Exhibit 1.2
PSB HOLDINGS, INC.
(a federal stock corporation)
2,686,688 Shares
(subject to increase to 3,089,691 shares)
COMMON STOCK
($0.10 Par Value)
Subscription Price $10.00 Per Share
AGENCY AGREEMENT
August __, 2004
Xxxxx, Xxxxxxxx & Xxxxx, Inc.
000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000-0000
Ladies and Gentlemen:
Putnam Bancorp, MHC, a federal mutual holding company (the "MHC"), PSB
Holdings, Inc., a federal corporation (the "Company"), and Putnam Savings Bank,
a federally chartered savings bank located in Putnam, Connecticut (the "Bank"),
with its deposit accounts insured by the Bank Insurance Fund ("BIF")
administered by the Federal Deposit Insurance Corporation ("FDIC") (hereinafter
any reference to the FDIC shall include the SAIF), hereby confirm their
agreement with Xxxxx, Xxxxxxxx & Xxxxx, Inc. (the "Agent") as follows:
SECTION 1. THE OFFERING. The Company, in accordance with its Stock Issuance
Plan adopted by its Board of Directors (the "Plan"), will offer and sell up to
2,686,688 shares (subject to increase to 3,089,691 shares) of its common stock,
$0.10 par value per share (the "Common Stock"). The shares of Common Stock to be
sold by the Company are hereinafter called the "Securities." In addition, in
accordance with the Plan and as described herein, the Company expects to
contribute Common Stock, in an amount equal to 4% of the Common Stock sold in
the Offering (as defined herein), to the Xxxxxx Savings Foundation (the
"Foundation"), such shares being referred to herein as the "Foundation Shares".
Pursuant to the Plan, the Company will offer the Securities in a subscription
offering (the "Subscription Offering") to (1) depositors of the Bank having
accounts at the Bank with aggregate balances of at least $50.00 on March 31,
2003 ("Eligible Account Holders"), (2) the tax-qualifed employee benefit plans
of the Bank (including its Employee Stock Ownership Plan, the "ESOP"), (3)
depositors of the Bank having accounts at the Bank with aggregate balances of at
least $50.00 on June 30, 2004 ("Supplemental Eligible Account Holders"), and (4)
employees, officers and directors of the Bank or the Company. Subject to the
prior subscription rights of the above-listed parties, the Company may offer for
sale in a community offering (the "Community Offering" and when referred to
together with or subsequent to the Subscription Offering, the "Subscription and
Community Offering")
conducted concurrently with or subsequent to the Subscription Offering, the
Securities not subscribed for or ordered in the Subscription Offering to members
of the general public to whom a copy of the Prospectus (as hereinafter defined)
is delivered with a preference given first to people who are residents of
Xxxxxxx County, Connecticut. It is anticipated that Securities not subscribed
for in the Subscription and Community Offering may be offered to certain members
of the general public on a best efforts basis through a selected dealers
agreement (the "Syndicated Community Offering") (the Subscription Offering,
Community Offering and Syndicated Community Offering are collectively referred
to as the "Offering"). It is acknowledged that the purchase of Securities in the
Offering is subject to the maximum and minimum purchase limitations as described
in the Plan and that the Company and the Bank may reject, in whole or in part,
any orders received in the Community Offering or Syndicated Community Offering.
The Securities offered for sale in the Offering will represent 44.5% of the
Company's total outstanding shares of Common Stock after the Offering. The
Company will issue the Securities offered for sale in the Offering at a purchase
price of $10.00 per share (the "Purchase Price"). After the Offering, 55.5% of
the total outstanding shares of the Company's Common Stock will be owned by the
MHC.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form SB-2 (File No. 333-116364) (the
"Registration Statement") containing a prospectus relating to the Offering for
the registration of the Securities and the Foundation Shares under the
Securities Act of 1933 (the "1933 Act"), and has filed such amendments thereof
and such amended prospectuses as may have been required to the date hereof. The
term "Registration Statement" shall include any documents incorporated by
reference therein and all financial schedules and exhibits thereto, as amended,
including post-effective amendments. The prospectus, as amended, on file with
the Commission at the time the Registration Statement initially became effective
is hereinafter called the "Prospectus," except that if any Prospectus is filed
by the Company pursuant to Rule 424(b) or (c) of the rules and regulations of
the Commission under the 1933 Act (the "1933 Act Regulations") differing from
the prospectus on file at the time the Registration Statement initially becomes
effective, the term "Prospectus" shall refer to the prospectus filed pursuant to
Rule 424(b) or (c) from and after the time said prospectus is filed with the
Commission.
In accordance with Title 12, Part 575 of the Code of Federal Regulations
(the "MHC Regulations"), the Bank has filed with the Office of Thrift
Supervision ("OTS") a Form MHC-2 Application for Approval of a Minority Stock
Issuance by a Subsidiary of a Mutual Holding Company (the "MHC Application"),
including the Prospectus and the Valuation Appraisal Report prepared by RP
Financial, LC (the "Appraisal") and has filed such amendments thereto as may
have been required by the OTS. The MHC Application has been approved by the OTS
and the related Prospectus has been authorized for use by the OTS.
SECTION 2. RETENTION OF AGENT; COMPENSATION. Subject to the terms and
conditions herein set forth, the Company and the Bank hereby appoint the Agent
as their exclusive financial advisor and marketing agent (i) to utilize its best
efforts to solicit subscriptions for Securities and to advise and assist the
Company and the Bank with respect to the Company's sale of the Securities in the
Offering and (ii) to participate in the Offering in the areas of market making,
research coverage and in syndicate formation (if necessary).
2
On the basis of the representations, warranties, and agreements herein
contained, but subject to the terms and conditions herein set forth, the Agent
accepts such appointment and agrees to consult with and advise the Company and
the Bank as to the matters set forth in the letter agreement, dated March 4,
2004, made by and among the Company, the Bank and the Agent (a copy of which is
attached hereto as EXHIBIT A). It is acknowledged by the Company and the Bank
that the Agent shall not be required to purchase any Securities or be obligated
to take any action which is inconsistent with all applicable laws, regulations,
decisions or orders.
The obligations of the Agent pursuant to this Agreement (other than those
set forth in Section 2(a) and (c) hereof) shall terminate upon the completion or
termination or abandonment of the Plan by the Company or upon termination of the
Offering, but in no event later than 45 days after the completion of the
Subscription Offering (the "End Date"). All fees or expenses due to the Agent
will be payable to the Agent in next day funds at the earlier of the Closing
Date (as hereinafter defined) or the End Date. In the event the Offering is
extended beyond the End Date (which extension would require the approval of the
OTS), the Company, the Bank and the Agent may agree to renew this Agreement
under mutually acceptable terms.
In the event the Company is unable to sell a minimum of 1,985,813
Securities within the period herein provided, this Agreement shall terminate and
the Company shall refund to any persons who have subscribed for any of the
Securities the full amount which it may have received from them plus accrued
interest, as set forth in the Prospectus; and none of the parties to this
Agreement shall have any obligation to the other parties hereunder, except as
set forth in this Section 2 and in Sections 6, 8 and 9 hereof. In the event the
Offering is terminated for any reason not attributable to the action or inaction
of the Agent, the Agent shall be paid the fees and expenses due to the date of
such termination pursuant to subparagraphs (a) and (d) below.
If all conditions precedent to the consummation of the Offering, including,
without limitation, the sale of all Securities required by the Plan to be sold,
are satisfied, the Company agrees to issue, or have issued, the Securities sold
in the Offering and to release for delivery certificates for such Securities on
the Closing Date (as hereinafter defined) against payment to the Company by any
means authorized by the Plan; provided, however, that no funds shall be released
to the Company until the conditions specified in Section 7 hereof shall have
been complied with to the reasonable satisfaction of the Agent and its counsel.
The release of Securities against payment therefor shall be made on a date and
at a place acceptable to the Company, the Bank and the Agent. Certificates for
Securities shall be delivered directly to the purchasers in accordance with
their directions. The date upon which the Company shall release or deliver the
Securities sold in the Offering, in accordance with the terms herein, is called
the "Closing Date."
The Agent shall receive the following compensation for its services
hereunder:
(a) A management fee of $40,000 payable in four (4) consecutive monthly
installments of $10,000 commencing with the adoption of the Plan. This fee
shall be due as it is earned and shall be non-refundable. In the event the
Offering is terminated for any reason not attributable to any action or
inaction by the Agent, the Agent shall have earned and be due all portions
of the fee accruing through such date of termination.
3
(b) A success fee of 1.00% of the aggregate Purchase Price of the
Securities sold in the Subscription Offering and Community Offering,
excluding Securities purchased by (i) the Bank's officers, directors, or
employees (or members of their immediate family); (ii) any ESOP,
tax-qualified or stock based compensation plans (except IRAs) or similar
plan created by the Bank or the Company for some or all of its directors or
employees; and (iii) any charitable foundation established by the Bank in
connection with the Offering. The management fee described in subparagraph
2(a) will be applied against this success fee.
(c) If any of the Securities remain available after the Subscription
Offering and the Community Offering, at the request of the Company, the
Agent will seek to form a syndicate of registered broker-dealers ("Selected
Dealers") to assist in the sale of such Securities on a best efforts basis.
The Agent will endeavor to distribute the Securities among the Selected
Dealers in a fashion which best meets the distribution objectives of the
Company and the Plan. The Agent will be paid a fee not to exceed 5.5% of
the aggregate Purchase Price of the Securities sold by the Selected
Dealers. From this fee, the Agent will pass on to the Selected Dealers who
assist in the Syndicated Community 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 the Agent shall be transmitted by the Agent to such
Selected Dealers. The decision to utilize Selected Dealers will be made by
the Company upon consultation with the Agent. In the event any fees are
paid pursuant to this subparagraph 2(c), such fees shall be in lieu of, and
not in addition to any fees for the sale of Securities payable pursuant to
subparagraph 2(b).
(d) The Bank and Company shall reimburse the Agent for reasonable
out-of-pocket expenses (including costs of travel, meals and lodging,
photocopying, telephone, facsimile and couriers), provided that such
expenses do not exceed $15,000 and for the fees of its counsel (which do
not include legal fees to complete the qualification of the Securities
under the various state securities "Blue Sky" laws) up to $30,000. The Bank
will bear the expenses of the Offering customarily borne by issuers
including, without limitation, regulatory filing fees, SEC, "Blue Sky," and
NASD filing and registration fees; the fees of the Bank's accountants,
attorneys, appraiser, transfer agent and registrar, printing, mailing and
marketing expenses associated with Offering; and the fees set forth under
this Section 2. The Company or the Bank will reimburse the Agent for any
such expenses incurred by the Agent on their behalf.
