EXHIBIT 1.2
36,167,500 Shares
(subject to increase up to 41,592,625 shares
in the event of an oversubscription)
AMERICAN FINANCIAL HOLDINGS, INC.
(a Delaware corporation)
Common Stock
(par value $0.01 per share)
AGENCY AGREEMENT
________, 0000
XXXXXXX X'XXXXX & PARTNERS, L.P.
Two World Trade Center, 000xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
American Financial Holdings, Inc., a Delaware corporation (the
"Company"), and American Savings Bank, a state chartered mutual savings bank
(the "Bank"), hereby confirm their agreement with Sandler X'Xxxxx & Partners,
L.P. ("Sandler X'Xxxxx" or the "Agent") with respect to the offer and sale by
the Company of 36,167,500 shares (subject to increase up to 41,592,625 shares in
the event of an oversubscription) of the Company's Common Stock, par value $0.01
per share (the "Common Stock"). The shares of Common Stock to be sold by the
Company are hereinafter called the "Securities." In addition, as described
herein, the Company expects to contribute shares of Common Stock in an amount
equal to 8% of the shares of Common Stock sold in the Offerings (as hereinafter
defined) to the American Savings Charitable Foundation (the "Foundation"), such
shares hereinafter being referred to as the "Foundation Shares".
The Securities are being offered for sale and the Foundation Shares
are being contributed in accordance with the plan of conversion (the "Plan")
adopted by the Board of Directors of the Bank pursuant to which the Bank intends
to convert from a state chartered mutual savings bank to a state chartered stock
savings bank and issue all of its stock to the Company. Pursuant to the Plan,
the Company is offering to the Bank's tax qualified employee benefit plans,
including the Employee Stock Ownership Plan (the "ESOP") (collectively, the
"Employee Plans") and to certain of the Bank's depositors rights to subscribe
for the Securities in a subscription offering (the "Subscription Offering").
Rights to subscribe will also be offered to the Bank's officers, directors and
employees and corporators who do not have a higher priority right. To the
extent Securities are not subscribed for in the Subscription Offering, such
Securities may be offered to certain members of the
general public, with preference given to certain natural persons residing in the
counties in which the Bank's offices are located, in a direct community offering
(the "Community Offering" and together with the Subscription Offering, as each
may be extended or reopened from time to time, the "Subscription and Community
Offering") which may be commenced concurrently with the Subscription Offering.
It is currently anticipated by the Bank and the Company that any Securities not
subscribed for in the Subscription and Community Offering will be offered,
subject to Section 2 hereof, in a syndicated community offering (the "Syndicated
Community Offering"). The Subscription Offering and the Syndicated Community
Offering are hereinafter referred to collectively as the "Offerings," and the
conversion of the Bank from mutual to stock form, the acquisition of the capital
stock of the Bank by the Company and the Offerings are hereinafter referred to
collectively as the "Conversion." It is acknowledged that the number of
Securities to be sold in the Conversion may be increased or decreased as
described in the Prospectus (as hereinafter defined). If the number of
Securities is increased or decreased in accordance with the Plan, the term
"Securities" shall mean such greater or lesser number, where applicable. In the
event that a holding company form of organization is not utilized, all pertinent
terms of this Agreement will apply to the conversion of the Bank from the mutual
to stock form of organization and the sale of the Bank's common stock.
In connection with the Conversion and pursuant to the terms of the
Plan as described in the Prospectus, the Company has established the Foundation.
Immediately following the consummation of the Conversion, subject to the
approval of the establishment of the Foundation by the depositors of the Bank
and compliance with certain conditions as may be imposed by regulatory
authorities, the Company will contribute newly issued shares of Common Stock in
an amount equal to 8% of the Securities sold in the Offering, or between
2,138,600 and 2,893,400 shares of Common Stock (subject to increase in certain
circumstances to 3,327,410 shares).
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-____), including a
related prospectus, for the registration of the Securities and the Foundation
Shares under the Securities Act of 1933, as amended (the "Securities Act"), has
filed such amendments thereto, if any, and such amended prospectuses as may have
been required to the date hereof by the Commission in order to declare such
registration statement effective, and will file such additional amendments
thereto and such amended prospectuses and prospectus supplements as may
hereafter be required. Such registration statement (as amended to date, if
applicable, and as from time to time amended or supplemented hereafter) and the
prospectuses constituting a part thereof (including in each case all documents
incorporated or deemed to be incorporated by reference therein and the
information, if any, deemed to be a part thereof pursuant to the rules and
regulations of the Commission under the Securities Act, as from time to time
amended or supplemented pursuant to the Securities Act or otherwise (the
"Securities Act Regulations")), are hereinafter referred to as the "Registration
Statement" and the "Prospectus," respectively, except that if any revised
prospectus shall be used by the Company in connection with the Subscription and
Community Offering or the Syndicated Community Offering which differs from the
Prospectus on file at the Commission at the time the Registration Statement
becomes effective (whether or not such revised prospectus is required to be
filed by the Company pursuant to Rule 424(b) of the Securities Act Regulations),
the term "Prospectus" shall refer to such revised prospectus from and after the
time it is first provided to the Agent for such use.
Concurrently with the execution of this Agreement, the Company is
delivering to the Agent copies of the Prospectus of the Company to be used in
the Subscription and Community Offering. Such prospectus contains information
with respect to the Bank, the Company and the Common Stock.
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SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) The Company and the Bank jointly and severally represent and
warrant to the Agent as of the date hereof as follows:
(i) The Registration Statement has been declared effective by
the Commission, no stop order has been issued with respect thereto and no
proceedings therefor have been initiated or, to the knowledge of the
Company and the Bank, threatened by the Commission. At the time the
Registration Statement became effective and at the Closing Time referred to
in Section 2 hereof, the Registration Statement complied and will comply in
all material respects with the requirements of the Securities Act and the
Securities Act Regulations and did not and will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading. The Prospectus, at the date hereof does not and at the Closing
Time referred to in Section 2 hereof will not, include an untrue statement
of a material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that the representations
and warranties in this subsection shall not apply to statements in or
omissions from the Registration Statement or Prospectus made in reliance
upon and in conformity with information with respect to the Agent furnished
to the Company in writing by the Agent expressly for use in the
Registration Statement or Prospectus (the "Agent Information," which the
Company and the Bank acknowledge appears only in the sections captioned
"The Conversion - Syndicate Community Offering," "-Plan of Distribution for
the Subscription, Direct Community Offering and Syndicated Community
Offering" and "-Description of Sales Activities" of the Prospectus.
(ii) The Company has filed with the Department of the Treasury,
Office of Thrift Supervision (the "OTS") the Company's application for
approval of its acquisition of the Bank (the "Holding Company Application")
on Form H-(e)1-S promulgated under the savings and loan holding company
provisions of the Home Owners' Loan Act, as amended ("HOLA") and the
regulations promulgated thereunder. The Company has received written
notice from the OTS of its approval of the acquisition of the Bank, such
approval remains in full force and effect and no order has been issued by
the OTS suspending or revoking such approval and no proceedings therefor
have been initiated or, to the knowledge of the Company or the Bank,
threatened by the OTS. At the date of such approval and at the Closing
Time referred to in Section 2, the Holding Company Application complied and
will comply in all material respects with the applicable provisions of HOLA
and the regulations promulgated thereunder.
(iii) Pursuant to the rules and regulations of the Federal
Deposit Insurance Corporation ("FDIC") and the Department of Banking of the
State of Connecticut ("Department of Banking") governing the conversion of
state chartered mutual savings banks to stock form (the "Conversion
Regulations"), the Bank has filed with the FDIC and Department of Banking
an application for conversion, and has filed such amendments thereto and
supplementary materials as may have been required to the date hereof (such
application, as amended to date, if applicable, and as from time to time
amended or supplemented hereafter, is hereinafter referred to as the
"Conversion Application"), including copies of the Bank's Proxy Statement,
dated July 16, 1999, relating to the Conversion (the "Proxy Statement"),
and the Prospectus. The FDIC, by letter dated __________, 199__, and the
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Department of Banking, by letter dated __________, 199__, have approved the
Conversion Application, such approvals remain in full force and effect and
no order has been issued by the FDIC or Department of Banking suspending or
revoking such approvals and no proceedings therefor have been initiated or,
to the knowledge of the Company or the Bank, threatened by the FDIC or
Department of Banking. At the date of such approval and at the Closing Time
referred to in Section 2, the Conversion Application complied and will
comply in all material respects with the applicable provisions of the
Conversion Regulations.
(iv) At the time of their use, the Proxy Statement and any
other proxy solicitation materials will comply in all material respects
with the applicable provisions of the Conversion Regulations and 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. The Company and
the Bank will promptly file the Prospectus and any supplemental sales
literature with the FDIC and Department of Banking. The Prospectus and all
supplemental sales literature, as of the date the Registration Statement
became effective and at the Closing Time referred to in Section 2, complied
and will comply in all material respects with the applicable requirements
of the Conversion Regulations and, at or prior to the time of their first
use, will have received all required authorizations of the FDIC and
Department of Banking for use in final form.
(v) Neither the FDIC nor Department of Banking has, by order
or otherwise, prevented or suspended the use of the Prospectus or any
supplemental sales literature authorized by the Company or the Bank for use
in connection with the Offerings.
(vi) At the Closing Time referred to in Section 2, the Company
and the Bank will have completed the conditions precedent to the Conversion
and the establishment of the Foundation in accordance with the Plan, the
applicable Conversion Regulations and all other applicable laws,
regulations, decisions and orders, including all material terms,
conditions, requirements and provisions precedent to the Conversion imposed
upon the Company or the Bank by the FDIC, Department of Banking or any
other regulatory authority, other than those which the regulatory authority
permits to be completed after the Conversion.
(vii) FinPro, Inc., which prepared the valuation of the Bank as
part of the Conversion, has advised the Company and the Bank in writing
that it satisfies all requirements for an appraiser set forth in the
Conversion Regulations and any interpretations or guidelines issued by the
Department of Banking and the FDIC with respect thereto.
(viii) The accountants who certified the consolidated financial
statements and supporting schedules of the Bank included in the
Registration Statement have advised the Company and the Bank in writing
that they are independent public accountants within the meaning of the Code
of Ethics of the American Institute of Certified Public Accountants (the
"AICPA"), and such accountants are, with respect to the Company, the Bank
and each subsidiary of the Bank, independent certified public accountants
as required by the Securities Act and the Securities Act Regulations.
(ix) The only subsidiaries of the Bank are American Investment
Services, Inc., ASB Mortgage Servicing Company and American Savings Bank
Foundation, Inc.
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(x) The consolidated financial statements and the related
notes thereto included in the Registration Statement and the Prospectus
present fairly the financial position of the Company, the Bank and its
consolidated subsidiaries at the dates indicated and the results of
operations, retained earnings and cash flows for the periods specified, and
comply as to form in all material respects with the applicable accounting
requirements of the Securities Act Regulations and the Conversion
Regulations; except as otherwise stated in the Registration Statement, said
financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis; and the
supporting schedules and tables included in the Registration Statement
present fairly the information required to be stated therein.
