Exhibit 1.2 - Form of Agency Agreement
1,955,000 Shares
(subject to increase up to 2,248,250 shares
in the event of an oversubscription)
GSB FINANCIAL CORPORATION
(a Delaware corporation)
COMMON STOCK
($0.01 Par Value Per Share)
Subscription Price: $10.00 Per Share
AGENCY AGREEMENT
May __, 1997
Capital Resources, Inc.
0000 Xxxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Ladies and Gentlemen:
GSB Financial Corporation (the "Company") and Goshen Savings
Bank, a federally chartered mutual savings bank ("Bank"), with its deposit
accounts insured by the Bank Insurance Fund ("BIF") administered by the Federal
Deposit Insurance Corporation ("FDIC"), hereby confirm their agreement with
Capital Resources, Inc. ("Capital Resources") as follows:
SECTION 1. The Offering. The Bank, in accordance with and
pursuant to its plan of conversion adopted by the Board of Directors of the Bank
(the "Plan"), intends to be converted from a federally-chartered mutual savings
bank to a federally-chartered stock savings bank and will sell all of its issued
and outstanding stock to the Company. The Company will offer and sell its common
stock (the "Common Stock") in a subscription offering ("Subscription Offering")
to (1) depositors of the Bank as of December 31, 1995 ("Eligible Account
Holders"), (2) tax qualified employee benefit plans of the Bank, (3) depositors
of the Bank as of March 31, 1997 ("Supplemental Eligible Account Holders") and
(4) certain other deposit account holders of the Bank ("Other Members"),
pursuant to rights to subscribe for shares of Common Stock (the "Shares").
Subject to the prior subscription rights of the above-listed parties, the
Company may offer for sale in a public offering (the "Public Offering," and when
referred to together with the Subscription Offering, the "Subscription and
Public Offerings") conducted after the Subscription Offering, the Shares not so
subscribed for or ordered in the Subscription Offering to the general public
(all such offerees being referred to in the aggregate as "Eligible Offerees").
It is acknowledged that the purchase of Shares in the Subscription and Public
Offerings is subject to maximum and minimum purchase limitations as described in
the Plan and that the Company may reject in whole or in part any subscriptions
received from subscribers in the Public Offering.
The Company and the Bank desire to retain Capital Resources to
assist the Company with its sale of the Shares in the Subscription and Public
Offerings. By and through this Agreement, the Company and the Bank confirm the
retention of Capital Resources to assist the Company and the Bank during the
Subscription and Public Offerings.
The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-l (File No.
333-23573) containing an offering prospectus relating to the Subscription and
Public Offerings for the registration of the Shares under the Securities Act of
1933, as amended (the "1933 Act"), and has filed such amendments thereto, if
any, and such amended prospectuses as may have been required to the date hereof
(the "Registration Statement"). The prospectus, as amended, included in the
Registration Statement at the time it initially becomes effective, is
hereinafter called the "Offering Prospectus", except that if any prospectus is
filed by the Company pursuant to Rule 424(b) or (c) of the rules and regulations
of the Commission under the 1933 Act (the "1933 Act Regulations") differing from
the offering prospectus included in the Registration Statement at the time it
initially becomes effective, the term "Offering Prospectus" shall refer to the
offering prospectus filed pursuant to Rule 424(b) or (c) from and after the time
said offering prospectus is filed with or mailed to the Commission for filing.
In accordance with Title 12, Part 563b of the Code of Federal
Regulations (the "Conversion Regulations"), the Bank has filed with the Office
of Thrift Supervision (the "OTS") an Application for Approval of Conversion on
Form AC (the "Conversion Application") including the Offering Prospectus and has
filed such amendments thereto, if any, as may have been required by the OTS. The
Conversion Application has been approved by the OTS. The Company has filed with
the OTS its application on Form H-(e)1-S (the "Holding Company Application") to
acquire the Bank under the Home Owners' Loan Act, as amended (12 U.S.C. ss.
1467a) ("HOLA").
SECTION 2. Retention of Capital Resources; Compensation; Sale
and Delivery of the Shares. Subject to the terms and conditions herein set
forth, the Company and the Bank hereby appoint Capital Resources as their agent
to advise and assist the Company and the Bank with the Company's sale of the
Shares in the Subscription and Public Offerings.
On the basis of the representations, warranties, and
agreements herein contained, but subject to the terms and conditions herein set
forth, Capital Resources accepts such appointment and agrees to consult with and
advise the Company and the Bank as to matters relating to the Conversion and the
Subscription and Public Offerings. It is acknowledged by the Company and the
Bank that Capital Resources shall not be required to purchase any Shares and
shall not be obligated to take any action which is inconsistent with any
applicable laws, regulations, decisions or orders. The obligations of Capital
Resources pursuant to this Agreement shall terminate upon the completion or
termination or abandonment of the Plan by the Company or the Bank or upon
termination of the Subscription and Public Offerings, or if the terms of the
Conversion are substantially amended so as to materially and adversely change
the role of Capital Resources, but in no event later than 45 days after the
completion of the Subscription and Public Offerings (the "End Date"). All fees
due to Capital Resources but unpaid will be payable to Capital Resources in next
day funds at the earlier of the Closing Date (as hereinafter defined) or the End
Date. In the event the Subscription and Public Offerings are extended beyond the
End Date, the Company, the Bank and Capital Resources may mutually agree to
renew this Agreement under mutually acceptable terms.
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In the event the Company is unable to sell a minimum of
1,445,000 Shares within the period herein provided, this Agreement shall
terminate, and the Company shall refund to any persons who have subscribed for
any of the Shares, the full amount which it may have received from them plus
accrued interest as set forth in the Offering Prospectus; and none of the
parties to this Agreement shall have any obligation to the other parties
hereunder, except as set forth in this Section 2 and in Sections 7, 9 and 10
hereof.
In the event the closing does not occur, the Conversion is
terminated or otherwise abandoned, or the terms of the Conversion are
substantially amended so as to materially and adversely change the role of
Capital Resources, Capital Resources shall be reimbursed for all reasonable
legal fees and out-of-pocket expenses for rendering financial advice to the Bank
concerning the structure of the Conversion, preparing a market and financial
analysis, performing due diligence and assisting in the preparation of the
Application for Conversion and the Registration Statement, which shall be paid
upon such termination, abandonment or amendment or within five days of such
event.
If all conditions precedent to the consummation of the
Conversion, including, without limitation, the sale of all Shares required by
the Plan to be sold, are satisfied, the Company agrees to issue or have issued
the Shares sold in the Subscription and Public Offerings and to release for
delivery certificates for such Shares on the Closing Date (as hereinafter
defined) against payment to the Company by any means authorized by the Plan,
provided, however, that except as otherwise required by law, no certificates
shall be released for such shares until the conditions specified in Sections
2(a) and 7 hereof shall have been complied with. The release of Shares against
payment therefor shall be made on a date and at a time and place acceptable to
the Company, the Bank and Capital Resources. The date upon which the Company
shall release or deliver the Shares sold in the Subscription and Public
Offerings, in accordance with the terms hereof, is herein called the "Closing
Date."
Capital Resources shall receive the following compensation for
its services hereunder:
(a) a marketing fee in the amount of two percent (2.0%) of the
aggregate dollar amount of all Shares sold in the Subscription and Public
Offerings, excluding shares sold to the Bank's or the Company's Employee Stock
Ownership Plan, directors, officers or employees of the Bank or the Company, and
any member of such person's immediate family (defined to include children,
spouse, parents, grandparents and grandchildren);
(b) Capital Resources shall be reimbursed for all reasonable
out-of-pocket expenses, including, but not limited to, legal fees, travel,
communications and postage, incurred by it whether or not the Conversion is
successfully completed as set forth in Section 7 hereof. Reimbursement for
Capital Resources' legal and other expense hereunder shall not exceed $35,000
and $20,000 respectively, unless the Bank has approved such expense prior to its
incurrence. Capital Resources shall be reimbursed promptly for all out-of-pocket
expenses upon receipt by the Company or the Bank of a monthly itemized xxxx
summarizing such expenses since the date of the last xxxx, if any, to the date
of the current xxxx.
All subscription funds received by Capital Resources (and if
by check shall be made payable to the Company) shall be transmitted (either by
U.S. Mail or similar type of transmittal) to the Company by noon of the
following business day.
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SECTION 3. Offering Prospectus; Subscription and Public
Offerings. The Shares are to be initially offered in the Subscription and Public
Offerings at the Purchase Price as set forth on the cover page of the Offering
Prospectus.
SECTION 4. Representations and Warranties. The Company and the
Bank jointly and severally represent and warrant to Capital Resources as
follows:
(a) The Registration Statement was declared effective by the
Commission on May __, 1997. At the time the Registration Statement, including
the Offering Prospectus contained therein (including any amendment or supplement
thereto), became effective, the Registration Statement complied in all material
respects with the requirements of the 1933 Act and the 1933 Act Regulations and
the Registration Statement, including the Offering Prospectus contained therein
(including any amendment or supplement thereto), any Blue Sky Application or any
Sales Information (as such terms are defined previously herein or in Section 9
hereof) authorized by the Company or the Bank for use in connection with the
Subscription and Public Offerings did not contain an untrue statement of a
material fact or except as to any Blue Sky Application, omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, and at
the time any Rule 424(b) or (c) Offering Prospectus was filed with or mailed to
the Commission for filing and at the Closing Date referred to in Section 2, the
Registration Statement including the Offering Prospectus contained therein
(including any amendment or supplement thereto), any Blue Sky Application or any
Sales Information (as such terms are defined previously herein or in Section 9
hereof) authorized by the Company or the Bank for use in connection with the
Subscription and Public Offerings will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the representations and warranties
in this Section 4(a) shall not apply to statements in or omissions from such
Registration Statement or, Offering Prospectus, made in reliance upon and in
conformity with written information furnished to the Company or the Bank by
Capital Resources expressly and specifically regarding Capital Resources for use
under the captions "The Conversion-Marketing Arrangements, - "Plan of
Distribution," or - "Public Offering" or for inclusion in any Blue Sky
Application or Sales Information, as such terms are defined herein.