Full payment of Agent's actual and accountable expenses, advisory fees and
compensation 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 3. SALE AND DELIVERY OF SECURITIES. If all conditions precedent to
the consummation of the Offering, including, without limitation, the sale of all
Securities required by the Plan to be sold, are satisfied, the Company agrees to
issue, or have issued, the Securities sold in the Offering and to release for
delivery certificates for such Securities on the Closing Date against payment to
the Company by any means authorized by the Plan; provided, however, that
4
no funds shall be released to the Company until the conditions specified in
Section 7 hereof shall have been complied with to the reasonable satisfaction of
the Agent and its counsel. The release of Securities against payment therefor
shall be made on a date and at a place acceptable to the MHC, the Company, the
Bank and the Agent. Certificates for Securities shall be delivered directly to
the purchasers in accordance with their directions.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE MHC, THE COMPANY AND THE
BANK. The MHC, the Company and the Bank jointly and severally represent and
warrant to and agree with the Agent as follows:
(a) The Registration Statement which was prepared by the Company and the
Bank and filed with the Commission has been declared effective by the
Commission, no stop order has been issued with respect thereto and no
proceedings therefor have been initiated or, to the knowledge of the MHC,
the Company and the Bank, threatened by the Commission. At the time the
Registration Statement, including the Prospectus contained therein
(including any amendment or supplement), became effective and at the
closing time, the Registration Statement complied and will comply in all
material respects with the requirements of the 1933 Act and the 1933 Act
Regulations and the Registration Statement, including the Prospectus
contained therein (including any amendment or supplement thereto), and any
information regarding the Company or the Bank contained in Sales
Information (as defined in Section 8 hereof) authorized by the Company or
the Bank for use in connection with the Offering, did not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and at the
time any Rule 424(b) or (c) Prospectus is filed with the Commission and at
the Closing Date referred to in Section 2, the Prospectus (including any
amendment or supplement thereto) and any information regarding the Company
or the Bank contained in Sales Information authorized by the Company or the
Bank for use in connection with the Offering will contain all statements
that are required to be stated therein in accordance with the 1933 Act and
the 1933 Act Regulations and will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the representations and
warranties in this Section 4(a) shall not apply to statements or omissions
made in reliance upon and in conformity with written information furnished
to the Company or the Bank by the Agent or its counsel expressly regarding
the Agent for use in the Prospectus under the caption "The Stock Offering--
Plan of Distribution and Marketing Arrangements" or statements in or
omissions from any Sales Information or information filed pursuant to state
securities or blue sky laws or regulations regarding the Agent.
(b) The MHC Application which was prepared by the Company and the Bank and
filed with the OTS has been approved by the OTS and the related Prospectus
have been authorized for use by the OTS and the MHC Application complied in
all material respects with the MHC Regulations. No order has been issued by
the OTS preventing or suspending the use of the Prospectus, and no action
by or before any such government entity to revoke any approval,
authorization or order of effectiveness related to the Offering is, to the
best knowledge of the Company or the Bank, pending or threatened.
5
At the time of the approval of the MHC Application, including the
Prospectus (including any amendment or supplement thereto), by the OTS and
at all times subsequent thereto until the Closing Date, the MHC
Application, including the Prospectus (including any amendment or
supplement thereto), will comply in all material respects with the MHC
Regulations, except to the extent waived in writing by the OTS. The MHC
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 light of the circumstances
under which they were made, not misleading; provided, however, that the
representations and warranties in this Section 4(b) shall not apply to
statements or omissions made in reliance upon and in conformity with
written information furnished to the Company or the Bank by the Agent or
its counsel expressly regarding the Agent for use in the Prospectus
contained in the MHC Application under the caption "The Stock
Offering--Plan of Distribution and Marketing Arrangements" or statements in
or omissions from any sales information or information filed pursuant to
state securities or blue sky laws or regulations regarding the Agent.
(c) The Company and the MHC have registered with the OTS as nondiversified
savings and loan holding companies under the Home Owners Loan Act, as
amended ("HOLA").
(d) At the Closing Date, the Plan will have been adopted by the Board of
Directors of the Company, and the offer and sale of the Securities, the
establishment of the Foundation, and the contribution of the Foundation
Shares will have been conducted in all material respects in accordance with
the Plan, the MHC Regulations, and all other applicable laws, regulations,
decisions and orders, including all terms, conditions, requirements and
provisions precedent to the Offering and the establishment of the
Foundation, and the contribution of the Foundation Shares imposed upon the
MHC, the Company or the Bank by the OTS, the Commission, or any other
regulatory authority and in the manner described in the Prospectus. To the
best knowledge of the MHC, the Company and the Bank, no person has sought
to obtain review of the final action of the OTS in approving the Plan.
(e) The Bank has been duly organized and is a validly existing
federally-chartered savings bank in capital stock form of organization,
duly authorized to conduct its business and own its property as described
in the Registration Statement and the Prospectus; the Bank has obtained all
licenses, permits and other governmental authorizations currently required
for the conduct of its business, except those that individually or in the
aggregate would not materially adversely affect the financial condition,
results of operations or business of the Bank; all such licenses, permits
and governmental authorizations are in full force and effect, and the Bank
is in compliance with all material laws, rules, regulations and orders
applicable to the operation of its business, except where failure to be in
compliance would not materially adversely affect the financial condition,
results of operations or business of the Bank; the Bank is duly qualified
as a foreign corporation to transact business and is in good standing in
each jurisdiction in which its ownership of property or leasing of property
or the conduct of its business requires such qualification, unless the
failure to be so qualified in one or more of
6
such jurisdictions would not have a material adverse effect on the
financial condition, results of operations or business of the Bank. The
Bank does not own equity securities or any equity interest in any other
business enterprise except as described in the Prospectus or as would not
be material to the operations of the Bank. All of the authorized and
outstanding capital stock of the Bank is owned by the Company, and the
Company has no direct subsidiaries other than the Bank. The Offering will
be 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, the MHC Regulations or letters of
approval at the time of the Closing all terms, conditions, requirements and
provisions with respect to the Offering imposed by the Commission, the OTS
and the FDIC, if any, will have been complied with by the Company and the
Bank 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.
(f) The establishment of the Foundation has been duly authorized, and the
Foundation has been incorporated and is validly existing as a non-stock
corporation in good standing under the laws of the State of Delaware with
corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Prospectus; the Foundation will
not be a bank holding company within the meaning of 12 C.F.R. Section
225.2(c) or a savings and loan holding company under HOLA as a result of
the issuance of shares of Common Stock to it in accordance with the terms
of the Plan and in the amounts as described in the Prospectus; no approvals
are required to establish the Foundation and to contribute the Foundation
Shares thereto as described in the Prospectus other than those imposed by
the OTS and the FDIC; except as specifically disclosed in the Prospectus,
there are no agreements and/or understandings, written or oral, between the
Company and/or the Bank and the Foundation with respect to the control,
directly or indirectly, over the voting and the acquisition or disposition
of the Foundation Shares; as of the Closing the Foundation Shares will have
been duly authorized for issuance and, when issued and contributed by the
Company pursuant to the Plan, will be duly and validly issued and fully
paid and nonassessable; and the issuance of the Foundation Shares is not
subject to preemptive or similar rights. The Foundation Shares have been
registered pursuant to the Registration Statement.
(g) The Company is, and as of the Closing Date will continue to be, duly
incorporated and validly existing as a corporation under the laws of the
United States of America with corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus, and at the Closing Date the
Company will be qualified to do business as a foreign corporation in each
jurisdiction in which the conduct of its business requires such
qualification, except where the failure to so qualify would not have a
material adverse effect on the financial condition, results of operations
or business of the Company. At the Closing Date, the Company will have
obtained all licenses, permits and other governmental authorizations
currently required for the conduct of its business except those that
individually or in the aggregate would not materially adversely affect the
financial condition, results of operations or business of the Company and
the Bank, taken as a whole; all such licenses, permits and governmental
authorizations will be in full force and effect, and the
7
Company will be in all material respects complying with all laws, rules,
regulations and orders applicable to the operation of its business.
(h) The MHC is, and as of the Closing Date will continue to be, duly
incorporated and validly existing as a corporation under the laws of the
United States of America with corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus, and at the Closing Date the MHC
will be qualified to do business as a foreign corporation in each
jurisdiction in which the conduct of its business requires such
qualification, except where the failure to so qualify would not have a
material adverse effect on the financial condition, results of operations
or business of the Company and the Bank, taken as a whole. At Closing Date,
the MHC will have obtained all licenses, permits and other governmental
authorizations currently required for the conduct of its business except
those that individually or in the aggregate would not materially adversely
affect the financial condition, results of operations or business of the
Company and the Bank, taken as a whole; all such licenses, permits and
governmental authorizations will be in full force and effect, and the MHC
will be in all material respects complying with all laws, rules,
regulations and orders applicable to the operation of its business.
(i) The MHC does not own any equity securities or any equity interest in
any business enterprise except as described in the Prospectus.
(j) The MHC is not authorized to issue any shares of capital stock.
(k) The Bank is a member of the Federal Home Loan Bank of Boston
("FHLB-Boston"). The deposit accounts of the Bank are insured by the FDIC
up to the applicable limits, and no proceedings for the termination or
revocation of such insurance are pending or, to the best knowledge of the
MHC, the Company or the Bank, threatened. The Bank is a "qualified thrift
lender" within the meaning of 12 U.S.C. Sectionl467(a)(m).
(l) The MHC, the Company and the Bank have good and marketable title to
all real property and good title to all other assets material to the
business of the Company and the Bank, taken as a whole, and to those
properties and assets described in the Registration Statement and
Prospectus as owned by them, free and clear of all liens, charges,
encumbrances or restrictions, except such as are described in the
Registration Statement and Prospectus, or are not material to the business
of the Company and the Bank, taken as a whole; and all of the leases and
subleases material to the business of the Company and the Bank, taken as a
whole, under which the MHC, the Company or the Bank hold properties,
including those described in the Registration Statement and Prospectus, are
in full force and effect.
(m) The Company and the Bank have received an opinion of their special
counsel, Xxxx Xxxxxx Xxxxxxxx & Xxxxxx P.C., with respect to the legality
of the Securities and the Foundation Shares and the federal income tax
consequences of the Offering, the establishment of the Foundation and
contribution of the Foundation Shares, and an opinion of Xxxxxx & Xxxxxx,
P.C. with respect to the Connecticut state income tax consequences of the
Offering; all material aspects of such opinions are accurately
8
summarized in the Registration Statement and the Prospectus. The MHC, the
Company and the Bank represent and warrant that the facts upon which such
opinions are based are truthful, accurate and complete. Neither the MHC,
the Company nor the Bank will take any action inconsistent therewith.
(n) The MHC, the Company and the Bank have all such power, authority,
authorizations, approvals and orders as may be required to enter into this
Agreement, to carry out the provisions and conditions hereof and to issue
and sell the Securities to be sold by the Company and contribute the
Foundation Shares to the Foundation as provided herein and as described in
the Prospectus, subject to approval or confirmation by the OTS of the final
appraisal of the Company. The execution, delivery and performance of this
Agreement and the consummation of the transactions herein contemplated have
been duly and validly authorized by all necessary corporate action on the
part of the MHC, the Company and the Bank. This Agreement has been validly
executed and delivered by the MHC, the Company and the Bank and is the
valid, legal and binding agreement of the MHC, the Company and the Bank
enforceable in accordance with its terms (except as the enforceability
thereof may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar laws relating to or affecting the enforcement of
creditors' rights generally or the rights of creditors of savings and loan
holding companies, the accounts of whose subsidiaries are insured by the
FDIC, or by general equity principles, regardless of whether such
enforceability is considered in a proceeding in equity or at law, and
except to the extent, if any, that the provisions of Sections 8 and 9
hereof may be unenforceable as against public policy).
