Exhibit 1.2
JEFFERSON BANCSHARES, INC.
(a Tennessee corporation)
Up to 5,750,000 Shares
(Subject to Increase Up to 6,612,500 Shares)
COMMON STOCK ($.01 Par Value)
Subscription Price $10.00 Per Share
AGENCY AGREEMENT
___________, 2003
Keefe, Bruyette & Woods, Inc.
211 Bradenton Drive
Dublin, Ohio 43017-5034
Ladies and Gentlemen:
Jefferson Bancshares, Inc., a newly formed Tennessee-chartered stock
corporation (the "Holding Company"), Jefferson Bancshares, MHC, a federally
chartered mutual holding company which owned 82.64% of the common stock of
Jefferson Federal Savings and Loan Association of Morristown, a federally
chartered savings association (together with its subsidiary, the "Bank") at
March 31, 2003 (the "MHC") and the Bank (collectively, the "Jefferson Parties")
hereby confirm, jointly and severally, their agreement with Keefe, Bruyette &
Woods, Inc. ("KBW" or the "Agent"), as follows:
Section 1. The Offering. The MHC, in accordance with the Plan of Conversion
adopted March 3, 2003 (the "Plan"), intends to convert from mutual to stock form
(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 ("OTS") (such laws and the regulations of the OTS are referred to
herein as the "Conversion Regulations"). In connection with the Conversion, the
Holding Company will offer stock on a priority basis to (i) Eligible Account
Holders; (ii) Employee Plans of the Holding Company; (iii) Supplemental Eligible
Account Holders; and (iv) Other Members (all capitalized terms used in this
Agreement and not defined in this Agreement shall have the meanings set forth in
the Plan). Pursuant to the Plan, the Holding Company is offering a minimum of
4,250,000 and a maximum of 5,750,000 shares (subject to an increase up to
6,612,500 shares) of common stock, par value $.01 per share (the "Common
Stock"), in the Subscription Offering, and, if necessary, (i) the Community
Offering and/or (ii) a Syndicated Community Offering.
Pursuant to the Plan, the Holding Company will offer and sell shares of its
Common Stock (the "Shares") in the Subscription Offering, Community Offering,
and/or Syndicated Community Offering (the "Offerings") and issue shares of its
Common Stock (the "Exchange Shares") to existing shareholders of the Bank, other
than the MHC, in exchange for their existing shares of the Bank (the
"Exchange"). Upon completion of the Offerings and the Exchange, pursuant to the
Plan, 100% of the outstanding Common Stock of the Holding Company will be
publicly held, 100% of the outstanding
common stock of the Bank will be held by the Holding Company, and the MHC will
cease to exist. The Holding Company will sell the Shares in the Offerings at
$10.00 per share (the "Purchase Price"). If the number of Shares is increased or
decreased in accordance with the Plan, the term "Shares" shall mean such greater
or lesser number, where applicable.
Pursuant to the Plan, in the Subscription Offering, the Holding Company
will offer the Shares, subject to the allocation procedures and purchase
limitations set forth in the Plan, in descending order of priority to: (1)
Eligible Account Holders; (2) Employee Plans of the Holding Company or the Bank;
(3) Supplemental Eligible Account Holders; and (4) Other Members. The Holding
Company may offer Shares, if any, remaining after the Subscription Offering, in
the Community Offering on a priority basis to the MHC's public stockholders at
the Voting Record Date, and then to the natural persons residing within the
Tennessee counties of Cocke, Grainger, Greene, Hamblen, Hawkins, Jefferson, Knox
or Sevier County, and then to the general public. In the event a Community
Offering is held, it may be held at any time during or immediately after the
Subscription Offering. Depending on market conditions, Shares available for sale
but not subscribed for in the Subscription Offering or purchased in the
Community Offering may be offered in the Syndicated Community Offering to the
general public on a best efforts basis, as described in subsection 4(c) below.
In connection with the Conversion and pursuant to the terms of the Plan as
described in the Prospectus (as hereinafter defined), immediately following the
consummation of the Conversion, subject to the approval of the members of the
MHC and compliance with certain conditions as may be imposed by regulatory
authorities, the Company will contribute 375,000 shares of newly issued Common
Stock to the Jefferson Federal Charitable Foundation (the "Foundation") such
shares hereinafter being referred to as the ("Foundation Shares"). In addition,
the Company will make a cash contribution to the Foundation equal to $250,000.
