ADVANCE FINANCIAL BANCORP
Up to 1,084,450 Shares
COMMON STOCK
($0.10 Par Value)
Subscription Price $10.00 Per Share
AGENCY AGREEMENT
----------------
November __, 1996
Xxxxxxx Xxxx & Company
000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000-0000
Ladies and Gentlemen:
Advance Financial Bancorp, a Delaware corporation (the "Company") and
Advance Financial Savings Bank, F.S.B., a federally chartered mutual savings
bank (references to the "Bank" include the Bank in the mutual or stock form, as
indicated by the context), with its deposit accounts insured by the Savings
Association Insurance Fund ("SAIF") administered by the Federal Deposit
Insurance Corporation ("FDIC"), hereby confirm their agreement with Xxxxxxx Xxxx
& Company, a division of Xxxxx, Xxxxxxxx & Xxxxx, Inc. ("Xxxx") as follows:
Section 1. The Offering. The Bank, in accordance with its plan of
conversion adopted by its Board of Directors (the "Plan"), intends to convert
from a federally chartered mutual savings bank to a federally chartered stock
savings bank, and to issue all of its issued and outstanding capital stock to
the Company. In addition, pursuant to the Plan, the Company will offer and sell
up to 1,084,450 shares of its common stock, par value $0.10 per share (the
"Shares" or "Common Stock"), in a subscription offering (the "Subscription
Offering") to (1) depositors of the Bank with savings accounts as of August 31,
1995 ("Eligible Account Holders"), (2) the Bank's Employee Stock Ownership Plan
("ESOP"), (3) depositors of the Bank with savings accounts as of September 30,
1996 ("Supplemental Eligible Account Holders") and (4) depositors of the Bank
(other than Eligible Account Holders and Supplemental Eligible Account Holders)
and certain borrowers of the Bank as of _______, 1996 ("Other Members"). Subject
to the prior subscription rights of the above-listed parties, the Company is
offering for sale in a community offering (the "Community Offering" and, when
referred to together with the Subscription Offering, the "Subscription and
Community
Offering") conducted concurrently with the Subscription Offering, the Shares not
so subscribed for or ordered in the Subscription Offering to certain members of
the general public to whom a copy of the Prospectus (as hereinafter defined) is
delivered, with a preference given to natural persons who reside in the West
Virginia and Ohio counties in which the Bank has an office (the "Local
Community") and then to natural persons residing in the State of West Virginia
("Other Subscribers") (all such offerees being referred to in the aggregate as
"Eligible Offerees"). It is anticipated that shares not subscribed for in the
Subscription and Community Offering will be offered to members of the general
public on a best efforts basis through a selected dealers arrangement (the
"Syndicated Community Offering") (the Subscription Offering, Community Offering
and Syndicated Community Offering are collectively referred to as the
"Offering"). It is acknowledged that the purchase of Shares in the Offering is
subject to the maximum and minimum purchase limitations as described in the Plan
and that the Company and the Bank may reject, in whole or in part, any orders
received in the Community Offering or Syndicated Community Offering.
Collectively, these transactions are referred to herein as the "Conversion."
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (File No. 33-_______) (the
"Registration Statement") containing a prospectus relating to the Offering for
the registration of the Shares under the Securities Act of 1933 (the "1933
Act"), and has filed such amendments thereof, if any, and such amended
prospectuses as may have been required to the date hereof. The prospectus, as
amended, on file with the Commission at the time the Registration Statement
initially became effective is hereinafter called the "Prospectus," except that
if any prospectus is filed by the Company pursuant to Rule 424(b) or (c) of the
rules and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations") differing from the prospectus on file at the time the Registration
Statement initially becomes effective, the term "Prospectus" shall refer to the
prospectus filed pursuant to Rule 424(b) or (c) from and after the time said
prospectus is filed with the Commission.
In accordance with 12 C.F.R. Part 563b (the "Conversion Regulations"),
the Bank has filed with the Office of Thrift Supervision (the "OTS") an
Application for Conversion (the "Conversion Application"), including the
prospectus, and has filed such amendments thereto, if any, as may have been
required by the OTS. The Conversion Application has been [approved] by the OTS
and the related Prospectus has been authorized for use by the OTS. In addition,
the Company has filed with the OTS an Application H-(e)1-S (the "Holding Company
Application") to become a registered savings and loan holding company under
Section 10 of the Home Owners' Loan Act, as amended ("SLHCA"), which has been
[approved].
Section 2. Retention of Xxxx; Compensation; Sale and Delivery of the
Shares. Subject to the terms and conditions herein set forth, the Company and
the Bank hereby appoint Xxxx (i) as their exclusive financial advisory and
marketing agent to utilize its best efforts to solicit subscriptions for Shares
of the Common Stock and to advise and assist the Company and the Bank with
respect to the Company's sale of the Shares in the Offering and
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(ii) to participate in the Offering in the areas of market making, research
coverage and syndicate formation (if necessary).
On the basis of the representations, warranties, and agreements herein
contained, but subject to the terms and conditions herein set forth, Xxxx
accepts such appointment and agree to consult with and advise the Company and
the Bank as to the matters set forth in the letter agreement ("Letter
Agreement"), dated August 19, 1996, between the Bank and Xxxx (a copy of which
is attached hereto as Exhibit A). It is acknowledged by the Company and the Bank
that Xxxx shall not be required to purchase any Shares and shall not be
obligated to take any action which is inconsistent with all applicable laws,
regulations, decisions or orders. In the event of a Syndicated Community
Offering, Xxxx will assemble and manage a selling group of broker-dealers which
are members of the National Association of Securities Dealers, Inc. (the "NASD")
to participate in the solicitation of purchase orders for shares under a
selected dealers' agreement ("Selected Dealers' Agreement"), the form of which
is set forth as Exhibit B to this Agreement.
The obligations of Xxxx pursuant to this Agreement shall terminate upon
the completion or termination or abandonment of the Plan by the Company or upon
termination of the Offering, but in no event later than 60 days after the
completion of the Subscription Offering (the "End Date"). All fees or expenses
due to Xxxx but unpaid will be payable to Xxxx in next day funds at the earlier
of the Closing Date (as hereinafter defined) or the End Date. In the even the
Offering is extended beyond the End Date, the Company, the Bank and Xxxx may
agree to renew this Agreement under mutually acceptable terms.
In the event the Company is unable to sell a minimum of 697,000 Shares
within the period herein provided, this Agreement shall terminate and the
Company shall refund to any persons who have subscribed for any of the Shares,
the full amount which it may have received from them plus accrued interest as
set forth in the Prospectus; and none of the parties to this Agreement shall
have any obligation to the other parties hereunder, except as otherwise set
forth in this Section 2 and in Sections 6, 8 and 9 hereof.
In the event the Offering is terminated for any reason not attributable
to the action or inaction of Xxxx, Xxxx shall be paid the fees and expenses due
to the date of such termination pursuant to subparagraphs (a) and (d) below.
If all conditions precedent to the consummation of the Conversion,
including, without limitation, the sale of all Shares required by the Plan to be
sold, are satisfied, the Company agrees to issue, or have issued, the Shares
sold in the Offering and to release for delivery certificates for such Shares on
the Closing Date (as hereinafter defined) against payment to the Company by any
means authorized by the Plan, provided however, that no funds shall be released
to the Company until the conditions specified in Section 7 hereof shall have
been complied with to the reasonable satisfaction of Xxxx and their counsel. The
release of Shares against payment therefor shall be made at 10:00 a.m., Eastern
Time, on a date
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and at a place acceptable to the Company, the Bank and Xxxx (it being understood
that such date shall not be more than ten business days after termination of the
Offering) or such other time or place as shall be agreed upon by the Company,
the Bank and Xxxx. Certificates for shares shall be delivered directly to the
purchasers in accordance with their directions. The date upon which the Company
shall release or deliver the Shares sold in the Offering, in accordance with the
terms herein, is called the "Closing Date."
Xxxx shall receive the following compensation for their services
hereunder:
(a) A management fee to Xxxx in the amount of $25,000, of which
$______ has been paid as of the date of this Agreement. Such fees
shall be deemed to be earned when due. Should the Conversion be
terminated for any reason not attributable to the action or
inaction of Xxxx, Xxxx shall have earned and be entitled to be
paid fees accruing through the stage at which point the
termination occurred.
(b) A success fee of 1.5% of the dollar amount of Common Stock sold
in the Subscription and Community Offering, excluding Common
Stock purchased by directors, officers and employees (and members
of their immediate families) of Advance Financial and by the ESOP
and any tax-qualified or stock-based compensation plan (excluding
individual retirement plans ("IRAs")) and any similar plan
created by the Bank for some or all of its directors or employees
payable on the Closing Date.
(c) If any shares of the Company's stock remain available after the
Subscription and Community Offering, at the request of the Bank,
Xxxx will seek to form a syndicate of registered broker-dealers
to assist in the sale of such common stock on a best efforts
basis, subject to the terms and conditions set forth in the
selected dealers agreement. Xxxx will endeavor to distribute the
common stock among dealers in a fashion which best meets the
distribution objectives of the Bank and the Plan of Conversion.
Xxxx will be paid a fee not to exceed 5.5% of the aggregate
Purchase Price of the shares of common stock sold pursuant to the
selected dealers agreement and then will pass onto selected
broker-dealers who assist in the syndicated community an amount
competitive with gross underwriting discounts charged at such
time for comparable amounts of stock sold at a comparable price
per share in a similar market environment. Fees with respect to
purchases affected with the assistance of a broker/dealer shall
be transmitted by Xxxx to such broker/dealer. The decision to
utilize selected broker-dealers will be made by the Bank upon
consultation with Xxxx. In the event, with respect to any stock
purchases, fees are paid pursuant to this subparagraph 2(c), such
fees shall be in lieu of, and not in addition to, payment
pursuant to subparagraphs 2(a) and 2(b).
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(d) The Bank and the Company hereby agree to reimburse Xxxx, from
time to time upon Xxxx'x request, for its reasonable
out-of-pocket expenses, not to exceed $5,000. In addition, Xxxx
shall be reimbursed for the reasonable fees and expenses of their
counsel which shall not exceed $30,000 excluding "Blue Sky"
related fees of counsel. The Bank will bear the expenses of the
Offering customarily borne by issuers including, without
limitation, OTS, SEC, "Blue Sky," and NASD filing and
registration fees; the fees of the Bank's accountants, conversion
agent, attorneys, appraiser, transfer agent and registrar,
printing, mailing and marketing expenses associated with the
Conversion; and the fees set forth under this Section 2.