(o) None of the MHC, the Company nor the Bank is in violation of any
directive received from the OTS, the FDIC, or any other agency to make any
material change in the method of conducting their businesses so as to
comply in all material respects with all applicable statutes and
regulations (including, without limitation, regulations, decisions,
directives and orders of the OTS and the FDIC) and, except as may be set
forth in the Registration Statement and the Prospectus, there is no suit or
proceeding or charge or action before or by any court, regulatory authority
or governmental agency or body, pending or, to the knowledge of the MHC,
the Company or the Bank, threatened, which might materially and adversely
affect the Offering, the performance of this Agreement or the consummation
of the transactions contemplated in the Plan and as described in the
Registration Statement and the Prospectus or which might result in any
material adverse change in the financial condition, results of operations
or business of the MHC, the Company or the Bank, or which would materially
affect their properties and assets.
(p) The financial statements, schedules and notes related thereto which
are included in the Prospectus fairly present the balance sheet, income
statement, statement of changes in equity capital and statement of cash
flows of the Company 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. Such financial statements, schedules and notes
related thereto have been prepared in accordance with generally accepted
accounting principles ("GAAP") consistently applied through the periods
involved, present fairly in all material respects the information required
to be stated therein, comply in all respects with any relevant
9
promulgation of the Public Company Accounting Oversight Board ("PCAOB") and
are consistent with the most recent financial statements and other reports
filed by the Bank with the OTS, except that accounting principles employed
in such regulatory filings conform to the requirements of the OTS and not
necessarily to GAAP. The other financial, statistical and pro forma
information and related notes included in the Prospectus present fairly the
information shown therein on a basis consistent with the audited and
unaudited financial statements of the Bank included in the Prospectus, and
as to the pro forma adjustments, the adjustments made therein have been
properly applied on the basis described therein.
(q) Since the respective dates as of which information is given in the
Registration Statement, including the Prospectus, there has not been: (i)
any material adverse change, financial or otherwise, in the condition of
the MHC, the Company or the Bank and its subsidiaries, considered as one
enterprise, or in the earnings, capital, properties or business of the MHC,
the Company or the Bank, whether or not arising in the ordinary course of
business; (ii) any material increase in the long-term debt of the Bank or
in the principal amount of the Bank's assets which 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 has the MHC, the Company or the Bank
issued any securities or incurred any liability or obligation for borrowing
other than in the ordinary course of business; (iii) any material
transactions entered into by the MHC, the Company or the Bank; (iv) any
material adverse change in the aggregate dollar amount of the Bank's
deposits or its net worth; (v) any material adverse change in the MHC's,
the Company's or the Bank's relationship with its insurance carriers,
including, without limitation, cancellation or other termination of the
MHC's, the Company's or the Bank's fidelity bond or any other type of
insurance coverage; (vi) except as disclosed in the Prospectus, any
material change in management of the MHC, the Company or the Bank; (vii)
any material loss or interference sustained by the MHC, the Company or the
Bank with its respective business or properties from fire, flood,
windstorm, earthquake, accident or other calamity, whether or not covered
by insurance; (viii) any defaults in the payment of principal or interest
on any outstanding debt obligations by the MHC, the Company or the Bank;
(ix) any material changes to the capitalization, liabilities, assets,
properties and business of the MHC, the Company and the Bank and the
capitalization, liabilities, assets, properties and business of the MHC,
the Company and the Bank conform in all material respects to the
descriptions thereof contained in the Prospectus; and (x) any material
contingent liabilities incurred by the MHC, the Company and the Bank,
except as set forth in the Prospectus.
(r) None of the MHC, the Company, the Bank nor the Foundation is or will
be (i) in violation of its charter, certificate of incorporation, or
bylaws, as applicable, or (ii) in default in the performance or observance
of any material obligation, agreement, covenant, or condition contained in
any material contract, lease, loan agreement, indenture or other instrument
to which it is a party or by which it or any of its property may be bound.
The execution and delivery of this Agreement and the consummation of the
transactions herein contemplated will not: (i) conflict with or constitute
a breach of, or default under, or result in the creation of any material
lien, charge or encumbrance
10
upon any of the assets of the MHC, the Company or the Bank pursuant to the
Charter and Bylaws of the MHC, the Company or the Bank or any material
contract, lease or other instrument in which the MHC, the Company or the
Bank has a beneficial interest, or any applicable law, rule, regulation or
order; (ii) violate any authorization, approval, judgment, decree, order,
statute, rule or regulation applicable to the MHC, the Company or the Bank,
except for such violations which would not have a material adverse effect
on the financial condition and results of operations of the MHC, the
Company and the Bank on a consolidated basis; or (iii) result in the
creation of any material lien, charge or encumbrance upon any property of
the MHC, the Company or the Bank.
(s) All documents made available to or delivered or to be made available
to or delivered by the MHC, the Company and the Bank or their
representatives in connection with the issuance and sale of the Securities
and the Foundation Shares, including records of account holders, depositors
and borrowers 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 MHC, the Company and the Bank or their representatives, to
the knowledge of the MHC, the Company and the Bank, 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.
(t) No default exists, and no event has occurred which with notice or
lapse of time, or both, would constitute a default on the part of the MHC,
the Company or the Bank in the due performance and observance of any term,
covenant or condition of any indenture, mortgage, deed of trust, note, bank
loan or credit agreement or any other instrument or agreement to which the
MHC, the Company or the Bank is a party or by which any of them or any of
their property is bound or affected, except such defaults which would not
have a material adverse affect on the financial condition or results of
operations of the MHC, the Company and the Bank on a consolidated basis;
such agreements are in full force and effect; and no other party to any
such agreements has instituted or, to the knowledge of the MHC, the Company
and the Bank, threatened any action or proceeding wherein the MHC, the
Company or the Bank would or might be alleged to be in default thereunder,
where such action or proceeding, if determined adversely to the MHC, the
Company or the Bank, would have a material adverse effect on the financial
condition, results of operations, or business of the MHC, the Company or
the Bank considered as one enterprise.
(u) Upon consummation of the Offering and the contribution of the
Foundation Shares as described in the Prospectus, the authorized, issued
and outstanding equity capital of the Company will be within the range set
forth in the Prospectus under the caption "Capitalization," and no Common
Stock has been or will be issued and outstanding prior to the Closing Date
(other than Common Stock held by the MHC); the Common Stock (including the
Securities and Common Stock to be issued to the MHC and the Foundation)
will have been duly and validly authorized for issuance and, when issued
and delivered by the Company pursuant to the Plan against payment of the
consideration calculated as set forth in the Plan, or contributed by the
Company pursuant to the Plan in the case of the Foundation Shares, and in
the Prospectus, will be duly and validly issued, fully paid and
non-assessable, except for shares purchased by the ESOP
11
with funds borrowed from the Company to the extent payment therefor in cash
has not been received by the Company; except to the extent that
subscription rights and priorities pursuant thereto exist pursuant to the
Plan, no preemptive rights exist with respect to the Securities or the
Foundation Shares; and the terms and provisions of the Securities and the
Foundation Shares will conform in all material respects to the description
thereof contained in the Registration Statement and the Prospectus. To the
knowledge of the Company and the Bank, upon the issuance of the Securities,
good title to the Securities will be transferred from the Company to the
purchasers thereof against payment therefor, subject to such claims as may
be asserted against the purchasers thereof by third-party claimants.
(v) No approval of any regulatory or supervisory or other public authority
is required in connection with the execution and delivery of this Agreement
or the issuance of the Securities, except for the approval of the
Commission and the OTS, and any necessary qualification, notification,
registration or exemption under the securities or blue sky laws of the
various states in which the Securities are to be offered, and except as may
be required under the rules and regulations of the National Association of
Securities Dealers, Inc. ("NASD").
(w) Xxxxxx & Xxxxxx, P.C., which has certified the audited financial
statements and schedules of the Company included in the Prospectus, has
advised the MHC, the Company and the Bank in writing that they are, with
respect to the MHC, the Company and the Bank, independent public
accountants within the meaning of the Code of Professional Ethics of the
American Institute of Certified Public Accountants and applicable
regulations of the OTS, and registered with the PCAOB.
(x) RP Financial, LC, which has prepared the Company's Appraisal, has
advised the Company in writing that it is independent of the MHC, the
Company and the Bank within the meaning of the MHC Regulations.
(y) The MHC, the Company and the Bank have timely filed all required
federal, state and local tax returns; the MHC, the Company and the Bank
have paid all taxes that have become due and payable in respect of such
returns, except where permitted to be extended, have made adequate reserves
for similar future tax liabilities and no deficiency has been asserted with
respect thereto by any taxing authority.
(z) The MHC, the Company and the Bank are and will be, as the case may be,
in compliance in all material respects with the applicable financial
record-keeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, and the regulations and
rules thereunder.
(aa) To the knowledge of the MHC, the Company and the Bank, neither the
MHC, the Company nor the Bank has made any payment of funds of the MHC, the
Company or the Bank as a loan for the purchase of the Securities as
prohibited by law, and no funds have been set aside to be used for any
payment prohibited by law.
12
(bb) Prior to the Offering, neither the MHC, the Company nor the Bank has:
(i) issued any securities within the last 18 months (except for notes to
evidence bank loans and reverse repurchase agreements or other liabilities
in the ordinary course of business or as described in the Prospectus and
except for securities issued to the Company and the MHC in connection with
the reorganization of the MHC); (ii) had any material dealings within the
12 months prior to the date hereof with any member of the NASD, or any
person related to or associated with such member, other than discussions
and meetings relating to the proposed Offering and purchases and sales of
United States government and agency and other securities in the ordinary
course of business; (iii) entered into a financial or management consulting
agreement except as contemplated hereunder; and (iv) engaged any
intermediary between the Agent and the MHC, the Company and the Bank in
connection with the offering of the Securities, and no person is being
compensated in any manner for such service. Appropriate arrangements have
been made for placing the funds received from subscriptions for Securities
in a special interest-bearing account with the Bank until all Securities
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 Company if all Securities are sold.
(cc) The MHC, the Company and the Bank have not relied upon the Agent or
its legal counsel for any legal, tax or accounting advice in connection
with the Offering.
(dd) The records used by the MHC, the Company and the Bank to determine the
identity of Eligible Account Holders and Supplemental Eligible Account
Holders are accurate and complete in all material respects.
(ee) The Company and the MHC are not required to be registered under the
Investment Company Act of 1940, as amended.
(ff) Neither the MHC, the Company nor the Bank nor any properties owned or
operated by the MHC, the Company or the Bank, is in violation of or liable
under any Environmental Law (as defined below), except for such violations
or liabilities that, individually or in the aggregate, would not have a
material adverse effect on the financial condition, results of operations
or business of the MHC, the Company and the Bank, taken as a whole. There
are no actions, suits or proceedings, or demands, claims, notices or
investigations (including, without limitation, notices, demand letters or
requests for information from any environmental agency) instituted or
pending or, to the knowledge of the MHC, the Company or the Bank,
threatened relating to the liability of any property owned or operated by
the MHC, the Company or the Bank under any Environmental Law. For purposes
of this subsection, the term "Environmental Law" means any federal, state,
local or foreign law, statute, ordinance, rule, regulation, code, license,
permit, authorization, approval, consent, order, judgment, decree,
injunction or agreement with any regulatory authority relating to (i) the
protection, preservation or restoration of the environment (including,
without limitation, air, water, vapor, surface water, groundwater, drinking
water supply, surface soil, subsurface soil, plant and animal life or any
other natural resource), and/or (ii) the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
production, release or disposal of any substance presently listed, defined,
designated or classified as hazardous, toxic,
13
radioactive or dangerous, or otherwise regulated, whether by type or by
quantity, including any material containing any such substance as a
component.