The Holding Company has filed with the U.S. Securities and Exchange
Commission (the "Commission" or the "SEC") Registration Statement on Form S-1
(File No. 333-103961) in order to register the Shares, the Exchange Shares and
the Foundation Shares under the Securities Act of 1933, as amended (the "1933
Act"), and has filed such amendments thereto as have been required to the date
hereof (the "Registration Statement"). The prospectus, as amended, included in
the Registration Statement at the time it initially became effective is
hereinafter called the "Prospectus," except that if any prospectus is filed by
the Holding Company pursuant to Rule 424(b) or (c) of the rules and regulations
of the Commission under the 1933 Act (the "1933 Act Regulations") differing from
the prospectus included in the Registration Statement at the time it initially
becomes effective, the term "Prospectus" shall refer to the prospectus filed
pursuant to Rule 424(b) or (c) from and after the time said prospectus is filed
with the Commission and shall include any supplements and amendments thereto
from and after their dates of effectiveness or use, respectively.
In connection with the Conversion, the MHC filed with the OTS an
application for conversion to a federal interim stock savings association (the
"Conversion Application")
2
and amendments thereto as required by the OTS. The Holding Company has filed
with the OTS its application on Form H-(e)1-S (the "Holding Company
Application") to become a unitary savings and loan holding company under the
Home Owners' Loan Act of 1933, as amended (the "HOLA"), and the regulations
promulgated thereunder. Collectively, the Conversion Application and the Holding
Company Application may also be termed the "Applications."
Section 2. Retention of Agent. Subject to the terms and conditions herein
set forth, the Jefferson Parties hereby appoint the Agent as their financial
advisor and marketing agent to utilize its best efforts to solicit subscriptions
for Shares and to advise and assist the Jefferson Parties with respect to the
Holding Company's sale of the Shares in the Offering.
On the basis of the representations, warranties, and agreements herein
contained, but subject to the terms and conditions herein set forth, the Agent
accepts such appointment and agrees to consult with and advise the Jefferson
Parties as to the matters set forth in the letter agreement, dated February 27,
2003, between the Bank and KBW. It is acknowledged by the Jefferson Parties that
the Agent shall not be required to purchase any Shares or be obligated to take
any action that is inconsistent with all applicable laws, regulations, decisions
or orders.
Except as described in Section 13(b) of this Agreement, the obligations of
the Agent pursuant to this Agreement shall terminate upon the completion or
termination or abandonment of the Plan by the Holding Company or upon
termination of the Offering, but in no event later than 90 days after the
completion of the Subscription Offering (the "End Date"). All fees or expenses
due to the Agent but unpaid will be payable to the Agent in next day funds at
the earlier of the Closing Date (as hereinafter defined) or the End Date. In the
event the Offering is extended beyond the End Date, the Jefferson Parties and
the Agent may agree to renew this Agreement under mutually acceptable terms and
subject to the approval of any governmental agency or regulatory authority
having jurisdiction over such matters.
In the event the Holding Company is unable to sell a minimum of 4,250,000
Shares by the End Date, this Agreement shall terminate and the Holding Company
shall refund to any persons who have subscribed for any of the Shares the full
amount that it may have received from them plus accrued interest, as set forth
in the Prospectus, and none of the parties to this Agreement shall have any
obligation to the other parties hereunder, except as set forth in this Section 2
and in Sections 9, 11 and 12 hereof.
In the event the Offering is terminated for any reason not attributable to
the action or inaction of the Agent, the Agent shall be paid the fees due to the
date of such termination pursuant to Section 4, subparagraph (a) below, and to
the reimbursement of expenses pursuant to Section 9 below.
Section 3. Sale and Delivery of Shares. If all conditions precedent to the
consummation of the Conversion, including, without limitation, the sale of all
Shares required by the Plan to be sold, are satisfied, the Holding Company
agrees to issue, or
3
have issued, the Shares sold in the Offering and to release for delivery
certificates for such Shares on the Closing Date (as hereinafter defined)
against payment to the Holding Company by any means authorized by the Plan;
provided, however, that no funds shall be released to the Holding Company until
the conditions specified in Section 10 hereof shall have been complied with to
the reasonable satisfaction of the Agent and its counsel. The release of Shares
against payment therefor shall be made on a date and at a place acceptable to
the Jefferson Parties and the Agent. Certificates for shares shall be delivered
directly to the purchasers in accordance with their directions. The date upon
which the Holding Company shall release or deliver the Shares sold in the
Offering, in accordance with the terms herein, is called the "Closing Date."
Section 4. Compensation. The Agent shall receive the following compensation
for its services hereunder:
(a) A management fee of $50,000, payable in four consecutive monthly
installments of $12,500, commencing in February 2003 of which $ has
----------
been paid. Such fees shall be deemed to have been earned when due. Should the
Conversion be terminated for any reason not attributable to the action or
inaction of the Agent, the Agent shall have earned and be entitled to be paid
fees accruing through the stage at which the termination occurred.
(b) A Success Fee of $600,000 shall be charged upon consummation of the
conversion. The management fee described in subparagraph 4(a) shall be applied
against the Success Fee described in this subparagraph 4(b).