(b) The Conversion Application, including the Offering
Prospectus, was approved by the OTS on May __, 1997. At the time of the approval
of the Conversion Application, including the Offering Prospectus, by the OTS
(including any amendment or supplement thereto) and at all times subsequent
thereto until the Closing Date, the Conversion Application, including the
Offering Prospectus, will comply in all material respects with the Conversion
Regulations and any other rules and regulations of the OTS. The Conversion
Application, including the Offering Prospectus (including any amendment or
supplement thereto), does not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that representations or warranties in
this Section 4(b) shall not apply to statements in or omissions from such
Conversion Application or Offering Prospectus made in reliance upon and in
conformity with written information furnished to the Bank by Capital Resources
expressly and specifically regarding Capital Resources for use in the Offering
Prospectus contained in the Conversion Application under the captions "The
Conversion- Marketing Arrangements, " - Public Offering", or "Plan of
Distribution."
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(c) The Company has filed with the OTS the Holding Company
Application and will have received, as of the Closing Date, approval of its
acquisition of the Bank from the OTS.
(d) No order has been issued by the OTS, the Commission, the
FDIC (and hereinafter reference to the FDIC shall include the BIF), or to the
best knowledge of the Company or the Bank any State regulatory or Blue Sky
authority, preventing or suspending the use of the Offering Prospectus and no
action by or before any such government entity to revoke any approval,
authorization or order of effectiveness related to the Conversion is, to the
best knowledge of the Bank or the Company, pending or threatened.
(e) At the Closing Date referred to in Section 2, the Plan
will have been adopted by the Board of Directors of both the Company and the
Bank, the Company and the Bank will have completed all material conditions
precedent to the Conversion and the offer and sale of the Shares will have been
conducted in accordance with the Plan, the Conversion Regulations and all other
applicable laws, regulations, and all written terms, conditions, requirements
and provisions precedent to the Conversion imposed upon the Company or the Bank
by the OTS (including the OTS approval order described in paragraph (b) of this
Section 4), the Commission or any other regulatory authority and in the manner
described in the Offering Prospectus. At the Closing Date, no person will have
sought to obtain review of the final action of the OTS, to the knowledge of the
Company or the Bank, in approving the Plan or in approving the Conversion or the
Company's application to acquire all of the capital stock and control of the
Bank pursuant to the HOLA or any other statute or regulation.
(f) The Bank is now an organized and validly existing
federally-chartered savings bank in mutual form of organization and upon the
Conversion will become a duly organized and validly existing federally-chartered
savings bank in capital stock form of organization, in both instances duly
authorized to conduct its business and own its property as described in the
Registration Statement and the Offering Prospectus; the Company and the Bank
have obtained all material licenses, permits and other governmental
authorizations currently required for the conduct of their respective
businesses; all such licenses, permits and governmental authorizations are in
full force and effect, and the Company and the Bank are in all material respects
complying with all material laws, rules, regulations and orders applicable to
the operation of their businesses; and the Bank is duly qualified as a foreign
corporation to transact business in each jurisdiction in which its ownership of
property or leasing of properties or the conduct of its business requires such
qualification, unless the failure to be so qualified in one or more of such
jurisdictions would not have a material adverse effect on the condition,
financial or otherwise, or the business, operations or income of the Bank. The
Bank does not own equity securities or any equity interest in any other business
enterprise except as described in the Offering Prospectus. Upon the completion
of the Conversion of the Bank pursuant to the Plan to a federally-chartered
stock savings bank, (i) all of the authorized and outstanding capital stock of
the Bank will be owned by the Company, and (ii) the Company will have no direct
subsidiaries other than the Bank. The Conversion will have been effected in all
material respects in accordance with all applicable statutes, regulations,
decisions and orders except to the extent compliance therewith shall have been
waived by OTS; and except with respect to the filing of certain post-sale,
post-conversion reports and documents in compliance with the 1933 Act
Regulations or the OTS's resolutions or letters of approval. All terms,
conditions, requirements and provisions with respect to the Conversion imposed
by the Commission, the OTS and the FDIC, if any, will have been complied with by
the Company and the Bank in all material
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respects or appropriate waivers will have been obtained and all material notice
and waiting periods will have been satisfied, waived or elapsed.
(g) The Company has been incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware with
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and the Offering
Prospectus, and the Company is qualified to do business as a foreign corporation
in any jurisdiction in which the conduct of its business requires such
qualification, except where the failure to so qualify would not have a material
adverse effect on the financial condition or the business operations or income
of the Company.
(h) The Bank is a member of the Federal Home Loan Bank of New
York ("FHLBNY"); and the deposit accounts of the Bank are insured by the FDIC up
to the applicable limits. Upon consummation of the Conversion, the liquidation
account for the benefit of Eligible Account Holders and Supplemental Eligible
Account Holders will be duly established in accordance with the requirements of
the Conversion Regulations.
(i) The Company and the Bank have good and marketable title to
all assets owned by them which are material to the business of the Company and
the Bank and to those assets described in the Registration Statement and
Offering Prospectus as owned by them, free and clear of all liens, charges,
encumbrances or restrictions, except such as are described in the Registration
Statement and Offering Prospectus or are not materially significant or important
in relation to the business of the Company and the Bank; and all of the leases
and subleases material to the business of the Company and the Bank under which
the Company or the Bank holds properties, including those described in the
Registration Statement and Offering Prospectus, are in full force and effect.
(j) The Bank has received an opinion of its counsel, Serchuck
& Zelermyer, with respect to the federal and state income tax consequences of,
and other matters relating to the Conversion of the Bank from mutual to stock
form as described in the Registration Statement and the Offering Prospectus; all
material aspects of the opinion of Serchuck & Zelermyer are accurately
summarized in the Offering Prospectus; and the facts and representations upon
which such opinion is based are truthful, accurate and complete, and neither the
Bank nor the Company will take any action inconsistent therewith.
(k) The Company and the Bank have all such power, authority,
authorizations, approvals and orders as may be required to enter into this
Agreement, to carry out the provisions and conditions hereof and to issue and
sell the Capital Stock of the Bank to the Company and Shares to be sold by the
Company as provided herein and as described in the Offering Prospectus. The
consummation of the Conversion, the execution, delivery and performance of this
Agreement and the consummation of the transactions herein contemplated have been
duly and validly authorized by all necessary corporate action on the part of the
Company and the Bank and this Agreement has been validly executed and delivered
by the Company and the Bank and is the valid, legal and binding agreement of the
Company and the Bank enforceable in accordance with its terms (except as the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar laws relating to or affecting the enforcement of
creditors' rights generally or the rights of creditors of savings and loan
holding companies, the accounts of whose subsidiaries are insured by the FDIC or
by general equity principles regardless of whether such enforceability
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is considered in a proceeding in equity or at law, and except to the extent, if
any, that the provisions of Sections 9 and 10 hereof may be unenforceable as
against public policy).
(l) The Company and the Bank are not in violation of any
written directive which has been delivered to the Company or the Bank or of
which management of the Company or the Bank has actual knowledge from the OTS,
the Commission, the FDIC or any other agency to make any material change in the
method of conducting their businesses so as to comply in all material respects
with all applicable statutes and regulations (including, without limitation,
regulations, decisions, directives and orders of the OTS, the Commission and the
FDIC) and except as set forth in the Registration Statement and the Offering
Prospectus there is no suit or proceeding or, to the knowledge of the Company or
the Bank, charge, investigation or action before or by any court, regulatory
authority or governmental agency or body, pending or, to the knowledge of the
Company or the Bank, threatened, which might materially and adversely affect the
Conversion, the performance of this Agreement or the consummation of the
transactions contemplated in the Plan and as described in the Registration
Statement or which might result in any material adverse change in the condition
(financial or otherwise), earnings, capital, properties, business affairs or
business prospects of the Company or the Bank or which would materially affect
their properties and assets.
(m) The financial statements which are included in the
Registration Statement and which are part of the Offering Prospectus fairly
present the financial condition, results of operations, retained earnings and
cash flows of the Bank at the respective dates thereof and for the respective
periods covered thereby, and comply as to form in all material respects with the
applicable accounting requirements of Title 12 of the Code of Federal
Regulations and generally accepted accounting principles ("GAAP") (including
those requiring the recording of certain assets at their current market value).
To the knowledge of the Company and the Bank, such financial statements have
been prepared in accordance with generally accepted accounting principles
consistently applied through the periods involved, present fairly in all
material respects the information required to be stated therein and are
consistent with the most recent financial statements and other reports filed by
the Bank with the OTS and the FDIC, except that accounting principles employed
in such filings conform to requirements of such authorities and not necessarily
to generally accepted accounting principles. The other financial, statistical
and pro forma information and related notes included in the Offering Prospectus
present fairly the information shown therein on a basis consistent with the
audited and unaudited financial statements, if any, of the Bank included in the
Offering Prospectus, and as to the pro forma adjustments, the adjustments made
therein have been properly applied on the basis described therein.
(n) Since the date as of which the Registration Statement was
declared effective by the SEC: (i) there has not been any material adverse
change, financial or otherwise, in the condition of the Company or the Bank, or
of the Company and the Bank considered as one enterprise, or in the earnings,
capital or properties of the Company or the Bank, whether or not arising in the
ordinary course of business, (ii) there has not been any other material change
which would require an amendment to the Offering Prospectus; (iii) the Bank has
not issued any securities or incurred any liability or obligation for borrowing
other than in the ordinary course of business; (iv) there have not been any
material transactions entered into by the Company or the Bank, except with
respect to those transactions entered into in the ordinary course of business;
and (v) the capitalization, liabilities, assets, properties and business of the
Company and the Bank conform in all material respects to the descriptions
thereof contained in the Offering Prospectus, and neither
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the Company nor the Bank have any material liabilities of any kind, contingent
or otherwise, except as set forth in the Offering Prospectus.