(gg) The Company has received approval, subject to final regulatory
approval to consummate the Offering and to have the Securities and the
Foundation Shares quoted on the Nasdaq Stock Market effective as of the
Closing Date.
(hh) The Company has filed a registration statement for the Securities and
the Foundation Shares under Section 12(g) of the Securities Exchange Act of
1934, as amended (the "Exchange Act Registration Statement").
(ii) All of the loans represented as assets of the Bank in the Prospectus
meet or are exempt from all requirements of federal, state and local law
pertaining to lending, including, without limitation, truth in lending
(including the requirements of Regulations Z and 12 C.F.R. Part 226), real
estate settlement procedures, consumer credit protection, equal credit
opportunity and all disclosure laws applicable to such loans, except for
violations which, if asserted, would not have a material adverse effect on
the financial condition, results of operations, or business of the MHC, the
Company or the Bank considered as one enterprise.
(jj) The MHC, the Company and the Bank have taken all actions necessary to
obtain at Closing a Blue Sky Memorandum from Xxxx Xxxxxx Xxxxxxxx & Xxxxxx
P.C.
(kk) Any certificates signed by an officer of the MHC, the Company or the
Bank pursuant to the conditions of this Agreement and delivered to the
Agent or their counsel that refers to this Agreement shall be deemed to be
a representation and warranty by the MHC, the Company or the Bank to the
Agent as to the matters covered thereby with the same effect as if such
representation and warranty were set forth herein.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE AGENT. The Agent
represents and warrants to the MHC, Company and the Bank as follows:
(a) The Agent is a corporation and is validly existing 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 MHC, the Company and the Bank
hereunder.
(b) The Agent is duly registered and in good standing as a broker-dealer
with the Commission and is a member in good standing of the NASD.
(c) The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized
by all necessary action on the part of the Agent, and this Agreement has
been duly and validly executed and delivered by the Agent and is a legal,
valid and binding agreement of the Agent, enforceable in accordance with
its terms, except as the legality, validity, binding nature and
enforceability thereof may be limited by (i) bankruptcy, insolvency,
moratorium, reorganization, conservatorship, receivership or other similar
laws relating to or affecting the enforcement of creditors' rights
generally, and (ii) general equity principles regardless of whether such
enforceability is considered in a proceeding in equity or at law.
14
(d) Each of the Agent and its employees, agents and representatives who
shall perform any of the services hereunder shall be duly authorized and
empowered, and shall have all licenses, approvals and permits necessary to
perform such services; and the Agent is a registered selling agent in each
of the jurisdictions in which the Securities are to be offered by the
Company in reliance upon the Agent as a registered selling agent as set
forth in the blue sky memorandum prepared with respect to the Offering.
(e) 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 agreement, indenture or other instrument to which the Agent is
a party or by which it or its property is bound.
(f) No approval of any regulatory or supervisory or other public authority
is required in connection with the Agent's execution and delivery of this
Agreement, except as may have been received.
(g) There is no suit or proceeding or charge or action before or by any
court, regulatory authority or government agency or body or, to the
knowledge of the Agent, pending or threatened, which might materially
adversely affect the Agent's performance under this Agreement.
SECTION 5.1 COVENANTS OF THE MHC, THE COMPANY AND THE BANK. The MHC, the
Company and the Bank hereby jointly and severally covenant with the Agent as
follows:
(a) The Company will not, at any time after the date the Registration
Statement is declared effective, file any amendment or supplement to the
Registration Statement without providing the Agent and its counsel an
opportunity to review such amendment or supplement or file any amendment or
supplement to which amendment or supplement the Agent or its counsel shall
reasonably object.
(b) The MHC and the Bank will not, at any time after the MHC Application
is approved by the OTS, file any amendment or supplement to such MHC
Application without providing the Agent and its counsel an opportunity to
review such amendment or supplement or file any amendment or supplement to
which amendment or supplement the Agent or its counsel shall reasonably
object.
(c) The MHC, the Company and the Bank will use their best efforts to cause
any post-effective amendment to the Registration Statement to be declared
effective by the Commission and any post-effective amendment to the MHC
Application to be approved by the OTS and will immediately upon receipt of
any information concerning the events listed below notify the Agent: (i)
when the Registration Statement, as amended, has become effective; (ii)
when the MHC Application, as amended, has been approved by the OTS; (iii)
of any comments from the Commission, the OTS or any other governmental
entity with respect to the Offering or the transactions contemplated by
this Agreement;
15
(iv) of the request by the Commission, the OTS or any other governmental
entity for any amendment or supplement to the Registration Statement, the
MHC Application or for additional information; (v) of the issuance by the
Commission, the OTS or any other governmental entity of any order or other
action suspending the Offering or the use of the Registration Statement or
the Prospectus or any other filing of the Company or the Bank under the MHC
Regulations, or other applicable law, or the threat of any such action;
(vi) of the issuance by the Commission, the OTS or any 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
paragraph (h) below. The MHC, the Company and the Bank will make every
reasonable effort (i) to prevent the issuance by the Commission, the OTS or
any other state authority of any such order and, (ii) if any such order
shall at any time be issued, to obtain the lifting thereof at the earliest
possible time.
(d) The MHC, the Company and the Bank will deliver to the Agent and to its
counsel two conformed copies of the Registration Statement, the MHC
Application as originally filed and of each amendment or supplement
thereto, including all exhibits. Further, the Company and the Bank will
deliver such additional copies of the foregoing documents to counsel to the
Agent as may be required for any NASD filings.
(e) The MHC, the Company and the Bank will furnish to the Agent, from time
to time during the period when the Prospectus (or any later prospectus
related to this offering) is required to be delivered under the 1933 Act or
the Securities Exchange Act of 1934 (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, the 1934 Act or the rules and regulations promulgated under
the 1934 Act (the "1934 Act Regulations"). The 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 Securities by the Agent.
(f) The MHC, the Company and the Bank will comply with any and all
material terms, conditions, requirements and provisions with respect to the
Offering, including the formation and operation of the Foundation and the
transactions contemplated thereby imposed by the Commission, the OTS or the
MHC Regulations, and by the 1933 Act, the 1933 Act Regulations, the 1934
Act and the 1934 Act Regulations to be complied with prior to or subsequent
to the Closing Date and when the Prospectus is required to be delivered,
and during such time period the Company and the Bank will comply, at their
own expense, with all material requirements imposed upon them by the
Commission, the OTS or the MHC Regulations, and by the 1933 Act, the 1933
Act Regulations, the 1934 Act and the 1934 Act Regulations, including,
without limitation, Rule 10b-5 under the 1934 Act, in each case as from
time to time in force, so far as necessary to permit the continuance of
sales or dealing in the Securities during such period in accordance with
the provisions hereof and the Prospectus.
(g) If, at any time during the period when the Prospectus relating to the
Securities is required to be delivered, any event relating to or affecting
the MHC, the Company or the
16
Bank shall occur, as a result of which it is necessary or appropriate, in
the opinion of counsel for the MHC, the Company and the Bank or in the
reasonable opinion of the Agent's counsel, to amend or supplement the
Registration Statement or Prospectus in order to make the Registration
Statement or Prospectus not misleading in light of the circumstances
existing at the time the Prospectus is delivered to a purchaser, the MHC,
the Company and the Bank will immediately so inform the Agent and prepare
and file, at their own expense, 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 or Prospectus (in form and substance reasonably satisfactory to
the Agent and its counsel after a reasonable time for review) which will
amend or supplement the Registration Statement or Prospectus so that as
amended or supplemented it will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in light of the circumstances existing at the time
the Prospectus is delivered to a purchaser, not misleading. For the purpose
of this Agreement, the MHC, the Company and the Bank each will timely
furnish to the Agent such information with respect to itself as the Agent
may from time to time reasonably request.
(h) The MHC, the Company and the Bank will take all necessary actions in
cooperating with the Agent and furnish to whomever the Agent may direct
such information as may be required to qualify or register the Securities
for offering and sale by the Company or to exempt such Securities from
registration, or to exempt the Company as a broker-dealer and its officers,
directors and employees as broker-dealers or agents under the applicable
securities or blue sky laws of such jurisdictions in which the Securities
are required under the MHC Regulations to be sold or as the Agent and the
MHC, the Company and the Bank may reasonably agree upon; provided, however,
that the Company shall not be obligated to file any general consent to
service of process, to qualify to do business in any jurisdiction in which
it is not so qualified, or to register its directors or officers as
brokers, dealers, salesmen or agents in any jurisdiction. In each
jurisdiction where any of the Securities shall have been qualified or
registered as above provided, the Company will make and file such
statements and reports in each fiscal period as are or may be required by
the laws of such jurisdiction.
(i) The Company and the Bank will not sell or issue, contract to sell or
otherwise dispose of, for a period of 90 days after the Closing Date,
without the Agent's prior written consent, any of their Common Stock other
than in connection with any plan or arrangement described in the
Prospectus, including existing stock benefit plans.
(j) The Company and the Bank will comply with the conditions imposed by or
agreed to with the OTS in connection with their approval or non-objection
of, or non-objection to those conditions relating to the establishment and
the operation of the Foundation; the Company and the Bank shall use their
best efforts to ensure that the Foundation submits within the time frames
required by applicable law a request to the Internal Revenue Service to be
recognized as a tax-exempt organization under Section 501(c)(3) of the
Code; the Company and the Bank will take no action which will result in the
possible loss of the Foundation's tax exempt status; and neither the
Company nor the
17
Bank will contribute any additional assets to the Foundation until such
time that such additional contributions will be deductible for federal and
state income tax purposes.
(k) The Company will register the Securities and Foundation Shares under
Section 12(g) of the 1934 Act. The Company shall maintain the effectiveness
of such registration for not less than three years from the time of
effectiveness or such shorter period as may be required by the OTS.
(l) During the period during which the Securities and the Foundation
Shares are registered under the 1934 Act or for three years from the date
hereof, whichever period is greater, the Company will furnish to its
shareholders as soon as practicable after the end of each fiscal year an
annual report of the Company (including a consolidated balance sheet and
statements of consolidated income, shareholders' equity and cash flows of
the Company and its subsidiaries as at the end of and for such year,
certified by independent public accountants in accordance with Regulation
S-X under the 1933 Act and the 1934 Act).
(m) During the period of three years from the date hereof, the Company
will furnish to the Agent: (i) as soon as practicable after such
information is publicly available, a copy of each report of the Company
furnished to or filed with the Commission under the 1934 Act or any
national securities exchange or system on which any class of securities of
the Company is listed or quoted (including, but not limited to, reports on
Forms 10-K or 10-KSB, 10-Q or 10-QSB and 8-K and all proxy statements and
annual reports to stockholders), (ii) a copy of each other non-confidential
report of the Company mailed to its shareholders or filed with the
Commission, the OTS or any other supervisory or regulatory authority or any
national securities exchange or system on which any class of securities of
the Company is listed or quoted, each press release and material news items
and additional documents and information with respect to the Company or the
Bank as the Agent may reasonably request; and (iii) from time to time, such
other nonconfidential information concerning the MHC, the Company or the
Bank as the Agent may reasonably request.
