Exhibit 1.2
Up to 5,045,625 Shares
(subject to increase up to 5,802,469 shares
in the event of an increase in the pro forma market value
of the Company's Common Stock)
Partners Trust Financial Group, Inc.
(a federally-chartered corporation)
(in formation)
Common Stock
(par value $0.10 per share)
AGENCY AGREEMENT
______________, 0000
Xxxxxxx X'xxxxx & Partners, L.P.
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Partners Trust, MHC, a federal mutual holding company (the "MHC"),
Partners Trust Financial Group, Inc., a federally-chartered corporation (the
"Company"), and SBU Bank, a federal savings bank (the "Bank"), hereby confirm
their agreement with Sandler X'Xxxxx & Partners, L.P. ("Sandler X'Xxxxx" or the
"Agent") with respect to the offer and sale by the Company of 5,045,625 shares
(subject to increase up to 5,802,469 shares in the event of an increase in the
pro forma market value of the Company's Common Stock) of the Company's Common
Stock, par value $0.10 per share (the "Common Stock"). The shares of Common
Stock to be sold by the Company are hereinafter called the "Securities." As of
the date hereof, each of the Company and the MHC are in formation. Accordingly,
the Bank hereby agrees to cause the MHC and the Company to duly ratify, execute
and deliver this Agreement upon completion of their formation at or prior to the
Closing Time (as that term is defined herein).
The Securities are being offered for sale in accordance with the plan
of reorganization and stock issuance (the "Plan") duly adopted by the Board of
Directors of the Bank pursuant to which the Bank intends to reorganize from a
federally chartered mutual savings bank to a federally chartered stock savings
bank and issue all of its stock to the Company, and the Company will become a
majority-owned subsidiary of the MHC. Pursuant to the Plan, the Company is also
offering to the Bank's tax qualified employee benefit plans, including the
Employee Stock Ownership Plan (the "ESOP") (collectively, the "Employee Plans")
and to certain of the Bank's depositors and borrowers rights to subscribe for
the Securities in a subscription offering (the "Subscription Offering"). To the
extent Securities are not subscribed for in the Subscription Offering, such
Securities may be offered to certain members of the general public, with
preference given to certain natural persons residing in Herkimer, Onondaga,
Madison and Oneida Counties, New York in a direct community offering (the
"Community Offering" and together with the Subscription and Community Offering,
as each may be extended or reopened from time to time, the "Subscription and
Community Offering") to be commenced concurrently with, during or promptly after
the Subscription Offering. It is currently anticipated by the Bank and the
Company that any Securities not subscribed for in the Subscription and Community
Offering will be offered, subject to Section 2 hereof, in a syndicated community
offering (the "Syndicated Community Offering"). The Subscription and Community
Offering and the Syndicated Community Offering are hereinafter referred to
collectively as the "Offerings," and the reorganization of the Bank from mutual
to stock form, the formation of the MHC, the acquisition of the capital stock of
the Bank by the Company and the Offerings are hereinafter referred to
collectively as the "Reorganization."
The Company also intends to form a Charitable Foundation (the "Foundation")
in connection with the Plan. Subject to compliance with certain conditions as
may be imposed by certain regulatory authorities, the Company will make a
contribution to the Foundation equal to 3% of the Securities sold in the
Offerings (up to 174, 074 shares -- "Charitable Foundation Shares") and $200,000
in cash.
It is acknowledged that the number of Securities to be sold in the
Reorganization may be increased or decreased as described in the Prospectus (as
hereinafter defined). If the number of Securities is increased or decreased in
accordance with the Plan, the term "Securities" shall mean such greater or
lesser number, where applicable.
The Company has filed with the Securities and Exchange Commission (the
"SEC") a registration statement on Form S-1 (No. 333-____), including a related
prospectus, for the registration of the Securities under the Securities Act of
1933, as amended (the "Securities Act"), has filed such amendments thereto, if
any, and such amended prospectuses as may have been required to the date hereof
by the SEC in order to declare such registration statement effective, and will
file such additional amendments thereto and such amended prospectuses and
prospectus supplements as may hereafter be required. Such registration statement
(as amended to date, if applicable, and as from time to time amended or
supplemented hereafter) and the prospectuses constituting a part thereof
(including in each case all documents incorporated or deemed to be incorporated
by reference therein and the information, if any, deemed to be a part thereof
pursuant to the rules and regulations of the SEC under the Securities Act, as
from time to time amended or supplemented pursuant to the Securities Act or
otherwise (the "Securities Act Regulations")), are hereinafter referred to as
the "Registration Statement" and the "Prospectus," respectively, except that if
any revised prospectus shall be used by the Company in connection with the
Subscription and Community Offering or the Syndicated Community Offering which
differs from the Prospectus on file at the SEC at the time the Registration
Statement becomes effective (whether or not such revised prospectus is required
to be filed by the Company pursuant to Rule 424(b) of the Securities Act
Regulations), the term "Prospectus" shall refer to such revised prospectus from
and after the time it is first provided to the Agent for such use.
Concurrently with the execution of this Agreement, the Company is
delivering to the Agent copies of the Prospectus of the Company to be used in
the Subscription and Community Offering. Such prospectus contains information
with respect to the Company, the Bank, the MHC and the Common Stock.
SECTION 1. Representations and Warranties.
(a) The Company, the Bank and the MHC jointly and severally represent
and warrant to the Agent as of the date hereof as follows:
(i) The Registration Statement has been declared effective by
the SEC, no stop order has been issued with respect thereto and no
proceedings therefor have been initiated or threatened by the SEC. At the
time the Registration Statement became effective and at the Closing Time
referred to in Section 2 hereof, the Registration Statement complied and
will comply in all material respects with the requirements of the
Securities Act and the Securities Act Regulations and did not and will not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading. The Prospectus, at the date hereof does not and at
the Closing Time referred to in Section 2 hereof will not, include an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the representations and warranties in this subsection shall
not apply to statements in or omissions from the Registration Statement or
Prospectus made in reliance upon and in conformity with information with
respect to the Agent furnished to the Company in writing by the Agent
expressly for use in the Registration Statement or Prospectus (the "Agent
Information," which the Company, the Bank, and the MHC acknowledge appears
only in the sections captioned "Market for the Common Stock" and the first
three paragraphs of the section "The Reorganization and the Offering - Plan
of Distribution and Marketing Arrangements" of the Prospectus).
(ii) The Company and the MHC have filed with the Department of
the Treasury, Office of Thrift Supervision (the "OTS") the Company's and
the MHC's application for approval of acquisition of the Bank (the "Holding
Company Application") on Form H-(e)1 promulgated under the savings and loan
holding company provisions of the Home Owners' Loan Act, as amended
("HOLA") and the regulations promulgated thereunder. The Company and the
MHC have received written notice from the OTS of their approval of the
acquisition of the Bank, such approval remains in full force and effect and
no order has been issued by the OTS suspending or revoking such approval
and no proceedings therefor have been initiated or threatened by the OTS.
At the date of such approval and at the Closing Time referred to in Section
2, the Holding Company Application complied and will comply in all material
respects with the applicable provisions of HOLA and the regulations
promulgated thereunder.
(iii) Pursuant to the rules and regulations of the OTS (the "OTS
Regulations"), the Bank has filed with the OTS a Notice of Mutual Holding
Company Reorganization on Form MHC-1 (the "Form MHC-1") and an Application
for Approval of Minority Stock Issuance by a Savings Association Subsidiary
of a Mutual Holding Company on Form MHC-2 (the "Form MHC-2"), and has filed
such amendments thereto and supplementary materials as may have been
required to the date hereof (such applications, as amended to date, if
applicable, and as from time to time amended or supplemented hereafter, are
hereinafter referred to as the "MHC Application" and, together with the
Holding Company Application, the "Reorganization Application"), including
copies of the Bank's Proxy Statement, dated ______________, 2002, relating
to the Reorganization (the "Proxy Statement"), and the Prospectus. The OTS
has, by letter dated __________, 2002, approved the MHC Application,
including the Proxy Statement and the Prospectus, such approval remains in
full force and effect and no order has been issued by the OTS suspending or
revoking such approval and no proceedings therefor have been initiated or
threatened by the OTS. At the date of such approval and at the Closing Time
referred to in Section 2, the MHC Application complied and will comply in
all material respects with the applicable provisions of the OTS
Regulations.
(iv) At the time of their use, the Proxy Statement and any other
proxy solicitation materials will comply in all material respects with the
applicable provisions of the OTS Regulations and will not contain an untrue
statement of a material fact or omit to state a material fact necessary in
order
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to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The Company, the Bank and the MHC
will promptly file the Prospectus and any supplemental sales literature
with the SEC and the OTS. The Prospectus and all supplemental sales
literature, as of the date the Registration Statement became effective and
at the Closing Time referred to in Section 2, complied and will comply in
all material respects with the applicable requirements of the OTS
Regulations and, at or prior to the time of their first use, will have
received all required authorizations of the OTS for use in final form.
(v) Neither the SEC nor the OTS has, by order or otherwise,
prevented or suspended the use of the Prospectus or any supplemental sales
literature authorized by the Company, or the Bank or the MHC for use in
connection with the Offerings.
(vi) At the Closing Time referred to in Section 2, the Company,
the Bank and the MHC will have completed the conditions precedent to the
Reorganization and the establishment of the Foundation in accordance with
the Plan, the applicable OTS Regulations and all other applicable laws,
regulations, decisions and orders, including all material terms,
conditions, requirements and provisions precedent to the Reorganization
imposed upon the Company, the Bank or the MHC by the OTS, the Federal
Deposit Insurance Corporation (the "FDIC"), or any other regulatory
authority, other than those which the regulatory authority permits to be
completed after the Reorganization.
(vii) RP Financial, LC which prepared the valuation of the Bank
as part of the Reorganization, has advised the Company, the Bank and the
MHC in writing that it satisfies all requirements for an appraiser set
forth in the OTS Regulations and any interpretations or guidelines issued
by the Superintendent and the FDIC with respect thereto.