(o) As of the date hereof and as of the Closing Date, neither
the Company nor the Bank is in violation of its certificate of incorporation or
charter, respectively, or its bylaws (and the Bank will not be in violation of
its charter or bylaws in capital stock form as of the Closing Date) or in
default in the performance or observance of any material obligation, agreement,
covenant, or condition contained in any material contract, lease, loan
agreement, indenture or other instrument to which it is a party or by which it,
or any of its property may be bound which would result in a material adverse
change in the condition (financial or otherwise), earnings, capital, properties,
business affairs or business prospects of the Company or Association or which
would materially affect their properties or assets. The consummation of the
transactions herein contemplated will not (i) conflict with or constitute a
breach of, or default under, the certificate of incorporation and bylaws of the
Company, the charter and bylaws of the Bank (in either mutual or capital stock
form), or any material contract, lease or other instrument to which the Company
or the Bank has a beneficial interest, or any applicable law, rule, regulation
or order; (ii) violate any authorization, approval, judgment, decree, order,
statute, rule or regulation applicable to the Company or the Bank; or (iii) with
the exception of the Liquidation Account established in the Conversion, result
in the creation of any material lien, charge or encumbrance upon any property of
the Company or the Bank.
(p) No material default exists, and no event has occurred
which with notice or lapse of time, or both, would constitute a material default
on the part of the Company or the Bank, in the due performance and observance of
any term, covenant or condition of any indenture, mortgage, deed of trust, note,
bank loan or credit agreement or any other material instrument or agreement to
which the Company or the Bank is a party or by which any of them or any of their
property is bound or affected in any respect which, in any such cases, is
material to the Company or the Bank on a consolidated basis; such agreements are
in full force and effect; and no other party to any such agreements has
instituted or, to the best knowledge of the Company or the Bank, threatened any
action or proceeding wherein the Company or the Bank would or might be alleged
to be in default thereunder.
(q) Upon consummation of the Conversion, the authorized,
issued and outstanding equity capital of the Company will be within the range
set forth in the Registration Statement under the caption "Capitalization," and
no shares of Common Stock have been or will be issued and outstanding prior to
the Closing Date referred to in Section 2; the Shares will have been duly and
validly authorized for issuance and, when issued and delivered by the Company
pursuant to the Plan against payment of the consideration calculated as set
forth in the Plan and in the Offering Prospectus, will be duly and validly
issued and fully paid and non-assessable; the issuance of the Shares will not
violate any preemptive rights; and the terms and provisions of the Shares will
conform in all material respects to the description thereof contained in the
Registration Statement and the Offering Prospectus. To the knowledge of the Bank
and the Company, upon the issuance of the Shares, good title to the Shares will
be transferred from the Company to the purchasers thereof against payment
therefor, subject to such claims as may be asserted against the purchasers
thereof by third party claimants.
(r) 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
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Shares, except for the approval of the OTS, the Commission and any necessary
qualification or registration under the securities or blue sky laws of the
various states in which the Shares are to be offered and as may be required
under the regulations-of the National Association of Securities Dealers, Inc.
("NASD") and the National Association of Securities Dealers Automated Quotation
("NASDAQ") Stock Market.
(s) Xxxxxx & Xxxxxxxxx, P.C. ("NH") has certified the
financial statements of the Bank included in the Registration Statement at and
for the three years ended September 30, 1996, and NH is with respect to the
Company and the Bank an independent public accountant within the meaning of the
Code of Professional Ethics of the American Institute of Certified Public
Accountants and Title 12 of the Code of Federal Regulations, Section 571.2(c)(3)
and the 1933 Act and the 1933 Act Regulations.
(t) The Company and the Bank have (subject to all properly
obtained extensions) timely filed all required federal and state tax returns,
have paid all taxes that have become due and payable in respect of such returns,
have made adequate reserves for similar future tax liabilities and no deficiency
has been asserted with respect thereto by any taxing authority.
(u) Appropriate arrangements have been made for placing the
funds received from subscriptions for Shares in special interest-bearing
accounts with the Bank until all Shares are sold and paid for as described in
the Offering Prospectus, with provision for refund to the purchasers in the
event that the Conversion is not completed for whatever reason or for delivery
to the Company if all Shares are sold.
(v) The Company and the Bank are in compliance in all material
respects with the applicable financial record keeping and reporting requirements
of the Currency and Foreign Transactions Reporting Act of 1970, as amended, and
the regulations and rules thereunder.
(w) To the knowledge of the Company and the Bank, none of the
Company, the Bank nor directors or employees of the Company or the Bank have
made any payment of funds of the Company or the Bank as a loan to any person
other than the Employee Stock Ownership Plan Trust for the purchase of the
Shares.
(x) Prior to the Conversion, the Bank was not authorized to
issue shares of capital stock and neither the Company nor the Bank has: (i)
issued any securities within the last 18 months (except for notes to evidence
other bank loans and reverse repurchase agreements or other liabilities); (ii)
had any material dealings within the twelve months prior to the date hereof with
any member of the NASD, or any person related to or associated with such member,
other than discussions and meetings relating to the proposed Subscription and
Public Offerings and routine purchases and sales of U.S. government and agency
securities and other investment securities; (iii) entered into a financial or
management consulting agreement except as contemplated hereunder; and (iv)
engaged any intermediary between Capital Resources and the Company and the Bank
in connection with the offering of Common Stock, and no person is being
compensated in any manner for such service.
(y) All pending legal proceedings to which the Company or the
Bank is a party or of which any of their property is the subject which are not
described in the Registration Statement
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and the Offering Prospectus, including ordinary routine litigation incidental to
the business are, considered in the aggregate, not material.
(z) To the knowledge of the Company and the Bank, the Company
and the Bank comply in all material respects with all laws, rules and
regulations relating to environmental protection, and neither the Company nor
the Bank has been notified or is otherwise aware that any of them is potentially
liable, or is considered potentially liable in any material respect, under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, or any similar state or local laws. There are no actions, suits,
regulatory investigations or other proceedings pending or, to the knowledge of
the Company or the Bank, threatened against the Company or the Bank relating to
environmental protection, nor does the Company or the Bank have any reason to
believe any such proceedings may be brought against any of them.
Any certificates signed by an officer of the Company or the
Bank and delivered to Capital Resources or its counsel that refer to this
Agreement shall be deemed to be a representation and warranty by the Company or
the Bank to Capital Resources as to the matters covered thereby with the same
effect as if such representation and warranty were set forth herein.
SECTION 5. Capital Resources represents and warrants to the
Company and the Bank that:
(a) Capital Resources is a corporation and is validly existing
in good standing under the laws of the District of Columbia with full power and
authority to provide the services to be furnished to the Company and the Bank
hereunder.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary action on the part of Capital Resources, and this
Agreement has been duly and validly executed and delivered by Capital Resources
and is the legal, valid and binding agreement of Capital Resources, enforceable
in accordance with its terms.
(c) Each of Capital Resources and its employees, agents and
representatives who shall perform any of the services hereunder shall be duly
authorized and empowered, and shall have all licenses, approvals and permits
necessary, to perform such services and Capital Resources is a registered
selling agent in the jurisdictions listed in Exhibit A hereto and will remain
registered in such jurisdictions in which the Company is relying on such
registration for the sale of the Shares, until the Conversion is consummated or
terminated.
(d) The execution and delivery of this Agreement by Capital
Resources, the consummation of the transactions contemplated hereby and
compliance with the terms and provisions hereof will not conflict with, or
result in a breach of, any of the terms, provisions or conditions of, or
constitute a default (or event which with notice or lapse of time or both would
constitute a default) under, the certificate of incorporation of Capital
Resources or any agreement, indenture or other instrument to which Capital
Resources is a party or by which its property is bound, or law or regulation by
which Capital Resources is bound.
(e) Funds received by Capital Resources to purchase Common
Stock will be handled in accordance with Rule 15c2-4 under the Securities
Exchange Act of 1934, as amended.
-10-
(f) Capital Resources will comply with all applicable laws and
regulations in the performance of its obligations hereunder.
SECTION 6. Covenants of the Company and Bank. The Company and
the Bank hereby jointly and severally covenant with Capital Resources as
follows:
(a) The Company has filed the Registration Statement with the
Commission. The Company will not, at any time after the date the Registration
Statement is declared effective, file any amendment or supplement to the
Registration Statement without providing Capital Resources and its counsel
reasonable time to review such amendment or file any amendment or supplement to
which amendment Capital Resources or its counsel shall reasonably object.
(b) The Bank has filed the Conversion Application and the
Holding Company Application with the OTS. The Bank will not, at any time after
the date the Conversion Application is approved, file any amendment or
supplement to the Conversion Application without providing Capital Resources and
its counsel an opportunity to review such amendment or supplement or file any
amendment or supplement to which amendment or supplement Capital Resources or
its counsel shall reasonably object.
(c) The Company and the Bank will use their best efforts to
cause any post-effective amendment to the Registration Statement to be declared
effective by the Commission and any post-effective amendment to the Conversion
Application to be approved by the OTS and will immediately upon receipt of any
information concerning the events listed below notify Capital Resources and
promptly confirm the notice in writing: (i) when the Registration Statement, as
amended, has become effective; (ii) when the Conversion Application, as amended,
has been approved by the OTS; (iii) of the receipt of any comments from the
Commission, the OTS or the FDIC or any other governmental entity with respect to
the Conversion or the transactions contemplated by this Agreement; (iv) of the
request by the Commission, the OTS or the FDIC or any other governmental entity
for any amendment or supplement to the Registration Statement or for additional
information; (v) of the issuance by the Commission, the OTS, the FDIC or any
other governmental entity of any order or other action suspending the
Subscription or Public Offerings or the use of the Registration Statement or the
Offering Prospectus or any other filing of the Company and the Bank under the
Conversion Regulations or other applicable law, or the threat of any such
action; (vi) the issuance by the Commission, the OTS or the FDIC, or any other
state authority, of any stop order suspending the effectiveness of the
Registration Statement or of the initiation or threat of initiation or threat of
any proceedings for that purpose; or (vii) of the occurrence of any event
mentioned in paragraph (h) below. The Company and the Bank will make every
reasonable effort to prevent the issuance by the Commission, the OTS or the
FDIC, or any other state authority of any such order and, if any such order
shall at any time be issued, to obtain the lifting thereof at the earliest
possible time.
