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Exhibit 1.2
XXXXXX CITY BANCORP, INC.
(a Delaware-chartered Stock Corporation)
Up to 67,562,500 Shares
(Subject to Increase Up to 77,696,875 Shares)
COMMON STOCK ($.01 Par Value)
Subscription Price $10.00 Per Share
AGENCY AGREEMENT
May ___, 1999
Xxxx, Xxxx & Co., Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
Ladies and Gentlemen:
Xxxxxx City Bancorp, Inc., a Delaware-chartered stock corporation (the
"Holding Company"), Xxxxxx City, MHC, a New Jersey-chartered mutual savings bank
holding company (the "MHC"), in formation, and Xxxxxx City Savings Bank, a New
Jersey-chartered mutual savings bank (the "Bank") (collectively, the "Primary
Parties") hereby confirm, jointly and severally, their agreement with Xxxx, Xxxx
& Co., Inc. (the "Agent"), as follows:
Section 1. The Offering. The Bank, in accordance with the Plan of
Reorganization and Stock Issuance of Xxxxxx City Savings Bank (the "Plan"),
intends to convert from a New Jersey-chartered mutual savings bank to a New
Jersey-chartered stock savings bank, which will become a wholly-owned subsidiary
of the Holding Company, which in turn will become a majority-owned subsidiary of
the MHC. Pursuant to the Plan, the Holding Company is offering up to 67,562,500
shares of common stock, par value $.01 per share (the "Common Stock") (subject
to an increase up to 77,696,875 shares), in a subscription offering (the
"Subscription Offering"), and, if necessary, (i) a community offering (the
"Community Offering") and/or (ii) syndicated community offering ("Syndicated
Community Offering") or a public offering (the "Public Offering"). If there is a
Public Offering, such Public Offering will be governed by an underwriting
agreement, the terms of which shall be mutually agreed upon by the Primary
Parties and Agent.
Pursuant to the Plan, the Holding Company will offer and sell shares of
its Common Stock (the "Conversion Shares" or "Shares") in the Subscription
Offering, Community Offering, and Syndicated Community Offering (collectively,
the "Conversion Offerings" or "Offerings") so that, upon completion of the
Conversion Offerings, the purchasers of Conversion Shares in the Conversion
Offerings will own 47% of the outstanding Common Stock of Holding Company and
the MHC will own 53% of the outstanding Common Stock of Holding Company. The
Holding Company will issue the Shares at a purchase price of $10.00 per share
(the "Purchase Price"). If the number of Conversion Shares is increased or
decreased in accordance with the Plan, the terms "Conversion Shares" and
"Shares" shall mean such greater or lesser number, where applicable. References
to the Bank herein includes the Bank in its current mutual form
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and/or post-Reorganization stock form as a wholly-owned subsidiary of the
Holding Company, as indicated by the context.
Pursuant to the Plan, in the Subscription Offering, the Company will offer
the Conversion Shares in descending order of priority to: (1) the Bank's
depositors with aggregate account balances of $100.00 or more on December 31,
1997 ("Eligible Account Holders"); (2) the Tax-Qualified Employee Stock Benefit
Plans (as such term is defined in the Plan); and (3) the Bank's depositors with
aggregate account balances of $100.00 on March 31, 1999 ("Supplemental Eligible
Account Holders"), subject to the allocation procedures and purchase limitations
set forth in the Plan. The Holding Company may offer shares of Common Stock
offered but not subscribed for in the Subscription Offering, in the Community
Offering to the following persons in the following order of priority: (i) the
Bank's depositors with aggregate account balances of $100.00 or more on the
voting record date of April 30, 1999 to be established in connection with the
Special Meeting ("Other Depositors"); (ii) natural persons that are Residents of
New Jersey (as defined in the Plan), (iii) other Residents of New Jersey and
(iv) certain other persons that the Bank determines to be members of its
community, subject to priorities and purchase limitations set forth in the Plan.
In the event a Community Offering is held, it may be held at any time during or
immediately after the Subscription Offering. Depending on market conditions,
Shares not subscribed for in the Subscription Offering or purchased in the
Community Offering may be offered in the Syndicated Community Offering to
eligible members of the general public on a best efforts basis, as described in
subsection 4(c) below.
The Holding Company has filed with the U.S. Securities and Exchange
Commission (the "Commission") a Registration Statement on Form S-1 (File No.
333-74383) in order to register the Shares under the Securities Act of 1933, as
amended (the "1933 Act"), and has filed such amendments thereto as have been
required to the date hereof (the "Registration Statement"). The prospectus, as
amended, included in the Registration Statement at the time it initially became
effective is hereinafter called the "Prospectus", except that if any prospectus
is filed by the Holding Company pursuant to Rule 424(b) or (c) of the
regulations of the Commission under the 1933 Act differing from the prospectus
included in the Registration Statement at the time it initially becomes
effective, the term "Prospectus" shall refer to the prospectus filed pursuant to
Rule 424(b) or (c) from and after the time said prospectus is filed with the
Commission and shall include any supplements and amendments thereto from and
after their dates of effectiveness or use, respectively.
In connection with the Reorganization, the Bank filed with the Federal
Deposit Insurance Corporation (the "FDIC"), pursuant to Part 303 of Title 12, of
the Code of Federal Regulations (the "Federal Regulations"), a Notice of Mutual
Holding Company Reorganization and an Interagency Merger Application for
approval of the merger of an interim savings bank with and into the Bank, and
has filed amendments thereto as required by the FDIC (as so amended, the "MHC
Notice and Application"). The Holding Company and the MHC have filed with the
Board of Governors of the Federal Reserve System (the "FRB") its application on
Form FRY-3 (the "Holding Company Application") to become bank holding companies
under the Bank Holding Company Act of 1956, as amended, and the regulations
promulgated thereunder ("BHCA"). In addition, the Bank has filed an Application
for the formation of a Mutual Savings Bank Holding Company (the "NJ
Application") with the New Jersey Department of Banking and Insurance (the
"DOBI") for approval of the proposed transaction pursuant to the New Jersey
Banking Act of
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1948 and the regulations promulgated thereunder (the "State Regulations", and
together with Federal Regulations, the "Conversion Regulations"), which includes
a request for approval of the DOBI for the formation of the interim stock
savings banks and the merger of one of the interim stock savings banks with and
into the Bank. The MHC Notice and Application, the Holding Company Application
and the NJ Application may, from time-to-time, collectively be referred to
herein as the Applications.
Section 2. Appointment of Agent. Subject to the terms and conditions of
this Agreement, the Primary Parties hereby appoint the Agent to consult with,
advise and assist the Primary Parties with the solicitation of subscriptions and
purchase orders for the Conversion Shares in connection with the sale of the
Conversion Shares in the Conversion Offerings.
On the basis of the representations and warranties of the Primary Parties
contained in, and subject to the terms and conditions of, this Agreement, the
Agent accepts such appointment and agrees to consult with and advise the Primary
Parties as to the matters set forth in Section 3 of the letter agreement (the
"Letter Agreement"), dated January 27, 1999, between the Bank and Agent (a copy
of which is attached hereto as Exhibit A). It is acknowledged by the Primary
Parties that the Agent shall not be obligated to purchase any Shares and shall
not be obligated to take any action which is inconsistent with any applicable
law, regulation, decision or order. Except as provided in paragraph 9 of the
Letter Agreement, the appointment of the Agent to provide services hereunder
shall terminate upon consummation of the Offerings.
If requested by the Bank, Agent may also assemble and manage a selling
group of broker-dealers that are members of the National Association of
Securities Dealers, Inc. ("NASD") to participate in the solicitation of purchase
orders for the Shares under a selected dealers' agreement ("Selected Dealers'
Agreement"), the form of which is set forth as Exhibit B to this Agreement. The
Agent will distribute the Common Stock among dealers in a fashion which best
meets the distribution objectives of the Bank and the Plan. On the basis of the
representations and warranties of the Primary Parties contained in, and subject
to the terms and conditions of, this Agreement, Agent accepts such appointment
and agrees to manage the selling group of broker-dealers in the Syndicated
Community Offering. The Agent will not commence the Syndicated Community
Offering without the prior approval of the Primary Parties.
Section 3. Refund of Purchase Price. In the event that the Reorganization
is not consummated for any reason, including but not limited to the inability to
sell 49,937,500 Conversion Shares during the Offerings (including any permitted
extension thereof), this Agreement shall terminate and any persons who have
subscribed for any of the Conversion Shares shall have refunded to them the full
amount which has been received from such person, together with interest as
provided in the Prospectus. Upon termination of this Agreement, neither the
Agent nor the Primary Parties shall have any obligation to the other except that
(i) the Primary Parties shall remain liable for any amounts due pursuant to
Sections 4(a), 9, 11, 12, and 14 hereof , unless the transaction is not
consummated solely due to the breach by the Agent of a warranty, representation
or covenant; and (ii) the Agent shall remain liable for any amount due pursuant
to Sections 11 and 12 hereof, unless the transaction is not consummated due to
the breach by the Primary Parties of a warranty, representation or covenant.
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Section 4. Fees. In addition to the expenses specified in Section 9
hereof, as compensation for the Agent's services under this Agreement, the Agent
has received or will receive the following fees from the Primary Parties:
(a) An advisory fee of $150,000, with the first $50,000 having been
paid upon execution of the Letter Agreement, and the remaining $100,000 due upon
the commencement of the Offering or, if this Agreement is terminated pursuant to
Section 14 hereof prior to the commencement of the Offering, immediately upon
such termination.
(b) A fee of one and one-fifth percent (1.2%) of the dollar amount
of the Common Stock sold in the Subscription Offering and Community Offering,
excluding shares purchased by the Bank's officers, directors, or employees (or
members of the immediate families of such persons. For these purposes, immediate
family of a person means: (a) the person's spouse, or (b) the person's parents,
siblings or children, who live in the same household as the person).
(c) If any of the Conversion Shares remain available after the
Subscription Offering and Community Offering, at the request of the Bank, the
Agent will seek to form a group of approved broker-dealer firms in accordance
with Section 2 for purposes of the Syndicated Community Offering. Pursuant to
this subsection 4(c), the Agent will be paid a fee not to exceed 6.0% and not
less than 5.0% of the aggregate dollar amount of the Conversion Shares sold
pursuant to this subsection 4(c) in the Syndicated Community Offering. The exact
percentage shall be agreed to by the Bank and Agent in writing prior to the
commencement of the Syndicated Community Offering. Of such fee, the Agent will
retain 1.2% of the aggregate dollar amount of the shares sold pursuant to this
subsection 4(c) as a management fee, and will pass on to the Assisting Brokers,
which may include the Agent, the remainder of such fee relating to the
Conversion Shares sold by such Assisting Brokers pursuant to this subsection
4(c).
