PROVIDENT BANCORP, INC.
11,475,000 to 17,853,750 Shares of Common Stock
(par value $.01 per share)
AGENCY AGREEMENT
___________, 2003
Xxxx Xxxx & Co., Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
Ladies and Gentlemen:
Provident Bancorp, Inc., a Delaware corporation (the "Company"),
Provident Bank, a savings association (the "Bank"), Provident Bancorp, Inc., a
federal corporation, the current mid-tier holding company of the Bank ("PBI"),
and Provident Bancorp, MHC, a federally chartered mutual holding company and the
current majority owner of PBI (the "MHC"), hereby confirm their agreement with
Xxxx Xxxx & Co. ("Xxxx Xxxx" or the "Selling Agent") to serve as agent of the
Company to assist the Company in the sale of between 11,475,000 and 17,853,750
shares of Common Stock (as defined below) of the Company (the "Shares" or
"Conversion Stock") in the Subscription and Community Offerings, as defined
below, as follows:
Introductory. The Company was recently incorporated under the laws of
the State of Delaware for the purpose of being the successor of PBI. The Company
is authorized to issue 85,000,000 shares of capital stock, of which 75,000,000
shares are common stock having a par value of one cent ($.01) per share (the
"Common Stock"). The Offering, as defined below, is being conducted in
connection with the mutual-to-stock conversion of the MHC (the "Conversion").
The Conversion is being conducted in accordance with the laws of the
United States and the applicable regulations of the Office of Thrift Supervision
(the "OTS") (such laws and the regulations of the OTS are referred to herein as
the "Conversion Regulations").
The Company, PBI, the MHC and the Bank are sometimes referred to herein
as the "Provident Parties."
The Conversion is to be conducted in accordance with a Plan of
Conversion and Reorganization (the "Plan") adopted by the Board of Directors of
the MHC and the Board of Directors of PBI on July 1, 2003. The Plan provides
that the Conversion will be effected as follows: the Bank will establish the
Company as a Delaware stock holding company subsidiary; the Company will charter
an interim federal savings bank as a wholly-owned subsidiary ("Interim Bank");
PBI will convert to an interim stock savings bank and will thereafter merge with
and into the Bank, with the Bank as the surviving entity; the MHC will
contemporaneously convert to an interim stock savings bank and merge with and
into the Bank; the Interim Bank will then merge with and into the Bank with the
Bank as the surviving entity. In connection with the foregoing transactions,
each stockholder of PBI immediately prior to the Conversion, other than the MHC
("Public Stockholders"), will receive shares of the Company's Common Stock
pursuant to an exchange ratio described in the Plan. Pursuant to the Plan and in
connection with the Conversion, the Company will offer the Conversion Stock for
sale in the Offering, as defined below.
Simultaneous with or immediately after the consummation of the
Conversion and the Offering, as defined below, the Company will acquire E.N.B.
Holding Company, Inc., a New York corporation ("E.N.B."), pursuant to the terms
of an Agreement and Plan of Reorganization dated as of July 1, 2003 (the "Merger
Agreement"). E.N.B. is the holding company of Ellenville National Bank, a
national association headquartered in Ellenville, New York ("Ellenville").
E.N.B. will merge with and into the Company and Ellenville will merge with and
into the Bank pursuant to the Merger Agreement (the "Merger"). The Merger will
be accomplished in accordance with the laws of the State of New York, State of
Delaware and the United States and applicable regulations of the OTS (such laws
and the regulations collectively, the "Merger Regulations", and together with
the Conversion Regulations, the "Reorganization Regulations"). Pursuant to the
terms of the Merger Agreement, upon consummation of the Merger each outstanding
share of common stock, par value one cent ($.01) per share, of E.N.B. ("E.N.B.
Common Stock"), will convert into the right to receive the Merger consideration
of $4,830 per share of the E.N.B. Common Stock in the form of (i) cash, (ii)
Common Stock of the Company, or (iii) a combination of cash and Common Stock.
The Merger Agreement further provides that the aggregate Merger consideration
shall be 50% cash and 50% Common Stock of the Company. The Merger is expected to
close simultaneously with or immediately after consummation of the Conversion.
The Conversion and the Merger are separate, distinct transactions. The
Conversion, the Offering and the Merger are sometimes collectively referred to
herein as the "Reorganization." The Company, PBI, the MHC, the Bank, E.N.B. and
Ellenville are sometimes hereinafter collectively referred to as the
"Constituent Institutions."
The Company, in accordance with the Plan, is offering, in a
subscription offering by way of nontransferable subscription rights, the Shares
for a purchase price of $10.00 per share (the "Purchase Price") in a
Subscription Offering, Community Offering and, if necessary, a Syndicated
Community Offering (in each case, as defined below and all of which,
collectively, are referred to herein as the "Offering"). The aggregate number of
Shares to be issued in the Offering will be between 11,475,000 and 17,853,750
and will be based upon an independent appraisal of the estimated pro forma
market value of the Common Stock of the Company.
The Shares will be offered in descending order of priority to (i) the
Bank's Eligible Account Holders (defined as holders of deposit accounts totaling
$50 or more as of June 30, 2002); (ii) PBI's tax-qualified employee stock
benefit plans, including PBI's Employee Stock Ownership Plan (the "ESOP") and
401(k) Plan ("401(k) Plan") (for a total of up to 10% of the Shares issued in
the Offering); (iii) the Bank's Supplemental Eligible Account Holders (defined
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as holders of deposit accounts totaling $50 or more as of September 30, 2003);
and (iv) depositors with accounts at the Bank as of __________, and to borrowers
of the Bank as of January 7, 1999 whose borrowings remained outstanding as of
______________ (collectively, the "Subscription Offering"). Shares of Common
Stock not purchased in the Subscription Offering may be offered to PBI public
stockholders, depositors of Ellenville and the general public in a community
offering that is expected to be conducted during the Subscription Offering (the
"Community Offering"). In the Community Offering, preference will be given to
Rockland and Orange Counties PBI public stockholders as of ___________, 2002 and
to natural persons who reside in the New York counties of Rockland and Orange.
It is acknowledged that the Company reserves the right, in its absolute
discretion, to accept or reject, in whole or in part, any or all orders in the
Community Offering and the Syndicated Community Offering (as defined below). If
the Company does not receive orders for at least 11,475,000 shares in the
Subscription and Community Offerings, then, in the Company's discretion in order
to issue the minimum number of shares necessary to complete the Offering, up to
3,677,320 of the unsubscribed Shares may be applied to the acquisition by Merger
of E.N.B., and any such Shares ("E.N.B. Shares") so applied will be deemed
issued in the Community Offering.
Shares of Common Stock not purchased in the Subscription Offering or in
the Community Offering or applied as E.N.B. Shares may be sold through a
syndicated community offering managed by Selling Agent (the "Syndicated
Community Offering").
Except for the ESOP and 401(k) Plan, generally no person may purchase
in the Offering more than 40,000 Shares; the maximum number of shares that an
individual together with persons acting in concert may purchase in all
categories of the Offering combined is 80,000; provided that the Company may,
subject to OTS approval, in its sole discretion and without further notice to or
solicitation of subscribers or other prospective purchasers, increase or
decrease such maximum purchase limitations.
The following applications have been filed in connection with the
Reorganization: (i) an Application for Conversion on Form AC (the "Conversion
Application") has been filed with the OTS; (ii) a Combined Application
H-(e)1/H-(e)3 Holding Company Application (the "Holding Company Application")
has been filed with the OTS; (iii) a Bank Merger Act Application (the "BMA
Application") has been filed with the OTS; (iv); and all amendments to the
foregoing applications required to the date hereof have also been filed. The
Conversion Application, the Holding Company Application and the BMA Application
are referred to herein collectively as the "Reorganization Applications." The
Conversion Application includes, among other things, the Plan. The Company has
filed with the Securities and Exchange Commission (the "Commission") a
registration statement on Form S-1 (File No. 333-_____) (the "S-1 Registration
Statement") containing a prospectus relating to the Subscription Offering, the
Community Offering and the Syndicated Community Offering for the registration of
the Shares under the Securities Act of 1933, as amended (the "1933 Act"), and
has filed such amendments thereto and such amended prospectuses as may have been
required to the date hereof. The prospectus, as amended, on file with the
Commission at the time the S-1 Registration Statement becomes effective is
hereinafter called the "S-1 Prospectus," except that if the Prospectus filed by
the Company pursuant to Rule 424(b) of the rules and regulations, as amended, of
the Commission under the 1933 Act (the "1933 Act Regulations") differs from the
prospectus on file at the time the Registration Statement becomes effective, the
term "S-1 Prospectus" shall refer to the prospectus filed pursuant to Rule
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424(b) from and after the time such prospectus is filed with or mailed to the
Commission for filing.
The Company has also filed with the Commission a registration statement
on Form S-4 (File No. 333-______) (the "S-4 Registration Statement") containing
a proxy statement to be used to solicit proxies of the E.N.B. stockholders with
respect to the approval of the Reorganization. The Company has filed such
amendments to the S-4 Registration Statement and such amended prospectuses as
may have been required to the date hereof. The proxy statement/prospectus, as
amended, on file with the Commission at the time the S-4 Registration Statement
becomes effective is hereinafter called the "S-4 Prospectus," except that if the
S-4 Prospectus filed by the Company pursuant to Rule 424(b) of the rules and
regulations of the Commission under the 1933 Act Regulations differs from the
prospectus on file at the time the Registration Statement becomes effective, the
term "S-4 Prospectus" shall refer to the prospectus filed pursuant to Rule
424(b) from and after the time such prospectus is filed with or mailed to the
Commission for filing.
The S-1 Registration Statement and the S-4 Registration Statement are
collectively referred to herein as the "Registration Statement." The S-1
Prospectus and the S-4 Prospectus are collectively referred to herein as the
"Prospectus."
SECTION 1. Appointment of the Selling Agent; Compensation to the
Selling Agent. Subject to the terms and conditions set forth below, the Company
hereby appoints Xxxx Xxxx as its agent to consult with and advise the Provident
Parties, and to solicit subscriptions and purchase orders for Shares on behalf
of the Company, in connection with the Company's offering of Common Stock in the
Subscription and Community Offerings. On the basis of the representations,
warranties and agreements herein contained, and subject to the terms and
conditions herein set forth, Xxxx Xxxx accepts such appointment and agrees to
consult with and advise the Provident Parties as to the matters set forth in
Section 3 of the Engagement Letter between the Selling Agent, MHC and PBI dated
July 21, 2003 attached as Exhibit A hereto ("Engagement Letter"), and to use its
best efforts to solicit subscriptions and purchase orders for Shares in
accordance with this Agreement; provided, however, that the Selling Agent shall
not be responsible for obtaining subscriptions or purchase orders for any
specific number of Shares, shall not be required to purchase any Shares and
shall not be obligated to take any action which is inconsistent with any
applicable law, regulation, decision or order.
If requested by the Provident Parties, the Selling Agent may also
assemble and manage a selling group of broker-dealers that are members of the
National Association of Securities Dealers, Inc. ("NASD") to participate in the
solicitation on a "best efforts" basis of purchase orders for the Shares (the
"Assisting Brokers"). The Selling Agent will distribute the Shares among dealers
in the Syndicated Community Offering in a fashion which best meets the
distribution objectives of the Provident Parties and the Plan. The Selling Agent
will not commence the Syndicated Community Offering without the prior approval
of the Provident Parties.
