EXHIBIT 1
1993 AGREEMENT
Agreement, dated as of April 3, 1993, between BFS Bankorp, Inc., a Delaware
Corporation having its principal executive offices at 000 Xxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx (the "Company"), and Xxxxxxx X. Xxxxx, Xxxxx Investors L.P., and
other persons and entities affiliated with such persons, under their direct or
indirect control, or acting on their behalf or in concert with them
(collectively referred to as the "Xxxxx").
For purposes of this Agreement, the term "Voting Securities" shall mean the
Company's common stock, par value $.01 per share, and any other securities of
the Company generally entitled to vote for the election of Directors.
In consideration of the mutual covenants and agreements set forth herein,
the parties agree as follows:
1. AMENDMENT OF CERTIFICATE OF INCORPORATION
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(a) The Company shall convene a special meeting of its holders of Common
Stock ("Special Meeting") for the purpose of considering and voting upon an
amendment (the "Amendment") to the Company's Certificate of Incorporation
("Certificate") to delete Section C of Article FOURTH and to eliminate all
references throughout the Certificate to the "Limit" or to Section C of Article
FOURTH. Such Amendment shall be proposed by the Board of Directors of the
Company (the "Board") and shall be recommended for approval by the Board to the
Company's stockholders.
(b) The Special Meeting shall be held on or before August 31, 1993.
(c) The members of the Boards of Directors of the Company and Bankers
Federal Savings Bank FSB ("Bankers Federal") whose names appear on the signature
page of this Agreement, individually agree to vote shares of Common Stock of
the Company as to which they have voting power, in favor of the Amendment.
(d) The expenses incurred by the Company in connection with the Special
Meeting, including but not limited to legal fees, and printing and mailing
costs, shall be shared equally by the Company and Xxxxx.
2. ISSUANCE OF DEBENTURES BY COMPANY; PURCHASE OF DEBENTURES BY XXXXX
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L.P.
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(a) Upon execution of this Agreement, Xxxxx shall purchase for cash in the
amount of $1,650,000 (in the form of a certified check or by wire transfer of
immediately available funds), and the Company shall issue to Xxxxx, $1,650,000
principal amount of Adjustable Rate, Nonconvertible Debenture, due April 3, 1996
(the "Debenture"), upon such terms and conditions and in substantially similar
form as set forth in the Form of Adjustable Rate Nonconvertible Debenture
attached to this Agreement as Exhibit A.
(b) Upon receipt of all requisite regulatory approvals from the Office of
Thrift Supervision ("OTS"), Xxxxx shall purchase for cash in the aggregate
amount of $1,650,000 (in the form of a certified check or by wire transfer of
immediately available funds), and the Company shall issue to Xxxxx, 150,000
shares of Common Stock of the Company (the "Common Stock"). The 150,000 shares
of Common Stock to be sold to Xxxxx in accordance with this Paragraph 2(b) are
hereinafter referred to as the "Shares."
(c) In the event that stockholders of the Company fail to approve the
Amendment on or before August 31, 1993, the Company shall, within thirty days of
August 31, 1993, determine to either (i) prepay the entire principal amount of
the Debenture, including accrued interest thereon, or (ii) in lieu of (i)
above, and at the sole discretion of the Company and provided that OTS approval
of the Application (as hereinafter defined), allow Xxxxx to convert the
principal amount of the Debenture into Common Stock at a conversion price of
$11.00 per share. Xxxxx shall be notified in writing of the Company's election
as to (i) or (ii) above by September 30, 1993. The Debenture shall be repaid by
the Company, or converted by Xxxxx, within sixty (60) days of the written notice
provided by the Company as to its election.
(d) Xxxxx hereby acknowledges that: (i) the Debenture and Shares are being
issued by the Company to Xxxxx for its own account and not with a view to, or
for sale in connection with, any distribution of the Shares, Debenture or the
Common Stock obtainable upon the conversion of the Debenture; and (ii) the
issuance and sale of the Debenture and Shares to Xxxxx is being made in reliance
upon the exemption from the registration requirements of the Securities Act of
1933 (the "Securities Act") contained in Section 4(2) thereof and Regulation D
of the SEC's rules and regulations promulgated thereunder, and in accordance
with comparable exemptions from registration found in State securities or "Blue
Sky" laws. Accordingly, the Shares and the
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Debenture (including any Common Stock obtained as a result of the conversion of
any Debenture) may not be sold, transferred or otherwise disposed of for value
unless the securities are subsequently registered under the Securities Act or
such state laws, or unless an exemption from such registration is available.
