[Form of]
SYNERGY FINANCIAL GROUP, INC.
850,000 to 1,150,000 Shares
(as may be increased to 1,322,500 shares)
Common Stock
($.10 Par Value Per Share)
Purchase Price: $10.00 Per Share
SALES AGENCY AGREEMENT
_____________________________
_______________, 2002
Trident Securities, a Division of McDonald Investments Inc.
0000 Xxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Dear Sirs:
Synergy Mutual Holding Company, a federal mutual holding company (the
"MHC"), Synergy Financial Group, Inc., a federally-chartered corporation (the
"Company"), Synergy Bank, a federally-chartered stock savings bank (the "Bank")
and Synergy Financial Services, Inc., a New Jersey corporation ("Financial
Services Company"), hereby confirm, as of _____________, 2002, their respective
agreements with Trident Securities, a Division of McDonald Investments, Inc.
together with its successors and assigns as contemplated in Section 13 hereof
(collectively, "McDonald"), a broker-dealer registered with the Securities and
Exchange Commission (the "Commission") and a member of the National Association
of Securities Dealers, Inc. (the "NASD"), as follows:
1. Introduction. The Company is offering shares of its common stock,
$.10 par value per share ("Common Stock"), pursuant to nontransferable
subscription rights in a subscription offering ("Subscription Offering") to
certain depositors and to the Company's tax-qualified employee stock benefit
plans. Any shares of the Common Stock not sold in the Subscription Offering may
be offered to the general public in a Community Offering ("Community Offering"),
with preference given to natural persons who are residents of Union, Middlesex,
Monmouth and Xxxxxx Counties, New Jersey (the Subscription Offering and the
Community Offering are sometimes referred to collectively as the "Subscription
and Community Offering," or the "Offerings" or the "Offering"), subject to the
right of the Company and the Bank, in their absolute discretion, to reject
orders in the Community Offering in whole or in part. In the Subscription
Offering (and the Community Offering, if applicable), the Company is
offering between 850,000 and 1,150,000 shares of Common Stock ("Shares"), with
the possibility of offering up to 1,322,500 shares without a resolicitation of
subscribers, as contemplated by Parts 563b and 575 of Title 12 of the Code of
Federal Regulations. No person may purchase shares with an aggregate purchase
price of more than $250,000 and no person or entity, together with associates of
and persons acting in concert with such person or other entity, may purchase
more than $300,000 of Common Stock.
McDonald has advised the Company that it will utilize its best efforts
to assist the Company with the sale of the Shares in the Offerings. The
prospectus dated ___________, 2002 (as hereinafter defined), and all supplements
thereto, if any, to be used in the Offerings have been delivered to McDonald (or
if after the date of this Agreement, will be promptly delivered to McDonald).
Such prospectus contains information with respect to the Company, the Bank, the
MHC, the Financial Services Company and the Shares.
2. Representations and Warranties.
(a) The Company, the Bank, the MHC, and the Financial Services
Company jointly and severally represent and warrant to McDonald that:
(i) The Company has filed with the Commission a registration
statement, including exhibits and an amendment or amendments thereto,
on Form SB-2 (No. 333-89384), including a prospectus relating to the
Offerings, for the registration of the Shares under the Securities Act
of 1933, as amended ("Act"). Such registration statement has become
effective under the Act and no stop order has been issued with respect
thereto and no proceedings therefor have been initiated or, to the
Company's best knowledge, threatened by the Commission. Except as the
context may otherwise require, such registration statement, as amended
or supplemented, on file with the Commission at the time the
registration statement became effective, including the prospectus,
financial statements, schedules, exhibits and all other documents
filed as part thereof, as amended and supplemented, is herein called
the "Registration Statement," and the prospectus, as amended or
supplemented, on file with the Commission at the time the Registration
Statement became effective is herein called the "Prospectus," except
that if the prospectus filed by the Company with the Commission
pursuant to Rule 424(b) of the general rules and regulations of the
Commission under the Act ("SEC Regulations") differs from the form of
prospectus on file at the time the Registration Statement became
effective, the term "Prospectus" shall refer to the Rule 424(b)
prospectus from and after the time it is filed with the Commission and
shall include any amendments or supplements thereto from and after
their dates of effectiveness or use, respectively. If any Shares
remain unsubscribed following completion of the Subscription Offering
and the Community Offering, if any, the Company (i) will, if required
by SEC Regulations, promptly file with the Commission a post-effective
amendment to such Registration Statement relating to the results of
the Subscription Offering and the Community Offering, if any, 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 the Commission a
prospectus or prospectus supplement
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containing information relating to the results of the Subscription and
the Community Offerings and pricing information pursuant to Rule
424(c) of the SEC Regulations, in either case in a form reasonably
acceptable to the Company and McDonald.
(ii) At the date of the Prospectus and at all times
subsequent thereto through and including the Closing Date (as
hereinafter defined) (i) the Registration Statement and the Prospectus
complied and will comply as to form in all material respects with the
Act and the SEC Regulations, (ii) the Registration Statement did not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading and (iii) the Prospectus (as amended
or supplemented, if amended or supplemented) did not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Representations or warranties in this subsection shall not
apply to statements or omissions made in reliance upon and in
conformity with written information about McDonald furnished to the
Company or the Bank by or on behalf of McDonald expressly for use in
the Registration Statement or Prospectus.
(iii) The Company is duly incorporated and validly existing
as a corporation under the laws of the United States, the Bank is
currently organized as a stock savings bank under the laws of the
United States, the MHC is duly organized as a federal mutual holding
company under the laws of the United States, and the Financial
Services Company is duly incorporated and validly existing as a
corporation under the laws of New Jersey, and each of them at the
Closing Date will be validly existing and in good standing under the
laws of the jurisdiction of its organization with full power and
authority to own its property and conduct its business as described in
the Prospectus; the Bank is a member of the Federal Home Loan Bank of
New York and the deposit accounts of the Bank are insured by the
Savings Association Insurance Fund ("SAIF") administered by the
Federal Deposit Insurance Corporation ("FDIC") up to the applicable
limits. None of the Company, the MHC, the Bank, or the Financial
Services Company is or will be required to be qualified to do business
as a foreign corporation in any jurisdiction where non-qualification
would have a material adverse effect on the Company, the Bank, the
MHC, and the Financial Services Company, taken as a whole. The Bank
does not own equity securities of or an equity interest in any
business enterprise, except as described in the Prospectus.
(iv) The Bank has good and marketable title to all assets
material to its businesses and to those assets described in the
Prospectus as owned by it, free and clear of all liens, charges,
encumbrances or restrictions, except as described in the Prospectus
and except as would not in the aggregate have a material adverse
effect on the Bank; and all of the leases and subleases material to
the operations or financial condition of the Bank, under which it
holds properties, including those described in the Prospectus, are in
full force and effect as described therein.
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(v) The Bank has obtained all licenses, permits and other
governmental authorizations currently required for the conduct of its
business, all such licenses, permits and other governmental
authorizations are in full force and effect and the Bank is in all
material respects complying therewith, except where the failure to
hold or comply with such licenses, permits or governmental
authorizations would not have a material adverse effect on the
Company, the Bank, the MHC, and the Financial Services Company, taken
as a whole.
(vi) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
and validly authorized by all necessary corporate action on the part
of each of the Company, the Bank, the MHC, and the Financial Services
Company, and this Agreement has been validly executed and delivered
by, and is a valid and binding obligation of, each of the Company, the
Bank, the MHC, and the Financial Services Company, enforceable in
accordance with its terms (except as the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, reorganization or
similar laws relating to or affecting the enforcement of creditors'
rights generally or the rights of creditors of depository institutions
whose accounts are insured by the FDIC and of savings and loan holding
companies the accounts of whose subsidiary are insured by the FDIC or
by general equity principles, regardless of whether such
enforceability is considered in a proceeding in equity or at law, and
except to the extent that the provisions of Sections 8 and 9 hereof
may be unenforceable as against public policy or pursuant to Section
23A of the Federal Reserve Act, 12 U.S.C. Section 371c ("Section
23A")).