In addition to the reimbursement of the expenses specified in Sections
6 and 7 hereof, the Selling Agent shall receive and the Provident Parties shall
pay (i) an advisory and management fee of $50,000 (the "Management Fee"), all of
which Management Fee has been paid in full on or before the date of this
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Agreement, and (ii) a fee of (x) one percent (1.0%) of the dollar amount of the
Shares sold in the Subscription Offering and Community Offering (the "Marketing
Fee"), excluding shares purchased by officers, directors, employees (and
immediate family thereof) (collectively, the "Insiders"), employee benefit plans
of PBI, the issuance of any Shares to any charitable foundation established by
the Company or the Bank, and any E.N.B. Shares issued in the Community Offering,
provided, however, that the Marketing Fee shall be paid to the Selling Agent
with respect to E.N.B. Shares issued in the Offering to the extent that such
Shares are issued in order to reach the minimum of 11,475,000 Shares necessary
to complete the Offering. For purposes of this Agreement, "immediate family"
includes an officer's, director's or employee's spouse, siblings, parents and
also children who live in the same house with the officer, director or employee.
With respect to Shares sold in the Syndicated Community Offering, the Provident
Parties shall pay the Selling Agent a Marketing Fee of one percent (1.00%) of
the dollar amount of the Shares sold in the Syndicated Community Offering, which
fee along with the fee payable directly by the Company to selected dealers
(which may include the Selling Agent) shall not exceed six percent (6.00%) in
the aggregate. The exact percentage shall be agreed to by the Provident Parties
and Selling Agent in writing prior to the commencement of the Syndicated
Community Offering. Of such fee, the Agent will retain one percent (1.00%) of
the aggregate dollar amount of the shares sold pursuant to this Section 1 as a
management fee, and will pass on to the Assisting Brokers, which may include the
Agent, the remainder of such fee relating to the Shares sold by such Assisting
Brokers pursuant to this Section 1.
If (i) the Plan is abandoned or terminated by the Company; (ii) the
Offering is not consummated by June 30, 2004; (iii) the Selling Agent terminates
this Agreement because there has been a material adverse change in the financial
condition or operations of PBI or the Bank since March 31, 2003; or (iv)
immediately prior to the commencement of the Offering, the Selling Agent
terminates this Agreement because, in its reasonable judgment, the Provident
Parties have failed to satisfactorily disclose all relevant information in the
Registration Statement, the Prospectus and the Reorganization Applications or
the Selling Agent determines that market conditions exist which might render the
sale of the Shares by the Company inadvisable, the Management Fee shall serve as
compensation for its advisory and administrative services as set forth in the
Engagement Letter, in addition to reimbursement of the Selling Agent's
reasonable out-of-pocket expenses as set forth in Section 6 hereof. If there is
a resolicitation of subscriptions for any reason, and the Selling Agent is
required to provide significant additional services or expend significant
additional time, the parties agree to negotiate in good faith an agreement to
cover the Selling Agent's additional fees and expenses in connection therewith,
including attorneys' fees and expenses.
The compensation specified above shall be payable (to the extent not
already paid) to the Selling Agent in next day clearinghouse funds on the
earlier of the Closing Date (as hereinafter defined), a determination by the
Company and the Bank to terminate or abandon the Plan, or the termination of
this Agreement by the Selling Agent or the Company and the Bank in accordance
with the preceding paragraph or otherwise. The Bank and the Company agree to
reimburse the Selling Agent from time to time for the reasonably costs and
expenses specified in Sections 6 and 7 hereof, promptly upon receiving a
reasonable accounting of such costs and expenses.
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SECTION 2. Closing Date; Release of Funds and Delivery of
Certificates. If all conditions precedent to the consummation of the Conversion
and the Offering are satisfied, the Company agrees to issue or have issued the
Shares sold in the Subscription and Community Offerings and to release for
delivery certificates evidencing such Shares on the Closing Date against payment
therefor by release of funds from the special, interest-bearing account referred
to in Section 5(o) hereof and by the authorized withdrawal of funds from deposit
accounts at the Bank in accordance with the Plan; provided, however, that no
such funds shall be released to the Company or withdrawn until the conditions
specified in Section 8 hereof shall have been complied with to the reasonable
satisfaction of the Selling Agent and its counsel. Such release, withdrawal and
payment shall be made on the Closing Date, on a business day and at a time and
place selected by the Selling Agent, which date and place shall be acceptable to
the Bank and the Company, on at least two (2) business days prior notice to the
Bank and the Company, or such other time or place as shall be agreed upon by the
Selling Agent, the Bank and the Company. Certificates evidencing the Shares sold
in the Subscription and Community Offerings shall be delivered directly to the
purchasers thereof or in accordance with their directions. The hour and date
upon which the Company shall release or deliver the Shares sold in the Offering
in accordance with the terms hereof is called the "Closing Date."
SECTION 3. Prospectus; Offering. The Shares are to be offered in the
Offering at $10.00 per share, as set forth on the cover page of the Prospectus.
There will be a maximum and minimum, and an adjusted maximum, number of Shares
offered. The number of Shares offered may be changed by the Company after
consultation with the Selling Agent, subject to the provisions of the Plan,
depending on market and financial conditions.
SECTION 4. Representations and Warranties; Certain Covenants.
-------------------------------------------------
4.1 Representations and Warranties of the Provident Parties. The
Provident Parties jointly and severally represent and warrant to and covenant
with the Selling Agent as follows. The representations and warranties regarding
E.N.B., Ellenville and their subsidiaries are based solely on the
representations and warranties made by E.N.B. and Ellenville to the Provident
Parties in the Merger Agreement.
a. The Registration Statement was declared effective by the
Commission on ___________, 2003. At the time the Registration Statement,
including the Prospectus contained therein, became effective, the Registration
Statement complied in all material respects with the requirements of the 1933
Act and the 1933 Act Regulations and the Registration Statement, any preliminary
or final Prospectus, any Securities Communication (as defined in Section 7
hereof) or any Sales Information (as defined in Section 7 hereof) authorized by
any Provident Party for use in connection with the Offering did not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and at the time any
Rule 424(b) Prospectus is filed with or mailed to the Commission for filing and
at the Closing Date referred to in Section 2, the Registration Statement, any
preliminary or final Prospectus, any Securities Communication or any Sales
Information authorized by any Provident Party for use in connection with the
Offering will not contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided,
however, that the representations and warranties in this Section 4.1(a) shall
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not apply to statements in or omissions from the Registration Statement, any
preliminary or final Prospectus, any Securities Communication or any Sales
Information made in reliance upon and in conformity with information furnished
in writing to the Provident Parties by the Selling Agent expressly regarding the
Selling Agent for use under the caption "Plan of Distribution; Selling Agent
Compensation" in the Prospectus, provided, however, that nothing has come to the
attention of the Provident Parties that would lead them to believe that the
information under such captions contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
b. The Company has filed with the OTS the Conversion Application,
including the Plan, the Registration Statement and the Prospectus, the Holding
Company Application and the BMA Application, each of which included exhibits and
supplemental material, and has filed an amendment or amendments thereto, as
required, and has published notice of such filings, as required, all of which
applications have been or prior to the Closing Date will be approved by the OTS;
and the Plan has been adopted by the Board of Directors of the MHC, and has been
or prior to the Closing Date will be approved by the Members of the MHC and the
stockholders of PBI in accordance with the Conversion Regulations.
c. At the Closing Date, (i) the Conversion and the Offering will
have been effected in the manner described in the Prospectus and in accordance
with the Plan, the Conversion Regulations and all other applicable laws,
regulations, decisions and orders, including in compliance with all terms,
conditions, requirements and provisions precedent to the Conversion and the
Offering imposed upon the Provident Parties by the Commission, the OTS, any
state regulatory or Blue Sky authority or any other regulatory authority, and
(ii) the Constituent Institutions will have completed the conditions precedent
to the Merger in accordance with the Merger Agreement, and all applicable laws,
regulations, decisions and orders, including all material terms, conditions,
requirements and provisions precedent to the Merger imposed upon the Constituent
Institutions by the OTS or any other regulatory authority, other than those
which the regulatory authority permits to be completed after the effective time
of the Merger ("Effective Time").
d. No order has been issued by the OTS or any state regulatory or
Blue Sky authority preventing or suspending the use of the Prospectus, and, to
the knowledge of the Provident Parties, no action by or before any such
governmental entity to revoke any approval, authorization or order of
effectiveness related to the Conversion or the Offering is pending or
threatened.
e. At the time of the approval of the Reorganization Applications
(including any amendment or supplement thereto) by the applicable regulatory
authorities and at all times subsequent thereto until the Closing Date, the
Reorganization Applications complied and will comply in all material respects
with the Reorganization Regulations. The Prospectus contained in the
Reorganization Applications (including any amendment or supplement thereto), at
the time of the approval of the Reorganization Applications by the OTS and at
all times subsequent thereto until the Closing Date and the Effective Time,
complied and will comply in all material respects with the Reorganization
Regulations.
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f. RP Financial, LC ("RP Financial"), which prepared the
Independent Valuation dated as of ___________, 2003 described in the Prospectus
("Independent Valuation"), is independent with respect to the Provident Parties
within the meaning of the Plan and the Conversion Regulations and is believed by
the Provident Parties to be experienced and expert in the valuation and the
appraisal of business entities, including savings institutions, and the
Provident Parties believe that RP Financial has prepared the pricing information
set forth in the Prospectus in accordance with the requirements of the
Conversion Regulations.
g. KPMG LLP ("KPMG"), the firm which certified the financial
statements of PBI filed as part of the Registration Statement, is, with respect
to the Provident Parties, an independent certified public accountant as required
by the 1933 Act and the 1933 Act Regulations and the Securities Exchange Act of
1934, as amended (the "1934 Act"), and the regulations thereunder.
h. The consolidated financial statements, together with the
related schedules and notes thereto, included in the Registration Statement and
which are part of the Prospectus present fairly the financial condition, results
of operations, changes in retained earnings and cash flows of each of (i) PBI
and its consolidated subsidiaries and (ii) E.N.B. and its consolidated
subsidiaries, at and for the dates indicated and the periods specified and
comply as to form in all material respects with the applicable accounting
requirements of the 1933 Act Regulations. Such financial statements have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis during the periods involved, present fairly in all material
respects the information required to be stated therein and are consistent with
financial statements and other reports filed by PBI and/or E.N.B. with their
applicable bank regulatory authorities except to the extent that accounting
principles employed in such filings conform to the requirements of such
authorities and not necessarily to generally accepted accounting principles. The
other financial, statistical and pro forma information and related notes thereto
included in the Prospectus present fairly the information shown therein on a
basis consistent with the audited financial statements of PBI and/or E.N.B.
included in the Registration Statement and which are part of the Prospectus, and
as to the pro forma adjustments, such adjustments have been properly applied on
the basis described therein.
