedings pending or threatened (i) asserting the
invalidity of this Agreement, (ii) seeking to prevent the Offering
or the offer, sale or issuance of the Shares or (iii) which are
required to be disclosed in the Registration Statement and
Prospectus, other than those disclosed therein.
(xv) The information in the Prospectus under the captions
"Summary - The Stock Offering," "Risk Factors," "How We Intend to
Use the Proceeds," "Our Policy Regarding Dividends," "The Stock
Offering," "Management," "How We Are Regulated," "Taxation"
"Restrictions on Acquisition of K-Fed Bancorp and Kaiser Federal Bank"
and "Description of Capital Stock of K-Fed Bancorp," to the extent
that such information constitutes matters of law, summaries of legal
matters, documents or proceedings, or legal conclusions, has been
reviewed by such counsel and is accurate in all material respects. The
descriptions in the Prospectus of statutes or regulations are accurate
summaries and fairly present the information required to be shown.
22
(xvi) None of the Kaiser Parties are required to be registered
as an investment company under the Investment Company Act of 1940.
(xvii) To such counsel's Actual Knowledge, none of the Kaiser
Parties is in violation of its Articles of Incorporation, Charter
and Bylaws or in default or violation of any obligation, agreement,
covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which
it is a party or by which it or its property may be bound, except
for such defaults or violations which would not have a Material
Adverse Effect; and the execution and delivery of this Agreement,
the incurrence of the obligations herein set forth and the
consummation of the transactions contemplated herein do not (a) to
such counsel's Actual Knowledge, conflict with or constitute a
breach of, or default under, or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of
the Kaiser Parties pursuant to any material contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which
any of the Kaiser Parties is a party or by which any of them may be
bound, or to which any of the property or assets of the Kaiser
Parties are subject (other than the establishment of the liquidation
account), (b) result in any violation of the provisions of the
Articles of Incorporation, Charter or Bylaws of the Kaiser Parties
or (c) result in any violation of any applicable federal or state
law, act, regulation (except that no opinion with respect to the
securities and blue sky laws of various jurisdictions or the rules
or regulations of the NASD and/or Nasdaq need be rendered), or, to
such counsel's Actual Knowledge, order or court order, writ,
injunction or decree.
(xviii) The Kaiser Parties' Articles of Incorporation, Charter
and Bylaws comply in all material respects with applicable OTS
requirements.
(xix) To such counsel's Actual Knowledge, none of the Kaiser
Parties is in violation of any directive from the OTS or the FDIC to
make any material change in the method of conducting its respective
business.
(xx) To such counsel's Actual Knowledge, there are no material
contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments required to be described or referred to in the OTS
Application, the Registration Statement or the Prospectus, or
required to be filed as exhibits thereto other than those described
or referred to therein or filed as exhibits thereto in the OTS
Application, the Registration Statement or the Prospectus. The
descriptions in the OTS Application, the Registration Statement and
the Prospectus of such documents and exhibits are accurate in all
material respects and fairly present the information required to be
shown.
(xxi) To such counsel's Actual Knowledge, the Bank has no
subsidiaries.
23
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 California.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of any laws other than the United States and the
financial institution laws of the State of California, to the extent such
counsel deems proper and specified in such opinion, upon the opinion of
counsel reasonably acceptable to the Agent, as long as such other opinion
indicates that the Agent may rely on the opinion and (B) as to matters of
fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Kaiser Parties and public officials, provided
copies of any such opinion(s) or certificates of public officials are
delivered to Agent together with the opinion to be rendered hereunder by
special counsel to the Kaiser Parties. The term "Actual Knowledge" as used
herein shall mean the conscious awareness of facts or other information of
the attorneys in such counsel's firm who have rendered legal services in
connection with the representation of the Kaiser Parties in the Offering
or the preparation of such counsel's opinion letter. Such opinion may be
limited to present statutes, regulations and judicial interpretations and
to facts as they presently exist; in rendering such opinion, such counsel
need assume no obligation to revise or supplement it should the present
laws be changed by legislative or regulatory action, judicial decision or
otherwise; and such counsel need express no view, opinion or belief with
respect to whether any proposed or pending legislation, if enacted, or any
proposed or pending regulations or policy statements issued by any
regulatory agency, whether or not promulgated pursuant to any such
legislation, would affect the validity of the Offering or any aspect
thereof. In the context of such counsel's opinion described in paragraph
(ix) above regarding the absence of any stop order suspending the
effectiveness of the Registration Statement or the institution of
proceedings for that purpose by the Commission, such counsel's opinion
letter shall state that such counsel has confirmed the same with the staff
of the Commission by telephone on the date of such counsel's opinion. Such
counsel may assume that any agreement is the valid and binding obligation
of any parties to such agreement other than each of the Kaiser Parties.