(vii) There is no litigation or governmental proceeding
pending or, to the best knowledge of the Company, the Bank, the MHC,
or the Financial Services Company, threatened against or involving the
Company, the Bank, the MHC or any of their respective assets which
individually or in the aggregate would reasonably be expected to have
a material adverse effect on the condition (financial or otherwise),
results of operations, assets or properties of the Company, the Bank,
the MHC, and the Financial Services Company, taken as a whole.
(viii) Each of the Company, the Bank, the MHC, and the
Financial Services Company has all such corporate power, authority,
authorizations, approvals and orders as may be required to enter into
this Agreement and to carry out the provisions and conditions hereof,
and except as may be required under the "blue sky" laws of various
jurisdictions, and in the case of the Company, as of the Closing Date,
will have such approvals and orders to issue and sell the Shares to be
sold by the Company as provided herein.
(ix) None of the Company, the Bank, the MHC, or the
Financial Services Company are in violation of any rule or regulation
of the Office, or the FDIC, or any insurance regulator that could
reasonably be expected to result in any enforcement action against the
Company, the Bank, the MHC, or the
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Financial Services Company or their officers or directors that would
have a material adverse effect on the condition (financial or
otherwise), results of operations, businesses, assets or properties of
the Company, the Bank, the MHC, and the Financial Services Company,
taken as a whole.
(x) The financial statements and the related notes or
schedules which are included in the Registration Statement and are
part of the Prospectus fairly present the balances sheets, related
statements of income, changes in capital accounts, and cash flows of
the Company and the Bank at the respective dates thereof and for the
respective periods covered thereby and comply as to form in all
material respects with the applicable accounting requirements of the
SEC Regulations and the applicable accounting regulations of the
Office of Thrift Supervision. Such financial statements have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as set
forth therein, and such financial statements are in all material
respects consistent with financial statements and other reports filed
by the Bank with supervisory and regulatory authorities except as such
generally accepted accounting principles may otherwise require. The
tables in the Prospectus accurately present the information purported
to be shown thereby at the respective dates thereof and for the
respective periods therein.
(xi) There has been no material change in the financial
condition, results of operations or business, including assets and
properties, of the Company, the Bank, the MHC, and the Financial
Services Company, taken as a whole, since the latest date as of which
such condition is set forth in the Prospectus, except as set forth
therein; and the capitalization, assets, properties and business of
each of the Company, the Bank, the MHC, and the Financial Services
Company conform in all materials respects to the descriptions thereof
contained in the Prospectus. None of the Company, the Bank, the MHC,
or the Financial Services Company has any material liabilities of any
kind, contingent or otherwise, except as set forth in the Prospectus.
(xii) There has been no breach or default (or the occurrence
of any event which, with notice or lapse of time or both, would
constitute a default) under, or creation or imposition of any lien,
charge or other encumbrance upon any of the properties or assets of
the Company, the Bank, the MHC, or the Financial Services Company
pursuant to any of the terms, provisions or conditions of, any
agreement, contract, indenture, bond, debenture, note, instrument or
obligation to which the Company, the Bank, the MHC, or the Financial
Services Company is a party or by which any of them or any of their
respective assets or properties may be bound or is subject, or
violation of any governmental license or permit or any enforceable
published law, administrative regulation or order or court order,
writ, injunction or decree, which breach, default, encumbrance or
violation would have a material adverse effect on the condition
(financial or otherwise), results of operations, businesses, assets or
properties of the Company, the Bank, the MHC, and the Financial
Services Company, taken as a whole; all agreements which are material
to the financial
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condition, results of operations or business, assets or properties of
the Company, the Bank, the MHC, and the Financial Services Company,
taken as a whole, are in full force and effect, and no party to any
such agreement has instituted or, to the best knowledge of the
Company, the Bank, the MHC, or the Financial Services Company,
threatened any action or proceeding wherein the Company, the Bank, the
MHC, or the Financial Services Company is alleged to be in default
thereunder.
(xiii) Neither the Bank, the Company, the MHC, nor the
Financial Services Company is in violation of their respective
charters or bylaws. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby by the
Company, the Bank, the MHC, and the Financial Services Company do not
conflict with or result in a breach of the respective charters or
bylaws of the Company, the Bank, the MHC, or the Financial Services
Company, or constitute a material breach of or default (or an event
which, with notice or lapse of time or both, would constitute a
default) under, give rise to any right of termination, cancellation or
acceleration contained in, or result in the creation or imposition of
any lien, charge or other encumbrance upon any of the properties or
assets of the Company, the Bank, the MHC, or the Financial Services
Company pursuant to any of the terms, provisions or conditions of, any
material agreement, contract, indenture, bond, debenture, note,
instrument or obligation to which the Company, the Bank, the MHC, or
the Financial Services Company is a party or violate any governmental
license or permit or any enforceable published law, administrative
regulation or order or court order, writ, injunction or decree which
breach, default, encumbrance or violation would have a material
adverse effect on the Company, the Bank, the MHC, and the Financial
Services Company, taken as a whole.
(xiv) Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus and
prior to the Closing Date, except as otherwise may be indicated or
contemplated therein, none of the Company, the Bank, the MHC, or the
Financial Services Company have issued any securities which will
remain issued and outstanding at the Closing Date or incurred any
liabilities or obligations, direct or contingent, or borrowed money,
except liabilities, obligations or borrowings in the ordinary course
of business, or entered into any other transaction not in the ordinary
course of business and consistent with prior practices, which are not
material in light of the business of the Company, the Bank, the MHC,
and the Financial Services Company, taken as a whole.
(xv) The authorized, issued and outstanding equity capital
of the Company is within the range set forth in the Prospectus under
the caption "Capitalization"; the issuance and the sale of the Shares
have been duly authorized by all necessary corporate action of the
Company, the MHC, and the Bank and approved by the Office of Thrift
Supervision and will be validly issued, fully paid and nonassessable
and shall conform to the description thereof contained in the
Prospectus; the issuance of the Shares is not subject to
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preemptive rights, except as set forth in the Prospectus; and good
title to the Shares will be transferred by the Company to the
purchasers thereof upon issuance thereof against payment therefor,
free and clear of all claims, encumbrances, security interests and
liens of the Company whatsoever. The certificates representing the
Shares will conform in all material respects with the requirements of
applicable laws and regulations.
(xvi) No approval of any regulatory or supervisory or other
public authority is required of the Company, the Bank, the MHC, or the
Financial Services Company in connection with the execution and
delivery of this Agreement or the issuance of the Shares, except: (a)
the declaration of effectiveness of any required post-effective
amendment by the Commission and approval thereof by the Office of
Thrift Supervision; and (b) as may be required under the "blue sky"
laws of various jurisdictions.
(xvii) All contracts and other documents required to be
filed as exhibits to the Registration Statement have been filed with
the Commission.
(xviii) The Company's financial statements as of December
31, 2001 and for the two years ended December 31, 2001 included in
this Prospectus, have been audited by Xxxxxxxxxx and Xxxxxxx.
Xxxxxxxxxx and Xxxxxxx are independent public accountants with respect
to the Company within the meaning of the Code of Professional Ethics
of the American Institute of Certified Public Accountants and such
accountants are, with respect to the Company, independent certified
public accountants as required by the Act and the SEC Regulations.