i. Since the respective dates as of which information is given in
the Registration Statement and Prospectus, except as may otherwise be stated
therein, or as to E.N.B. or Ellenville, as set forth in the S-4 Prospectus: (i)
there has not been any material adverse change in the financial condition, net
income, capital, properties, affairs or prospects of the Provident Parties,
E.N.B., Ellenville, or their respective subsidiaries (the "combined
institution"), taken as a whole, whether or not arising in the ordinary course
of business, (ii) there has not been any material increase in the long-term debt
of the combined institution taken as a whole, nor have the Provident Parties,
E.N.B., Ellenville or their respective subsidiaries issued any securities or
incurred any liability or obligations for borrowing other than in the ordinary
course of business, (iii) there have not been any material transactions entered
into by the Provident Parties, E.N.B., Ellenville or their respective
subsidiaries, except those transactions entered into in the ordinary course of
business and those specifically described in or contemplated by the Prospectus,
including the execution of loan documents pertaining to the ESOP and the 401(k)
Plan, and (iv) the capitalization, liabilities, assets, properties and business
of the Provident Parties, E.N.B., Ellenville and their respective subsidiaries
conform in all material respects to the descriptions thereof contained in the
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Prospectus. The Provident Parties, E.N.B., Ellenville and their respective
subsidiaries have no material liability of any kind, contingent or otherwise,
except as reflected in the financial statements filed as part of the
Registration Statement or otherwise set forth in the Prospectus, or as to E.N.B.
or Ellenville, as set forth in the S-4 Prospectus.
j. The Company is a Delaware corporation, duly organized and
validly existing and in good standing under the laws of the State of Delaware
with the corporate power and authority to conduct the business and own the
property of PBI as described in the Registration Statement and Prospectus under
Delaware law. PBI is a federal corporation, duly organized and validly existing
and in good standing under the laws of the United States with the corporate
power and authority to conduct the business and own the property of PBI as
described in the Registration Statement and Prospectus under Delaware law. The
Company is a duly registered savings and loan holding company under the Home
Owners' Loan Act ("HOLA").
k. The Bank is a federally chartered savings bank organized,
validly existing and in good standing under the laws of the United States with
the corporate power and authority to conduct its business and own its property
as described in the Registration Statement and Prospectus under the HOLA and the
regulations thereunder.
l. The MHC is a federally chartered mutual holding company, duly
organized and validly existing and in good standing under the laws of the United
States with the corporate power and authority to conduct its business and own
its property as described in the Registration Statement and the Prospectus.
m. Provident Municipal Bank is a wholly-owned subsidiary of the
Bank and is a commercial bank organized, validly existing and in good standing
under the laws of the State of New York.
n. E.N.B. is a New York corporation, duly organized and validly
existing and in good standing under the laws of the State of New York with the
corporate power and authority to conduct its business and own its property as
described in the Registration Statement and Prospectus. E.N.B. is duly
registered with the Board of Governors of the Federal Reserve System (the "FRB")
as a bank holding company under the Bank Holding Company Act of 1956, as
amended. Ellenville is a national association, duly organized and validly
existing under the laws of the United States with the corporate power and
authority to conduct its business and own its property as described in the
Registration Statement and Prospectus.
o. The Provident Parties, E.N.B., Ellenville and their respective
subsidiaries have obtained all material licenses, permits and other governmental
authorizations currently required for the conduct of their respective businesses
(including, in the case of the Company, for the conduct of the business of PBI
following the Conversion); all such licenses, permits and governmental
authorizations are in full force and effect; the Provident Parties, E.N.B.,
Ellenville and their respective subsidiaries are complying with all laws, rules,
regulations and orders applicable to the operation of their respective
businesses, except where noncompliance would not result in a material adverse
effect on the business, financial condition, results of operations, affairs or
prospects of the combined institution taken as a whole; and none of the
Provident Parties, E.N.B., Ellenville or their respective subsidiaries has
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received notice of any proceeding or action relating to the revocation or
modification of any such license, permit or governmental authorization which,
singly or in the aggregate, if subject to an unfavorable decision, ruling or
finding, might materially and adversely affect the conduct of the business, the
financial condition the results of operations, affairs or prospects of the
combined institution taken as a whole.
p. The certificate of incorporation, charter or similar
instruments of the Provident Parties, E.N.B. and Ellenville are in full force
and effect; no conservator or receiver has been appointed for any of the
Provident Parties, E.N.B., or Ellenville; and the Bank and Ellenville are each
operating as an insured depository institution. Each of the Provident Parties,
E.N.B., and Ellenville is duly qualified to transact business and is in good
standing in each jurisdiction in which its ownership or leasing of property or
the conduct of its business (currently and as contemplated following the
Reorganization) requires such qualification unless the failure to be so
qualified in one or more of such jurisdictions would not have a material adverse
effect on the business, financial condition, results of operations, affairs or
prospects of the combined institution taken as a whole.
q. Upon consummation of the Reorganization, all of the
outstanding capital stock of the Bank will be duly authorized and validly issued
and fully paid and nonassessable; and all such stock will be owned directly by
the Company, free and clear of all liens, encumbrances, claims or other
restrictions. Each of the Provident Parties, E.N.B., and Ellenville does not own
equity securities or any equity interest in any other business enterprise except
as described in the Prospectus; each of their respective subsidiaries has been
duly organized and is validly existing and in good standing under the laws of
its jurisdiction of organization with the authority to conduct its business and
own its property as described in the Registration Statement and the Prospectus;
all of the outstanding stock of each such subsidiary has been duly authorized
and validly issued and is fully paid and nonassessable; all such stock is owned
directly by PBI, the Bank, E.N.B. or Ellenville, as the case may be, free and
clear of all liens, encumbrances, claims or other restrictions; and each such
subsidiary is duly qualified to transact business and is in good standing in
each jurisdiction in which its ownership or leasing of property or the conduct
of its business requires such qualification, unless the failure to be so
qualified would not have a material adverse effect on the business, the
financial condition, the results of operations, affairs or prospects of the
combined institution taken as a whole. The activities of the Company's
subsidiaries are permitted to subsidiaries of federally chartered savings banks
(with respect to the Bank's subsidiaries) and to subsidiaries of savings and
loan holding companies (with respect to subsidiaries of MHC and PBI), and the
activities of E.N.B.'s subsidiaries are permitted to subsidiaries of national
banks (with respect to Ellenville's subsidiaries) and to subsidiaries of bank
holding companies (with respect to E.N.B.'s subsidiaries), in each case by the
rules and regulations of the OTS (in the case of the Bank's subsidiaries), the
FRB and the OCC (in the case of E.N.B. subsidiaries), and any other state or
federal authority having jurisdiction over such matters.
r. The deposit accounts of the Bank, Provident Municipal Bank and
Ellenville are, and following the Closing Date of the Reorganization the deposit
accounts of the Bank will be, insured by the Federal Deposit Insurance
Corporation (the "FDIC"), up to the maximum amounts allowed by law. Upon
consummation of the Conversion, the liquidation account for the benefit of
Eligible Account Holders and Supplemental Eligible Account Holders ("Liquidation
10
Account") will be duly established by the Bank in accordance with the
requirements of the Conversion Regulations.
s. Upon consummation of the Reorganization, the authorized equity
capital of the Company will consist of 75,000,000 shares of Common Stock and
10,000,000 shares of preferred stock, and the issued and outstanding equity
capital of the Company will be consistent with that set forth in the Prospectus
under the caption "Capitalization"; no shares of Common Stock, or securities
exercisable into or exchangeable for Common Stock, will have been issued prior
to the Closing Date; the Shares will have been duly and validly authorized for
issuance and, when issued and delivered by the Company pursuant to the Plan,
will be duly and validly issued and fully paid and nonassessable, the issuance
of the Shares is not subject to any preemptive rights; and the terms and
provisions of the Common Stock will conform in all material respects to the
description thereof contained in the Prospectus. Upon the issuance of the
Shares, good title to the Shares will be transferred from the Company to the
purchasers thereof against payment therefor, subject to such claims as may be
asserted against the purchasers thereof by third-party claimants.
t. As of the date hereof and as of the Closing Date, none of the
Provident Parties, E.N.B., Ellenville, or any of their respective subsidiaries
is or will be in violation of its charter or bylaws or in default in the
performance or observance of any material obligation, agreement, covenant or
condition contained in any material contract, lease, loan agreement, indenture
or other instrument to which it is a party or by which it or any of its property
may be bound; the consummation of the Reorganization, the execution, delivery
and performance of this Agreement and the consummation of the transactions
herein contemplated have been duly and validly authorized by all necessary
corporate action on the part of the Provident Parties, and this Agreement has
been validly executed and delivered by the Provident Parties and is the valid,
legal and binding obligation of the Provident Parties, enforceable in accordance
with its terms, except to the extent that rights to indemnity hereunder may be
limited under applicable law and subject to bankruptcy, insolvency,
reorganization or other laws related to or affecting the enforcement of
creditors' rights generally and equitable principles limiting the right to
obtain specific enforcement or similar equitable relief. The execution and
delivery of this Agreement, the fulfillment of the terms herein set forth and
the consummation of the transactions herein contemplated will not (i) 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, the charter or bylaws
of the Provident Parties, E.N.B., Ellenville, or any of their respective
subsidiaries, or any material contract, lease or other instrument to which the
Provident Parties, or any of their respective subsidiaries is a party or in
which the Provident Parties, or any of their respective subsidiaries has a
beneficial interest, or any applicable law, rule, regulation or order; (ii)
violate any authorization, approval, judgment, decree, order, statute, rule or
regulation applicable to the Provident Parties, or any of their respective
subsidiaries; or (iii) result in the creation of any lien, charge, encumbrance
or other restriction upon any property of the Provident Parties, or any of their
respective subsidiaries.
u. The Provident Parties have all such 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 the Company
has all such power, authority, authorizations and orders as may be required to
issue and sell the Shares as provided in the Plan and described in the
11
Prospectus, subject to the approval of the applicable regulatory authorities and
the satisfaction of any conditions of such approval.
v. The Provident Parties, E.N.B., Ellenville, and their
respective subsidiaries have good and marketable title to all properties and
assets which are material to the business of the combined institution taken as a
whole, including those properties and assets described in the Prospectus as
owned by them, free and clear of all liens, except such liens as are described
in the Prospectus or are not material in relation to the business of the
combined institution and its subsidiaries on a consolidated basis; and all
leases and subleases which are material to the business of the combined
institution taken as a whole under which the Provident Parties, E.N.B.,
Ellenville, or any of their respective subsidiaries holds properties, including
those leases and subleases described in the Prospectus, are in full force and
effect.
w. As of the date hereof and as of the Closing Date and the
effective date of the Registration Statement, the Provident Parties, E.N.B., and
Ellenville, are not and will not be in violation of any directive from the
Commission, the OTS, the OCC, the FDIC, or any other agency to make any material
change in the method of conducting their respective businesses so as to comply
in all material respects with all applicable statutes and regulations
(including, without limitation, regulations, decisions, directives and orders of
such governmental agencies), and no suit or proceeding, charge, investigation or
action before or by any court, regulatory authority or governmental agency or
body is or will be pending or, to the knowledge of the Provident Parties,
threatened, which might materially and adversely affect the Conversion or the
Merger, the performance of this Agreement or the consummation of the
transactions contemplated in the Plan and as described in the Prospectus, or
which might result in any material adverse effect on the business, financial
condition, results of operations, affairs or prospects of the combined
institution taken as a whole, or which would materially affect its respective
properties and assets.