The Agent's counsel may rely for purposes of its own opinion on the
opinion of Xxxxxxx & Xxxxxxxxx whose opinion shall expressly authorize
such reliance. The opinion of such counsel for the Kaiser Parties shall
state that it has no reason to believe that the Agent is not reasonably
justified in relying thereon.
(2) A letter of Xxxxxxx & Xxxxxxxxx which shall state that during the
preparation of the Registration Statement and the Prospectus, Xxxxxxx &
Xxxxxxxxx participated in conferences with certain officers of and other
representatives of the Kaiser Parties, counsel to the Agent,
representatives of the independent public accountants for the Kaiser
Parties and representatives of the Agent at which the contents of the
Registration Statement and the Prospectus and related matters were
discussed and has considered the matters required to be stated therein and
the statements contained therein and, although (without limiting the
opinions provided pursuant to Section 10(c)(1)), Xxxxxxx & Xxxxxxxxx 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 Xxxxxxx &
Xxxxxxxxx that caused Xxxxxxx & Xxxxxxxxx to believe that the Registration
Statement at the time it was declared effective by the Commission and as
of
24
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
financial statements, notes to financial statements, schedules and other
financial and statistical data included, or statistical or appraisal
methodology employed, in the Registration Statement or Prospectus, the
appraisal valuation or the business plan).
(3) A Blue Sky Memorandum from Xxxxxxx & Xxxxxxxxx relating to the
Offering, including Agent's participation therein, and should be furnished
to Agent with a copy thereof addressed to Agent or upon which Xxxxxxx &
Xxxxxxxxx shall state Agent may rely. The Blue Sky Memorandum will relate
to the necessity of obtaining or confirming exemptions, qualifications or
the registration of the common stock under applicable state securities
law.
(d) Concurrently with the execution of this Agreement, the Agent shall
receive (1) a letter from XxXxxxxxx & Xxxxxx, LLP dated the date hereof and
addressed to the Agent, such letter (i) confirming that McGladrey & Xxxxxx, LLP
is a firm of independent public accountants within the meaning of the 1933 Act
and the 1933 Act Regulations and 12 C.F.R. Section 562.4(d) and no information
concerning its relationship with or interests in the Kaiser Parties is required
by the OTS Application or Item 10 of the Registration Statement, and stating in
effect that in the opinion of XxXxxxxxx & Xxxxxx, LLP, the financial statements
of the Holding Company and the Bank included in the Prospectus comply as to form
in all material respects with the applicable accounting requirements of the 1933
Act, the 1933 Act Regulations, the 1934 Act, the 1934 Act Regulations, the
Conversion Regulations and GAAP 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 review (in accordance with Statement of Auditing Standards No. 100) of the
latest available unaudited consolidated interim financial statements of the Bank
prepared by the Kaiser Parties, a reading of the minutes of the meetings of the
Board of Directors of the Holding Company and the Bank and committees thereof
and consultations with officers of the Holding Company and the Bank responsible
for financial and accounting matters, nothing came to their attention which
caused them to believe that: (A) such unaudited consolidated financial
statements included in the Prospectus are not in conformity with GAAP applied on
a basis substantially consistent with that of the audited financial statements
included in the Prospectus; or (B) during the period from the date of the latest
unaudited consolidated financial statements included in the Prospectus to a
specified date not more than three business days prior to the date hereof, there
was any increase in borrowings (defined as securities sold under agreements to
repurchase and any other form of debt other than deposits), or non-accrual
loans, accruing loans past due 90 days or more or foreclosed assets, or decrease
in the deposits, loan loss allowance, total assets or stockholders' equity, or
there was any change in common stock outstanding at the date of such letter as
compared with amounts shown in the latest unaudited statement of condition, or
there was any decrease in net income, non-interest income, provision for loan
losses or net income after provision, or increase in non-interest expense of the
Bank for the period commencing immediately after the period covered by the
latest unaudited income statement and ended not more than three business days
prior to the date hereto compared to
25
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 (d), 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 Kaiser Parties from accounting records,
to the extent specified in such letter, such amounts and/or percentages set
forth in the Prospectus as the Agent may reasonably request, and they have found
such amounts and percentages to be in agreement therewith (subject to rounding).