(viii) The accountants who certified the consolidated financial
statements and supporting schedules of the Bank included in the
Registration Statement have advised the Company, the Bank and the MHC in
writing that they are independent public accountants within the meaning of
the Code of Ethics of the American Institute of Certified Public
Accountants (the "AICPA"), and such accountants are, with respect to the
Company, the MHC, the Bank and each subsidiary of the Bank, independent
certified public accountants as required by the Securities Act and the
Securities Act Regulations.
(ix) The only subsidiaries of the Bank are SBU Investment
Services, Inc. and 000 Xxxxxxx Xxxxxx Corporation.
(x) The consolidated financial statements and the related
notes thereto included in the Registration Statement and the Prospectus
present fairly the financial position of the Bank and its consolidated
subsidiaries at the dates indicated and the results of operations, equity
and cash flows for the periods specified, and comply as to form in all
material respects with the applicable accounting requirements of the
Securities Act Regulations and the OTS Regulations; except as otherwise
stated in the Registration Statement, said financial statements have been
prepared in conformity with generally accepted accounting principles
applied on a consistent basis; and the supporting schedules and tables
included in the Registration Statement present fairly the information
required to be stated therein.
(xi) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as otherwise
stated therein (A) there has been no material adverse change in the
financial condition, results of operations or business affairs of the
Company, the MHC, the Bank and the Bank's subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and
(B) except for transactions specifically referred to or contemplated in the
Prospectus, there have been no transactions entered into by the Company,
the MHC, the Bank or any of the Bank's subsidiaries, other than those in
the ordinary course of business, which are material with respect to the
Company, the MHC, the Bank and the Bank's subsidiaries, considered as one
enterprise.
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(xii) Upon completion of its formation, and in any event no later than
the Closing Time, the Company will have been duly incorporated and validly
existing as a corporation under the laws of the United States with corporate
power and authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and to enter into and perform its
obligations under this Agreement; and the Company will have been duly qualified
as a foreign corporation to transact business and in good standing in the State
of New York and in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify would not have a material
adverse effect on the financial condition, results of operations or business
affairs of the Company, the MHC, the Bank and the Bank's subsidiaries,
considered as one enterprise.
(xiii) Upon consummation of the Reorganization and the
contribution of the Charitable Foundation Shares as described in the
Prospectus, the authorized, issued and outstanding capital stock of the
Company will be as set forth in the Prospectus under "Capitalization"
(except for subsequent issuances, if any, pursuant to reservations,
agreements or employee benefit plans referred to in the Prospectus); no
shares of Common Stock have been or will be issued and outstanding prior to
the Closing Time referred to in Section 2; at the time of Reorganization,
the Securities will have been duly 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 stated on the cover
page of the Prospectus, will be duly and validly issued and fully paid and
non-assessable; the terms and provisions of the Common Stock and the
capital stock of the Company conform to all statements relating thereto
contained in the Prospectus; the certificates representing the shares of
Common Stock conform to the requirements of applicable law and regulations;
and the issuance of the Securities is not subject to preemptive or other
similar rights.
(xiv) The Bank, as of the date hereof, is a federally chartered
savings bank in mutual form and upon consummation of the Reorganization
will be a federally chartered savings bank in stock form, in both instances
with full corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus; the
Company, the MHC, the Bank and the Bank's subsidiaries have obtained all
licenses, permits and other governmental authorizations currently required
for the conduct of their respective businesses or required for the conduct
of their respective businesses as contemplated by the Holding Company
Application and the MHC Application, except where the failure to obtain
such licenses, permits or other governmental authorizations would not have
a material adverse effect on the financial condition, results of operations
or business affairs of the Company, the MHC, the Bank and the Bank's
subsidiaries considered as one enterprise; all such licenses, permits and
other governmental authorizations are in full force and effect and the
Company, the MHC, the Bank and the Bank's subsidiaries are in all material
respects in compliance therewith; neither the Company, the MHC, the Bank
nor any of the Bank's subsidiaries has received notice of any proceeding or
action relating to the revocation or modification of any such license,
permit or other governmental authorization which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
might have a material adverse effect on the financial condition, results of
operations or business affairs of the Company, the MHC, the Bank and the
Bank's subsidiaries, considered as one enterprise; and the Bank is validly
existing under the laws of the United States and is qualified to transact
business as a foreign corporation in any jurisdiction in which the failure
to so qualify would have a material adverse effect on the financial
condition, results of operations or business affairs of the Company, the
MHC, the Bank and the Bank's subsidiaries considered as one enterprise.
(xv) The deposit accounts of the Bank are insured by the FDIC
up to the applicable limits and upon consummation of the Reorganization,
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 OTS Regulations. The Bank is a
"qualified thrift lender" within the meaning of 12 U.S.C. Section 1467a(m).
5
(xvi) Upon consummation of the Reorganization, the authorized
capital stock of the Bank will be[ ________ ]shares of common stock, par
value $___ per share (the "Bank Common Stock") and [________] shares of
preferred stock, par value $____ per share (the "Bank Preferred Stock"),
and the issued and outstanding capital stock of the Bank will be
[_____________] shares of Bank Common Stock and no shares of the Bank
Preferred Stock, and no shares of Bank Common Stock or Bank Preferred Stock
have been or will be issued prior to the Closing time referred to in
Section 2; and as of Closing Time referred to in Section 2, all of the
issued and outstanding capital stock of the Bank will be duly authorized,
validly issued and fully paid and nonassessable and have been issued in
compliance with all federal and state securities laws. The shares of Bank
Common Stock to be issued to the Company will have been duly authorized for
issuance and, when issued and delivered by the Bank pursuant to the Plan
against payment of the consideration calculated as set forth in the Plan
and as described in the Prospectus, will be duly and validly issued and
fully paid and nonassessable, and all such Bank Common Stock will be owned
beneficially and of record by the Company free and clear of any security
interest, mortgage, pledge, lien, encumbrance or legal or equitable claim;
the terms and provisions of the Bank Common Stock and the Bank Preferred
Stock conform to all statements relating thereto contained in the
Prospectus, and the certificates representing the shares of the Bank Common
Stock will conform with the requirements of applicable laws and
regulations; and the issuance of the Bank Common Stock is not subject to
preemptive or similar rights.
(xvii) Upon consummation of the Reorganization, the authorized
capital stock of the Company will be 35,000,000 shares of common stock, par
value $0.10 per share (the "Company Common Stock") and 5,000,000 shares of
serial preferred stock, par value $0.10 per share (the "Company Preferred
Stock"), and the issued and outstanding capital stock of the Company will
be within the range set forth in the Prospectus and no shares of Company
Common Stock or Company Preferred Stock have been or will be issued prior
to the Closing Time referred to in Section 2; and as of Closing Time
referred to in Section 2, all of the issued and outstanding capital stock
of the Company will be duly authorized, validly issued and fully paid and
nonassessable and have been issued in compliance with all federal and state
securities laws. The shares of Company Common Stock to be issued to the MHC
will have been duly 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 as described in the Prospectus,
will be duly and validly issued and fully paid and nonassessable, and all
such Company Common Stock will be owned beneficially and of record by the
MHC free and clear of any security interest, mortgage, pledge, lien,
encumbrance or legal or equitable claim; the terms and provisions of the
Company Common Stock and the Company Preferred Stock conform to all
statements relating thereto contained in the Prospectus, and the
certificates representing the shares of the Company Common Stock will
conform with the requirements of applicable laws and regulations; and the
issuance of the Company Common Stock is not subject to preemptive or
similar rights.
(xviii) Upon consummation of the Reorganization, the Foundation
will have been duly incorporated and will be validly existing as a
non-stock corporation in good standing under the laws of the state of
Delaware with corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus. The
Foundation will not be a savings and loan holding company within the
meaning of 12 C.F.R. Section 574.2(q) as a result of the issuance of shares
of Securities in accordance with the terms of the Plan, and in the amounts
as described in the Prospectus; no approvals are required to establish the
Foundation and to contribute the Securities thereto as described in the
Prospectus other than those imposed by the OTS and the FDIC; except as
specifically disclosed in the Prospectus and the Proxy Statement, there are
and will be no agreements and/or understandings, written or oral, between
the Company, the Bank, and or the MHC, and the Foundation with respect to
the control, directly or indirectly, over the voting and the acquisition or
disposition of the Charitable Foundation Shares; at the time of the
Reorganization, the Charitable Foundation Shares will have been duly
authorized for issuance and, when issued and contributed by the Company
pursuant to the Plan, will be duly and validly issued and fully paid and
non-assessable; and the issuance of the Charitable Foundation Shares is not
subject to preemptive or similar rights.
6
(xix) Each direct and indirect subsidiary of the Bank has been
duly incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has full corporate
power and authority to own, lease and operate its properties and to conduct
its business as described in the Registration Statement and Prospectus, and
is duly qualified to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure to so qualify would not have a material adverse effect on
the financial condition, results of operations or business affairs of the
Company, the MHC, the Bank and the Bank's subsidiaries considered as one
enterprise; the activities of each such subsidiary are permitted to
subsidiaries of a federally chartered savings bank by the rules,
regulations, resolutions and practices of the OTS; all of the issued and
outstanding capital stock of each such subsidiary has been duly authorized
and validly issued, is fully paid and nonassessable and is owned by the
Bank, directly, free and clear of any security interest, mortgage, pledge,
lien, encumbrance or legal or equitable claim.
(xx) The Company, the MHC and the Bank have taken all
corporate action necessary for them to execute, deliver and perform this
Agreement, and this Agreement has been duly executed and delivered by, and
is the valid and binding agreement of, the Company, the MHC and the Bank,
enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency or other laws affecting the enforceability of the
rights of creditors generally and judicial limitations on the right of
specific performance and except as the enforceability of indemnification
and contribution provisions may be limited by applicable securities laws.
(xxi) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus and
prior to the Closing Time, except as otherwise may be indicated or
contemplated therein, none of the Company, the MHC, the Bank or any
subsidiary of the Bank will have (A) issued any securities or incurred any
liability or obligation, direct or contingent, or borrowed money, except
borrowings in the ordinary course of business from the same or similar
sources and in similar amounts as indicated in the Prospectus, or (B)
entered into any transaction or series of transactions which is material in
light of the business of the Company, the MHC, the Bank and the Bank's
subsidiaries, taken as a whole, excluding the origination, purchase and
sale of loans or the purchase or sale of investment securities or
mortgaged-backed securities in the ordinary course of business.