(n) The MHC, the Company and the Bank will use the net proceeds from the
sale of the Securities in the manner set forth in the Prospectus under the
caption "Use of Proceeds."
(o) Other than as permitted by the MHC Regulations, the HOLA, the 1933
Act, the 1933 Act Regulations and the rules and regulations and the laws of
any state in which the Securities are registered or qualified for sale or
exempt from registration, neither the Company nor the Bank will distribute
any prospectus, offering circular or other offering material in connection
with the offer and sale of the Securities.
(p) The Company will use its best efforts to maintain quotation of the
Securities and the Foundation Shares on the NASDAQ Stock Market.
(q) The Bank will maintain appropriate arrangements for depositing all
funds received from persons mailing subscriptions for or orders to purchase
Securities in the
18
Offering on an interest-bearing basis at the rate described in the
Prospectus until the Closing Date and satisfaction of all conditions
precedent to the release of the Bank's obligation to refund payments
received from persons subscribing for or ordering Securities in the
Offering in accordance with the Plan and as described in the Prospectus or
until refunds of such funds have been made to the persons entitled thereto
or withdrawal authorizations canceled in accordance with the Plan and as
described in the Prospectus. The Bank will maintain such records of all
funds received to permit the funds of each subscriber to be separately
insured by the FDIC (to the maximum extent allowable) and to enable the
Bank to make the appropriate refunds of such funds in the event that such
refunds are required to be made in accordance with the Plan and as
described in the Prospectus.
(r) The MHC, the Company and the Bank will take such actions and furnish
such information as are reasonably requested by the Agent in order for the
Agent to ensure compliance with NASD's Rule 2790.
(s) Neither the MHC, the Company nor the Bank will amend the Plan without
notifying the Agent and the Agent's counsel prior thereto.
(t) The Company shall assist the Agent, if necessary, in connection with
the allocation of the Securities in the event of an oversubscription and
shall provide the Agent with any information necessary to assist the
Company in allocating the Securities in such event and such information
shall be accurate and reliable in all material respects.
(u) Prior to the Closing Date, the MHC, the Company and the Bank will
inform the Agent of any event or circumstances of which it is aware as a
result of which the Registration Statement and/or Prospectus, as then
amended or supplemented, 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.
(v) The Company will not deliver the Securities or the Foundation Shares
until the MHC, the Company and the Bank have satisfied or caused to be
satisfied each condition set forth in Section 7 hereof, unless such
condition is waived in writing by the Agent.
(w) The Company and the Bank shall notify the Agent when funds shall have
been received for the minimum number of Securities set forth in the
Prospectus.
(x) Subsequent to the date the Registration Statement is declared
effective by the Commission and prior to the Closing Date, except as
otherwise may be indicated or contemplated therein or set forth in an
amendment or supplement thereto, neither the MHC, the Company nor the Bank
will have: (i) issued any securities or incurred any liability or
obligation, direct or contingent, for borrowed money, except borrowings
from the same or similar sources indicated in the Prospectus in the
ordinary course of its business, or (ii) entered into any transaction which
is material in light of the business and properties of the MHC, the Company
and the Bank, taken as a whole.
19
(y) Until the Closing Date, the MHC, the Company and the Bank will conduct
their businesses in compliance in all material respects with all applicable
federal and state laws, rules, regulations, decisions, directives and
orders, including all decisions, directives and orders of the Commission,
the FDIC and the OTS.
(z) The MHC, the Company and the Bank 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 MHC
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 Company will comply with all provisions of all
undertakings contained in the Registration Statement.
(aa) The facts and representations provided to Xxxx Xxxxxx Xxxxxxxx &
Xxxxxx P.C. by the Bank and the Company and upon which Xxxx Xxxxxx Xxxxxxxx
& Xxxxxx P.C. will base its opinion under Section 7(c)(1) are and will be
truthful, accurate and complete.
(bb) The Company shall comply with all applicable provisions of the
Xxxxxxxx-Xxxxx Act and the Nasdaq Stock Market's corporate governance
rules.
SECTION 6. PAYMENT OF EXPENSES. Whether or not the Offering is completed or
the sale of the Securities by the Company is consummated, the Company and the
Bank jointly and severally agree to pay or reimburse the Agent for: (a) all
filing fees in connection with all filings related to the Offering with the
NASD; (b) any stock issue or transfer taxes which may be payable with respect to
the sale of the Securities; (c) subject to Section 2(d), all reasonable expenses
of the Offering, including but not limited to the Agent's attorneys' fees and
expenses, blue sky fees, transfer agent, registrar and other agent charges, fees
relating to auditing and accounting or other advisors and costs of printing all
documents necessary in connection with the Offering. In the event the Company is
unable to sell the minimum number of Securities necessary to complete the
offering or the Offering is terminated or otherwise abandoned, the MHC, the
Company and the Bank shall promptly reimburse the Agent in accordance with
Section 2(d) hereof.
In the event that the Agent incurs any expenses on behalf of the MHC, the
Company or the Bank, the MHC, the Company and the Bank 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 in Section 2(d) hereof. The MHC, the Company and the Bank
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 Prospectus
for a period later than December 31, 2003. Not later than two days prior to the
Closing Date, the Agent will provide the Bank with an 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 7. CONDITIONS TO THE AGENT'S OBLIGATIONS. The obligations of the
Agent hereunder, as to the Securities to be delivered at the Closing Date, are
subject, to the extent not
20
waived in writing by the Agent, to the condition that all representations and
warranties of the MHC, the Company and the Bank herein are, at and as of the
commencement of the Offering and at and as of the Closing Date, true and correct
in all material respects, the condition that the MHC, the Company and the Bank
shall have performed all of their obligations hereunder to be performed on or
before such dates, and to the following further conditions:
(a) At the Closing Date, the MHC, the Company and the Bank shall have
conducted the Offering in all material respects in accordance with the
Plan, the MHC 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.
(b) The Registration Statement shall have been declared effective by the
Commission and the MHC Application approved by the OTS not later than 5:30
p.m. on the date of this Agreement, or with the Agent's consent at a later
time and date; and at the Closing Date, no stop order suspending the
effectiveness of the Registration Statement shall have been issued under
the 1933 Act or proceedings therefor initiated or threatened by the
Commission or any state authority, and no order or other action suspending
the authorization of the Prospectus or the consummation of the Offering
shall have been issued or proceedings therefor initiated or, to the
Company's or the Bank's knowledge, threatened by the Commission, the OTS,
the FDIC or any other state authority.
(c) At the Closing Date, the Agent shall have received:
(1) The favorable opinion, dated as of the Closing Date and addressed
to the Agent and for its benefit, of Xxxx Xxxxxx Xxxxxxxx & Xxxxxx
P.C., special counsel for the MHC, the Company and the Bank, in form
and substance to the effect that:
(i) The Company and the MHC have been duly incorporated and
are validly existing as a stock holding company and a mutual
holding company, respectively, under the laws of the United
States of America.
(ii) The Company and the MHC have corporate power and
authority to own, lease and operate their properties and to
conduct their business as described in the Registration Statement
and the Prospectus.
(iii) The Bank is a validly existing federally-chartered
savings bank in stock form, duly authorized to conduct its
business and own its property as described in the Registration
Statement and the Prospectus. All of the outstanding capital
stock of the Bank is duly authorized, validly issued, fully-paid
and non-assessable and owned by the Company, to such counsel's
Actual Knowledge, free and clear of any liens, encumbrances,
claims or other restrictions.
(iv) The Bank is a member of the FHLB-Boston. The deposit
accounts of the Bank are insured by the FDIC up to the maximum
amount allowed
21
under law and, to our Actual Knowledge, no proceedings for the
termination or revocation of such insurance are pending or
threatened;
(v) Upon consummation of the Offering and the issuance of the
Foundation Shares, the authorized, issued and outstanding Common
Stock of the Company will be within the range set forth in the
Prospectus under the caption "Capitalization," and no Common
Stock has been issued prior to the Closing Date (except to the
MHC); the Securities subscribed for pursuant to the Offering will
have been duly and validly authorized for issuance, and when
issued and delivered by the Company pursuant to the Plan against
payment of the consideration calculated as set forth in the Plan
and Prospectus, will be duly and validly issued and fully paid
and non-assessable, except for shares purchased by the ESOP with
funds borrowed from the Company to the extent payment therefor in
cash has not been received by the Company; except to the extent
that subscription rights and priorities pursuant thereto exist
pursuant to the Plan, the issuance of the Securities and the
Foundation Shares are not subject to preemptive rights and the
terms and provisions of the Securities and the Foundation Shares
conform in all material respects to the description thereof
contained in the Prospectus. To such counsel's Actual Knowledge,
the Securities and the Foundation Shares will not, when issued,
be subject to any liens, charges, encumbrances or other claims
created by the Company or the Bank.
(vi) The Foundation has been duly incorporated and is validly
existing as a non-stock corporation in good standing under the
laws of the State of Delaware with corporate power and authority
to own, lease and operate its properties and to conduct its
business as described in the Prospectus; the Foundation is not a
bank holding company within the meaning of 12 C.F.R. Section
225.2(c) or a savings and loan holding company under HOLA as a
result of the issuance of the Foundation Shares to it in
accordance with the terms of the Plan and in the amounts as
described in the Prospectus; no approvals are required to
establish the Foundation and to contribute the Foundation Shares
thereto as described in the Prospectus other than those set forth
in any written notice or order of approval or non-objection of
the OTS, copies of which were provided to the Agent prior to the
Closing Time; and the issuance of the Foundation Shares to the
Foundation is registered pursuant to the Registration Statement.
(vii) The MHC, the Company and the Bank have full corporate
power and authority to enter into this Agreement and to
consummate the transactions contemplated thereby and by the Plan.
The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and
validly authorized by all necessary action on the part of the
MHC, the Company and the Bank; and this Agreement is a valid and
binding obligation of the MHC, the Company and the Bank,
enforceable against the MHC, the Company and
22
the Bank in accordance with its terms, except as the
enforceability thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium, conservatorship,
receivership or other similar laws now or hereafter in effect
relating to or affecting the enforcement of creditors' rights
generally or the rights of creditors of federally chartered
savings institutions, (ii) general equitable principles, (iii)
laws relating to the safety and soundness of insured depository
institutions, and (iv) applicable law or public policy with
respect to the indemnification and/or contribution provisions
contained herein, including without limitation the provisions of
Sections 23A and 23B of the Federal Reserve Act and except that
no opinion need be expressed as to the effect or availability of
equitable remedies or injunctive relief (regardless of whether
such enforceability is considered in a proceeding in equity or at
law).
(viii) The MHC Application has been approved by the OTS and the
Prospectus has been authorized for use by the OTS and no action
has been taken, and to such counsel's Actual Knowledge none is
pending or threatened, to revoke any such authorization or
approval.