(xi) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as otherwise
stated therein (A) there has been no material adverse change in the
financial condition, results of operations or business affairs of the
Company, the Bank and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, and (B) except
for transactions specifically referred to or contemplated in the
Prospectus, there have been no transactions entered into by the Company,
the Bank or any of its subsidiaries, other than those in the ordinary
course of business, which are material with respect to the Company, the
Bank and its subsidiaries, considered as one enterprise.
(xii) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware with corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus and
to enter into and perform its obligations under this Agreement; and the
Company is duly qualified as a foreign corporation to transact business and
is in good standing in the State of Connecticut and in each jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure to
so qualify would not have a material adverse effect on the financial
condition, results of operations or business affairs of the Company, the
Bank and its subsidiaries, considered as one enterprise.
(xiii) Upon consummation of the Conversion and the contribution
of the Foundation Shares as described in the Prospectus, the authorized,
issued and outstanding capital stock of the Company will be as set forth in
the Prospectus under "Capitalization" (except for subsequent issuances, if
any, pursuant to reservations, agreements or employee benefit plans
referred to in the Prospectus); no shares of Common Stock have been or will
be issued and outstanding prior to the Closing Time referred to in Section
2; at the time of Conversion, the Securities will have been duly authorized
for issuance and, when issued and delivered by the Company pursuant to the
Plan against payment of the consideration calculated as set forth in the
Plan and stated on the cover page of the Prospectus, will be duly and
validly issued and fully paid and non-assessable; the terms and provisions
of the Common Stock and the capital stock of the Company conform to all
statements relating thereto contained in the Prospectus; the certificates
representing the shares of Common Stock conform to the requirements of
applicable law and regulations; and the issuance of the Securities is not
subject to preemptive or other similar rights.
(xiv) The Bank, as of the date hereof, is a state chartered
savings bank in mutual form and upon consummation of the Conversion will be
a state chartered savings bank
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in stock form, in both instances with full corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus; the Company, the Bank and its subsidiaries
have obtained all licenses, permits and other governmental authorizations
currently required for the conduct of their respective businesses or
required for the conduct of their respective businesses as contemplated by
the Holding Company Application and the Conversion Application, except
where the failure to obtain such licenses, permits or other governmental
authorizations would not have a material adverse effect on the financial
condition, results of operations or business affairs of the Company, the
Bank and its subsidiaries considered as one enterprise; all such licenses,
permits and other governmental authorizations are in full force and effect
and the Company, the Bank and its subsidiaries are in all material respects
in compliance therewith; neither the Company, the Bank nor any of the
Bank's subsidiaries has received notice of any proceeding or action
relating to the revocation or modification of any such license, permit or
other governmental authorization which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, might have a
material adverse effect on the financial condition, results of operations
or business affairs of the Company, the Bank and its subsidiaries,
considered as one enterprise; and the Bank is in good standing under the
laws of the United States and the State of Connecticut and is qualified to
transact business as a foreign corporation in any jurisdiction in which the
failure to so qualify would have a material adverse effect on the financial
condition, results of operations or business affairs of the Company, the
Bank and its subsidiaries considered as one enterprise.
(xv) The deposit accounts of the Bank are insured by the FDIC
up to the applicable limits and upon consummation of the 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. The Bank is
a "qualified thrift lender" within the meaning of 12 U.S.C. Section
1467a(m).
(xvi) Upon consummation of the Conversion, the authorized
capital stock of the Bank will be 120,000,000 shares of common stock, par
value $1.00 per share (the "Bank Common Stock") and 10,000,000 shares of
preferred stock, par value $1.00 per share (the "Bank Preferred Stock"),
and the issued and outstanding capital stock of the Bank will be 1,000
shares of Bank Common Stock and no shares of the Bank Preferred Stock, and
no shares of Bank Common Stock or Bank Preferred Stock have been or will be
issued prior to the Closing time referred to in Section 2; and as of
Closing Time referred to in Section 2, all of the issued and outstanding
capital stock of the Bank will be duly authorized, validly issued and fully
paid and nonassessable and have been issued in compliance with all federal
and state securities laws. The shares of Bank Common Stock to be issued to
the Company will have been duly authorized for issuance and, when issued
and delivered by the Bank pursuant to the Plan against payment of the
consideration calculated as set forth in the Plan and as described in the
Prospectus, will be duly and validly issued and fully paid and
nonassessable, and all such Bank Common Stock will be owned beneficially
and of record by the Company free and clear of any security interest,
mortgage, pledge, lien, encumbrance or legal or equitable claim; the terms
and provisions of the Bank Common Stock and the Bank Preferred Stock
conform to all statements relating thereto contained in the Prospectus, and
the certificates representing the shares of the Bank Common Stock will
conform with the requirements of applicable laws and regulations; and the
issuance of the Bank Common Stock is not subject to preemptive or similar
rights.
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(xvii) The Foundation has been duly authorized and incorporated
and is validly existing as a non stock corporation in good standing under
the laws of the State of Delaware with corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus; the Foundation will not be a savings and loan
holding company within the meaning of 12 C.F.R. Section 574.2(q) as a
result of the issuance of shares of Common Stock to it in accordance with
the terms of the Plan and in the amounts as described in the Prospectus; no
approvals are required to establish the Foundation and to contribute the
shares of Common Stock thereto as described in the Prospectus other than
those imposed by the Department of Banking and the FDIC; except as
specifically disclosed in the Prospectus and the Proxy Statement, there are
no agreements and/or understandings, written or oral, between the Company
and/or the Bank and the Foundation with respect to the control, directly or
indirectly, over the voting and the acquisition or disposition of the
Foundation Shares; at the time of the Conversion, the Foundation Shares
will have been duly authorized for issuance and, when issued and
contributed by the Company pursuant to the Plan, will be duly and validly
issued and fully paid and non-assessable; and the issuance of the
Foundation Shares is not subject to preemptive or similar rights.
(xviii) Each direct and indirect subsidiary of the Bank has been
duly incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has full corporate
power and authority to own, lease and operate its properties and to conduct
its business as described in the Registration Statement and Prospectus, and
is duly qualified to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure to so qualify would not have a material adverse effect on
the financial condition, results of operations or business affairs of the
Company, the Bank and its subsidiaries considered as one enterprise; the
activities of each such subsidiary are permitted to subsidiaries of a state
chartered savings bank by the rules, regulations, resolutions and practices
of the FDIC and the Department of Banking; all of the issued and
outstanding capital stock of each such subsidiary has been duly authorized
and validly issued, is fully paid and nonassessable and is owned by the
Bank, directly, free and clear of any security interest, mortgage, pledge,
lien, encumbrance or legal or equitable claim.
(xix) The Company and the Bank have taken all corporate action
necessary for them to execute, deliver and perform this Agreement, and this
Agreement has been duly executed and delivered by, and is the valid and
binding agreement of, the Company and the Bank, enforceable in accordance
with its terms, except as may be limited by bankruptcy, insolvency or other
laws affecting the enforceability of the rights of creditors generally and
judicial limitations on the right of specific performance and except as the
enforceability of indemnification and contribution provisions may be
limited by applicable securities laws.
(xx) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus and
prior to the Closing Time, except as otherwise may be indicated or
contemplated therein, none of the Company, the Bank or any subsidiary of
the Bank will have (A) issued any securities or incurred any liability or
obligation, direct or contingent, or borrowed money, except borrowings in
the ordinary course of business from the same or similar sources and in
similar amounts as indicated in the Prospectus, or (B) entered into any
transaction or series of transactions which is material in light of the
business of the Company, the Bank and its subsidiaries, taken as a whole,
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excluding the origination, purchase and sale of loans or the purchase or
sale of investment securities or mortgaged-backed securities in the
ordinary course of business.
(xxi) No approval of any regulatory or supervisory or other
public authority is required in connection with the execution and delivery
of this Agreement or the issuance of the Securities and the Foundation
Shares that has not been obtained and a copy of which has been delivered to
the Agent, except as may be required under the securities laws of various
jurisdictions.
(xxii) Neither the Company, the Bank nor any of the Bank's
subsidiaries is in violation of its certificate of incorporation,
organization certificate, articles of incorporation or charter, as the case
may be, or bylaws (and the Bank will not be in violation of its charter or
bylaws in stock form upon consummation of the Conversion); and neither the
Company, the Bank nor any of the Bank's subsidiaries is in default (nor has
any event occurred which, with notice or lapse of time or both, would
constitute a default) in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which the
Company, the Bank or any of its subsidiaries is a party or by which it or
any of them may be bound, or to which any of the property or assets of the
Company, the Bank or any of its subsidiaries is subject, except for such
defaults that would not, individually or in the aggregate, have a material
adverse effect on the financial condition, results of operations or
business of the Company, the Bank and its subsidiaries considered as one
enterprise; and there are no contracts or documents of the Company, the
Bank or any of the Bank's subsidiaries which are required to be filed as
exhibits to the Registration Statement or the Conversion Application which
have not been so filed.
(xxiii) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated herein have been duly
authorized by all necessary corporate action and do not and will not
conflict with or constitute a breach of, or default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company, the Bank or any of its subsidiaries pursuant to,
any contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Company, the Bank or any of its subsidiaries is a
party or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any of its subsidiaries is subject,
except for such defaults that would not, individually or in the aggregate,
have a material adverse effect on the financial condition, results of
operations or business affairs of the Company, the Bank and its
subsidiaries considered as one enterprise; nor will such action result in
any violation of the provisions of the certificate of incorporation,
organization certificate, articles of incorporation or charter or by-laws
of the Company, the Bank or any of its subsidiaries, or any applicable law,
administrative regulation or administrative or court decree.
(xxiv) No labor dispute with the employees of the Company, the
Bank or any of its subsidiaries exists or, to the knowledge of the Company
or the Bank, is imminent or threatened; and the Company and the Bank are
not aware of any existing or threatened labor disturbance by the employees
of any of its principal suppliers or contractors which might be expected to
result in any material adverse change in the financial condition, results
of operations or business affairs of the Company, the Bank and its
subsidiaries considered as one enterprise.
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(xxv) Each of the Company, the Bank and its subsidiaries have
good and marketable title to all properties and assets for which ownership
is material to the business of the Company, the Bank or its subsidiaries
and to those properties and assets described in the Prospectus as owned by
them, free and clear of all liens, charges, encumbrances or restrictions,
except such as are described in the Prospectus or are not material in
relation to the business of the Company, the Bank or its subsidiaries
considered as one enterprise; and all of the leases and subleases material
to the business of the Company, the Bank or its subsidiaries under which
the Company, the Bank or its subsidiaries hold properties, including those
described in the Prospectus, are valid and binding agreements of the
Company, the Bank and its subsidiaries, enforceable in accordance with
their terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization and similar laws of general
applicability relating to or affecting creditors' rights or general
principles of equity).