(d) The Company and the Bank will provide Capital Resources
and its counsel notice of its intention to file, and reasonable time to review
prior to filing any amendment or supplement to the Conversion Application or the
Holding Company Application and will not file any such amendment or supplement
to which Capital Resources shall reasonably object or which shall be reasonably
disapproved by its counsel.
-11-
(e) The Company and the Bank will deliver to Capital Resources
and to its counsel two conformed copies of each of the following documents, with
all exhibits: the Conversion Application and the Holding Company Application, as
originally filed and of each amendment or supplement thereto, and the
Registration Statement, as originally filed and each amendment thereto. Further,
the Company and the Bank will deliver such additional copies of the foregoing
documents to counsel for Capital Resources as may be required for any NASD and
blue sky filings. In addition, the Company and the Bank will also deliver to
Capital Resources such number of copies of the Offering Prospectus, as amended
or supplemented, as Capital Resources or its counsel may reasonably request.
(f) The Company will furnish to Capital Resources, from time
to time during the period when the Offering Prospectus (or any later prospectus
related to this Offering) is required to be delivered under the 1933 Act or the
Securities Exchange Act of 1934 (the "1934 Act"), such number of copies of such
prospectus (as amended or supplemented) as Capital Resources or its counsel may
reasonably request for the purposes contemplated by the 1933 Act or the 1934 Act
or the respective applicable rules and regulations of the Commission thereunder.
The Company authorizes Capital Resources to use the Offering Prospectus (as
amended or supplemented, if amended or supplemented) for any lawful manner in
connection with the sale of the Shares by Capital Resources.
(g) The Company and the Bank will comply in all material
respects with any and all terms, conditions, requirements and provisions with
respect to the Conversion and the transactions contemplated thereby imposed by
the Commission, by applicable Blue Sky laws and regulations, and by the 1933
Act, the 1934 Act and the rules and regulations of the Commission promulgated
under such statutes, to be complied with prior to or subsequent to the Closing
Date and when the Offering Prospectus is required to be delivered, the Company
and the Bank will comply in all material respects, at their own expense, with
all requirements imposed upon them by the OTS, the Conversion Regulations, the
FDIC, the Commission, by applicable state law and regulations and by the 1933
Act, the 1934 Act and the rules and regulations of the Commission promulgated
under such statutes, including, without limitation, Rule 10b-6 under the 1934
Act, in each case as from time to time in force, so far as necessary to permit
the continuance of sales or dealing in shares of Common Stock during such period
in accordance with the provisions hereof and the Offering Prospectus.
(h) If, at any time during the period when the Offering
Prospectus relating to the Shares is required to be delivered, any event
relating to or affecting the Company or the Bank shall occur, as a result of
which it is necessary or appropriate, in the reasonable opinion of counsel for
the Company and the Bank to amend or supplement the Registration Statement or
Offering Prospectus in order to make the Registration Statement or Offering
Prospectus not misleading in light of the circumstances existing at the time it
is delivered to a purchaser, the Company and the Bank will, at their sole
expense, forthwith prepare, file with the Commission and the OTS and furnish to
Capital Resources a reasonable number of copies of any amendment or amendments
of, or a supplement or supplements to, the Registration Statement or Offering
Prospectus (in form and substance reasonably satisfactory to Capital Resources
and its counsel after a reasonable time for review) which will amend or
supplement the Registration Statement or Offering Prospectus so that as amended
or supplemented it will not contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in light of the circumstances existing at the time the Offering Prospectus
reasonably is delivered to a purchaser, not misleading.
-12-
For the purpose of this Agreement, the Company and the Bank each will timely
furnish to Capital Resources such information with respect to itself as Capital
Resources may from time to time request.
(i) The Company and the Bank will take all necessary actions,
in cooperation with Capital Resources, and furnish to whomever Capital Resources
may direct, such information as may be required to qualify or register the
Shares for offering and sale by the Company under the applicable securities or
blue sky laws of such jurisdictions in which the shares are required under the
Conversion Regulations to be sold or as Capital Resources may reasonably
designate and as reasonably agreed to by the Bank; provided, however, that the
Company shall not be obligated to file any general consent to service of process
or to qualify to do business in any jurisdiction in which it is not so
qualified. In each jurisdiction where any of the Shares shall have been
qualified or registered as above provided, the Company will make and file such
statements and reports in each fiscal period as are or may be required by the
laws of such jurisdiction.
(j) The liquidation account for the benefit of account holders
with account balances of $50 or more as of the applicable record dates will be
duly established and maintained in accordance with the requirements of the OTS.
(k) The Company and the Bank will not sell or issue, contract
to sell or otherwise dispose of, for a period of 180 days after the date hereof,
without Capital Resources' prior written consent, any shares of Common Stock
other than in connection with any plan or arrangement described in the Offering
Prospectus.
(l) The Company shall register its Common Stock under Section
12(g) of the 1934 Act concurrent with the stock offering pursuant to the Plan
and shall request that such registration be effective upon completion of the
Conversion. The Company shall maintain the effectiveness of such registration
for not less than three years or such shorter period as permitted by the OTS.
(m) During the period during which the Company's common stock
is registered under the 1934 Act or for three years from the date hereof,
whichever period is greater, the Company will furnish to its stockholders as
soon as practicable after the end of each fiscal year an annual report
(including a balance sheet and statements of income, stockholders' equity and
changes in financial position or cash flow statement of the Company as at the
end of and for such year, certified by independent public accountants and
prepared in accordance with Regulation S-X under the 1934 Act).
(n) During the period of three years from the date hereof, the
Company will furnish to Capital Resources: (i) a copy of each public report of
the Company furnished to or filed with the Commission under the 1934 Act or any
national securities exchange or system on which any class of securities of the
Company is listed or quoted (including but not limited to, reports on Form 10-K,
10-Q and 8-K and all proxy statements and annual reports to stockholders), a
copy of each public report of the Company mailed to its stockholders or filed
with the Commission or the OTS or any other supervisory or regulatory authority
or any national securities exchange or system on which any class of securities
of the Company is listed or quoted, each press release and material news items
and additional public documents and information with respect to the Company or
the Bank as Capital Resources may reasonably request, and (ii) from time to
time, such other publicly
-13-
available information concerning the Company and the Bank as Capital Resources
may reasonably request.
(o) The Company and the Bank will use the net proceeds from
the sale of the Shares in the manner set forth in the Offering Prospectus under
the caption "Use of Proceeds."
(p) Other than as permitted by the Conversion Regulations, the
1933 Act, the 1933 Act Regulations and the laws of any state in which the Shares
are qualified for sale, neither the Company nor the Bank will distribute any
prospectus, offering circular or other offering material in connection with the
offer and sale of the Shares.
(q) The Company will make generally available to its security
holders as soon as practicable, but not later than 90 days after the close of
the period an earnings statement (in form complying with the provisions of Rule
158 under the 0000 Xxx) 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.
(r) The Company will file with the Commission such reports on
Form SR as may be required pursuant to Rule 463 under the 1933 Act.
(s) The Company will use its best efforts to obtain approval
for quotation of the shares on the NASDAQ Stock Market effective on or prior to
the Closing Date.
(t) The Bank will maintain appropriate arrangements for
depositing all funds received from persons mailing subscriptions for or orders
to purchase Shares in the Subscription and Public Offerings on an
interest-bearing basis at the rate described in the Offering Prospectus until
the Closing Date and satisfaction of all conditions precedent to the release of
the Bank's obligation to refund payments received from persons subscribing for
or ordering Shares in the Subscription and Public Offerings in accordance with
the Plan as described in the Offering Prospectus or until refunds of such funds
have been made to the persons entitled thereto or withdrawal authorizations
canceled in accordance with the Plan and as described in the Offering
Prospectus. The Bank will maintain such records of all funds received to permit
the funds of each subscriber to be separately insured by the FDIC (to the
maximum extent allowable) and to enable the Bank to make the appropriate refunds
of such funds in the event that such refunds are required to be made in
accordance with the Plan and as described in the Offering Prospectus.
(u) The Company will register as a savings and loan holding
company under the HOLA within the period required by applicable law.
(v) The Company and the Bank will take such actions and
furnish such information as are reasonably requested by Capital Resources in
order for Capital Resources to ensure compliance with the "Interpretation of the
Board of Governors of the NASD on Free Riding and Withholding."
(w) The Company and the Bank have conducted their businesses
in compliance in all material respects with all applicable federal and state
laws, rules, regulations, decisions, directives and orders, including all
decisions, directives and orders of the OTS and the FDIC.
-14-
(x) The Bank will not amend the Plan of Conversion without
Capital Resources' prior written consent in any manner that, in the reasonable
opinion of Capital Resources, would materially and adversely affect the sale of
the Shares or the terms of this Agreement except to comply with any regulatory
requirement.
SECTION 7. Payment of Expenses. Whether or not this Agreement
becomes effective, the Conversion is completed or the sale of the Shares by the
Company is consummated, the Company and Association jointly and severally agree
to pay directly for or to reimburse Capital Resources for (to the extent that
such expenses have been reasonably incurred by Capital Resources) (a) all filing
fees and expenses incurred in connection with the qualification or registration
of the Shares for offer and sale by the Company under the securities or blue sky
laws of any jurisdictions Capital Resources and the Company may agree upon
pursuant to subsection (i) of Section 6 above, including counsel fees paid or
incurred by the Company, the Bank or Capital Resources in connection with such
qualification or registration or exemption from qualification or registration;
(b) all filing fees in connection with all filings with the NASD; (c) any stock
issue or transfer taxes which may be payable with respect to the sale of the
Shares to purchasers in the Conversion; (d) reasonable and necessary expenses of
the Conversion, including but not limited to, attorneys' fees, transfer agent,
registrar and other agent charges, fees relating to auditing and accounting or
other advisors and costs of printing all documents necessary in connection with
the Conversion; and (e) out-of-pocket expenses incurred by Capital Resources in
connection with the Conversion or any of the transactions contemplated hereby,
including, without limitation, the fees of its attorneys, and reasonable
communication and travel expenses, as limited by Section 2 hereof.