x. The Provident Parties have received an opinion of their
counsel, Xxxx Xxxxxx Xxxxxxxx & Xxxxxx, P.C., Washington, D.C. ("Xxxx Xxxxxx"),
with respect to the federal income tax consequences of the Reorganization, and
an opinion of KPMG with respect to the New York state income tax consequences of
the Reorganization; the federal tax opinion of Xxxx Xxxxxx is accurately
summarized in the Conversion Application and the Prospectus. The facts and
representations upon which such opinions are based are truthful, accurate and
complete, and no Provident Party will take any action inconsistent therewith.
y. No default exists, and no event has occurred which, with
notice or lapse of time or both, would constitute a default, on the part of any
Provident Party or any subsidiary thereof in the due performance and observance
of any term, covenant or condition of any indenture, mortgage, deed of trust,
note, bank loan or credit agreement or any other instrument or agreement to
which any Provident Party or any subsidiary thereof is a party or by which any
of them or any of their respective property is bound or affected which, in any
such case, is material to the Provident Parties and their subsidiaries taken as
a whole; such agreements are in full force and effect and no other party to any
such agreement has instituted or, to the knowledge of the Provident Parties,
threatened any action or proceeding wherein the Provident Parties or any
subsidiary thereof would or might be alleged to be in default thereunder. No
default exists, and no event has occurred which with notice or lapse of time, or
both, would constitute a default, on the part of E.N.B., Ellenville or any
12
subsidiary thereof in the due performance and observance of any term, covenant
or condition of any indenture, mortgage, deed of trust, note, bank loan or
credit agreement or any other instrument or agreement to which E.N.B.,
Ellenville or any subsidiary thereof is a party or by which any of them or any
of their respective property is bound or affected which, in any such case, is
material to E.N.B., Ellenville and their subsidiaries taken as a whole; such
agreements are in full force and effect and no other party to any such agreement
has instituted or, to the knowledge of the Provident Parties (based on inquiries
of officers of E.N.B. and Ellenville), threatened any action or proceeding
wherein E.N.B., Ellenville or any subsidiary thereof would or might be alleged
to be in default thereunder.
z. Subsequent to the date the Registration Statement is declared
effective by the Commission and prior to the Closing Date, except as otherwise
may be indicated or contemplated in the Registration Statement, none of the
Provident Parties or any of its subsidiaries has or will have issued any
securities or incurred any liability or obligation, direct or contingent, for
borrowed money, except borrowings from the same or similar sources indicated in
the Prospectus in the ordinary course of its business. Subsequent to the date
the Registration Statement is declared effective by the Commission and prior to
the Closing Date, except as otherwise may be indicated or contemplated therein,
none of E.N.B., Ellenville or any of their subsidiaries has or will have issued
any securities or incurred any liability or obligation, direct or contingent,
for borrowed money, except borrowings from the same or similar sources indicated
in the Prospectus in the ordinary course of its business. For purposes of this
Section 4.1(z), obligations for borrowed money do not include deposits. In
addition, except as contemplated in the Merger Agreement, the Provident Parties
will not enter into, nor will the Provident Parties consent to E.N.B.'s or
Ellenville's entering into, any transaction which is material in light of the
business and properties of the Provident Parties taken as a whole or E.N.B. and
Ellenville taken as a whole, as the case may be, without giving prior notice of
such transaction to the Selling Agent. In such event, the Company's obligations
under Section 5(f) shall apply.
aa. The Provident Parties, E.N.B., Ellenville and their respective
subsidiaries have filed all federal, state and local tax returns required to be
filed and have made timely payment of all taxes due and payable in respect of
such returns and no deficiency has been asserted with respect thereto by any
taxing authority.
bb. Except as disclosed in the Prospectus with respect to the ESOP
and 401(K) Plan, none of the Provident Parties, E.N.B., Ellenville or any of
their respective subsidiaries has made any payment of funds of the Provident
Parties, E.N.B., Ellenville or any of their respective subsidiaries as a loan
for the purchase of the Shares 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.
cc. Prior to the Conversion, (x) the Bank had authorized capital
stock consisting of ______ shares of common stock, _____ of which were
outstanding, and _____ shares of preferred stock, ____ of which were
outstanding, (y) PBI had authorized capital stock consisting of 20,000,000
shares of common stock, [3,537,075] of which were publicly held and 4,416,000 of
which were held by the MHC, and 10,000,000 shares of preferred stock, none of
which were outstanding and (z) the MHC was not authorized to issue capital
stock. None of the Provident Parties has: (i) other than as described in the
Prospectus issued any securities within the last 18 months (except for notes to
13
evidence other bank loans and reverse repurchase agreements); (ii) had any
material dealings within the 12 months prior to the date hereof with any member
of the NASD, or any person related to or associated with such member, other than
discussions and meetings relating to the Offering and the Merger and routine
purchases and sales of securities for or from its portfolio; (iii) entered into
a financial or management consulting agreement relating to the sale of stock,
except as contemplated hereunder and in connection with the Merger; or (iv)
engaged any intermediary between the Selling Agent and any Provident Party in
connection with any offering of shares of its capital stock, and no person is
being compensated in any manner for such service.
dd. Neither the Provident Parties, E.N.B., or Ellenville is
required to be registered under the Investment Company Act of 1940, as amended.
ee. To the knowledge of the Provident Parties, no filings are
required, and no other actions are necessary to qualify or register the Shares
for offer and sale in the Conversion and the Merger, under the securities or
Blue Sky laws of any jurisdictions wherein such Shares will be offered.
ff. All Sales Information used by the Company in connection with
the Offering that is required by the Conversion Regulations to be filed has been
filed with and approved by the applicable regulatory authority.
gg. Except for information provided in writing to the Provident
Parties by the Selling Agent related to the Selling Agent for use in the
Prospectus and appearing under the heading "Plan of Distribution; Selling Agent
Compensation" and "Syndicated Community Offering," the Company and the Bank have
not relied upon the Selling Agent or its legal or other advisors for any legal,
tax or accounting advice in connection with the Conversion.
hh. To the knowledge of the Provident Parties, each of the
Provident Parties, E.N.B., Ellenville and their respective subsidiaries is in
compliance with all laws, rules and regulations relating to environmental
protection, except where such failure would not have a material adverse effect
on the business, financial condition, results of operations, affairs or
prospects of the combined institution taken as a whole, and none of the
Provident Parties, E.N.B., Ellenville or any of their respective subsidiaries
has been notified or is otherwise aware that any of them is potentially liable,
or is considered potentially liable, under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, or any similar
state laws. No actions, suits, regulatory investigations or other proceedings
are pending, or, to the knowledge of the Provident Parties, threatened against
any Provident Party, E.N.B., Ellenville or any of their respective subsidiaries
relating to environmental protection, nor does any Provident Party have any
reason to believe any such proceedings may be brought against any of such
entities. To the knowledge of the Provident Parties, 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 occurred on, in, at or about any of the
facilities or properties owned, operated or leased by, or pledged to, any
Provident Party, E.N.B., Ellenville or any of their respective subsidiaries,
except such disposal, release or discharge which would not have a material
adverse effect on the business, financial condition, results of operations,
affairs or prospects of the combined institution taken as a whole. The Provident
14
Parties' "knowledge" with respect to E.N.B. and Ellenville in this subsection
(hh) is based on inquiries of officers of E.N.B. and Ellenville.
ii. No labor dispute with the employees of any Provident Party,
E.N.B., Ellenville or any of their respective subsidiaries exists or, to the
knowledge of the Provident Parties, is imminent.
jj. All of the loans represented as assets on the most recent
financial statements or selected financial information of PBI and E.N.B.
included in the Prospectus meet or are exempt from all requirements of federal,
state and local law pertaining to lending, including, without limitation, truth
in lending (including the requirements of Regulation Z and 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 result in a material adverse effect on
the business, financial condition, results of operations, affairs or prospects
of the combined institution taken as a whole.
kk. Any certificate signed by an officer of any Provident Party
and delivered to the Selling Agent or their counsel that refers to this
Agreement shall be deemed to be a representation and warranty by such Provident
Party to the Selling Agent as to the matters covered thereby with the same
effect as if such representation and warranty were set forth herein.
ll. The Provident Parties have taken all actions necessary to
obtain on the Closing Date a Blue Sky Memorandum from Xxxx Xxxxxx which
authorizes sales in each of the states of the United States and the District of
Columbia.
4.2 Representations and Warranties of the Selling Agent. The Selling
Agent represents and warrants to the Provident Parties as follows:
a. The Selling Agent is registered as a broker-dealer with the
Commission and is a member of the NASD.
b. The Selling Agent is validly existing and in good standing as
a corporation under the laws of the State of New Jersey with the corporate power
and authority to provide the services to be furnished to the Provident Parties
hereunder.
c. The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated have been duly and validly
authorized by all necessary corporate action on the part of the Selling Agent,
and this Agreement is a legal, valid and binding obligation of the Selling
Agent, enforceable in accordance with its terms, except to the extent that
rights to indemnity hereunder may be limited under applicable law and subject to
bankruptcy, insolvency, reorganization or other laws related to or affecting the
enforcement of creditors' rights generally and equitable principles limiting the
right to obtain specific enforcement or similar equitable relief.
d. The Selling Agent and, to the Selling Agent's knowledge, its
employees, agents and representatives who shall perform any of the services
required hereunder to be performed by the Selling Agent shall be duly authorized
and shall have all licenses, approvals and permits necessary to perform such
services, and Selling Agent is a registered selling agent in the jurisdictions
15
of each of the States of the United States except the jurisdiction(s) listed in
Exhibit B hereto and will remain registered in such jurisdictions in which the
Company is relying on such registration for the sale of the Shares, until the
Conversion is consummated or terminated.
e. The execution and delivery of this Agreement by the Selling
Agent, the fulfillment of the terms set forth herein and the consummation of the
transactions herein contemplated shall not violate or conflict with the
corporate charter or bylaws of the Selling Agent 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 the Selling Agent is bound or under any
governmental license or permit or any law, administrative regulation,
authorization, approval or order or court decree, injunction or order applicable
to it.
f. Any funds received by the Selling Agent to purchase Shares in
the Syndicated Community Offering will be handled in accordance with Rule 15c2-4
under the 1934 Act, to the extent applicable.
SECTION 5. Additional Covenants of the Provident Parties.