(xxvi) None of the Company, the Bank nor its subsidiaries are
in violation of any directive from the OTS, the FDIC or the Department of
Banking to make any material change in the method of conducting their
respective businesses; the Bank and its subsidiaries have conducted and are
conducting their business so as to comply in all material respects with all
applicable statutes, regulations and administrative and court decrees
(including, without limitation, all regulations, decisions, directives and
orders of the FDIC and the Department of Banking).
(xxvii) There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now pending, or,
to the knowledge of the Company or the Bank, threatened, against or
affecting the Company, the Bank or any of its subsidiaries which is
required to be disclosed in the Registration Statement (other than as
disclosed therein), or which might result in any material adverse change in
the financial condition, results of operations or business affairs of the
Company, the Bank and its subsidiaries considered as one enterprise, or
which might materially and adversely affect the properties or assets
thereof or which might materially and adversely affect the consummation of
the Conversion; all pending legal or governmental proceedings to which the
Company, the Bank or any subsidiary is a party or of which any of their
respective property or assets is the subject which are not described in the
Registration Statement, including ordinary routine litigation incidental to
the business, are considered in the aggregate not material; and there are
no contracts or documents of the Company or any of its subsidiaries which
are required to be filed as exhibits to the Registration Statement or the
Conversion Application which have not been so filed.
(xxviii) The Bank has obtained an opinion of its counsel,
Xxxxxxx, Xxxxxx & Xxxxxxxx, LLP, with respect to the legality of the
Securities to be issued and the Foundation Shares and the federal income
tax consequences of the Conversion, and an opinion from KPMG LLP ("KPMG")
regarding state and local income tax (including franchise tax, sales or use
tax, license fee on foreign corporations, stock transfer tax, real property
transfer gain tax and real estate transfer tax), copies of which are filed
as exhibits to the Registration Statement; all material aspects of the
aforesaid opinions are accurately summarized in the Prospectus; the facts
and representations upon which such opinions are based are truthful,
accurate and complete in all material respects; and neither the Bank nor
the Company has taken or will take any action inconsistent therewith.
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(xxix) The Company is not required to be registered under the
Investment Company Act of 1940, as amended.
(xxx) All of the loans represented as assets on the most
recent consolidated financial statements or consolidated selected financial
information of the Bank included in the Prospectus meet or are exempt from
all requirements of federal, state or local law pertaining to lending,
including without limitation truth in lending (including the requirements
of Regulations Z and 12 C.F.R. Part 226 and Section 563.99), real estate
settlement procedures, consumer credit protection, equal credit opportunity
and all disclosure laws applicable to such loans, except for violations
which, if asserted, would not result in a material adverse effect on the
financial condition, results of operations or business of the Company, the
Bank and its subsidiaries considered as one enterprise.
(xxxi) To the knowledge of the Company and the Bank, with the
exception of the intended loan to the Bank's ESOP by the Company to enable
the ESOP to purchase shares of Common Stock in an amount of up to 8% of the
Common Stock issued in the Conversion, none of the Company, the Bank or
employees of the Bank has made any payment of funds of the Company or the
Bank as a loan for the purchase of the Common Stock or made any other
payment of funds prohibited by law, and no funds have been set aside to be
used for any payment prohibited by law.
(xxxii) The Company, the Bank and its subsidiaries are in
compliance in all material respects with the applicable financial
recordkeeping and reporting requirements of the Currency and Foreign
Transaction Reporting Act of 1970, as amended, and the rules and
regulations thereunder.
(xxxiii) None of the Company, the Bank nor its subsidiaries nor
any properties owned or operated by the Company, the Bank or its
subsidiaries is in violation of or liable under any Environmental Law (as
defined below), except for such violations or liabilities that,
individually or in the aggregate, would not have a material adverse effect
on the financial condition, results of operations or business affairs of
the Company, the Bank and the subsidiaries considered as one enterprise.
There are no actions, suits or proceedings, or demands, claims, notices or
investigations (including, without limitation, notices, demand letters or
requests for information from any environmental agency) instituted or
pending, or to the knowledge of the Company or the Bank threatened,
relating to the liability of any property owned or operated by the Company,
the Bank or the subsidiaries thereof, under any Environmental Law. For
purposes of this subsection, the term "Environmental Law" means any
federal, state, local or foreign law, statute, ordinance, rule, regulation,
code, license, permit, authorization, approval, consent, order, judgment,
decree, injunction or agreement with any regulatory authority relating to
(i) the protection, preservation or restoration of the environment
(including, without limitation, air, water, vapor, surface water,
groundwater, drinking water supply, surface soil, subsurface soil, plant
and animal life or any other natural resource), and/or (ii) the use,
storage, recycling, treatment, generation, transportation, processing,
handling, labeling, production, release or disposal of any substance
presently listed, defined, designated or classified as hazardous, toxic,
radioactive or dangerous, or otherwise regulated, whether by type or by
quantity, including any material containing any such substance as a
component.
-10-
(xxxiv) The Company, the Bank and its subsidiaries have filed all
federal income and state and local franchise tax returns required to be
filed and have made timely payments of all taxes shown as due and payable
in respect of such returns, and no deficiency has been asserted with
respect thereto by any taxing authority.
(xxxv) The Company has received approval, subject to regulatory
approval to consummate the Offerings and issuance, to have the Securities
quoted on the National Market System of the National Association of
Securities Dealers' Automated Quotation System ("Nasdaq National Market")
effective as of the Closing Time referred to in Section 2 hereof.
(xxxvi) The Company has filed a registration statement for the
Common Stock under Section 12(g) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and such registration statement was declared
effective concurrent with the effectiveness of the Registration Statement.
(b) Any certificate signed by any officer of the Company or the
Bank and delivered to either of the Agent or to counsel for the Agent shall be
deemed a representation and warranty by the Company or the Bank to each Agent as
to the matters covered thereby.
SECTION 2. APPOINTMENT OF SANDLER X'XXXXX; SALE AND DELIVERY OF THE
SECURITIES; CLOSING.
On the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Company hereby
appoints Sandler X'Xxxxx as its Agent to consult with and advise the Company,
and to assist the Company with the solicitation of subscriptions and purchase
orders for Securities, in connection with the Company's sale of Common Stock in
the Subscription and Community Offering and the Syndicated Community Offering.
On the basis of the representations and warranties herein contained, and subject
to the terms and conditions herein set forth, Sandler X'Xxxxx accepts such
appointment and agrees to use its best efforts to assist the Company with the
solicitation of subscriptions and purchase orders for Securities in accordance
with this Agreement; provided, however, that the Agent shall not be obligated to
take any action which is inconsistent with any applicable laws, regulations,
decisions or orders. The services to be rendered by Sandler X'Xxxxx pursuant to
this appointment include the following: (i) consulting as to the securities
marketing implications of any aspect of the Plan of Conversion or related
corporate documents; (ii) reviewing with the Board of Directors the independent
appraiser's appraisal of the common stock; (iii) reviewing all offering
documents, including the Prospectus, stock order form and related offering
materials (it being understood that preparation and filing of such documents is
the sole responsibility of the Company and the Bank and their counsel); (iv)
assisting in the design and implementation of a marketing strategy for the
Offerings; (v) assisting the Company and the Bank in obtaining all requisite
regulatory approvals; (vi) assisting Bank management in preparing for meetings
with potential investors and broker-dealers; and (vii) providing such other
general advice and assistance as may be requested to promote the successful
completion of the Offerings.
The appointment of the Agent hereunder shall terminate upon the
earlier to occur of (a) forty-five (45) days after the last day of the
Subscription and Community Offering, unless the Company and the Agent agree in
writing to extend such period and the FDIC and Department of Banking agree to
extend the period of time in which the Shares may be sold, or (b) the receipt
and
-11-
acceptance of subscriptions and purchase orders for all of the Securities, or
(c) the completion of the Syndicated Community Offering.
If any of the Securities remain available after the expiration of the
Subscription and Community Offering, at the request of the Company and the Bank,
Sandler X'Xxxxx will seek to form a syndicate of registered brokers or dealers
("Selected Dealers") to assist in the solicitation of purchase orders of such
Securities on a best efforts basis, subject to the terms and conditions set
forth in a selected dealers' agreement (the "Selected Dealers' Agreement"),
substantially in the form set forth in Exhibit A to this Agreement. Sandler
X'Xxxxx will endeavor to limit the aggregate fees to be paid by the Company and
the Bank under any such Selected Dealers' Agreement to an amount competitive
with gross underwriting discounts charged at such time for underwritings of
comparable amounts of stock sold at a comparable price per share in a similar
market environment; provided, however, that the aggregate fees payable to
Sandler X'Xxxxx and Selected Dealers shall not exceed 6% of the aggregate
Purchase Price of the Securities sold by such Selected Dealers. Sandler X'Xxxxx
will endeavor to distribute the Securities among the Selected Dealers in a
fashion which best meets the distribution objective of the Company and the
requirements of the Plan, which may result in limiting the allocation of stock
to certain Selected Dealers. It is understood that in no event shall Sandler
X'Xxxxx be obligated to act as a Selected Dealer or to take or purchase any
Securities.
In the event the Company is unable to sell at least the total minimum
of the Securities, as set forth on the cover page of the Prospectus, within the
period herein provided, this Agreement shall terminate and the Company shall
refund to any persons who have subscribed for any of the Securities the full
amount which it may have received from them, together with interest as provided
in the Prospectus, and no party to this Agreement shall have any obligation to
the others hereunder, except for the obligations of the Company and the Bank as
set forth in Sections 4, 6(a) and 7 hereof and the obligations of the Agent as
provided in Sections 6(b) and 7 hereof. Appropriate arrangements for placing
the funds received from subscriptions for Securities or other offers to purchase
Securities in special interest-bearing accounts with the Bank until all
Securities are sold and paid for were made prior to the commencement of the
Subscription Offering, with provision for refund to the purchasers as set forth
above, or for delivery to the Company if all Securities are sold.
If at least the total minimum of Securities, as set forth on the cover
page of the Prospectus, are sold, the Company agrees to issue or have issued the
Securities sold and to release for delivery certificates for such Securities at
the Closing Time against payment therefor by release of funds from the special
interest-bearing accounts referred to above. The closing shall be held at the
__________ offices of _________________________, at 10:00 a.m., local time, or
at such other place and time as shall be agreed upon by the parties hereto, on a
business day to be agreed upon by the parties hereto. The Company shall notify
the Agent by telephone, confirmed in writing, when funds shall have been
received for all the Securities. Certificates for Securities shall be delivered
directly to the purchasers thereof in accordance with their directions.
Notwithstanding the foregoing, certificates for Securities purchased through
Selected Dealers shall be made available to the Agent for inspection at least 48
hours prior to the Closing Time at such office as the Agent shall designate.