SECTION 8. Conditions to Capital Resources' Obligations.
Capital Resources' obligations hereunder, as to the Shares to be delivered at
the Closing Date, are subject to the condition that all representations and
warranties and other statements of the Company and the Bank herein are, at and
as of the commencement of the Subscription and Public Offerings and at and as of
the Closing Date, true and correct in all material respects, the condition that
the Company and the Bank shall have performed in all material respects all of
their obligations hereunder to be performed on or before such dates, and to the
following further conditions:
(a) At the Closing Date, the Company and the Bank will have
completed the conditions precedent to, and shall have conducted the Conversion
in all material respects in accordance with, the Plan, the Conversion
Regulations and all other applicable laws, regulations, decisions and orders,
including all terms, conditions, requirements and provisions precedent to the
Conversion imposed upon them by the OTS.
(b) The Registration Statement shall have been declared
effective by the Commission and the Conversion Application approved by the OTS
not later than 5:30 p.m. (eastern time) on the date of this Agreement, or with
Capital Resources' consent at a later time and date; and at the Closing Date no
stop order suspending the effectiveness of the Registration Statement shall have
been issued under the 1933 Act or proceedings therefore initiated or threatened
by the Commission or any state authority, and no order or other action
suspending the authorization of the Offering Prospectus or the consummation of
the Conversion shall have been issued or proceedings therefore initiated or, to
the Company's or Association's knowledge, threatened by the Commission, the OTS,
the FDIC or any state authority.
(c) At the Closing Date, Capital Resources shall have
received:
-15-
(1) The favorable opinion, dated as of the Closing Date
addressed to Capital Resources and for its benefit, of Xxxxxxx & Xxxxxxxxx,
("S&Z") counsel for the Company and the Bank as to issues of law set forth
below. The opinion of S&Z shall in form and substance be to the effect that:
(i) The Company has been incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware.
(ii) The Company has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Registration Statement and the Offering Prospectus; and the Company is qualified
to do business as a foreign corporation in New York, to such counsel's
knowledge, the only state in which it is doing business.
(iii) The Bank was organized and is a validly existing
federally-chartered savings and loan association in mutual form of organization
and upon the Conversion will become an organized and validly existing
federally-chartered savings bank in capital stock form of organization, in both
instances duly authorized to conduct its business and own its property as
described in the Registration Statement and the Bank has corporate existence
under the laws of the United States. The activities of the Bank as described in
the Offering Prospectus, insofar as they are material to the operations and
financial condition of the Bank, are permitted by the rules and regulations of
the OTS.
(iv) The Bank is a member of the FHLBNY, and the deposit
accounts of the Bank are insured by the FDIC up to the maximum amount allowed
under law and to such counsel's knowledge no proceedings for the termination or
revocation of such insurance are pending or threatened; and the description of
the liquidation account as set forth in the Registration Statement and the
Offering Prospectus under the caption "The Conversion - Effects of Conversion to
Stock Form on Depositors and Borrowers of the Bank - Liquidation Account" to the
extent that it constitutes matters of law, summaries of legal matters,
documents, proceedings or legal conclusions has been reviewed by such counsel
and is accurate in all material respects.
(v) On the Closing Date, the authorized, issued and
outstanding capital stock of the Company will be as set forth in the
Registration Statement and the Offering Prospectus under the caption
"Capitalization," and to such counsel's knowledge no shares of Common Stock have
been issued prior to the Closing Date; at the time of the Conversion, the Shares
subscribed for pursuant to the Offerings will have been duly and validly
authorized for issuance, and when issued and delivered by the Company pursuant
to the Plan against payment of the consideration calculated as set forth in the
Plan, will be duly and validly issued and fully paid and non-assessable; and the
issuance of the Shares is not subject to preemptive rights.
(vi) The issuance and sale of the common stock of the Bank to
the Company have been duly and validly authorized by all necessary corporate
action on the part of the Company and the Bank and, upon payment therefor in
accordance with the terms of the Plan of Conversion, will be duly and validly
issued, fully paid and non-assessable and will be owned of record by the Company
to such counsel's knowledge, free and clear of any mortgage, pledge, lien,
encumbrance or claim (legal or equitable).
-16-
(vii) The execution and delivery of this Agreement, and the
performance by the Bank and the Company of their respective obligations
hereunder, have been validly authorized by all necessary corporate action on the
part of the Company and the Bank; and this Agreement is a valid and binding
obligation of the Company and the Bank, enforceable in accordance with its terms
(except as the enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization or similar laws relating to or affecting the
enforcement of creditors' rights generally or the rights of creditors of savings
associations or savings and loan holding companies, or by general equity
principles, regardless of whether such enforceability is considered in a
proceeding in equity or at law, and except as the obligations of the Bank and
the Company under the indemnification provisions of Sections 9 and 10 hereof may
be limited by law or unenforceable as against public policy, as to which, no
opinion need be expressed).
(viii) The Plan has been duly adopted by the required vote of
the Directors and members of the Bank.
(ix) Subject to the satisfaction of the conditions to the
OTS's approval of the Conversion and the Holding Company Application, no further
approval, registration, authorization, consent or other order of any regulatory
agency, public board or body is required in connection with the execution and
delivery of this Agreement, the issuance of the Shares and the consummation of
the Conversion, except as may be required under Blue Sky laws or the regulations
of the NASD and the NASDAQ Stock Market. The Conversion has been consummated in
all material respects in accordance with all applicable provisions of the HOLA
and the Conversion Regulations.
(x) The Conversion Application including the Offering
Prospectus as filed with the OTS was complete in all material respects and has
been approved by the OTS. The OTS has issued its order of approval under the
savings and loan holding company provisions of the HOLA, and the purchase by the
Company of all of the issued and outstanding capital stock of the Bank has been
authorized by the OTS and to such counsel's knowledge, no action has been taken,
or to counsel's knowledge is pending or threatened, to revoke any such
authorization or approval.
(xi) The Registration Statement is effective under the 1933
Act and to such counsel's knowledge, no stop order suspending the effectiveness
has been issued under the 1933 Act or proceedings therefor initiated or,
threatened by the Commission.
(xii) At the time the Conversion Application, including the
Offering Prospectus contained therein, was approved, the Conversion Application
including the Offering Prospectus contained therein (as amended or supplemented,
if so amended or supplemented) complied as to form in all material respects with
the requirements of all rules and regulations of the OTS (except as to the
financial statements, other financial and statistical data and stock valuation
and pro forma information included therein as to which such counsel need express
no opinion); to such counsel's knowledge, all material documents and exhibits
required to be filed with the Conversion Application (as amended or
supplemented, if so amended or supplemented) have been so filed. The description
in the Conversion Application and the Offering Prospectus contained therein of
such documents and exhibits is accurate in all material respects.
(xiii) At the time that the Registration Statement became
effective, (i) the Registration Statement (as amended or supplemented if so
amended or supplemented) (other than the financial statements and other
financial and statistical data and stock valuation and pro forma
-17-
information included therein, as to which no opinion need be rendered), complied
as to form in all material respects with the requirements of the 1933 Act and
the 1933 Act Regulations and (ii) the Offering Prospectus (other than the
financial statements and other financial and statistical data and the stock
valuation and pro forma information included therein, as to which no opinion
need be rendered) complied as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations. To such counsel's
knowledge, all material documents and exhibits required to be filed with the
Registration Statement (as amended or supplemented, if so amended or
supplemented) have been so filed. The description in the Registration Statement
and the Offering Prospectus of such documents and exhibits is accurate in all
material respects. To such counsel's knowledge, no person has sought to obtain
regulatory or judicial review of the final action of the OTS approving the
Conversion Application or in approving the Holding Company Application.
(xiv) The terms and provisions of the Common Stock of the
Company conform to the description thereof contained in the Registration
Statement and the Offering Prospectus, and the form of certificate used to
evidence the Shares is in due and proper form.
(xv) To such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened which are required to be
disclosed in the Registration Statement and the Offering Prospectus, other than
those disclosed therein, provided that for this purpose, any litigation or
governmental proceeding is not considered to be "threatened" unless the
potential litigant or governmental authority has manifested to the management of
the Company or the Bank, or to such counsel, a present intention to initiate
such litigation or proceeding.
(xvi) To such counsel's knowledge, the Company the Bank have
obtained all licenses, permits and other governmental authorizations required
for the conduct of their respective businesses, except where the failure to have
such licenses, permits or authorizations would not have a material adverse
effect on the business, financial condition, operations or income of the Company
and the Bank on a consolidated basis, and, to such counsel's knowledge, all such
licenses, permits and other governmental authorizations are in full force and
effect.
(xvii) To such counsel's knowledge neither the Company nor the
Bank is in contravention of its certificate of incorporation or its charter,
respectively, or its bylaws (and the Bank will not be in contravention of its
charter or bylaws in stock form upon consummation of the Conversion) or, to such
counsel's knowledge, in default or violation of any material obligation,
agreement, covenant or condition contained in any material contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which it is a party
or by which it or its property may be bound which default or violation would be
material to the business of the Company and the Bank considered as one
enterprise; to such counsel's knowledge, the execution and delivery of this
Agreement by the Company and the Bank, the incurring of the obligations herein
set forth and the consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate action of the Company and the Bank,
and, to such counsel's knowledge, will not constitute a material breach of, or
default under, or result in the creation or imposition of any material lien,
charge or encumbrance upon any property or assets of the Company or the Bank
which are material to their business considered as one enterprise, pursuant to
any material contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Company or the Bank is a party or by which any of them
may be bound, or to which any of the property or assets of the Company or the
Bank is subject. In addition to such counsel's knowledge , such action will not
-18-
result in any material violation of the provisions of the certificate of
incorporation or bylaws of the Company or the charter and bylaws of the Bank.
(xviii) To such Counsel's knowledge the Company and the Bank
are not in violation of any directive from the OTS or the FDIC requiring them to
make any material change in the method of conducting their business.
(xix) The information in the Registration Statement and
Offering Prospectus under the captions "Regulation," "Certain Restrictions on
Acquisitions of the Company," "The Conversion-Tax Effects", "Taxation", 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 such counsel and is correct in all material respects (except as
to the financial statements and other financial and statistical data and stock
valuation and pro forma data included therein as to which such counsel need
express no opinion).