Full payment of Xxxx'x actual and accountable expenses, advisory fees
and compensation shall be made in next day funds on the earlier of the Closing
Date or a determination by the Bank to terminate or abandon the Plan.
Xxxx will provide financial advisory assistance for a period of one year
following completion of the Conversion as set forth in the Letter Agreement.
Following this initial one-year term, if Xxxx and the Company wish to continue
the relationship, a fee will be negotiated and an agreement entered into at that
time.
In the event of an oversubscription or other event which causes the
Offering to continue beyond the original expiration date, or a resolicitation of
subscribers, the parties agree to renegotiate the expense cap applicable to
Xxxx.
Section 3. Prospectus; Offering. The Shares are to be initially offered
in the Offering at the Purchase Price as defined and set forth on the cover page
of the Prospectus.
Section 4. Representations and Warranties. The Company and the Bank
jointly and severally represent and warrant to Xxxx on the date hereof as
follows:
(a) The Registration Statement was declared effective by the Commission
on _________ __, 1996. At the time the Registration Statement, including the
Prospectus contained therein (including any amendment or supplement thereto),
became effective, the Registration Statement complied in all material respects
with the requirements of the 1933 Act and the 1933 Act Regulations and the
Registration Statement, including the Prospectus contained therein (including
any amendment or supplement thereto), and any information regarding the Company
or the Bank contained in Sales Information (as such term is defined in Section 8
hereof) authorized by the Company or the Bank for use in connection with the
Offering, did not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and at the time any Rule 424(b) or (c) Prospectus was filed with
the Commission; provided, however, that the representations and warranties in
this Section 4(a) shall not apply to statements or omissions made in reliance
upon and in conformity with written information furnished to the Company
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or the Bank by Xxxx expressly regarding Xxxx for use in the Prospectus under the
caption "The Conversion-Marketing Arrangements" or statements in or omissions
from any Sales Information or information filed pursuant to state securities or
blue sky laws or regulations regarding Xxxx.
(b) The Conversion Application was approved by the OTS on _______ __,
1996 and the related Prospectus has been authorized for use by the OTS on
_______ __, 1996. At the time of the approval of the Conversion Application,
including the Prospectus (including any amendment or supplement thereto), by the
OTS and at all times subsequent thereto until the Closing Date, the Conversion
Application, including the Prospectus (including any amendment or supplement
thereto), will comply in all material respects with the Conversion Regulations
except to the extent waived by the OTS. The Conversion Application, including
the Prospectus (including any amendment or supplement thereto), does not include
any untrue statement of a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that the
representations and warranties in this Section 4(b) shall not apply to
statements or omissions made in reliance upon and in conformity with written
information furnished to the Company or the Bank by Xxxx expressly regarding
Xxxx for use in the Prospectus contained in the Conversion Application under the
caption ["The Conversion-Subscription and Community Marketing" and "- Syndicated
Community Offering"] or statements in or omissions from any sales information or
information filed pursuant to state securities or blue sky laws or regulations
regarding Xxxx.
(c) The Company filed with the OTS the Holding Company Application which
was approved on ______ __, 1996.
(d) No order has been issued by the OTS or the Commission 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 Conversion is, to the best knowledge of the Company
or the Bank, pending or threatened.
(e) To the best knowledge of the Company, no person has sought to obtain
review of the final action of the OTS in approving or taking no objection to the
Plan or in approving or taking no objection to the Conversion or the Holding
Company Application pursuant to the Conversion Regulations, the SLHCA, or any
other statute or regulation.
(f) The Bank has been organized and is a validly existing federally
chartered savings bank in mutual form of organization and upon the Conversion
will become a duly organized and validly existing federally chartered savings
bank in capital stock form of organization, in both instances duly authorized to
conduct its business and own its property as described in the Registration
Statement and the Prospectus; the Bank has obtained all material licenses,
permits and other governmental authorizations currently required for the conduct
of its business; all such licenses, permits and governmental authorizations are
in full force and effect, and the Bank is in all material respects complying
with all laws, rules, regulations
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and orders applicable to the operation of its business; the Bank is existing
under federal laws and is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which its ownership of
property or leasing of property or the conduct of its business requires such
qualification, unless the failure to be so qualified in one or more of such
jurisdictions would not have a material adverse effect on the condition,
financial or otherwise, or the business, operations or income of the Bank. The
Bank does not own equity securities or any equity interest in any other business
enterprise except as described in the Prospectus or as would not be material to
the operations of the Bank.
(g) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware with
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and the
Prospectus, and the Company is qualified to do business as a foreign corporation
in each jurisdiction in which the conduct of its business requires such
qualification, except where the failure to so qualify would not have a material
adverse effect on the condition, financial or otherwise, or the business,
operations or income of the Company. The Company has obtained all material
licenses, permits and other governmental authorizations currently required for
the conduct of its business; all such licenses, permits and governmental
authorizations are in full force and effect, and the Company is in all material
respects complying with all laws, rules, regulations and orders applicable to
the operation of its business.
(h) The Bank's wholly owned subsidiary, Advance Financial Service
Corporation of West Virginia ("Advance Service"), is duly incorporated and
validly existing as a corporation in good standing under the laws of the State
of [West Virginia], and is duly licensed and possessed of full corporate power
and authority to own its properties and conduct its business as described in the
Prospectus.
(i) The Bank is a member of the Federal Home Loan Bank of Pittsburgh
("FHLB- Pittsburgh"). The deposit accounts of the Bank are insured by the FDIC
up to the applicable limits; and no proceedings for the termination or
revocation of such insurance are pending or, to the best knowledge of the
Company or the Bank, threatened. Upon consummation of the Conversion, the
liquidation account for the benefit of Eligible Account Holders and Supplemental
Eligible Account Holders will be duly established in accordance with the
requirements of the Conversion Regulations.
(j) The Company and the Bank have good and marketable title to all real
property and other assets material to the business of the Company and the Bank
and to those properties and assets described in the Registration Statement and
Prospectus as owned by them, free and clear of all liens, charges, encumbrances
or restrictions, except such as are described in the Registration Statement and
Prospectus or are not material to the business of the Company and the Bank taken
as a whole; and all of the leases and subleases material to the business of the
Company and the Bank under which the Company or the Bank hold
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properties, including those described in the Registration Statement and
Prospectus, are in full force and effect.
(k) The Company and the Bank have received an opinion from
[______________________] with respect to the West Virginia state income tax
consequences of the proposed transaction; all material aspects of the opinion of
[___________________________] are accurately summarized in the Prospectus; and
the facts and representations upon which such opinion are based are truthful,
accurate and complete.
(l) The Company and the Bank have all such power, authority,
authorizations, approvals and orders as may be required to enter into this
Agreement, to carry out the provisions and conditions hereof and to issue and
sell (i) the capital stock of the Bank to the Company and (ii) the Shares to be
sold by the Company as provided herein and as described in the Prospectus.
(m) The Company and the Bank are not in violation of any directive
received from the OTS or any other agency to make any material change in the
method of conducting their businesses so as to comply in all material respects
with all applicable statutes and regulations (including, without limitation,
regulations, decisions, directives and orders of the OTS, and, except as set
forth in the Registration Statement and the Prospectus, there is no suit or
proceeding or charge or action before or by any court, regulatory authority or
governmental agency or body, pending or, to the knowledge of the Company and the
Bank, threatened, which would materially and adversely affect the Conversion,
the performance of this Agreement or the consummation of the transactions
contemplated in the Plan and as described in the Registration Statement and the
Prospectus or which would result in any material adverse change in the condition
(financial or otherwise), earnings, capital or properties of the Company, or the
Bank.
(n) The financial statements which are included in the Prospectus fairly
present the financial condition, results of operations, retained earnings and
cash flows of the Bank at the respective dates thereof and for the respective
periods covered thereby and comply as to form in all material respects with the
applicable accounting requirements of the Regulations of the Commission, Title
12 of the Code of Federal Regulations and generally accepted accounting
principles (including those requiring the recording of certain assets at their
current market value). Such financial statements have been prepared in
accordance with generally accepted accounting principles consistently applied
through the periods involved, present fairly in all material respects the
information required to be stated therein and are consistent with the most
recent financial statements and other reports filed by the Bank with the OTS,
except that accounting principles employed in such regulatory filings conform to
the requirements of such authorities and not necessarily to generally accepted
accounting principles. The other financial, statistical and pro forma
information and related notes included in the Prospectus present fairly the
information shown therein on a basis consistent with the audited and unaudited
financial statements of the Bank included
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in the Prospectus, and as to the pro forma adjustments, the adjustments made
therein have been properly applied on the basis described therein.
(o) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus: (i) there has not been any material
adverse change, financial or otherwise, in the condition of the Company, the
Bank or Advance Service considered as one enterprise, or in the earnings,
capital or properties of the Company or the Bank, whether or not arising in the
ordinary course of business; (ii) there has not been any material increase in
the long term debt of the Bank or in loans past due 90 days or more or real
estate acquired by foreclosure, by deed-in-lieu of foreclosure or deemed
in-substance foreclosure or any material decrease in surplus and reserves or
total assets of the Bank nor has the Company or the Bank issued any securities
or incurred any liability or obligation for borrowing other than in the ordinary
course of business and (iii) there have not been any material transactions
entered into by the Company or the Bank, except with respect to those
transactions entered into in the ordinary course of business.
(p) The capitalization, liabilities, assets, properties and business of
the Company and the Bank conform in all material respects to the descriptions
thereof contained in the Prospectus.
(q) Neither the Company nor the Bank has any material contingent
liabilities, except as set forth in the Prospectus.