The hour and date upon which the Company shall release for delivery all of the
Securities, in accordance with the terms hereof, is herein called the "Closing
Time."
The Company will pay any stock issue and transfer taxes which may be
payable with respect to the sale of the Securities.
-12-
In addition to the reimbursement of the expenses specified in Section
4 hereof, the Agent will receive the following compensation for its services
hereunder:
(a) one and thirty-five hundredths percent (1.35%) of the aggregate
Actual Purchase Price (as defined in the Prospectus) of the Securities sold
in the Subscription and Community Offering, excluding in each case shares
purchased by (i) any employee benefit plan of the Company or the Bank
established for the benefit of their respective directors, officers and
employees, (ii) by any foundation or charitable organization established by
the Bank in connection with the Conversion, and (iii) any director, officer
or employee of the Company or the Bank or members of their immediate
families (which term shall mean parents, grandparents, spouse, siblings,
children and grandchildren); and
(b) with respect to any Securities sold by an NASD member firm (other
than Sandler X'Xxxxx) under the Selected Dealers' Agreement in the
Syndicated Community Offering, (i) the compensation payable to Selected
Dealers under any Selected Dealers' Agreement, (ii) any sponsoring dealer's
fees; and (iii) a management fee to Sandler X'Xxxxx of one and thirty-five
hundredths percent (1.35%). Any fees payable to Sandler X'Xxxxx for
Securities sold by Sandler X'Xxxxx under any such agreement shall be
limited to an aggregate of [six percent (6%)] of the Actual Purchase Price
of such Securities.
If this Agreement is terminated by the Agent in accordance with the
provisions of Section 9(a) hereof or the Conversion is terminated by the
Company, no fee shall be payable by the Company to Sandler X'Xxxxx; however, the
Company shall reimburse the Agent for all of its reasonable out-of-pocket
expenses incurred prior to termination, including the reasonable fees and
disbursements of counsel for the Agent in accordance with the provisions of
Section 4 hereof.
All fees payable to the Agent hereunder shall be payable in
immediately available funds at Closing Time, or upon the termination of this
Agreement, as the case may be. In recognition of the long lead times involved
in the conversion process, the Bank agrees to make advance payments to the Agent
in the aggregate amount of fifty thousand dollars ($50,000), twenty-five
thousand dollars ($25,000) of which has been previously paid and the remaining
twenty-five thousand ($25,000) of which shall be payable upon commencement of
the subscription offering, which shall be credited against any fees or
reimbursement of expenses payable hereunder.
SECTION 3. COVENANTS OF THE COMPANY. The Company and the Bank
covenant with the Agent as follows:
(a) The Company and the Bank will prepare and file such amendments or
supplements to the Registration Statement, the Prospectus, the Conversion
Application and the Proxy Statement as may hereafter be required by the
Securities Act Regulations or the Conversion Regulations or as may
hereafter be requested by the Agent. Following completion of the
Subscription and Community Offering, in the event of a Syndicated Community
Offering, the Company and the Bank will (i) promptly prepare and file with
the Commission a post-effective amendment to the Registration Statement
relating to the results of the Subscription and Community Offering, any
additional information with respect to the proposed plan of distribution
and any revised pricing information or (ii) if no such post-effective
amendment is required, will file with, or mail for filing to, the
Commission a
-13-
prospectus or prospectus supplement containing information relating to the
results of the Subscription and Community Offering and pricing information
pursuant to Rule 424 of the Securities Act Regulations, in either case in a
form acceptable to the Agent. The Company and the Bank will notify the
Agent immediately, and confirm the notice in writing, (i) of the
effectiveness of any post-effective amendment of the Registration
Statement, the filing of any supplement to the Prospectus and the filing of
any amendment to the Conversion Application, (ii) of the receipt of any
comments from the Commission, OTS, FDIC or Department of Banking with
respect to the transactions contemplated by this Agreement or the Plan,
(iii) of any request by the Commission for any amendment to the
Registration Statement or by the FDIC or Department of Banking for any
amendment to the Conversion Application or any amendment or supplement to
the Prospectus or for additional information, (iv) of the issuance by the
FDIC or Department of Banking of any order suspending the Offerings or the
use of the Prospectus or the initiation of any proceedings for that
purpose, (v) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose, and (vi) of the receipt of any notice with
respect to the suspension of any qualification of the Securities for
offering or sale in any jurisdiction. The Company and the Bank will make
every reasonable effort to prevent the issuance of any stop order and, if
any stop order is issued, to obtain the lifting thereof at the earliest
possible moment.
(b) The Company and the Bank will give the Agent notice of its
intention to file or prepare any amendment to the Conversion Application or
Registration Statement (including any post-effective amendment) or any
amendment or supplement to the Prospectus (including any revised prospectus
which the Company proposes for use in connection with the Syndicated
Community Offering of the Securities which differs from the prospectus on
file at the Commission at the time the Registration Statement becomes
effective, whether or not such revised prospectus is required to be filed
pursuant to Rule 424(b) of the Securities Act Regulations), will furnish
the Agent with copies of any such amendment or supplement a reasonable
amount of time prior to such proposed filing or use, as the case may be,
and will not file any such amendment or supplement or use any such
prospectus to which the Agent or counsel for the Agent may object.
(c) The Company and the Bank will deliver to the Agent as many signed
copies and as many conformed copies of the Conversion Application and the
Registration Statement as originally filed and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein)
as the Agent may reasonably request, and from time to time such number of
copies of the Prospectus as the Agent may reasonably request.
(d) During the period when the Prospectus is required to be
delivered, the Company and the Bank will comply, at their own expense, with
all requirements imposed upon them by the FDIC and Department of Banking,
by the applicable Conversion Regulations, as from time to time in force,
and by the Securities Act, the Securities Act Regulations, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations of the Commission promulgated thereunder, including, without
limitation, Regulation M under the Exchange Act, so far as necessary to
permit the continuance of sales or dealing in shares of Common Stock during
such period in accordance with the provisions hereof and the Prospectus.
-14-
(e) If any event or circumstance shall occur as a result of which it
is necessary, in the opinion of counsel for the Agent, to amend or
supplement the Prospectus in order to make the Prospectus not misleading in
the light of the circumstances existing at the time it is delivered to a
purchaser, the Company and the Bank will forthwith amend or supplement the
Prospectus (in form and substance satisfactory to counsel for the Agent) so
that, as so amended or supplemented, the Prospectus will not include an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to a purchaser, not
misleading, and the Company and the Bank will furnish to the Agent a
reasonable number of copies of such amendment or supplement. For the
purpose of this subsection, the Company and the Bank will each furnish such
information with respect to itself as the Agent may from time to time
reasonably request.
(f) The Company and the Bank will take all necessary action, in
cooperation with the Agent, to qualify the Securities for offering and sale
under the applicable securities laws of such states of the United States
and other jurisdictions as the Conversion Regulations may require and as
the Agent and the Company have agreed; provided, however, that the Company
and the Bank shall not be obligated to file any general consent to service
of process or to qualify as a foreign corporation in any jurisdiction in
which it is not so qualified. In each jurisdiction in which the Securities
have been so qualified, the Company and the Bank will file such statements
and reports as may be required by the laws of such jurisdiction to continue
such qualification in effect for a period of not less than one year from
the effective date of the Registration Statement.
(g) The Company authorizes Sandler X'Xxxxx and any Selected Dealers
to act as agent of the Company in distributing the Prospectus to persons
entitled to receive subscription rights and other persons to be offered
Securities having record addresses in the states or jurisdictions set forth
in a survey of the securities or "blue sky" laws of the various
jurisdictions in which the Offerings will be made (the "Blue Sky Survey").
(h) The Company will make generally available to its security holders
as soon as practicable, but not later than 60 days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 of the 1933 Act Regulations) covering a twelve month
period beginning not later than the first day of the Company's fiscal
quarter next following the "effective date" (as defined in said Rule 158)
of the Registration Statement.
(i) During the period ending on the third anniversary of the
expiration of the fiscal year during which the closing of the transactions
contemplated hereby occurs, the Company will furnish to its stockholders as
soon as practicable after the end of each such fiscal year an annual report
(including consolidated statements of financial condition and consolidated
statements of income, stockholders' equity and cash flows, certified by
independent public accountants) and, as soon as practicable after the end
of each of the first three quarters of each fiscal year (beginning with the
fiscal quarter ending after the effective date of the Registration
Statement), consolidated summary financial information of the Company, the
Bank and its subsidiaries for such quarter in reasonable detail. In
addition, such annual report and quarterly consolidated summary financial
information shall be made public through the issuance of appropriate press
releases at the same time or prior to the time of the furnishing thereof to
stockholders of the Company.
-15-
(j) During the period ending on the third anniversary of the
expiration of the fiscal year during which the closing of the transactions
contemplated hereby occurs, the Company will furnish to the Agent (i) as
soon as publicly available, a copy of each report or other document of the
Company furnished generally to stockholders of the Company or furnished to
or filed with the Commission under the Exchange Act or any national
securities exchange or system on which any class of securities of the
Company is listed, and (ii) from time to time, such other information
concerning the Company as the Agent may reasonably request.
(k) The Company and the Bank will conduct the Conversion including
the formation and operation of the Foundation in all material respects in
accordance with the Plan, the Conversion Regulations and all other
applicable regulations, decisions and orders, including all applicable
terms, requirements and conditions precedent to the Conversion imposed upon
the Company or the Bank by the FDIC or Department of Banking.
(l) The Company and the Bank will use the net proceeds received by it
from the sale of the Securities in the manner specified in the Prospectus
under "Use of Proceeds."
(m) The Company will file with the Commission such reports on Form SR
as may be required pursuant to Rule 463 of the Securities Act Regulations,
if such report or substantially similar report is required by the SEC.
(n) The Company will maintain the effectiveness of the Exchange Act
Registration Statement for not less than three years. The Company will
file with the Nasdaq Stock Market all documents and notices required by the
Nasdaq Stock Market of companies that have issued securities that are
traded in the over-the-counter market and quotations for which are reported
by the Nasdaq National Market.
(o) The Company and the Bank will take such actions and furnish such
information as are reasonably requested by the Agent in order for the Agent
to ensure compliance with the National Association of Securities Dealers,
Inc.'s "Interpretation Relating to Free-Riding and Withholding."
(p) Other than in connection with any employee benefit plan or
arrangement described in the Prospectus, the Company will not, without the
prior written consent of the Agent, sell or issue, contract to sell or
otherwise dispose of, any shares of Common Stock other than the Securities
for a period of 180 days following the Closing Time.