(xxii) No approval of any regulatory or supervisory or other
public authority is required in connection with the execution and delivery
of this Agreement or the issuance of the Securities and the Charitable
Foundation Shares that has not been obtained and a copy of which has been
delivered to the Agent, except as may be required under the securities laws
of various jurisdictions.
(xxiii) Neither the Company, the MHC, the Bank nor any of the
Bank's subsidiaries is in violation of its certificate of incorporation,
organization certificate, articles of incorporation or charter, as the case
may be, or bylaws (and the Bank will not be in violation of its charter or
bylaws in stock form upon consummation of the Reorganization); and neither
the Company, the MHC, the Bank nor any of the Bank's subsidiaries is in
default (nor has any event occurred which, with notice or lapse of time or
both, would constitute a default) in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to
which the Company, the MHC, the Bank or any of the Bank's subsidiaries is a
party or by which it or any of them may be bound, or to which any of the
property or assets of the Company, the MHC, the Bank or any of the Bank's
subsidiaries is subject, except for such defaults that would not,
individually or in the aggregate, have a material adverse effect on the
financial condition, results of operations or business of the Company, the
MHC, the Bank and the Bank's subsidiaries considered as one enterprise; and
there are no contracts or documents of the Company, the MHC, the Bank or
any of
7
the Bank's subsidiaries which are required to be filed as exhibits to the
Registration Statement or the Reorganization Application which have not
been so filed.
(xxiv) The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated herein have
been duly authorized by all necessary corporate action and do not and 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, the MHC, the Bank or any of the Bank's
subsidiaries pursuant to, any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Company, the MHC,
the Bank or any of the Bank's subsidiaries is a party or by which it or any
of them may be bound, or to which any of the property or assets of the
Company, the MHC, the Bank or any of the Bank's subsidiaries is subject,
except for such defaults that would not, individually or in the aggregate,
have a material adverse effect on the financial condition, results of
operations or business affairs of the Company, the MHC, the Bank and the
Bank's subsidiaries considered as one enterprise; nor will such action
result in any violation of the provisions of the certificate of
incorporation, organization certificate, articles of incorporation or
charter or by-laws of the Company, the MHC, the Bank or any of the Bank's
subsidiaries, or any applicable law, administrative regulation or
administrative or court decree.
(xxv) No labor dispute with the employees of the Company, the
MHC, the Bank or any of the Bank's subsidiaries exists or is imminent or
threatened; and neither the Company, the MHC, the Bank nor any of the
Bank's subsidiaries are aware of any existing or threatened labor
disturbance by the employees of any of its principal suppliers or
contractors which might be expected to result in any material adverse
change in the financial condition, results of operations or business
affairs of the Company, the MHC, the Bank and the Bank's subsidiaries
considered as one enterprise.
(xxvi) Each of the Bank and the Bank's subsidiaries, and upon
their formation, the Company and the MHC, have or will have good and
marketable title to all properties and assets for which ownership is
material to the business of the Company, the MHC, the Bank or the Bank's
subsidiaries and to those properties and assets described in the Prospectus
as owned by them, free and clear of all liens, charges, encumbrances or
restrictions, except such as are described in the Prospectus or are not
material in relation to the business of the Company, the MHC, the Bank or
the Bank's subsidiaries considered as one enterprise; and all of the leases
and subleases material to the business of the Company, the MHC, the Bank or
the Bank's subsidiaries under which the Company, the MHC, the Bank or the
Bank's subsidiaries hold properties, including those described in the
Prospectus, are valid and binding agreements of the Company, the MHC, the
Bank and the Bank's subsidiaries, enforceable in accordance with their
terms (except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization and similar laws of general applicability
relating to or affecting creditors' rights or general principles of
equity).
(xxvii) None of the Company, the MHC, the Bank nor the Bank's
subsidiaries are, or at the time of their formation, will be, in violation
of any directive from the OTS or the FDIC to make any material change in
the method of conducting their respective businesses; the Bank and its
subsidiaries have conducted and are conducting their business so as to
comply in all material respects with all applicable statutes, regulations
and administrative and court decrees (including, without limitation, all
regulations, decisions, directives and orders of the OTS or the FDIC).
(xxviii) There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now pending, or
threatened, against or affecting the Company, the MHC, the Bank or any of
the Bank's subsidiaries which is required to be disclosed in the
Registration Statement (other than as disclosed therein), or which might
result in any material adverse change in the financial condition, results
of operations or business affairs of the Company, the MHC, the Bank and the
Bank's subsidiaries considered as one enterprise, or which might materially
and adversely affect the properties or assets thereof or which might
materially and adversely affect the consummation of the
8
Reorganization; all pending legal or governmental proceedings to which the
Company, the MHC, the Bank or any subsidiary is a party or of which any of
their respective property or assets is the subject which are not described
in the Registration Statement, including ordinary routine litigation
incidental to the business, are considered in the aggregate not material;
and there are no contracts or documents of the Company, the MHC, the Bank
or any of the Bank's subsidiaries which are required to be filed as
exhibits to the Registration Statement or the Reorganization Application
which have not been so filed.
(xxix) The Company, the MHC and the Bank have obtained an
opinion of their counsel, Xxxx Xxxxxx Xxxxxx Xxxxxxxx & Xxxxxx, P.C. with
respect to the legality of the Securities and the Charitable Foundation Shares
to be issued and the federal income tax consequences of the Reorganization, and
(ii) the opinion of KPMG LLP that the New York State income tax consequences of
the proposed transaction are consistent with the federal income tax
consequences, copies of which are filed as exhibits to the Registration
Statement; all material aspects of the aforesaid opinions are accurately
summarized in the Prospectus; the facts and representations upon which such
opinions are based are truthful, accurate and complete in all material respects;
and neither the Bank, the MHC nor the Company has taken or will take any action
inconsistent therewith.
(xxx) The Company is not required to be registered under the
Investment Company Act of 1940, as amended.
(xxxi) All of the loans represented as assets on the most
recent consolidated financial statements or selected consolidated financial
and other data of the Bank included in the Prospectus meet or are exempt
from all requirements of federal, state or local law pertaining to lending,
including without limitation truth in lending (including the requirements
of Regulations Z and 12 C.F.R. Part 226 and Section 563.99), real estate
settlement procedures, consumer credit protection, equal credit opportunity
and all disclosure laws applicable to such loans, except for violations
which, if asserted, would not result in a material adverse effect on the
financial condition, results of operations or business of the Company, the
MHC, the Bank and the Bank's subsidiaries considered as one enterprise.
(xxxii) With the exception of the intended loan to the Bank's
ESOP by the Company to enable the ESOP to purchase shares of Common Stock
in an amount of up to 10.0% of 46.35% of the outstanding Common Stock
issued in the Reorganization, none of the Company, the MHC, the Bank or
employ ees of the Bank has made any payment of funds of the Company, the
MHC or the Bank as a loan for the purchase of the Common Stock or made any
other payment of funds prohibited by law, and no funds have been set aside
to be used for any payment prohibited by law.
(xxxiii) The Bank and the Bank's subsidiaries, and, upon their
formation, the Company and the MHC are and will be in compliance in all
material respects with the applicable financial record keeping and
reporting requirements of the Currency and Foreign Transaction Reporting
Act of 1970, as amended, and the rules and regulations thereunder.
(xxxiv) None of the Company, the MHC, the Bank nor the Bank's
subsidiaries nor any properties owned or operated by the Company, the MHC,
the Bank or the Bank's subsidiaries is in violation of or liable under any
Environmental Law (as defined below), except for such violations or
liabilities that, individually or in the aggregate, would not have a
material adverse effect on the financial condition, results of operations
or business affairs of the Company, the MHC, the Bank and the Bank's
subsidiaries considered as one enterprise. There are no actions, suits or
proceedings, or demands, claims, notices or investigations (including,
without limitation, notices, demand letters or requests for information
from any environmental agency) instituted or pending, or threatened,
relating to the liability of any property owned or operated by the Company,
the MHC, the Bank or the Bank's subsidiaries, under any Environmental Law.
For purposes of this subsection, the term "Environmental Law" means any
federal, state, local or foreign law, statute, ordinance, rule, regulation,
code, license, permit, authorization, approval, consent, order, judgment,
decree, injunction or agreement with any regulatory
9
authority relating to (i) the protection, preservation or restoration of
the environment (including, without limitation, air, water, vapor, surface
water, groundwater, drinking water supply, surface soil, subsurface soil,
plant and animal life or any other natural resource), and/or (ii) the use,
storage, recycling, treatment, generation, transportation, processing,
handling, labeling, production, release or disposal of any substance
presently listed, defined, designated or classified as hazardous, toxic,
radioactive or dangerous, or otherwise regulated, whether by type or by
quantity, including any material containing any such substance as a
component.
(xxxv) The Company, the MHC, the Bank and the Bank's
subsidiaries have filed all federal income and state and local franchise
tax returns required to be filed and have made timely payments of all taxes
shown as due and payable in respect of such returns, and no deficiency has
been asserted with respect thereto by any taxing authority.
(xxxvi) The Company has received approval, subject to regulatory
approval to consummate the Offerings and issuance, to have the Securities
quoted on the National Market System of the National Association of
Securities Dealers' Automated Quotation System ("Nasdaq National Market")
effective as of the Closing Time referred to in Section 2 hereof.
(xxxvii) The Company has filed a registration statement for the
Common Stock under Section 12(g) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and such registration statement was declared
effective concurrent with the effectiveness of the Registration Statement.
(b) Any certificate signed by any officer of the Company, the MHC or
the Bank and delivered to either of the Agent to counsel for the Agent shall be
deemed a representation and warranty by the Company, the MHC or the Bank to each
Agent as to the matters covered thereby.
SECTION 2. Appointment of Sandler X'Xxxxx; Sale and Delivery of the
Securities; Closing.
On the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Company hereby
appoints Sandler X'Xxxxx as its Agent to consult with and advise the Company,
and to assist the Company with the solicitation of subscriptions and purchase
orders for Securities, in connection with the Company's sale of Common Stock in
the Subscription and Community Offering and the Syndicated Community Offering.