3. TWO YEAR AGREEMENTS AS TO VOTING SECURITIES.
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(a) For a period beginning on the date hereof and ending on April 3, 1995,
neither Xxxxx nor any person or entity affiliated with Xxxxx, shall, without the
prior approval of the Company's Board of Directors specifically expressed in a
resolution adopted by a majority of the Directors of the Company who are not
designated by Xxxxx:
(1) acquire, directly or indirectly, by purchase or otherwise, any
Voting Securities, if after such acquisition Xxxxx would hold or own,
beneficially or of record, in the aggregate more than 50.00% of the Voting
Securities outstanding; provided that ownership in excess of 50.00%
resulting from the Company's purchase of its own shares shall not be a
violation of the provisions of this paragraph as long as Xxxxx has not
subsequently purchased additional shares after such repurchase by the
Company of its own shares; and provided further, that for purposes of this
Section 3(a)(1), the calculation of the percentage of outstanding Voting
Securities owned or held by Xxxxx (beneficially or of record) shall be
satisfied under the following method:
(i) Voting Securities obtainable by Xxxxx upon conversion of the
Debenture (if Paragraph 2(c)(ii) is applicable) or upon exercise of
options granted under any option plan or arrangement approved by the
Board of Directors of the Company, and the Shares, shall not be deemed
to be owned or held by Xxxxx or to be outstanding, and shares
obtainable pursuant to the exercise of options or warrants issued by
the Company to persons other than Xxxxx, as well as the Shares, shall
not be deemed to be outstanding;
(2) solicit proxies with respect to Voting Securities under any
circumstances; or become a "participant," in any "election contest"
relating to the election of directors of the Company (as such terms are
used in Rule 14a-11 of Regulation 14A under the Securities Exchange Act of
1934, as amended (the "Exchange Act")); provided, however, that Xxxxx
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shall not be deemed to be a "participant" by reason of the voting of its
Voting Securities or by reason of any membership of its representative or
employees on the Company's Board of Directors;
(3) deposit any Voting Securities in a voting trust; or
(4) directly or indirectly sell, transfer, pledge or otherwise
dispose of or encumber any Voting Securities except:
(i) monthly sales of Voting Securities that do not-exceed 1% of
the Voting Securities outstanding, or sales of Voting Securities made
in accordance with the volume limitation of Rule 144(e) of the General
Rules and Regulations under the Securities Act, as in effect on the
date hereof, whichever is greater;
(ii) to the Company or to any person, corporation, entity or
group approved by the Company;
(iii) to any other entity or corporation which is an affiliate
of Xxxxx and which agrees to be bound by this Agreement to the same
extent as Xxxxx; or
(iv) pursuant to a bona fide pledge of, or the granting of a
security interest in,'Voting Securities Provided that such pledgee or
secured party acknowledges in writing that it is bound by the
provisions of this Agreement; or
(v) sales made pursuant to a tender offer, or merger,
recommended by the Board.
(5) Except as provided in 3(c) below, not join a partnership, limited
partnership, syndicate or other group, or otherwise act in concert with any
other person, for the purpose of acquiring, holding, voting or disposing
of, or tendering for or requesting tenders for, Voting Securities, or
otherwise become a "person" within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange Act") (in
each case other than solely as contemplated by this Agreement).
(6) Propose or otherwise solicit stockholders for the approval of one
or more stockholder proposals with respect
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to the Company, as described in Rule 14a-8 promulgated pursuant to the
Exchange Act, or as described in the Bylaws of the Company for the
submission of proposals of stockholders.
(b) Xxxxx shall take such action as may be required so that all Voting
Securities owned or held by them are voted, on all matters to be voted on by the
holders of Voting Securities that pertain to compensation plans proposed by the
Board for shareholder approval, either (i) in the same proportion as the votes
cast by other holders of Voting Securities or (ii) as recommended by the Board
to shareholders of the Company.