(d) The Primary Parties have agreed to reimburse the Agent for its
out-of-pocket expenses and its legal fees in accordance with Section 9 hereof
and to indemnify the Agent against certain claims or liabilities, including
certain liabilities under the 1933 Act in accordance with Section 11 hereof, and
will, in addition to the fees set forth under this Section 4, be required to
contribute to payments Agent may be required to make in connection with any such
claims or liabilities in accordance with Section 12 hereof.
In the event that the Holding Company and/or the Bank are required to resolicit
subscribers for Conversion Shares in the Subscription Offering and Community
Offering and the Agent is required to provide significant additional services in
connection with such a resolicitation, the Primary Parties and the Agent shall
mutually agree to the dollar amount of additional compensation due to the Agent
and the Primary Parties shall pay such amount, if any. Until any agreement
called for by this paragraph is reached, the Agent shall not incur expenses
relating to any resolicitation in an amount that would cause the total expenses
incurred by the Agent, that are reimbursable by the Bank pursuant to Section 9
hereof, to be greater than those permitted without the prior written consent of
the Holding Company or the Bank, which consent shall not be unreasonably
withheld.
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Section 5. Closing. If the minimum number of Conversion Shares permitted
to be sold in the Reorganization on the basis of the most recently updated
Appraisal (as defined in Section 6(h)) are subscribed for at or before the
termination of the Offerings, and the other conditions to the completion of the
Reorganization are satisfied, the Holding Company agrees to issue the Shares on
the Closing Date (as hereinafter defined) against payment therefor by the means
authorized by the Plan and to deliver certificates evidencing ownership of the
Conversion Shares in such authorized denominations and registered in such names
as may be indicated on the subscription order forms directly to the purchasers
thereof as promptly as practicable after the Closing Date. The closing (the
"Closing") shall be held at the offices of Xxxxxxx Xxxxxxxx & Xxxx ("Xxxxxxx
Xxxxxxxx"), New York, NY, or at such other place as shall be agreed upon among
the Primary Parties and the Agent, at 10:00 a.m., Eastern Standard Time, on the
business day selected by the Holding Company, which business day shall be no
less than two business days following the giving of prior notice by the Holding
Company to the Agent or at such other time as shall be agreed upon by the
Primary Parties and the Agent. At the Closing, the Primary Parties shall deliver
to the Agent by wire transfer in same-day funds the commissions, fees and
expenses owing to the Agent as set forth in Sections 4 and 9 hereof and the
opinions required hereby and other documents deemed reasonably necessary for the
Agent shall be executed and delivered to effect the sale of the Shares as
contemplated hereby and pursuant to the terms of the Prospectus; provided,
however, that all fees and expenses to which the Agent is entitled under this
Section 4 and 9 hereof shall be due and payable upon receipt by the Company or
the Bank of a written accounting therefor setting forth in reasonable detail the
expenses incurred by the Agent. The Holding Company shall notify the Agent when
funds shall have been received for the minimum number of shares of the Common
Stock. The hour and date upon which the Holding Company shall release the
Conversion Shares for delivery in accordance with the terms hereof is referred
to herein as the "Closing Date."
The Holding Company and the Bank (or their respective agents) shall advise
the Agent whenever an allocation of the Shares does not strictly correspond to
all subscriptions for Shares, as to the allocation of the Shares. The Agent
shall have no liability to any party for the records or other information
provided by the Holding Company and the Bank (or their respective agents) to the
Agent for use in allocating the Shares. The Holding Company and the Bank shall
indemnify and hold harmless the Agent for any liability arising out of the
allocation of the Shares in accordance with the Plan generally and the records
or other information provided to the Agent by the Holding Company and the Bank
(or their respective agents).
Section 6. Representations and Warranties of the Primary Parties. The
Primary Parties jointly and severally represent and warrant to the Agent that:
(a) The Bank has, and as of the Closing Date, the MHC and the
Holding Company will have, all such power, authority, authorizations, approvals
and orders as may be required to enter into this Agreement, to carry out the
provisions and conditions hereof and to issue and sell the Shares as provided
herein and as described in the Prospectus. The consummation of the
Reorganization, the execution, delivery and performance of this Agreement and
the Letter Agreement and the consummation of the transactions contemplated
herein have been duly and validly authorized by all necessary corporate action
on the part of the Bank (except for the approval of the Bank's depositors
necessary for the consumption of the Reorganization) and, as of the Closing
Date, will have been duly and validly authorized by all
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necessary corporate action on the part of the MHC and the Holding Company. This
Agreement has been validly executed and delivered by the Primary Parties, and is
a valid, legal and binding obligation of the Primary Parties, in each case
enforceable in accordance with its terms, except as the legality, validity,
binding nature and enforceability thereof may be limited by (i) bankruptcy,
insolvency, moratorium, reorganization, conservatorship, receivership or other
similar laws relating to or affecting the enforcement of creditors' rights
generally, (ii) general equity principles regardless of whether such
enforceability is considered in a proceeding in equity or at law, and (iii) the
extent, if any, that the provisions of Sections 11 or 12 hereof may be
unenforceable as against public policy.
(b) The Registration Statement was declared effective by the
Commission on ________________, 1999; and no stop order has been issued with
respect thereto and to the best knowledge of the Primary Parties no proceedings
therefor have been initiated or threatened by the Commission. At the time the
Registration Statement, including the Prospectus contained therein (including
any amendment or supplement thereto), became effective, the Registration
Statement complied as to form in all material respects with the 1933 Act and the
regulations promulgated thereunder and the Registration Statement, including the
Prospectus contained therein (including any amendment or supplement thereto),
did not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and at the time any Rule 424(b) or (c) Prospectus was filed with the
Commission and at the Closing Date referred to in Section 5, the Registration
Statement, including the Prospectus contained therein (including any amendment
or supplement thereto) and any Blue Sky Application or Sales Information
authorized for use by any of the Primary Parties in connection with the
Offerings, will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that the representations and warranties in
this Section 6(c) shall not apply to statements or omissions made in reliance
upon and in conformity with written information furnished to the Primary Parties
by the Agent expressly regarding the Agent for use under the captions "Market
for the Common Stock", "The Reorganization and the Offering - Marketing and
Underwriting Arrangements" and "The Reorganization and the Offering --
Syndicated Community Offering" or with written statements or omissions from any
Sales Information or information filed pursuant to state securities or blue sky
laws or regulations regarding the Agent.
(c) The MHC Notice and Application was filed with the FDIC and the
FDIC has issued to the Bank a notice of its intent not to object to the
Reorganization; the NJ Application has been approved by the DOBI; and the
Holding Company Application has been approved by the FRB. The MHC Notice and
Application, the NJ Application, did and will as of the Closing Date comply as
to form in all material respects with the Conversion Regulations and any other
applicable rules and regulations of the FDIC, the DOBI, and the FRB,
respectively (except as modified or waived in writing by the FDIC, the DOBI or
the FRB.
(d) No order has been issued by the FDIC, the DOBI, or any state
regulatory authority, preventing or suspending the use of the Prospectus and no
action by or before any such government entity to revoke any approval,
authorization or order of effectiveness related to the Reorganization is pending
or, to the best knowledge of the Primary Parties, threatened.
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(e) The Plan has been duly adopted by the Board of Managers of the
Bank. To the best knowledge of the Primary Parties, no person has, or at the
Closing Date will have, sought to obtain review of the final action of the FDIC
or the DOBI in approving the Plan, the Reorganization, or the Applications,
pursuant to the BHCA or any other statute or regulation.
(f) The MHC and the Holding Company have filed with the FRB the
Holding Company Application and as of the Closing Date the FRB will have
approved of the MHC's and the Holding Company's becoming bank holding companies
with respect to the Bank.
(g) RP Financial, LC., which prepared the appraisal of the aggregate
pro forma market value of the Common Stock on which the Offerings were based
(the "Appraisal"), has advised the Primary Parties in writing that it is
independent with respect to each of the Primary Parties.
(h) KPMG LLP ("KPMG"), which certified the financial statements
filed as part of the Registration Statement and the MHC Notice and Application,
has advised the Primary Parties that it is and independent certified public
accountant within the meaning of the Code of Ethics of the AICPA, and KPMG is,
with respect to the Company, the Bank and each subsidiary of the Bank,
independent certified public accountants as required by the 1933 Act and the
1933 Act Regulations.
(i) The financial statements and the notes thereto which are
included in the Registration Statement and which are a part of the Prospectus
present fairly the financial condition and retained earnings of the Bank as of
the dates indicated and the results of operations and cash flows for the periods
specified. The financial statements comply in all material respects with the
applicable accounting requirements of Title 12 of the Code of Federal
Regulations, Regulation S-X of the Commission and generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods presented,
except as otherwise noted therein, and present fairly in all material respects
the information required to be stated therein. The other financial, statistical
and pro forma information and related notes included in the Prospectus present
fairly the information shown therein on a basis consistent with the audited and
unaudited financial statements included in the Prospectus, and as to the pro
forma adjustments, the adjustments made therein have been consistently applied
on the basis described therein.
(j) Since the respective dates as of which information is given in
the Registration Statement, including the Prospectus; (i) there has not been any
material adverse change in the financial condition or in the earnings, capital,
properties or business affairs of the Primary Parties considered as one
enterprise, whether or not arising in the ordinary course of business; (ii)
there have not been any material transactions entered into by any of the Primary
Parties, other than those in the ordinary course of business; and (iii) the
capitalization, liabilities, assets, properties and business of the Primary
Parties conform in all material respects to the descriptions thereof contained
in the Prospectus and, none of the Primary Parties has any material liabilities
of any kind, contingent or otherwise, except as disclosed in the Registration
Statement or the Prospectus.
(k) As of the Closing Date, the Holding Company will be a stock
corporation duly organized and in good standing under the laws of the State of
Delaware, with corporate
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power and authority to own its properties and to conduct its business as
described in the Prospectus, and will be qualified to transact business and in
good standing in New Jersey and in each jurisdiction in which the conduct of
business requires such qualification, unless the failure to qualify in one or
more of such jurisdictions would not have a material adverse effect on the
financial condition, earnings, capital, properties or business affairs of the
Primary Parties taken as a whole. As of the Closing Date, the Holding Company
will have obtained all licenses, permits and other governmental authorizations
required for the conduct of its business, except those that individually or in
the aggregate would not materially adversely affect the financial condition,
earnings, capital, assets or properties of the Primary Parties taken as a whole;
and as of the Closing Date, all such licenses, permits and governmental
authorizations will be in full force and effect, and the Holding Company will be
in compliance therewith in all material respects.
(l) As of the Closing Date, the MHC will be duly organized and will
be validly existing as a mutual savings bank holding company under the laws of
the State of New Jersey, duly authorized to conduct its business and own its
property as described in the Registration Statement and the Prospectus; as of
the Closing Date, the MHC will have obtained all licenses, permits and other
governmental authorizations required for the conduct of its business, except
those that individually or in the aggregate would not materially adversely
affect the financial condition, earnings, capital, assets or properties of the
Primary Parties taken as a whole; as of the Closing Date, all such licenses,
permits and governmental authorizations will be in full force and effect and the
MHC will be in compliance therewith in all material respects; as of the Closing
Date, the MHC will be duly qualified as a foreign corporation to transact
business in New Jersey and in each other jurisdiction in which the failure to be
so qualified would have a Material Adverse Effect on the financial condition,
earnings, or business of the Primary Parties taken as a whole (a "Material
Adverse Effect").