On the basis of the representations and warranties herein contained, and subject
to the terms and conditions herein set forth, Sandler X'Xxxxx accepts such
appointment and agrees to use its best efforts to assist the Company with the
solicitation of subscriptions and purchase orders for Securities in accordance
with this Agreement; provided, however, that the Agent shall not be obligated to
take any action which is inconsistent with any applicable laws, regulations,
decisions or orders. The services to be rendered by Sandler X'Xxxxx pursuant to
this appointment include the following: (i) consulting as to the securities
marketing implications of any aspect of the Plan of Reorganization or related
corporate documents; (ii) reviewing with the Board of Directors the independent
appraiser's appraisal of the Common Stock; (iii) reviewing all offering
documents, including the Prospectus, stock order forms and related offering
materials (it being understood that preparation and filing of such documents is
the sole responsibility of the Company, the MHC and the Bank and their counsel);
(iv) assisting in the design and implementation of a marketing strategy for the
Offerings; (v) assisting the Company, the MHC and the Bank in obtaining all
requisite regulatory approvals; (vi) assisting Bank management in preparing for
meetings with potential investors and broker-dealers; and (vii) providing such
other general advice and assistance as may be requested to promote the
successful completion of the Offerings.
The appointment of the Agent hereunder shall terminate upon the
earlier to occur of (a) forty-five (45) days after the last day of the
Subscription and Community Offering, unless the Company and the Agent agree in
writing to extend such period and the OTS agrees to extend the period of time in
which the Shares may
10
be sold, or (b) the receipt and acceptance of subscriptions and purchase orders
for all of the Securities, or (c) the completion of the Syndicated Community
Offering.
If any of the Securities remain available after the expiration of the
Subscription and Community Offering, at the request of the Company, Sandler
X'Xxxxx will seek to form a syndicate of registered brokers or dealers
("Selected Dealers") to assist in the solicitation of purchase orders of such
Securities on a best efforts basis, subject to the terms and conditions set
forth in a selected dealers' agreement (the "Selected Dealers' Agreement"),
substantially in the form set forth in Exhibit A to this Agreement. Sandler
X'Xxxxx will endeavor to limit the aggregate fees to be paid by the Company
under any such Selected Dealers' Agreement to an amount competitive with gross
underwriting discounts charged at such time for underwritings of comparable
amounts of stock sold at a comparable price per share in a similar market
environment; provided, however, that the aggregate fees payable to Xxxxxx
X'Xxxxx and Selected Dealers shall not exceed 5.5% of the price at which the
shares of Common Stock are sold in the Offerings ("Actual Purchase Price") of
the shares sold under such agreements. Xxxxxx X'Xxxxx will endeavor to
distribute the Securities among the Selected Dealers in a fashion which best
meets the distribution objective of the Company and the requirements of the
Plan, which may result in limiting the allocation of stock to certain Selected
Dealers. It is understood that in no event shall Sandler X'Xxxxx be obligated to
act as a Selected Dealer or to take or purchase any Securities.
In the event the Company is unable to sell at least the total minimum
of the Securities, as set forth on the cover page of the Prospectus, within the
period herein provided, this Agreement shall terminate and the Company shall
refund to any persons who have subscribed for any of the Securities the full
amount which it may have received from them, together with interest as provided
in the Prospectus, and no party to this Agreement shall have any obligation to
the others hereunder, except for the obligations of the Company and the Bank as
set forth in Sections 4, 6(a) and 7 hereof and the obligations of the Agent as
provided in Sections 6(b) and 7 hereof. Appropriate arrangements for placing the
funds received from subscriptions for Securities or other offers to purchase
Securities in special interest-bearing accounts with the Bank until all
Securities are sold and paid for were made prior to the commencement of the
Subscription Offering, with provision for refund to the purchasers as set forth
above, or for delivery to the Company if all Securities are sold.
If at least the total minimum of Securities, as set forth on the cover
page of the Prospectus, are sold, the Company agrees to issue or have issued the
Securities sold and to release for delivery certificates for such Securities at
the Closing Time against payment therefor by release of funds from the special
interest-bearing accounts referred to above. The closing shall be held at the
Washington, D.C. offices of Xxxx Xxxxxx Xxxxxx Xxxxxxxx & Xxxxxx, P.C. at __:___
__.m., local time, or at such other place and time as shall be agreed upon by
the parties hereto, on a business day to be agreed upon by the parties hereto.
The Company shall notify the Agent by telephone, confirmed in writing, when
funds shall have been received for all the Securities. Certificates for
Securities shall be delivered directly to the purchasers thereof in accordance
with their directions. Notwithstanding the foregoing, certificates for
Securities purchased through Selected Dealers shall be made available to the
Agent for inspection at least 48 hours prior to the Closing Time at such office
as the Agent shall designate. The hour and date upon which the Company shall
release for delivery all of the Securities, in accordance with the terms hereof,
is herein called the "Closing Time."
The Company will pay any stock issue and transfer taxes which may be
payable with respect to the sale of the Securities.
In addition to the reimbursement of the expenses specified in Section
4 hereof, the Agent will receive the following compensation for its services
hereunder:
(a) One percent (1.0%) of the aggregate Actual Purchase Price of the
Securities sold in the Subscription and Community Offering, excluding in
each case shares purchased by (i) any employee benefit plan of the Company,
the MHC or
11
the Bank established for the benefit of their respective directors,
officers and employees and (ii) any director, officer or employee of the
Company, the MHC or the Bank or members of their immediate families (which
term shall mean parents, grandparents, spouse, siblings, children and
grandchildren);
(b) with respect to any Securities sold by an NASD member firm
(including Sandler X'Xxxxx) under the Selected Dealers' Agreement in the
Syndicated Community Offering, (i) the compensation payable to Selected
Dealers under any Selected Dealers' Agreement, (ii) any sponsoring dealer's
fees; and (iii) a management fee to Sandler X'Xxxxx of one percent (1.00%).
Any fees payable to Sandler X'Xxxxx for Securities sold by Sandler X'Xxxxx
under any such agreement shall be limited to an aggregate of five and
one-half percent (5.5%) of the Aggregate Actual Purchase Price of the
Securities sold by Sandler X' Xxxxx and other NASD member firms under such
Selected Dealer's Agreements.
If this Agreement is terminated by the Agent in accordance with the
provisions of Section 9(a) hereof or the Reorganization is terminated by the
Company, no fee shall be payable by the Company to Sandler X'Xxxxx; however, the
Company shall reimburse the Agent for all of its reasonable out-of-pocket
expenses incurred prior to termination, including the reasonable fees and
disbursements of counsel for the Agent in accordance with the provisions of
Section 4 hereof.
All fees payable to the Agent hereunder shall be payable in
immediately available funds at Closing Time, or upon the termination of this
Agreement, as the case may be. In recognition of the long lead times involved in
the Reorganization process, the Bank made an advance payment to the Agent in the
aggregate amount of $30,000 which shall be credited against any fees or
reimbursement of expenses payable hereunder.
SECTION 3. COVENANTS OF THE COMPANY, THE BANK AND THE MHC. The
Company, the Bank and the MHC covenant with the Agent as follows:
(a) The Company, the Bank and the MHC will prepare and file such
amendments or supplements to the Registration Statement, the Prospectus,
the Reorganization Application and the Proxy Statement as may hereafter be
required by the Securities Act Regulations or the OTS Regulations or as may
hereafter be requested by the Agent. Following completion of the
Subscription and Community Offering, in the event of a Syndicated Community
Offering, the Company will (i) promptly prepare and file with the SEC a
post-effective amendment to the Registration Statement relating to the
results of the Subscription and Community Offering, any additional
information with respect to the proposed plan of distribution and any
revision to the number of Securities to be sold in the Reorganization or
(ii) if no such post-effective amendment is required, will file with, or
mail for filing to, the SEC a prospectus or prospectus supplement
containing information relating to the results of the Subscription and
Community Offering and pricing information pursuant to Rule 424 of the
Securities Act Regulations, in either case in a form acceptable to the
Agent. The Company, the MHC and the Bank will notify the Agent immediately,
and confirm the notice in writing, (i) of the effectiveness of any
post-effective amendment of the Registration Statement, the filing of any
supplement to the Prospectus and the filing of any amendment to the
Reorganization Application, (ii) of the receipt of any comments from the
OTS or the SEC with respect to the transactions contemplated by this
Agreement or the Plan, (iii) of any request by the SEC or the OTS for any
amendment to the Registration Statement or the Reorganization Application
or any amendment or supplement to the Prospectus or for additional
information, (iv) of the issuance by the OTS of any order suspending the
Offerings or the use of the Prospectus or the initiation of any proceedings
for that purpose, (v) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose, and (vi) of the receipt of
any notice with respect to the suspension of any qualification of the
Securities for offering or sale in any jurisdiction. The Company, the Bank
and the MHC will make every reasonable
12
effort to prevent the issuance of any stop order and, if any stop
order is issued, to obtain the lifting thereof at the earliest
possible moment.
(b) The Company, the Bank and the MHC will give the Agent notice
of its intention to file or prepare any amendment to the
Reorganization Application or Registration Statement (including any
post-effective amendment) or any amendment or supplement to the
Prospectus (including any revised prospectus which the Company
proposes for use in connection with the Syndicated Community Offering
of the Securities which differs from the prospectus on file at the SEC
at the time the Registration Statement becomes effective, whether or
not such revised prospectus is required to be filed pursuant to Rule
424(b) of the Securities Act Regulations), will furnish the Agent with
copies of any such amendment or supplement a reasonable amount of time
prior to such proposed filing or use, as the case may be, and will not
file any such amendment or supplement or use any such prospectus to
which the Agent or counsel for the Agent may object.
(c) The Company, the Bank and the MHC will deliver to the Agent
as many signed copies and as many conformed copies of the
Reorganization Application and the Registration Statement as
originally filed and of each amendment thereto (including exhibits
filed therewith or incorporated by reference therein) as the Agent may
reasonably request, and from time to time such number of copies of the
Prospectus as the Agent may reasonably request.