The Provident Parties hereby jointly and severally covenant with the Selling
Agent as follows:
a. The Provident Parties will not file any amendment or
supplement to the Registration Statement or any Reorganization Application
without written notice to the Selling Agent of its intention to do so and
providing the Selling Agent and its counsel an opportunity to review such
amendment or supplement, nor will any Provident Party file any such amendment or
supplement to which the Selling Agent or its counsel shall reasonably object.
b. The Provident Parties will use their best efforts to cause
each Reorganization Application not heretofore approved to be approved by the
applicable regulatory authority and will promptly upon receipt of any
information concerning the events listed below notify the Selling Agent and its
counsel in writing: (i) of the approval of any Reorganization Application not
heretofore approved; (ii) of the receipt of any comments from the OTS or any
other governmental entity with respect to the Conversion, the Merger or the
transactions contemplated by this Agreement; (iii) of the receipt of any
comments from the Commission to the Registration Statement or the Prospectus,
(iv) of the request by the OTS or any other governmental entity for any
amendment or supplement to the Registration Statement, the Prospectus or any
Reorganization Application or for additional information; (v) of the issuance by
the Commission, the OTS or any other governmental entity of any order or other
action suspending the Conversion or the Merger or the use of the Registration
Statement or the Prospectus or any other filing of the Company and the Bank
under the Reorganization Regulations, the 1933 Act, 1933 Act Regulations or
other applicable law, or the threat of any such action; (vi) of the issuance by
the Commission, the OTS or any other state governmental authority of any stop
order suspending the effectiveness of the Registration Statement or any
Reorganization Application or of the initiation or threat of any proceedings for
such purpose; or (vii) of the occurrence of any event mentioned in paragraph (f)
below. The Provident Parties will make every reasonable effort to prevent the
issuance by the Commission, the OTS or any other governmental authority of any
such order and, if any such order shall at any time be issued, to obtain the
16
lifting thereof at the earliest possible time. The Provident Parties will
provide copies of the foregoing comments, requests and orders to the Selling
Agent upon receipt of such items.
c. The Provident Parties will promptly deliver to the Selling
Agent and to its counsel two conformed copies of each of the following
documents, with all exhibits: each Reorganization Application as originally
filed and each amendment or supplement thereto and the Registration Statement as
originally filed and each amendment thereto. In addition, the Provident Parties
will also promptly deliver to the Selling Agent such number of copies of the
closing documents with respect to the Conversion and the Offering as the Selling
Agent may reasonably request.
d. The Provident Parties will furnish to the Selling Agent, from
time to time during the period when the S-1 Prospectus is required to be
delivered under federal or state securities laws or regulations or the
applicable rules and regulations of any other governmental entity, such number
of copies of the S-1 Prospectus (as amended or supplemented) as the Selling
Agent may reasonably request for the purposes contemplated by such federal or
state securities laws or regulations or the applicable rules and regulations of
any other governmental entity. The Company authorizes the Selling Agent to use
the S-1 Prospectus (as amended or supplemented) for any lawful manner in
connection with the sale of the Shares.
e. The Provident Parties will comply with any and all terms,
conditions, requirements and provisions with respect to the Reorganization and
the transactions contemplated thereby imposed by the Commission, the OTS, any
state regulatory or Blue Sky authority or any other governmental entity,
including the terms, conditions, requirements and provisions contained in the
Reorganization Regulations, the 1933 Act, the 1933 Act Regulations, the 1934 Act
and the rules and regulations, as amended, of the Commission promulgated under
the 1934 Act (the "1934 Act Regulations").
f. If, at any time during the period when the Prospectus is
required to be delivered, any event relating to or affecting any Provident Party
shall occur, as a result of which it is necessary or appropriate, in the opinion
of counsel for the Provident Parties, to amend or supplement the Registration
Statement or the Prospectus in order to make the Registration Statement or
Prospectus not misleading in light of the circumstances existing at the time it
is delivered to a purchaser, the Provident Parties will, at their expense,
forthwith prepare, file with the Commission and furnish to the Selling Agent a
reasonable number of copies of an amendment or amendments of, or a supplement or
supplements to, the Registration Statement or Prospectus (in form and substance
reasonably satisfactory to the Selling Agent and its counsel after a reasonable
time for review) which will amend or supplement the Registration Statement or
Prospectus so that as amended or supplemented it will not contain an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances existing at the
time the Prospectus is delivered to a purchaser, not misleading.
g. The Company will not sell or issue, contract to sell or
otherwise dispose of, for a period of 180 days after the Closing Date, without
the prior written consent of the Selling Agent, any shares of, or any securities
17
convertible into or exercisable for shares of, Common Stock other than in
connection with the Merger or any other plan or arrangement described in the
Prospectus.
h. During the period in which the Company's Common Stock is
registered under the 1934 Act, the Company will furnish to its stockholders as
soon as practicable after the end of each fiscal year an annual report
(including a consolidated balance sheet and consolidated statements of income,
stockholders' equity and cash flows of the Company and its subsidiaries as at
the end of and for such year, certified by independent public accountants in
accordance with the 1934 Act and Regulation S-X under the 0000 Xxx) and make
available as soon as practicable after the end of each of the first three
quarters of each fiscal year (beginning with the first fiscal quarter ending
after the Closing Date) financial information of the Company and its
subsidiaries for such quarter in reasonable detail.
i. During the period of three years from the date hereof, the
Company will furnish to the Selling Agent: (i) promptly after it becomes
available, a copy of each report of the Company furnished generally to
stockholders of the Company or furnished to or filed with the Commission under
the 1934 Act or any national securities exchange or system on which any class of
securities of the Company is listed or quoted (including, but not limited to,
reports on Forms 10-K, 10-Q and 8-K and all proxy statements and annual reports
to stockholders), a copy of each other report of the Company mailed to its
stockholders or filed with the Commission or any other supervisory or regulatory
authority or any national securities exchange or system on which any class of
securities of the Company is listed or quoted and each press release and
material news item and article released by the Company or its subsidiaries, and
(ii) from time to time, such other public information concerning the Company and
its subsidiaries as the Selling Agent may reasonably request.
j. The Company and the Bank will use the net proceeds from the
sale of the Shares substantially in the manner set forth in the Prospectus under
the caption "How We Intend To Use the Proceeds From the Offering."
k. Other than as permitted by the Reorganization Regulations, the
HOLA, the 1933 Act, the 1933 Act Regulations and the laws of any jurisdiction in
which the Shares are qualified for sale, neither the Company nor the Bank will
distribute any Prospectus or other Sales Information in connection with the
offer and sale of the Shares.
l. 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 such Rule 158) of the
Registration Statement.
m. The Company will register the Common Stock under Section 12(g)
of the 1934 Act effective on or prior to the Closing Date.
18
n. The Company will use its best efforts to obtain approval for,
effective on or prior to the Closing Date, and maintain quotation of the Common
Stock on the Nasdaq National Market System.
o. The Provident Parties will maintain appropriate arrangements
for depositing all funds received from persons delivering orders to purchase
Shares in the Subscription and Community Offerings on an interest-bearing basis
at the rate described in the Prospectus until the Closing Date or until the
Offering is terminated in accordance with the Plan and as described in the
Prospectus. The Provident Parties will maintain such records of all funds
received to permit the funds of each subscriber to be separately insured by the
FDIC and to enable the Company to make appropriate refunds of such funds in the
event that such refunds are required to be made in accordance with the Plan and
as described in the Prospectus.
p. The Provident Parties will take such actions and furnish such
information as are reasonably requested by the Selling Agent in order for the
Selling Agent to ensure compliance with Article III, Section 1, of the NASD's
Rules of Fair Practice and the NASD's "Free-Riding and Withholding
Interpretation."
q. The Provident Parties will conduct their respective businesses
in compliance in all material respects with all applicable federal and state
laws, rules, regulations, decisions, directives and orders including, all
decisions, directives and orders of the OTS.
r. The Provident Parties will not amend the Plan without the
Selling Agent's prior written consent, which consent shall not be unreasonably
withheld, in any manner that, in the opinion of the Selling Agent, would affect
the sale of the Shares or the terms of this Agreement.
s. The Provident Parties will use all reasonable efforts to
comply with, or cause to be complied with, the conditions precedent to the
several obligations of the Selling Agent specified in Section 8 hereof.
t. Prior to the Closing Date, the Provident Parties shall have
received approval of each Reorganization Application required to consummate the
Merger, and all applicable waiting periods shall have expired.
SECTION 6. Payment of Expenses. Whether or not the Conversion is
completed or the sale of the Shares by the Company is consummated, the Provident
Parties jointly and severally agree to pay all expenses incident to the
performance of the obligations of any Provident Party under this Agreement,
including the following: (i) the preparation, printing, issuance and delivery of
the certificates evidencing the Shares sold to the purchasers in the Offering
and the printing and delivery of all other documents applicable to the
Conversion and the Merger; (ii) the fees and disbursements of the Provident
Parties' counsel, accountants and other advisors; (iii) the qualification or
exemption from qualification of the Shares under all applicable securities or
Blue Sky laws, including filing fees and the reasonable fees and disbursements
of counsel in connection therewith and in connection with the preparation of a
Blue Sky Survey concerning such jurisdictions as the Selling Agent may
reasonably designate; (iv) the printing and mailing costs of the Offering,
including the delivery to the Selling Agent in such quantities as the Selling
19
Agent shall reasonably request of copies of the Registration Statement, the
Prospectus and the Reorganization Applications as originally filed and as
amended or supplemented and all other documents in connection with the
Conversion and this Agreement; (v) the filing fees incurred in connection with
the review of the Registration Statement, the Reorganization Applications and
any other application, form or filing by the Commission and the OTS; (vi) the
filing fees and the fees and disbursements of counsel to the Selling Agent
incurred in connection with the review of the Offering by the NASD; (vii) the
fees for listing the Shares on the Nasdaq National Market System; (viii) the
fees and expenses relating to the Independent Valuation; (ix) the fees and
expenses relating to proxy solicitation, advertising expenses, temporary
personnel expenses, expenses related to the Stock Information Center to be
established, investor meeting expenses and other miscellaneous expenses relating
to the marketing of the Shares; and (x) the fees and charges of any transfer
agent, registrar or other agent. In the event that the Selling Agent incurs any
such expenses on behalf of the Provident Parties, the Provident Parties will pay
or reimburse the Selling Agent for such expenses regardless of whether the
Conversion is successfully completed, and such reimbursements will not be
included in the expense limitations set forth in the following paragraph. The
Selling Agent will not incur any single expense of more than $2,000 (other than
set forth in subsection (vi)) pursuant to this paragraph without the prior
approval of the Company or the Bank.
In addition, the Provident Parties will reimburse the Selling Agent for
all reasonable out-of- pocket expenses, including legal fees and expenses,
incurred by the Selling Agent in connection with the services provided by the
Selling Agent to the Provident Parties pursuant to this Agreement. Such legal
fees shall not exceed $60,000 (excluding legal out-of-pocket expenses) and such
other out-of-pocket expenses incurred by the Selling Agent shall not exceed
$15,000 without the approval of the Provident Parties. The Selling Agent's legal
fees and expenses shall be paid monthly as incurred. Not later than two days
prior to the Closing Date, the Selling Agent will provide a detailed accounting
of all of the out-of-pocket expenses referred to in this paragraph, and any
remaining expenses will be paid by the Company and/or the Bank on the Closing
Date. The parties hereto acknowledge that the expense limitations set forth in
this paragraph may be exceeded in the event of a material delay in the Offering
that requires an update of financial information contained in the Registration
Statement for a period later than June 30, 2003.
SECTION 7. Indemnification and Contribution.