(c) For a period beginning on the date hereof and ending on April 3, 1995,
Xxxxx shall not, directly or indirectly, offer to acquire, whether such offer is
written or oral, public or made solely to the Board, any Voting Securities,
other than in accordance with Section 3(a)(1) above, unless Xxxxx is requested
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in writing by the Board to make an offer, or unless the Board has agreed to
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accept an offer from a third party to acquire all or substantially all of the
Company's Common Stock and Xxxxx is not otherwise required to vote pursuant to
Section 5(a) of this Agreement; provided further, that nothing herein shall be
interpreted as prohibiting Xxxxx from informally seeking the Board's
receptivity to receiving from Xxxxx, and thereby requesting Xxxxx to make, an
offer (informally shall mean nonwritten and in a manner that would not require
public disclosure, and will not be publicly disclosed, by Xxxxx)
(d) The Company agrees to support in writing an application
("Application") to be made to the OTS by Xxxxx and/or such other person
affiliated with Xxxxx and approved by the Company (the "Applicant"), which
Application will request OTS permission and approval, pursuant to Part 574 of
the Regulations of the OTS, 12 C.F.R. Part 574 for the Applicant to acquire
"Control" of the Company and Bankers Federal, and the Company agrees to support,
if requested, additional regulatory filings required to be made by the Applicant
in order to acquire "control" of the Company and Bankers Federal. The Company
further agrees to cause its wholly-owned subsidiary, Bankers Federal Savings FSB
("Bankers Xxxxx al"), to support the Application and, if requested, any other
regulatory filings required to be made by the Applicant to acquire control of
the Company and Bankers Federal. The Company also agrees to support in writing,
and to cause Bankers Federal to support in writing, any application required to
be made on behalf of Xxxxx to the OTS in order to enable a designee of Xxxxx, in
accordance with the provisions of this Agreement, to
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become a director of the Company and/or Bankers Federal (the "Directors
Application"). The Company shall, and shall cause Bankers Federal to, promptly
file any and all additional documents which may be requested or required by the
OTS in connection with the Application and the Directors Application. The
Company further agrees to support in writing any application to be filed with
the OTS by the Applicant, after April 3, 1995, to acquire additional Voting
Securities. The obligation of the Company to support the Applications to be
made to the OTS shall not otherwise operate to restrict the Board in connection
with any acquisition of additional Voting Securities, or proposed acquisition,
by Xxxxx.
(e) Subject to the provisions of paragraph 5 of this Agreement, after
April 3, 1995, Xxxxx can acquire Voting Securities in open market transactions,
privately negotiated transactions, by means of a tender offer, or otherwise,
subject to any required OTS approval.
(f) Xxxxx hereby consents to the issuance by the Company of the joint
press release by the Company and Xxxxx in substantially similar form as Exhibit
C attached hereto, and Xxxxx agrees to make no further public statement or
announcement unless otherwise required by law, which in any event will not be
contradictory to the press release attached as Exhibit C.
4. AGREEMENTS AS TO THE BOARDS OF DIRECTORS
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(a) Upon execution of this Agreement and the issuance by the Company and
the purchase by Xxxxx of the Debenture, Xxxxx may propose a person for election
and appointment to the Board of Directors of Bankers Federal, subject to the
approval of the Board of Directors of Bankers Federal, which approval shall not
be unreasonably withheld. Following the receipt of any required OTS approval,
the Board of Directors of Bankers Federal shall appoint such person to the
Bankers Federal Board of Directors, and the Company, as the sole stockholder of
the Bankers Federal, shall take such action as necessary to effectuate such
appointment. Such person shall be elected to a class of directors whose term
expires at the annual meeting of stockholders of Bankers Federal to be held
after fiscal year ending September 30, 1995, and such person shall be
renominated for election to the Bankers Federal's Board for such additional
terms as shall be coincident with the term of this Agreement.
(b) During the period from April 3, 1993 to April 3, 1995, the Board of
Directors of the Company will not appoint an addi-
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tional director to the Board (other than to fill a vacancy as provided below)
without the prior written approval of Xxxxx, provided that the Company may
appoint one additional director to the Board who is at the time of such
appointment an executive officer or director of Bankers Federal, without the
prior approval of Xxxxx.
(c) On or after April 3, 1993 and until the termination of this Agreement,
the Board of Directors may determine to increase the number of persons
constituting the entire Board and support and elect an additional director
(inclusive of the addition of a director in accordance with provisions of 4(b)
above, but excluding any director designated by Xxxxx), subject to the approval
of Xxxxx, which approval will not be unreasonably withheld, and provided that
for each additional person appointed or elected by the Board, there is one
person designated by Xxxxx, subject to the approval of the Board, which approval
shall not be unreasonably withheld, who shall be appointed and elected to the
Board.