(r) As of the date hereof, neither the Company, the Bank nor Advance
Service is in violation of its articles of incorporation or bylaws or charter or
bylaws, as applicable (and the Bank will not be in violation of its charter or
bylaws in capital stock form at the time of consummation of the Conversion), or
in default in the performance or observance of any material obligation,
agreement, covenant, or condition contained in any material contract, lease,
loan agreement, indenture or other instrument to which it is a party or by which
it or any other instrument to which it is a party or by which it or any of its
property may be bound; the consummation of the Conversion, the execution,
delivery and performance of this Agreement and the consummation of the
transactions herein contemplated have been duly and validly authorized by all
necessary corporate action on the part of the Company and the Bank and this
Agreement has been validly executed and delivered by the Company and the Bank
and is the valid, legal and binding Agreement of the Company and the Bank
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by (i) bankruptcy, insolvency, reorganization, moratorium,
conservatorship, receivership or other similar laws now or hereafter in effect
relating to or affecting the enforcement of creditors' rights generally or the
rights of creditors of Federal savings associations and their holding companies,
(ii) general equitable principles, (iii) laws relating to the safety and
soundness of insured depository institutions, and (iv) applicable law or public
policy with respect to the indemnification and/or contribution provisions
contained herein, and except that no representation or warranty need be made as
to the effect or availability of equitable remedies or injunctive relief
(regardless of whether such enforceability is considered in a
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proceeding in equity or at law). The consummation of the transaction herein
contemplated will not: (i) conflict with or constitute a breach of, or default
under, the articles of incorporation and bylaws of the Company or the charter
and bylaws of the Bank (in either mutual or capital stock form), or any material
contract, lease or other instrument to which the Company or the Bank is a party,
or any applicable law, rule, regulation or order; (ii) violate any
authorization, approval, judgement, decree, order, statute, rule or regulation
applicable to the Company or the Bank, except for such violation which would not
have a material adverse effect on the financial condition and results of
operations of the Company and the Bank on a consolidated basis; or (iii) with
the exception of the liquidation account established in the Conversion, result
in the creation of any material lien, charge or encumbrance upon any property of
the Company or the Bank.
(s) No default exists, and no event has occurred which with notice or
lapse of time, or both, would constitute a default on the part of the Company,
the Bank or Advance Service, in the due performance and observance of any term,
covenant or condition of any indenture, mortgage, deed of trust, note, bank loan
or credit agreement or any other instrument of agreement to which the Company,
the Bank or Advance Service is a party or by which any of them or any of their
property is bound or affected except such defaults which would not have a
material adverse effect on the financial condition or results of operations of
the Company, the Bank and Advance Service on a consolidated basis; such
agreements are in full force and effect; and no other party to any such
agreements has instituted or, to the best knowledge of the Company, the Bank and
Advance Service, threatened any action or proceeding wherein the Company, the
Bank or Advance Service would be alleged to be in default thereunder under
circumstances where such action or proceeding, if determined adversely to the
Company, the Bank or Advance Service, would have a material adverse effect on
the Company, the Bank and Advance Service, taken as a whole.
(t) Upon consummation of the Conversion, the authorized, issued and
outstanding equity capital of the Company will be within the range set forth in
the Prospectus under the caption "Capitalization," and no shares of Common Stock
have been or will be issued and outstanding prior to the Closing Date referred
to in Section 2; the Shares will have been duly and validly authorized for
issuance and, when issued and delivered by the Company pursuant to the Plan
against payment of the consideration calculated as set forth in the Plan and in
the Prospectus, will be duly and validly issued, fully paid and non-assessable;
no preemptive rights exist with respect to the Shares; and the terms and
provisions of the Shares will conform in all material respects to the
description thereof contained in the Registration Statement and the Prospectus.
To the best knowledge of the Company and the Bank, upon the issuance of the
Shares, good title to the Shares will be transferred from the Company to the
purchasers thereof against payment therefor, subject to such claims as may be
asserted against the purchasers thereof by third-party claimants.
(u) No approval of any regulatory or supervisory or other public
authority is required in connection with the execution and delivery of this
Agreement or the issuance
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of the Shares, except for the approval of the Commission, the OTS and any
necessary qualification, notification, registration or exemption under the
securities or blue sky laws of the various states in which the Shares are to be
offered, and except as may be required under the rules and regulations of the
NASD and/or the Nasdaq SmallCap Market.
(v) S.R. Xxxxxxxxx X.X., which has certified the financial statements of
the Bank included in the Prospectus as of June 30, 1996 and 1995 and for each of
the years in the three-year period ended June 30, 1996, has advised the Company
and the Bank in writing that they are, with respect to the Company and the Bank,
independent public accountants within the meaning of the Code of Professional
Ethics of the American Institute of Certified Public Accountants and Title 12 of
the Code of Federal Regulations and Section 571.2(c)(3).
(v) Xxxxxx & Company, Inc. which has prepared the Bank's Conversion
Valuation Appraisal Report as of September 6, 1996 (as amended or supplemented,
if so amended or supplemented) (the "Appraisal"), has advised the Company in
writing that it is independent of the Company and the Bank within the meaning of
the Conversion Regulations.
(w) The Company and the Bank have timely filed all required federal,
state and local tax returns; the Company and the Bank have paid all taxes that
have become due and payable in respect of such returns, except where permitted
to be extended; to the best knowledge of the Bank adequate reserves have been
made for similar future tax liabilities and no deficiency has been asserted with
respect thereto by any taxing authority.
(x) The Company and the Bank are in compliance in all material respects
with the applicable financial record-keeping and reporting requirements of the
Currency and Foreign Transactions Reporting Act of 1970, as amended, and the
regulations and rules thereunder.
(y) To the knowledge of the Company and the Bank, neither the Company,
the Bank nor employees of the Company or the Bank have made any payment of funds
of the Company or the Bank as a loan for the purchase of the Shares.
(z) Prior to the Conversion, the Bank was not authorized to issue shares
of capital stock and neither the Company nor the Bank has: (i) issued any
securities within the last 18 months (except for notes to evidence other bank
loans and reverse repurchase agreements or other liabilities in the ordinary
course of business or as described in the Prospectus); (ii) had any material
dealings within the 12 months prior to the date hereof with any member of the
NASD, or any person related to or associated with such member, other than
discussions and meetings relating to the proposed Offering (and the offering
related to a proposed mutual holding company reorganization which was terminated
prior to consummation) and routine purchases and sales of United States
government and agency securities; (iii) entered into a financial or management
consulting agreement except as contemplated hereunder and except for the Letter
Agreement set forth in Exhibit A; and (iv) engaged any intermediary between Xxxx
and the Company and the Bank in connection
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with the offering of the Shares, and no person is being compensated in any
manner for such service.
(aa) Except in connection with "Blue Sky" matters, the Company and the
Bank have not relied upon Xxxx or Xxxx'x counsel for any legal, tax or
accounting advice in connection with the Conversion.
(bb) The Company is not required to be registered under the Investment
Company Act of 1940, as amended.
Any certificates signed by an officer of the Company or the Bank
pursuant to the conditions of this Agreement and delivered to Xxxx or its
counsel that refers to this Agreement shall be deemed to be a representation and
warranty by the Company or the Bank to Xxxx as to the matters covered thereby
with the same effect as if such representation and warranty were set forth
herein.
Section 5. Representations and Warranties of Xxxx.
(a) Xxxx represents and warrants to the Company and the Bank that:
(i) Xxxx is a corporation and is validly existing in good
standing under the laws of the State of Ohio with full power and authority to
provide the services to be furnished to the Bank and the Company hereunder.
(ii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary action on the part of Xxxx, and this Agreement has
been duly and validly executed and delivered by Xxxx and is the legal, valid and
binding agreement of Xxxx, enforceable in accordance with its terms.
(iii) Each of Xxxx and its employees, agents and representatives
who shall perform any of the services hereunder shall be duly authorized and
empowered, and shall have all licenses, approvals and permits necessary to
perform such services.
(iv) The execution and delivery of this Agreement by Xxxx, the
consummation of the transactions contemplated hereby and compliance with the
terms and provisions hereof will not conflict with, or result in a breach of,
any of the terms, provisions or conditions of, or constitute a default (or event
which with notice or lapse of time or both would constitute a default) under,
the articles of incorporation of Xxxx or any agreement, indenture or other
instrument to which Xxxx is a party or by which it or its property is bound.
-12-
(v) No approval of any regulatory or supervisory or other public
authority is required in connection with Xxxx'x execution and delivery of this
Agreement, except as may have been received.
(vi) There is no suit or proceeding or charge or action before or
by any court, regulatory authority or government agency or body or, to the
knowledge of Xxxx, pending or threatened, which might materially adversely
affect Xxxx'x performance under this Agreement.
Section 5.1 Covenants of the Company and the Bank. The Company and the
Bank hereby jointly and severally covenant with Xxxx as follows:
(a) The Company has filed the Registration Statement with the
Commission. The Company will not, at any time after the date the Registration
Statement is declared effective, file any amendment or supplement to the
Registration Statement without providing Xxxx and its counsel an opportunity to
review such amendment or supplement or file any amendment or supplement to which
amendment or supplement Xxxx or its counsel shall reasonably object.
(b) The Bank has filed the Conversion Application with the OTS. The Bank
will not, at any time after the Conversion Application is approved by the OTS,
file any amendment or supplement to such Conversion Application without
providing Xxxx and its counsel an opportunity to review such amendment or
supplement or file any amendment or supplement to which amendment or supplement
Xxxx or its counsel shall reasonably object.
(c) The Company will not, at any time before the Holding Company
Application is approved by the OTS, file any amendment or supplement to such
Holding Company Application without providing Xxxx and its counsel an
opportunity to review the nonconfidential portions of such amendment or
supplement or file any amendment or supplement to which amendment or supplement
Xxxx or its counsel shall reasonably object.
(d) The Company and the Bank will use their best efforts to cause any
post-effective amendment to the Registration Statement to be declared effective
by the Commission and any post-effective amendment to the Conversion Application
to be approved by the OTS and will immediately upon receipt of any information
concerning the events listed below notify Xxxx: (i) when the Registration
Statement, as amended, has become effective; (ii) when the Conversion
Application, as amended, has been approved by the OTS; (iii) when the Holding
Company Application, as amended, has been approved by he OTS; (iv) of any
comments from the Commission, the OTS or any other governmental entity with
respect to the Conversion or the transactions contemplated by this Agreement;
(v) of the request by the Commission, the OTS or any other governmental entity
for any amendment or supplement to the Registration Statement, the Conversion
Application or the Holding Company Application or for additional information;
(vi) of the issuance by the commission, the OTS or any other governmental entity
of any order or other action suspending the
-13-
Offering or the use of the Registration Statement or the Prospectus or any other
filing of the Company or the Bank under the Conversion Regulations, or other
applicable law, or the threat of any such action; (vii) the issuance by the
Commission, the OTS or any state authority of any stop order suspending the
effectiveness of the Registration Statement or the approval of the Conversion
Application or Holding Company Application, or of the initiation or threat of
initiation or threat of any proceedings for any such purpose; or (viii) of the
occurrence of any event mentioned in paragraph (h) below. The Company and the
Bank will make every reasonable effort (i) to prevent the issuance by the
Commission, the OTS or any state authority of any such order and, if any such
order shall at any time be issued, (ii) to obtain the lifting thereof at the
earliest possible time.