(m) The Holding Company does not, and as of the Closing Date, will
not own any equity securities or any equity interest in any business enterprise
except as described in the Prospectus.
(n) As of the Closing Date, the MHC will not be authorized to issue
any shares of capital stock.
(o) The Bank is a duly organized and validly existing New
Jersey-chartered savings bank in mutual form, duly authorized to conduct its
business as described in the Prospectus; the activities of the Bank are
permitted by the rules, regulations and practices of the FDIC, and the DOBI and
under New Jersey law; the Bank has obtained all licenses, permits and other
governmental authorizations currently required for the conduct of its business,
except those that individually or in the aggregate would not materially
adversely affect the financial condition of the Primary Parties taken as a
whole; all such licenses, permits and other governmental authorizations are in
full force and effect and the Bank is in good standing under the laws of the
State of New Jersey and is duly qualified as a foreign corporation to transact
business in each jurisdiction in which failure to so qualify would have a
Material Adverse Effect; all of the issued and outstanding capital stock of the
Bank after the Reorganization will be duly and validly issued and fully paid and
nonassessable; and the Holding Company will directly own all of such capital
stock free and clear of any mortgage, pledge, lien, encumbrance, claim or
restriction. The Bank
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does not own equity securities or any equity interest in any other business
enterprise except as otherwise described in the Prospectus or as are immaterial
in amount and are not required to be described in the Prospectus.
(p) The deposit accounts of the Bank are insured by the FDIC up to
applicable limits. Upon consummation of the Reorganization, the Bank will
establish a liquidation account for the benefit of the Bank's depositors, in
accordance with the Plan and the requirements of the Conversion Regulations.
(q) As of the Closing Date, the Bank will not be authorized to issue
any shares of capital stock except to the Holding Company.
(r) Upon consummation of the Reorganization, the authorized, issued
and outstanding equity capital of the Holding Company will be within the range
set forth in the Prospectus under the caption "Capitalization" and, except for
the shares of Common Stock held by the Bank and MHC, in connection with the
Reorganization, no shares of Common Stock have been or will be issued and
outstanding prior to the Closing Date; and the shares of Common Stock to be
subscribed for in the Offering have been duly and validly authorized for
issuance and, when issued and delivered by the Holding Company pursuant to the
Plan against payment of the consideration calculated as set forth in the Plan
and the Prospectus, will be duly and validly issued and fully paid and
nonassessable; the issuance of the Shares is not subject to preemptive rights,
except for the Subscription Rights granted pursuant to the Plan; and the terms
and provisions of the shares of Common Stock will conform in all material
respects to the description thereof contained in the Prospectus. Upon issuance
of the Shares, good title to the Shares will be transferred from the Holding
Company to the purchasers of Shares against payment therefor in the Offering as
set forth in the Plan and the Prospectus.
(s) The Primary Parties are not in violation of their respective
articles of incorporation or charter or their respective bylaws, or in material
default in the performance or observance of any obligation, agreement, covenant,
or condition contained in any contract, lease, loan agreement, indenture or
other instrument to which they are a party or by which they, or any of their
respective property, may be bound which would result in a Material Adverse
Effect. The consummation of the transactions herein contemplated will not (i)
conflict with or constitute a breach of, or default under, the Certificate of
Incorporation, charter or bylaws of any of the Primary Parties, or materially
conflict with or constitute a material breach of, or default under, any material
contract, lease or other instrument to which any of the Primary Parties has a
beneficial interest, or any applicable law, rule, regulation or order that is
material to the financial condition of the Bank; (ii) violate any authorization,
approval, judgment, decree, order, statute, rule or regulation applicable to the
Primary Parties except for such violations which would not have a material
adverse effect on the financial condition and results of operations of the Bank;
or (iii) result in the creation of any lien, charge or encumbrance upon any
property of the Primary Parties, except for such liens, changes or encumbrances
that would not individually or in the aggregate have a Material Adverse Effect.
(t) No material default exists, and no event has occurred which with
notice or lapse of time, or both, would constitute a material default on the
part of any of the Primary Parties, in the due performance and observance of any
term, covenant or condition of any
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indenture, mortgage, deed of trust, note, bank loan or credit agreement or any
other material instrument or agreement to which any of the Primary Parties is a
party or by which any of their property is bound or affected in any respect
which, in any such case, is material to the Primary Parties taken as a whole,
and such agreements are in full force and effect; and no other party to any such
agreements has instituted or, to the best knowledge of any of the Primary
Parties, threatened any action or proceeding wherein any of the Primary Parties
is alleged to be in default thereunder under circumstances where such action or
proceeding, if determined adversely to any of the Primary Parties, would have a
Material Adverse Effect.
(u) The Primary Parties have good and marketable title to all assets
which are material to the businesses of the Primary Parties, free and clear of
all liens, charges, encumbrances, restrictions or other claims, except such as
are described in the Prospectus or which do not have a Material Adverse Effect;
and all of the leases and subleases which are material to the businesses of the
Primary Parties, as described in the Registration Statement or Prospectus, are
in full force and effect.
(v) The Primary Parties are not in material violation of any
directive from the FDIC, the DOBI, the FRB, the Commission or any other agency
to make any material change in the method of conducting their respective
businesses; the Primary Parties have conducted and are conducting their
respective businesses so as to comply in all respects with all applicable
statutes and regulations (including, without limitation, regulations, decisions,
directives and orders of the DOBI, the FRB, the Commission and the FDIC), except
where the failure to so comply would not reasonably be expected to result in a
Material Adverse Effect, and there is no charge, investigation, action, suit or
proceeding before or by any court, regulatory authority or governmental agency
or body pending or, to the best knowledge of any of the Primary Parties,
threatened, which would reasonably be expected to materially and adversely
affect the Reorganization, the performance of this Agreement, or the
consummation of the transactions contemplated in the Plan as described in the
Registration Statement, or which would reasonably be expected to result in a
Material Adverse Effect.
(w) Prior to the Closing Date, the Primary Parties will have
received an opinion of their special counsel, Xxxxxxx Xxxxxxxx, with respect to
the federal income tax consequences of the Reorganization, as described in the
Registration Statement and the Prospectus, and an opinion from KPMG with respect
to the tax consequences of the Reorganization under the laws of the State of New
Jersey; and the facts and representations upon which such opinions will be
based, will be truthful, accurate and complete, and none of the Primary Parties
will take any action inconsistent therewith.
(x) The Bank has filed all required federal and state tax returns,
has paid all taxes that have become due and payable in respect of such returns,
except where permitted to be extended, and no deficiency has been asserted with
respect thereto by any taxing authority.
(y) No approval, authorization, consent or other order of any
regulatory or supervisory or other public authority is required for the
execution and delivery by the Primary Parties of this Agreement, or the issuance
of the Shares, except for the non-objection of the FDIC, and the approval of the
DOBI, the FRB and the Commission and any necessary
11
qualification, notification, or registration or exemption under the securities
or blue sky laws of the various states in which the Shares are to be offered.
(z) None of the Primary Parties has: (i) issued any securities
within the last 18 months (except for (a) notes to evidence bank loans or other
liabilities in the ordinary course of business or as described in the
Prospectus, and (b) shares of Common Stock issued with respect to the initial
capitalization of the Holding Company); (ii) had any dealings with respect to
sales of securities within the 12 months prior to the date hereof with any
member of the NASD, or any person related to or associated with such member,
other than discussions and meetings relating to the Offering and purchases and
sales of U.S. government and agency and other securities in the ordinary course
of business; or (iii) engaged any intermediary between the Agent and the Primary
Parties in connection with the Offering or the offering of shares of the common
stock of the Bank, and no person is being compensated in any manner for such
services.
(aa) The Primary Parties have not made any payment of funds of the
Primary Parties as a loan to any person for the purchase of Conversion Shares,
except for the Holding Company's loan to the ESOP the proceeds of which will be
used to purchase Conversion Shares, or has made any other payment of funds
prohibited by law, and no funds have been set aside to be used for any payment
prohibited by law.
(ab) The Bank complies in all material respects with the applicable
financial record keeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, and the regulations and rules
thereunder.
(ac) The Primary Parties have not relied upon Agent or its counsel
for any legal, tax or accounting advice in connection with the Reorganization.
(ad) The records of Eligible Account Holders, Supplemental Eligible
Account Holders and Other Depositors are accurate and complete in all material
respects.
(ae) The Primary Parties comply with all laws, rules and regulations
relating to environmental protection, and none of them has been notified or is
otherwise aware that any of them is potentially liable, or is considered
potentially liable, under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, or any other Federal, state or local
environmental laws and regulations (including, but not limited to, the New
Jersey Industrial Site Recovery Act) except to the extent that any
non-compliance would not have a Material Adverse Effect; no action, suit,
regulatory investigation or other proceeding is pending or to the knowledge of
the Primary Parties threatened against the Primary Parties relating to
environmental protection, nor do the Primary Parties have any reason to believe
any such proceedings may be brought against any of them; and no disposal,
release or discharge of hazardous or toxic substances, pollutants or
contaminants, including petroleum and gas products, as any of such terms may be
defined under federal, state or local law, has occurred on, in, at or about any
facilities or properties owned or leased by any of the Primary Parties or, to
the best knowledge of the Bank, in which the Bank has a security interest.
(af) All of the loans represented as assets on the most recent
financial statements or selected financial information of the Bank included in
the Prospectus meet or are
12
exempt from all requirements of federal, state and local law pertaining to
lending, including, without limitation, truth in lending (including the
requirements of Regulations Z and 12 C.F.R. Part 226), real estate settlement
procedures, consumer credit protection, equal credit opportunity and all
disclosure laws applicable to such loans, except for violations which, if
asserted, would not result in a material adverse effect on the financial
condition, results of operations or business of the Primary Parties taken as a
whole.
(ag) None of the Primary Parties are required to be registered as an
investment company under the Investment Company Act of 1940.
Any certificates signed by an officer of any of the Primary Parties and
delivered to the Agent or its counsel that refer to this Agreement shall be
deemed to be a representation and warranty by the Primary Parties to the Agent
as to the matters covered thereby with the same effect as if such representation
and warranty were set forth herein.
Section 7. Representations and Warranties of the Agent. Agent represents
and warrants to the Primary Parties that:
(a) Agent is a corporation and is validly existing and in good
standing under the laws of the State of New Jersey with full power and authority
to provide the services to be furnished to the Primary Parties hereunder.