(e) At the Closing Date, the Agent shall receive a letter from XxXxxxxxx &
Xxxxxx, LLP dated the Closing Date, addressed to the Agent, confirming the
statements made by its letter delivered by pursuant to Section 10(d), 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.
(f) 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 Shares 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.
(g) At the Closing Date, the Agent shall receive a certificate of the
Chief Executive Officer and Chief Financial Officer of each of the Kaiser
Parties, dated the Closing Date, to the effect that: (i) they have examined the
Registration Statement and at the time the Registration Statement became
authorized for final use, the Prospectus did not contain an untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein not misleading; (ii) there has not been, since the respective
dates as of which information is given in the Registration Statement, any
Material Adverse Effect otherwise than as set forth or contemplated in the
Registration Statement; (iii) the representations and warranties contained in
Section 6 of this Agreement are true and correct with the same force and effect
as though made at and as of the Closing Date; (iv) each of the Kaiser Parties
has complied in all material respects with all material agreements and satisfied
all conditions on its part to be performed or satisfied at or prior to the
Closing Date including the conditions contained in this Section 10; (v) no stop
order has been issued or, to their knowledge, is threatened, by the Commission
or any other governmental body; (vi) no order suspending the Offering, the
transactions required under the Plan to consummate the Offering or the
effectiveness of the Prospectus has been issued and to 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; and (vii) to 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 Offering.
(h) At the Closing Date, the Agent shall receive a letter from RP
Financial, LC., dated as of the Closing Date, (i) confirming that said firm is
independent of the Kaiser Parties and is experienced and expert in the area of
corporate appraisals, (ii) stating in effect that the Appraisal complies in all
material respects with the applicable requirements of the Conversion Regulations
26
and (iii) further stating that its opinion of the aggregate pro forma market
value of the Kaiser Parties, as converted, expressed in the appraisal as most
recently updated, remains in effect.
(i) None of the Kaiser 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, earthquake or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth in the Registration Statement and the
Prospectus, and since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there shall not have been any
Material Adverse Effect, or any development involving a potential Material
Adverse Effect, that 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, business affairs or prospects
of any of the Kaiser Parties independently, or the Kaiser Parties taken as a
whole, from and as of the latest dates as of which such condition is set forth
in the Prospectus, except as referred to therein, (ii) there shall have been no
material transaction entered into by the Kaiser Parties, independently or
considered as one enterprise, from the latest date as of which the financial
condition of the Kaiser Parties is set forth in the Prospectus, other than
transactions referred to or contemplated therein, (iii) none of the Kaiser
Parties shall have received from the OTS or the FDIC any directive (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 directive, if
any, shall have been disclosed to the Agent) and which would reasonably be
expected to have a Material Adverse Effect, (iv) none of the Kaiser 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 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 Kaiser Parties, threatened against any of the Kaiser Parties or
affecting any of their properties wherein an unfavorable decision, ruling or
finding would reasonably be expected to have a Material Adverse Effect 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 OTS Application and a copy of the letters from the OTS authorizing the use
of the Prospectus and approving the OTS 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 Holding Company and the Bank, (iv) a
certificate or other writing from the appropriate federal authority in form and
substance reasonably
27
satisfactory to the Agent evidencing the valid existence of the Holding Company
as of the Closing Date; (v) a certificate from the FDIC evidencing the Bank's
insurance of accounts, (vi) a certificate of the FHLB - San Francisco evidencing
the Bank's membership therein, (vii) a certificate or other writing from the OTS
in form and substance reasonably satisfactory to the Agent evidencing the valid
existence of the MHC as of the Closing Date and (vi) 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 Nasdaq, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required by either of such exchanges or the NASD or by
order of the Commission or any other governmental authority other than temporary
trading halts or limitation (A) imposed as a result of intraday changes in the
Dow 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
(5) business days, total less than two (2); (ii) a general moratorium on the
operations of federally-insured financial institutions or a general moratorium
on the withdrawal of deposits from commercial banks or other federally-insured
financial institutions declared by either federal or state authorities; or (iii)
there shall not have occurred any material adverse change in the financial
markets in the United States or elsewhere or any outbreak of hostilities or
escalation thereof or other calamity or crisis, including, without limitation,
terrorist activities after the date hereof, the effect of which, in the judgment
of the Agent, is so material and adverse as to make it impracticable to market
the Shares or to enforce contracts, including subscriptions or purchase orders,
for the sale of the Shares.