(e) The Company and the Bank will deliver to Xxxx and to its counsel two
conformed copies of the Registration Statement, the Conversion Application and
the Holding Company Application, as originally filed and of each amendment or
supplement thereto, including all exhibits. Further, the Company and the Bank
will deliver such additional copies of the foregoing documents to counsel to
Xxxx as may be required for any NASD and blue sky filings.
(d) The Company and the Bank will furnish to Xxxx, from time to time
during the period when the Prospectus (or any later prospectus related to this
offering) is required to be delivered under the 1933 Act or the Securities
Exchange Act of 1934, (the "1934 Act"), such number of copies of such Prospectus
(as amended or supplemented) as Xxxx may reasonably request for the purposes
contemplated by the 1933 Act, the 1933 Act Regulations, the 1934 Act or the
rules and regulations promulgated under the 1934 Act (the "1934 Act
Regulations"). The Company authorizes Xxxx to use the Prospectus (as amended or
supplemented, if amended or supplemented) in any lawful manner contemplated by
the Plan in connection with the sale of the Shares by Xxxx.
(g) The Company and the Bank will comply with any and all material
terms, conditions, requirements and provisions with respect to the Conversion
and the transactions contemplated thereby imposed by the Commission, the OTS,
the Conversion Regulations or the SLHCA, and by the 1933 Act, the 1933 Act
Regulations, the 1934 Act and the 1934 Act Regulations to be complied with prior
to or subsequent to the Closing Date and when the Prospectus is required to be
delivered, the Company and the Bank will comply, at their own expense, with all
material requirements imposed upon them by the Commission, the OTS, the
Conversion Regulations or the SLHCA, and by the 1993 Act, the 1933 Act
Regulations, the 1934 Act and the 1934 Act Regulations, including, without
limitation, Rule 10b-5 under the 1934 Act, in each case as from time to time in
force, so far as necessary to permit the continuance of sales or dealing in
shares of Common Stock during such period in accordance with the provisions
hereof and the Prospectus.
(h) If, at any time during the period when the Prospectus relating to
the Shares is required to be delivered, any event relating to or affecting the
Company, the Bank or Advance Service shall occur, as a result of which it is
necessary or appropriate, in the
-14-
opinion of counsel for the Company and the Bank to amend or supplement the
Registration Statement or Prospectus in order to make the Registration Statement
or Prospectus not misleading in light of the circumstances existing at the time
the Prospectus is delivered to a purchaser, the Company and the Bank will, at
their expense, prepare and file with the Commission and the OTS and furnish to
Xxxx a reasonable number of copies of an amendment or amendments of, or a
supplement or supplements to, the Registration Statement and Prospectus (in form
and substance satisfactory to Xxxx and its counsel after a reasonable time for
review) which will amend or supplement the Registration Statement and Prospectus
so that as amended or supplemented it will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances existing at the time the
Prospectus is delivered to a purchaser, not misleading. For the purpose of this
Agreement, the Company and the Bank each will timely furnish to Xxxx such
information with respect to itself as Xxxx may from time to time reasonably
request.
(i) At the Closing Date referred to in Section 2, the Plan will have
been adopted by the Boards of Directors of both the Company and the Bank and the
offer and sale of the Shares will have been conducted in all material respects
in accordance with the Plan, the Conversion Regulations, and all other
applicable laws, regulations, decisions and orders, including all terms,
conditions, requirements and provisions precedent to the Conversion imposed upon
the Company or the Bank by the OTS, the Commission or any other regulatory
authority and in the manner described in the Prospectus.
(j) Upon completion of the sale by the Company of the Shares
contemplated by the Prospectus, (i) the Bank will be converted pursuant to the
Plan to a federally chartered stock savings bank, (ii) all of the authorized and
outstanding capital stock of the Bank will be owned by the Company, and (iii)
the Company will have no direct subsidiaries other than the Bank. The Conversion
will have been effected in all material respects in accordance with all
applicable statutes, regulations, decisions and orders; and, except with respect
to the filing of certain post-sale, post-Conversion reports, and documents in
compliance with the 1933 Act Regulations or the OTS's letters of approval, all
terms, conditions, requirements and provisions with respect to the Conversion
(except those that are conditions subsequent) imposed by the Commission and the
OTS, if any, will have been complied with by the Company and the Bank in all
material respects or appropriate waivers will have been obtained and all
material notice and waiting periods will have been satisfied, waived or elapsed.
(k) The Company and the Bank will take all necessary actions, in
cooperation with Xxxx, and furnish to whomever Xxxx may direct, such information
as may be required to qualify or register the Shares for offering and sale by
the Company or to exempt such Shares from registration, or to exempt the Company
as a broker-dealer and its officers, directors and employees as broker-dealers
or agents under the applicable securities or blue sky laws of such jurisdictions
in which the Shares are to be offered and sold as Xxxx and the Company and the
Bank may reasonably agree upon; provided, however, that the Company
-15-
shall not be obligated to file any general consent to service of process or to
qualify to do business in any jurisdiction in which it is not so qualified. In
each jurisdiction where any of the Shares shall have been qualified or
registered as above provided, the Company will make and file such statements and
reports in each fiscal period as are or may be required by the laws of such
jurisdiction.
(l) The liquidation account for the benefit of Eligible Account Holders
and Supplemental Eligible Account Holders will be duly established and
maintained in accordance with the requirements of the OTS, and such Eligible
Account Holders and Supplemental Eligible Account Holders who continue to
maintain their savings accounts in the Bank will have an inchoate interest in
their pro rata portion of the liquidation account which shall have a priority
superior to that of the holders of shares of Common Stock in the event of a
complete liquidation of the Bank.
(m) The Company and the Bank will not sell or issue, contract to sell or
otherwise dispose of, for a period of 90 days after the Closing Date, without
Xxxx'x prior written consent, any shares of Common Stock other than the Shares
or other than in connection with any plan or arrangement described in the
Prospectus.
(n) The Company shall register its Common Stock under Section 12(g) of
the 1934 Act concurrent with the Offering pursuant to the Plan and shall request
that such registration be effective upon completion of the Conversion. The
Company shall maintain the effectiveness of such registration for not less than
three (3) years or such shorter period as may be required by the OTS.
(o) During the period during which the Company's Common Stock is
registered under the 1934 Act or for three years from the date hereof, whichever
period is greater, the Company will furnish to its stockholders as soon as
practicable after the end of each fiscal year an annual report of the Company
(including a consolidated balance sheet and statements of consolidated income,
stockholders' equity and cash flows of the Company and its subsidiaries as at
the end of and for such year, certified by independent public accountants in
accordance with Regulation S-X under the 1933 Act and the 1934 Act).
(p) During the period of three years from the date hereof, the Company
will furnish to Xxxx: (i) as soon as practicable after such information is
publicly available, a copy of each report of the Company furnished to or filed
with the Commission under the 1934 Act or any national securities exchange or
system on which any class of securities of the Company is listed or quoted
(including, but not limited to, reports on Forms 10-K, 10-Q and 8-K and all
proxy statements and annual reports to stockholders), (ii) a copy of each other
non-confidential report of the Company mailed to its stockholders or filed with
the Commission, the OTS or any other supervisory or regulatory authority or any
national securities exchange or system on which any class of securities of the
Company is listed or quoted, each press release and material news items and
additional documents and information with respect to the Company or the Bank as
Xxxx may reasonably request; and
-16-
(iii) from time to time, such other nonconfidential information concerning the
Company or the Bank as Xxxx may reasonably request.
(q) The Company and the Bank will use the net proceeds from the sale of
the Shares in the manner set forth in the Prospectus under the caption "Use of
Proceeds."
(r) Other than as permitted by the Conversion Regulations, the SLHCA,
the 1933 Act, the 1933 Act Regulations, and the laws of any state in which the
Shares are registered or qualified for sale or exempt from registration, neither
the Company nor the Bank will distribute any prospectus, offering circular or
other offering material in connection with the offer and sale of the Shares.
(s) The Company will use its best efforts to (i) encourage and assist
two market makers to establish and maintain a market for the Shares and (ii)
list the Shares on a national or regional securities exchange or on the Nasdaq
SmallCap Market effective on or prior to the Closing Date.
(t) The Bank will maintain appropriate arrangements for depositing all
funds received from persons mailing subscriptions for or orders to purchase
Shares in the Offering on an interest bearing basis at the rate described in the
Prospectus until the Closing Date and satisfaction of all conditions precedent
to the release of the Bank's obligation to refund payments received from persons
subscribing for or ordering Shares in the Offering in accordance with the Plan
and as described in the Prospectus or until refunds of such funds have been made
to the persons entitled thereto or withdrawal authorizations cancelled in
accordance with the Plan and as described in the Prospectus. The Bank will
maintain such records of all funds received to permit the funds of each
subscriber to be separately insured by the FDIC (to the maximum extent
allowable) and to enable the Bank to make the appropriate refunds of such funds
in the event that such refunds are required to be made in accordance with the
Plan and as described in the Prospectus.
(u) The Company will promptly take all necessary action to register as a
savings and loan holding company under the SLHCA within 90 days of the Closing
Date.
(v) The Company and the Bank will take such actions and furnish such
information as are reasonably requested by Xxxx in order for Xxxx to ensure
compliance with the NASD's "Interpretation Relating to Free Riding and
Withholding."
(w) The Bank will not amend the Plan of Conversion without notifying
Xxxx prior thereto.
(x) The Company shall assist Xxxx, if necessary, in connection with the
allocation of the Shares in the event of an oversubscription and shall provide
Xxxx with any information necessary in allocating the Shares in such event and
such information shall be accurate and reliable.
-17-
(y) Prior to the Closing Date, the Company and the Bank will inform Xxxx
of any event or circumstances of which it is aware as a result of which the
Registration Statement, the Conversion Application and/or Prospectus, as then
amended or supplemented, would contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein
not misleading.
Section 5.2 Covenants of Xxxx. Xxxx hereby covenants with the Company
and the Bank as follows:
(a) During the period when the Prospectus is used, Xxxx will comply, in
all material respects and at its own expense, with all requirements imposed upon
it by the OTS and the NASD and, to the extent applicable, by the 1933 Act and
the 1934 Act and the rules and regulations promulgated thereunder.
(b) Xxxx shall return unused copies of the Prospectus, if any, to the
Company promptly upon the completion of the Conversion.