--------------------------------
a. The Provident Parties agree to indemnify and hold harmless the
Selling Agent, its officers, directors, employees and agents and each person, if
any, who controls the Selling Agent within the meaning of Section 15 of the 1933
Act or Section 20(a) of the 1934 Act, against any loss, liability, claim,
damage, and expense whatsoever (which shall include, but not be limited to
amounts incurred in investigating, preparing, or defending against any
litigation, commenced or threatened, or any claim or investigation whatsoever
and any and all amounts paid in settlement of any claim or litigation), as and
when incurred, arising out of, based upon, or in connection with (i) any untrue
statement or alleged untrue statement of a material fact or any omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, contained in (A) any
preliminary prospectus, the Registration Statement, or the Prospectus (as from
time to time amended and supplemented), or any amendment or supplement thereto
or in any document incorporated by reference therein or required to be delivered
20
with any preliminary prospectus or the Prospectus or (B) in any application or
other document or communication filed with the Commission or any securities
exchange ("Securities Communication") or (C) in any application or other
document, advertisement or communication prepared, made or executed by or on
behalf of any Provident Party or based upon written information or statements
furnished or made by any Provident Party or its representatives (including
counsel) whether or not filed in any jurisdiction in order to register or
qualify any or all of the Shares under the securities law thereof (the "Sales
Information"); unless such statement or omission was made in reliance upon and
in conformity with written information concerning the Selling Agent or the
compensation of the Selling Agent furnished to the Company by or on behalf of
the Selling Agent expressly for inclusion in any preliminary prospectus, the
Registration Statement, or the Prospectus, or any amendment or supplement
thereto, or in any Securities Communication or Sales Information, as the case
may be, or (ii) any breach of any representation, warranty, covenant, or
agreement of the Provident Parties contained in this Agreement. For purposes of
this section, the term "expense" shall include, but not be limited to, counsel
fees and costs, court costs, out-of-pocket costs and compensation for the time
spent by the Selling Agent's directors, officers and employees according to his
or her normal hourly billing rates. The indemnification provisions shall also
extend to all affiliates of the Selling Agent, their respective directors,
officers, employees, legal counsel, agents and controlling persons within the
meaning of the federal securities laws. The foregoing agreement to indemnify
shall be in addition to any liability the Provident Parties may otherwise have
to the Selling Agent or the persons entitled to the benefit of these
indemnification provisions.
b. The Selling Agent agrees to indemnify and hold harmless the
Company, its directors, officers who signed the S-1 Registration Statement, and
each person, if any, who controls the Company within the meaning of Section 15
of the 1933 Act or Section 20(a) of the 1934 Act, against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
subsection (a) above, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the S-1
Registration Statement or the S-1 Prospectus in reliance upon and in conformity
with written information about the Selling Agent, or the compensation of the
Selling Agent, furnished to the Company by the Selling Agent expressly for use
in the S-1 Registration Statement or the S-1 Prospectus.
c. An indemnified party shall give prompt notice to the
indemnifying party if any action, suit, proceeding or investigation is commenced
in respect of which indemnity may be sought hereunder, but failure to so notify
an indemnifying party shall not relieve the indemnifying party from its
obligations to indemnify hereunder. If it so elects within a reasonable time
after receipt of such notice, an indemnifying party may assume the defense of
such action, including the employment of counsel satisfactory to the indemnified
parties) and payment of all expenses of the indemnified party in connection with
such action. Such indemnified party or parties shall have the right to employ
its or their own counsel (but only one counsel) in any such case, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
or parties unless the employment of such counsel shall have been authorized in
writing by the indemnifying party in connection with the defense of such action
or the indemnifying party shall not have promptly employed counsel satisfactory
to such indemnified party or parties or such indemnified party or parties shall
have reasonably concluded that there may be one or more legal defenses available
to it or them or to other indemnified parties which are different from or
21
additional to those available to one or more of the indemnifying parties, in any
of which events such fees and expenses shall be borne by the indemnifying party
and the indemnifying party shall not have the right to direct the defense of
such action on behalf of the indemnified party or parties. The Provident Parties
shall be liable for any settlement of any claim against the Selling Agent (or
its directors, officers, employees, affiliates or controlling persons), made
with the Provident Parties' written consent, which consent shall not be
unreasonably withheld. The Provident Parties shall not, without the written
consent of the Selling Agent, settle or compromise any claim against it based
upon circumstances giving rise to an indemnification claim against the Provident
Parties hereunder unless such settlement or compromise provides that the Selling
Agent and the other indemnified parties shall be unconditionally and irrevocably
released from all liability in respect of such claim.
d. In order to provide for just and equitable contribution, if a
claim for indemnification pursuant to these indemnification provisions is made
but it is found in a final judgment by a court that such indemnification may not
be enforced in such case, even though the express provisions hereof provide for
indemnification in such case, then the Provident Parties, on the one hand, and
the Selling Agent, on the other hand, shall contribute to the amount paid or
payable by such indemnified persons as a result of such loss, liability, claim,
damage and expense in such proportion as is appropriate to reflect the relative
benefits received by the Provident Parties, on the one hand, and the Selling
Agent, on the other hand, from the Offering, and also the relative fault of the
Provident Parties, on the one hand, and the Selling Agent, on the other hand, in
connection with the statements, acts or omissions which resulted in such loss,
liability claim, damage and expense, and any other relevant equitable
considerations shall also be considered. No person found liable for a fraudulent
misrepresentation or omission shall be entitled to contribution from any person
who is not also found liable for such fraudulent misrepresentation or omission.
Notwithstanding the foregoing, the Selling Agent shall not be obligated to
contribute any amount hereunder that exceeds the total amount of the fees paid
to the Selling Agent hereunder.
e. The indemnity and contribution agreements contained herein are
in addition to any liability which the Provident Parties may otherwise have to
the Selling Agent.
f. Neither termination nor completion of the engagement of the
Selling Agent nor any investigation made by or on behalf of the Selling Agent
shall affect the indemnification, obligations of the Provident Parties or the
Selling Agent hereunder, which shall remain and continue to be operative and in
full force and effect.
SECTION 8. Conditions of the Selling Agent's Obligations. The
obligations of the Selling Agent hereunder as to the Shares to be delivered at
the Closing Date are subject, in the discretion of the Selling Agent, to the
condition that all representations and warranties and other statements of the
Provident Parties herein are, at and as of the commencement of the Offering and
at and as of the Closing Date, true and correct in all material respects, the
condition that the Provident Parties shall have performed in all material
respects all of their respective obligations hereunder to be performed on or
before such dates, and to the following conditions:
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a. The Registration Statement shall have been declared effective
by the Commission and cleared for use by the OTS not later than 5:30 p.m. on the
date of this Agreement, or with the written consent of the Selling Agent at a
later time and date; and at the Closing Date no stop order suspending the
effectiveness of the Registration Statement or the consummation of the
Conversion shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission or any state securities or Blue Sky
authority, and no order or other action suspending the effectiveness of the
Prospectus or the consummation of the Conversion shall have been issued or
proceedings therefore initiated or threatened by the OTS.
b. At the Closing Date, the Selling Agent shall have received:
(i) The favorable opinion, dated as of the Closing Date addressed to
the Selling Agent and for its and its counsel's benefit, of Xxxx Xxxxxx, as to
issues of federal, Delaware and New York law set forth below. The opinion of
Xxxx Xxxxxx shall be in form and substance to the effect that:
(1) Prior to the Conversion, PBI was validly existing as
a corporation under the laws of Delaware, the Bank was validly existing under
the laws of the United States as a federal savings bank, and the MHC was duly
organized and validly existing under the laws of the United States as a mutual
holding company; and each had the corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Registration Statement and Prospectus.
(2) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of Delaware, and has
the corporate power and authority to own, lease and operate the combined
properties and to conduct the combined operations of PBI and E.N.B. following
the Merger, as described in the Registration Statement and Prospectus. Each of
the Company's direct and indirect subsidiaries is validly existing and in good
standing under the laws of its jurisdiction of organization, and each has the
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and Prospectus.
(3) Each of the Provident Parties and their subsidiaries
is duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is and, following
consummation of the Reorganization, will be required, unless the failure to be
so qualified in one or more of such jurisdictions would not have a material
adverse effect on the business, the financial condition or the results of
operations, affairs or prospects of the Provident Parties taken as a whole.
(4) All of the outstanding capital stock of the Bank is
duly authorized and validly issued, fully paid and non-assessable and, upon
consummation of the Reorganization, will be owned by the Company, free and clear
of any liens, encumbrances, claims or other restrictions.
(5) The activities of each subsidiary of PBI, the MHC and
the Bank as described in the Registration Statement and Prospectus are permitted
to subsidiaries of a federally chartered savings bank or a savings and loan
23
holding company, by the rules, regulations, policies and practices of the OTS
and any other federal or state authority having jurisdiction over such matters.
The activities of each subsidiary of the Company following the Merger (which
will include each of the direct and indirect subsidiaries of PBI and E.N.B.) as
described in the Registration Statement and Prospectus are permitted to
subsidiaries of a savings and loan holding company by the rules, regulations,
policies and practices of the OTS and any other federal or state authority
having jurisdiction over such matters. The activities of each subsidiary of the
Bank following the Merger (including each of the direct and indirect
subsidiaries of the Bank and Ellenville) as described in the Registration
Statement and Prospectus are permitted to subsidiaries of a federally chartered
savings bank by the rules, regulations, policies and practices of the OTS and
any other federal or state authority having jurisdiction over such matters. All
of the outstanding stock of each subsidiary of PBI, the MHC and the Bank has
been duly authorized and validly issued and is fully paid and nonassessable; and
upon consummation of the Reorganization all such stock will be owned of record
and beneficially by the Bank, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or other restriction.
(6) Upon consummation of the Reorganization, the
authorized equity capital of the Company will consist of 75,000,000 shares of
common stock and 10,000,000 shares of preferred stock, and the issued and
outstanding equity capital of the Company will be consistent with that set forth
in the Registration Statement and the Prospectus under the caption
"Capitalization;" no shares of the Company's common stock, or securities
exercisable into or exchangeable for common stock, will have been issued prior
to the Closing Date; at the time of the Conversion the Shares will have been
duly and validly authorized for issuance, and when issued and delivered by the
Company pursuant to the Plan, will be duly authorized and validly issued and
fully paid and nonassessable; the issuance of the Shares is not subject to any
preemptive rights. Upon the issuance of the Shares, against payment therefor in
accordance with the Prospectus, the purchasers will have full legal title to the
Shares, subject to such claims as may be asserted against the purchasers thereof
by third-party claimants of such purchasers.
(7) Each Reorganization Application has been approved by
the applicable regulatory authority pursuant to the Reorganization Regulations
and the Prospectus has been authorized for use by the OTS, and, to Xxxx Xxxxxx'x
knowledge, no action has been taken or is pending or threatened to revoke any
such authorization or approval.
(8) Each Reorganization Application, as amended or
supplemented, if amended or supplemented, as filed with the applicable
regulatory authority complied as to form in all material respects with the
requirements of the Reorganization Regulations. At the time the Registration
Statement became effective, (i) the Registration Statement (as amended or
supplemented, if so amended or supplemented) (other than the financial
statements, stock valuation information and other financial 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 1933 Act and the 1933 Act
Regulations and (ii) the Prospectus (other than the financial statements, stock
valuation information and other financial 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 Conversion Regulations.
24
(9) The OTS's approval of the Plan remains in full force
and effect; the Provident Parties have conducted the Reorganization in all
material respects in accordance with the requirements of the Reorganization
Regulations, federal law, all other applicable regulations, decisions and orders
and the Plan, including all material applicable terms, conditions, requirements
and conditions precedent to the Reorganization imposed by the OTS; no order has
been issued by the OTS to suspend the Conversion or the Merger and no action for
such purpose has been instituted or, to Xxxx Xxxxxx'x knowledge, threatened by
the OTS; and, to Xxxx Xxxxxx'x knowledge, no person has sought to obtain review
of the final action of the OTS in approving any Reorganization Application or
the Plan.