(xix) For the past five years (or since formation, as
applicable), the Company, the Bank, the MHC and the Financial Services
Company have timely (including any permissible extensions) filed all
required federal, state and local tax returns, and no deficiency has
been asserted with respect to such returns by any taxing authorities,
and the Bank and the Financial Services Company have paid all taxes
that have become due and, to the best of their knowledge, have made
adequate reserves for known future tax liabilities, except where any
failure to make such filings, payments and reserves, or the assertion
of such a deficiency, would not have a material adverse effect on the
Company, the Bank, the MHC, and the Financial Services Company, taken
as a whole.
(xx) All of the loans represented as assets of the Bank on
the most recent statement of financial condition 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 Regulation Z, 12
C.F.R. Part 226), real estate settlement procedures, consumer credit
protection, equal credit opportunity and all disclosure laws
applicable to such loans, except for violations which, if asserted,
would not have a material adverse effect on the Company, the Bank, the
MHC, and the Financial Services Company, taken as a whole.
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(xxi) To the best knowledge of the Company, the Bank, the
MHC, and the Financial Services Company, the records of account
holders, depositors and other members of the Bank delivered to
McDonald by the Bank for use during the Offerings are reliable and
accurate.
(xxii) To the best knowledge of the Company, the Bank, the
MHC, and the Financial Services Company, none of the Company, the
Bank, the MHC, or the Financial Services Company nor the employees of
the Company, the Bank, the MHC, or the Financial Services Company,
have made any payment of funds of the Company, the Bank, the MHC, or
the Financial Services Company prohibited by law, and no funds of the
Company, the Bank, the MHC, or the Financial Services Company have
been set aside to be used for any payment prohibited by law.
(xxiii) To the best knowledge of the Company, the Bank, the
MHC, or the Financial Services Company, the Company, the Bank, the
MHC, and the Financial Services Company are in compliance with all
laws, rules and regulations relating to the discharge, storage,
handling and disposal of hazardous or toxic substances, pollutants or
contaminants and none of the Company, the Bank, the MHC, or the
Financial Services Company believes that the Company, the Bank, the
MHC, or the Financial Services Company are subject to liability under
the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, or any similar law, except for violations
which, if asserted, would not have a material adverse effect on the
Company, the Bank, the MHC, and the Financial Services Company, taken
as a whole. There are no actions, suits, regulatory investigations or
other proceedings pending or, to the best knowledge of the Company,
the Bank, the MHC, and the Financial Services Company, threatened
against the Company, the Bank, the MHC, or the Financial Services
Company relating to the discharge, storage, handling and disposal of
hazardous or toxic substances, pollutants or contaminants. To the best
knowledge of the Company, the Bank, the MHC, and the Financial
Services Company, no disposal, release or discharge of hazardous or
toxic substances, pollutants or contaminants, including petroleum and
gas products, as any of such terms may be defined under federal, state
or local law, has been caused by the Company, the Bank, the MHC, or
the Financial Services Company or, to the best knowledge of the
Company, the Bank, the MHC, and the Financial Services Company, has
occurred on, in or at any of the facilities or properties of the
Company, the Bank, the MHC, or the Financial Services Company, except
such disposal, release or discharge which would not have a material
adverse effect on the Company, the Bank, the MHC, or the Financial
Services Company, taken as a whole.
(xxiv) For purposes of McDonald's obligation to file certain
documents and to make certain representations to the National
Association of Securities Dealers ("NASD") in connection with the
Offerings, the Company and the Bank warrant that: (a) neither the
Company nor the Bank has privately placed any securities within the
last 18 months; (b) there have been no material dealings within the
last 12 months between the Company or the Bank and any NASD
8
member or any person related to or associated with any such member;
(c) none of the officers or directors of the Company or the Bank have
any affiliation with the NASD, (d) except as contemplated by the
engagement letter with McDonald, neither the Company nor the Bank has
any financial or management consulting contracts outstanding with any
other person; and (e) there has been no intermediary between McDonald
and the Company or the Bank in connection with the public offering of
the Company's Shares, and no person is being compensated in any manner
for providing such service.
(xxv) The activities of the Bank, the MHC, the Company,
and the Financial Services Company as described in the Prospectus
comply, in all material respects, with applicable federal and state
law.
(b) McDonald represents and warrants to the Company, the Bank,
the MHC, and the Financial Services Company that:
(i) McDonald is registered as a broker-dealer with the
Commission and a member of the NASD, and is in good standing with the
Commission and the NASD.
(ii) McDonald is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation, with
full corporate power and authority to provide the services to be
furnished to the Company, the Bank, the MHC, and the Financial
Services Company hereunder.
(iii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
and validly authorized by all necessary action on the part of
McDonald, and this Agreement is a legal, valid and binding obligation
of McDonald, enforceable in accordance with its terms (except as the
enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization or similar laws relating to or affecting
the enforcement of creditors' rights generally or the rights of
creditors of registered broker-dealers accounts of whom may be
protected by the Securities Investor Protection Corporation or by
general equity principles, regardless of whether such enforceability
is considered in a proceeding in equity or at law, and except to the
extent that the provisions of Sections 8 and 9 hereof may be
unenforceable as against public policy or pursuant to Section 23A).
(iv) McDonald, and to McDonald's best knowledge, its
employees, agents and representatives who shall perform any of the
services required hereunder to be performed by McDonald, shall be duly
authorized and shall have all licenses, approvals and permits
necessary to perform such services, and McDonald is a registered
selling agent in the jurisdictions listed in Exhibit A hereto and will
remain registered in such jurisdictions in which the Company is
relying on such registration for the sale of the Shares, until the
Offerings are consummated or terminated.
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(v) The execution and delivery of this Agreement by
McDonald, the fulfillment of the terms set forth herein and the
consummation of the transactions contemplated hereby shall not violate
or conflict with the corporate charter or bylaws of McDonald or
violate, conflict with or constitute a breach of, or default (or an
event which, with notice or lapse of time, or both, would constitute a
default) under, any material agreement, indenture or other instrument
by which McDonald is bound or under any governmental license or permit
or any law, administrative regulation, authorization, approval or
order or court decree, injunction or order, except for such
violations, conflicts, breaches or defaults that would not have an
effect on McDonald's ability to perform its obligations under this
Agreement.
(vi) All funds received by McDonald to purchase the Common
Stock will be handled in accordance with Rule 15c2-4 under the
Securities Exchange Act of 1934, as amended ("Exchange Act").
(vii) There is not now pending or, to McDonald's best
knowledge, threatened against McDonald any action or proceeding before
the Commission, the NASD, any state securities commission or any state
or federal court concerning McDonald's activities as a broker-dealer.
3. Employment of McDonald; Sale and Delivery of the Shares. On the
basis of the representations and warranties herein contained, but subject to the
terms and conditions herein set forth, the Company, the Bank, the MHC, and the
Financial Services Company hereby employ McDonald as their agent to utilize its
best efforts in assisting the Company with the sale of the Shares by the Company
in the Offerings. McDonald will assist the Company and the Bank in the Offerings
by acting in the capacity and performing the services as described in the
engagement letter dated March 27, 2002. The employment of McDonald hereunder
shall terminate forty-five (45) days after the Offerings close, unless the
Company and the Bank, with the approval of the Office of Thrift Supervision, are
permitted to extend such period of time.
If the Company is unable to sell a minimum of 850,000 Shares of Common
Stock (or such lesser amount as the Office of Thrift Supervision may permit)
within the period herein provided, this Agreement shall terminate, and the
Company and the Bank shall refund promptly to any person who has subscribed for
any of the Shares, 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 other party hereunder, except as set
forth in Sections 6, 8(a), 8(d) and 9 hereof. Appropriate arrangements for
placing the funds received from subscriptions for Shares in a special
interest-bearing account with the Bank until all Shares are sold and paid for
were made prior to the commencement of the Offerings, with provision for prompt
refund to the purchasers as set forth above, or for delivery to the Company if
all Shares are sold.