(b) The execution, delivery and performance of this Agreement and
the Letter Agreement and the consummation of the transactions contemplated
herein have been duly and validly authorized by all necessary corporate action
on the part of Agent, and this Agreement is the legal, valid and binding
agreement of Agent. This Agreement has been validly executed and delivered by
Agent and is a valid, legal and binding obligation of Agent, enforceable in
accordance with its terms, except as the legality, validity, binding nature and
enforceability thereof may be limited by (i) bankruptcy, insolvency, moratorium,
reorganization, conservatorship, receivership or other similar laws relating to
or affecting the enforcement of creditors' rights generally, (ii) general equity
principles regardless of whether such enforceability is considered in a
proceeding in equity or at law, and (iii) the extent, if any, that the
provisions of Sections 11 or 12 hereof may be unenforceable as against public
policy.
(c) Each of Agent and its employees, agents and representatives who
shall perform any of the services hereunder shall have, and until the
Reorganization is completed or terminated shall maintain, all licenses,
approvals and permits necessary to perform such services and shall comply in all
material respects with all applicable laws and regulations in connection with
the performance of such services.
(d) No action, suit, charge or proceeding before the Commission, the
NASD, any state securities commission or any court is pending, or to the
knowledge of Agent threatened, against Agent which, if determined adversely to
Agent, would have a material adverse effect upon the ability of Agent to perform
its obligations under this Agreement.
(e) Agent is registered as a broker/dealer pursuant to Section 15(b)
of the Securities Exchange Act of 1934, as amended (the "1934 Act") and is a
member of the National Association of Securities Dealers, Inc.
13
(f) Any funds received in the Offering by the Agent will be handled
by the Agent in accordance with Rule 15c2-4 under the 1934 Act to the extent
applicable.
Section 8. Covenants of the Primary Parties. The Primary Parties hereby
jointly and severally covenant with the Agent as follows:
(a) The Holding Company will not, at any time after the date the
Registration Statement is declared effective, file any amendment or supplement
to the Registration Statement without providing the Agent and its counsel an
opportunity to review such amendment or file any amendment or supplement to
which amendment the Agent or its counsel shall reasonably object. The Holding
Company will furnish promptly to the Agent and its counsel copies of all
correspondence from the Commission with respect to the Registration Statement
and the Holding Company's responses thereto.
(b) The Primary Parties will not, at any time after the date any
Application is approved, file any amendment or supplement to such Application
without providing the Agent and its counsel an opportunity to review such
amendment or supplement or file any amendment or supplement to which amendment
or supplement the Agent or its counsel shall reasonably object. The Primary
Parties will furnish promptly to the Agent and its counsel copies of all
correspondence from the FRB, the FDIC and the DOBI with respect to the
Applications and the Primary Parties' responses thereto.
(c) The Primary Parties will use their best efforts to cause the FRB
to approve the MHC and the Holding Company's acquisition of the Bank, and will
use their best efforts to cause any post-effective amendment to the Registration
Statement to be declared effective by the Commission and any post-effective
amendment to the Applications to be approved by the FDIC and the DOBI, and will
promptly upon receipt of any information concerning the events listed below
notify the Agent (i) when the Registration Statement, as amended, has become
effective; (ii) when the MHC Notice and Application, the NJ Application, as
amended, have received the non-objection of the FDIC and the approval of the
DOBI; (iii) when the Holding Company Application, as amended, has been approved
by the FRB; (iv) of the receipt of any comments from the Commission, the FDIC
and the DOBI, or any other governmental entity with respect to the
Reorganization or the transactions contemplated by this Agreement; (v) of any
request by the Commission, the FRB, the FDIC, the DOBI, or any other
governmental entity for any amendment or supplement to the Registration
Statement or the Applications or for additional information; (vi) of the
issuance by the Commission, the FDIC or the DOBI, or any other governmental
agency of any order or other action suspending the Offerings or the use of the
Registration Statement or the Prospectus or any other filing of the Primary
Parties under the Conversion Regulations or other applicable law, or the threat
of any such action; (vii) of the issuance by the Commission, the FDIC or the
DOBI, or any state authority of any stop order suspending the effectiveness of
the Registration Statement or of the initiation or threat of initiation or
threat of any proceedings for that purpose; or (viii) of the occurrence of any
event mentioned in subsection (f) below. The Primary Parties will make every
reasonable effort to prevent the issuance by the Commission, the FDIC, the DOBI,
or any state authority of any order referred to in (vi) and (vii) above and, if
any such order shall at any time be issued, to obtain the lifting thereof at the
earliest possible time.
14
(d) The Primary Parties will deliver to the Agent and to its counsel
conformed copies of each of the following documents, with all exhibits: each of
the Applications as originally filed and of each amendment or supplement
thereto, and the Registration Statement, as originally filed and each amendment
thereto. Further, the Primary Parties will deliver such additional copies of the
foregoing documents to counsel to the Agent as may be required for any NASD
filings. In addition, the Primary Parties will also deliver to the Agent such
number of copies of the Prospectus, as amended or supplemented, as the Agent may
reasonably request.
(e) The Primary Parties will comply in all material respects with
any and all terms, conditions, requirements and provisions with respect to the
Reorganization and the transactions contemplated thereby imposed by the
Commission, by applicable state law and regulations, and by the 1933 Act, the
1934 Act, and the rules and regulations of the Commission promulgated under such
Acts, to be complied with prior to or subsequent to the Closing Date; and when
the Prospectus is required to be delivered, the Primary Parties will comply in
all material respects, at their own expense, with all material requirements
imposed upon them by the FDIC, the DOBI, the Conversion Regulations (except as
modified or waived in writing by the FDIC or the DOBI), the Commission, by
applicable state law and regulations and by the 1933 Act, the 1934 Act and the
rules and regulations of the Commission promulgated under such statutes, in each
case as from time to time in force, so far as necessary to permit the
continuance of sales or dealing in shares of Common Stock during such period in
accordance with the provisions hereof and the Prospectus.
(f) During any period when the Prospectus is required to be
delivered, each of the Primary Parties will inform the Agent of any event or
circumstance of which it is or becomes aware as a result of which the
Registration Statement and/or Prospectus, as then supplemented or amended, would
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading. If it is
necessary, in the reasonable opinion of counsel for the Primary Parties, to
amend or supplement the Registration Statement or the Prospectus in order to
correct such untrue statement of a material fact or to make the statements
therein not misleading in light of the circumstances existing at the time of
their use, the Primary Parties will, at their expense, prepare, file with the
Commission, the FDIC, and the DOBI, and furnish to the Agent, a reasonable
number of copies of an amendment or amendments of, or a supplement or
supplements to, the Registration Statement and the Prospectus (in form and
substance reasonably satisfactory to counsel for the Agent after a reasonable
time for review) which will amend or supplement the Registration Statement
and/or the Prospectus so that as amended or supplemented it will not contain an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances existing
at the time, not misleading. For the purpose of this subsection, each of the
Primary Parties will furnish such information with respect to itself as the
Agent may from time to time reasonably request.
(g) Pursuant to the terms of the Plan, the Holding Company will
endeavor in good faith, in cooperation with the Agent, to register or to qualify
the Shares for offering and sale or to exempt such Shares from registration and
to exempt the Holding Company and its officers, directors and employees from
registration as broker-dealers, under the applicable securities laws of the
jurisdictions in which the Offering will be conducted; provided, however, that
the Holding Company shall not be obligated to file any general consent to
service of process
15
or to qualify as a foreign corporation to do business in any jurisdiction in
which it is not so qualified. In each jurisdiction where any of the Shares shall
have been registered or qualified as above provided, the Holding Company will
make and file such statements and reports for a period of not less than one year
from the effective date of the Registration Statement.
(h) The Holding Company will not sell or issue, contract to sell or
otherwise dispose of, for a period of 90 days after the date hereof, any shares
of Common Stock, without the Agent's prior written consent, which consent shall
not be unreasonably withheld, other than in connection with any plan or
arrangement described in the Prospectus.
(i) For the period of three years from the date of this Agreement,
the Holding Company will furnish to the Agent, as soon as practical after such
information is available (i) a copy of each report of the Holding Company
furnished to or filed with the Commission under the 1934 Act or any national
securities exchange or system on which any class of securities of the Holding
Company is listed or quoted, (ii) a copy of each report of the Holding Company
mailed to holders of Common Stock or non-confidential report filed with the
Commission or the FRB or any other supervisory or regulatory authority or any
national securities exchange or system on which any class of the securities of
the Holding Company is listed or quoted, (iii) each press release and material
news item and article released by the Holding Company and/or Bank, and (iv) from
time-to-time, such other publicly available information concerning the Primary
Parties as the Agent may reasonably request.
(j) The Primary Parties will use the net proceeds from the sale of
the Common Stock in the manner set forth in the Prospectus under the caption
"How We Intend to Use the Proceeds from the Offering."
(k) The Holding Company and the Bank will distribute the Prospectus
or other offering materials in connection with the offering and sale of the
Common Stock only in accordance with the Conversion Regulations, the 1933 Act
and the 1934 Act and the rules and regulations promulgated under such statutes,
and the laws of any state in which the shares are qualified for sale.
(l) Prior to the Closing Date, the Holding Company shall register
its Common Stock under Section 12(b) or 12(g) of the 1934 Act, and will request
that such registration statement be effective upon completion of the
Reorganization. The Holding Company shall maintain the effectiveness of such
registration for not less than three years.
(m) For so long as the Conversion Shares are registered under the
1934 Act, the Holding Company will furnish to its stockholders as soon as
practicable after the end of each fiscal year such reports and other information
as are required to be furnished to its stockholders under the 1934 Act.
(n) The Holding Company will report the use of proceeds of the
Offering in accordance with Rule 463 under the 0000 Xxx.
(o) The Primary Parties will maintain appropriate arrangements for
depositing all funds received from persons mailing subscriptions for or orders
to purchase Conversion Shares on an interest bearing basis at the rate described
in the Prospectus until the Closing Date
16
and satisfaction of all conditions precedent to the release of the Holding
Company's obligation to refund payments received from persons subscribing for or
ordering Conversion Shares in the Conversion Offerings, in accordance with the
Plan as described in the Prospectus, or until refunds of such funds have been
made to the persons entitled thereto or withdrawal authorizations canceled in
accordance with the Plan and as described in the Prospectus. The Primary Parties
will maintain such records of all funds received to permit the funds of each
subscriber to be separately insured by the FDIC (to the maximum extent
allowable) and to enable the Primary Parties to make the appropriate refunds of
such funds in the event that such refunds are required to be made in accordance
with the Plan and as described in the Prospectus.
(p) The MHC and the Holding Company will each register as bank
holding companies under the Bank Holding Company Act ("BHCA").
(q) The Primary Parties will take such actions and furnish such
information as are reasonably requested by the Agent in order for the Agent to
ensure compliance with the "Interpretation of the Board of Governors of the NASD
on Free Riding and Withholding."
(r) The Primary Parties will conduct their businesses in compliance
in all material respects with all applicable federal and state laws, rules,
regulations, decisions, directives and orders, including all decisions,
directives and orders of the Commission, the FDIC, the DOBI, and the FRB.