(vix) Based upon the minutes of the proceedings of the Board of
Directors, the Plan has been duly adopted or ratified by the
required vote of the directors of the MHC, the Company and the
Bank, and the establishment and founding of the Foundation has
been approved by the Board of Directors of the Company and the
Corporators of the MHC and that no other votes are required under
these circumstances.
(x) Subject to the satisfaction of the conditions to the
OTS's approval of the Offering, no further approval,
registration, authorization, consent or other order of any
federal regulatory agency is required in connection with the
execution and delivery of this Agreement, the issuance of the
Securities and the Foundation Shares and the consummation 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) and except as may be required under the rules and
regulations of the NASD (as to which no opinion need be
rendered).
(xi) The Registration Statement is effective under the 1933
Act and to such counsel's Actual Knowledge no stop order
suspending the effectiveness has been issued under the 1933 Act
or proceedings therefor initiated or threatened by the
Commission.
(xii) At the time the MHC Application, including the Prospectus
contained therein, was approved by the OTS, the MHC Application,
including the Prospectus contained therein, complied as to form
in all material respects with the requirements of the MHC
Regulations (other than the financial statements, the notes
thereto, and other tabular,
23
statistical and appraisal data included therein, including the
business plan as to which no opinion need be rendered).
(xiii) At the time that the Registration Statement became
effective, (a) the Registration Statement (as amended or
supplemented, if so amended or supplemented) (other than the
financial statements, the notes thereto, and other tabular,
statistical and appraisal data included therein, as to which no
opinion need be rendered), complied as to form in all material
respects with the requirements of the 1933 Act and the 1933 Act
Regulations, and (b) the Prospectus (other than the financial
statements, the notes thereto, and other tabular, statistical and
appraisal data included therein, as to which no opinion need be
rendered) complied as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations.
(xiv) The terms and provisions of the Common Stock of the
Company conform, in all material respects, to the description
thereof contained in the Registration Statement and Prospectus,
and the form of certificate used to evidence the Securities
complies with applicable laws.
(xv) 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 offer,
sale or issuance of the Securities or the Foundation Shares, or
(iii) which are required to be disclosed in the Registration
Statement and Prospectus, other than those disclosed therein.
(xvi) Neither the MHC, the Company nor the Bank is required to
be registered as an investment company under the Investment
Company Act of 1940.
(xvii) To such counsel's Actual Knowledge, neither the MHC, the
Company nor the Bank 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.
(xiii) 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 MHC 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 MHC Application, the Registration Statement or the
Prospectus. The description in the MHC Application, the
Registration Statement and the Prospectus of such documents and
exhibits is accurate in all material respects and fairly presents
the information required to be shown.
24
(xix) Unless otherwise waived by the OTS, the Plan complies in
all material respects with all applicable federal law, rules,
regulations, decisions and orders including, but not limited to,
the MHC Regulations; to such counsel's Actual Knowledge, no order
has been issued by the OTS, the Commission, the FDIC, or any
state authority to suspend the Offering or the use of the
Prospectus, and no action for such purposes has been instituted
or threatened by the OTS, the Commission, the FDIC, or any other
state authority and, 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 MHC Application
or the Prospectus.
(xx) To such counsel's Actual Knowledge, the MHC, the Company
and the Bank have obtained all material licenses, permits and
other governmental authorizations currently required for the
conduct of their businesses as described in the Registration
Statement, and all such licenses, permits and other governmental
authorizations are in full force and effect, and the MHC, the
Company and the Bank are in all material respects complying
therewith.
(xxi) To such counsel's Actual Knowledge, neither the MHC, the
Company, the Bank nor the Foundation is in violation of its
Charter, Certificate of Incorporation and/or Bylaws, as
applicable, 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 impact on the financial condition or
results of operations of the MHC, the Company and the Bank on a
consolidated basis; to such counsel's Actual Knowledge, the
execution and delivery of this Agreement, the incurrence of the
obligations herein set forth and the consummation of the
transactions contemplated herein, including the establishment of
the Foundation and the contribution thereto of Foundation Shares
will not conflict with or constitute a breach of, or default
under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the MHC, the
Company or the Bank pursuant to any material contract, indenture,
mortgage, loan agreement, note, lease or other instrument to
which the MHC, the Company or the Bank is a party or by which any
of them may be bound, or to which any of the property or assets
of the MHC, the Company or the Bank are subject; and such action
will not result in any violation of the provisions of the
Charter, Certificate of Incorporation and/or Bylaws of the
Company, the Bank or the MHC, or 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
need be rendered) or order or court order, writ, injunction or
decree.
25
(xxii) Unless otherwise waived by the OTS, the MHC's and the
Company's Charters and By-Laws and the Bank's Charter and/or
Bylaws, as applicable, each comply in all material respects with
the laws of the United States of America.
(xxiii) The information in the Prospectus under the captions
"Risk Factors," "Supervision and Regulation," "Federal and State
Taxation," "The Stock Offering," "Restrictions on Acquisition of
PSB Holdings, Inc. and Xxxxxx Savings Bank" and "Description of
Capital Stock of PSB Holdings, Inc.," 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. The information under the
caption "Tax Effects of the Stock Offering" has been reviewed by
legal counsel and fairly describes the federal and state tax
opinions rendered by Xxxx Xxxxxx Xxxxxxxx & Xxxxxx, P.C. and
Xxxxxx & Xxxxxx, P.C., respectively, to the MHC, the Company and
the Bank with respect to such matters.
In addition, such counsel shall state that during the preparation
of the MHC Application, the Registration Statement and the
Prospectus, they participated in conferences with certain
officers of, the independent public and internal accountants for,
and other representatives of, the MHC, the Company and the Bank,
at which conferences the contents of the MHC Application, the
Registration Statement and the Prospectus and related matters
were discussed and, while such counsel have not confirmed the
accuracy or completeness of or otherwise verified the information
contained in the MHC Application, the Registration Statement or
the Prospectus and do not assume any responsibility for such
information, based upon such conferences and a review of
documents deemed relevant for the purpose of rendering their
opinion (relying as to materiality as to factual matters on
certificates of officers and other factual representations by the
MHC, the Company and the Bank), nothing has come to their
attention that would lead them to believe that the MHC
Application, the Registration Statement, the Prospectus, or any
amendment or supplement thereto (other than the financial
statements, the notes thereto, and other tabular, Financial
Services, statistical and appraisal data included therein as to
which no view need be rendered) contained an untrue statement of
a material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading.
In giving such opinion, such counsel may rely as to all matters
of fact on certificates of officers or directors of the MHC, the
Company and the Bank and certificates of public officials. Such
counsel's opinion shall be
26
limited to matters governed by federal laws and by the laws of
the State of Connecticut.
For purposes of such opinion, no proceedings shall be deemed to
be pending, no order or stop order shall be deemed to be issued,
and no action shall be deemed to be instituted unless, in each
case, a director or executive officer of the MHC, the Company or
the Bank shall have received a copy of such proceedings, order,
stop order or action. In addition, such opinion may be limited to
present statutes, regulations and judicial interpretations and to
facts as they presently exist; in rendering such opinion, such
counsel need assume no obligation to revise or supplement it
should the present laws be changed by legislative or regulatory
action, judicial decision or otherwise; and such counsel need
express no view, opinion or belief with respect to whether any
proposed or pending legislation, if enacted, or any proposed or
pending regulations or policy statements issued by any regulatory
agency, whether or not promulgated pursuant to any such
legislation, would affect the validity of the Offering or any
aspect thereof. Such counsel may assume that any agreement is the
valid and binding obligation of any parties to such agreement
other than the Company or the Bank.
(d) A Blue Sky Memorandum from Xxxx Xxxxxx Xxxxxxxx & Xxxxxx P.C. relating
to the Offering, including Agent's participation therein, and should be
furnished to Agent with a copy thereof addressed to Agent or upon which
Xxxx Xxxxxx Xxxxxxxx & Xxxxxx P.C. shall state Agent may rely. The Blue Sky
Memorandum will relate to the necessity of obtaining or confirming
exemptions, qualifications or the registration of the Securities under
applicable state securities law.
(e) At the Closing Date, the Agent shall receive a certificate of the
Chief Executive Officer and the Chief Financial Officer of the MHC, the
Company and the Bank in form and substance reasonably satisfactory to the
Agent's Counsel, dated as of such Closing Date, to the effect that: (i)
they have carefully examined the Prospectus and, in their opinion, at the
time the Prospectus became authorized for final use, the Prospectus did not
contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; (ii) since the
date the Prospectus became authorized for final use, no event has occurred
which should have been set forth in an amendment or supplement to the
Prospectus which has not been so set forth, including specifically, but
without limitation, any material adverse change in the condition, financial
or otherwise, or in the earnings, capital, properties or business of the
MHC, the Company or the Bank and the conditions set forth in this Section 7
have been satisfied; (iii) since the respective dates as of which
information is given in the Registration Statement and the Prospectus,
there has been no material adverse change in the condition, financial or
otherwise, or in the earnings, capital or properties of the MHC, the
Company or the Bank independently, or of the MHC, the Company and the Bank
considered as one enterprise, whether or not arising in the ordinary course
of business; (iv) the representations and warranties in Section 4 are true
and correct with the same force and
27
effect as though expressly made at and as of the Closing Date; (v) the MHC,
the Company and the Bank have complied in all material respects with all
agreements and satisfied all conditions on their part to be performed or
satisfied at or prior to the Closing Date and will comply in all material
respects with all obligations to be satisfied by them after the Offering;
(vi) no stop order suspending the effectiveness of the Registration
Statement has been initiated or, to the best knowledge of the MHC, the
Company or the Bank, threatened by the Commission or any state authority;
(vii) no order suspending the Offering or the effectiveness of the
Prospectus has been issued and no proceedings for that purpose are pending
or, to the best knowledge of the MHC, the Company or the Bank, threatened
by the OTS, the Commission, the FDIC, or any state authority; and (viii) to
the best knowledge of the Company or the Bank, no person has sought to
obtain review of the final action of the OTS approving the Plan.
(f) Neither the MHC, the Company nor the Bank shall have sustained, since
the date of the latest financial statements included in the Registration
Statement and Prospectus, any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth in the Registration
Statement and the Prospectus, and since the respective dates as of which
information is given in the Registration Statement and the Prospectus,
there shall not have been any material adverse effect on the financial
condition, results of operations, or business of the MHC, the Company or
the Bank 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 Securities on the terms and in the manner
contemplated in the Prospectus.
(g) 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, results of operations or business of the MHC, the Company and
the Bank considered as one enterprise, from that as of the latest dates as
of which such condition is set forth in the Prospectus, other than
transactions referred to or contemplated therein; (ii) the MHC, the Company
or the Bank shall not have received from the OTS or the FDIC any direction
(oral or written) to make any material change in the method of conducting
their business with which it has not complied (which direction, if any,
shall have been disclosed to the Agent) or which materially and adversely
would affect the financial condition, results of operations or business of
the MHC, the Company and the Bank taken as a whole; (iii) neither the
Company nor the Bank shall have been in default (nor shall an event have
occurred which, with notice or lapse of time or both, would constitute a
default) under any provision of any agreement or instrument relating to any
outstanding indebtedness; (iv) no action, suit or proceeding, at law or in
equity or before or by any federal or state commission, board or other
administrative agency, shall be pending or, to the knowledge of the MHC,
the Company or the Bank, threatened against the MHC, the Company or the
Bank or affecting any of their properties wherein an unfavorable decision,
ruling or finding would materially and adversely affect the financial
condition, results of operations or business taken as a whole; and (v) the
Securities shall have been qualified or registered for offering and sale or
exempted therefrom under the securities or blue sky
28
laws of the jurisdictions as the Agent shall have reasonably requested and
as agreed to by the MHC, the Company or the Bank.