The Company agrees to issue or have issued such Shares and to release
for delivery certificates to subscribers thereof for such Shares on the Closing
Date against payment to the Company by any means authorized pursuant to the
Prospectus, at the principal office of the Company or at such other place as
shall be agreed upon between the parties hereto. The date
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upon which McDonald is paid the compensation due hereunder is herein called the
"Closing Date."
McDonald agrees either (a) upon receipt of an executed order form of a
subscriber to forward the aggregate offering price of the Shares of Common Stock
ordered on or before twelve noon on the next business day following receipt or
execution of an order form by McDonald to the Bank for deposit in a segregated
account or (b) to solicit indications of interest in which event (i) McDonald
will subsequently contact any potential subscriber indicating interest to
confirm the interest and give instructions to execute and return an order form
or to receive authorization to execute the order form on the subscriber's
behalf, (ii) McDonald will mail acknowledgments of receipt of orders to each
subscriber confirming interest on the business day following such confirmation;
(iii) McDonald will debit accounts of such subscribers on the third business day
("debit date") following receipt of the confirmation referred to in (i); and
(iv) McDonald will forward completed order forms together with such funds to the
Bank on or before twelve noon on the next business day following the debit date
for deposit in a segregated account. McDonald acknowledges that if the procedure
in (b) is adopted, subscribers' funds are not required to be in their accounts
until the debit date.
In addition to the expenses specified in Section 6 hereof, McDonald
shall receive the following compensation for its services hereunder and
reimbursement of expenses:
(1) (i) a non-refundable management fee of twenty-five thousand
dollars ($25,000) that was paid on March 27, 2002; (ii) a
success fee equal to $125,000 for shares sold in the Offering;
(iii) a 6% commission for Shares sold in a syndicated
community offering, if any, by any NASD member firms,
including McDonald. The success fee is to be payable in
same-day funds to McDonald on the Closing Date. Commissions,
if any, will be payable in same-day funds on the Closing Date
to McDonald or to another NASD member firm. McDonald
acknowledges receipt of the $25,000 management fee.
(2) McDonald shall be reimbursed for all out-of-pocket expenses
(including the legal fees and expenses of McDonald's counsel)
incurred, not to exceed $45,000, whether or not the Offering
is successfully completed, unless the Bank agrees to a greater
amount. McDonald will submit invoices for expense
reimbursement periodically throughout the Offering, and full
payment of any reimbursable expenses shall be made in same-day
funds to McDonald on the Closing Date, or if the Offering is
not completed and is terminated for any reason, with ten
business days of receipt by the Bank or the Company of a
written request from McDonald for reimbursement of expenses.
The Company shall pay any stock issue and transfer taxes which may be
payable with respect to the sale of the Shares. The Company, the Bank, the MHC,
and the Financial Services Company shall also pay all expenses of the Offerings
incurred by them or on their prior approval including but not limited to their
attorneys' fees, NASD filing fees, filing and registration fees, and attorneys'
fees relating to any required state securities laws research and filings,
telephone charges, air freight, rental equipment, supplies, transfer agent
charges, fees relating to auditing and accounting and costs of printing all
documents necessary in connection with the Offering.
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4. Offering. Subject to the provisions of Section 7 hereof, McDonald is
assisting the Company on a best efforts basis in offering a minimum of 850,000
and a maximum of 1,150,000 shares, with the possibility of offering up to
1,322,500 shares (except as the Office may permit such amount to be decreased or
increased) in the Offerings. The Shares are to be offered to the public at the
price per share set forth on the cover page of the Prospectus.
5. Further Agreements. The Company and the Bank jointly and severally
covenant and agree that:
(a) The Company shall deliver to McDonald, from time to time,
such number of copies of the Prospectus as McDonald reasonably may request.
The Company authorizes McDonald to use the Prospectus in any lawful manner
in connection with the offer and sale of the Shares.
(b) The Company will notify McDonald or its counsel immediately
upon discovery, and confirm the notice in writing, (i) when any
post-effective amendment to the Registration Statement becomes effective or
any supplement to the Prospectus has been filed, (ii) of the issuance by
the Commission of any stop order relating to the Registration Statement or
of the initiation or the threat of any proceedings for that purpose, (iii)
of the receipt of any notice with respect to the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, and
(iv) of the receipt of any comments from the staff of the Commission
relating to the Registration Statement. If the Commission enters a stop
order relating to the Registration Statement at any time, the Company will
make every reasonable effort to obtain the lifting of such order at the
earliest possible time.
(c) During the time when the Prospectus is required to be
delivered under the Act, the Company will comply with all requirements
imposed upon it by the Act, as now in effect and hereafter amended, and by
the SEC Regulations and the OTS Regulations, as from time to time in force,
so far as necessary to permit the continuance of offers and sales of or
dealings in the Shares in accordance with the provisions hereof and the
Prospectus. If, during the period when the Prospectus is required to be
delivered in connection with the offer and sale of the Shares, any event
relating to or affecting the Company, the Bank, the MHC, or the Financial
Services Company shall occur as a result of which it is necessary, in the
opinion of counsel for McDonald, with concurrence of counsel of the
Company, to amend or supplement the Prospectus in order to make the
Prospectus not false or misleading as to a material fact in light of the
circumstances existing at the time it is delivered to a purchaser of the
Shares, the Company shall prepare and furnish to McDonald promptly a
reasonable number of copies of an amendment or amendments or of a
supplement or supplements to the Prospectus (in form and substance
satisfactory to counsel for McDonald) which shall amend or supplement the
Prospectus so that, as amended or supplemented, the Prospectus shall not
contain an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the
circumstances existing at the time the Prospectus is delivered to a
purchaser of the Shares, not misleading. The Company will not file or use
any amendment or supplement to the Registration Statement or the Prospectus
of which McDonald has not first been furnished a copy or to which McDonald
shall reasonably
12
object after having been furnished such copy. For the purposes of this
subsection the Company and the Bank shall furnish such information with
respect to themselves as McDonald from time to time may reasonably request.
(d) The Company has taken or will take all necessary action as
may be required to qualify or register the Shares for offer and sale by the
Company under the securities or blue sky laws of such jurisdictions as
McDonald and either the Company or its counsel may agree upon; provided,
however, that the Company shall not be obligated to qualify as a foreign
corporation to do business under the laws of any such jurisdiction. In each
jurisdiction where such qualification or registration shall be effected,
the Company, unless McDonald agrees that such action is not necessary or
advisable in connection with the distribution of the Shares, shall file and
make such statements or reports as are, or reasonably may be, required by
the laws of such jurisdiction.
(e) The Company will file a registration statement for the Common
Stock under Section 12(g) of the Exchange Act prior to completion of the
Offerings and shall request that such registration statement be effective
upon completion of the Offering. The Company shall maintain the
effectiveness of such registration for a minimum period of three years or
for such shorter period as may be required by applicable law.
(f) The Company will make generally available to its security
holders as soon as practicable, but not later than 90 days after the close
of the period covered thereby, an earnings statement (in form complying
with the provisions of Rule 158 of the SEC 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.
(g) For a period of three (3) years from the date of this
Agreement (unless the Common Stock shall have been deregistered under the
Exchange Act), the Company will furnish to McDonald, as soon as publicly
available after the end of each fiscal year, a copy of its annual report to
shareholders for such year; and the Company will furnish to McDonald (i) as
soon as publicly available, a copy of each report or definitive proxy
statement of the Company filed with the Commission under the Exchange Act
or mailed to shareholders, and (ii) from time to time, such other public
information concerning the Company as McDonald may reasonably request.