(q) During the period beginning on the date hereof and ending on the
later of the third anniversary of the Closing Time or the date on which the
Agent receives full payment in satisfaction of any claim for
indemnification or contribution to which it may be entitled pursuant to
Sections 6 or 7, respectively, neither the Company nor the Bank shall,
without the prior written consent of the Agent, take or permit to be taken
any action that could result in the Bank Common Stock becoming subject to
any security interest, mortgage, pledge, lien or encumbrance; provided,
however, that this covenant shall be null and void if the OTS, by
regulation, policy statement or interpretive release, or by written order
or written advice addressed to the Bank or the Agent specifically
addressing the provisions of Section 6(a) hereof, permits indemnification
of the Agent by the Bank as contemplated by such provisions.
-16-
(r) The Company and the Bank will comply with the conditions imposed
by or agreed to with the OTS in connection with its approval of the Holding
Company Application and with the FDIC and Department of Banking in
connection with their approval or non-objection of, or non-objection to,
the Conversion Application, including those conditions relating to the
establishment and the operation of the Foundation; the Company and the Bank
shall use their best efforts to ensure that the Foundation submits within
the time frames required by applicable law a request to the Internal
Revenue Service to be recognized as a tax-exempt organization under Section
501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code");
the Company and the Bank will take no action which will result in the
possible loss of the Foundation's tax exempt status; and neither the
Company nor the Bank will contribute any additional assets to the
Foundation until such time that such additional contributions will be
deductible for federal and state income tax purposes.
(s) During the period ending on the first anniversary of the Closing
Time, the Bank will comply with all applicable law and regulation necessary
for the Bank to continue to be a "qualified thrift lender" within the
meaning of 12 U.S.C. Section 1467a(m).
(t) The Company shall not deliver the Securities until the Company
and the Bank have satisfied each condition set forth in Section 5 hereof,
unless such condition is waived by the Agent.
(u) The Company or the Bank will furnish to Sandler X'Xxxxx as early
as practicable prior to the Closing Date, but no later than two (2) full
business days prior thereto, a copy of the latest available unaudited
interim consolidated financial statements of the Bank and the Subsidiaries
which have been read by KPMG, as stated in their letters to be furnished
pursuant to subsections (e) and (f) of Section 5 hereof.
SECTION 4. PAYMENT OF EXPENSES. The Company and the Bank jointly and
severally agree to pay all expenses incident to the performance of their
obligations under this Agreement, including but not limited to (i) the cost of
obtaining all securities and bank regulatory approvals, (ii) the printing and
filing of the Registration Statement as originally filed and of each amendment
thereto, (iii) the preparation, issuance and delivery of the certificates for
the Securities to the purchasers in the Offerings, (iv) the fees and
disbursements of the Company's and the Bank's counsel, accountants appraiser and
other advisors, (v) the qualification of the Securities under securities laws in
accordance with the provisions of Section 3(f) hereof, including filing fees and
the fees and disbursements of counsel in connection therewith and in connection
with the preparation of the Blue Sky Survey, (vi) the printing and delivery to
the Agent of copies of the Registration Statement as originally filed and of
each amendment thereto and the printing and delivery of the Prospectus and any
amendments or supplements thereto to the purchasers in the Offerings and the
Agent, (vii) the printing and delivery to the Agent of copies of a Blue Sky
Survey, and (viii) the fees and expenses incurred in connection with the listing
of the Securities on the Nasdaq National Market. In the event the Agent incurs
any such fees and expenses on behalf of the Bank or the Company, the Bank will
reimburse the Agent for such fees and expenses whether or not the Conversion is
consummated; provided, however, that the Agent shall not incur any substantial
expenses on behalf of the Bank or the Company pursuant to this Section without
the prior approval of the Bank.
The Company and the Bank jointly and severally agree to pay certain
expenses incident to the performance of the Agent's obligations under this
Agreement, regardless of whether the Conversion
-17-
is consummated, including (i) the filing fees paid or incurred by the Agent in
connection with all filings with the National Association of Securities Dealers,
Inc., and (ii) all reasonable out of pocket expenses incurred by the Agent
relating to the Offerings, including, without limitation, advertising,
promotional, syndication and travel expenses and fees and expenses of the
Agent's counsel. All fees and expenses to which the Agent is entitled to
reimbursement under this paragraph of this Section 4 shall be due and payable
upon receipt by the Company or the Bank of a written accounting therefor setting
forth in reasonable detail the expenses incurred by the Agent.
SECTION 5. CONDITIONS OF AGENT'S OBLIGATIONS. The Company, the Bank
and the Agent agree that the issuance and the sale of Securities and all
obligations of the Agent hereunder are subject to the accuracy of the
representations and warranties of the Company and the Bank herein contained as
of the date hereof and the Closing Time, to the accuracy of the statements of
officers and directors of the Company and the Bank made pursuant to the
provisions hereof, to the performance by the Company and the Bank of their
obligations hereunder, and to the following further conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued under the Securities Act or proceedings
therefor initiated or threatened by the Commission, no order suspending the
Offerings or authorization for final use of the Prospectus shall have been
issued or proceedings therefor initiated or threatened by the FDIC or
Department of Banking and no order suspending the sale of the Securities in
any jurisdiction shall have been issued.
(b) At Closing Time, the Agent shall have received:
(1) The favorable opinion, dated as of Closing Time, of
Xxxxxxx, Xxxxxx & Xxxxxxxx, LLP, counsel for the Company and the Bank,
in form and substance satisfactory to counsel for the Agent, to the
effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Delaware.
(ii) The Company has full corporate power and authority to
own, lease and operate its properties and to conduct its business
as described in the Registration Statement and Prospectus and to
enter into and perform its obligations under this Agreement.
(iii) The Company is duly qualified as a foreign
corporation to transact business and is in good standing in the
State of Connecticut and in each other jurisdiction in which such
qualification is required whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure to so qualify would not have a material adverse effect
upon the financial condition, results of operations or business
affairs of the Company, the Bank and its subsidiaries, considered
as one enterprise.
(iv) Upon consummation of the Conversion, and the issuance
of the Foundation Shares to the Foundation immediately upon
completion thereof
-18-
and in the amount described in the Prospectus, and in compliance
with all conditions imposed upon the contribution thereof by the
FDIC and Department of Banking, the authorized, issued and
outstanding capital stock of the Company will be as set forth in
the Prospectus under "Capitalization" and no shares of Common
Stock have been or will be issued and outstanding prior to the
Closing Time.
(v) The Securities and the Foundation Shares have been
duly and validly authorized for issuance and sale and, when
issued and delivered by the Company pursuant to the Plan against
payment of the consideration calculated as set forth in the Plan,
or contributed by the Company pursuant to the Plan in the case of
the Foundation Shares, will be duly and validly issued and fully
paid and non-assessable.
(vi) The issuance of the Securities and the Foundation
Shares is not subject to preemptive or other similar rights
arising by operation of law or, to the best of their knowledge
and information, otherwise.
(vii) The Bank has been at all times since 1862 and prior
to the Closing Time duly organized, and is validly existing and
in good standing under the laws of the State of Connecticut as a
state chartered savings bank of mutual form, and, at Closing
Time, has become duly organized, validly existing and in good
standing under the laws of the State of Connecticut as a state
chartered savings bank of stock form, in both instances with full
corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the
Registration Statement and the Prospectus; and the Bank is duly
qualified as a foreign corporation in each jurisdiction in which
the failure to so qualify would have a material adverse effect
upon the financial condition, results of operations or business
affairs of the Bank.
(viii) The Bank is a member in good standing of the Federal
Home Loan Bank of Boston and the deposit accounts of the Bank are
insured by the FDIC up to the applicable limits.
(ix) Each direct and indirect subsidiary of the Bank has
been duly incorporated and is validly existing as a corporation
in good standing under the laws of the jurisdiction of its
incorporation, has full corporate power and authority to own,
lease and operate its properties and to conduct its business as
described in the Registration Statement and is duly qualified as
a foreign corporation to transact business and is in good
standing in each jurisdiction in which the failure to so qualify
would have a material adverse effect upon the financial
condition, results of operations or business of the Company, the
Bank and its subsidiaries, taken as a whole; the activities of
each such subsidiary are permitted to subsidiaries of a savings
and loan holding company and of a state chartered savings bank by
the rules, regulations, resolutions and practices of the OTS,
FDIC and Department of Banking; all of the issued and outstanding
capital stock of each such subsidiary has been duly authorized
and validly issued, is fully paid and non-assessable and is owned
by the Bank,
-19-
directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity.
(x) The Foundation has been duly incorporated and is
validly existing as a non-stock corporation in good standing
under the laws of the State of Delaware with corporate power and
authority to own, lease and operate its properties and to conduct
its business as described in the Prospectus; the Foundation is
not a savings and loan holding company within the meaning of 12
C.F.R. Section 574.2(q) as a result of the issuance of shares of
Common Stock to it in accordance with the terms of the Plan and
in the amounts as described in the Prospectus; no approvals are
required to establish the Foundation and to contribute the shares
of Common Stock thereto as described in the Prospectus other than
those set forth in any written notice or order of approval or
non-objection of the Conversion, the Conversion Application or
the Holding Company Application, copies of which were provided to
the Agent prior to the Closing Time.
(xi) Upon consummation of the Conversion, all of the
issued and outstanding capital stock of the Bank when issued and
delivered pursuant to the Plan against payment of consideration
calculated as set forth in the Plan and set forth in the
Prospectus, will be duly authorized and validly issued and fully
paid and nonassessable, and all such capital stock will be owned
beneficially and of record by the Company free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or
equity.
(xii) The OTS has duly approved the Holding Company
Application and the FDIC and Department of Banking have duly
approved the Conversion Application and no action is pending, or
to the best of such counsel's knowledge, threatened respecting
the Holding Company Application or the Conversion Application or
the acquisition by the Company of all of the Bank's issued and
outstanding capital stock; the Holding Company Application and
the Conversion Application comply with the applicable
requirements of the OTS, FDIC and Department of Banking, as
required, includes all documents required to be filed as exhibits
thereto, and is, to the best of such counsel's knowledge and
information, truthful, accurate and complete; and the Company is
duly authorized to become a savings and loan holding company and
is duly authorized to own all of the issued and outstanding
capital stock of the Bank to be issued pursuant to the Plan.
(xiii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, including
the establishment of the Foundation and the contribution thereto
of the Foundation Shares, (A) have been duly and validly
authorized by all necessary action on the part of each of the
Company and the Bank, and this Agreement constitutes the legal,
valid and binding agreement of each of the Company and the Bank,
enforceable in accordance with its terms, except as rights to
indemnity and contribution hereunder may be limited under
applicable law (it being understood that such counsel may avail
itself of customary exceptions concerning the effect of
bankruptcy, insolvency or similar laws and the
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availability of equitable remedies); (B) will not result in any
violation of the provisions of the charter or by-laws of the
Company, the Bank or any of its subsidiaries; and, (C) will not
conflict with or constitute a breach of, or default under, and no
event has occurred which, with notice or lapse of time or both,
would constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance, that, individually
or in the aggregate, would have a material adverse effect on the
financial condition, results of operations or business affairs of
the Company, the Bank and its subsidiaries considered as one
enterprise, upon any property or assets of the Company, the Bank
or its subsidiaries pursuant to any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to
which the Company, the Bank or its subsidiaries is a party or by
which any of them may be bound, or to which any of the property
or assets of the Company, the Bank or its subsidiaries is
subject.