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other than the
United States, to the extent such counsel deems proper and specified in such
opinion satisfactory to Capital Resources, upon the opinion of other counsel of
good standing (providing that such counsel states that Capital Resources is
justified in relying upon such specified opinion or opinions), and (B) as to
matters of fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company and the Bank and public officials (but not
on conclusions of law which may be set forth in said certificates); provided
copies of any such opinion(s) or certificates are delivered pursuant hereto or
to Capital Resources together with the opinion to be rendered hereunder by
special counsel to the Company and the Bank. Such counsel may assume that any
agreement is the valid and binding obligation of any parties to such agreement
other than the Company or the Bank.
(2) The letter of S&Z, counsel for the Company and the Bank
addressed to Capital Resources, dated the Closing Date, in form and substance to
the effect that:
During the preparation of the Registration Statement and the
Offering Prospectus, such counsel participated in conferences with officers,
directors and representatives of the Bank and the Company, representatives of
the independent public accountants for the Company and the Bank and
representatives of Capital Resources, at which the contents of the Registration
Statement and Offering Prospectus were discussed. Based upon such conferences
and a review of corporate records of the Company and the Bank as such counsel
conducted in connection with the preparation of the Registration Statement and
Conversion Application, and on the basis of the foregoing (relying as to factual
matters on officers' certificates and other statements of fact made by the Bank
and the Company), nothing has come to such counsel's attention that would lead
them to believe that the Registration Statement at the time it was declared
effective or, the Offering Prospectus as of its date, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (it being understood
that such counsel need express no opinion with respect to the financial
statements schedules and other financial, statistical, valuation and pro forma
data included or statistical methodology employed in the Registration Statement
or Prospectus).
(3) The favorable opinion, dated as of the Closing Date, of
Xxxxxxx, Spidi, Sloane & Xxxxx, P.C., Capital Resources' counsel, with respect
to such matters as Capital Resources may reasonably require. Such opinion may
rely upon the opinions of counsel to the Company and the Bank, and as to matters
of fact, upon certificates of officers and directors of the Company and the
-19-
Bank delivered pursuant hereto or as such counsel shall reasonably request.
(d) At the Closing Date, counsel to Capital Resources shall
have been furnished with such documents and opinions as they may reasonably
require for the purpose of enabling them to render the opinion as herein
contemplated and related proceedings or in order to evidence the occurrence or
completeness of any of the representations or warranties, or the fulfillment of
any of the conditions, herein contained.
(e) At the Closing Date, Capital Resources shall receive a
certificate of the Chief Executive Officer and the Chief Financial Officer of
the Company and of the Chief Executive Officer and Chief Financial Officer of
the Bank, dated as of such Closing Date, to the effect that: (i) they have
carefully examined the Offering Prospectus and, in their opinion, at the time
the Offering Prospectus became authorized for final use, the Offering Prospectus
did not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; (ii) since the date
the Offering Prospectus became authorized for final use, in their opinion no
event has occurred which should have been set forth in an amendment or
supplement to the Offering Prospectus which has not been so set forth, including
specifically, but without limitation, any material adverse change in the
condition, financial or otherwise, or in the earnings, financial condition,
capital, properties, business prospects or business affairs of the Company or
the Bank, and the conditions set forth in this Section 8 have been satisfied;
(iii) to their knowledge since the respective dates as of which information is
given in the Registration Statement and the Offering Prospectus, there has been
no material adverse change in the condition, financial or otherwise, or in the
earnings, capital, properties, business affairs or business prospects of the
Company or the Bank, independently, or of the Company and the Bank considered as
one enterprise, whether or not arising in the ordinary course of business; (iv)
to the knowledge of such officers the representations and warranties in Section
4 are true and correct with the same force and effect as though expressly made
at and as of the Closing Date; (v) to their knowledge, the Company and the Bank
have complied with all material agreements and satisfied, in all material
respects at or prior to the Closing Date, all obligations required to be met by
such date and will in all material respects comply with all obligations to be
satisfied by them after Conversion; (vi) to their knowledge no stop order
suspending the effectiveness of the Registration Statement has been initiated
or, to their knowledge, threatened by the Commission or any state authority;
(vii) no order suspending the Subscription or Public Offerings, the Conversion,
the acquisition of all of the shares of the Bank by the Company or the
effectiveness of the Offering Prospectus has been issued and to the best
knowledge of the Company or Association, no proceedings for that purpose have
been initiated or threatened by the OTS, the Commission, the FDIC, or any state
authority; and (viii) to their knowledge, no person has sought to obtain review
of the final action of the OTS approving the Plan.
(f) Prior to and at the Closing Date: (i) in the reasonable
opinion of Capital Resources, there shall have been no material adverse change
in the condition, financial or otherwise, or in the earnings, or the business
affairs or business prospects of the Company or the Bank independently, or of
the Company or the Bank, considered as one enterprise, since the latest dates as
of which such condition is set forth in the Offering Prospectus, except as
referred to therein; (ii) there shall have been no material transaction entered
into by the Company or the Bank from the latest date as of which the financial
condition of the Company or the Bank is set forth in the Offering Prospectus
other than transactions referred to or contemplated therein; (iii) the Company
or the Bank shall not have received from the OTS or the FDIC any direction (oral
or written) to
-20-
make any material change in the method of conducting their business with which
it has not complied (which direction, if any, shall have been disclosed to
Capital Resources) and which would reasonably be expected to have a material and
adverse effect on the business, operations or financial condition or income of
the Company or the Bank taken as a whole; (iv) neither the Company nor the Bank
shall have been in default (nor shall an event have occurred which, with notice
or lapse of time or both, would constitute a default) under any provision of and
agreement or instrument relating to any material outstanding indebtedness; (v)
no action, suit or proceedings, at law or in equity or before or by any federal
or state commission, board or other administrative agency, shall be pending, or,
to the knowledge of the Company or the Bank, threatened against the Company or
the Bank or affecting any of their properties wherein an unfavorable decision,
ruling or finding would reasonably be expected to have a material and adverse
effect on the business, operations, financial condition or income of the Company
or the Bank, taken as a whole; and (vi) the Shares have been qualified or
registered for offering and sale under the securities or blue sky laws of the
jurisdictions as Capital Resources shall have requested and as agreed to by the
Company.
(g) Concurrently with the execution of this Agreement, Capital
Resources shall receive a letter from NH, dated the date hereof and addressed to
Capital Resources: (i) confirming that NH is a firm of independent public
accountants within the meaning of the 1933 Act and the 1933 Act Regulations and
12 C.F.R. ss. 571.2(c)(3) and no information concerning its relationship with or
interests in the Company and the Bank is required to be disclosed in the
Offering Prospectus by the Conversion Regulations or Item 10 of the Registration
Statement, and stating in effect that in NH's opinion the financial statements
of the Bank as are included in the Offering Prospectus comply as to form in all
material respects with the applicable accounting requirements of the 1933 Act
and the related published rules and regulations of the Commission thereunder and
the Conversion Regulations and generally accepted accounting principles; (ii)
stating in effect that, on the basis of certain agreed upon procedures (but not
an audit examination in accordance with generally accepted auditing standards)
consisting of a reading of the latest available unaudited interim financial
statements of the Bank prepared by the Bank, a reading of the minutes of the
meetings of the Board of Directors and members of the Bank and consultations
with officers of the Bank responsible for financial and accounting matters,
nothing came to their attention which caused them to believe that: (A) such
unaudited financial statements are not in conformity with generally accepted
accounting principles applied on a basis substantially consistent with that of
the audited financial statements included in the Offering Prospectus; or (B)
during the period from the date of the latest audited financial statements
included in the Offering Prospectus to a specified date not more than ten
business days prior to the date hereof, there has been (1) any increase in the
long term debt of the Bank or (2) an increase of greater than $100,000 in non
performing assets (consisting of accruing loans past due 90 days or more,
non-accruing loans and foreclosed assets) or (3) any decrease in the allowance
for loan losses or (4) any decrease in total equity or (5) a decrease in net
income when compared to the like period in 1996 or (6) any change in total
assets of the Bank in an amount greater than $5,000,000; and (iii) stating that,
in addition to the audit examination referred to in its opinion included in the
Offering Prospectus and the performance of the procedures referred to in clause
(ii) of this subsection (g), they have compared with the general accounting
records of the Company and/or the Bank, as applicable, which are subject to the
internal controls of the Company and/or the Bank, as applicable, accounting
system and other data prepared by the Company and/or the Bank, as applicable,
directly from such accounting records, to the extent specified in such letter,
such amounts and/or percentages set forth in the Offering Prospectus as Capital
Resources may reasonably request; and they have found such amounts and
percentages to be in agreement therewith (subject to rounding).
-21-
(h) At the Closing Date, Capital Resources shall receive a
letter from NH, dated the Closing Date, addressed to Capital Resources,
confirming the statements made by its letter delivered by it pursuant to
subsection (g) of this Section 8, except that the "specified date" referred to
in clause (ii)(B) thereof to be a date specified in such letter, which shall not
be more than three business days prior to the Closing Date.
(i) The Company and the Bank shall not have sustained since
the date of the latest audited financial statements included in the Registration
Statement and Offering Prospectus any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth or contemplated in the Registration
Statement and Offering Prospectus, and since the respective dates as of which
information is given in the Registration Statement and Offering Prospectus,
there shall not have been any material change in the long term debt of the
Company or the Bank other than debt incurred in relation to the purchase of
Shares by the Company's Tax-Qualified Employee Plans, or any change, or any
development involving a prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of operations of
the Company or the Bank, otherwise than as set forth or contemplated in the
Registration Statement and Offering Prospectus, the effect of which, in any such
case described above, is in Capital Resources' reasonable judgment sufficiently
material and adverse as to make it impracticable or inadvisable to proceed with
the Subscription or Public Offerings or the delivery of the Shares on the terms
and in the manner contemplated in the Offering Prospectus.