(h) The Company and the Bank shall use the net proceeds from the
sale of the Shares consistently with the manner set forth in the
Prospectus.
(i) The Company shall not deliver the Shares until each and every
condition set forth in Section 7 hereof has been satisfied, unless such
condition is waived in writing by McDonald.
(j) The Company shall advise McDonald, if necessary, as to the
allocation of deposits in connection with subscription rights priorities
for the Shares in the event of an oversubscription and shall provide
McDonald final instructions as to the allocation of the Shares ("Allocation
Instructions") and such information shall be accurate and reliable.
13
McDonald shall be entitled to rely on such instructions and shall have no
liability in respect of its reliance thereon, including without limitation,
no liability for or related to any denial or grant of a subscription in
whole or in part, except for such liability contemplated under Section 8(b)
of this Agreement.
(k) The Company and the Bank will take such actions and furnish
such information as are reasonably requested by McDonald in order for
McDonald to ensure compliance with the NASD's "Interpretation Relating to
Free- Riding and Withholding."
6. Payment of Expenses. Whether or not the Offering is consummated, the
Company and the Bank shall pay or reimburse McDonald for allocable expenses
incurred by McDonald relating to the offering of the Shares as provided in
Section 3 hereof; provided, however, that neither the Company nor the Bank shall
pay or reimburse McDonald for any of the foregoing expenses accrued after
McDonald shall have notified the Company or the Bank of its election to
terminate this Agreement pursuant to Section 11 hereof or after such time as the
Company or the Bank shall have given notice in accordance with Section 12 hereof
that McDonald is in breach of this Agreement.
7. Conditions of McDonald's Obligations. Except as may be waived by
McDonald, the obligations of McDonald as provided herein shall be subject to the
accuracy of the representations and warranties contained in Section 2 hereof as
of the date hereof and as of the Closing Date, to the performance by the Company
and the Bank of their obligations hereunder and to the following conditions:
(a) At the Closing Date, McDonald shall receive the favorable
opinion of Xxxxxxx, Spidi & Xxxxx, PC, counsel for the Company, the Bank,
the MHC, and the Financial Services Company dated the Closing Date,
addressed to McDonald, in form and substance satisfactory to McDonald to
the effect that:
(i) The Company is a corporation in existence under the
laws of the United States, the Bank is a stock savings bank in
existence under the laws of the United States, the MHC is a federal
mutual holding company in existence under the laws of the United
States, and the Financial Services Company is a New Jersey
corporation, each having the corporate power to execute, deliver and
perform its respective obligations under this Agreement and to carry
on its business as now conducted and as described in the Prospectus;
(ii) The Bank is a member of the Federal Home Loan Bank of
New York, and the deposit accounts of the Bank are insured by the SAIF
up to the applicable legal limits;
(iii) To such counsel's knowledge, the activities of the
MHC, the Company and the Financial Services Company as described in
the Prospectus comply, in all material respects, with applicable
federal and state law.
(iv) The Company has authorized capital stock as set forth
in the Registration Statement and the Prospectus;
14
(v) The Company has authorized the issuance and sale of the
Shares by all necessary corporate action; the Shares will be validly
issued, fully paid, nonassessable and, except as disclosed in the
Prospectus, free of preemptive rights; and purchasers of the Shares
from the Company, upon issuance thereof against payment therefor, will
acquire such Shares free and clear of all claims, encumbrances,
security interests and liens created by the Company;
(vi) The form of certificate used to evidence the Shares is
in proper form and complies in all material respects with the
applicable requirements of United States law and the regulations of
the Office of Thrift Supervision;
(vii) No consent, approval, authorization or other action
by, or filing or registration with, any governmental agency is
required to be obtained or made by the Company, the Bank, the MHC, or
the Financial Services Company for the execution and delivery of this
Agreement or the issuance of the Shares except as may be required
under the "blue sky" laws of various jurisdictions;
(viii) The Company, the Bank, the MHC, and the Financial
Services Company have authorized the execution, delivery and
performance of this Agreement by all necessary corporate action;
(ix) The statements in the Prospectus under the captions
"Dividend Policy," "Regulation," "Taxation," "Description of Capital
Stock," and "Restrictions on Acquisition of Synergy Financial Group,
Inc." insofar as they are, or refer to, statements of law or legal
conclusions (excluding financial data included therein or omitted
therefrom, as to which an opinion need not be expressed), have been
prepared or reviewed by such counsel and are accurate in all material
respects;
(x) The Registration Statement and the Prospectus, in each
case as amended or supplemented, comply as to form in all material
respects with the requirements of the Act, the SEC Regulations, the
HOLA and the OTS Regulations, as the case may be (except as to
information with respect to McDonald included therein and financial
statements, notes to financial statements, financial tables and other
financial and statistical data, including the appraisal, included
therein or omitted therefrom, as to which no opinion need be
expressed); to such counsel's knowledge, all documents and exhibits
required to be filed with the Registration Statement have been so
filed and the descriptions in the Registration Statement of such
documents and exhibits are accurate in all material respects;
(xi) The Prospectus has been authorized for use by the
Office of Thrift Supervision; the Registration Statement and any
post-effective amendment thereto has been declared effective by the
Commission; no proceedings are pending by or before the Commission or
the Office of Thrift Supervision seeking to revoke or rescind the
orders declaring the Registration Statement effective or, to such
counsel's knowledge, are contemplated or threatened (provided that for
this
15
purpose such counsel need not regard any litigation or governmental
procedure to be "threatened" unless the potential litigant or
government authority has manifested to the management of the Company,
the Bank, the MHC, or the Financial Services Company, or to such
counsel, a present intention to initiate such litigation or
proceeding); (xii) The execution and delivery of this Agreement by the
Company, the Bank, the MHC, and the Financial Services Company, do not
violate any provision of the charter or bylaws of the Company, the
Bank, the MHC, or the Financial Services Company, except where such
violations would not have a material adverse effect on the Company,
the Bank, the MHC, and the Financial Services Company, taken as a
whole;
(xiii) To such counsel's knowledge, the Company, the Bank,
the MHC, and the Financial Services Company have obtained all
licenses, permits and other governmental authorizations currently
required for the conduct of their respective businesses as such
businesses are described in the Prospectus; to such counsel's
knowledge, all such licenses, permits and other governmental
authorizations are in full force and effect and the Company, the Bank,
the MHC, and the Financial Services Company are in all material
respects complying therewith, except where the failure to hold such
licenses, permits or governmental authorizations or the failure to so
comply would not have a material adverse effect on the Company, the
Bank, the MHC, and the Financial Services Company;
(xiv) There is no action, suit, proceedings, inquiry or
investigation before or by any court or governmental agency or body,
now pending or, to such counsel's knowledge, threatened, against
either the Company, the Bank, the MHC, or the Financial Services
Company which individually, or in the aggregate, would have a material
adverse effect on the Company, the Bank, the MHC, or the Financial
Services Company, taken as a whole;
(xv) This Agreement has been duly executed and delivered by
the Company, the Bank, the MHC, and the Financial Services Company and
is enforceable against the Company, the Bank, the MHC, and the
Financial Services Company (except as the enforceability thereof may
be limited by bankruptcy, insolvency, moratorium, reorganization or
similar laws relating to or affecting the enforcement of creditors'
rights generally or the rights of creditors of insured depository
institutions or their holding companies or by general equity
principles, regardless of whether such enforceability is considered in
a proceeding in equity or at law, and except to the extent that the
provisions of Sections 8 and 9 of this Agreement may be unenforceable
as against public policy or pursuant to Section 23A);
(xvi) The execution and delivery of this Agreement by the
Company, the Bank, the MHC, and the Financial Services Company do not
constitute a breach of or default (or an event which, with notice or
lapse of time or both, would constitute a default) under, give rise to
any right of termination, cancellation or
16
acceleration contained in, or result in the creation or imposition of
any lien, charge or other encumbrance upon any of the properties or
assets of the Company, the Bank, the MHC, or the Financial Services
Company pursuant to any of the terms, provisions or conditions of, any
material agreement, contract, indenture, bond, debenture, note,
instrument or obligation to which the Company, the Bank, the MHC, or
the Financial Services Company are a party or violate any governmental
license or permit or any enforceable published law, administrative
regulation or order or court order, writ, injunction or decree (except
as may be required under the "blue sky" laws as to which no opinion
need be expressed), which breach, default, encumbrance or violation
would have a material adverse effect on the Company, the Bank, the
MHC, and the Financial Services Company, taken as a whole; and
(xvii) Neither the Bank, the Company, the MHC, nor the
Financial Services Company is in violation of their respective charter
or bylaws.