(d) During the period when the Prospectus is required to be
delivered, the Company, and the Bank and the MHC will comply, at their
own expense, with all requirements imposed upon them by the OTS, by
the applicable OTS Regulations, as from time to time in force, and by
the Securities Act, the Securities Act Regulations, the Exchange Act,
and the rules and regulations of the SEC promulgated thereunder,
including, without limitation, Regulation M under the Exchange Act, 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.
(e) If any event or circumstance shall occur as a result of
which it is necessary, in the opinion of counsel for the Agent, to
amend or supplement the Prospectus in order to make the Prospectus not
misleading in the light of the circumstances existing at the time it
is delivered to a purchaser, the Company will forthwith amend or
supplement the Prospectus (in form and substance satisfactory to
counsel for the Agent) so that, as so amended or supplemented, the
Prospectus will not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing at the
time it is delivered to a purchaser, not misleading, and the Company
will furnish to the Agent a reasonable number of copies of such
amendment or supplement. For the purpose of this subsection, the
Company, the Bank and the MHC will each furnish such information with
respect to itself as the Agent may from time to time reasonably
request.
(f) The Company will take all necessary action, in cooperation
with the Agent, to qualify the Securities for offering and sale under
the applicable securities laws of such states of the United States and
other jurisdictions as the OTS Regulations may require and as the
Agent and the Company have agreed; provided, however, that neither the
Company, the Bank nor the MHC shall be obligated to file any general
consent to service of process or to qualify as a foreign corporation
in any jurisdiction in which it is not so qualified. In each
jurisdiction in which the Securities have been so qualified, the
Company will file such statements and reports as may be required by
the laws of such jurisdiction to continue such qualification in effect
for a period of not less than one year from the effective date of the
Registration Statement.
(g) The Company authorizes Sandler X'Xxxxx and any Selected
Dealers to act as agent of the Company in distributing the Prospectus
to persons entitled to receive subscription rights and other persons
to be offered Securities having record addresses in the states or
jurisdictions set forth in a survey
13
of the securities or "blue sky" laws of the various jurisdictions in
which the Offerings will be made (the "Blue Sky Survey").
(h) The Company will make generally available to its security
holders as soon as practicable, but not later than 60 days after the
close of the period covered thereby, an earnings statement (in form
complying with the provisions of Rule 158 of the Securities Act
Regulations) covering a twelve month period beginning not later than
the first day of the Company's fiscal quarter next following the
"effective date" (as defined in said Rule 158) of the Registration
Statement.
(i) During the period ending on the third anniversary of the
expiration of the fiscal year during which the closing of the
transactions contemplated hereby occurs, the Company will furnish to
its stockholders as soon as practicable after the end of each such
fiscal year an annual report (including consolidated statements of
financial condition and consolidated statements of income,
stockholders' equity and cash flows, certified by independent public
accountants) and, as soon as practicable after the end of each of the
first three quarters of each fiscal year (beginning with the fiscal
quarter ending after the effective date of the Registration
Statement), consolidated summary financial information of the Company,
the Bank and the Bank's subsidiaries for such quarter in reasonable
detail. In addition, such annual report and quarterly consolidated
summary financial information shall be made public through the
issuance of appropriate press releases at the same time or prior to
the time of the furnishing thereof to stockholders of the Company.
(j) During the period ending on the third anniversary of the
expiration of the fiscal year during which the closing of the
transactions contemplated hereby occurs, the Company will furnish to
the Agent (i) as soon as publicly available, a copy of each report or
other document of the Company furnished generally to stockholders of
the Company or furnished to or filed with the SEC under the Exchange
Act or any national securities exchange or system on which any class
of securities of the Company is listed, and (ii) from time to time,
such other information concerning the Company as the Agent may
reasonably request.
(k) The Company, the Bank and the MHC will conduct the
Reorganization (including the formation of the Foundation) in all
material respects in accordance with the Plan, the OTS Regulations and
all other applicable regulations, decisions and orders, including all
applicable terms, requirements and conditions precedent to the
Reorganization imposed upon the Company, the MHC or the Bank by the
OTS.
(l) The Company, the Bank and the MHC will use the net proceeds
received by it from the sale of the Securities in the manner specified
in the Prospectus under "Use of Proceeds."
(m) The Company will report the use of proceeds from the
offerings on its first periodic report filed with the SEC pursuant to
Section 13(a) or 15(d) of the Exchange Act and on any subsequent
periodic reports as may be required pursuant to Rule 463 of the
Securities Act Regulations.
(n) The Company will maintain the effectiveness of the Exchange
Act Registration Statement for not less than three years. The Company
will use its best efforts to effect the listing of the Common Stock on
the Nasdaq National Market System. The Company will file with the
Nasdaq Stock Market all documents and notices required by the Nasdaq
Stock Market of companies that have issued securities that are traded
in the over-the-counter market and quotations for which are reported
by the Nasdaq National Market.
(o) The Company will take such actions and furnish such
information as are reasonably requested by the Agent in order for the
Agent to ensure compliance with the National Association of Securities
Dealers, Inc.'s "Interpretation Relating to Free-Riding and
Withholding."
14
(p) Other than in connection with any employee benefit plan or
arrangement described in the Prospectus, the Company will not, without
the prior written consent of the Agent, sell or issue, contract to
sell or otherwise dispose of, any shares of Common Stock other than
the Securities for a period of 180 days following the Closing Time.
(q) During the period beginning on the date hereof and ending on
the later of the third anniversary of the Closing Time or the date on
which the Agent receives full payment in satisfaction of any claim for
indemnification or contribution to which it may be entitled pursuant
to Sections 6 or 7, respectively, neither the Company, the MHC nor the
Bank shall, without the prior written consent of the Agent, take or
permit to be taken any action that could result in the Bank Common
Stock becoming subject to any security interest, mortgage, pledge,
lien or encumbrance; provided, however, that this covenant shall be
null and void if the Board of Governors of the Federal Reserve System,
by regulation, policy statement or interpretive release, or by written
order or written advice addressed to the Bank or the Agent
specifically addressing the provisions of Section 6(a) hereof, permits
indemnification of the Agent by the Bank as contemplated by such
provisions.
(r) The Company, the MHC and the Bank will comply with the
conditions imposed by or agreed to with the OTS in connection with its
approval of the Holding Company Application and the MHC Application.
(s) The Company, the MHC and the Bank shall use their best
efforts to ensure that the Foundation submits, within the time frames
required by applicable law, a request to the Internal Revenue Service
to be recognized as a tax- exempt organization under Section 501(c)(3)
of the Internal Revenue Code of 1986, as amended (the "Code"); the
Company, the Bank and the MHC will take no action which will result in
the possible loss of the Foundation's tax-exempt status; and neither
the Company, the Bank nor the MHC will contribute any additional
assets to the Foundation until such time that such additional
contributions will be deductible for federal and state income tax
purposes.
(t) During the period ending on the first anniversary of the
Closing Time, the Bank will comply with all applicable law and
regulation necessary for the Bank to continue to be a "qualified
thrift lender" within the meaning of 12 U.S.C. Section 1467a(m).
(u) The Company shall not deliver the Securities until the
Company and the Bank have satisfied each condition set forth in
Section 5 hereof, unless such condition is waived by the Agent.
(v) The Company or the Bank will furnish to Sandler X'Xxxxx as
early as practicable prior to the Closing Date, but no later than two
(2) full business days prior thereto, a copy of the latest available
unaudited interim consolidated financial statements of the Bank and
the Subsidiaries which have been read by KPMG LLP, as stated in their
letters to be furnished pursuant to subsections (e) and (f) of Section
5 hereof.
SECTION 4. Payment of Expenses. The Company, the MHC and the Bank
jointly and severally agree to pay all expenses incident to the performance of
their obligations under this Agreement, including but not limited to (i) the
cost of obtaining all securities and bank regulatory approvals, (ii) the
preparation, printing and filing of the Registration Statement, the Holding
Company Application and the MHC Application, each as originally filed and of
each amendment thereto, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the purchasers in the Offerings, (iv) the
fees and disbursements of the Company's, the MHC's and the Bank's counsel,
accountants, appraiser and other advisors, (v) the qualification of the
Securities under securities laws in accordance with the provisions of Section
3(f) hereof, including filing fees and the fees and disbursements of counsel in
connection therewith and in connection with the preparation of the Blue Sky
Survey, (vi) the printing and delivery to the Agent of copies of the
Registration Statement as originally filed and of each amendment thereto and the
printing and delivery of the Prospectus and any amendments or supplements
thereto to the purchasers in the Offerings and the Agent, (vii) the printing and
delivery to the Agent
15
of copies of a Blue Sky Survey, and (viii) the fees and expenses incurred in
connection with the listing of the Securities on the Nasdaq National Market. In
the event the Agent incurs any such fees and expenses on behalf of the Bank, the
MHC or the Company, the Bank will reimburse the Agent for such fees and expenses
whether or not the Reorganization is consummated; provided, however, that the
Agent shall not incur any substantial expenses on behalf of the Bank, the MHC or
the Company pursuant to this Section without the prior approval of the Bank.
The Company and the Bank jointly and severally agree to pay certain
expenses incident to the performance of the Agent's obligations under this
Agreement, regardless of whether the Reorganization is consummated, including
(i) the filing fees paid or incurred by the Agent in connection with all filings
with the National Association of Securities Dealers, Inc., and (ii) all
reasonable out of pocket expenses incurred by the Agent relating to the
Offerings, including, without limitation, promotional, syndication and travel
expenses and fees and expenses of the Agent's counsel up to a maximum of $60,000
(including legal fees and expenses). All fees and expenses to which the Agent is
entitled to reimbursement under this paragraph of this Section 4 shall be due
and payable upon receipt by the Company or the Bank of a written accounting
therefor setting forth in reasonable detail the expenses incurred by the Agent.
SECTION 5. Conditions of Agent's Obligations. The Company, the
MHC, the Bank and the Agent agree that the issuance and the sale of Securities
and all obligations of the Agent hereunder are subject to the accuracy of the
representations and warranties of the Company, the MHC and the Bank herein
contained as of the date hereof and the Closing Time, to the accuracy of the
statements of officers and directors of the Company, the MHC and the Bank made
pursuant to the provisions hereof, to the performance by the Company, the MHC
and the Bank of their obligations hereunder, and to the following further
conditions:
(a) No stop order suspending the effectiveness of the
Registration Statement shall have been issued under the Securities Act or
proceedings therefor initiated or threatened by the SEC, no order
suspending the Offerings or authorization for final use of the Prospectus
shall have been issued or proceedings therefor initiated or threatened by
the OTS and no order suspending the sale of the Securities in any
jurisdiction shall have been issued.