(d) After April 3, 1995, if Xxxxx has not previously designated a person
who has been appointed and elected to the Board in accordance with (c) above,
Xxxxx may propose a person for appointment and election to the Board, subject to
the approval of the Board, which approval will not be unreasonably withheld,
and subject to any required OTS (or other regulatory) approval.
(e) Beginning on the date hereof and ending on April 3, 1999, any
vacancies occurring in the Board of Directors of Bankers Federal or the Company,
including any vacancy in the directorship now being held by Xxxxxxxx X. Xxxxx,
shall be filled in the following manner;
(i) if the vacancy occurs as a result of the departure of Xxxxxxx X.
Xxxxx, or a designee of Xxxxx, then Xxxxx may propose a person to fill the
vacancy, subject to the approval of the Board of Directors of the Company
or Bankers Federal, as the case may be, which approval shall not be
unreasonably withheld;
(ii) if the vacancy occurs as a result of the departure of a director
who is not a designee of Xxxxx, then the vacancy shall be filled by a
person determined by a vote of a majority of the Board of Directors of the
Company or Bankers Federal, as the case may be, other than Xxxxxxx Xxxxx
and persons who are designees of Xxxxx, subject to the approval of the
respective
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Board of Directors, which approval will not be unreasonably withheld;
(iii) all shares of Common Stock of Bankers Federal or the Company,
as the case may be, beneficially owned by each of the Company, directors
of the Company and/or Bankers Federal, and Xxxxx, shall be voted in favor
of the persons nominated to the Board of Directors of the Company and/or
Bankers Federal in accordance with this Section 4.
(f) The effectiveness of paragraphs 4(b), (c), (d) and (e) shall be
suspended at any time that the number of shares of Common Stock owned or held by
Xxxxx, beneficially or of record, shall constitute less than: 24.9% of the
Common Stock then outstanding, as determined in accordance with Section
3(a)(1)(i), during the period commencing on the date of this Agreement and
ending April 3, 1994; 35% of the Common Stock outstanding,.as determined in
accordance with Section 3(a)(1)(i), during the period commencing April 3, 1994
and ending on April 3, 1995; and 40% of the Common Stock outstanding, determined
in accordance with Section 3(a)(1)(i), during the period commencing April 3,
1995 until April 3, 1999.
5. ADDITIONAL RESTRICTIONS AND OTHER PROVISIONS
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(a) For a period beginning on the date of this Agreement and ending April
3, 1999, Xxxxx agrees to vote all Voting Securities owned or held by Xxxxx,
beneficially or of record, in favor of any "merger agreement" approved by a
majority of the Board, and which agreement a majority of the Board determines
to, and does, recommend to shareholders, provided that: (i) if Xxxxx
beneficially owns 75% or more of the Common Stock (including shares Xxxxx has
offered or is offering to acquire), (x) the merger agreement offers shareholders
a per share consideration, the value of which is in excess of the per share
consideration that Xxxxx has offered (at the time of approval by the Board of a
proposal as to a merger agreement) in writing to the Board to be provided to the
shareholders, and (y) Xxxxx shall have been given substantially the same
opportunity to submit an offer as the other party that submitted the offer as to
a merger agreement to the Board that was approved by the Board; or (ii) if Xxxxx
beneficially owns less than 75% of the Common Stock (including shares Xxxxx has
offered or is offering to acquire), the merger agreement offers shareholders a
per share consideration, the value of which is, in an "open bidding" process, in
excess of the per share consideration that Xxxxx has offered in writing to the
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Board to be provided to the shareholders. In interpreting and applying the
foregoing, it is contemplated that the circumstances set forth in (ii) above
would involve an "open bidding process," in accordance with appropriate
procedures adopted by the Board, whereby Xxxxx would be obligated to vote in
favor of a "merger agreement" in accordance with this Section 5 only if his last
offer does not provide shareholders with a per share consideration in excess of
the offer accepted by the Board.
(b) In determining the per share value to shareholders of any proposed
merger transaction for purposes of 5(a) above, the Board is entitled to rely on
the advice of its investment advisors, who may take into account all terms and
conditions of any offer, including, without limitation, the form of
consideration to be paid (e.g., cash or stock, common stock or preferred stock,
or debentures); provided that, in order for paragraph (a) above to be effective
as to Xxxxx, as to non-cash consideration included in any offer: any equity
security offered as part of the consideration to be paid shareholders shall be
listed or quoted on the New York Stock Exchange, American Stock Exchange or
NASDAQ National Market System; and any debt security offered as part of the
consideration to be paid to shareholders is rated, or will be rated, in one of
the four highest rating categories by at least one nationally recognized
statistical rating organization (as defined under the Exchange Act).