(10) This Agreement has been duly authorized, executed and
delivered by the MHC, PBI, the Company and the Bank and is the legal, valid and
binding agreement of the MHC, PBI, the Company and the Bank, subject, as to
enforceability, to bankruptcy, insolvency, reorganization, moratorium,
conservatorship, receivership and other laws of general applicability relating
to or affecting creditors' rights or the rights of creditors of depository
institutions the deposits of which are insured by the FDIC, to general
principles of equity (whether considered in an action at law or in equity) and
to the extent that rights to indemnity and contribution thereunder may be
limited under applicable laws or under considerations of public policy.
(11) The Registration Statement is effective under the
1933 Act and no stop order suspending effectiveness has been issued under the
1933 Act and, to Xxxx Xxxxxx'x knowledge, no proceedings therefor have been
initiated or threatened by the Commission.
(12) All conditions imposed by the OTS in connection with
its approvals of the Reorganization Applications have been satisfied, other than
any post-closing filings and submissions, and no further approval,
authorization, consent or other order of any federal or state board or body is
required in connection with the execution and delivery of this Agreement, the
issuance of the Shares and the consummation of the Reorganization.
(13) The information in the Registration Statement and
Prospectus under the captions "Supervision and Regulation," "Taxation,"
"Restrictions on Acquisition of Provident Bancorp" and "Description of Capital
Stock of Provident Bancorp Following the Conversion," to the extent that it
constitutes matters of law, summaries of legal matters, documents or proceedings
or legal conclusions, has been reviewed by Xxxx Xxxxxx and is correct in all
material respects.
(14) The terms and provisions of the Common Stock conform
in all material respects to the description thereof contained in the Prospectus,
and the form of certificate used to evidence the Shares is in due and proper
form.
(15) To Xxxx Xxxxxx'x knowledge, there are no legal or
governmental proceedings pending or threatened against any Provident Party or
any subsidiary which are required to be disclosed in the Registration Statement
and Prospectus other than those disclosed therein, and all pending legal and
governmental proceedings to which any Provident Party or any of their respective
subsidiaries is the subject which are not disclosed in the Registration
Statement, including ordinary routine litigation, are, considered in the
aggregate, not material.
25
(16) To Xxxx Xxxxxx'x knowledge, there are no material
contracts, indentures, mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to in the Registration
Statement and Prospectus or to be filed as exhibits thereto other than those
described or referred to therein or filed as exhibits thereto, and the
description thereof or references thereto are correct in all material respects.
(17) To Xxxx Xxxxxx'x knowledge, PBI, the Bank and their
respective subsidiaries have obtained all material licenses, permits and other
governmental authorizations currently required for the conduct of their
respective businesses, taken as a whole, as described in the Registration
Statement and Prospectus; the Company has obtained all material licenses,
permits and other governmental authorizations required for the conduct of the
business of PBI, taken as a whole, as described in the Registration Statement
and Prospectus, following consummation of the Reorganization; all such licenses,
permits and other governmental authorizations are in full force and effect; and
PBI, the Company, the Bank and their respective subsidiaries are in all material
respects complying therewith.
(18) All corporate acts and other proceedings required to
be taken by or on the part of the Provident Parties to adopt and approve the
Plan have been properly taken, including the votes of the Board of Directors of
the MHC, the stockholders of PBI, and the depositors of the Bank.
(19) The Company's certificate of incorporation and bylaws
comply in all material respects with the Delaware General Corporation Law
("DGCL"). The Company is not in violation of its certificate of incorporation or
bylaws; the execution and delivery of this Agreement, the incurrence of the
obligations herein set forth and the consummation of the transactions
contemplated herein will not result in any violation of the provisions of the
certificate of incorporation or bylaws of the Company.
(20) The Bank's charter and bylaws comply in all material
respects with the HOLA and the rules and regulations of the OTS. The Bank is not
in violation of its charter or bylaws; the execution and delivery of this
Agreement, the incurrence of the obligations herein set forth and the
consummation of the transactions contemplated herein will not result in any
violation of the provisions of the charter or bylaws of the Bank.
(21) To Xxxx Xxxxxx'x knowledge, none of the Company's
subsidiaries is in violation of its charter or bylaws; to Xxxx Xxxxxx'x
knowledge, the execution and delivery of this Agreement, the incurrence of the
obligations herein set forth and the consummation of the transactions
contemplated herein will not result in any violation of the provisions of the
charter or bylaws of any such subsidiary.
(22) To Xxxx Xxxxxx'x knowledge, the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated herein (A) do not and will not result in the creation or imposition
of any lien, charge, encumbrance, or restriction upon an property or assets of
the Company or any of the Company's subsidiaries, (B) do not and will not
conflict with, or constitute a breach or violation of, or constitute a default
under, with or without notice or lapse of time or both, any of the terms,
provisions or conditions of any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease, franchise, license or any other agreement
26
or instrument to which the Company or any of the Company's subsidiaries is a
party or by which any of them or any of their respective properties may be
bound, or (C) do not and will not conflict with any order, decree, judgment,
franchise, license, permit, rule or regulation of any court, arbitration,
government, or governmental agency or instrumentality, domestic or foreign,
having jurisdiction over the Company or any of the Company's subsidiaries or any
of their respective properties which, in each case, would have a material
adverse effect on the business, financial condition, results of operations,
affairs or prospects of the Provident Parties taken as a whole.
(23) To Xxxx Xxxxxx'x knowledge, none of the Provident
Parties is in violation of any directive from the OTS to make any material
change in the method of conducting its business, and the Provident Parties have
conducted and are conducting their respective businesses so as to comply in all
material respect with all applicable statutes and regulations (including,
without limitation, regulations, decisions, directives and orders of the New
York Department of Banking, the FDIC and the OTS).
(24) Neither PBI, the Company nor the Bank is required to
be registered as an investment company under the Investment Company Act of 1940,
as amended.
(25) The Provident Parties have the power and authority to
consummate the transactions contemplated by the Merger Agreement.
(26) The Merger Agreement has been duly authorized,
executed and delivered by each of the Provident Parties and constitutes the
valid and binding obligation of each of them, enforceable in accordance with its
terms subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally and subject, as to enforceability, to
general principles of equity (whether considered in an action at law or in
equity).
(27) To Xxxx Xxxxxx'x knowledge, all corporate acts and
other proceedings required to be taken by or on the part of the Provident
Parties to consummate the Merger have been properly taken and, as of the closing
of the merger of Ellenville into the Bank (the "Bank Merger"), all corporate
acts and other proceedings required to be taken by or on the part of the
Provident Parties to consummate the Bank Merger will have been properly taken;
neither the execution and delivery of the Merger Agreement, nor the consummation
of the transactions contemplated thereby, with and without the giving of notice
or the lapse of time, or both, will violate any provision of the certificate of
incorporation, charter or bylaws of any Provident Party.
(28) Except as disclosed in such opinion, to Xxxx Xxxxxx'x
knowledge, there are no actions, suits, proceedings or investigations (public or
private) of any nature pending or threatened that challenge the validity or
propriety of the Reorganization or which seek or threaten to restrain, enjoin or
prohibit or to obtain substantial damages in connection with the consummation of
the Reorganization.
27
(29) All regulatory and governmental approvals and
consents which are necessary to be obtained by the Provident Parties and their
subsidiaries to permit the execution, delivery and performance of the Merger
Agreement have been obtained.
(30) All conditions precedent to consummation of the
Merger have been satisfied or waived, including but not limited to those
referenced in the Merger Agreement, and all statutory waiting periods with
respect to all regulatory and governmental approvals of the Merger have expired.
Xxxx Xxxxxx may expressly exclude any opinions as to choice of law and
antitrust matters and may add other qualifications and explanations of the basis
of its opinions as are consistent with the Legal Opinion Accord prepared by the
Section of Business Law of the American Bar Association.
In rendering their opinion, Xxxx Xxxxxx may rely, to the extent such
counsel deems such reliance necessary or appropriate, upon certificates of
governmental officials, certificates or opinions of other counsel reasonably
satisfactory to the Selling Agent and, as to matters of fact, officers'
certificates. The opinion of such counsel need refer only to matters of New
York, Delaware and federal law and may add other qualifications and explanations
of the basis of their opinion as may be reasonably acceptable to the Selling
Agent.
(ii) The letter of Xxxx Xxxxxx, addressed to the Selling Agent,
dated the Closing Date, in form and substance to the effect that:
(1) During the preparation of the Conversion Application,
the Registration Statement and the Prospectus, such counsel participated in
conferences with management of and the independent certified public accountants
for the Provident Parties. Based upon such conferences and such review of
corporate records of the Provident Parties as such counsel conducted in
connection with the preparation of the Registration Statement and Conversion
Application, nothing has come to their attention that would lead them to believe
that any Conversion Application, the Registration Statement, the Prospectus or
any amendment or supplement thereto (other than financial statements, stock
valuation information and other financial and statistical data included therein,
as to which such counsel need express no view), contained an untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(iii) The favorable opinion, dated as of the Closing Date, of
Pitney, Xxxxxx, Xxxx & Xxxxx LLP, counsel for the Selling Agent, with respect to
such matters as the Selling Agent may reasonably require. Such opinion may rely
upon certificates of officers and directors of the Provident Parties delivered
pursuant hereto or as such counsel shall reasonably request.
(iv) A Blue Sky Memorandum from Xxxx Xxxxxx relating to the
Offering, including Selling Agent's participation therein, and should be
furnished to the Company with a copy thereof addressed to Selling Agent or upon
which Xxxx Xxxxxx shall state Selling Agent may rely. The Blue Sky Memorandum
will relate to the necessity of obtaining or confirming exemptions,
28
qualifications or the registration of the Common Stock under the state
securities laws of all of the states of the United States and the District of
Columbia.
c. At the Closing Date, the Selling Agent shall receive a
certificate of the Chief Executive Officer and the Chief Financial Officer of
each of the Provident Parties, dated the Closing Date, to the effect that: (i)
since the respective dates as of which information is given in the Registration
Statement and the Prospectus, there has been no material adverse effect on the
business, financial condition, results of operations, affairs or prospects of
the Provident Parties and E.N.B. and Ellenville taken as a whole, whether or not
arising in the ordinary course of business; (ii) the representations and
warranties in Section 4 of this Agreement are true and correct with the same
force and effect as though expressly made at and as of the Closing Date;
provided that the representations and warranties as to E.N.B. and Ellenville
(and their subsidiaries) are to the knowledge of the signing officers based on
information provided by E.N.B. or Ellenville; (iii) the Provident Parties have
complied with all agreements and satisfied all conditions on their part to be
performed or satisfied at or prior to the Closing Date and will comply with all
obligations to be satisfied by them after the Conversion; (iv) 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 or any state securities or Blue Sky authority; and (v) no order
suspending the Offering, the Conversion or the effectiveness of the Prospectus
has been issued and no proceedings for that purpose have been issued and no
proceedings for that purpose have been initiated or threatened by the OTS.