(h) Concurrently with the execution of this Agreement, the Agent shall
receive a letter dated as of the date of the Prospectus and addressed to
the Agent: (i) confirming that Xxxxxx & Xxxxxx, P.C. is a firm of
independent public accountants within the meaning of Rule 101 of the Code
of Professional Ethics of the American Institute of Certified Public
Accountants and applicable regulations of the OTS, that they are registered
with the PCAOB and stating in effect that in its opinion the financial
statements, schedules and related notes of the Company and the Bank
included in the Prospectus and covered by their opinion included therein,
comply as to form in all material respects with the applicable accounting
requirements and related published rules and regulations of the OTS and the
1933 Act; (ii) stating in effect that, on the basis of certain agreed upon
procedures (but not an audit in accordance with generally accepted auditing
standards) consisting of a reading of the latest available unaudited
interim financial statements of the Bank prepared by the Bank, a reading of
the minutes of the meetings of the Board of Directors and members of the
Bank and consultations with officers of the Bank responsible for financial
and accounting matters, nothing came to their attention which caused them
to believe that: (A) the unaudited financial statements included in the
Prospectus are not in conformity with the 1933 Act, applicable accounting
requirements of the OTS and accounting principles generally accepted in the
United States of America applied on a basis substantially consistent with
that of the audited financial statements included in the Prospectus; or (B)
during the period from the date of the latest unaudited financial
statements included in the Prospectus to a specified date not more than
three business days prior to the date of the Prospectus, except as has been
described in the Prospectus, there was any increase in borrowings, other
than normal deposit fluctuations, by the Bank; or (C) there was any
decrease in the net assets of the Bank at the date of such letter as
compared with amounts shown in the latest unaudited balance sheets included
in the Prospectus; and (iii) stating that, in addition to the audit
referred to in their opinion included in the Prospectus and the performance
of the procedures referred to in clause (ii) of this subsection (g), they
have compared with the general accounting records of the Bank, which are
subject to the internal controls of the Bank, the accounting system and
other data prepared by the Bank, directly from such accounting records, to
the extent specified in such letter, such amounts and/or percentages set
forth in the Prospectus as the Agent may reasonably request; and they have
reported on the results of such comparisons.
(i) At the Closing Date, the Agent shall receive a letter dated the
Closing Date, addressed to the Agent, confirming the statements made by
Xxxxxx & Xxxxxx, P.C. in the letter delivered by it pursuant to subsection
(h) of this Section 7, the "specified date" referred to in clause (ii) of
subsection (h) to be a date specified in the letter required by this
subsection (i) which for purposes of such letter shall not be more than
three business days prior to the Closing Date.
(j) At the Closing Date, the Bank shall receive a letter from RP
Financial, LC, dated the Closing Date (i) confirming that said firm is
independent of the MHC, the Company and the Bank and is experienced and
expert in the area of corporate appraisals within the
29
meaning of Title 12 of the Code of Federal Regulations, Section
563b.200(b), (ii) stating in effect that the Appraisal prepared by such
firm complies in all material respects with the applicable requirements of
Title 12 of the Code of Federal Regulations, and (iii) further stating that
its opinion of the aggregate pro forma market value of the Company and the
Bank, as most recently updated, remains in effect.
(k) At or prior to the Closing Date, the Agent shall receive: (i) a copy
of the letters from the OTS approving the MHC Application and authorizing
the use of the Prospectus; (ii) a copy of the orders from the Commission
declaring the Registration Statement and the Exchange Act Registration
Statement effective; (iii) a certificate from the OTS evidencing the valid
existence of the Bank; (iv) a certificate from the FDIC evidencing the
Bank's insurance of accounts; (v) a certificate from the FHLB-Boston
evidencing the Bank's membership therein; (vi) a certificate from the OTS
evidencing the Company's and the MHC's standing as registered savings and
loan holding companies; (vii) a copy of the Bank's federal stock charter;
and (viii) a copy of the Company's federal charter; and (viii) a copy of
the MHC's federal charter.
(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 (the "NYSE") or in the
over-the-counter market, or quotations halted generally on The Nasdaq Stock
Market, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices for securities have been required by either of
such exchanges or the NASD or by order of the Commission or any other
governmental authority; (ii) a general moratorium on the operations of
commercial banks, or federal savings and loan associations or a general
moratorium on the withdrawal of deposits from commercial banks or federal
savings and loan associations declared by federal or state authorities;
(iii) the engagement by the United States in hostilities which have
resulted in the declaration, on or after the date hereof, of a national
emergency or war; or (iv) a material decline in the price of equity or debt
securities if the effect of such a declaration or decline, in the Agent's
reasonable judgment, makes it impracticable or inadvisable to proceed with
the Offering or the delivery of the Securities on the terms and in the
manner contemplated in the Registration Statement and the Prospectus.
(m) At or prior to the Closing Date, counsel to the Agent shall have been
furnished with such documents and opinions as they may reasonably require
for the purpose of enabling them to pass upon the sale of the Securities as
herein contemplated and related proceedings or in order to evidence the
occurrence or completeness of any of the representations or warranties, or
the fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Company or the Bank in connection with the
Offering and the sale of the Securities as herein contemplated shall be
satisfactory in form and substance to the Agent and its counsel.
(n) 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 MHC, the Company or the
Bank and delivered to the Agent or to counsel for the Agent shall be
30
deemed a representation and warranty by the MHC, the Company or the Bank,
as the case may be, to the Agent as to the statements made therein.
SECTION 8. INDEMNIFICATION.
(a) The MHC, the Company and the Bank, jointly and severally, agree to
indemnify and hold harmless the Agent, its respective officers and
directors, employees and agents, and each person, if any, who controls the
Agent within the meaning of Section 15 of the 1933 Act or Section 20(a) of
the 1934 Act, against any and all loss, liability, claim, damage or expense
whatsoever (including, but not limited to, settlement expenses), joint or
several, that the Agent or any of them may suffer or to which the Agent and
any such persons may become subject under all applicable federal or state
laws or otherwise, and to promptly reimburse the Agent and any such persons
upon written demand for any expense (including reasonable fees and
disbursements of counsel) incurred by the Agent or any of 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: (i) arise out of or are
based upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or any amendment or
supplement thereto), preliminary or final Prospectus (or any amendment or
supplement thereto), the MHC Application (or any amendment or supplement
thereto), or any instrument or document executed by the MHC, the Company or
the Bank or based upon written information supplied by the MHC, the Company
or the Bank filed in any state or jurisdiction to register or qualify any
or all of the Securities or to claim an exemption therefrom or provided to
any state or jurisdiction to exempt the Company as a broker-dealer or its
officers, directors and employees as broker-dealers or agent, under the
securities laws thereof (collectively, the "Blue Sky Application"), or any
document, advertisement, oral statement or written communication ("Sales
Information") prepared, made or executed by or on behalf of the MHC, the
Company or the Bank with their consent or based upon written or oral
information furnished by or on behalf of the MHC, the Company or the Bank,
whether or not filed in any jurisdiction, in order to qualify or register
the Securities or the Foundation Shares or to claim an exemption therefrom
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; or (iii) arise from any theory of liability
whatsoever relating to or arising from or based upon the Registration
Statement (or any amendment or supplement thereto), preliminary or final
Prospectus (or any amendment or supplement thereto), the MHC Application
(or any amendment or supplement thereto), any Blue Sky Application or Sales
Information or other documentation distributed in connection with the
Offering; provided, however, that no indemnification is required under this
paragraph (a) to the extent such losses, claims, damages, liabilities or
actions arise out of or are based upon any untrue material statement or
alleged untrue material statement in, or material omission or alleged
material omission from, the Registration Statement (or any amendment or
supplement thereto), preliminary or final Prospectus (or any amendment or
supplement thereto), the MHC Application, any Blue Sky Application or Sales
Information made in reliance upon and in conformity with information
furnished in writing to the MHC, the Company or the Bank
31
by the Agent or its counsel regarding the Agent, provided, that it is
agreed and understood that the only information furnished in writing to the
MHC, the Company or the Bank by the Agent regarding the Agent is set forth
in the Prospectus under the caption "The Stock Offering--Plan of
Distribution and Marketing Arrangements"; and, provided further, that such
indemnification shall be to the extent not prohibited by the Commission,
the OTS, the FDIC and the Board of Governors of the Federal Reserve.
(b) The Agent agrees to indemnify and hold harmless the MHC, the Company
and the Bank, their directors and officers and each person, if any, who
controls the MHC, the Company or the Bank within the meaning of Section 15
of the 1933 Act or Section 20(a) of the 1934 Act against any and all loss,
liability, claim, damage or expense whatsoever (including but not limited
to settlement expenses), joint or several, which they, or any of them, may
suffer or to which they, or any of them may become subject under all
applicable federal and state laws or otherwise, and to promptly reimburse
the Company, the Bank, and any such persons upon written demand for any
expenses (including reasonable fees and disbursements of counsel) incurred
by them, or any of them, in connection with investigating, preparing 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 MHC Application (or any
amendment or supplement thereto), the preliminary or final Prospectus (or
any amendment or supplement thereto), any Blue Sky Application or Sales
Information, (ii) are based upon the omission or alleged omission to state
in any of the foregoing documents a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or (iii) arise
from any theory of liability whatsoever relating to or arising from or
based upon the Registration Statement (or any amendment or supplement
thereto), preliminary or final Prospectus (or any amendment or supplement
thereto), the MHC Application (or any amendment or supplement thereto), or
any Blue Sky Application or Sales Information or other documentation
distributed in connection with the Offering; provided, however, that the
Agent's obligations under this Section 8(b) shall exist only if and only to
the extent that such untrue statement or alleged untrue statement was made
in, or such material fact or alleged material fact was omitted from, the
Registration Statement (or any amendment or supplement thereto), the
preliminary or final Prospectus (or any amendment or supplement thereto),
the MHC Application (or any amendment or supplement thereto), any Blue Sky
Application or Sales Information in reliance upon and in conformity with
information furnished in writing to the MHC, the Company or the Bank by the
Agent or its counsel regarding the Agent, provided, that it is agreed and
understood that the only information furnished in writing to the MHC, the
Company or the Bank by the Agent regarding the Agent is set forth in the
Prospectus under the caption "The Stock Offering--Plan of Distribution and
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
32
on account of this Section 8 or otherwise. An indemnifying party may
participate at its own expense in the defense of such action. In addition,
if it so elects within a reasonable time after receipt of such notice, an
indemnifying party, jointly with any other indemnifying parties receiving
such notice, may assume defense of such action with counsel chosen by it
and approved by the indemnified parties that are defendants in such action,
unless such indemnified parties reasonably object to such assumption on the
ground that there may be legal defenses available to them that are
different from or in addition to those available to such indemnifying
party. If an indemnifying party assumes the defense of such action, the
indemnifying parties shall not be liable for any fees and expenses of
counsel for the indemnified parties incurred thereafter in connection with
such action, proceeding or claim, other than reasonable costs of
investigation. In no event shall the indemnifying parties be liable for the
fees and expenses of more than one separate firm of attorneys (and any
special counsel that said firm may retain) for each indemnified party in
connection with any one 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.