(c) If in accordance with 5 (a) above, Xxxxx is required to vote their
Voting Securities in favor of a merger agreement approved by the Board, Xxxxx
shall not publicly offer to acquire Voting Securities, or request tenders of
Voting Securities or tender any Voting Securities other than in accordance with
such merger agreement.
(d) Other than as provided in this Agreement, the Company will not issue
additional equity securities (other than pursuant to options outstanding on the
date hereof or that may be issued pursuant to options granted under employee or
outside director option plans adopted and approved by the Board and the
Company's shareholders) or additional debt securities unless Xxxxx is given the
opportunity, in connection with such issuances, to purchase such securities on a
pro rata basis relative to his percentage of beneficial ownership of Common
Stock (such right to purchase shall be on such terms, including pricing, as to
be offered by the Company to any other party or parties).
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6. TERM OF AGREEMENT
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Unless otherwise provided in this Agreement, this Agreement shall terminate
on April 3, 1999, provided that notwithstanding anything in this Agreement to
the contrary, this Agreement shall terminate at the earlier of either of the
following events: such time as any party (including Xxxxx) shall acquire
beneficial ownership of more than 90% of the Common Stock then outstanding; a
repayment of the Debenture pursuant to Section 2(c) due to the fact that a
majority of the shares entitled to vote at the Special Meeting did not vote to
approve the Amendment.
7. STOCK CERTIFICATE
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(a) Xxxxx agrees to the placement on the certificate(s) representing any
Voting Securities owned by Xxxxx of the following legend:
"The shares represented by this certificate or any certificate issued
in exchange therefor are subject to certain restrictions on transfer as
provided in an Agreement dated April 3, 1993 between the holder hereof and
BFS Bankorp, Inc."
(b) The Company may enter a stop transfer order with the transfer agent or
agents for any Voting Securities owned by Xxxxx now or in the future and subject
to the provisions of this Agreement, restricting the transfer of such Voting
Securities except in compliance with the requirements of this Agreement.
(c) The Company agrees that it will promptly cause the removal of such
legend and the withdrawal of such stop transfer order with respect to all or the
affected portion of the Voting Securities upon (i) any sale or other disposition
of Voting Securities in compliance with the provisions of this Agreement or (ii)
the termination of this Agreement.
8. MISCELLANEOUS
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(a) The Company and Xxxxx each acknowledges and agrees that it would be
irreparably damaged in the event any of the provisions of this Agreement were
not performed by the other party in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that each party shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
specifically enforce the terms and provisions thereof in any action instituted
in any court of the United States or any
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state thereof having subject matter jurisdiction, in addition to any other
remedy to which such party may be entitled, at law or in equity.
(b) The Company and Xxxxx each represent to the other that (i) the
execution, delivery and performance of this letter agreement by it has been duly
authorized by all necessary corporate action and (ii) this letter agreement has
been duly executed and delivered by it, and assuming the authorization,
execution and delivery by the other party, constitutes the valid and binding
obligation of such party.
(c) This Agreement contains the entire understanding of the parties with
respect to the transactions contemplated hereby, and supersedes any and all
prior agreements between Xxxxx and the Company, including an Agreement dated
April 3, 1990. This Agreement may be amended only by an agreement in writing
executed by the parties hereto.
(d) Descriptive headings are for convenience only and shall not control or
affect the meaning or construction of any provision of this Agreement.
(e) For the convenience of the parties, any number of counterparts of this
Agreement may be executed by the parties hereto and each such executed
counterpart shall be, and shall be deemed to be, an original instrument.
(f) All notices, consents, requests, instructions, approvals and other
communications provided for herein and all legal process in regard hereto shall
be validly given, made or served, if in writing and delivered personally by
telecopy (except for legal process) or sent by registered mail, postage prepaid,
if to:
The Company:
Xxxxx X. Xxxxxxx, President and
Chief Executive Officer
BFS Bankorp, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
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Copy to:
Xxxx X. Xxxxxx, Esquire
Xxxxxxx, Xxxxxx & Xxxxxxxx
0000 Xxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Investors:
Xxxxxxx X. Xxxxx
Xxxxx Investors, L.P.