(s) The Primary Parties shall comply with any and all terms,
conditions, requirements and provisions with respect to the Reorganization and
the transactions contemplated thereby imposed by the FDIC, the DOBI, the BHCA,
the Commission, the 1933 Act, the Regulations, the 1934 Act and the regulations
promulgated by the Commission pursuant to the 1934 Act to be complied with
subsequent to the Closing Date. The Holding Company will comply with all
provisions of all undertakings contained in the Registration Statement.
(t) The Primary Parties will not amend the Plan without notifying
the Agent prior thereto.
(u) The Holding Company shall provide the Agent with any information
necessary to carry out the allocation of the Conversion Shares in the event of
an oversubscription, and such information shall be accurate and reliable in all
material respects.
(v) The Holding Company will not deliver the Shares until the
Primary Parties have satisfied or caused to be satisfied each condition set
forth in Section 10 hereof, unless such condition is waived in writing by the
Agent.
(w) Immediately upon completion of the sale by the Holding Company
of the Shares contemplated by the Plan and the Prospectus, (i) the MHC shall
have been formed pursuant to the Plan and shall own at all times more than 50%
of the issued and outstanding shares of Common Stock, (ii) all of the issued and
outstanding shares of capital stock of the Bank shall be owned by the Holding
Company, (iii) the Holding Company shall have no direct subsidiaries other than
the Bank, and (iv) the Reorganization shall have been effected in accordance
with all applicable statutes, regulations, decisions and orders; and all terms,
conditions, requirements and provisions with respect to the Reorganization
(except those that are
17
conditions subsequent) imposed by the Commission, the FDIC, the DOBI, the FRB,
or any other governmental agency, if any, shall have been complied with by the
Primary Parties in all material respects or appropriate waivers shall have been
obtained and all notice and waiting periods shall have been satisfied, waived or
elapsed.
(x) Prior to the Closing Date, the Plan shall have been approved by
the voting depositors of the Bank in accordance with the Plan, the Conversion
Regulations and the provisions of the Bank's charter and bylaws.
(y) On or before the Closing Date, the Primary Parties will have
completed all conditions precedent to the Reorganization specified in the Plan
and the offer and sale of the Shares will have been conducted in all material
respects in accordance with the Plan, the Conversion Regulations (except as
modified or waived in writing by the FDIC and/or the DOBI) and with all other
applicable laws, regulations, decisions and orders, including all terms,
conditions, requirements and provisions precedent to the Reorganization imposed
upon any of the Primary Parties by the FDIC and/or the DOBI, the Commission, the
FRB, or any other regulatory authority and in the manner described in the
Prospectus.
Section 9. Payment of Expenses. Whether or not the Reorganization is
completed or the sale and exchange of the Shares by the Holding Company is
consummated, the Primary Parties will pay for all expenses incident to the
performance of this Agreement, including without limitation: (a) the preparation
and filing of the Applications; (b) the preparation, printing, filing, delivery
and shipment of the Registration Statement, including the Prospectus, and all
amendments and supplements thereto; (c) all filing fees and expenses in
connection with the qualification or registration of the Shares for offer and
sale by the Holding Company or the Bank under the securities or "blue sky" laws,
including without limitation filing fees, reasonable legal fees and
disbursements of counsel in connection therewith, and in connection with the
preparation of a blue sky law survey; (d) the filing fees of the NASD related to
the Agent's fairness filing under NASD Rule 2710 and the application of the
Holding Company to list its shares; (e) fees and expenses related to the
preparation of the independent appraisal; (f) the reasonable expenses of the
Agent, including but not limited to the reasonable fees and expenses of its
counsel and the Agent's reasonable out-of-pocket expenses (not to exceed $2,000
in any one instance without the prior approval of the Bank); (g) fees and
expenses related to auditing and accounting services; and (h) expenses relating
to advertising, temporary personnel, and the preparation of stock certificates.
Notwithstanding the foregoing, regardless of whether the Reorganization is
successfully completed, the Primary Parties shall, without the prior approval of
the Bank, be required to reimburse Agent for $125,000 in legal fees (plus such
fees as shall be related to "blue sky" matters and the out-of-pocket expenses of
counsel and other fees as may be approved by the Bank) and $50,000 in other
out-of-pocket expenses, including legal fees and in the event of any material
delay in the Offering that would require an update of the financial information
in tabular form contained in the Registration Statement, as amended or
supplemented, to reflect a period later than that set forth in the Registration
Statement as first filed with the Commission. Not later than two days prior to
the Closing Date, the Agent will provide the Bank with a detailed accounting of
all reimbursable expenses to be paid at the Closing.
18
Section 10. Conditions to the Agent's Obligations. The obligations of the
Agent hereunder and the occurrence of the Closing and the Reorganization are
subject to the condition that all representations and warranties of the Primary
Parties herein contained are, at and as of the commencement of the Offering and
at and as of the Closing Date, true and correct, the condition that the Primary
Parties shall have performed all of their obligations hereunder to be performed
on or before such dates and to the following further conditions:
(a) The Registration Statement shall have been declared effective by
the Commission and the MHC Notice and Application and the NJ Application shall
have been approved by the FDIC and the DOBI, as applicable, the Holding Company
Application shall have been approved by the FRB, and no stop order or other
action suspending the effectiveness of the Registration Statement shall have
been issued under the 1933 Act to any of the Primary Parties' best knowledge or
proceedings therefor initiated or threatened by the Commission or any state
authority and no order or other action suspending the authorization for use of
the Prospectus or the consummation of the Reorganization shall have been issued
to any of the Primary Parties' best knowledge, or proceedings therefor initiated
or threatened by the FDIC, the DOBI, the FRB, the Commission, or any other
governmental body.
(b) At the Closing Date, the Agent shall have received:
(1) The opinion, dated as of the Closing Date, of Xxxxxxx
Xxxxxxxx, and/or local counsel acceptable to the Agent, in form and substance
satisfactory to the Agent and counsel for the Agent to the effect that:
(i) The Holding Company is a corporation duly organized
and validly existing and in good standing under the laws of the State of
Delaware, with corporate power and authority to own its properties and to
conduct its business as described in the Prospectus, and is duly qualified to
transact business and is in good standing in New Jersey and in each other
jurisdiction in which the conduct of its business requires such qualification
and except where the failure to qualify would have a Material Adverse Effect.
(ii) On the date hereof, the Bank is a validly existing
New Jersey-chartered mutual savings bank, and upon consummation of the
Reorganization, the Bank will be a duly-organized and validly existing New
Jersey-chartered stock savings bank, with full power and authority to own its
properties and to conduct its business as described in the Prospectus and to
enter into this Agreement and perform its obligations hereunder; the activities
of the Bank as described in the Prospectus are permitted by federal and New
Jersey law and the rules, regulations and practices of the FDIC and the DOBI;
the issuance and sale of the capital stock of the Bank to the Holding Company in
the Reorganization has been duly and validly authorized by all necessary
corporate action on the part of the Holding Company and the Bank and, upon
payment therefor in accordance with the terms of the Plan, will be validly
issued, fully paid and nonassessable and will be owned of record and
beneficially by the Holding Company, free and clear of any mortgage, pledge,
lien, encumbrance, claim or restriction.
(iii) The activities of the MHC, the Holding Company and
the Bank, as described in the Prospectus, are permitted for bank holding
companies and for subsidiaries of a bank holding company and a
Delaware-chartered stock holding company under
19
applicable federal and state law. To the best of such counsel's knowledge, each
of the MHC, the Holding Company and the Bank has obtained all licenses, permits,
and other governmental authorizations that are material for the conduct of its
business, and all such licenses, permits and other governmental authorization
are in full force and effect, and to the best of such counsel's knowledge the
Holding Company and the Bank are complying therewith in all material respects.
(iv) The Bank is an insured depository institution under
the provisions of the Federal Deposit Insurance Act, as amended, and to such
counsel's knowledge, no proceedings for the termination or revocation of the
federal deposit insurance of the Bank are pending or threatened.
(v) Upon consummation of the Reorganization, the MHC
will have been duly organized and will be validly existing as a mutual savings
bank holding company chartered under New Jersey law, duly authorized to conduct
its business and own its properties as described in the Registration Statement
and Prospectus.
(vi) Upon consummation of the Reorganization, (a) the
authorized, issued and outstanding capital stock of the Holding Company will be
within the range set forth in the Prospectus under the caption "Capitalization",
and no shares of Common Stock have been or will be issued and outstanding prior
to the Closing Date (except for the shares issued upon incorporation of the
Holding Company to facilitate the Reorganization); (b) the shares of Common
Stock of the Holding Company issued to the MHC will have been duly and validly
authorized for issuance and will be fully paid and nonassessable; (c) the shares
of Common Stock of the Holding Company to be subscribed for in the Offering will
have been duly and validly authorized for issuance, and when issued and
delivered by the Holding Company pursuant to the Plan against payment of the
consideration calculated as set forth in the Plan, will be fully paid and
nonassessable; and (d) the issuance of the Conversion Shares is not subject to
preemptive rights under the charter, articles of incorporation or bylaws of the
Holding Company, or arising or outstanding by operation of law or, to the best
knowledge of such counsel, under any contract, indenture, agreement, instrument
or other document, except for the subscription rights under the Plan.
(vii) The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the Primary Parties;
and this Agreement constitutes a valid, legal and binding obligation of each of
the Primary Parties, enforceable in accordance with its terms, except as rights
to indemnity and contribution thereunder may be limited under applicable law,
subject to the qualification that (i) enforcement thereof may be limited by
bankruptcy, insolvency, moratorium, reorganization or other laws (including the
laws of fraudulent conveyance) or judicial decisions affecting the
enforceability of creditors' rights generally, the rights of creditors of
federally chartered savings associations, the accounts of which are insured by
the FDIC, or the reorganization of financial institutions and (ii) enforcement
thereof is subject to general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and to the
effect of certain laws and judicial decisions upon the availability of
injunctive relief and enforceability of equity remedies, including the remedies
of specific performance and self-help.
20
(viii) The Plan has been duly adopted by the board of
directors of the Bank and by the voting depositors of the Bank, in the manner
required by the Conversion Regulations and the Bank's charter and bylaws.
(ix) The NJ Application has been approved by the DOBI,
the FRB has approved the Holding Company Application, and the Bank has received
the non-objection of the FDIC to the Reorganization, and subject to the
satisfaction of any conditions set forth in such approvals, no further approval,
registration, authorization, consent or other order of any federal or state
regulatory agency, public board or body is required in connection with the
execution and delivery of this Agreement, the offer, sale and issuance of the
Shares and the consummation of the Reorganization, except as may be required
under the securities or "blue sky" laws of various jurisdictions as to which no
opinion need be rendered.
(x) The Registration Statement has become effective
under the 1933 Act and to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued, or proceedings for
that purpose have been instituted or threatened by the Commission.