d. Prior to and at the Closing Date: (i) there shall have been no
material adverse effect on the business, financial condition, results of
operations, affairs or prospects of the Provident Parties, E.N.B., Ellenville or
any subsidiary thereof taken as a whole since the respective dates as of which
information is given in the Prospectus, except as referred to therein; (ii)
there shall have been no material transaction entered into by any Provident
Party, E.N.B., Ellenville or any subsidiary thereof since the latest dates as of
which the financial condition of the Company and the Bank is set forth in the
Prospectus, other than transactions referred to or contemplated therein; (iii)
no Provident Party shall have received from the OTS or any other government
agency 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 Selling Agent) or which would materially
and adversely effect on the business, financial condition, results of
operations, affairs or prospects; (iv) no Provident Party, nor E.N.B.,
Ellenville or any subsidiary thereof shall have been in default (nor shall an
event have occurred which, with notice or lapse of time or both, would
constitute a default) under any provision of any agreement or instrument
relating to any outstanding indebtedness; and (v) 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, to the knowledge of any
Provident Party, threatened against any Provident Party, E.N.B., Ellenville or
any subsidiary thereof or affecting any of their respective properties wherein
an unfavorable decision, ruling or finding would materially and adversely effect
on the business, financial condition, results of operations, affairs or
prospects of the Provident Parties, E.N.B. and Ellenville taken as a whole.
e. Concurrently with the execution of this Agreement, the Selling
Agent and the Provident Parties shall receive a letter from KPMG dated the date
hereof and addressed to the Selling Agent: (i) confirming that KPMG is a firm of
independent certified public accountants with respect to PBI and the Bank within
29
the meaning of the 1933 Act and the 1933 Act Regulations, the 1934 Act and the
1934 Act Regulations and the Code of Ethics of the American Institute of
Certified Public Accountants and no information concerning KPMG's relationship
with or interests in any Provident Party is required to be disclosed in the S-1
Prospectus, and stating in effect that in KPMG's opinion the consolidated
financial statements of PBI included in the S-1 Prospectus and covered by KPMG's
opinion included therein comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act, the 1934 Act, the 1933 Act
Regulations, the 1934 Act Regulations and generally accepted accounting
principles; (ii) stating in effect that, on the basis of certain agreed upon
procedures (but not an examination in accordance with generally accepted
auditing standards) consisting of a review, in accordance with Statement on
Auditing Standards No. 71, of the latest available unaudited interim
consolidated financial statements of PBI prepared by PBI, a reading of the
minutes of the meetings of the Board of Directors, Executive Committee, Audit
Committee and stockholders of PBI and the Bank and consultations with officers
of PBI and the Bank responsible for financial and accounting matters, nothing
has come to KPMG's attention which causes KPMG to believe that: (A) such
unaudited consolidated financial statements including any "Recent Developments"
section in the S-1 Prospectus do not comply as to form in all material respects
with applicable accounting requirements; (B) such unaudited consolidated
financial statements including any "Recent Developments" section are not in
conformity with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited consolidated financial
statements included in the S-1 Prospectus; (C) during the period from the date
of the latest audited consolidated financial statements included in the S-1
Prospectus to a specified date not more than five business days prior to the
date hereof, there was any material increase in borrowings (defined as
securities sold under agreements to repurchase and any other form of debt other
than deposits), or non-performing loans, special mention loans or decrease in
the deposits or loan allowance, total assets, stockholders' equity or there was
any change in common stock outstanding (other than for stock option plans) or
(D) there was any material decrease in retained earnings of PBI at the date of
such letter as compared with amounts shown in the latest audited consolidated
balance sheet included in the S-1 Prospectus or there was any decrease in net
income, net interest income, provision for loan losses or net income after
provision or increase in non-interest expense of PBI for the number of full
months commencing immediately after the period covered by the latest audited
consolidated income statement included in the S-1 Prospectus and ended on the
latest month end prior to the date of the S-1 Prospectus as compared to the
corresponding period in the preceding year; and (iii) stating that, in addition
to the examination referred to in KPMG's opinion included in the S-1 Prospectus
and the performance of the procedures referred to in clause (ii) of this
paragraph (e), KPMG has compared with the general accounting records of PBI's
and/or the Bank's, as applicable, which are subject to the internal controls of
the accounting system and other data prepared by PBI and/or the Bank, as
applicable, directly from such accounting records, to the extent specified in
such letter, such amounts and/or percentages set forth in the S-1 Prospectus as
the Selling Agent may reasonably request; and they have found such amounts and
percentages to be in agreement therewith (subject to rounding).
f. At the Closing Date, the Selling Agent shall receive a letter
from KPMG, dated the Closing Date, addressed to the Selling Agent, confirming
the statements made by KPMG in the letter delivered pursuant to paragraph (e) of
this Section 8, the "specified date" referred to in clause (ii) (C) thereof to
30
be a date specified in such letter, which shall not be more than three (3)
business days prior to the Closing Date.
g. At the Closing Date, the Selling Agent shall have received a
letter from RP Financial, dated as of the Closing Date, confirming the
Independent Valuation.
h. At the Closing Date, counsel to the Selling Agent shall have
been furnished with such documents and opinions as they may reasonably require
for the purpose of enabling them to pass upon the sale of the Shares as herein
contemplated and related proceedings or in order to evidence the accuracy or
completeness of any of the representations and warranties, or the fulfillment of
any of the conditions, herein contained; and all proceedings taken by the
Provident Parties in connection with the Reorganization and the sale of the
Shares as herein contemplated shall be satisfactory in form and substance to the
Selling Agent and counsel to the Selling Agent.
i. The Provident Parties shall not have sustained since the date
of the latest audited consolidated financial statements included in the
Registration Statement and Prospectus any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, other than as set forth or contemplated in the Registration Statement,
which is in the judgment of the Selling Agent sufficiently material and adverse
as to make it impracticable or inadvisable to proceed with the Offering or the
delivery of the Shares on the terms and in the manner contemplated in the
Prospectus.
j. Subsequent to the date hereof, there shall not have occurred
any of the following: (i) a suspension or limitation in trading in securities
generally on the New York Stock Exchange or American Stock Exchange or in the
over-the-counter market, or quotations halted generally on the Nasdaq Stock
Market, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices for securities have been required by either of such exchanges
or the NASD or by order of the Commission or any other governmental authority
other than temporary trading halts or limitation (A) imposed as a result of
intraday changes in the Dow Xxxxx Industrial Average, (B) lasting no longer than
until the regularly scheduled commencement of trading on the next succeeding
business-day and (C) which when combined with all other such halts occurring
during the previous five (5) business days, total less than two (2) hours; (ii)
a general moratorium on the operations of operation of commercial banks, federal
or state savings banks in New York or a general moratorium on the withdrawal of
deposits from commercial banks operation of commercial banks, federal or state
savings and loan associations or savings banks in New York declared by either
federal or state authorities; or (iii) 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, including, without limitation, terrorist activities after the date
hereof, the effect of which, in the judgment of the Agent, is so material and
adverse as to make it impracticable to market the Shares or to enforce
contracts, including subscriptions or purchase orders, for the sale of the
Shares.
k. If any of the conditions specified in this Section 8 shall not
have been fulfilled when and as required by this Agreement, or by June 30, 2004,
this Agreement and all of the Selling Agent's obligations hereunder may be
31
canceled by the Selling Agent by notifying the Provident Parties of such
cancellation in writing or by fax at any time at or prior to the Closing Date,
and any such cancellation shall be without liability of any party to any other
party except as otherwise provided in Sections 1, 6 and 7 hereof.
Notwithstanding the above, if this Agreement is canceled pursuant to this
paragraph, the Provident Parties jointly and severally agree to reimburse the
Selling Agent for all of the Selling Agent's out-of-pocket expenses reasonably
incurred by the Selling Agent, including any legal fees (and out-of- pocket
expenses) to be paid to the Selling Agent's counsel, subject to the limits
expressed in Section 6 hereof.
SECTION 9. Termination.
-----------
a. In the event the Company fails to sell the minimum number of
Shares in the Offering as set forth in the Prospectus and does not modify the
Offering within the period specified in, and in accordance with the provisions
of, the Plan or as required by the Conversion Regulations, this Agreement shall
terminate upon refund by the Company to each person who has subscribed for or
ordered any of the Shares the full amount which it may have received from such
person, together with interest, as provided in the Prospectus (or without
interest in the case of Shares sold in a Syndicated Community Offering), and no
party to this Agreement shall have any obligation to the other hereunder, except
for payment by the Provident Parties as set forth in Sections 1, 6 and 7 hereof.
b. This Agreement may be terminated by the Selling Agent, with
respect to the Selling Agent's obligations hereunder, by notifying the Company
at any time or prior to the Closing Date, if any of the conditions specified in
Section 8 hereof shall not have been fulfilled when and as required by this
Agreement or if the Conversion has not been completed by June 30, 2003.
SECTION 10. Survival. The respective indemnities, agreements,
representations, warranties and other statements of the Provident Parties and
the Selling Agent, as set forth in this Agreement, shall remain in full force
and effect, regardless of any investigation (or any statement as to the results
thereof) made by or on behalf of the Selling Agent or any of the Selling Agent's
officers or directors or any person controlling the Selling Agent, or the
Provident Parties, or any of their respective officers or directors or any
person controlling the Provident Parties, and shall survive termination of this
Agreement and receipt or delivery of any payment for the Shares.
SECTION 11. Waiver of Trial by Jury. Each of the Selling Agent and the
Provident Parties waives all right to trial by jury in any action, proceeding,
claim or counterclaim (whether based on contract, tort, or otherwise) related to
or arising out of this Agreement.
SECTION 12. Market Making. The Selling Agent agrees to use its best
efforts to maintain a market in the Company's Common Stock for a period of three
(3) years.
SECTION 13. Miscellaneous. Notices hereunder, except as otherwise
provided herein, shall be given in writing or by telegraph, addressed (a) to
Xxxx Xxxx at 000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000-0000 (Attention:
Xxxxxxxx Xxxxxx, First Vice President), with a copy to Pitney, Xxxxxx, Xxxx &
Xxxxx LLP, P.O. Box 1945, Xxxxxxxxxx, XX 00000 (Attention: Xxxxxx X. Xxxxx,
Esq.) and (b) to the Provident Parties at the Bank's principal office
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(Attention: Xxxxxx Xxxxxxxx, President and Chief Executive Officer), with a copy
to Xxxx Xxxxxx Xxxxxxxx & Xxxxxx, P.C., 0000 Xxxxxxxxx Xxxxxx, X.X. Xxxxx Xxxxx
Xxxxxxxx, Xxxxx 000, Xxxxxxxxxx, X.X. 00000, (Attention: Xxxx X. Xxxxxx, Esq.).
This Agreement is made solely for the benefit of and will be binding
upon the parties hereto and their respective successors and the directors,
officers and controlling persons referred to in Section 7 hereof, and no other
person will have any right or obligation hereunder.
The term "successors" shall not include any purchaser of any of the
Shares. This Agreement shall be governed by and construed in accordance with the
laws of the State of New Jersey. Time shall be of the essence of this Agreement.
This Agreement may be signed in various counterparts which together
will constitute one agreement. The remainder of this page has been intentionally
left blank.
33
If the foregoing correctly sets forth the arrangement among the
Company, the Bank, PBI, MHC and the Selling Agent, please indicate acceptance
thereof in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement.
PROVIDENT BANCORP, INC. PROVIDENT BANK
By:____________________________ By:_____________________________
PROVIDENT BANCORP, INC. PROVIDENT BANCORP, MHC
By:____________________________ By:_____________________________
XXXX XXXX & CO., INC.
By:____________________________
34
EXHIBIT A
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Engagement Letter
EXHIBIT B
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[Xxxx Xxxx is registered in all U.S. jurisdictions except Arkansas.]