(xiv) The Prospectus has been duly authorized by the FDIC
and Department of Banking for final use pursuant to the
Conversion Regulations and no action is pending, or to the best
of such counsel's knowledge, is threatened, by the FDIC or
Department of Banking to revoke such authorization.
(xv) The Registration Statement is effective under the
Securities Act and no stop order suspending the effectiveness of
the Registration Statement has been issued under the Securities
Act or, to the best of such counsel's knowledge, proceedings
therefor initiated or threatened by the Commission.
(xvi) No further approval, authorization, consent or other
order of any public board or body is required in connection with
the execution and delivery of this Agreement, the issuance of the
Securities and the consummation of the Conversion, except as may
be required under the securities or Blue Sky laws of various
jurisdictions as to which no opinion need be rendered.
(xvii) At the time the Registration Statement became
effective, the Registration Statement (other than the financial
statements and statistical data included therein, as to which no
opinion need be rendered) complied as to form in all material
respects with the requirements of the Securities Act and the
Securities Act Regulations and the Conversion Regulations.
(xviii) The Common Stock conforms to the description
thereof contained in the Prospectus, and the form of certificate
used to evidence the Common Stock is in due and proper form and
complies with all applicable statutory requirements.
(xix) There are no legal or governmental proceedings
pending or threatened against or affecting the Company, the Bank
or its subsidiaries which are required, individually or in the
aggregate, to be disclosed in the Registration Statement and
Prospectus, other than those disclosed therein, and
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all pending legal or governmental proceedings to which the
Company, the Bank or any of its subsidiaries is a party or to
which any of their property is subject which are not described in
the Registration Statement, including ordinary routine litigation
incidental to the business, are, considered in the aggregate, not
material.
(xx) The information in the Prospectus under "Risk
Factors - Contribution to the Foundation may not be tax
deductible which could hurt American Savings' earnings," "- Anti-
takeover provisions and statutory provisions could make takeover
attempts more difficult to achieve," "-Banking reform legislation
may reduce American Financial's powers," "Dividend Policy,"
"Business of American Savings - Legal Proceedings," "Regulation
and Supervision," "Federal and State Taxation on Income," "The
Conversion - Establishment of the Charitable Foundation," "-
Effects of Conversion to Stock Form," "- Prospective investors
are urged to consult with their own tax advisors regarding the
tax consequence of the conversion particular to them," "-
Limitations of Purchaser of Shares," "- Restrictions on
Repurchase of Stock," "- Restrictions on Transferability by
Directors and Officers and NASD Members," "- Interpretation,
Amendment and Termination," "Restriction on Acquisition of
American Financial and American Savings," "Description of
American Financial Stock," "Description of American Savings
Stock," "Registration Requirements," "Legal and Tax Opinions" to
the extent that it constitutes matters of law, summaries of legal
matters, documents or proceedings, or legal conclusions, has been
reviewed by them and is complete and accurate in all material
respects.
(xxi) To the best of such counsel's knowledge, there are no
contracts, indentures, mortgages, loan agreements, notes, leases
or other instruments required to be described or referred to in
the Registration Statement or to be filed as exhibits thereto
other than those described or referred to therein or filed as
exhibits thereto, the descriptions thereof or references thereto
are correct, and no default exists, and no event has occurred
which, with notice or lapse of time or both, would constitute a
default, in the due performance or observance of any material
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or
other instrument so described, referred to or filed.
(xxii) The Plan has been duly authorized by the Board of
Directors of the Company and the Board of Directors of the Bank,
and the FDIC's and Department of Banking's approval of the Plan
remains in full force and effect; the Bank's charter has been
amended, effective upon consummation of the Conversion and the
filing of such amended charter with the Department of Banking, to
authorize the issuance of permanent capital stock; to the best of
such counsel's knowledge, the Company and the Bank have conducted
the Conversion and the establishment and funding of the
Foundation in all material respects in accordance with applicable
requirements of the Conversion Regulations, the Plan and all
other applicable regulations, decisions and orders thereunder,
including all material applicable terms,
-22-
conditions, requirements and conditions precedent to the
Conversion imposed upon the Company or the Bank by the FDIC and
Department of Banking and, no order has been issued by the FDIC
or Department of Banking to suspend the Conversion or the
Offerings and no action for such purpose has been instituted or
threatened by the FDIC or Department of Banking; and, to the best
of such counsel's knowledge, no person has sought to obtain
review of the final action of the FDIC or Department of Banking
in approving the Conversion Application (which includes the Plan
which provides for the establishment of the Foundation) or the
final action of the OTS in approving the Holding Company
Application.
(xxiii) To the best of such counsel's knowledge, the
Company and the Bank and its subsidiaries have obtained all
licenses, permits and other governmental authorizations currently
required for the conduct of their respective businesses as
described in the Registration Statement and Prospectus, and all
such licenses, permits and other governmental authorizations are
in full force and effect, and the Company and the Bank and its
subsidiaries are in all material respects complying therewith.
(xxiv) Neither the Company, the Bank nor any of its
subsidiaries is in violation of its certificate of incorporation,
organization certificate, articles of incorporation or charter,
as the case may be, or bylaws (and the Bank will not be in
violation of its charter in stock form upon consummation of the
Conversion) or, to the best of such counsel's knowledge, in
default (nor has any event occurred which, with notice or lapse
of time or both, would constitute a default) in the performance
or observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement,
note, lease or other instrument to which the Company, the Bank or
any of its subsidiaries is a party or by which the Company, the
Bank or any of its subsidiaries or any of their property may be
bound.
(xxv) The Company is not required to be registered as an
investment company under the Investment Company Act of 1940.
(2) The favorable opinion, dated as of Closing Time, of Xxxxx
Xxxxxx & Xxxxxx, LLP, counsel for the Agent, with respect to the
matters set forth in Section 5(b)(1)(i), (iv), (v), (vi) (solely as to
preemptive rights arising by operation of law), (xii), (xiii), (xiv),
(xvi) and (xvii) and such other matters as the Agent may reasonably
require.
(3) In giving their opinions required by subsections (b)(l) and
(b)(2), respectively, of this Section, Xxxxxx, Xxxxxxx & Xxxxxxxx, LLP
and Xxxxx Xxxxxx & Xxxxxx, LLP shall each additionally state that
nothing has come to their attention that would lead them to believe
that the Registration Statement (except for financial statements and
schedules and other financial or statistical data included therein, as
to which counsel need make no statement), at the time it became
effective, contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the
-23-
Prospectus (except for financial statements and schedules and other
financial or statistical data included therein, as to which counsel
need make no statement), at the time the Registration Statement became
effective or at Closing Time, included an untrue statement of a
material fact or omitted to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading. In giving their opinions,
Xxxxxx, Xxxxxxx & Xxxxxxxx, LLP and Xxxxx Xxxxxx & Xxxxxx, LLP may
rely as to matters of fact on certificates of officers and directors
of the Company and the Bank and certificates of public officials,
which opinions shall be in form and substance satisfactory to counsel
for the Agent, and Xxxxx Xxxxxx & Xxxxxx, LLP may also rely on the
opinion of Xxxxxx, Xxxxxxx & Xxxxxxxx, LLP.
(c) At Closing Time referred to in Section 2, the Company and the
Bank shall have completed in all material respects the conditions precedent
to the Conversion in accordance with the Plan, the applicable Conversion
Regulations and all other applicable laws, regulations, decisions and
orders, including all terms, conditions, requirements and provisions
precedent to the Conversion imposed upon the Company or the Bank by the
FDIC or Department of Banking, or any other regulatory authority other than
those which the FDIC or Department of Banking permits to be completed after
the Conversion.
(d) At Closing Time, there shall not have been, since the date hereof
or since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change in
the financial condition, results of operations or business affairs of the
Company, the Bank and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, and the Agent
shall have received a certificate of the Chief Executive Officer of the
Company and of the Bank, the President of the Company and the Bank and the
chief financial or chief accounting officer of the Company and of the Bank,
dated as of Closing Time, to the effect that (i) there has been no such
material adverse change, (ii) there shall have been no material transaction
entered into by the Company or the Bank from the latest date as of which
the financial condition of the Company or the Bank as set forth in the
Registration Statement and the Prospectus other than transactions referred
to or contemplated therein and transactions in the ordinary cause of
business, (iii) neither the Company nor the Bank shall have received from
the OTS, FDIC or Department of Banking any direction (oral or written) to
make any material change in the method of conducting its business with
which it has not complied (which direction, if any, shall have been
disclosed to the Agent) or which materially and adversely would affect the
business, financial condition or results of operations of the Company, the
Bank or its subsidiaries, (iv) the representations and warranties in
Section 1 hereof are true and correct with the same force and effect as
though expressly made at and as of the Closing Time, (v) the Company and
the Bank have complied with all agreements and satisfied all conditions on
their part to be performed or satisfied at or prior to Closing Time, (vi)
no stop order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have been initiated or
threatened by the Commission and (vii) no order suspending the Public
Offering or Syndicated Community Offering or the authorization for final
use of the Prospectus has been issued and no proceedings for that purpose
have been initiated or threatened by the Department of Banking or the FDIC
and no person has sought to obtain regulatory or judicial review of the
action of the FDIC or Department of Banking in approving the Plan in
accordance with the Conversion Regulations
-24-
nor has any person sought to obtain regulatory or judicial review of the
action of the OTS in approving the Holding Company Application.