(m) All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to the Agent and to counsel for the Agent. Any certificate
signed by an officer of the Holding Company or the Bank and delivered to the
Agent or to counsel for the Agent shall be deemed a representation and warranty
by the Holding Company or the Bank, as the case may be, to the Agent as to the
statements made therein. 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 the Shares is nevertheless consummated, the Agent shall be entitled
to compensation provided for in Section 4 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 11. INDEMNIFICATION.
28
(a) The Kaiser Parties jointly and severally agree to indemnify and hold
harmless the Agent, its officers, directors, agents, attorneys, servants and
employees and each person, if any, who controls the Agent within the meaning of
Section 15 of the 1933 Act or Section 20(a) of the 1934 Act, against any and all
loss, liability, claim, damage or expense whatsoever (including but not limited
to settlement expenses, subject to the limitation set forth in the last sentence
of subsection (c) below), joint or several, that the Agent or any of such
officers, directors, agents, attorneys, servants, employees and controlling
persons (collectively, the "Related Persons") may suffer or to which the Agent
or the Related Persons may become subject under all applicable federal and state
laws or otherwise, and to promptly reimburse the Agent and any Related Persons
upon written demand for any reasonable expenses (including reasonable fees and
disbursements of counsel and Agent's time spent according to normal hourly
rates) incurred by the Agent or any Related Persons in connection with
investigating, preparing or defending any actions, proceedings or claims
(whether commenced or threatened) to the extent such losses, claims, damages,
liabilities or actions: (i) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment or supplement thereto), the Prospectus (or any
amendment or supplement thereto), the OTS Application or any blue sky
application, or other instrument or document of the Kaiser Parties or based upon
written information supplied by any of the Kaiser 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 Kaiser
Parties with its consent or based upon information furnished by or on behalf of
any of the Kaiser 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), the preliminary
or final Prospectus (or any amendment or supplement thereto), the OTS
Application, any Blue Sky Applications or Sales Information or other
documentation distributed in connection with the Offering; or (iv) result from
any claims made with respect to the accuracy, reliability and completeness of
the records identifying the Eligible Account Holders and Supplemental Eligible
Account Holders or for any denial or reduction of a subscription or order to
purchase Common Stock, whether as a result of a properly calculated allocation
pursuant to the Plan or otherwise, based upon such records; provided, however,
that no indemnification is required under this subsection (a) to the extent such
losses, claims, damages, liabilities or actions arise out of or are based upon
any untrue material statements or alleged untrue material statements in, or
material omission or alleged material omission from, the Registration Statement
(or any amendment or supplement thereto) or the preliminary or final Prospectus
(or any amendment or supplement thereto), the OTS Application, the Blue Sky
Applications or Sales Information or other documentation distributed in
connection with the Offering made in reliance upon and in conformity with
information furnished in writing to the Kaiser Parties by the Agent or its
representatives (including counsel) with respect to the Agent expressly for use
in the Registration Statement (or any amendment or supplement thereto) or
Prospectus (or any amendment or
29
supplement thereto) under the caption "The Stock Offering - Marketing
Arrangements" except for information derived from the Prospectus; provided,
further, that the Kaiser Parties will not be responsible for any loss,
liability, claim, damage or expense to the extent a court of competent
jurisdiction finds they result primarily from material oral misstatements by the
Agent to a purchaser or prospective 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 Kaiser
Parties any amounts advanced to it by the Kaiser Parties in connection with
matters as to which it is found by a court of competent jurisdiction not to be
entitled to indemnification hereunder.