(b) At Closing Time, the Agent shall have received:
(1) The favorable opinion, dated as of Closing Time, of
Xxxx Xxxxxx Xxxxxx Xxxxxxxx & Xxxxxx, P.C. counsel for the
Company, the MHC and the Bank, in form and substance satisfactory
to counsel for the Agent, to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a federal stock corporation under the
laws of the United States, and the MHC has been duly
incorporated and is validly existing as a federal mutual
holding company under the laws of the United States.
(ii) Each of the Company and the MHC has full
corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the
Registration Statement and Prospectus and to enter into and
perform its obligations under this Agreement.
(iii) Upon completion of the Reorganization, each of
the Company and the MHC will be duly qualified as a foreign
corporation to transact business and is in good standing in
the State of New York and in each other jurisdiction in
which such qualification is required whether by reason of
the ownership or leasing of property or the conduct of
business, except where the failure to so qualify would not
have a material adverse effect upon the financial condition,
results of operations or business
16
affairs of the Company, the MHC, the Bank and the Bank's
subsidiaries, considered as one enterprise.
(iv) Upon consummation of the Reorganization and the
issuance of Charitable Foundation Shares to the Foundation,
immediately upon the completion thereof, subject to
compliance with all conditions imposed upon the formation
and contribution thereof by the OTS under the terms of any
written notice or order of approval of the Reorganization
Application, the authorized, issued and outstanding capital
stock of the Company will be as set forth in the Prospectus
under "Capitalization" and, no shares of Common Stock have
been or will be issued and outstanding prior to the Closing
Time.
(v) The Securities and Charitable Foundation Shares
have been duly and validly authorized for issuance and sale
and, when issued and delivered by the Company pursuant to
the Plan against payment of the consideration calculated as
set forth in the Plan, or contributed by the Company
pursuant to the Plan in the case of the Charitable
Foundation Shares, will be duly and validly issued and fully
paid and non-assessable.
(vi) The issuance of the Securities and Charitable
Foundation Shares is not subject to preemptive or other
similar rights arising by operation of law or, to the best
of their knowledge and information, otherwise.
(vii) The Bank is duly organized and validly existing
under the laws of the United States of America as a
federally chartered savings bank of mutual form, and, at
Closing Time, has become duly organized and validly existing
under the laws of the United States of America as a
federally chartered savings bank of stock form, in both
instances with full 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 Bank is duly qualified as a foreign
corporation in each jurisdiction in which the failure to so
qualify would have a material adverse effect upon the
financial condition, results of operations or business
affairs of the Bank.
(viii) The Bank is a member of the Federal Home Loan
Bank of New York and the deposit accounts of the Bank are
insured by the FDIC up to the applicable limits.
(ix) Each direct and indirect subsidiary of the Bank
has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the
jurisdiction of its incorporation, has full corporate power
and authority to own, lease and operate its properties and
to conduct its business as described in the Registration
Statement and is duly qualified as a foreign corporation to
transact business and is in good standing in each
jurisdiction in which the failure to so qualify would have a
material adverse effect upon the financial condition,
results of operations or business of the Company, the MHC,
the Bank and the Bank's subsidiaries, taken as a whole; the
activities of each such subsidiary are permitted to
subsidiaries of a savings association holding company and of
a federally chartered savings bank by the rules,
regulations, resolutions and practices of the OTS; all of
the issued and outstanding capital stock of each such
subsidiary has been duly authorized and validly issued, is
fully paid and non-assessable and is owned by the Bank,
directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance,
claim or equity.
17
(x) The Foundation has been duly incorporated and is
validly existing as a non-stock corporation in good standing
under the laws of the State of Delaware with corporate power
to own, lease and operate its properties and to conduct its
business as described in the Prospectus; the Foundation is
not a savings and loan holding company within the meaning of
12 C.F.R. Section 574.2(q) as a result of the issuance of
shares of Common Stock to it in accordance with the terms of
the Plan and in the amounts described in the Prospectus; no
approvals are required to establish the Foundation and to
contribute the shares of Common Stock thereto as described
in the Prospectus other than those set forth in any written
notice or order of approval of the Reorganization
Application, copies of which were provided to the Agent
prior to the Closing Time.
(xi) Upon consummation of the Reorganization, all of
the issued and outstanding capital stock of the Bank when
issued and delivered pursuant to the Plan against payment of
consideration calculated as set forth in the Plan and set
forth in the Prospectus, will be duly authorized and validly
issued and fully paid and nonassessable, and all such
capital stock will be owned beneficially and of record by
the Company free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity.
(xii) The OTS has duly approved the Holding Company
Application and the MHC Application and no action is
pending, or threatened respecting the Holding Company
Application or the MHC Application (including therewith the
establishment of the Foundation and the contribution of
shares of common stock thereto) or the acquisition by the
Company of all of the Bank's issued and outstanding capital
stock; the Holding Company Application and the MHC
Application comply with the applicable requirements of the
OTS, includes all documents required to be filed as exhibits
thereto, and is truthful, accurate and complete; the Company
is duly authorized to become a savings association holding
company and is duly authorized to own all of the issued and
outstanding capital stock of the Bank to be issued pursuant
to the Plan; and the MHC is duly authorized to become a
federal mutual holding company and is duly authorized to own
a majority of the issued and outstanding capital stock of
the Company.
(xiii) The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby,
including the establishment of the Foundation and the
contribution thereto of the Charitable Foundation Shares (A)
have been duly and validly authorized by all necessary
action on the part of each of the Company, the MHC and the
Bank, and this Agreement constitutes the legal, valid and
binding agreement of each of the Company, the MHC and the
Bank, enforceable in accordance with its terms, except as
rights to indemnity and contribution hereunder may be
limited under applicable law (it being understood that such
counsel may avail itself of customary exceptions concerning
the effect of bankruptcy, insolvency or similar laws and the
availability of equitable remedies); (B) will not result in
any violation of the provisions of the charter or by-laws of
the Company, the MHC, the Bank or any of the Bank's
subsidiaries; and, (C) will not conflict with or constitute
a breach of, or default under, and no event has occurred
which, with notice or lapse of time or both, would
constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance, that,
individually or in the aggregate, would have a material
adverse effect on the financial condition, results of
operations or business affairs of the Company, the MHC, the
Bank and the Bank's subsidiaries considered as one
enterprise, upon any property or assets of the Company, the
MHC, the Bank or the Bank's subsidiaries pursuant to any
contract, indenture, mortgage, loan agreement, note, lease
or other instrument to which the Company, the MHC, the Bank
or the
18
Bank's subsidiaries is a party or by which any of them may
be bound, or to which any of the property or assets of the
Company, the MHC, the Bank or the Bank's subsidiaries is
subject.
(xiv) The Prospectus has been duly authorized by the
OTS for final use pursuant to the OTS Regulations and no
action is pending or threatened by the OTS to revoke such
authorization.
(xv) The Registration Statement is effective under
the Securities Act and no stop order suspending the
effectiveness of the Registration Statement has been issued
under the Securities Act or proceedings therefor initiated
or threatened by the SEC.
(xvi) No further approval, authorization, consent or
other order of any public board or body is required in
connection with the execution and delivery of this
Agreement, the issuance of the Securities and the
consummation of the Reorganization, except as may be
required under the securities or Blue Sky laws of various
jurisdictions as to which no opinion need be rendered.
(xvii) At the time the Registration Statement became
effective, the Registration Statement (other than the
financial statements and statistical data included therein,
as to which no opinion need be rendered) complied as to form
in all material respects with the requirements of the
Securities Act and the Securities Act Regulations and the
OTS Regulations.
(xviii) The Common Stock conforms to the description
thereof contained in the Prospectus, and the form of
certificate used to evidence the Common Stock is in due and
proper form and complies with all applicable statutory
requirements.
(xix) There are no legal or governmental proceedings
pending or threatened against or affecting the Company, the
MHC, the Bank, the Bank's subsidiaries, or the Foundation
which are required, individually or in the aggregate, to be
disclosed in the Registration Statement and Prospectus,
other than those disclosed therein, and all pending legal or
governmental proceedings to which the Company, the MHC, the
Bank or any of the Bank's subsidiaries is a party or to
which any of their property is subject which are not
described in the Registration Statement, including ordinary
routine litigation incidental to the business, are,
considered in the aggregate, not material.
(xx) The information in the Prospectus under "Our
Policy Regarding Dividends," "Business of SBU Bank - Legal
Proceedings," "Regulation," "Federal and State Taxation,"
"The Reorganization and the Offering - Effects of
Reorganization," "- Liquidation Rights," and "- Federal and
State Tax Consequences," "Restrictions on Acquisitions of
Partners Trust Financial Group" and "Description of Capital
Stock" to the extent that it constitutes matters of law,
summaries of legal matters, documents or proceedings, or
legal conclusions, has been reviewed by them and is complete
and accurate in all material respects.
(xxi) To the best of such counsel's knowledge, there
are no contracts, indentures, mortgages, loan agreements,
notes, leases or other instruments required to be described
or referred to in the Registration Statement or to be filed
as exhibits thereto other than those described or referred
to therein or filed as exhibits thereto, the descriptions
thereof or references thereto are correct, and no default
exists, and no event has occurred which, with notice or
lapse of time or both, would constitute a default, in the
due performance or observance of any material obligation,
agreement,
19
covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other instrument so
described, referred to or filed.