(e) At the time of the execution of this Agreement, the Agent shall
have received from KPMG a letter dated such date, in form and substance
satisfactory to the Agent, to the effect that (i) they are independent
public accountants with respect to the Company, the Bank and its
subsidiaries within the meaning of the Code of Ethics of the American
Institute of Certified Public Accountants, the Securities Act and the
Securities Act Regulations and the Conversion Regulations; (ii) it is their
opinion that the consolidated financial statements and supporting schedules
included in the Registration Statement and covered by their opinions
therein comply as to form in all material respects with the applicable
accounting requirements of the Securities Act and the Securities Act
Regulations; (iii) based upon limited procedures as agreed upon by the
Agent and KPMG set forth in detail in such letter, nothing has come to
their attention which causes them to believe that (A) the unaudited
financial statements and supporting schedules of the Bank and its
subsidiaries included in the Registration Statement do not comply as to
form in all material respects with the applicable accounting requirements
of the Securities Act, the Securities Act Regulations and the Conversion
Regulations or are not presented in conformity with generally accepted
accounting principles applied on a basis substantially consistent with that
of the audited financial statements included in the Registration Statement
and the Prospectus, (B) the unaudited amounts of net interest income and
net income set forth under "Consolidated Selected Financial Information" in
the Registration Statement and Prospectus do not agree with the amounts set
forth in unaudited consolidated financial statements as of and for the
dates and periods presented under such captions or such amounts were not
determined on a basis substantially consistent with that used in
determining the corresponding amounts in the audited financial statements
included in the Registration Statement, (C) at a specified date not more
than five days prior to the date of this Agreement, there has been any
increase in the consolidated long term or short term debt of the Bank and
its subsidiaries or any decrease in consolidated total assets, the
allowance for loan losses, total deposits or net worth of the Bank and its
subsidiaries, in each case as compared with the amounts shown in the May
31, 1999 balance sheet included in the Registration Statement or, (D)
during the period from May 31, 1999 to a specified date not more than five
days prior to the date of this Agreement, there were any decreases, as
compared with the corresponding period in the preceding year, in total
interest income, net interest income, net interest income after provision
for loan losses, income before income tax expense or net income of the Bank
and its subsidiaries, except in all instances for increases or decreases
which the Registration Statement and the Prospectus disclose have occurred
or may occur; and (iv) in addition to the examination referred to in their
opinions and the limited procedures referred to in clause (iii) above, they
have carried out certain specified procedures, not constituting an audit,
with respect to certain amounts, percentages and financial information
which are included in the Registration Statement and Prospectus and which
are specified by the Agent, and have found such amounts, percentages and
financial information to be in agreement with the relevant accounting,
financial and other records of the Company, the Bank and its subsidiaries
identified in such letter.
(f) At Closing Time, the Agent shall have received from KPMG a
letter, dated as of Closing Time, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection (d) of this
Section, except that the specified date referred to shall be a date not
more than five days prior to Closing Time.
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(g) At Closing Time, the Securities shall have been approved for
listing on the Nasdaq National Market upon notice of issuance.
(h) At Closing Time, the Agent shall have received a letter from
FinPro, Inc., dated as of the Closing Time, confirming its appraisal.
(i) At Closing Time, counsel for the Agent shall have been
furnished with such documents and opinions as they may require for the
purpose of enabling them to pass upon the issuance and sale of the
Securities and the Foundation Shares as herein contemplated and related
proceedings, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company in connection
with the issuance and sale of the Securities and Foundation Shares as
herein contemplated shall be satisfactory in form and substance to the
Agent and counsel for the Agent.
(j) At any time prior to Closing Time, (i) there shall not have
occurred any material adverse change in the financial markets in the United
States or elsewhere or any outbreak of hostilities or escalation thereof or
other calamity or crisis the effect of which, in the judgment of the Agent,
are so material and adverse as to make it impracticable to market the
Securities or to enforce contracts, including subscriptions or orders, for
the sale of the Securities, and (ii) trading generally on either the
American Stock Exchange, the New York Stock Exchange or the Nasdaq Stock
Market shall not have been suspended, and minimum or maximum prices for
trading shall not have been fixed, or maximum ranges for prices for
securities have been required, by either of said Exchanges or by order of
the Commission or any other governmental authority, and a banking
moratorium shall not have been declared by either Federal or New York
authorities.
SECTION 6. INDEMNIFICATION.
(a) The Company and the Bank, jointly and severally, agree to
indemnify and hold harmless the Agent, each person, if any, who controls the
Agent, within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, and its respective partners, directors, officers, employees
and agents as follows:
(i) from and against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, related to or arising out of the
Conversion (including the establishment of the Foundation and the
contribution of the Foundation Shares thereto by the Company) or any action
taken by the Agent where acting as agent of the Company or the Bank or
otherwise as described in Section 2 hereof; provided, however, that this
indemnity agreement shall not apply to any loss, liability, claim, damage
or expense found in a final judgment by a court of competent jurisdiction
to have resulted primarily from the bad faith, willful misconduct or gross
negligence of the Agent seeking indemnification hereunder.
(ii) from and against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, based upon or arising out of any
untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement (or any amendment thereto), or the omission
or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of any
-26-
untrue statement or alleged untrue statement of a material fact contained
in the Proxy Statement or Prospectus (or any amendment or supplement
thereto) or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(iii) from and against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or of any claim
whatsoever described in clauses (i) or (ii) above, if such settlement is
effected with the written consent of the Company or the Bank, which consent
shall not be unreasonably withheld; and
(iv) from and against any and all expense whatsoever, as incurred
(including, subject to Section 6(c) hereof, the fees and disbursements of
counsel chosen by the Agent), reasonably incurred in investigating,
preparing for or defending against any litigation, or any investigation,
proceeding or inquiry by any governmental agency or body, commenced or
threatened, or any claim pending or threatened whatsoever described in
clauses (i) or (ii) above, to the extent that any such expense is not paid
under (i), (ii) or (iii) above;
provided, however, that the indemnification provided for in this paragraph (a)
shall not apply to any loss, liability, claim, damage or expense to the extent
arising out of any untrue statement or alleged untrue statement of a material
fact contained in the Prospectus (or any amendment or supplement thereto) or the
omission or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading which was made in reliance upon and in conformity with
written information relating to the Agent furnished to the Company or the Bank
by the Agent expressly for use in the Prospectus (or any amendments or
supplements thereto), which information the Company and the Bank acknowledge is
included only in the sections captioned "The Conversion - Syndicate Community
Offering," "-Plan of Distribution for the Subscription, Direct Community
Offering and Syndicated Community Offering" and "-Description of Sales
Activities" of the Prospectus (the "Agent Information").
(b) The Agent agrees to indemnify and hold harmless the Company, the
Bank, their directors and trustees, each of their officers who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act against any and all loss, liability, claim, damage and expense described in
the indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, of a material fact made in the Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with the Agent
Information.
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to
so notify an indemnifying party shall not relieve such indemnifying party from
any liability which it may have otherwise than on account of this indemnity
agreement. An indemnifying party may participate at its own expense in the
defense of any such action. In no event shall the indemnifying parties be liable
for fees and expenses of more than one counsel (in addition to no more than one
local counsel in each separate jurisdiction in which any action or proceeding is
commenced) separate from their own counsel for all indemnified parties in
connection with any one
-27-
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances.
(d) The Company and the Bank also agree that the Agent shall not have
any liability (whether direct or indirect, in contract or tort or otherwise) to
the Bank, the Company, its security holders or the Bank's or the Company's
creditors relating to or arising out of the engagement of the Agent pursuant to,
or the performance by the Agent of the services contemplated by, this Agreement,
except to the extent that any loss, claim, damage or liability is found in a
final judgment by a court of competent jurisdiction to have resulted primarily
from the Agent's bad faith, willful misconduct or gross negligence.
(e) In addition to, and without limiting, the provisions of Section
(6)(a)(iv) hereof, in the event that any Agent, any person, if any, who controls
the Agent within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act or any of its partners, directors, officers, employees or
agents is requested or required to appear as a witness or otherwise gives
testimony in any action, proceeding, investigation or inquiry brought by or on
behalf of or against the Company, the Bank, the Agent or any of its respective
affiliates or any participant in the transactions contemplated hereby in which
the Agent or such person or agent is not named as a defendant, the Company and
the Bank jointly and severally agree to reimburse the Agent for all reasonable
and necessary out-of-pocket expenses incurred by it in connection with preparing
or appearing as a witness or otherwise giving testimony and to compensate the
Agent in an amount to be mutually agreed upon.
SECTION 7. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 hereof is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Company, the Bank
and the Agent shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by said indemnity agreement
incurred by the Company or the Bank and the Agent, as incurred, in such
proportions (i) that the Agent is responsible for that portion represented by
the percentage that the maximum aggregate marketing fees appearing on the cover
page of the Prospectus bears to the maximum aggregate gross proceeds appearing
thereon and the Company and the Bank are jointly and severally responsible for
the balance or (ii) if, but only if, the allocation provided for in clause (i)
is for any reason held unenforceable, in such proportion as is appropriate to
reflect not only the relative benefits to the Company and the Bank on the one
hand and the Agent on the other, as reflected in clause (i), but also the
relative fault of the Company and the Bank on the one hand and the Agent on the
other, as well as any other relevant equitable considerations; provided,
however, that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section, each person, if any, who
controls the Agent within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act shall have the same rights to contribution as the
Agent, and each director of the Company, each trustee of the Bank, each officer
of the Company who signed the Registration Statement, and each person, if any,
who controls the Company or the Bank within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Company and the Bank. Notwithstanding anything to the
contrary set forth herein, to the extent permitted by applicable law, in no
event shall the Agent be required to contribute an aggregate amount in excess of
the aggregate marketing fees to which the Agent is entitled and actually paid
pursuant to this Agreement.
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SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement, or contained in certificates of officers of the Company or the Bank
submitted pursuant hereto, shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of any Agent or controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Securities.
SECTION 9. TERMINATION OF AGREEMENT.
(a) The Agent may terminate this Agreement, by notice to the Company,
at any time at or prior to Closing Time (i) if there has been, since the date of
this Agreement or since the respective dates as of which information is given in
the Registration Statement, any material adverse change in the financial
condition, results of operations or business affairs of the Company or the Bank,
or the Company, the Bank and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, or (ii) if there has
occurred any material adverse change in the financial markets in the United
States or elsewhere or any outbreak of hostilities or escalation thereof or
other calamity or crisis the effects of which, in the judgment of the Agent, are
so material and adverse as to make it impracticable to market the Securities or
to enforce contracts, including subscriptions or orders, for the sale of the
Securities, (iii) if trading generally on the Nasdaq Stock Market, the American
Stock Exchange or the New York Stock Exchange has been suspended, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by either of said Exchanges or by order of the
Commission or any other governmental authority, or if a banking moratorium has
been declared by either Federal or New York authorities, (iv) if any condition
specified in Section 5 shall not have been fulfilled when and as required to be
fulfilled; (v) if there shall have been such material adverse change in the
condition or prospects of the Company or the Bank or the prospective market for
the Company's securities as in the Agent's good faith opinion would make it
inadvisable to proceed with the offering, sale or delivery of the Securities;
(vi) if, in the Agent's good faith opinion, the price for the Securities
established by FinPro, Inc. is not reasonable or equitable under then prevailing
market conditions, or (vii) if the Conversion is not consummated on or prior to
August 3, 2001.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof relating to the reimbursement of expenses and
except that the provisions of Sections 6 and 7 hereof shall survive any
termination of this Agreement.
SECTION 10. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Agent
shall be directed to the Agent at Two World Trade Center, 104th Floor, New York,
New York 10048, attention of Xxxxxxxxx X. Xxxxxx, Principal; notices to the
Company and the Bank shall be directed to either of them at American Financial
Holdings, Inc., 000 Xxxx Xxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxxx 00000, attention
of Xxxxxx X. Xxxxxx, Chairman of the Board, President and Chief Executive
Officer.