(j) At or prior to the Closing Date, Capital Resources shall
receive (i) a copy of the letter from the OTS authorizing the use of the
Offering Prospectus, (ii) a copy of the order from the Commission declaring the
Registration Statement effective, (iii) a copy of a certificate from the OTS
evidencing the corporate existence of the Bank, (iv) certificates of good
standing from the States of Delaware and New York evidencing the good standing
of the Company and from the State of New York evidencing that the Company is
duly qualified to do business and in good standing in New York and (v) a copy of
the letter from the OTS approving the Company's Holding Company Application.
(k) As soon as available after the Closing Date, Capital
Resources shall receive a certified copy of the Bank's stock charter.
(1) Subsequent to the date hereof, there shall not have
occurred any of the following: (i) a suspension or limitation in trading in
securities generally on the New York Stock Exchange or American Stock Exchange
or in the over-the-counter market, or quotations halted generally on the NASDAQ
Stock Market, or minimum or maximum prices for trading being fixed, or maximum
ranges for prices for securities being required by either of such exchanges or
the NASD or by order of the Commission or any other governmental authority; (ii)
a general moratorium on the operations of commercial banks or federal savings
banks or general moratorium on the withdrawal of deposits from commercial banks
or federal savings banks declared by either federal or state authorities; (iii)
the engagement by the United States in hostilities which have resulted in the
declaration, on or after the date hereof, of a national emergency or war; or
(iv) a material decline in the price of equity or debt securities if, as to
clauses (iii) or (iv), the effect of such hostilities or decline, in Capital
Resources' reasonable judgment, makes it impracticable or inadvisable to proceed
with the Subscription or Public Offerings or the delivery of the Shares on the
terms and in the manner contemplated in the Registration Statement and the
Offering Prospectus.
-22-
All such opinions, certifications, letters and documents shall
be in compliance with the provisions hereof only if they are, in the reasonable
opinion of Capital Resources and its counsel, satisfactory to Capital Resources
and its counsel. Any certificates signed by an officer or director of the
Company or the Bank and delivered to Capital Resources or its counsel shall be
deemed a representation and warranty by the Company or the Bank to Capital
Resources as to the statements made therein.
If any of the conditions specified in this Section shall not
have been fulfilled when and as required by this Agreement, this Agreement and
all of Capital Resources' obligations hereunder may be canceled by Capital
Resources by notifying the Bank of such cancellation in writing or by telegram
at any time at or prior to the Closing Date, and any such cancellation shall be
without liability of any party to any other party except as otherwise provided
in Sections 2, 7, 9 and 10 hereof. Notwithstanding the above, if this Agreement
is canceled pursuant to this paragraph, the Company and the Bank jointly and
severally agree to reimburse Capital Resources for all out-of-pocket expenses,
(including without limitation the fees and expenses of Capital Resources'
counsel) reasonably incurred by Capital Resources and Capital Resources' counsel
at its normal rates, in connection with the preparation of the Registration
Statement and the Offering Prospectus, and in contemplation of the proposed
Subscription or Public Offerings to the extent provided for in Sections 2 and 7
hereof.
SECTION 9. Indemnification.
(a) The Company and the Bank jointly and severally agree to
indemnify and hold harmless Capital Resources, its officers, directors, agents
and employees and each person, if any, who controls or is under common control
with Capital Resources within the meaning of Section 15 of the 1933 Act or
Section 20(a) of the 1934 Act, against any and all loss, liability, claim,
damage or expense whatsoever (including but not limited to settlement expenses),
joint or several, that Capital Resources or any of them may suffer or to which
Capital Resources and any such persons upon written demand for any expenses
(including fees and disbursements of counsel) incurred by Capital Resources or
any of them in connection with investigating, preparing or defending any
actions, proceedings or claims (whether commenced or threatened) to the extent
such losses, claims, damages, liabilities or actions (i) arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement (or any amendment or supplement
thereto), Offering Prospectus (or any amendment or supplement thereto), the
Conversion Application or any Blue Sky application or other instrument or
document of the Company or the Bank or based upon written information supplied
by the Company or the Bank filed in any state or jurisdiction to register or
qualify any or all of the Shares or the subscription rights applicable thereto
under the securities laws thereof (collectively, the "Blue Sky Application"), or
any application or other document, advertisement, oral statement, or
communication ("Sales Information") prepared, made or executed by or on behalf
of the Company with its consent or based upon written or oral information
furnished by or on behalf of the Company or the Bank, whether or not filed in
any jurisdiction in order to qualify or register the Shares under the securities
laws thereof; (ii) arise out of or are based upon the omission or alleged
omission to state in any of the foregoing documents or information, a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading; or,
(iii) arise from any theory of liability whatsoever relating to or arising from
or based upon the Registration Statement (or any amendment or supplement
thereto), Offering Prospectus (or any amendment or supplement thereto), the
Conversion Application, any Blue Sky Application or Sales Information or other
documentation distributed in connection with the Conversion;
-23-
provided, however, that no indemnification is required under this paragraph (a)
to the extent such losses, claims, damages, liabilities or actions arise out of
or are based upon any untrue material statements or alleged untrue material
statements in, or material omission or alleged material omission from, the
Registration Statement (or any amendment or supplement thereto), the Conversion
Application, any Blue Sky Application, the Offering Prospectus (or any amendment
or supplement thereto), or Sales Information made in reliance upon and in
conformity with written information furnished to the Company or the Bank by
Capital Resources regarding Capital Resources expressly for use under the
captions "The Conversion - Marketing Arrangements" - "Public Offering," or -
"Plan of Distribution" in the Offering Prospectus nor is indemnification
required for material oral misstatements made by Capital Resources, which are
not based upon information provided by the Bank or the Company orally or in
writing or based on information contained in the Registration Statement (or any
amendment or supplement thereto), preliminary or final Offering Prospectus (or
any amendment or supplement thereto), the Conversion Application, any Blue Sky
Application or Sales Information distributed in connection with the Conversion.
In addition, the Bank and the Company will not be liable under the foregoing
provisions to the extent that the loss, claim, damage, liability or action is
expressly found in a final judgment by a court of competent jurisdiction to have
resulted from Capital Resources' bad faith or gross negligence.
(b) Capital Resources agrees to indemnify and hold harmless
the Company and the Bank, their directors and officers, agents, servants and
employees and each person, if any, who controls the Company or the Bank within
the meaning of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act
against any and all loss, liability, claim, damage or expense whatsoever
(including but not limited to settlement expenses), joint or several which they,
or any of them, may suffer or to which they, or any of them, may become subject
under all applicable federal and state laws or otherwise, and to promptly
reimburse the Company, the Bank and any such persons upon written demand for any
expenses (including fees and disbursements of counsel) incurred by them, or any
of them, in connection with investigating, preparing or defending any actions,
proceedings or claims (whether commenced or threatened) to the extent such
losses, claims, damages, liabilities or actions arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment or supplement thereto), or the
preliminary or final Offering Prospectus (or any amendment or supplement
thereto), or the Conversion Application or any Blue Sky Application or Sales
Information or are based upon the omission or alleged omission to state in any
of the foregoing documents a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that Capital
Resources obligations under this Section 9(b) shall exist only if and only to
the extent that such untrue statement or alleged untrue statement was made in,
or such material fact or alleged material fact was omitted from, the
Registration Statement (or any amendment or supplement thereto), the Offering
Prospectus (or any amendment or supplement thereto), or the Conversion
Application, any Blue Sky Application or Sales Information in reliance upon and
in conformity with written information furnished to the Company or the Bank by
Capital Resources regarding Capital Resources expressly for use under the
caption "The Conversion - Marketing Arrangements" - "Public Offering," or -
"Plan of Distribution" in the Offering Prospectus or in the event of oral
misstatements made by Capital Resources, which are not based upon information
provided by the Bank or the Company orally or in writing or based on information
contained in the Registration Statement (or any amendment or supplement
thereto), Offering Prospectus (or any amendment or supplement thereto), the
Conversion Application, any Blue Sky Application or Sales Information
distributed in connection with the Conversion. In addition, Capital Resources
will not be liable under the foregoing provisions to the extent that the
-24-
loss, claim, damage, liability or action is expressly found in a final
judgment by a court of competent jurisdiction to have resulted from the Bank's
or the Company's bad faith or gross negligence.
(c) Each indemnified party shall give prompt written notice to
each indemnifying party of any action, proceeding, claim (whether commenced or
threatened), or suit instituted against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve it from any liability which it may have on account of this Section 9 or
otherwise. An indemnifying party may participate at its own expense in the
defense of such action. In addition, if it so elects within a reasonable time
after receipt of such notice, an indemnifying party, jointly with any other
indemnifying parties receiving such notice, may assume defense of such action
with counsel chosen by it and approved by the indemnified parties that are
defendants in such action, unless such indemnified parties reasonably object to
such assumption on the ground that there may be legal defenses available to them
that are different from or in addition to those available to such indemnifying
party. If an indemnifying party assumes the defense of such action, the
indemnifying parties shall not be liable for any fees and expenses of counsel
for the indemnified parties incurred thereafter in connection with such action,
proceeding or claim, other than reasonable costs of investigation. In no event
shall the indemnifying parties be liable for the fees and expenses of more than
one separate firm of attorneys (and any special counsel that said firm may
retain) for all indemnified parties in connection with any one action,
proceeding or claim or separate but similar or related actions, proceedings or
claims in the same jurisdiction arising out of the same general allegations or
circumstances.
(d) This Section 9 and Section 10 hereof and the
representations and warranties of the Company and the Bank set forth in this
Agreement shall survive, remain operative and in full force and effect
regardless of any termination of this Agreement.
(e) No indemnification by the Bank under Section 9(a) hereof
nor contribution under Section 10 hereof shall be effective if the same shall be
deemed to be in violation of any law, rule or regulation applicable to the Bank
including, without limitation, Section 23A of the Federal Reserve Act. If the
indemnification or contribution by the Bank is not effective pursuant to the
preceding sentence, then the indemnification by Capital Resources pursuant to
Section 9(b) shall be given only to the Company, its directors and officers,
agents, servants and employees and not to the Bank, its directors and officers,
agents, servants and employees and the Bank shall not be entitled to any
contribution from Capital Resources pursuant to Section 10.