(b) The Agent agrees to indemnify and hold harmless the Kaiser Parties,
their directors and officers, agents, attorneys, servants and employees and each
person, if any, who controls any of the Kaiser Parties within the meaning of
Section 15 of the 1933 Act or Section 20(a) of the 1934 Act against any and all
loss, liability, claim, damage or expense whatsoever (including but not limited
to settlement expenses, subject to the limitation set forth in the last sentence
of subsection (c) below), joint or several, which they, or any of them, may
suffer or to which they, or any of them, may become subject under all applicable
federal and state laws or otherwise, and to promptly reimburse the Kaiser
Parties and any such persons upon written demand for any reasonable expenses
(including out-of-pocket expenses, fees and disbursements of counsel) incurred
by them in connection with investigating, preparing or defending any actions,
proceedings or claims (whether commenced or threatened) to the extent such
losses, claims, damages, liabilities or actions arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment or supplement thereto), the OTS
Application or any Blue Sky Applications or Sales Information or are based upon
the omission or alleged omission to state in any of the foregoing documents a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that the Agent's obligations under this Section
11(b) shall exist only if and only to the extent that such untrue statement or
alleged untrue statement was made in, or such material fact or alleged material
fact was omitted from, the OTS Application, Registration Statement (or any
amendment or supplement thereto) or the Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with information
furnished to the Kaiser Parties by the Agent or its representatives (including
counsel) expressly for use under the caption "The Stock Offering - Marketing
Arrangements."
(c) Each indemnified party shall give prompt written notice to each
indemnifying party of any action, proceeding, claim (whether commenced or
threatened) or suit instituted against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve it from any liability which it may have on account of this Section 11,
Section 12 or otherwise, unless the failure to give such notice promptly results
in material prejudice to the indemnifying party. An indemnifying party may
participate at its own expense in the defense of such action. In addition, if it
so elects within a reasonable time after receipt of such notice, an indemnifying
party, jointly with any other indemnifying parties receiving such notice, may
assume the defense of such action with counsel chosen by it reasonably
acceptable to the indemnified parties that are defendants in such action, unless
such indemnified parties reasonably object to such
30
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. Neither the Kaiser Parties nor the Agent shall, without the written
consent of the other, settle or compromise any claim against them or it based
upon circumstances giving rise to an indemnification claim against the other
party hereunder unless such settlement or compromise provides that the
indemnified party shall be unconditionally and irrevocably released from all
liability in respect to such claim.
(d) The agreements contained in this Section 11 and in Section 12 hereof
and the representations and warranties of the Kaiser Parties set forth in this
Agreement shall remain operative and in full force and effect regardless of (i)
any investigation made by or on behalf of the Agent or its officers, directors,
controlling persons, agents, attorneys, servants or employees or by or on behalf
of any of the Kaiser Parties or any officers, directors, controlling persons,
agents, attorneys , servants or employees of any of the Kaiser Parties, (ii)
delivery of and payment hereunder for the Shares or (iii) any termination of
this Agreement.
SECTION 12. CONTRIBUTION.