00 Xxxxxx Xxxx Xxxx
Xxxxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Copy to:
Xxxxxx Xxxxxxxx
Senior Vice President
Xxxxx Investors, L.P.
00 Xxxxxx Xxxx Xxxx
Xxxxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
(g) From and after the termination of this Agreement, the covenants of the
parties set forth herein shall be of no further force or effect and the parties
shall be under no further obligation with respect thereto.
(h) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware, without reference to the
conflict of laws principles thereof.
(i) As used herein, the terms "affiliate" and "associate" shall have the
meaning set forth in Rule 12b-2 under the Exchange Act and the term "person"
shall mean any individual, partnership, corporation, trust or other entity.
Beneficial ownership shall be determined in accordance with Securities and
Exchange Commission Rule 13d-3 under the Exchange Act, except as otherwise
provided herein.
(j) The term acting in concert shall have the meaning set forth in 12
C.F.R. Part 574, as in effect on the date hereof.
(k) Any party to this Agreement that successfully brings an action to
enforce any provision of this Agreement shall be
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reimbursed by the other party to this Agreement as to the reasonable costs and
expenses of bringing such action.
(l) Each party to this Agreement shall pay its own expenses incurred in
connection with this Agreement.
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IN WITNESS WHEREOF, the Company and the Xxxxx have caused this Agreement to
be duly executed, all as of the day and year first above written.
BFS Bankorp, Inc.
By: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
President and Chief
Executive Officer
Xxxxx Investors, L.P.
By: Georgetown Partners, Inc.
Managing General Partner
/s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx Xxxxxxx X. Xxxxx
President
The Board of Directors of BFS Bankorp, Inc.
and Banker's Federal,
For Purposes of Section 1 and 4 of this Agreement,
Execute this Agreement in Their Individual Capacities
/s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx Xxxxx X. Xxxxx
/s/ Xxxx X. Poland /s/ Xxxxxxx X. Xxxxx
------------------------------- --------------------------------------
Xxxx X. Poland Xxxxxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxx
--------------------------------------
Xxxxxx X. Xxxxx
/s/ Xxxx Xxxx
------------------------------- --------------------------------------
Xxxxxxx X. Xxxx Xxxx Xxxx
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$1,650,000
BFS BANKORP, INC.
ADJUSTABLE RATE NON-CONVERTIBLE SENIOR DEBENTURE
DUE APRIL 3, 1996
BFS Bankorp, Inc., a corporation organized and existing under the laws of
the State of Delaware, promises to pay to Xxxxx Investors L.P. or registered
assigns, the principal sum of 1,650,000 dollars on April 3, 1996.
Interest Payment Dates: July 15, October 15, January 15 and April 15
Record Dates: June 30, November 30, December 31 and March 31
Additional terms of this Debenture are continued on the reverse side hereof and
the provisions set forth on such reverse side shall have the same effect as if
set forth here.
BFS BANKORP, INC.
Dated: By: __________________________________
____________________________
Secretary (SEAL)
BFS BANKORP, INC.
ADJUSTABLE RATE NON-CONVERTIBLE SENIOR DEBENTURE
DUE APRIL 3, 1996
1. Interest. BFS Bankorp, Inc., a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Debenture as it accrues
from the date of issuance for each monthly period. Each monthly period shall
commence on the first day of each month, except as to the monthly period during
which the Debenture is issued (in which event interest shall accrue beginning
with the date of issuance for such month), and shall end on and include the day
preceding the first day of the next month, at a rate per annum on the principal
amount of this Debenture equal to the Applicable Rate (as defined below).
Interest on the Debenture shall accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
original issuance of the Debenture. The Company shall pay interest, to the
extent permitted by law (including post-petition interest in any proceeding
under any Bankruptcy Law), on overdue installments of interest, and on overdue
princpal, at the Default Rate (as defined below). Interest shall be computed
on the basis of a 360-day year of twelve 30-day months.
The Applicable Rate shall be that rate which is equal to the sum of (i) the
Prime Rate, as quoted in the Wall Street Journal (the "Prime Rate") and (ii) 2%.
The Default Rate shall be that rate which is equal the sum of (i) the Prime Rate
and (ii) 5%. The Applicable Rate, or the Default Rate, if applicable, shall be
calculated as of the first business day of each monthly period, except as to the
monthly period during which the Debenture is initially issued, in which event,
the Applicable Rate shall be calculated as of the date of issuance.