(c) Xxxx will distribute copies of the Prospectus and Sales Information
in connection with the sales of the common stock only in accordance with NASD
and OTS regulations, the 1933 Act and the rules and regulations promulgated
thereunder.
(d) Xxxx shall assist the Bank in maintaining arrangements for the
deposit of funds and the making of refunds, as appropriate (as described in
Section 5.1(r)), and shall perform the allocation of shares in the event of an
oversubscription, in conformance with the Plan and applicable regulations and
based upon information furnished to Xxxx by the Bank (as described in Section
5.1(x)).
Section 6. Payment of Expenses. Whether or not the Conversion is
completed or the sale of the Shares by the Company is consummated, the Company
and the Bank jointly and severally agree to pay or reimburse Xxxx for: (a) all
filing fees in connection with all filings with the NASD; (b) any stock issue or
transfer taxes which may be payable with respect to the sale of the Shares; (c)
all reasonable expenses of the Conversion, including but not limited to, the
Company's and the Bank's attorneys' fees, transfer agent, registrar and other
agent charges, fees relating to auditing and accounting or other advisors and
costs of printing all documents necessary in connection with the Conversion; and
(d) all reasonable out-of-pocket expenses incurred by Xxxx not to exceed $5,000.
Such out-of-pocket expenses include, but are not limited to, travel,
communications and postage. However, such out-of-pocket expenses do not include
expenses incurred with respect to the matters set forth in (a) and (b) above. In
the event the Company is unable to sell a minimum of 697,000 Shares or the
Conversion is terminated or otherwise abandoned, the Company and the Bank shall
reimburse Xxxx in accordance with Section 2 hereof.
Section 7. Conditions to Xxxx'x Obligations. Xxxx'x obligations
hereunder, as to the Shares to be issued at the Closing Date, are subject, to
the extent not waived by Xxxx,
-18-
to the condition that all representations and warranties of the Company and the
Bank herein are, at and as of the commencement of the Offering and at and as of
the Closing Date, true and correct in all material respects, the condition that
the Company and the Bank shall have performed all of their obligations hereunder
to be performed on or before such dates, and to the following further
conditions:
(a) At the Closing Date, the Company and the Bank shall have conducted
the Conversion in all material respects in accordance with the Plan, the
Conversion Regulations, and all other applicable laws, regulations, decisions
and orders, including all terms, conditions, requirements and provisions
precedent to the Conversion imposed upon them by the OTS.
(b) The Registration Statement shall have been declared effective by the
Commission, the Conversion Application approved by the OTS, and the Holding
Company Application approved by the OTS not later than 5:30 p.m. on the date of
this Agreement, or with Xxxx'x consent at a later time and date; and at the
Closing Date, no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefore
initiated or threatened by the Commission, or any state authority and no order
or other action suspending the authorization of the Prospectus or the
consummation of the Conversion shall have been issued or proceedings therefore
initiated or, to the Company's or the Bank's knowledge threatened by the
Commission, the OTS or any state authority.
(c) At the Closing Date, Xxxx shall have received:
(1) The favorable opinion, dated as of the Closing Date and
addressed to Xxxx and for its benefit, of Xxxxxxx, Spidi, Sloane & Xxxxx, P.C.,
special counsel for the Company and the Bank, in form and substance to the
effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware and has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Registration
Statement and the Prospectus.
(ii) The Bank is organized and is validly existing as a
federally chartered savings bank in mutual form of organization and upon the
Conversion will become a duly organized and validly existing federally chartered
savings bank in capital stock form of organization, in both instances duly
authorized to conduct its business and own its property as described in the
Registration Statement and Prospectus. All of the outstanding capital stock of
the Bank will be duly authorized and, upon payment therefor, will be validly
issued, fully paid and non-assessable and will be owned by the Company, free and
clear of any liens, encumbrances, claims or other restrictions.
-19-
(iii) The Bank is a member of the FHLB-Pittsburgh. The
Bank is an insured depository institution under the provisions of Section 4(a)
of the Federal Deposit Insurance Act, as amended, and no proceedings for the
termination or revocation of such insurance are pending or, to such counsel's
Actual Knowledge, threatened; the description of the liquidation account as set
forth in the Prospectus under the caption "The Conversion- Liquidation Rights"
to the extent that such information constitutes matters of law and legal
conclusions has been reviewed by such counsel and is accurate in all material
respects.
(iv) Upon consummation of the Conversion, the authorized,
issued and outstanding capital stock of the Company will be within the range set
forth in the Prospectus under the caption "Capitalization," and except for
shares issued upon incorporation of the Company, no shares of Common Stock have
been issued prior to the Closing Date; at the time of the Conversion, the Shares
subscribed for pursuant to the Offering will have been duly and validly
authorized for issuance, and when issued and delivered by the Company pursuant
to the Plan against payment of the consideration calculated as set forth in the
Plan and the Prospectus, will be duly and validly issued and fully paid and
non-assessable; except for subscription rights granted pursuant to the Plan the
issuance of the Shares is not subject to preemptive rights and the terms and
provisions of the Shares conform in all material respects to the description
thereof contained in the Prospectus. To such counsel's Actual Knowledge, upon
the issuance of the Shares, good title to the Shares will be transferred from
the Company to the purchasers thereof against payment therefor, subject to such
claims as may be asserted against the purchasers thereof by third-party
claimants.
(v) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary action on the part of the Company and the Bank; and
this Agreement is a valid and binding obligation of the Company and the Bank,
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by (i) bankruptcy, insolvency, moratorium, reorganization,
conservatorship, receivership or other similar laws now or hereafter in effect
relating to or affecting the enforcement of creditors' rights generally or the
rights of creditors of savings associations and their holding companies, (ii)
general equitable principles, (iii) laws relating to the safety and soundness of
insured depository institutions, and (iv) applicable law or public policy with
respect to the indemnification and/or contribution provisions contained herein,
and except that no opinion need to be expressed as to the effect or availability
of equitable remedies or injunctive relief (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(vi) The Conversion Application has been approved by the
OTS and the Prospectus has been authorized for use by the OTS. The OTS has
approved the Holding Company Application and issued its letter of approval under
the SLHCA, and the purchase by the Company of all of the issued and outstanding
capital stock of the Bank has been authorized by the OTS and no action has been
taken, and to such counsel's Actual Knowledge, none is pending or threatened, to
revoke any such authorization or approval.
-20-
(vii) The Plan has been duly adopted by the required vote
of the directors of the Company and the Bank and, based upon the certificate of
the inspector of election, by the members of the Bank.
(viii) Subject to the satisfaction of the conditions to
the OTS approval of the Conversion, no further approval, registration,
authorization, consent or other order of or notice to any federal agency is
required in connection with the execution and delivery of this Agreement, the
issuance of the Shares and the consummation of the Conversion, except as may be
required under the securities or blue sky laws of various jurisdictions (as to
which no opinion need be rendered) and except as may be required under the rules
and regulations of the NASD and/or the Nasdaq SmallCap Market (as to which no
opinion need be rendered).
(ix) The Registration Statement is effective under the
1933 Act and no stop order suspending the effectiveness has been issued under
the 1933 Act or proceedings therefor initiated or, to such counsel's Actual
Knowledge, threatened by the Commission.
(x) At the time the Conversion Application, including the
Prospectus contained therein, was approved by the OTS, the Conversion
Application, including the Prospectus contained therein, complied as to form in
all material respects with the requirements of the Home Owners' Loan Act, as
amended ("HOLA") and all applicable rules and regulations promulgated
thereunder, including the Conversion Regulations (other than the financial
statements, the notes thereto, and other tabular, financial, statistical and
appraisal data included therein, as to which no opinion need be rendered).
(xi) At the time that the Registration Statement became
effective, (i) the Registration Statement (as amended or supplemented, if so
amended or supplemented) (other than the financial statements, the notes thereto
and other tabular, financial, statistical and appraisal data included therein,
as to which no opinion need be rendered) complied as to form in all material
respects with the requirements of the 1933 Act and the 1933 Act Regulations, and
(ii) the Prospectus (other than the financial statements, the notes thereto and
other tabular, financial, statistical and appraisal data included therein, as to
which no opinion need be rendered) complied as to form in all material respects
with the requirements of the 1933 Act and the 1933 Act Regulations.
(xii) The terms and provisions of the Shares of the
Company conform, in all material respects, to the description thereof contained
in the Registration Statement and Prospectus, and the form of certificate used
to evidence the Shares is in due and proper form.
(xiii) There are no legal or governmental proceedings
pending or to such counsel's Actual Knowledge, threatened which are required to
be disclosed in the Registration Statement and Prospectus, other than those
disclosed therein, and to such counsel's Actual Knowledge, all pending legal and
governmental proceedings to which the
-21-
Company, the Bank or Advance Service is a party or of which any of their
property is the subject, which are not described in the Registration Statement
and the Prospectus, including ordinary routine litigation incidental to the
Company's, the Bank's or Advance Service's business, are, considered in the
aggregate, not material.
(xiv) To such counsel's Actual Knowledge, there are no
material contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments required to be described or referred to in the Conversion
Application, the Registration Statement or the Prospectus or required to be
filed as exhibits thereto other than those described or referred to therein or
filed as exhibits thereto. The description in the Conversion Application, the
Registration Statement and the Prospectus of such documents and exhibits is
accurate in all material respects and fairly presents the information required
to be shown.
(xv) To such counsel's Actual Knowledge, the Company and
the Bank have conducted the Conversion, in all material respects, in accordance
with all applicable requirements of the Plan the Conversion Regulations and the
HOLA and the Plan complies in all material respects with, the Conversion
Regulations and the HOLA, and all decisions and orders issued thereunder (except
where a written waiver has been received); no order has been issued by the OTS,
the Commission or any state authority to suspend the Offering or the use of the
Prospectus, and no action for such purposes has been instituted or, to such
counsel's Actual Knowledge, threatened by the OTS or the Commission or any state
authority and, to such counsel's Actual Knowledge, no person has sought to
obtain regulatory or judicial review of the final action of the OTS approving
the Plan, the Conversion Application, the Holding Company Application or the
Prospectus.
(xvi) To such counsel's Actual Knowledge, the Company,
the Bank and Advance Service have obtained all material federal licenses,
permits and other governmental authorizations currently required under the HOLA
and the Federal Deposit Insurance Act and all applicable rules and regulations
promulgated thereunder for the conduct of their businesses and to such counsel's
Actual Knowledge all such licenses, permits and other governmental
authorizations are in full force and effect, and the Company, the Bank and
Advance Service are in all material respects complying therewith, except whether
the failure to have such licenses, permits and other governmental authorizations
or the failure to be in compliance therewith would not have a material adverse
affect on the business or operations of the Bank, the Company and Advance
Service, taken as a whole.