In order to provide for just and equitable contribution in circumstances
in which the indemnification provided for in Section 11 is due in accordance
with its terms but is found in a final judgment by a court to be unavailable
from the Kaiser Parties or the Agent, the Kaiser Parties and the Agent shall
contribute to the aggregate losses, claims, damages and liabilities of the
nature contemplated by such indemnification (including any investigation, legal
and other expenses incurred in connection therewith and any amount paid in
settlement of any action, suit, or proceeding of any claims asserted, but after
deducting any contribution received by the Kaiser Parties or the Agent from
persons other than the other party thereto, who may also be liable for
contribution) in such proportion so that (i) the Agent is responsible for that
portion represented by the percentage that the fees paid to the Agent pursuant
to Section 4 of this Agreement (not including expenses) ("Agent's Fees"), less
any portion of Agent's Fees paid by Agent to Selected Dealers, bear to the total
proceeds received by the Kaiser Parties from the sale of the Shares in the
Offering, net of all expenses of the Offering, except Agent's fees, and (ii) the
Kaiser Parties shall be responsible for the balance. If, however, the allocation
provided above is not permitted by applicable law or if the indemnified party
failed to give the notice required under Section 11 above, then each
indemnifying party shall contribute to such amount paid or payable to such
indemnified party in such proportion as is appropriate to reflect not only such
relative fault of the Kaiser Parties
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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 Kaiser 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 Kaiser Parties on the one hand and the
Agent on the other hand shall be deemed to be in the same proportion as the
total proceeds from the Offering, except Agent's fees, net of all expenses of
the Offering, received by the Kaiser 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 Selected Dealers. 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 Kaiser 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 Kaiser Parties and the Agent agree that it would not
be just and equitable if contribution pursuant to this Section 12 were
determined by pro-rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to above in this
Section 12. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages or liabilities (or action, proceedings or claims in
respect thereof) referred to above in this Section 12 shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action, proceeding or claim.
It is expressly agreed that the Agent shall not be liable for any loss,
liability, claim, damage or expense or be required to contribute any amount
which in the aggregate exceeds the amount paid (excluding reimbursable expenses)
to the Agent under this Agreement less the portion of such fees paid by the
Agent to Selected Dealers. It is understood and agreed that the above-stated
limitation on the Agent's liability is essential to the Agent and that the Agent
would not have entered into this Agreement if such limitation had not been
agreed to by the parties to this Agreement. No person found guilty of any
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution with respect to any loss or liability
arising from such misrepresentation from any person who was not found guilty of
such fraudulent misrepresentation. The duties, obligations and liabilities of
the Kaiser Parties and the Agent under this Section 12 and under Section 11
shall be in addition to any duties, obligations and liabilities which the Kaiser
Parties and the Agent may otherwise have. For purposes of this Section 12, each
of the Agent's and the Kaiser Parties' officers, directors and controlling
persons within the meaning of the 1933 Act and the 1934 Act shall have the same
rights to contribution as the Kaiser Parties and the Agent. Any party entitled
to contribution, promptly after receipt of notice of commencement of any action,
suit, claim or proceeding against such party in respect of which a claim for
contribution may be made against another party under this Section 12, will
notify such party from whom contribution may be sought, but the omission to so
notify such party shall not relieve the party from whom contribution may be
sought from any other obligation it may have hereunder or otherwise than under
this Section 12.
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SECTION 13. SURVIVAL.
(a) All representations, warranties and indemnities and other statements
contained in this Agreement, or contained in certificates of officers of the
Kaiser 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 Kaiser Parties and shall survive
the issuance of the Shares, and any legal representative, successor or assign of
the Agent, any of the Kaiser Parties and any indemnified person shall be
entitled to the benefit of the respective agreements, indemnities, warranties
and representations.
(b) The provisions of Paragraph 8 of the Letter Agreement, "Additional
Services," shall survive the issuance of the Shares (but not any termination or
cancellation of this Agreement) for a period of one year, and any legal
representative, successor or assign of the Agent, and any of the Kaiser Parties
shall be entitled during such period to the benefit of the agreements contained
therein.