(xi) The material tax consequences of the Reorganization
are set forth in the Prospectus under the caption "The Reorganization and the
Offering - Tax Effects of the Reorganization". The information in the Prospectus
under the caption "The Reorganization and the Offering - Tax Effects of the
Reorganization" has been reviewed by such counsel and fairly describes such
opinions rendered by such counsel to the Primary Parties with respect to such
matters.
(xii) The terms and provisions of the shares of Common
Stock conform to the description thereof contained in the Registration Statement
and the Prospectus, and the forms of certificates proposed to be used to
evidence the shares of Common Stock are in due and proper form.
(xiii) At the time the MHC Notice and Application and
the NJ Application was approved, the MHC Notice and Application (as amended or
supplemented), complied as to form in all material respects with the
requirements of the Conversion Regulations and all applicable laws, rules and
regulations and decisions and orders of the FDIC and the DOBI, except as
modified or waived in writing by the FDIC and/or the DOBI (other than the
financial statements, notes to financial statements, financial tables and other
financial and statistical data included therein and the appraisal valuation and
the business plan as to which counsel need express no opinion). To such
counsel's knowledge, no person has sought to obtain regulatory or judicial
review of the final action of the FDIC, the DOBI, or the FRB approving the
Applications.
(xiv) At the time that the Registration Statement became
effective the Registration Statement, including the Prospectus contained therein
(as amended or supplemented) (other than the financial statements, notes to
financial statements, financial tables or other financial and statistical data
included therein and the appraisal valuation and the business plan as to which
counsel need express no opinion), complied as to form in all material
21
respects with the requirements of the 1933 Act and the rules and regulations
promulgated thereunder.
(xv) To such counsel's knowledge, there are no legal or
governmental proceedings pending, or threatened (i) asserting the invalidity of
this Agreement or (ii) seeking to prevent the Reorganization or the offer, sale
or issuance of the Shares.
(xvi) The information in the Prospectus under the
captions "Regulation of Xxxxxx City Savings Bank and Xxxxxx City Bancorp,"
"Taxation," "Restrictions on the Acquisition Xxxxxx City Bancorp and Xxxxxx City
Savings", "Description of Capital Stock of Xxxxxx City Bancorp," and "The
Reorganization and the Offering," to the extent that it constitutes matters of
law, summaries of legal matters, documents or proceedings, or legal conclusions,
has been reviewed by such counsel and is accurate in all material respects
(other than the financial statements, notes to financial statements, financial
tables and other financial and statistical data included therein and the
appraisal valuation and the business plan as to which counsel need express no
opinion).
(xvii) None of the Primary Parties are required to be
registered as an investment company under the Investment Company Act of 1940.
(xviii) The Bank has duly adopted a New Jersey stock
charter and bylaws effective upon consummation of the Reorganization, and none
of the Primary Parties is in violation of its articles of incorporation or its
charter, as the case may be, or its bylaws or, to the best of such counsel's
knowledge, any material obligation, agreement, covenant or condition contained
in any material contract, indenture, mortgage, loan agreement, note, lease or
other instrument filed as an exhibit to, or incorporated by reference in, the
Registration Statement, which violation would have a Material Adverse Effect. In
addition, the execution and delivery of and performance under this Agreement by
the Primary Parties, the incurrence of the obligations set forth herein and the
consummation of the transactions contemplated herein will not result in any
violation of the provisions of the articles of incorporation or charter, as the
case may be, or the bylaws of any of the Primary Parties or any violation of any
applicable law, act, regulation, or to such counsel's knowledge, order or court
order, writ, injunction or decree.
(xix) The Agent's counsel may rely on this opinion for
purposes of its own opinion (Xxxxxxx Xxxxxxxx and/or local counsel shall
expressly authorize such reliance).
The opinion may be limited to matters governed by the laws of the United
States, the laws of the State of New Jersey and the corporate laws of the State
of Delaware and, in the case of local counsel, the State of New Jersey or
Delaware corporate law. In rendering such opinion, such counsel may rely (A) as
to matters involving the application of laws of any jurisdiction other than the
United States, to the extent such counsel deems proper and specified in such
opinion, upon the opinion of counsel reasonably acceptable to the Agent, as long
as such other opinion indicates that the Agent may rely on the opinion, and (B)
as to matters of fact, to the extent such counsel deems proper, on certificates
of responsible officers of the Primary Parties and public officials; provided
copies of any such opinion(s) or certificates of public officials are delivered
to Agent together with the opinion to be rendered hereunder by special counsel
to the
22
Primary Parties. The opinion of such counsel for the Primary Parties shall state
that it has no reason to believe that the Agent is not reasonably justified in
relying thereon.
(2) The letter of Xxxxxxx Xxxxxxxx to the effect that during
the preparation of the Registration Statement and the Prospectus, Xxxxxxx
Xxxxxxxx participated in conferences with certain officers of and other
representatives of the Primary Parties, counsel to the Agent, representatives of
the independent public accountants for the Primary Parties and representatives
of the Agent at which the contents of the Registration Statement and the
Prospectus and related matters were discussed and has considered the matters
required to be stated therein and the statements contained therein and, although
(without limiting the opinions provided pursuant to Section 10(b)(1)), Xxxxxxx
Xxxxxxxx has not independently verified the accuracy, completeness or fairness
of the statements contained in the Registration Statement and Prospectus, on the
basis of the foregoing, nothing has come to the attention of Xxxxxxx Xxxxxxxx
that caused Xxxxxxx Xxxxxxxx to believe that the Registration Statement at the
time it was declared effective by the SEC and as of the date of such letter,
contained or contains any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading (it being understood that counsel need express no comment or
opinion with respect to the financial statements, schedules and other financial
and statistical data included, or statistical or appraisal methodology employed,
in the Registration Statement or Prospectus).
(3) The favorable opinion, dated as of the Closing Date, of
Pitney, Xxxxxx, Xxxx & Xxxxx, counsel for the Agent, with respect to such
matters as the Agent may reasonably require; such opinion may rely, as to
matters of fact, upon certificates of officers and directors of the Primary
Parties delivered pursuant hereto or as such counsel may reasonably request.
(4) A Blue Sky Memorandum from Xxxxxxx Xxxxxxxx and/or local
counsel relating to the offering, including Agent's participation therein, and
shall furnish Agent with a copy thereof addressed to Agent or upon which Xxxxxxx
Xxxxxxxx and/or local counsel shall state Agent may rely. The Blue Sky
Memorandum will relate to the necessity of obtaining or confirming exemptions,
qualifications or the registration of the common stock under applicable state
securities law and NASD policies.
(c) Concurrently with the execution of this Agreement, the Agent
shall receive a letter from KPMG, dated the date hereof and addressed to the
Agent, such letter confirming that KPMG is a firm of independent public
accountants within the meaning of the Code of Professional Ethics of the
American Institute of Certified Public Accountants, the 1933 Act and the
regulations promulgated thereunder and the Conversion Regulations, and no
information concerning its relationship with or interests in the Primary Parties
is required by the Applications or Item 13 of the Registration Statement, and
stating in effect that in KPMG's opinion the financial statements of the Bank
included in the Prospectus comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act, the 1934 act and the related
rules and regulations of the Commission thereunder and the Conversion
Regulations and generally accepted accounting principles consistently applied;
(ii) stating in effect that, on the basis of certain agreed upon procedures (but
not an audit examination in accordance with generally accepted auditing
standards) consisting of a reading of the latest available unaudited
23
interim financial statements of the Bank prepared by the Bank, a reading of the
minutes of the meetings of the Board of Directors of the Bank and the members of
the Bank, a review of interim financial information in accordance with Statement
on Auditing Standards No. 71, and consultations with officers of the Bank
responsible for financial and accounting matters, nothing came to their
attention which caused them to believe that: (A) such unaudited financial
statements, including recent developments, if any, are not in conformity with
generally accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included in the
Prospectus; or (B) during the period from the date of the latest unaudited
consolidated financial statements included in the Prospectus to a specified date
not more than three business days prior to the date of the Prospectus, there was
any increase in borrowings (defined as securities sold under agreements to
repurchase and any other form of debt other than deposits) of the Bank or in
nonperforming loans of the Bank; or (C) there was any decrease in retained
earnings of the Bank at the date of such letter as compared with amounts shown
in the latest unaudited statement of condition included in the Prospectus or
there was any decrease in net income or net interest income of the Bank for the
number of full months commencing immediately after the period covered by the
latest audited income statement included in the Prospectus and ended on the
latest month end prior to the date of the Prospectus or in such letter as
compared to the corresponding period in the preceding year; and (iii) stating
that, in addition to the audit examination referred to in its opinion included
in the Prospectus and the performance of the procedures referred to in clause
(ii) of this subsection (c), they have compared with the general accounting
records of the Bank, which are subject to the internal controls of the
accounting system of the Bank and other data prepared by the Primary Parties
directly from such accounting records, to the extent specified in such letter,
such amounts and/or percentages set forth in the Prospectus as the Agent may
reasonably request, and they have found such amounts and percentages to be in
agreement therewith (subject to rounding).
(d) At the Closing Date, the Agent shall receive a letter from KPMG
dated the Closing Date, addressed to the Agent, confirming the statements made
by its letter delivered by it pursuant to subsection (c) of this Section 10, the
"specified date" referred to in clause (ii)(B) thereof to be a date specified in
such letter, which shall not be more than three business days prior to the
Closing Date.
(e) At the Closing Date, counsel to the Agent shall have been
furnished with such documents and opinions as counsel for the Agent may require
for the purpose of enabling them to advise the Agent with respect to the
issuance and sale of the Common Stock as herein contemplated and related
proceedings, or in order to evidence the accuracy of any of the representations
and warranties, or the fulfillment of any of the conditions herein contained.
(f) At the Closing Date, the Agent shall receive a certificate of
the Chief Executive Officer and Chief Financial Officer of each of the Primary
Parties, dated the Closing Date, to the effect that: (i) they have examined the
Prospectus and at the time the Prospectus became authorized for final use, the
Prospectus did not contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; (ii)
there has not been, since the respective dates as of which information is given
in the Prospectus, any Material Adverse Effect otherwise than as set forth or
contemplated in the Registration Statement and the Prospectus; (iii) the
representations and warranties contained in Sections 6 and 7 of this
24
Agreement are true and correct with the same force and effect as though made at
and as of the Closing Date; (iv) the Primary Parties have complied in all
material respects with all material agreements and satisfied all conditions on
its part to be performed or satisfied at or prior to the Closing Date including
the conditions contained in this Section 10; (v) no stop order has been issued
or, to the best of their knowledge, is threatened, by the Commission or any
other governmental body; (vi) no order suspending the Offering, the
Reorganization, the acquisition of all of the shares of the Bank by the Holding
Company, the acquisition by the MHC of shares of the Common Stock or the
effectiveness of the Prospectus has been issued and to the best of their
knowledge, no proceedings for any such purpose have been initiated or threatened
by the FDIC, the DOBI, the FRB, the Commission, or any other federal or state
authority; (vii) to the best of their knowledge, no person has sought to obtain
regulatory or judicial review of the action of the FRB, the FDIC or the DOBI in
approving the Plan or to enjoin the Reorganization.