(xxii) The Plan has been duly authorized by the Boards
of Directors of the Company, the MHC, the Bank and, the
OTS's approval of the Plan remains in full force and effect;
the Bank's charter has been amended, effective upon
consummation of the Reorganization and the filing of such
amended charter with the OTS, to authorize the issuance of
permanent capital stock; to the best of such counsel's
knowledge, the Company, the MHC and the Bank have conducted
the Reorganization and the establishment and funding of the
Foundation in all material respects in accordance with
applicable requirements of the OTS Regulations, the Plan and
all other applicable regulations, decisions and orders
thereunder, including all material applicable terms,
conditions, requirements and conditions precedent to the
Reorganization imposed upon the Company, the MHC or the Bank
by the OTS and, no order has been issued by the OTS to
suspend the Reorganization or the Offerings and no action
for such purpose has been instituted or threatened by the
OTS; and, to the best of such counsel's knowledge, no person
has sought to obtain review of the final action of the OTS
in approving the MHC Application (which includes the Plan
which provides for the establishment of the Foundation) or
the Holding Company Application.
(xxiii) To the best of such counsel's knowledge, the
Company, the MHC and the Bank and the Bank's subsidiaries
have obtained all licenses, permits and other governmental
authorizations currently required for the conduct of their
respective businesses as described in the Registration
Statement and Prospectus, and all such licenses, permits and
other governmental authorizations are in full force and
effect, and the Company, the MHC and the Bank and the Bank's
subsidiaries are in all material respects complying
therewith.
(xxiv) Neither the Company, the MHC, the Bank nor any
of the Bank's subsidiaries is in violation of its
certificate of incorporation, organization certificate,
articles of incorporation or charter, as the case may be, or
bylaws (and the Bank will not be in violation of its charter
in stock form upon consummation of the Reorganization) or in
default (nor has any event occurred which, with notice or
lapse of time or both, would constitute a default) in the
performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to
which the Company, the MHC, the Bank or any of the Bank's
subsidiaries is a party or by which the Company, the MHC,
the Bank or any of the Bank's subsidiaries or any of their
property may be bound.
(xxv) The Company is not required to be registered as
an investment company under the Investment Company Act of
1940.
(2) The favorable opinion, dated as of Closing Time, of
Xxxxxxx Spidi & Xxxxx, PC, counsel for the Agent, with respect to
the matters set forth in Section 5(b)(1)(i), (iv), (v), (vi)
(solely as to preemptive rights arising by operation of law),
(xi), (xiii), (xvi) and (xvii) and such other matters as the
Agent may reasonably require.
(3) In giving their opinions required by subsections (b)(l)
and (b)(2), respectively, of this Section, Xxxx Xxxxxx Xxxxxx
Xxxxxxxx & Xxxxxx, P.C. and Xxxxxxx Spidi & Xxxxx, PC shall each
additionally state that nothing has come to their attention that
would lead them to believe that the Registration Statement
(except for financial statements and schedules and other
financial or statistical data included therein, as to which
counsel need make no statement), at the
20
time it became effective, contained an untrue statement of a
material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus (except for
financial statements and schedules and other financial or
statistical data included therein, as to which counsel need
make no statement), at the time the Registration Statement
became effective or at Closing Time, included an untrue
statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made,
not misleading. In giving their opinions, Xxxx Xxxxxx Xxxxxx
Xxxxxxxx & Xxxxxx, P.C. and Xxxxxxx Spidi & Xxxxx, PC may
rely as to matters of fact on certificates of officers and
directors of the Company, the MHC and the Bank and
certificates of public officials, and as to certain matters
of New York Law upon the opinion of KPMG LLP, which opinions
shall be in form and substance satisfactory to counsel for
the Agent, and Xxxxxxx Spidi & Xxxxx, PC may also rely on
the opinion of Xxxx Xxxxxx Xxxxxx Xxxxxxxx & Xxxxxx, P.C.
(c) At Closing Time referred to in Section 2, the Company,
the MHC and the Bank shall have completed in all material
respects the conditions precedent to the Reorganization in
accordance with the Plan, the applicable OTS Regulations and all
other applicable laws, regulations, decisions and orders,
including all terms, conditions, requirements and provisions
precedent to the Reorganization imposed upon the Company, the MHC
or the Bank by the OTS, or any other regulatory authority other
than those which the OTS permits to be completed after the
Reorganization.
(d) At Closing Time, there shall not have been, since the
date hereof or since the respective dates as of which information
is given in the Registration Statement and the Prospectus, any
material adverse change in the financial condition, results of
operations or business affairs of the Company, the MHC, the Bank
and the Bank's subsidiaries considered as one enterprise, whether
or not arising in the ordinary course of business, and the Agent
shall have received a certificate of the President and Chief
Executive Officer of the Company, the MHC and the Bank, and the
chief financial or chief accounting officer of the Company, the
MHC and of the Bank, dated as of Closing Time, to the effect that
(i) there has been no such material adverse change, (ii) there
shall have been no material transaction entered into by the
Company, the MHC or the Bank from the latest date as of which the
financial condition of the Company, the MHC or the Bank as set
forth in the Registration Statement and the Prospectus other than
transactions referred to or contemplated therein and transactions
in the ordinary cause of business, (iii) neither the Company, the
MHC nor the Bank shall have received from the OTS any direction
(oral or written) to make any material change in the method of
conducting its business with which it has not complied (which
direction, if any, shall have been disclosed to the Agent) or
which materially and adversely would affect the business,
financial condition or results of operations of the Company, the
MHC the Bank or the Bank's subsidiaries, (iv) the representations
and warranties in Section 1 hereof are true and correct with the
same force and effect as though expressly made at and as of the
Closing Time, (v) the Company, the MHC and the Bank have complied
with all agreements and satisfied all conditions on their part to
be performed or satisfied at or prior to Closing Time, (vi) no
stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose
have been initiated or threatened by the SEC and (vii) no order
suspending the Offerings or the authorization for final use of
the Prospectus has been issued and no proceedings for that
purpose have been initiated or threatened by the OTS or the FDIC
and no person has sought to obtain regulatory or judicial review
of the action of the OTS in approving the Plan in accordance with
the OTS Regulations nor has any person sought to obtain
regulatory or judicial review of the action of the OTS in
approving the Holding Company Application.
(e) At the time of the execution of this Agreement, the
Agent shall have received from KPMG LLP a letter dated such date,
in form and substance satisfactory to the Agent, to the effect
that (i) they are independent public accountants with respect to
the Company, the MHC, the Bank and the Bank's subsidiaries within
the meaning of the Code of Ethics of the American Institute of
Certified Public Accountants, the Securities Act and the
Securities Act Regulations and the OTS Regulations; (ii) it is
21
their opinion that the consolidated financial statements and
supporting schedules included in the Registration Statement and
covered by their opinions therein comply as to form in all
material respects with the applicable accounting requirements of
the Securities Act and the Securities Act Regulations; (iii)
based upon limited procedures as agreed upon by the Agent and
KPMG LLP set forth in detail in such letter, nothing has come to
their attention which causes them to believe that (A) the
unaudited financial statements and supporting schedules of the
Bank and its subsidiaries included in the Registration Statement
do not comply as to form in all material respects with the
applicable accounting requirements of the Securities Act, the
Securities Act Regulations and the OTS Regulations or are not
presented in conformity with generally accepted accounting
principles applied on a basis substantially consistent with that
of the audited financial statements included in the Registration
Statement and the Prospectus, (B) the unaudited amounts of net
interest income and net income set forth under "Selected
Consolidated Financial and Other Data" in the Registration
Statement and Prospectus do not agree with the amounts set forth
in unaudited consolidated financial statements as of and for the
dates and periods presented under such captions or such amounts
were not determined on a basis substantially consistent with that
used in determining the corresponding amounts in the audited
financial statements included in the Registration Statement, (C)
at a specified date not more than five days prior to the date of
this Agreement, there has been any increase in the consolidated
long term or short term debt of the Bank and its subsidiaries or
any decrease in consolidated total assets, the allowance for loan
losses, total deposits or net worth of the Bank and its
subsidiaries, in each case as compared with the amounts shown in
the September 30, 2001 balance sheet included in the Registration
Statement or, (D) during the period from September 30, 2001] to a
specified date not more than five days prior to the date of this
Agreement, there were any decreases, as compared with the
corresponding period in the preceding year, in total interest
income, net interest income, net interest income after provision
for loan losses, income before income tax expense or net income
of the Bank and its subsidiaries, except in all instances for
increases or decreases which the Registration Statement and the
Prospectus disclose have occurred or may occur; and (iv) in
addition to the examination referred to in their opinions and the
limited procedures referred to in clause (iii) above, they have
carried out certain specified procedures, not constituting an
audit, with respect to certain amounts, percentages and financial
information which are included in the Registration Statement and
Prospectus and which are specified by the Agent, and have found
such amounts, percentages and financial information to be in
agreement with the relevant accounting, financial and other
records of the Company, the MHC, the Bank and the Bank's
subsidiaries identified in such letter.
(f) At Closing Time, the Agent shall have received from
KPMG LLP a letter, dated as of Closing Time, to the effect that
they reaffirm the statements made in the letter furnished
pursuant to subsection (d) of this Section, except that the
specified date referred to shall be a date not more than five
days prior to Closing Time.
(g) At Closing Time, the Securities shall have been
approved for listing on the Nasdaq National Market upon notice of
issuance.
(h) At Closing Time, the Agent shall have received a letter
from RP Financial, LC, dated as of the Closing Time, confirming
its appraisal.
(i) At Closing Time, counsel for the Agent shall have been
furnished with such documents and opinions as they may require
for the purpose of enabling them to pass upon the issuance and
sale of the Securities and the Charitable Foundation Shares as
herein contemplated and related proceedings, or in order to
evidence the accuracy of any of the representations or
warranties, or the fulfillment of any of the conditions, herein
contained; and all proceedings taken by the Company in connection
with the issuance and sale of the Securities and the Charitable
Foundation Shares as herein contemplated shall be satisfactory in
form and substance to the Agent and counsel for the Agent.
(j) At any time prior to Closing Time, (i) there shall not
have occurred any material adverse change in the financial
markets in the United States or elsewhere or any outbreak of
hostilities or
22
escalation thereof or other calamity or crisis the effect of which, in the
judgment of the Agent, are so material and adverse as to make it
impracticable to market the Securities or to enforce contracts, including
subscriptions or orders, for the sale of the Securities, and (ii) trading
generally on either the American Stock Exchange, the New York Stock
Exchange or the Nasdaq Stock Market shall not have been suspended, and
minimum or maximum prices for trading shall not have been fixed, or maximum
ranges for prices for securities have been required, by either of said
Exchanges or by order of the SEC or any other governmental authority, and a
banking moratorium shall not have been declared by either Federal or New
York authorities.