SECTION 11. PARTIES. This Agreement shall inure to the benefit of and
be binding upon the Agent, the Company and the Bank and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Agent, the Company and the Bank and their respective successors and the
controlling
-29-
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein or therein
contained. This Agreement and all conditions and provisions hereof and thereof
are intended to be for the sole and exclusive benefit of the Agent, the Company
and the Bank and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation.
SECTION 12. ENTIRE AGREEMENT; AMENDMENT. This Agreement represents
the entire understanding of the parties hereto with reference to the
transactions contemplated hereby and supersedes any and all other oral or
written agreements heretofore made, except of the engagement letter dated July
30, 1999, by and between the Agent and the Company and the Bank, relating to the
Agent's providing conversion agent services to the Company and the Bank in
connection with the Conversion. No waiver, amendment or other modification of
this Agreement shall be effective unless in writing and signed by the parties
hereto.
SECTION 13. GOVERNING LAW AND TIME. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York applicable
to agreements made and to be performed in said State without regard to the
conflicts of laws provisions thereof. Unless otherwise noted, specified times
of day refer to Eastern time.
SECTION 14. SEVERABILITY. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
SECTION 15. HEADINGS. Sections headings are not to be considered part
of this Agreement, are for convenience and reference only, and are not to be
deemed to be full or accurate descriptions of the contents of any paragraph or
subparagraph.
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Agent, the Company and the Bank in accordance with its terms.
Very truly yours,
AMERICAN FINANCIAL HOLDINGS, INC.
By:_____________________________________
Title:
AMERICAN SAVINGS BANK
By:_____________________________________
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
SANDLER X'XXXXX & PARTNERS, L.P.
By: Sandler X'Xxxxx & Partners Corp.,
the sole general partner
By:____________________________________
[Name]
Vice President
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AMERICAN FINANCIAL HOLDINGS, INC.
36,167,500 Shares
(Maximum Offered in Conversion, subject
to increase up to 41,592,625 shares in
the event of an over subscription)
Common Stock
(Par Value $0.01 Per Share)
SELECTED DEALER'S AGREEMENT
___________, 1999
We have agreed to assist American Financial Holdings, Inc. (the "Company")
in connection with the offer and sale of shares (the "Shares") of Common Stock,
par value $0.01 per share, of the Company, to be issued in connection with the
conversion of American Savings Bank, a state chartered savings bank (the "Bank")
from mutual to stock form. The Company, in connection with its plan to effect
such conversion, offered 36,167,500 Shares for subscription by the Company's and
the Bank's employee stock ownership plan and certain of the Bank's depositors,
in a subscription offering, and certain members of the general public in a
concurrent direct community offering. The Shares which were not subscribed for
pursuant to such subscription and direct community offerings are being offered
to the public in a syndicated community offering (the "Syndicated Community
Offering") in accordance with the rules of the Federal Deposit Insurance
Corporation ("FDIC") and the Banking Commissioner of the State of Connecticut
("Banking Commissioner"). The Shares, the bases on which the number of Shares
to be issued may change, and certain of the terms on which they are being
offered are more fully described in the enclosed Prospectus (the "Prospectus").
We are offering to Selected Dealers (of which you are one) the opportunity
to participate in the solicitation of offers to buy the Shares in the Syndicated
Community Offering and we will pay you a fee in the amount of ___________
percent (______%) of the dollar amount of the Shares sold on behalf of the
Company by you. The number of Shares sold by you shall be determined based on
the authorized designation of your firm on the order form or forms for such
Shares accompanying the funds transmitted for payment therefor (whether in the
form of a check payable to the Bank or a withdrawal from an existing account at
the Bank) to the special account established by the Company for the purpose of
holding such funds. It is understood, of course, that payment of your fee will
be made only out of compensation received by us for the Shares sold on behalf of
the Company by you, as evidenced in accordance with the preceding sentence. The
Bank has requested us to invite you to become a "Sponsoring Dealer," that is, a
Selected Dealer who solicits offers which result in the sale on behalf of the
Bank of at least ________ Shares. You may become a Sponsoring Dealer (subject
to your fulfillment of the requirement in the preceding sentence) by checking
the box on the confirmation at the end of this letter. If you become a
Sponsoring Dealer, you shall be entitled to an additional fee in the amount of
______ percent (_____%) of the dollar amount of the Shares sold on behalf of the
Company by you as evidenced in the manner set forth above.
Each order form for the purchase of Shares must set forth the identity,
---- --------
address and tax identification number of each person ordering Shares regardless
------- -------------------------
of whether the Shares will be
registered in street name or in the purchaser's name. Such order form should
clearly identify your firm.
As soon as practicable after all the Shares are sold, we will remit to you,
out of our compensation as provided above, the fees to which you are entitled
hereunder, including your Sponsoring Dealer fee.
This offer is made subject to the terms and conditions herein set forth and
is made only to Selected Dealers which are (i) members in good standing of the
National Association of Securities Dealers, Inc. ("NASD") which agree to comply
with all applicable rules of the NASD, including, without limitation, the NASD's
Interpretation With Respect to Free-Riding and Withholding and Section 24 of
Article III of the NASD's Rules of Fair Practice, or (ii) foreign dealers not
eligible for membership in the NASD which agree (A) not to sell any Shares
within the United States, its territories or possessions or to persons who are
citizens thereof or resident therein and (B) in making other sales to comply
with the above-mentioned NASD Interpretation, Sections 8, 24 and 36 of the
above-mentioned Article III as if they were NASD members and Section 25 of such
Article III as it applies to non-member brokers or dealers in a foreign country.
Orders for Shares will be strictly subject to confirmation and we, acting
on behalf of the Company, reserve the right in our absolute discretion to reject
any order in whole or in part, to accept or reject orders in the order of their
receipt or otherwise, and to allot. Neither you nor any other person is
authorized by the Company, the Bank or by us to give any information or make any
representations other than those contained in the Prospectus in connection with
the sale of any of the Shares. No Selected Dealer is authorized to act as agent
for us when soliciting offers to buy the Shares from the public or otherwise.
No Selected Dealer shall engage in any stabilizing (as defined in Regulation M
promulgated under the Securities Exchange Act of 1934, as amended) with respect
to the Company's Common Stock during the offering.
We and each Selected Dealer assisting in selling Shares pursuant hereto
agree to comply with the applicable requirements of the Securities Exchange Act
of 1934, as amended, and applicable rules and regulations issued by the FDIC and
Banking Commissioner. In addition, we and each Selected Dealer confirm that the
Securities and Exchange Commission interprets Rule 15c2-8 promulgated under the
Securities Exchange Act of 1934 as requiring that a prospectus be supplied to
each person who is expected to receive a confirmation of sale 48 hours prior to
delivery of such person's order form.
We and each Selected Dealer further agree to the extent that our customers
desire to pay for Shares with funds held by or to be deposited with us, in
accordance with the interpretation of the Securities and Exchange Commission of
Rule 15c2-4 promulgated under the Securities Exchange Act of 1934, as amended
either (a) upon receipt of an executed order form or direction to execute an
order form on behalf of a customer to forward the syndicated community offering
price for the Shares ordered on or before 12:00 p.m. on the business day
following receipt or execution of an order form by us to the Bank for deposit in
a segregated account or (b) to solicit indications of interest in which event
(i) we will subsequently contact any customers indicating interest to confirm
the interest and give instructions to execute and return an order form or to
receive authorization to execute an order form on their behalf, (ii) we will
mail acknowledgements of receipt of orders to each customer confirming interest
on the business day following such confirmation, (iii) we will debit accounts
of such customers on the fifth business day (the "debit date") following receipt
of the confirmation referred to in (i) and (iv) we will forward completed order
forms together with such funds to the
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Bank on or before 12:00 p.m. on the next business day following the debit date
for deposit in a segregated account. We acknowledge that if the procedure in (b)
is adopted, our customer's funds are not required to be in their accounts until
the debit date. We and each Selected Dealer further acknowledge that, in order
to use the foregoing "sweep arrangements," we comply with the net capital
requirements for broker/dealers under Rule 15c3-1(a)(1) of the Securities
Exchange Act of 1934.
Unless earlier terminated by us, this Agreement shall terminate 45 full
business days after the date hereof, but may be extended by us for an additional
period or periods not exceeding 30 full business days in the aggregate. We may
terminate this Agreement or any provisions hereof at any time by written or
telegraphic notice to you. Of course, our obligations hereunder are subject to
the successful completion of the offering, including the sale of all of the
Shares.
You agree that at any time or times prior to the termination of this
Agreement you will, upon our request, report to us the number of Shares sold on
behalf of the Company by you under this Agreement.
We shall have full authority to take such actions as we may deem advisable
in respect to all matters pertaining to the offering. We shall be under no
liability to you except for lack of good faith and for obligations expressly
assumed by us in this Agreement.
Upon application to us, we will inform you as to the states in which we
believe the Shares have been qualified for sale under, or are exempt from the
requirements of, the respective blue sky laws of such states, but we assume no
responsibility or obligation as to your rights to sell Shares in any state.
Additional copies of the Prospectus and any supplements thereto will be
supplied in reasonable quantities upon request.
Any notice from us to you shall be deemed to have been duly given if
mailed, telephoned or telegraphed to you at the address to which this Agreement
is mailed.
This Agreement shall be construed in accordance with the laws of New York.
Please confirm your agreement hereto by signing and returning the
confirmation accompanying this letter at once to us at Sandler X'Xxxxx &
Partners, L.P., Xxx Xxxxx Xxxxx Xxxxxx, 000xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000.
The enclosed duplicate copy will evidence the agreement between us.
Very truly yours,
Sandler X'Xxxxx & Partners, L.P.
By:_____________________________________
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Xxxxxxx X'Xxxxx & Partners, L.P.
Two World Trade Center - 000xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: (Name of Issuer)
----------------
We hereby confirm our agreement to all the terms and conditions stated in
the foregoing letter. We acknowledge receipt of the Prospectus relating to the
Shares and we further state that in agreeing thereto we have relied upon the
Prospectus and no other statement whatsoever, written or oral. We confirm that
we are (i) a member in good standing of the National Association of Securities
Dealers, Inc. ("NASD"), which agrees to comply with all applicable rules of the
NASD, including, without limitation, the NASD's Interpretation With Respect to
Free-Riding and Withholding and Section 24 of Article III of the NASD's Rules of
Fair Practice, or (ii) a foreign dealer not eligible for membership in the NASD
which agrees (A) not to sell any Shares within the United States, its
territories or possessions or to persons who are citizens thereof or resident
therein and (B) in making other sales to comply with the above-mentioned NASD
Interpretation, Sections 8, 24 and 26 of the above-mentioned Article III as if
they were NASD members and Section 25 of such Article III as it applies to a
non-member broker or dealer in a foreign country.
[_] We wish to become a "Sponsoring Dealer."
_____________________________________________
(Please print or type name of firm)
_____________________________________________
(Authorized Representative)
Dated:_________________
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