(g) At the Closing Date, the Agent shall receive a letter from RP
Financial, LC., dated as of the Closing Date, (i) confirming that said firm is
independent of the Primary Parties and is experienced and expert in the area of
corporate appraisals, (ii) stating in effect that the Appraisal complies in all
material respects with the applicable requirements of the Conversion
Regulations, and (iii) further stating that its opinion of the aggregate pro
forma market value of the Primary Parties, as converted, expressed in the
Appraisal as most recently updated, remains in effect.
(h) None of the Primary Parties shall have sustained, since the date
of the latest financial statements included in the Registration Statement and
Prospectus, any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth in the Registration Statement and the Prospectus, and since
the respective dates as of which information is given in the Registration
Statement and the Prospectus, there shall not have been any Material Adverse
Effect or affecting the general affairs of, management, financial position,
retained earnings, long-term debt, stockholders' equity or results of operations
of the Primary Parties, otherwise than as set forth or contemplated in the
Registration Statement and the Prospectus, the effect of which, in any such case
described above, is in the Agent's reasonable judgment sufficiently material and
adverse as to make it impracticable or inadvisable to proceed with the Offering
or the delivery of the Shares on the terms and in the manner contemplated in the
Prospectus.
(i) Prior to and at the Closing Date: in the reasonable opinion of
(i) the Agent there shall have been no material adverse change in the financial
condition or in the earnings, capital, properties or business affairs of any of
the Primary Parties independently, or the Primary Parties considered as one
enterprise, from and as of the latest dates as of which such condition is set
forth in the Prospectus, except as referred to therein; (ii) there shall have
been no material transaction entered into by the Primary Parties, independently
or considered as one enterprise, from the latest date as of which the financial
condition of the Primary Parties is set forth in the Prospectus, other than
transactions referred to or contemplated therein; (iii) none of the Primary
Parties shall have received from the FDIC, the DOBI, or the FRB any direction
(oral or written) to make any material change in the method of conducting their
business with which it has not complied in all material respects (which
direction, if any, shall have been disclosed to the Agent) and which would
reasonably be expected to have a material and adverse effect on the condition
25
(financial or otherwise) or on the earnings, capital, properties or business
affairs of the Primary Parties considered as one enterprise; (iv) none of the
Primary Parties shall have been in default (nor shall an event have occurred
which, with notice or lapse of time or both, would constitute a default) under
any provision of any agreement or instrument relating to any material
outstanding indebtedness; (v) no action, suit or proceeding, at law or in equity
or before or by any federal or state commission, board or other administrative
agency, shall be pending or, to the knowledge of the Primary Parties, threatened
against any of the Primary Parties or affecting any of their properties wherein
an unfavorable decision, ruling or finding would reasonably be expected to have
a material and adverse effect on the financial condition or on the earnings,
capital, properties or business affairs of the Primary Parties, considered as
one enterprise; and (vi) the Shares shall have been exempted, qualified or
registered for offering and sale under the securities or "blue sky" laws of the
jurisdictions requested by the Agent.
(j) At or prior to the Closing Date, the Agent shall receive (i) a
copy of the letters from the FDIC non-objecting to Reorganization and approving
the MHC Notice and Application and the NJ Application, (ii) a copy of the order
from the Commission declaring the Registration Statement effective, (iii) a
certified copy of the certificate of incorporation of the Holding Company, (iv)
a copy of the letter from the FRB approving the MHC and the Holding Company
Application, (v) a certificate from the FDIC evidencing the Bank's insurance of
accounts, (vi) a certificate or other writing from the DOBI, in form and
substance reasonably satisfactory to Agent, evidencing the valid existence of
the MHC as of the Closing Date, (vii) a copy of the letter from the DOBI
approving the NJ Application and (viii) any other documents that Agent shall
reasonably request.
(k) Subsequent to the date hereof, there shall not have occurred any
of the following: (i) a suspension or limitation in trading in securities
generally on the New York Stock Exchange or American Stock Exchange or in the
over-the-counter market, or quotations halted generally on the NASDAQ Stock
Market, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices for securities have been required by either of such exchanges
or the NASD or by order of the Commission or any other governmental authority
other than temporary trading halts (A) imposed as a result of intraday changes
in the Dow Xxxxx Industrial Average, (B) lasting no longer than until the
regularly scheduled commencement of trading on the next succeeding business-day,
and (C) which, when combined with all other such halts occurring during the
previous five business days, total less than three; (ii) a general moratorium on
the operations federally-insured financial institutions or general moratorium on
the withdrawal of deposits from commercial banks or other federally-insured
financial institutions declared by either federal or state authorities; (iii)
there shall not have occurred any material adverse change in the financial
markets in the United States or elsewhere or any outbreak of hostilities or
escalation thereof or other calamity or crisis the effect of which, in the
judgment of the Agent, is so material and adverse as to make it impracticable to
market the Conversion Shares or to enforce contracts, including subscriptions or
orders, for the sale of the Conversion Shares; or (iv) a material decline in the
price of equity or debt securities; any of which, in the Agent's reasonable
judgment, makes it impracticable or inadvisable to proceed with the offering or
the delivery of the Shares on the terms and in the manner contemplated in the
Registration Statement and the Prospectus.
26
(l) All such options, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to the Agent and to counsel for the Agent. Any certificate
signed by an officer of the Holding Company or the Bank and delivered to the
Agent or to counsel for the Agent shall be deemed a representation and warranty
by the Holding Company or the Bank, as the case may be, to the Agent as to the
statements made therein. If any condition to the Agent's obligations hereunder
to be fulfilled prior to or at the Closing Date is not fulfilled, the Agent may
terminate this Agreement (provided that if this Agreement is so terminated but
the sale of Shares is nevertheless consummated, the Agent shall be entitled to
the compensation provided for in Section 4 hereof) or, if the Agent so elects,
may waive any such conditions which have not been fulfilled or may extend the
time of their fulfillment.
Section 11. Indemnification.
(a) The Primary Parties jointly and severally agree to indemnify and
hold harmless the Agent, its officers, directors, agents, attorneys, servants
and employees and each person, if any, who controls the Agent within the meaning
of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act, against any and
all loss, liability, claim, damage or expense whatsoever (including but not
limited to settlement expenses, subject to the limitation set forth in the last
sentence of subsection (c) below), joint or several, that the Agent or any of
such officers, directors, agents, attorneys, servants, employees and controlling
Persons (collectively, the "Related Persons") may suffer or to which the Agent
or the Related Persons may become subject under all applicable federal and state
laws or otherwise, and to promptly reimburse the Agent and any Related Persons
upon written demand for any reasonable expenses (including reasonable fees and
disbursements of counsel) incurred by the Agent or any Related Persons in
connection with investigating, preparing or defending any actions, proceedings
or claims (whether commenced or threatened) to the extent such losses, claims,
damages, liabilities or actions: (i) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment or supplement thereto), the Prospectus
(or any amendment or supplement thereto), the Applications, or any blue sky
application or other instrument or document of the Primary Parties or based upon
written information supplied by any of the Primary Parties filed in any state or
jurisdiction to register or qualify any or all of the Shares under the
securities laws thereof (collectively, the "Blue Sky Applications"), or any
application or other document, advertisement, or communication ("Sales
Information") prepared, made or executed by or on behalf of any of the Primary
Parties with its consent or based upon written information furnished by or on
behalf of any of the Primary Parties, in order to qualify or register the Shares
under the securities laws thereof, (ii) arise out of or are based upon the
omission or alleged omission to state in any of the foregoing documents or
information, a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; (iii) arise from any theory of liability whatsoever
relating to or arising from or based upon the Registration Statement (or any
amendment or supplement thereto), the Prospectus (or any amendment or supplement
thereto), the Applications, any Blue Sky Applications or Sales Information or
other documentation distributed in connection with the Reorganization; or (iv)
result from any claims made with respect to the accuracy, reliability and
completeness of the records of Eligible Account Holders, Supplemental Eligible
Account Holders and Other Depositors or for any denial or reduction of a
subscription or order to purchase Common Stock, whether as a result of a
27
properly calculated allocation pursuant to the Plan or otherwise, based upon
such records; provided, however, that no indemnification is required under this
subsection (a) to the extent such losses, claims, damages, liabilities or
actions arise out of or are based upon any untrue material statements or alleged
untrue material statements in, or material omission or alleged material omission
from, the Registration Statement (or any amendment or supplement thereto) or the
Prospectus (or any amendment or supplement thereto), the Applications, the Blue
Sky Applications or Sales Information or other documentation distributed in
connection with the Reorganization made in reliance upon and in conformity with
written information furnished to the Primary Parties by the Agent or its
representatives (including counsel) with respect to the Agent expressly for use
in the Registration Statement (or any amendment or supplement thereto) or
Prospectus (or any amendment or supplement thereto) under the captions "Market
for the Common Stock", "The Reorganization and the Offering - Marketing and
Underwriting Arrangements" and "The Reorganization and the Offering - Syndicated
Community Offering" or statistical information regarding the Holding Company
prepared by the Agent for use in the Sales Information, except for information
derived from the Prospectus. Provided further, that the Primary Parties will not
be responsible for any loss, liability, claim, damage or expense to the extent a
court of competent jurisdiction finds they result primarily from material oral
misstatements by the Agent to a purchaser of Shares which are not based upon
information in the Registration Statement or Prospectus, or from actions taken
or omitted to be taken by the Agent in bad faith or from the Agent's gross
negligence or willful misconduct, and the Agent agrees to repay to the Primary
Parties any amounts advanced to it by the Primary Parties in connection with
matters as to which it is found by a court of competent jurisdiction not to be
entitled to indemnification hereunder.
(b) The Agent agrees to indemnify and hold harmless the Primary
Parties, their directors and officers, agents, servants and employees and each
person, if any, who controls any of the Primary Parties within the meaning of
Section 15 of the 1933 Act or Section 20(a) of the 1934 Act against any and all
loss, liability, claim, damage or expense whatsoever (including but not limited
to settlement expenses, subject to the limitation set forth in the last sentence
of subsection (c) below), joint or several which they, or any of them, may
suffer or to which they, or any of them, may become subject under all applicable
federal and state laws or otherwise, and to promptly reimburse the Primary
Parties and any such persons upon written demand for any reasonable expenses
(including fees and disbursements of counsel) incurred by them in connection
with investigating, preparing or defending any actions, proceedings or claims
(whether commenced or threatened) to the extent such losses, claims, damages,
liabilities or actions arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment of supplement thereto), the Applications or any Blue
Sky Applications or Sales Information or are based upon the omission or alleged
omission to state in any of the foregoing documents a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided, however,
that the Agent's obligations under this Section 11(b) shall exist only if and
only to the extent that such untrue statement or alleged untrue statement was
made in, or such material fact or alleged material fact was omitted from, the
Applications, Registration Statement (or any amendment or supplement thereto) or
the Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Primary Parties by the
Agent or its representatives (including counsel) expressly for use under the
captions "Market for the Common Stock", "The
28
Reorganization and the Offering Marketing and Underwriting Arrangements" and
"The Reorganization and the Offering - Syndicated Community Offering" or
statistical information regarding the Holding Company prepared by the Agent for
use in the Sales information (except for statistical information derived from
the Prospectus).