(xvii) To such counsel's Actual Knowledge, neither the
Company, nor the Bank is in violation of its articles of incorporation, bylaws,
or charter, as applicable, or, to such counsel's Actual Knowledge, in default or
violation of any obligation, agreement, covenant or condition contained in any
material contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which it is a party or by which it or its property may be bound
except for such defaults or violations which would not have a material adverse
impact on the financial condition or results of operations of the Company, the
Bank and Advance Service on a consolidated basis; to such counsel's Actual
Knowledge,
-22-
the execution and delivery of this Agreement, the occurrence of the obligations
herein set forth and the consummation of the transactions contemplated herein
will not conflict with or constitute a breach of, or default under, or result in
the creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or the Bank pursuant to any material contract,
indenture, mortgage, loan agreement, note, lease or other instrument to which
the Company or the Bank is a party or by which any of them may be bound, or to
which any of the property or assets of the Company or the Bank is subject (other
than the establishment of a liquidation account), and such action will not
result in any violation of the provisions of the articles of incorporation,
bylaws or charter, as applicable, of the Company or the Bank or any applicable
federal law, act, regulation (except that no opinion need be rendered with
respect to the securities or blue sky laws of various jurisdictions or the rules
and regulations of the NASD and/or the Nasdaq National Market) or order or court
order, writ, injunction or decree naming the Company or the Bank.
(xviii) The Company' articles of incorporation and bylaws
comply in all material respects with the General Corporation Law of the State of
Delaware ("Delaware Law"). The Bank's charter and bylaws in mutual form and,
upon the completion of the Conversion, in stock form, comply in all material
respects with the Home Owners' Loan Act and the rules and regulations of the
OTS.
(xix) To such counsel's Actual Knowledge, neither the
Company nor the Bank is in violation of any directive from the OTS to make any
material change in the method of conducting its respective business.
(xx) The information in the Prospectus under the captions
"Regulation," "The Conversion," "Certain Restrictions on Acquisition of the
Company" and "Description of Capital Stock," to the extent that such information
constitutes matters of law, summaries of legal matters, documents or
proceedings, or legal conclusions, has been reviewed by such counsel and is
correct in all material respects. The description of the Conversion process
under the caption "The Conversion" in the Prospectus has been reviewed by such
counsel and is in all material respects correct. The discussion of statutes or
regulations described or referred to in the Prospectus are accurate summaries
and fairly present the information required to be shown. The information
regarding the federal tax opinion under the caption "The Conversion-Tax Effects"
has been reviewed by such counsel and constitutes a correct summary of the
opinion rendered by such counsel to the Company and the Bank with respect to
such matters.
In giving such opinion, such counsel may rely as to
all matters of fact on certificates of officers or directors of the Company and
the Bank and certificates of public officials. Such counsel's opinion shall be
limited to matters governed by federal laws and by Delaware Law. With respect to
matters involving the application of West Virginia law, such counsel may rely,
to the extent it deems proper and as specified in its opinion, upon the opinion
of local counsel (providing that such counsel states that it believes Xxxx
-23-
are justified in relying upon such specified opinion or opinions. The opinion of
Xxxxxxx, Xxxxx, Xxxxx & Xxxxx, P.C. shall be governed by and subject to the
qualifications contained in the Legal Opinion Accord ("Accord") of the American
Bar Association Section of Business Law (1991). The term "Actual Knowledge" as
used herein shall have the meaning set forth in the Accord. For purposes of such
opinion, no proceedings shall be deemed to be pending, no order or stop order
shall be deemed to be issued, and no action shall be deemed to be instituted
unless, in each case, a director or executive officer of the Company or the Bank
shall have received a copy of such proceedings, order, stop order or action. In
addition, such opinion may be limited to present statutes, regulations and
judicial interpretations and to facts as they presently exist; in rendering such
opinion, such counsel need assume no obligation to revise or supplement it
should the present laws be changed by legislative or regulatory action, judicial
decision or otherwise; and such counsel need express no view, opinion or belief
with respect to whether any proposed or pending legislation, if enacted, or any
proposed or pending regulations or policy statements issued by any regulatory
agency, whether or not promulgated pursuant to any such legislation, would
affect the validity of the Conversion or any aspect thereof. Such counsel may
assume that any agreement is the valid and binding obligation of any parties to
such agreement other than the Company, the Bank or Advance Service.
In addition, such counsel shall provide a letter stating that during the
preparation of the Conversion Application, the Registration Statement and the
Prospectus, they participated in conferences with certain officers of, the
independent public and internal accountants for, and other representatives of
the Company and the Bank, at which conferences the contents of the Conversion
Application, the Registration Statement and the Prospectus and related matters
were discussed and, while such counsel has not confirmed the accuracy or
completeness of or otherwise verified the information contained in the
Conversion Application, the Registration Statement or the Prospectus, and does
not assume any responsibility for such information, based upon such conferences
and a review of documents deemed relevant for the purpose of rendering their
opinion (relying as to materiality as to factual matters on certificates of
officers and other factual representations by the Company and the Bank), nothing
has come to their attention that would lead them to believe that the Conversion
Application, the Registration Statement, the Prospectus, or any amendment or
supplement thereto (other than the financial statements, the notes thereto, and
other tabular, financial, statistical and appraisal data included therein as to
which no statement need be made) contained, as of the date of approval or
effectiveness, as the case may be, and as of the Closing Date, an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(2) The favorable opinion, dated as of the Closing Date and
addressed to Xxxx and for their benefit, of [West Virginia counsel], the Bank's
local counsel, in form and substance to the effect that, to the best of such
counsel's knowledge, (i) the Company and the Bank have good and marketable title
to all properties and assets which are material
-24-
to the business of the Company and the Bank and to those properties and assets
described in the Registration Statement and Prospectus, as owned by them, free
and clear of all liens, charges, encumbrances or restrictions, except such as
are described in the Registration Statement and Prospectus, or are not material
in relation to the business of the Company and the Bank considered as one
enterprise; (ii) all of the leases and subleases material to the business of the
Company and the Bank under which the Company and the Bank hold properties, as
described in the Registration Statement and Prospectus, ar in full force and
effect; (iii) the Bank is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which its ownership of
property or leasing of property or the conduct of its business requires such
qualification, unless the failure to be so qualified in one or more of such
jurisdictions would not have a material adverse effect on the condition,
financial or otherwise, or the business, operations or income of the Bank; (iv)
Advance Service's articles of incorporation and bylaws comply in all material
respects with [West Virginia Law]; (v) the information regarding the Oregon tax
opinion under the caption "The Conversion - Tax Effects" has been reviewed by
such counsel and constitutes a correct summary of the opinion rendered by
_____________________ to the Company and the Bank with respect to such matters;
(vi) Advance Service has been duly incorporated and is validly existing as a
corporation under the laws of the State of West Virginia and has corporate power
and authority to own, lease and operate its properties and conduct its business
as described in the Registration Statement and the Prospectus; (vii) subject to
the satisfaction of the conditions to the OTS approval of the Conversion, no
further approval, registration, authorization, consent or other order of or
notice to any West Virginia regulatory agency is required in connection with the
execution and delivery of this Agreement, the issuance of the Shares and the
consummation of the Conversion, except as may be required under the securities
or blue sky laws of various jurisdictions (as to which no opinion need be
rendered) and except as may be required under the rules and regulations of the
NASD and/or the Nasdaq SmallCap Market (as to which no opinion need be
rendered); (viii) to such counsel's Actual Knowledge, the Company, the Bank and
Advance Service have obtained all material West Virginia licenses, permits and
other governmental authorizations currently required for the conduct of their
businesses and to such counsel's Actual Knowledge all such licenses, permits and
other governmental authorizations are in full force and effect, and the Company,
the Bank and Advance Service are in all material respects complying therewith,
except whether the failure to have such licenses, permits and other governmental
authorizations or the failure to be in compliance therewith would not have a
material adverse affect on the business or operations of the Bank, the Company
and Advance Service, taken as a whole; and (ix) to such counsel's Actual
Knowledge, Advance Service is not in violation of its articles of incorporation
or bylaws, or, to such counsel's Actual Knowledge, in default or violation of
any obligation, agreement, covenant or condition contained in any material
contract, indenture, mortgage, loan agreement, note, lease or other instrument
to which it is a party or by which it or its property may be bound except for
such defaults or violations which would not have a material adverse impact on
the financial condition or results of operations of the Company, the Bank and
Advance Service on a consolidated basis.
-25-
(3) The favorable opinion, dated as of the Closing Date, of
Xxxxx, Xxxx, Xxxxxxx & Xxxxxxx L.L.P. Xxxx' counsel, with respect to such
matters as Xxxx may reasonably require. Such opinion may rely upon the opinions
of counsel to the Company and the Bank, and as to matters of fact, upon
certificates of officers and directors of the Company and the Bank delivered
pursuant hereto or as such counsel shall reasonably request.
(d) At the Closing Date, Xxxx shall receive a certificate of the Chief
Executive Officer and the Chief Financial Officer of the Company and a
certificate of the Chief Executive Officer and the Chief Financial Officer of
the Bank, both dated as of such Closing Date, to the effect that: (i) they have
reviewed the Prospectus and, in their opinion, at the time the Prospectus became
authorized for final use, the Prospectus did not contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; (ii) since the date the Prospectus became authorized for final
use, no material adverse change in the condition, financial or otherwise, or in
the earnings, capital, properties or business of the Company, the Bank and
Advance Service has occurred and, to their knowledge, no other event has
occurred, which should have been set forth in an amendment or supplement to the
Prospectus which has not been so set forth, and the conditions set forth in this
Section 7 have been satisfied; (iii) since the respective dates as of which
information is given in the Registration Statement and Prospectus, there has
been no material adverse change in the condition, financial or otherwise, or in
the earnings, capital or properties of the Company, the Bank or Advance Service,
independently, or of the Company, the Bank and Advance Service considered as one
enterprise, whether or not arising in the ordinary course of business; (iv) the
representations and warranties in Section 4 are true and correct with the same
force and effect a though expressly made at and as of the Closing Date; (v) the
Company and the Bank have complied in all material respects with all agreements
and satisfied all conditions on their part to be performed or satisfied at or
prior to the Closing Date and will comply in all material respects with all
obligations to be satisfied by them after Conversion; (vi) no stop order
suspending the effectiveness of the Registration Statement has been initiated
or, to the best knowledge of the Company or the Bank, threatened by the
Commission or any state authority; (vii) no order suspending the Offering, the
Conversion, the acquisition of all of the shares of the Bank by the Company or
the effectiveness of the Prospectus has been issued and no proceedings for that
purpose are pending or, to the best knowledge of the Company or the Bank,
threatened by the OTS, the Commission or any state authority; and (viii) to the
best knowledge of the Company or the Bank, no person has sought to obtain review
of the final action of the OTS approving the Plan.