SECTION 6. Indemnification.
(a) The Company, the MHC and the Bank, jointly and severally, agree
to indemnify and hold harmless the Agent, each person, if any, who controls the
Agent, within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, and its respective partners, directors, officers, employees
and agents as follows:
(i) from and against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, related to or arising out of the
Reorganization (including the establishment of the Foundation and the
contribution of the Charitable Foundation Shares thereto by the Company) or
any action taken by the Agent where acting as agent of the Company, the MHC
or the Bank or otherwise as described in Section 2 hereof;
(ii) from and against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, based upon or arising out of any
untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement (or any amendment thereto), or the omission
or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact contained in the Proxy Statement or Prospectus (or any
amendment or supplement thereto) or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
(iii) from and against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or of any claim
whatsoever described in clauses (i) or (ii) above, if such settlement is
effected with the written consent of the Company, the MHC or the Bank,
which consent shall not be unreasonably withheld; and
(iv) from and against any and all expense whatsoever, as
incurred (including, subject to Section 6(c) hereof, the fees and
disbursements of counsel chosen by the Agent), reasonably incurred in
investigating, preparing for or defending against any litigation, or any
investigation, proceeding or inquiry by any governmental agency or body,
commenced or threatened, or any claim pending or threatened whatsoever
described in clauses (i) or (ii) above, to the extent that any such expense
is not paid under (i), (ii) or (iii) above;
provided, however, that the indemnification provided for in this paragraph (a)
shall not apply to any loss, liability, claim, damage or expense to the extent
arising out of any untrue statement or alleged untrue statement of a material
fact contained in the Prospectus (or any amendment or supplement thereto) or the
omission or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading which was made in reliance upon and in conformity with
the Agent Information.
(b) The Agent agrees to indemnify and hold harmless the Company, the
Bank, the MHC, their directors, each of their officers who signed the
Registration Statement, and each person, if any, who controls
23
the Company within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act against any and all loss, liability, claim, damage and
expense described in the indemnity contained in subsection (a) of this Section,
as incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, of a material fact made in the Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with the
Agent Information.
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
which it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of any such
action. In no event shall the indemnifying parties be liable for fees and
expenses of more than one counsel (in addition to no more than one local counsel
in each separate jurisdiction in which any action or proceeding is commenced)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances.
(d) The Company, the MHC and the Bank also agree that the Agent shall
not have any liability (whether direct or indirect, in contract or tort or
otherwise) to the Company, the Bank, the MHC, members of the MHC, security
holders of the Company or the Bank's, the MHC or the Company's creditors
relating to or arising out of the engagement of the Agent pursuant to, or the
performance by the Agent of the services contemplated by, this Agreement.
(e) In addition to, and without limiting, the provisions of Section
(6)(a)(iv) hereof, in the event that any Agent, any person, if any, who controls
the Agent within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act or any of its partners, directors, officers, employees or
agents is requested or required to appear as a witness or otherwise gives
testimony in any action, proceeding, investigation or inquiry brought by or on
behalf of or against the Company, the MHC, the Bank, the Agent or any of its
respective affiliates or any participant in the transactions contemplated hereby
in which the Agent or such person or agent is not named as a defendant, the
Company, the MHC and the Bank jointly and severally agree to reimburse the Agent
for all reasonable and necessary out-of-pocket expenses incurred by it in
connection with preparing or appearing as a witness or otherwise giving
testimony and to compensate the Agent in an amount to be mutually agreed upon.
SECTION 7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 hereof is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Company, the MHC,
the Bank and the Agent shall contribute to the aggregate losses, liabilities,
claims, damages and expenses of the nature contemplated by said indemnity
agreement incurred by the Company, the MHC or the Bank and the Agent, as
incurred, in such proportions (i) that the Agent is responsible for that portion
represented by the percentage that the maximum aggregate marketing fees
appearing on the cover page of the Prospectus bears to the maximum aggregate
gross proceeds appearing thereon and the Company, the MHC and the Bank are
jointly and severally responsible for the balance or (ii) if, but only if, the
allocation provided for in clause (i) is for any reason held unenforceable, in
such proportion as is appropriate to reflect not only the relative benefits to
the Company, the MHC and the Bank on the one hand and the Agent on the other, as
reflected in clause (i), but also the relative fault of the Company, the MHC and
the Bank on the one hand and the Agent on the other, as well as any other
relevant equitable considerations; provided, however, that no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section, each
person, if any, who controls the Agent within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Agent, and each director of the Company, the MHC or the
Bank, each officer of the Company who signed the Registration Statement, and
each person, if any, who controls the Company, the MHC or the Bank within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
shall have the same rights to contribution as the Company, the MHC and the Bank.
24
Notwithstanding anything to the contrary set forth herein, to the extent
permitted by applicable law, in no event shall the Agent be required to
contribute an aggregate amount in excess of the aggregate marketing fees to
which the Agent is entitled and actually paid pursuant to this Agreement.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement, or contained in certificates of officers of the Company, the MHC or
the Bank submitted pursuant hereto, shall remain operative and in full force and
effect, regardless of any investigation made by or on behalf of any Agent or
controlling person, or by or on behalf of the Company, the MHC or the Bank and
shall survive delivery of the Securities.
SECTION 9. Termination of Agreement.
(a) The Agent may terminate this Agreement, by notice to the Company,
at any time at or prior to Closing Time (i) if there has been, since the date of
this Agreement or since the respective dates as of which information is given in
the Registration Statement, any material adverse change in the financial
condition, results of operations or business affairs of the Company, the MHC,
the Bank or the Bank's subsidiaries, or the Company, the MHC, the Bank and the
Bank's subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States or elsewhere or any
outbreak of hostilities or escalation thereof or other calamity or crisis the
effect of which, in the judgment of the Agent, are so material and adverse as to
make it impracticable to market the Securities or to enforce contracts,
including subscriptions or orders, for the sale of the Securities, (iii) if
trading generally on the Nasdaq Stock Market, the American Stock Exchange or the
New York Stock Exchange has been suspended, or minimum or maximum prices for
trading have been fixed, or maximum ranges for prices for securities have been
required, by either of said Exchanges or by order of the SEC or any other
governmental authority, or if a banking moratorium has been declared by either
Federal or New York authorities, (iv) if any condition specified in Section 5
shall not have been fulfilled when and as required to be fulfilled; (v) if there
shall have been such material adverse change in the condition or prospects of
the Company, the MHC or the Bank or the prospective market for the Company's
securities as in the Agent's good faith opinion would make it inadvisable to
proceed with the offering, sale or delivery of the Securities; (vi) if, in the
Agent's good faith opinion, the price for the Securities established by RP
Financial, LC is not reasonable or equitable under then prevailing market
conditions, or (vii) if the Reorganization is not consummated on or prior to
June 30, 2002.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof relating to the reimbursement of expenses and
except that the provisions of Sections 6 and 7 hereof shall survive any
termination of this Agreement.
SECTION 10. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Agent
shall be directed to the Agent at attention of Xxxxxxxxx X. Xxxxxx, General
Counsel, 0 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, and after February 1,
2002, notices should be sent to 000 Xxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000 with a copy to Xxxx X. Spidi, Esq., Xxxxxxx Spidi & Xxxxx, PC, 0000 Xxx
Xxxx Xxxxxx, X.X., Xxxxx 000 Xxxx, Xxxxxxxxxx, X.X. 00000; notices to the
Company, the MHC and the Bank shall be directed to any of them at The Savings
Bank of Utica, attention: Xxxx X. Xxxxxxxx, President and Chief Executive
Officer, 000 Xxxxxxx Xxxxxx, Xxxxx, Xxx Xxxx, 00000 with a copy to Xxxx Xxxxxx
at Xxxx Xxxxxx Xxxxxx Xxxxxxxx & Xxxxxx, P.C. at 0000 Xxxxxxxxx Xxxxxx, XX Xxxxx
000, Xxxxxxxxxx, X.X. 00000.
SECTION 11. Parties. This Agreement shall inure to the benefit of and
be binding upon the Agent, the Company, the MHC and the Bank and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Agent, the Company, the MHC and the Bank and their respective
successors and the controlling persons and officers and directors referred to in
Sections 6 and 7 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein or therein contained. This Agreement and all conditions and
provisions hereof and thereof are intended to be for the sole and exclusive
benefit of the Agent, the Company, the MHC and the Bank and their respective
successors, and said controlling
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persons and officers and directors and their heirs and legal representatives,
and for the benefit of no other person, firm or corporation.
SECTION 12. Entire Agreement; Amendment. This Agreement represents the
entire understanding of the parties hereto with reference to the transactions
contemplated hereby and supersedes any and all other oral or written agreements
heretofore made, except for the engagement letter dated August 29, 2001 by and
between the Agent and the Bank, relating to the Agent's providing Reorganization
agent services to the Company, the MHC and the Bank in connection with the
Reorganization. No waiver, amendment or other modification of this Agreement
shall be effective unless in writing and signed by the parties hereto.
SECTION 13. Governing Law and Time. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York applicable
to agreements made and to be performed in said State without regard to the
conflicts of laws provisions thereof. Unless otherwise noted, specified times of
day refer to Eastern time.
SECTION 14. Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
SECTION 15. Headings. Sections headings are not to be considered part
of this Agreement, are for convenience and reference only, and are not to be
deemed to be full or accurate descriptions of the contents of any paragraph or
subparagraph.
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Agent, the Company, the MHC and the Bank in accordance with its
terms.
Very truly yours,
Partners Trust Financial Group, Inc.
(In Formation)
By: ________________________________________
Xxxx X. Xxxxxxxx
President and Chief Executive Officer
SBU Bank
By: ________________________________________
Xxxx X. Xxxxxxxx
President and Chief Executive Officer
Partners Trust, MHC
(In Formation)
By: ________________________________________
Xxxx X. Xxxxxxxx
President and Chief Executive Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
Sandler X'Xxxxx & Partners, L.P.
By: Sandler X'Xxxxx & Partners Corp.,
the sole general partner
By: ________________________________
Vice President
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