SECTION 9. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 8 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the MHC, the Company, the Bank or the Agent, the
MHC, the Company, the Bank and the Agent shall contribute to the aggregate
losses, claims, damages and liabilities (including any investigation, legal and
other expenses incurred in connection with, and any amount paid in settlement
of, any action, suit or proceeding, but after deducting any contribution
received by the MHC, the Company, the Bank or the Agent from persons other than
the other parties thereto, who may also be liable for contribution) in such
proportion so that the Agent is responsible for that portion represented by the
percentage that the fees paid to the Agent pursuant to Section 2 of this
Agreement (not including expenses) bears to the gross proceeds received by the
Company from the sale of the Securities in the Offering, and the MHC, the
Company and the Bank shall be responsible for the balance. If, however, the
allocation provided above is not permitted by applicable law, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative fault of the MHC, the Company and the Bank on the one hand and the
Agent on the other in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities (or actions, proceedings or
claims in respect thereto), but also the relative benefits received by the MHC,
the Company and the Bank on the one hand and the Agent on the other from the
Offering (before deducting expenses). The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, the MHC and/or the Bank on the
one hand or the Agent on the other and the parties' relative intent, good faith,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The MHC, the Company, the Bank and the Agent agree that
it would not be just and equitable if contribution pursuant to this Section 9
were determined by pro-rata allocation or by any other method of allocation
which does not take into account the equitable considerations referred to above
in this Section 9. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions, proceedings or
claims in respect thereof) referred to above in this Section 9 shall be deemed
to include any legal or other expenses
33
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 under any circumstances for any loss, liability,
claim, damage or expense or be required to contribute any amount pursuant to
Section 8(b) or this Section 9 which in the aggregate exceeds the amount paid
(excluding reimbursable expenses) to the Agent under this Agreement. It is
understood that the above stated limitation on the Agent's liability is
essential to the Agent and that the Agent would not have entered into this
Agreement if such limitation had not been agreed to by the parties to this
Agreement. No person found guilty of any fraudulent misrepresentation (within
the meaning of Section 11(f) of the 0000 Xxx) shall be entitled to contribution
from any person who was not found guilty of such fraudulent misrepresentation.
The obligations of the MHC, the Company, the Bank and the Agent under this
Section 9 and under Section 8 shall be in addition to any liability which the
MHC, the Company, the Bank and the Agent may otherwise have. For purposes of
this Section 9, each of the Agent's, the Company's or the Bank's officers and
directors and each person, if any, who controls the Agent or the MHC, the
Company or the Bank within the meaning of the 1933 Act and the 1934 Act shall
have the same rights to contribution as the Agent, or the MHC, the Company or
the Bank. Any party entitled to contribution, promptly after receipt of notice
of commencement of any action, suit, claim or proceeding against such party in
respect of which a claim for contribution may be made against another party
under this Section 9, will notify such party from whom contribution may be
sought, but the omission to so notify such party shall not relieve the party
from whom contribution may be sought from any other obligation it may have
hereunder or otherwise than under this Section 9.
SECTION 10. SURVIVAL OF AGREEMENTS, REPRESENTATIONS AND INDEMNITIES. The
respective indemnities of the MHC, the Company, the Bank and the Agent, the
representations and warranties and other statements of the MHC, the Company, the
Bank and the Agent set forth in or made pursuant to this Agreement and the
provisions relating to contribution shall remain in full force and effect,
regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of the Agent, the MHC, the Company, the Bank
or any controlling person referred to in Section 8 hereof, and shall survive the
issuance of the Securities, and any successor or assign of the Agent, the MHC,
the Company, the Bank, and any such controlling person shall be entitled to the
benefit of the respective agreements, indemnities, warranties and
representations.
SECTION 11. TERMINATION. The Agent may terminate this Agreement by giving
the notice indicated below in this Section 11 at any time after this Agreement
becomes effective as follows:
(a) If any domestic or international event or act or occurrence has
materially disrupted the United States securities markets such as to make
it, in the Agent's reasonable opinion, impracticable to proceed with the
offering of the Securities; or if trading on the NYSE shall have suspended
(except that this shall not apply to the imposition of NYSE trading collars
imposed on program trading); or if the United States shall have become
involved in a war or major hostilities; or if a general banking moratorium
has been declared by a state or federal authority which has a material
effect on the Bank or the Offering; or if a moratorium in foreign exchange
trading by major international banks or persons has been declared; or if
there shall have been a material adverse change in the financial condition,
results of operations or business of the Bank, or if the Bank shall have
sustained a material or substantial loss by fire, flood, accident,
34
hurricane, earthquake, theft, sabotage or other calamity or malicious act,
whether or not said loss shall have been insured; or if there shall have
been a material adverse change in the financial condition, results of
operations or business of the MHC, the Company or the Bank.
(b) In the event the Company fails to sell the required minimum number of
the Securities by _________________, and in accordance with the provisions
of the Plan or as required by the MHC Regulations, and applicable law, this
Agreement shall terminate upon refund by the Company to each person who has
subscribed for or ordered any of the Securities the full amount which it
may have received from such person, together with interest as provided in
the Prospectus, and no party to this Agreement shall have any obligation to
the other hereunder, except as set forth in Sections 2(b), 6, 8 and 9
hereof.
(c) If any of the conditions specified in Section 7 shall not have been
fulfilled when and as required by this Agreement, unless waived in writing,
or by the Closing Date, this Agreement and all of the Agent's obligations
hereunder may be cancelled by the Agent by notifying the MHC, the Company
and the Bank of such cancellation in writing or by telegram at any time at
or prior to the Closing Date, and any such cancellation shall be without
liability of any party to any other party except as otherwise provided in
Sections 2(a), 2(d), 6, 8 and 9 hereof.
(d) If the Agent elects to terminate this Agreement as provided in this
Section, the MHC, the Company and the Bank shall be notified promptly by
telephone or telegram, confirmed by letter.
The MHC, the Company and the Bank may terminate this Agreement in the event
the Agent is in material breach of the representations and warranties or
covenants contained in Section 5 and such breach has not been cured within 30
days after the Company and the Bank have provided the Agent with notice of such
breach.
This Agreement may also be terminated by mutual written consent of the
parties hereto.
SECTION 12. NOTICES. All communications hereunder, except as herein
otherwise specifically provided, shall be mailed in writing and if sent to the
Agent shall be mailed, delivered or telegraphed and confirmed to Xxxxx, Xxxxxxxx
& Xxxxx, 000 Xxxxxxxxx Xxxxx, Xxxxxx, Xxxx 00000-0000, Attention: Xxxxxxxx
XxXxxxx, Managing Director (with a copy to Xxxxx Xxxxxx & Xxxxxx, LLP, 000
Xxxxxx Xxxxxx, XxxxXxxxx I, 00xx Xxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000, Attention:
Xxxxxxx X. Xxxxxx, III, Esq.) and, if sent to the Company and the Bank, shall be
mailed, delivered or telegraphed and confirmed to the Company and the Bank at 00
Xxxx Xxxxxx, X.X. Xxx 000, Xxxxxx, Xxxxxxxxxxx 00000, Attention: Xxxxxx X.
Cocks, President (with a copy to Xxxx Xxxxxx Xxxxxxxx & Xxxxxx P.C., 0000
Xxxxxxxxx Xxxxxx, X.X., Xxxxx 000, Xxxxxxxxxx, X.X. 00000, Attention: Xxxxxx X.
Xxxxxxxx, Esq.).
SECTION 13. PARTIES. The MHC, the Company and the Bank shall be entitled to
act and rely on any request, notice, consent, waiver or agreement purportedly
given on behalf of the Agent when the same shall have been given by the
undersigned. The Agent shall be entitled to act and rely on any request, notice,
consent, waiver or agreement purportedly given on behalf of
35
the MHC, the Company or the Bank, when the same shall have been given by the
undersigned or any other officer of the MHC, the Company or the Bank. This
Agreement shall inure solely to the benefit of, and shall be binding upon, the
Agent, the MHC, the Company, the Bank, and their respective successors and
assigns, and no other person shall have or be construed to have any legal or
equitable right, remedy or claim under or in respect of or by virtue of this
Agreement or any provision herein contained. It is understood and agreed that
this Agreement is the exclusive agreement among the parties hereto, and
supersedes any prior agreement among the parties and may not be varied except in
writing signed by all the parties.
SECTION 14. CLOSING. The closing for the sale of the Securities shall take
place on the Closing Date at such location as mutually agreed upon by the Agent
and the Company and the Bank. At the closing, the Company and the Bank shall
deliver to the Agent in next day funds the commissions, fees and expenses due
and owing to the Agent as set forth in Sections 2 and 6 hereof and the opinions
and certificates required hereby and other documents deemed reasonably necessary
by the Agent shall be executed and delivered to effect the sale of the
Securities as contemplated hereby and pursuant to the terms of the Prospectus.
SECTION 15. PARTIAL INVALIDITY. In the event that any term, provision or
covenant herein or the application thereof to any circumstance or situation
shall be invalid or unenforceable, in whole or in part, the remainder hereof and
the application of said term, provision or covenant to any other circumstances
or situation shall not be affected thereby, and each term, provision or covenant
herein shall be valid and enforceable to the full extent permitted by law.
SECTION 16. CONSTRUCTION. This Agreement shall be construed in accordance
with the laws of the State of New York.
SECTION 17. 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.
SECTION 18. ENTIRE AGREEMENT. This Agreement, including schedules and
exhibits hereto, which are integral parts hereof and incorporated as though set
forth in full, constitutes the entire agreement between the parties pertaining
to the subject matter hereof superseding any and all prior or contemporaneous
oral or prior written agreements, proposals, letters of intent and
understandings, and cannot be modified, changed, waived or terminated except by
a writing which expressly states that it is an amendment, modification or
waiver, refers to this Agreement and is signed by the party to be charged. No
course of conduct or dealing shall be construed to modify, amend or otherwise
affect any of the provisions hereof.
If the foregoing correctly sets forth the arrangement among the MHC, the
Company, the Bank and the Agent, please indicate acceptance thereof in the space
provided below for that purpose, whereupon this letter and the Agent's
acceptance shall constitute a binding agreement.
Very truly yours,
PSB HOLDINGS, INC. PUTNAM SAVINGS BANK
36
By Its Authorized Representative: By Its Authorized Representative:
-------------------------------------- ------------------------------------
Xxxxxx X. Cocks, President Xxxxxx X. Cocks, President
PUTNAM BANCORP, MHC
By Its Authorized Representative:
--------------------------------------
Xxxxxx X. Cocks, President
ACCEPTED AS OF THE DATE FIRST ABOVE
WRITTEN
Xxxxx, Xxxxxxxx & Xxxxx, Inc.
--------------------------------------
Xxxxxxxx XxXxxxx
Managing Director
37