(e) Prior to and at the Closing Date: (i) in the reasonable
opinion of Xxxx, there shall have been no material adverse change in the
condition, financial or otherwise, or in the earnings or business of the Bank
independently, or of the Company, the Bank and Advance Service considered as one
enterprise, from that as of the latest dates as of which such condition is set
forth in the Prospectus other than transactions referred to or
-26-
contemplated therein; (iii) the Company or the Bank shall not have received from
the OTS any direction (oral or written) to make any material change in the
method of conducting their business with which it has not complied (which
direction, if any, shall have been disclosed to Xxxx) or which materially and
adversely would affect the business, operations or financial condition or income
of the Company and the Bank considered as one enterprise; (iv) the Company, the
Bank and Advance Service shall not have been in material default (nor shall an
event have occurred which, with notice or lapse of time or both, would
constitute a default) under any material provision of any agreement or
instrument relating to any outstanding indebtedness; (v) no action, suit or
proceedings, 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 Company, the Bank or Advance Service, threatened against the
Company, the Bank or Advance Service or affecting any of their properties
wherein an unfavorable decision, ruling or finding would materially and
adversely affect the business operations, financially condition or income of the
Company, the Bank and Advance Service considered as one enterprise; and (vi) the
Shares have been qualified or registered for offering and sale or exempted
therefore under the securities or blue sky laws of the jurisdictions as Xxxx
shall have requested and as agreed to by the Company and the Bank.
(f) Concurrently with the execution of this Agreement, Xxxx shall
receive a letter from S.R. Xxxxxxxxx, X.X. dated as of the date of the
Prospectus and addressed to Xxxx: (i) confirming that S.R. Xxxxxxxxx, X.X. is a
firm of independent public accountants within the meaning of Rule 101 of the
Code of Professional Ethics of the American Institute of Certified Public
Accountants and applicable regulations of the OTS and stating in effect that in
S.R. Xxxxxxxxx, X.X.'s opinion the financial statements of the Bank as of June
30, 1995 and 1996 and for each of the three years in the period ended June 30,
1996, as are included in the Prospectus and covered by its opinion included
therein, comply as to form in all material respects with the applicable
accounting requirements and related published rules and regulations of the OTS
and the 1933 Act; (ii) a statement from S.R. Xxxxxxxxx, X.X. in effect that, on
the basis of certain agreed upon procedures (but not an audit in accordance with
generally accepted auditing standards) consisting of a reading of the latest
available unaudited interim consolidated financial statements of the Bank
prepared by the Bank, a reading of the minutes of the meetings of the Board of
Directors and members of the Bank and consultations with officers of the Bank
responsible for financial and accounting matters, nothing came to their
attention which caused them to believe that: (A) the unaudited financial
statements included in the Prospectus, are not in conformity with the 1933 Act,
applicable accounting requirements of the OTS and 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, except as has been described in the Prospectus,
there was any material increase in borrowings, other than normal deposit
fluctuations, by the Bank; or (C) there was any decrease in consolidated net
assets of the Bank at the date of such letter as compared with amounts shown in
the latest unaudited consolidated statement of condition included in the
-27-
Prospectus; and (iii) a statement from S.R. Xxxxxxxxx, X.X. that, in addition to
the audit referred to in their opinion included in the Prospectus and the
performance of the procedures referred to in clause (ii) of this subsection (f),
they have compared with the general accounting records of the Bank, which are
subject to the internal controls of the Bank, the accounting system and other
data prepared by the Bank, directly from such accounting records, to the extent
specified in such letter, such amounts and/or percentages set forth in the
Prospectus as Xxxx may reasonably request; and they have reported on the results
of such comparisons.
(g) At the Closing Date, Xxxx shall receive a letter from S.R.
Xxxxxxxxx, X.X. dated the Closing Date, addressed to Xxxx, confirming the
statements made by them in the letter delivered by it pursuant to subsection (f)
of this Section 7, the "specified date" referred to in clause (ii) of subsection
(f) thereof to be a date specified in such letter, which shall not be more than
three business days prior to the Closing Date.
(h) At the Closing Date, Xxxx shall receive a letter from Xxxxxx
& Company, Inc., dated the date thereof and addressed to counsel for Xxxx, (i)
confirming that said firm is independent of the Company and the Bank and is
experienced and expert in the area of corporate appraisals within the meaning of
Title 12 of the Code of Federal Regulations, Part 563b, (ii) stating in effect
that the Appraisal prepared by such firm complies in all material respects with
the applicable requirements of Title 12 of the Code of Federal Regulations, and
(iii) further stating that its opinion of the aggregate pro forma market value
of the Company and the Bank expressed in its Appraisal dated as of September 6,
1996, and most recently updated, remains in effect.
(i) The Company and the Bank shall not have sustained since the
date of the latest audited financial statements included in the Prospectus any
material loss or interference with their businesses 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 or contemplated in the Registration Statement and Prospectus.
(j) At or prior to the Closing Date, Xxxx shall receive: (i) a
copy of the letter from the OTS approving the Conversion Application and
authorizing the use of the Prospectus; (ii) a copy of the order from the
Commission declaring the Registration Statement effective; (iii) a certificate
from the OTS evidencing the existence of the Bank; (iv) certificates of good
standing from the State of Delaware evidencing the good standing of the Company;
(v) a certificate of good standing from the State of West Virginia evidencing
the good standing of Advance Service; (vi) a certificate from the FDIC
evidencing the Bank's insurance of accounts; and (vii) a certificate of the
FHLB-Pittsburgh evidencing the Bank's membership thereof; (viii) a copy of the
letter from the OTS approving the Company's Holding Company Application.
-28-
(k) As soon as available after the Closing Date, Xxxx shall
receive, upon request, a copy of the Bank's Federal stock charter.
(l) Subsequent to the date hereof, there shall not have occurred
any of the following: (i) a suspension or limitation in trading in securities
generally on the New York Stock Exchange or in the over-the-counter market, or
quotations halted generally on the Nasdaq SmallCap Market, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices for securities
have been required by either of such exchanges or the NASD or by order of the
Commission or any other governmental authority; (ii) a general moratorium on the
operations of commercial banks or federal savings associations or a general
moratorium on the withdrawal of deposits from commercial banks or federal
savings associations declared by federal or state authorities; (iii) the
engagement by the United States in hostilities which have resulted in the
declaration, on or after the date hereof, of a national emergency or war; or
(iv) a material decline in the price of equity or debt securities if the effect
of such a declaration or decline, in Xxxx'x 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 Prospectus.
Section 8. Indemnification.
(a) The Company and the Bank jointly and severally agree to indemnify
and hold harmless Xxxx, its officers, directors, agents, servants and employees
and each person, if any, who controls Xxxx within the meaning of Section 15 of
the 1933 Act or Section 20(a) of the 1934 Act, against any and all loss,
liability, claim, damage or expense whatsoever (including but not limited to
settlement expenses), joint or several, that Xxxx or any of them may suffer or
to which Xxxx and any such persons may become subject under all applicable
federal or state laws or otherwise, and to promptly reimburse Xxxx and any such
persons upon written demand for any expense (including fees and disbursements of
counsel) incurred by Xxxx or any of them in connection with investigating,
preparing or defending any actions, proceedings or claims (whether commenced or
threatened) to the extent such losses, claims, damages, liabilities or actions:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or any
amendment or supplement thereto), preliminary or final Prospectus (or any
amendment or supplement thereto), the Conversion Application (or any amendment
or supplement thereto), the Holding Company Application or any blue sky
application or other instrument or document executed by the Company or the Bank
or based upon written information supplied by the Company or the Bank filed in
any state or jurisdiction to register or qualify any or all of the Shares or to
claim an exemption therefrom, or provided to any state or jurisdiction to exempt
the Company as a broker-dealer or its officers, directors and employees as
broker-dealers or agents, under the securities laws thereof (collectively, the
"Blue Sky Application"), or any application or other document, advertisement,
oral statement or communication ("Sales Information") prepared, made or executed
by or on behalf of the Company or the Bank with their consent or based upon
-29-
written or oral information furnished by or on behalf of the Company or the
Bank, whether or not filed in any jurisdiction, in order to qualify or register
the Shares or to claim an exemption therefrom under the securities laws thereof;
(ii) arise out of or based upon the omission or alleged omission to state in any
of the foregoing documents or information, a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; or (iii) arise from
any theory of liability whatsoever relating to or arising from or based upon the
Registration Statement (or any amendment or supplement thereto), preliminary or
final Prospectus (or any amendment or supplement thereto), the Conversion
Application (or any amendment or supplement thereto), any Blue Sky Application
or Sales Information or other documentation distributed in connection with the
Conversion; provided, however, that no indemnification is required under this
paragraph (a) to the extent such losses, claims, damages, liabilities or actions
arise out of or are based upon any untrue material statement or alleged untrue
material statements in, or material omission or alleged material omission from,
the Registration Statement (or any amendment or supplement thereto), preliminary
or final Prospectus (or any amendment or supplement thereto), the Conversion
Application, any Blue Sky Application or Sales Information made in reliance upon
and in conformity with information furnished in writing to the Company or the
Bank by Xxxx regarding Xxxx or statistical information regarding national
averages provided by Xxxx for the Sales Information and provided further that
such indemnification shall be to the extent permitted by the OTS.