SECTION 10. Contribution. In order to provide for just and
equitable contribution in circumstances in which the indemnification provided
for in Section 9 is due in accordance with its terms but is for any reason
unavailable as a result of Section 9(e) or held by a court to be unavailable
from the Company, the Bank or Capital Resources, the Company, the Bank and
Capital Resources shall contribute to the aggregate losses, claims, damages and
liabilities (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of any action, suit or
proceeding of any claims asserted, but after deducting any contribution received
by the Company or the Bank or Capital Resources from persons other than the
other party thereto, who may also be liable for contribution) in such proportion
so that Capital Resources is responsible for that portion represented by the
percentage that the fees paid to Capital Resources pursuant to Section 2 of this
Agreement (not including expenses) bears to the gross proceeds received by the
Company from the sale of the Shares in the Subscription and Public Offerings
and the Company and the Bank shall be responsible for the balance. If, however,
the allocation provided above is not permitted by applicable law or if the
indemnified party failed to give
-25-
the notice required under Section 9 above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative fault of the
Company and the Bank on the one hand and Capital Resources on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions, proceedings or claims in respect
thereof), but also the relative benefits received by the Company and Association
on the one hand and Capital Resources on the other from the offering as well as
any other relevant equitable considerations. The relative benefits received by
the Company and the Bank on the one hand and Capital Resources on the other
shall be deemed to be in the same proportion as the total gross proceeds from
the Subscription and Public Offerings (before deducting expenses) received by
the Company bear to the total fees (not including expenses) received by Capital
Resources. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company and/or the Bank on the one hand or Capital Resources on
the other and the parties' relative intent, good faith, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Bank and Capital Resources agree that it would not be just and
equitable if contribution pursuant to this Section 10 were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 10. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or action, proceedings or claims in respect thereof)
referred to above in this Section 10 shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action, proceeding or claim. It is expressly
agreed that Capital Resources shall not be liable for any loss, liability,
claim, damage or expense or be required to contribute any amount which in the
aggregate exceeds the amount paid (excluding reimbursable expenses) to Capital
Resources under this Agreement. It is understood that the above-stated
limitation on Capital Resources' liability is essential to Capital Resources and
that Capital Resources relied upon such limitation and would not have entered
into this Agreement if such limitation had not been agreed to by the parties to
this Agreement. No person found guilty of any fraudulent misrepresentation
(within the meaning of Section 11(f) of the 0000 Xxx) shall be entitled to
contribution from any person who was not found guilty of such fraudulent
misrepresentation. The obligations of the Company and the Bank under this
Section 10 and under Section 9 shall be in addition to any liability which the
Company and the Bank may otherwise have. For purposes of this Section 10, each
of Capital Resources', the Company's or the Bank's officers and directors and
each person, if any, who controls Capital Resources or the Company or the Bank
within the meaning of the 1933 Act and the 1934 Act shall have the same rights
to contribution as the Company and the Bank. Any party entitled to contribution,
promptly after receipt of notice of commencement of any action, suit, claim or
proceeding against such party in respect of which a claim for contribution may
be made against another party under this Section 10, will notify such party from
whom contribution may be sought, but the omission to so notify such party shall
not relieve the party from whom contribution may be sought from any other
obligation it may have hereunder or otherwise than under this Section 10. This
Section 10 is subject to and limited by the provisions of Section 23A of the
Federal Reserve Act, as applicable.
SECTION 11. Survival of Agreements, Representations and
Indemnities. The respective indemnities of the Company, the Bank and Capital
Resources and the representations and warranties and other statements of the
Company and the Bank set forth in or made pursuant to this Agreement shall
remain in full force and effect, regardless of any termination or cancellation
of this Agreement or any investigation made by or on behalf of Capital
Resources, the Company, the Bank
-26-
or any indemnified person referred to in Section 9 hereof, and shall survive the
issuance of the Shares, and any legal representative, successor or assign of
Capital Resources, the Bank, and any such indemnified person shall be entitled
to the benefit of the respective agreements, indemnities, warranties and
representations.
SECTION 12. Termination. Capital Resources may terminate this
Agreement by giving the notice indicated below in this Section at any time after
this Agreement becomes effective as follows:
(a) In the event the Company fails to sell all of the Shares
within the period specified, and in accordance with the provisions of the Plan
or as required by the Conversion Regulations and applicable law, this Agreement
shall terminate upon refund by the Bank to each person who has subscribed for or
ordered any of the Shares the full amount which it may have received from such
person, together with interest as provided in the Offering Prospectus, and no
party to this Agreement shall have any obligation to the other hereunder, except
as set forth in Xxxxxxxx 0, 0, 0 xxx 00 xxxxxx.
(x) If any of the conditions specified in Section 8 shall not
have been fulfilled when and as required by this Agreement, or by the Closing
Date, or waived in writing by Capital Resources, this Agreement and all of
Capital Resources obligations hereunder may be canceled by Capital Resources by
notifying the Bank of such cancellation in writing or by telegram at any time at
or prior to the Closing Date, and, any such cancellation shall be without
liability of any party to any other party except as set forth in Sections 2, 7,
9 and 10 hereof.
(c) If Capital Resources elects to terminate this Agreement as
provided in this section, the Company and the Bank shall be notified as provided
in Section 13 hereof, promptly by Capital Resources by telephone or telegram,
confirmed by letter.
SECTION 13. Notices. All communications hereunder, except as
herein otherwise specifically provided, shall be mailed in writing and if sent
to Capital Resources shall be mailed, delivered or telegraphed and confirmed to
Capital Resources, Inc., 0000 Xxxxxxxxxxx Xxxxxx, X.X., Xxxxx 000, Xxxxxxxxxx,
X.X. 00000 Attention: Xxxxxxxxx X. Rochester (with a copy to Xxxxxxx, Spidi,
Sloane & Xxxxx, P.C., 0000 X. Xxxxxx, X.X., Xxxxx 000 Xxxx Xxxxxxxxxx, X.X.
00000, Attention: Xxxx X. Spidi, Esq.) and, if sent to the Company and the Bank,
shall be mailed, delivered or telegraphed and confirmed to the Company and the
Bank at 0 Xxxxx Xxxxxx Xxxxxx, Xxxxxx, Xxx Xxxx, 00000, (Attention: Xxxxxxxx X.
Xxxxxx, Xx. (with a copy to Xxxxxxx & Zelermyer, LLP, 00 Xxxx Xxxxxx, Xxxxx
Xxxxxx, XX 00000, Attention: Xxx Hack, Esq.)
SECTION 14. Parties. The Company and the Bank shall be
entitled to act and rely on any request, notice, consent, waiver or agreement
purportedly given on behalf of Capital Resources when the same shall have been
given by the undersigned. Capital Resources shall be entitled to act and rely on
any request, notice, consent, waiver or agreement purportedly given on behalf or
the Company or the Bank, when the same shall have been given by the undersigned
or any other officer of the Company or the Bank. This Agreement shall inure
solely to the benefit of, and shall be binding upon, Capital Resources and the
Company, the Bank and the controlling persons referred to in Section 9 hereof,
and their respective successors, legal representatives and assigns, and no other
person shall have or be construed to have any legal or equitable right, remedy
or claim under or in respect of or by virtue of this Agreement or any provision
herein contained.
-27-
SECTION 15. Closing. The closing for the sale of the Shares
shall take place on the Closing Date at the offices of Xxxxxxx & Zelermyer, LLP
or such other location as mutually agreed upon by Capital Resources, the Company
and the Bank. At the closing, the Bank shall deliver to Capital Resources in
next day funds the commissions, fees and expenses due and owing to Capital
Resources as set forth in Sections 2 and 7 hereof and the opinions and
certificates required hereby and other documents deemed reasonably necessary by
Capital Resources shall be executed and delivered to effect the sale of the
Shares as contemplated hereby and pursuant to the terms of the Offering
Prospectus.
SECTION 16. Partial Invalidity. In the event that any term,
provision or covenant herein or the application thereof to any circumstances or
situation shall be invalid or unenforceable, in whole or in part, the remainder
hereof and the application of said term, provision or covenant to any other
circumstance or situation shall not be affected thereby, and each term,
provision or covenant herein shall be valid and enforceable to the full extent
permitted by law.
SECTION 17. Construction. This Agreement shall be construed in
accordance with the laws of the District of Columbia.
SECTION 18. Counterparts. This Agreement may be executed in
separate counterparts, each of which so executed and delivered shall be an
original, but all of which together shall constitute but one and the same
instrument.
SECTION 19. Headings. Section 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.
SECTION 20. 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 (i) the engagement letter, dated
January 7, 1997, by and between Capital Resources and the Bank relating to
Capital Resources providing marketing agent services to the Company and the Bank
in connection with the Conversion and (ii) the engagement letter, dated January
7, 1997, by and between Capital Resources Group, Inc. and the Bank, relating to
Capital Resources Group, Inc. providing proxy solicitation and records
management services and appraisal services to the Company and the Bank in
connection with the Conversion. In the event of a conflict between any provision
of this Agreement and any provision of any of the other writings identified in
the preceding sentence, the provisions of this Agreement shall control. No
waiver, amendment or other modification of this Agreement shall be effective
unless in writing and signed by the parties hereto.
Time shall be of the essence of this Agreement.
-28-
If the foregoing correctly sets forth the arrangement among
the Company, the Bank and Capital Resources, please indicate acceptance thereof
in the space provided below for that purpose, whereupon this letter and Capital
Resources' acceptance shall constitute a binding agreement.
Very truly yours,
GSB FINANCIAL CORPORATION
By:
--------------------------------------------
Xxxxxxxx X. Xxxxxx, Xx., President and
Chief Executive Officer
GOSHEN SAVINGS BANK
By:
--------------------------------------------
Xxxxxxxx X. Xxxxxx, Xx., President and
Chief Executive Officer
Accepted as of the date first above written.
CAPITAL RESOURCES, INC.
By:
----------------------------------------
Xxxxxxxxx X. Rochester, President
-29-