2. Method of Payment. The Company shall pay interest on this Debenture
to the person who is the registered holder of this Debenture at the close of
business on the Record Date next preceding the Interest Payment Date. Unless
earlier redeemed, the Company shall pay the principal amount of this Debenture
on April 3, 1996. The holder must surrender this Debenture to a Paying Agent to
collect payments of principal and premium. Payments of interest may be mailed
to the holder's registered address. The Company shall pay principal, premium,
if any, and interest in money of the United States that at the time of payment
is legal tender for payment of public and private debts. The Company, however,
may pay principal, premium, if any, and
1
interest by its check payable in such money. If a payment date is a Legal
Holiday at a place of payment, payment may be made at that place on the next
succeeding day that is not a Legal Holiday, and no interest on the amount
payable on such payment dates shall accrue for the intervening period.
3. Paying Agent and Registrar. The Company or any of its Subsidiaries or
Affiliates will act as paying agent and registrar.
4. Transfer and Exchange. The Debenture cannot be transferred without
the consent of the Company, except to an affiliate of Xxxxx Investors L.P.
5. Convertibility. Except as provided in the 1993 Agreement, dated as
of April 3, 1993, between Xxxxx Investors L.P., Xxxxxxx X. Xxxxx and the
Company, this Debenture is not convertible into Common Stock or any other
securities of the Company. The number of shares into which this Debenture may
be converted and the conversion price applicable thereto, as set forth in the
1993 Agreement, shall be adjusted proportionate to any stock split, stock
dividend or other reclassification relating to the Company's Common Stock.
6. Event of Default. The following shall constitute an Event of Default:
(i) the failure to pay the interest due on or within 15 days of any applicable
Interest Payment Date, or (ii) the failure to pay the principal in full, plus
any accrued interest thereon, on or within 15 days of the maturity date (April
3, 1996). Upon an Event of Default, the holder of this Debenture shall have the
right to declare, in writing to the Company, the entire principal amount of the
Debenture due and payable. The right herein provided to accelerate the maturity
of this Debenture upon the occurrence of an Event of Default shall be exclusive
of any other right that the holder of this Debenture may have upon an Event of
Default.
7. Persons Deemed Owners. The registered holder of the Debenture may be
treated as its owner for all purposes, and neither the Company nor any agent
shall be affected by notice to the contrary.
8. Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for two years, the Paying Agent shall pay the money back to
the Company at its request. After that, the Debentureholder entitled to the
money must look to the Company for payment unless an abandoned property law
designates
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another person and all liability of the Paying Agent with respect to such money
shall cease.
9. Discharge Prior to Redemption or Maturity. If within one year of the
stated maturity of the Debenture the Company deposits with xxxxxxx money or U.S.
Government Obligations sufficient to pay principal of, premium, if any, and
accrued interest an the Debenture to redemption or maturity, the Company shall
be discharged from the Debenture.
10. Amendments, Supplements, and Waivers. Subject to certain exceptions,
the Debenture may be amended or supplemented with the consent of the holders of
at least a majority in principal amount of the then outstanding Debenture, and
any existing default may be waived with the consent of the holders of a majority
in principal amount of the then outstanding Debenture. Without the consent of
any Debentureholder, the Debenture may be amended to cure any ambiguity, defect
or inconsistency, to provide for the assumption of the obligations of the
Company by a successor corporation, or to make any change that does not
adversely affect the rights of the Debentureholder, except certain changes that
adversely affect rights of any holders of Senior Indebtedness.
11. Standing of Debenture. The indebtedness evidenced by this Debenture
shall stand pari passu in right or payment with other indebtedness of the
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Company, unless otherwise provided in such instrument creating any such other
indebtedness, whether now existing or hereafter created or incurred, provided
that no debt senior to the indebtedness shall be issued without the consent of
the holder.
12. This Debenture may be redeemed at any time by the Company by the
payment of the principal amount plus accrued interest up to any redemption date.
13. No Recourse Against Others. A director, officer, employee or
shareholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Debenture or for any claim based on, in
respect of or by reason of such obligations or their creation. The
Debentureholder by acceptance hereof waives and releases all such liability.
The waiver and release are part of the consideration for the issue of the
Debenture.
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THIS NOTE IS NOT A DEPOSIT ON ACCOUNT, IS NOT FEDERALLY INSURED, AND IS
NOT GUARANTEED BY BFS BANKORP, INC. OR BY THE FEDERAL GOVERNMENT.
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