(b) Xxxx agrees to indemnify and hold harmless the Company and the Bank,
their directors and officers and each person, if any, who controls the Company
or the Bank within the meaning of Section 15 of the 1933 Act or Section 20(a) of
the 1934 Act against any and all loss, liability, claim, damage or expense
whatsoever (including but not limited to settlement expenses), joint or several,
which it, or any of them, may suffer or to which it, or any of them may become
subject under all applicable federal and state laws or otherwise, and to
promptly reimburse the Company, the Bank, and any such persons upon written
demand for any expenses (including reasonable fees and disbursements of counsel)
incurred by it, or any of them, in connection with investigating, preparing or
defending any actions, proceedings or claims (whether commenced or threatened)
to the extent such losses, claims, damages, liabilities or actions 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 Conversion Application (or any amendment or supplement thereto) or
the preliminary or final Prospectus (or any amendment or supplement thereto), 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 Xxxx'x obligations under this
Section 8(b) shall exist only if and only to the extent (i) that such untrue
statement or alleged untrue statement was made in, or such material fact or
alleged material fact was omitted from, the Registration Statement (or any
amendment or supplement thereto), the preliminary or final Prospectus (or any
amendment or supplement thereto) or the Conversion Application (or any
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amendment or supplement thereto), any Blue Sky Application or Sales Information
in reliance upon and in conformity with information furnished in writing to the
Company or the Bank by Xxxx regarding Xxxx or statistical information regarding
national averages provided by Xxxx for the Sales Information.
(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 8 or
otherwise. An indemnifying party may participate at its own expense in the
defense of such action. In addition, if it so elects within a reasonable time
after receipt of such notice, an indemnifying party, jointly with any other
indemnifying parties receiving such notice, may assumed defense of such action
with counsel chosen by it and approved by the indemnified parties that are
defendants in such action, unless such indemnified parties reasonably object to
such assumption on the ground that there may be legal defenses available to them
that are different from or in addition to those available to such indemnifying
party. If an indemnifying party assumes the defense of such action, the
indemnifying parties shall not be liable for any fees and expenses of counsel
for the indemnified parties incurred thereafter in connection with such action,
proceeding or claim, other than reasonable costs of investigation. In no event
shall the indemnifying parties be liable for the fees and expenses of more than
one separate firm of attorneys (and any special counsel that said firm may
retain) for each indemnified party in connection with any one action, proceeding
or claim or separate but similar or related actions, 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.
(d) The agreements contained in this Section 8 and in Section 9 hereof
and the representations and warranties of the Company and the Bank 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 Xxxx or its officers,
directors or controlling persons, agents or employees or by or on behalf of the
Company or the Bank or any officers, directors or controlling persons, agents or
employees of the Company or the Bank; (ii) delivery of and payment hereunder for
the Shares; or (iii) any termination of this Agreement.
Section 9. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 8 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Company, the Bank or Xxxx, the Company, the
Bank and Xxxx shall contribute to the aggregate losses, claims, damages and
liabilities (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding of any claims asserted, but after deducting any contribution received
by the Company, the Bank or Xxxx from persons other than the other party
thereto, who may also be liable for contribution) in such proportion so that
Xxxx are responsible for that portion represented by the percentage that the
fees paid to Xxxx pursuant to Section 2 of this
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Agreement (not including expenses) bears to the gross proceeds received by the
Company from the sale of the Shares in the Offering and the Company and the Bank
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 8 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
Company and the Bank on the one hand and Xxxx and/or FBR on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions, proceedings or claims in respect
thereto), but also the relative benefits received by the Company and the Bank on
the one hand and Xxxx on the other from the Offering (before deducting
expenses). The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company and/or the Bank on the one hand or Xxxx 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 Company, the
Bank and Xxxx agree that it would not be just and equitable if contribution
pursuant to this Section 9 were determined by pro-rata allocation or by any
other method of allocation which does not take into account the equitable
considerations referred to above in this Section 9. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions, proceedings or claims in respect thereof) referred to
above in this Section 9 shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action, proceeding or claim. It is expressly agreed that
Xxxx shall not be required to contribute any amount which in the aggregate
exceeds the amount paid (excluding reimbursable expenses) to Xxxx under this
Agreement. It is understood that the above stated limitation on Xxxx'x liability
for contribution is essential to Xxxx and that Xxxx would not have entered into
this Agreement if such limitation had not been agreed to by the parties to this
Agreement. No person found guilty of any fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any person who was not found guilty of such fraudulent misrepresentation.
The obligations of the Company and the Bank under this Section 9 and under
Section 8 shall be in addition to any liability which the Company and the Bank
may otherwise have. For purposes of this Section 9, each of Xxxx'x, the
Company's or the Bank's officers and directors and each person, if any, who
controls Xxxx or the Company or the Bank within the meaning of the 1933 Act and
the 1934 Act shall have the same rights to contribution as Xxxx, the Company or
the Bank. Any party entitled to contribution, promptly after receipt of notice
of commencement of any action, suit, claim or proceeding against such party in
respect of which a claim for contribution may be made against another party
under this Section 9, will notify such party from whom contribution may be
sought, but the omission to so notify such party shall not relieve the party
from whom contribution may be sought from any other obligation it may have
hereunder or otherwise than under this Section 9.
-32-
Section 10. Survival of Agreements, Representations and Indemnities. The
respective indemnities of the Company, the Bank and Xxxx and the representations
and warranties and other statements of the Company and the Bank set forth in or
made pursuant to this Agreement shall remain in full force and effect,
regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of Xxxx, the Company, the Bank or any
controlling person referred to in Section 8 hereof, and shall survive the
issuance of the Shares, and any legal representative, successor or assign of
Xxxx, the Company, the Bank, and any such controlling person shall be entitled
to the benefit of the respective agreements, indemnities, warranties and
representations.
Section 11. Termination. Xxxx may terminate its obligations under this
Agreement by giving the notice indicated below in this Section 11 at any time
after this Agreement becomes effective as follows:
(a) In the event the Company fails to sell all of the Shares by
June 30, 1997, and 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 Bank to each person who has
subscribed for or ordered any of the Shares the full amount which it may
have received from such person, together with interest as provided in
the Prospectus, and no party to this Agreement shall have any obligation
to the other hereunder, except for payment by the Company and/or the
Bank as set forth in Sections 2(a) and (d), 6, 8 and 9 hereof.
(b) If any of the conditions specified in Section 7 shall not
have been fulfilled when and as required by this Agreement unless waived
in writing, or by the Closing Date, this Agreement and all of Xxxx'x
obligations hereunder may be cancelled by Xxxx by notifying the Company
and the Bank of such cancellation in writing at any time at or prior to
the Closing Date, and any such cancellation shall be without liability
of any party to any other party except as otherwise provided in Sections
2, 6, 8 and 9 hereof.
(c) If Xxxx elects to terminate this Agreement with respect to it
as provided in this Section, the Company and the Bank shall be notified
promptly by such Agent by telephone or telegram, confirmed by letter.
The Company and the Bank may terminate this Agreement with respect to
Xxxx in the event Xxxx is in material breach of the representations and
warranties or covenants contained in Section 5 and such breach has not been
cured after the Company and the Bank have provided Xxxx with notice of such
breach.
This Agreement may also be terminated by mutual written consent of the
parties hereto.
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Section 12. Notices. All communications hereunder, except as herein
otherwise specifically provided, shall be mailed in writing and if sent to Xxxx
shall be mailed, delivered or telegraphed and confirmed to Xxxxxxx Xxxx &
Company, 000 Xxxxxxxxx, Xxxxxx, Xxxx 00000-5034, Attention: Xxxxxxxx X. XxXxxxx
(with a copy to Xxxxx, Xxxx, Xxxxxxx & Xxxxxxx L.L.P., Attention: Xxxx X.
Xxxxxxxx) and, if sent to the Company and the Bank, shall be mailed, delivered
or telegraphed and confirmed to the Company and the Bank at Advance Financial
Bancorp, 0000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxx Xxxxxxxx 00000, Attention:
Xxxxxxx X. Xxxxxxxxx, President (with a copy to Xxxxxxx, Spidi, Sloane & Xxxxx,
P.C., 0000 X Xxxxxx, X.X., Xxxxx 000 Xxxx, Xxxxxxxxxx, X.X. 00000, Attention:
Xxxxxx X. Xxxxxxx, Esq.).
Section 13. Parties. The Company and the Bank shall be entitled to act
and rely on any request, notice, consent, waiver or agreement purportedly given
on behalf of Xxxx when the same shall have been given by the undersigned. Xxxx
shall be entitled to act and rely on any request, notice, consent, waiver or
agreement purportedly given on behalf of the Company or the Bank, when the same
shall have been given by the undersigned or any other officer of the Company or
the Bank. This Agreement shall inure solely to the benefit of, and shall be
binding upon, Xxxx, the Company, the Bank, and their respective successors,
legal representatives and assigns, and no other person shall have or be
construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provision herein contained. It
is understood and agreed that this Agreement, including Exhibit A thereto, is
the exclusive agreement among the parties hereto, and supersedes any prior
agreement among the parties and may not be varied except in writing signed by
all the parties.
Section 14. Closing. The closing for the sale of the Shares shall take
place on the Closing Date at such location as mutually agreed upon by Xxxx and
the Company and the Bank. At the closing, the Company and the Bank shall deliver
to Xxxx in next day funds the commissions, fees and expenses due and owing to
Xxxx as set forth in Sections 2 and 6 hereof and the opinions and certificates
required hereby and other documents deemed reasonably necessary by Xxxx shall be
executed and delivered to effect the sale of the Shares as contemplated hereby
and pursuant to the terms of the Prospectus.
Section 15. Partial Invalidity. In the event that any term, provision or
covenant herein or the application thereof to any circumstance or situation
shall be invalid or unenforceable, in whole or in part, the remainder hereof and
the application of said term, provision or covenant to any other circumstances
or situation shall not be affected thereby, and each term, provision or covenant
herein shall be valid and enforceable to the full extent permitted by law.
Section 16. Construction. This Agreement shall be construed in
accordance with the laws of the State of Ohio.
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Section 17. Counterparts. This Agreement may be executed in separate
counterparts, each of which so executed and delivered shall be an original, but
all of which together shall constitute but one and the same instrument.
If the foregoing correctly sets forth the arrangement among the Company,
the Bank and Xxxx, please indicate acceptance thereof in the space provided
below for that purpose, whereupon this letter and Xxxx'x acceptance shall
constitute a binding agreement.
Very truly yours,
ADVANCE FINANCIAL BANCORP ADVANCE SAVINGS BANK, F.S.B.
By: By:
------------------------------ ------------------------------
Xxxxxxx X. Xxxxxxxxx Xxxxxxx X. Xxxxxxxxx
President and Chief President and Chief
Executive Officer Executive Officer
Accepted as of the date first above written
XXXXXXX XXXX & COMPANY
By:
------------------------------
Xxxxxxxx X. XxXxxxx
Executive Vice President
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