In rendering such opinion, such counsel may rely as to matters of fact
on certificates of officers and directors of the Company, the Bank, the MHC, and
the Financial Services Company and certificates of public officials delivered
pursuant to this Agreement. Such counsel may assume that any agreement is the
valid and binding obligation of any parties to such agreement other than the
Company, the Bank, the MHC, and the Financial Services Company. Such opinion may
be governed by, and interpreted in accordance with, the Legal Opinion Accord
("Accord") of the ABA Section of Business Law (1991), and, as a consequence,
such opinion may be rendered subject to the qualifications, exceptions,
definitions, limitations on coverage and other limitations, all as more
particularly described in the Accord. Further, references in such opinion to
such counsel's "knowledge" may be limited to "knowledge" as defined in the
Accord (or knowledge based on certificates). In addition, the "General
Qualifications" set forth in the Accord and other customary assumptions and
limitations may apply to such opinion. Such opinion may be limited to present
statutes, regulations and judicial interpretations and to facts as they
presently exist; in rendering such opinion, such counsel need assume no
obligation to revise or supplement them should the present laws be changed by
legislative or regulatory action, judicial decision or otherwise; and such
counsel need express no view, opinion or belief with respect to whether any
proposed or pending legislation, if enacted, or any regulations or any policy
statements issued by any regulatory agency, whether or not promulgated pursuant
to any such legislation, would affect the validity of the execution and delivery
by the Company, the Bank, the MHC, and the Financial Services Company of this
Agreement or the issuance of the Shares. Further, in rendering such opinions,
Xxxxxxx Xxxxx & Xxxxx, PC may rely on the opinion of Xxxxxxxxxx and Xxxxxxx with
respect to any matter of New Jersey tax law.
(b) At the Closing Date, McDonald shall receive the letter of
Xxxxxxx Spidi & Xxxxx, PC, special counsel for the Company and the Bank,
dated the Closing Date, addressed to McDonald, in form and substance
satisfactory to McDonald and to the effect that: based on such counsel's
participation in conferences with representatives of the Company, the Bank,
the independent appraiser, the independent certified public accountants,
McDonald and its counsel, review of documents and understanding of
applicable law (including the requirements of Form SB-2 and the form of the
Registration Statement contemplated thereby) and the experience such
counsel has gained in its
17
practice under the Act, nothing has come to such counsel's attention that
would lead it to believe that the Registration Statement, as amended
(except as to information in respect of McDonald contained therein and
except as to the appraisal, financial statements, notes to financial
statements, financial tables and other financial and statistical data
contained therein or omitted therefrom, as to which such counsel need
express no comment), at the time it became effective contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements made therein, not
misleading, or that the Prospectus, as amended or supplemented (except as
to information in respect of McDonald contained therein and except as to
the appraisal, financial statements, notes to financial statements,
financial tables and other financial and statistical data contained therein
or omitted therefrom as to which such counsel need express no comment), at
the time the Prospectus was filed with the Commission under Rule 424(b),
and at the Closing Date, contained any untrue statement of a material fact
or omitted to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (in making this statement such counsel may state that it has not
undertaken to verify independently the information in the Registration
Statement or Prospectus and, therefore, does not assume any responsibility
for the accuracy or completeness thereof).
(c) Counsel for McDonald shall have been furnished such documents
as they reasonably may require for the purpose of enabling them to review
or pass upon the matters required by McDonald, and for the purpose of
evidencing the accuracy, completeness or satisfaction of any of the
representations, warranties or conditions contained in this Agreement,
including but not limited to, resolutions of the Boards of Directors of the
Company, the Bank, the MHC, and the Financial Services Company regarding
the authorization, execution and delivery of this Agreement and the
transactions contemplated by this Agreement.
(d) Prior to and at the Closing Date, in the reasonable opinion
of McDonald, (i) there shall have been no material adverse change in the
condition (financial or otherwise), business or results of operations of
the Company, the Bank, the MHC, and the Financial Services Company, taken
as a whole, since the latest date as of which information is set forth in
the Prospectus, except as referred to therein; (ii) there shall have been
no transaction entered into by the Company, the Bank, the MHC, or the
Financial Services Company after the latest date as of which the financial
condition of the Company, the Bank, the MHC, or the Financial Services
Company is set forth in the Prospectus other than transactions referred to
or contemplated therein, transactions in the ordinary course of business,
and transactions which are not material to the Company, the Bank, the MHC,
and the Financial Services Company, taken as a whole; (iii) none of the
Company, the Bank, the MHC, or the Financial Services Company shall have
received from any governmental authority any direction (oral or written) to
make any change in the method of conducting their respective businesses
which is material to the business of the Company, the Bank, the MHC, and
the Financial Services Company, taken as a whole, with which they have not
complied; (iv) no action, suit or proceeding, at law or in equity or before
or by any federal or state commission, board or other administrative
agency, shall be pending or threatened against the Company, the Bank, the
MHC, or the Financial Services Company affecting any of their respective
assets, wherein an
18
unfavorable decision, ruling or finding would have a material adverse
effect on the Company, the Bank, the MHC, and the Financial Services
Company, taken as a whole; and (v) the Shares shall have been qualified or
registered for offering and sale by the Company under the "blue sky" laws
of such jurisdictions as McDonald and the Company shall have agreed upon.
(e) At the Closing Date, McDonald shall receive a certificate of
the principal executive officer and the principal financial officer or his
designee, which designee shall be an executive officer, of each of the
Company, the Bank, the MHC, and the Financial Services Company dated the
Closing Date, to the effect that: (i) they have examined the Prospectus
and, at the time the Registration Statement was declared effective by the
Commission and at the time the Prospectus was authorized by the Office of
Thrift Supervision for use, the Prospectus did not contain an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading with respect to the Company, the Bank,
the MHC, or the Financial Services Company; (ii) since the date the
Registration Statement was declared effective by the Commission and since
the date the Prospectus became authorized by the Office of Thrift
Supervision for use, no event has occurred which should have been set forth
in an amendment or supplement to the Prospectus which has not been so set
forth, including specifically, but without limitation, any material change
in the business, condition (financial or otherwise) or results of
operations of the Company, the Bank, the MHC, or the Financial Services
Company and the conditions set forth in clauses (ii) through (v) inclusive
of subsection (d) of this Section 7 have been satisfied; (iii) no order has
been issued by the Commission or the Office of Thrift Supervision to
suspend the Offering or the effectiveness of the Prospectus, and no action
for such purposes has been instituted or, to the knowledge of such
officers, threatened by the Commission or the Office of Thrift Supervision;
and (iv) all of the representations and warranties contained in Section 2
of this Agreement are true and correct, with the same force and effect as
though expressly made on the Closing Date.