SECTION 14. TERMINATION. Agent may terminate this Agreement by giving
the notice indicated below in this Section at any time after this Agreement
becomes effective as follows:
(a) In the event (i) the Plan is abandoned or terminated by the Holding
Company, (ii) the Holding Company fails to consummate the sale of the minimum
number of Shares prior to March 31, 2004 in accordance with the provisions of
the Plan or as required by the Conversion Regulations and applicable law or
(iii) immediately prior to commencement of the Offering, the Agent terminates
this relationship because in its opinion, which shall have been formed in good
faith after reasonable determination and consideration of all relevant factors,
there has been a failure to satisfactorily disclose all relevant information in
the Prospectus or the existence of market conditions which might render the sale
of the Shares inadvisable, this Agreement shall terminate and the Kaiser Parties
shall refund to each person who has subscribed for or ordered any of the Shares
the full amount which it may have received from such person, together with
interest in accordance with Section 2 hereof and any such termination shall be
without liability of any party to any other party except as otherwise provided
in Sections 2, 4, 9, 11 and 12 hereof.
(b) If any of the conditions specified in Section 10 hereof shall not have
been fulfilled when and as required by this Agreement, or by the Closing Date,
or waived in writing by the Agent, this Agreement and all of the Agent's
obligations hereunder may be canceled by the Agent by notifying the Bank of such
cancellation in writing at any time at or prior to the Closing Date, and any
such cancellation shall be without liability of any party to any other party
except as otherwise provided in Sections 2, 4, 9, 11 and 12 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 15
hereof.
(d) If this Agreement is terminated in accordance with its provisions, the
Agent shall retain the advisory and management fee paid to it pursuant to
Section 4 and the Kaiser Parties shall
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reimburse the Agent for any of its other
actual, accountable, reasonable out-of-pocket expenses pursuant to Section 9,
including without limitation, communication, legal and travel expenses.
SECTION 15. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to Agent shall be
directed to Xxxxx, Xxxxxxxx & Xxxxx, Inc., 000 Xxxxxxxxx Xxxxx, Xxxxxx, Xxxx
00000, Attention: Xx. Xxxxxxxx XxXxxxx (with a copy to Breyer & Associates PC,
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000, XxXxxx, Xxxxxxxx 00000, Attention: Xxxx X.
Xxxxxx, Xx., Esq.); notices to the Kaiser Parties shall be directed to K-Fed
Bancorp, 0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000,
Attention: Xxx X. Xxxxxxxx, President and Chief Executive Officer (with a copy
to Jenkens & Xxxxxxxxx, 000 00xx Xxxxxx, XX, Xxxxx 000, Xxxxxxxxxx, XX
00000-0000, Attention: Xxxxxxx X. Xxxxxxxxxx, Esq.).
SECTION 16. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the Agent and the Kaiser Parties, and their respective successors.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person, firm or corporation, other than the parties hereto
and their respective successors and the controlling persons and officers and
directors referred to in Sections 11 and 12 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provisions herein contained. It is understood
and agreed that this Agreement is the exclusive agreement among the parties,
supersedes any prior Agreement among the parties and may not be varied except by
a writing signed by all parties, except for Paragraphs 4, 10 and 12 of the
Letter Agreement, which are not hereby superseded.
SECTION 17. PARTIAL INVALIDITY. In the event that any term, provision or
covenant herein or the application thereof to any circumstances or situation
shall be invalid or unenforceable, in whole or in part, the remainder hereof and
the application of said term, provision or covenant to any other circumstance or
situation shall not be affected thereby, and each term, provision or covenant
herein shall be valid and enforceable to the full extent permitted by law.
SECTION 18. CONSTRUCTION AND WAIVER OF JURY TRIAL. This Agreement shall
be construed in accordance with the laws of the State of New York.
SECTION 19. COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which so executed and delivered shall be an original, but
all of which together shall constitute but one and the same instrument.
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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.
K-FED MUTUAL HOLDING COMPANY
By:
---------------------------------------
Xxx X. Xxxxxxxx
President and Chief Executive Officer
K-FED BANCORP
By:
---------------------------------------
Xxx X. Xxxxxxxx
President and Chief Executive Officer
KAISER FEDERAL BANK
By:
---------------------------------------
Xxx X. Xxxxxxxx
President and Chief Executive Officer
The foregoing Agency Agreement is
hereby confirmed and accepted as
of the date first set forth above.
XXXXX, XXXXXXXX & XXXXX, INC.
By:
Xxxxxxxx XxXxxxx
Managing Director
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