(c) Each indemnified party shall give prompt written notice to each
indemnifying party of any action, proceeding, claim (whether commenced or
threatened), or suit instituted against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve it from any liability which it may have on account of this Section 11,
Section 12 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 the
defense of such action with counsel chosen by it reasonably acceptable to the
indemnified parties that are defendants in such action, unless such indemnified
parties reasonably object to such assumption on the ground that there may be
legal defenses available to them that are different from or in addition to those
available to such indemnifying party. If an indemnifying party assumes the
defense of such action, the indemnifying parties shall not be liable for any
fees and expenses of counsel for the indemnified parties incurred thereafter in
connection with such action, proceeding or claim, other than reasonable costs of
investigation. In no event shall the indemnifying parties be liable for the fees
and expenses of more than one separate firm of attorneys (unless an indemnified
party or parties shall have reasonably concluded that there may be defenses
available to it or them which are different from or in addition to those of
other indemnified parties) for all indemnified parties in connection with any
one action, proceeding or claim or separate but similar or related actions,
proceedings or claims in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party, shall be liable for any
settlement of any action, proceeding or suit, which settlement is effected
without its prior written consent.
(d) The agreements contained in this Section 11 and in Section 12
hereof and the representations and warranties of the Primary Parties set forth
in this Agreement shall remain operative and in full force and effect regardless
of (i) any investigation made by or on behalf of the Agent or its officers,
directors, controlling persons, agents or employees or by or on behalf of any of
the Primary Parties or any officers, directors, controlling persons, agents or
employees of any of the Primary Parties; (ii) delivery of and payment hereunder
for the Shares; or (iii) any termination of this Agreement. Notwithstanding the
prior sentence, Sections 11 and 12 hereof are subject to and limited by Section
23A of the Federal Reserve Act, as applicable.
Section 12. Contribution.
(a) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 11 is due in
accordance with its terms but is for any reason held by a court to be
unavailable from the Primary Parties or the Agent, the Primary Parties and the
Agent shall contribute to the aggregate losses, claims, damages and liabilities
of the nature contemplated by such indemnification (including any investigation,
legal and other expenses incurred in connection therewith and any amount paid in
settlement of any action, suit, or proceeding of any claims asserted, but after
deducting any contribution received by the Primary Parties or the Agent from
persons other than the other party thereto, who may
29
also be liable for contribution) in such proportion so that (i) the Agent is
responsible for that portion represented by the percentage that the fees paid to
the Agent pursuant to Section 4 of this Agreement (not including expenses)
("Agent's Fees"), less any portion of Agent's Fees paid by Agent to Assisting
Brokers, bear to the total proceeds received by the Primary Parties from the
sale of the Conversion Shares in the Offering, net of all expenses of the
Offering except Agent's Fees, and (ii) the Primary Parties shall be responsible
for the balance. If, however, the allocation provided above is not permitted by
applicable law or if the indemnified party failed to give the notice required
under Section 11 above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative fault of the Primary Parties on
the one hand and the Agent on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions, proceedings or claims in respect thereof), but also the relative
benefits received by the Primary Parties on the one hand and the Agent on the
other from the Offering, as well as any other relevant equitable considerations.
The relative benefits received by the Primary Parties on the one hand and the
Agent on the other hand shall be deemed to be in the same proportion as the
total proceeds from the Offering, net of all expenses of the Offering except
Agent's Fees, received by the Primary Parties bear, with respect to the Agent,
to the total fees (not including expenses) received by the Agent less the
portion of such fees paid by the Agent to Assisting Brokers. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Primary Parties
on the one hand or the Agent on the other and the parties relative intent, good
faith, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Primary Parties and the Agent agree that it
would not be just and equitable if contribution pursuant to this Section 12 were
determined by pro-rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to above in this
Section 12. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages or liabilities (or action, proceedings or claims in
respect thereof) referred to above in this Section 12 shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action, proceeding or claim.
It is expressly agreed that the Agent shall not be liable for any loss,
liability, claim, damage or expense or be required to contribute any amount
which in the aggregate exceeds the amount paid (excluding reimbursable expenses)
to the Agent under this Agreement less the portion of such fees paid by the
Agent to Assisting Brokers. It is understood and agreed that the above-stated
limitation on the Agent's liability is essential to the Agent and that the Agent
would not have entered into this Agreement if such limitation had not been
agreed to by the parties to this Agreement. No person found guilty of any
fraudulent misrepresentation (within the meaning of Section 11(f) of the 0000
Xxx) shall be entitled to contribution with respect to any loss or liability
arising from such misrepresentation from any person who was not found guilty of
such fraudulent misrepresentation. The duties, obligations and liabilities of
the Primary Parties and the Agent under this Section 12 and under Section 11
shall be in addition to any duties, obligations and liabilities which the
Primary Parties and the Agent may otherwise have. For purposes of this Section
12, each of the Agent's and the Primary Parties' officers and directors and each
person, if any, who controls the Agent or any of the Primary Parties within the
meaning of the 1933 Act and the 1934 Act shall have the same rights to
contribution as the Primary Parties and the Agent. Any party entitled to
contribution, promptly after receipt of notice of commencement of any
30
action, suit, claim or proceeding against such party in respect of which a claim
for contribution may be made against another party under this Section 12, will
notify such party from whom contribution may be sought, but the omission to so
notify such party shall not relieve the party from whom contribution may be
sought from any other obligation it may have hereunder or otherwise than under
this Section 12.
Section 13. Survival.
(a) All representations, warranties and indemnities and other
statements contained in this Agreement (and in Paragraph 11 of the Letter
Agreement, insofar as it relates to Paragraph 9 of that Letter Agreement), or
contained in certificates of officers of the Primary Parties or the Agent
submitted pursuant hereto, shall remain operative and in full force and effect,
regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of the Agent or its controlling persons, or
by or on behalf of the Primary Parties and shall survive the issuance of the
Shares, and any legal representative, successor or assign of the Agent, any of
the Primary Parties, and any indemnified person shall be entitled to the benefit
of the respective agreements, indemnities, warranties and representations.
(b) The provisions of Paragraph 9 of the Letter Agreement shall
survive the issuance of the Shares (but not any termination or cancellation of
this Agreement) for a period of one (1) year, and any legal representative,
successor or assign of the Agent, and any of the Primary Parties shall be
entitled during such period to the benefit of the agreements contained therein.
Section 14. Termination. Agent may terminate this Agreement by giving the
notice indicated below in this Section at any time after this Agreement becomes
effective as follows:
(a) In the event the Holding Company fails to sell the minimum
number of the Conversion Shares prior to December 31, 1999, in accordance with
the provisions of the Plan or as required by the Conversion Regulations and
applicable law, this Agreement shall terminate upon refund by the Primary
Parties to each person who has subscribed for or ordered any of the Conversion
Shares the full amount which it may have received from such person, together
with interest in accordance with Section 3.
(b) If any of the conditions specified in Section 10 shall not have
been fulfilled when and as required by this Agreement, or by the Closing Date,
or waived in writing by the Agent, this Agreement and all of the Agent's
obligations hereunder may be canceled by the Agent by notifying the Bank of such
cancellation in writing at any time at or prior to the Closing Date, and any
such cancellation shall be without liability of any party to any other party
except as otherwise provided in Sections 3, 4, 9, 11 and 12 hereof and Paragraph
11 of the Letter Agreement.
(c) If Agent elects to terminate this Agreement as provided in this
Section, the Bank shall be notified by the Agent as provided in Section 15
hereof.
(d) If this Agreement is terminated in accordance with the
provisions of this Agreement, the Primary Parties shall pay the Agent the fees
earned pursuant to Section 4 and
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will reimburse the Agent for its reasonable expenses pursuant to Section 9,
including without limitation accounting, communication, legal and travel
expenses.
Section 15. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to Agent shall be
directed to Xxxx, Xxxx & Co., 000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx
00000, Attention: Xx. Xxx Xxxxxxx, President (with a copy to Pitney, Xxxxxx,
Xxxx & Xxxxx, X.X. Xxx 0000, Xxxxxxxxxx, Xxx Xxxxxx 00000, Attention: Xxxxxx X.
Xxxxx, Esq.); notices to the Primary Parties shall be directed to Xxxxxx City
Savings Bank, West 00 Xxxxxxx Xxxx, Xxxxxxx, Xxx Xxxxxx 00000, Attention Xx.
Xxxxxx X. Xxxxxxxx, Xx., President and Chief Operating Officer (with a copy to
Xxxxxxx Xxxxxxxx & Xxxx, Two World Trade Center, 38th Floor, New York, New York
10048, Attention: Omer X.X. Xxxxxxxx, Esq.).
Section 16. Parties. This Agreement shall inure to the benefit of and be
binding upon the Agent and the Primary Parties, and their respective successors.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person, firm or corporation, other than the parties hereto
and their respective successors and the controlling persons and officers and
directors referred to in Sections 11 and 12 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provisions herein contained. It is understood
and agreed that this Agreement is the exclusive agreement among the parties,
supersedes any prior Agreement among the parties and may not be varied except by
a writing signed by all parties, except for Paragraphs 3, 9 and 11 of the Letter
Agreement, which are not hereby superceded.
Section 17. Partial Invalidity. In the event that any term, provision or
covenant herein or the application thereof to any circumstances or situation
shall be invalid or unenforceable, in whole or in part, the remainder hereof and
the application of said term, provision or covenant to any other circumstance or
situation shall not be affected thereby, and each term, provision or covenant
herein shall be valid and enforceable to the full extent permitted by law.
Section 18. Construction. This Agreement shall be construed in accordance
with the laws of the State of New Jersey.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
you and us in accordance with its terms.
Very truly yours,
XXXXXX CITY BANCORP, INC.
By:
--------------------------
Xxxxxx X. Xxxxxxxx, Xx.
President and
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Chief Operating Officer
XXXXXX CITY, MHC (in formation)
By:
--------------------------
Xxxxxx X. Xxxxxxxx, Xx.
President and
Chief Operating Officer
XXXXXX CITY SAVINGS BANK
By:
--------------------------
Xxxxxx X. Xxxxxxxx, Xx.
President and
Chief Operating Officer
The foregoing Agency Agreement is
hereby confirmed and accepted as
of the date first set forth above.
XXXX, XXXX & CO., INC.
By:
--------------------------
Xxx X. Xxxxxxx
President and
Chief Executive Officer