(f) At the Closing Date, McDonald shall receive, among other
documents, (i) copies of the letters from the Office of Thrift Supervision
authorizing the use of the Prospectus; (ii) a copy of the order of the
Commission declaring the Registration Statement effective; (iii) a
certified copy of the Bank's Stock Charter, the Company's Charter, and the
MHC's Charter, each as executed by the Office of Thrift Supervision; (iv) a
certified copy of the Articles of Incorporation of the Financial Services
Corporation; (v) a copy of the certificate from the FDIC certifying to the
insured status by the Bank; and (vi) copy of the letter from FHLB of New
York evidencing the Bank's membership therein.
(g) Concurrently with the execution of this Agreement, McDonald
shall receive a letter from Xxxxxxxxxx and Xxxxxxx, independent certified
public accountants, addressed to McDonald, the Company, the Bank, the MHC,
and the Financial Services Company, in substance and form satisfactory to
McDonald, with respect to the financial statements of the Bank and other
financial information contained in the Prospectus.
19
(h) At the Closing Date, McDonald shall receive a letter in form
and substance satisfactory to McDonald from Xxxxxxxxxx and Xxxxxxx,
independent certified public accountants, dated the Closing Date and
addressed to McDonald, the Company, the Bank, the MHC, and the Financial
Services Company, confirming the statements made by them in the letters
delivered by them pursuant to the preceding subsection as of a specified
date not more than five (5) business days prior to the Closing Date.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are, in the reasonable
opinion of McDonald and its counsel, satisfactory to McDonald. Any certificates
signed by an officer or director of the Company, the Bank, the MHC, or the
Financial Services Company prepared for McDonald's reliance and delivered to
McDonald or to counsel for McDonald shall be deemed a representation and
warranty by the Company, the Bank, the MHC, and the Financial Services Company
to McDonald as to the statements made therein. If any condition to McDonald's
obligations hereunder to be fulfilled prior to or at the Closing Date is not so
fulfilled, McDonald may terminate this Agreement or, if McDonald so elects, may
waive any such conditions which have not been fulfilled, or may extend the time
of their fulfillment. If McDonald terminates this Agreement as aforesaid, the
Company, the Bank, the MHC, and the Financial Services Company shall reimburse
McDonald for its expenses as provided in Section 3 hereof.
8. Indemnification.
(a) The Company, the Bank, the MHC, and the Financial Services
Company jointly and severally agree to indemnify and hold harmless
McDonald, its officers, directors, employees and agents and each person, if
any, who controls McDonald within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, against any and all loss, liability,
claim, damage and expense whatsoever and shall further promptly reimburse
such persons for any legal or other expenses reasonably incurred by each or
any of them in investigating, preparing to defend or defending against any
such action, proceeding or claim (whether commenced or threatened) arising
out of or based upon (i) any misrepresentation by the Company, the Bank,
the MHC, or the Financial Services Company in this Agreement or any breach
of warranty by the Company, the Bank, the MHC, or the Financial Services
Company with respect to this Agreement or arising out of or based upon any
untrue or alleged untrue statement of a material fact or the omission or
alleged omission of a material fact required to be stated or necessary to
make not misleading any statements contained in the (A) Registration
Statement or the Prospectus, or (B) any application or other document or
communication prepared or executed on behalf of the Company to qualify the
Shares under the securities laws of any jurisdiction, (an "Application")
unless such statement or omission was made in reliance upon and in
conformity with information furnished to the Company with respect to
McDonald by or on behalf of McDonald expressly for use in the Prospectus or
in any such Application, as the case may be; provided, however, that this
indemnification agreement will not apply to any loss, liability, claim,
damage or expense found in a final judgment by a court of competent
jurisdiction (not subject to further appeal) to have resulted primarily
from the bad faith, willful misconduct or gross negligence of McDonald or
any other party who may otherwise be entitled to indemnification pursuant
to this Section 8(a). This
20
indemnity shall be in addition to any liability the Company, the Bank, the
MHC, and the Financial Services Company may otherwise have to McDonald.
(b) The Company, the Bank, the MHC, and the Financial Services
Company shall indemnify and hold harmless McDonald, its officers,
directors, employees and agents and each person, if any, who controls
McDonald within the meaning of Section 15 of the Act or Section 20(a) of
the Exchange Act for any liability whatsoever arising out of (i) the
allocation instructions or (ii) any records of account holders and
depositors of the Bank delivered to McDonald by the Bank or its agents for
use during the Offering; provided, however, that this indemnification
agreement will not apply to any loss, liability, claim, damage or expense
found in a final judgment by a court of competent jurisdiction (not subject
to further appeal) to have resulted principally and directly from the bad
faith, willful misconduct or gross negligence of McDonald or any other
party who may otherwise be entitled to indemnification pursuant to this
Section 8(b). This indemnity shall be in addition to any liability the
Company, the Bank, the MHC, and the Financial Services Company may
otherwise have to McDonald.
(c) McDonald agrees to indemnify and hold harmless the Company,
the Bank, the MHC, and the Financial Services Company, their officers,
directors and employees and each person, if any, who controls the Company,
the Bank, the MHC, or the Financial Services Company within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, to the same
extent as the foregoing indemnity from the Company, the Bank, the MHC, and
the Financial Services Company to McDonald, but only with respect to (i)
statements or omissions, if any, made in the Prospectus or any amendment or
supplement thereof, or to a purchaser of the Shares in reliance upon, and
in conformity with, written information furnished to the Company, the Bank,
the MHC, or the Financial Services Company with respect to McDonald by
McDonald expressly for use in the Prospectus, which the Company, the Bank,
the MHC, and the Financial Services Company acknowledge appears only in the
section captioned "Market for the Stock" and the section captioned "The
Stock Offering - Plan of Distribution/Marketing Arrangements"; (ii) any
misrepresentation by McDonald in Section 2(b) of this Agreement; or (iii)
any liability of the Company, the Bank, the MHC, or the Financial Services
Company which is found in a final judgment by a court of competent
jurisdiction (not subject to further appeal) to have resulted principally
and directly from gross negligence, bad faith or willful misconduct of
McDonald.
(d) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party of
the commencement thereof; but the omission so to notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party otherwise than under this Section 8. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein and, to the extent that it may wish,
jointly with the other indemnifying party similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to
21
assume the defense thereof, the indemnifying party will not be liable to
such indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof other than the reasonable cost of investigation except as
otherwise provided herein. In the event the indemnifying party elects to
assume the defense of any such action and retain counsel acceptable to the
indemnified party, the indemnified party may retain additional counsel, but
shall bear the fees and expenses of such counsel unless (i) the
indemnifying party shall have specifically authorized the indemnified party
to retain such counsel or (ii) the parties to such suit include such
indemnifying party and the indemnified party, and such indemnified party
shall have been advised by counsel that one or more material legal defenses
may be available to the indemnified party which may not be available to the
indemnifying party, in which case the indemnifying party shall not be
entitled to assume the defense of such suit notwithstanding the
indemnifying party's obligation to bear the fees and expenses of such
counsel. An indemnifying party against whom indemnity may be sought shall
not be liable to indemnify an indemnified party under this Section 8 if any
settlement of any such action is effected without such indemnifying party's
consent. To the extent required by law, this Section 8 is subject to and
limited by the provisions of Section 23A.
9. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 8 above is for any reason held to be unavailable to McDonald, the
Company, the Bank, the MHC, and/or the Financial Services Company other than in
accordance with its terms, the Company, the Bank, the MHC, or the Financial
Services Company and McDonald shall contribute to the aggregate losses,
liabilities, claims, damages, and expenses of the nature contemplated by said
indemnity agreement incurred by the Company, the Bank, the MHC, or the Financial
Services Company and McDonald (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company, the Bank, the MHC, or the
Financial Services Company on the one hand, and McDonald, on the other hand,
from the offering of the Shares or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above, but
also the relative fault of the Company, the Bank, the MHC, or the Financial
Services Company, on the one hand, and McDonald, on the other hand, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative benefits received by the Company, the
Bank, the MHC, or the Financial Services Company, on the one hand, and McDonald,
on the other hand, shall be deemed to be in the same proportion as the total net
proceeds from the Offerings received by the Company, the Bank, the MHC, and the
Financial Services Company bear to the total fees and expenses received by
McDonald under this Agreement. The relative fault of the Company, the Bank, the
MHC, or the Financial Services Company, on the one hand, and McDonald, on the
other hand, shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company, the Bank, the MHC, or the Financial Services Company or by McDonald and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
22
The Company, the Bank, the MHC, and the Financial Services Company and
McDonald agree that it would not be just and equitable if contribution pursuant
to this Section 9 were determined by pro rata allocation or by any other method
of allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages, liabilities
or judgments referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by the indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 9, McDonald shall not be required to contribute any
amount in excess of the amount by which fees owed McDonald pursuant to this
Agreement exceeds the amount of any damages which McDonald has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who is not guilty of such fraudulent misrepresentation. To the extent
required by law, this Section 9 is subject to and limited by the provisions of
Section 23A.
10. Survival of Agreements, Representations and Indemnities. The
respective indemnities of the Company, the Bank, the MHC, and the Financial
Services Company and McDonald and the representations and warranties of the
Company, the Bank, the MHC, and the Financial Services Company and of McDonald
set forth in or made pursuant to this Agreement shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of McDonald or the Company, the Bank, the
MHC, or the Financial Services Company or any controlling person or indemnified
party referred to in Section 8 hereof, and shall survive any termination or
consummation of this Agreement and/or the issuance of the Shares, and any legal
representative of McDonald, the Company, the Bank, the MHC, and the Financial
Services Company and any such controlling persons shall be entitled to the
benefit of the respective agreements, indemnities, warranties and
representations.
11. Termination. McDonald may terminate this Agreement by giving the
notice indicated below in this Section at any time after this Agreement becomes
effective as follows:
(a) If any domestic or international event or act or occurrence
has materially disrupted the United States securities markets such as to
make it, in McDonald's reasonable opinion, impracticable to proceed with
the offering of the Shares; or if trading on the New York Stock Exchange or
the Nasdaq Stock Market shall have suspended; or if the United States shall
have become involved in a war or major hostilities other than as existing
at the time this Agreement becomes effective; or if a general banking
moratorium has been declared by a state or federal authority which has
material effect on the Bank; or if a moratorium in foreign exchange trading
by major international banks or persons has been declared; or if there
shall have been a material adverse change in the capitalization, financial
condition or business of the Company, the Bank, the MHC, or the Financial
Services Company or if the Company, the Bank, the MHC, or the Financial
Services Company shall have sustained a material or substantial loss by
fire, flood, accident, hurricane, earthquake, theft, sabotage or other
calamity or malicious act, whether or not said loss shall have been
insured; or if there shall have been a material
23
adverse change in the condition, financial or otherwise, or prospects of
the Company, the Bank, the MHC, and the Financial Services Company, taken
as a whole.
(b) If McDonald elects to terminate this Agreement as provided in
this Section, the Company, the Bank, the MHC, and the Financial Services
Company shall be notified promptly by McDonald by telephone or telegram,
confirmed by letter.
(c) If this Agreement is terminated by McDonald for any of the
reasons set forth in subsection (a) above, and to fulfill their
obligations, if any, pursuant to Sections 3, 6, 8(a) and 9 of this
Agreement and upon demand, the Company, the Bank, the MHC, and the
Financial Services Company shall pay McDonald the full amount so owing
thereunder.
12. Notices. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and if sent to McDonald shall be
mailed, delivered or faxed and confirmed to Trident Securities, A Division of
McDonald Investments Inc., 0000 Xxx Xxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxx
Xxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxxx (with a copy to Xxxxxx Xxxxxxx
Xxxxxxxxx & Xxxx, PLLC, 0000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx
00000, Attention: Xxxxxx X. Xxxxxxxx, Esq.) and if sent to the Company, the
Bank, the MHC, or the Financial Services Company, shall be mailed, delivered or
faxed and confirmed to Synergy Bank, 000 Xxxxx Xxxxxx Xxxx, Xxxxxxxx, Xxx Xxxxxx
00000, Attention: Xxxx X. Xxxxx, President and Chief Executive Officer of the
Company, the Bank, the MHC, and the Financial Services Company (with a copy to
Xxxxxxx Spidi & Xxxxx, PC, 0000 Xxx Xxxx Xxxxxx, XX, Xxxxx 000 Xxxx, Xxxxxxxxxx,
X.X. 00000, Attention: Xxxxxx X. Xxxxxxx, Esq.).
13. Parties. This Agreement shall inure solely to the benefit of, and
shall be binding upon, McDonald, the Company, the Bank, the MHC, and the
Financial Services Company, and the controlling and other persons referred to in
Section 8 hereof, and their respective successors, legal representatives and
assigns, and no other person shall have or be construed to have any legal or
equitable right, remedy or claim under or in respect of or by virtue of this
Agreement or any provision herein contained. The undersigned consent to the
assignment of rights and obligations of Trident Securities hereunder to McDonald
Investments Inc.
14. Construction. This Agreement shall be governed by and construed in
accordance with the substantive laws of North Carolina regardless of the laws
that might otherwise govern under applicable principles of conflicts of law
thereof.
15. Counterparts and Definitions. This Agreement may be executed in
separate counterparts, each of which when so executed and delivered shall be an
original, but all of which together shall constitute but one and the same
instrument. Any initially capitalized terms not defined herein shall have the
meanings ascribed thereto in the Prospectus.
24
Please acknowledge your agreement to the foregoing as of the date above
written by signing below and returning to the Company one copy of this letter.
SYNERGY FINANCIAL GROUP, INC. SYNERGY BANK
By: By:
-------------------------------------- --------------------------------------
Xxxx X. Xxxxx Xxxx X. Xxxxx
President and Chief Executive Officer President and Chief Executive Officer
SYNERGY MUTUAL HOLDING COMPANY SYNERGY FINANCIAL SERVICES, INC.
By: By:
-------------------------------------- --------------------------------------
Xxxx X. Xxxxx Xxxx X. Xxxxx
President and Chief Executive Officer President and Chief Executive Officer
Agreed to and accepted:
TRIDENT SECURITIES, A Division of McDonald Investments Inc.
By:
--------------------------------------
Xxxxxxx X. Xxxxxxx
Managing Director
EXHIBIT A
---------
Trident Securities, a Division of McDonald Investments Inc. is a registered
selling agent in the jurisdictions listed below:
Alabama Montana
Xxxxxx Xxxxxxxx
Arizona Nevada
Arkansas New Hampshire
California New Jersey
Colorado New Mexico
Connecticut New York
Delaware North Carolina
District of Columbia North Dakota
Florida Ohio
Georgia Oklahoma
Hawaii Oregon
Idaho Pennsylvania
Illinois Rhode Island
Indiana South Carolina
Iowa South Dakota
Kansas Tennessee
Kentucky Texas
Louisiana Utah
Maine Vermont
Maryland Virginia
Massachusetts Washington
Michigan West Virginia
Minnesota Wisconsin
Mississippi Wyoming
Missouri