(c) If any of the Shares remain available after the Subscription Offering
and the Community Offering, at the request of the Bank, KBW will seek to form a
syndicate of registered broker-dealers ("Selected Dealers") to assist in the
sale of such Shares on a best efforts basis, subject to the terms and conditions
set forth in the selected dealers agreement. KBW will endeavor to distribute the
Shares among the Selected Dealers in a fashion which best meets the distribution
objectives of the Bank and the Plan. KBW will be paid a fee not to exceed 5.5%
of the aggregate purchase price of the shares sold by the Selected Dealers. From
this fee, KBW will pass on to the Selected Dealers who assist in such offering
an amount competitive with gross underwriting discounts charged at such time for
comparable amounts of stock sold at a comparable price per share in a similar
market environment. Fees with respect to purchases affected with the assistance
of Selected Dealers other than KBW shall be transmitted by KBW to such Selected
Dealers. The decision to utilize Selected Dealers will be made by the Bank upon
consultation with KBW. In the event, with respect to any stock purchases, fees
are paid pursuant to this subparagraph 4(c), such fees shall be in addition to
payment pursuant to subparagraphs 4(a) and (b).
Full payment of KBW's fees, as described above, shall be made in next day
funds on the earlier of the Closing Date or a determination by the Bank to
terminate or abandon the Plan.
4
Section 5. Closing. The closing for the sale of the Shares shall take place
on the Closing Date at such location as mutually agreed upon by the Agent and
the Jefferson Parties. At the closing, the Jefferson Parties shall deliver to
the Agent in next day funds the commissions, fees and expenses due and owing to
the Agent as set forth in Sections 4 and 9 hereof and the opinions and
certificates required hereby and other documents deemed reasonably necessary by
the Agent shall be executed and delivered to effect the sale of the Shares as
contemplated hereby and pursuant to the terms of the Prospectus.
Section 6. Representations and Warranties of the Jefferson Parties. The
Jefferson Parties jointly and severally represent and warrant to the Agent that:
(a) Each of the Jefferson Parties has all such power, authority,
authorizations, approvals and orders as may be required to enter into this
Agreement, and, as of the Closing Date, each of the Jefferson Parties will have
all such power, authority, authorizations, approvals and orders as may be
required to carry out the provisions and conditions hereof and to issue and sell
the Shares to be sold by the Company, and to issue and contribute the Foundation
Shares and related cash contribution, as provided herein and as described in the
Prospectus. The consummation of the Conversion, the execution, delivery and
performance of this Agreement and the Letter Agreement and the consummation of
the transactions contemplated herein have been duly and validly authorized by
all necessary corporate action on the part of each of the Jefferson Parties.
This Agreement has been validly executed and delivered by each of the Jefferson
Parties, and is a valid, legal and binding obligation of each of the Jefferson
Parties, in each case enforceable in accordance with its terms, except as the
legality, validity, binding nature and enforceability thereof may be limited by
(i) bankruptcy, insolvency, moratorium, reorganization, conservatorship,
receivership or other similar laws relating to or affecting the enforcement of
creditors' rights generally, (ii) general equity principles regardless of
whether such enforceability is considered in a proceeding in equity or at law,
and (iii) the extent, if any, that the provisions of Sections 11 or 12 hereof
may be unenforceable as against public policy.
(b) The Registration Statement was declared effective by the Commission on
, 2003. No stop order has been issued with respect to the Prospectus. No
- --------
proceedings related to the Prospectus have been initiated or, to the knowledge
of the Jefferson Parties, threatened by the Commission. At the time the
Registration Statement, including the Prospectus contained therein (including
any amendment or supplement thereto), became effective, the Registration
Statement complied as to form in all material respects with the 1933 Act and the
1933 Act Regulations. The Registration Statement and the Prospectus 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. At the
time any Rule 424(b) or (c) Prospectus was filed with the Commission and at the
Closing Date referred to in Section 5, the Registration Statement, including the
Prospectus (including any amendment or supplement thereto) and, when taken
together with the Prospectus, any Blue Sky Application or Sales Information (as
such term is defined in Section 11 hereof) authorized for use by any of
5
the Jefferson Parties in connection with the Offerings, will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that the representations and warranties in this Section 6(b) shall not apply to
statements or omissions made in reliance upon and in conformity with written
information furnished to the Jefferson Parties by the Agent expressly regarding
the Agent for use under the caption " The Conversion - Marketing Arrangements."
(c) The Conversion Application, including the Prospectus, the proxy
statement for the solicitation of proxies from members of the MHC for the
special meeting to approve the Plan (the "Members' Proxy Statement") and the
proxy statement for the solicitation of proxies from stockholders of the Bank
for the special meeting to approve the Plan (the "Stockholders' Proxy
Statement"), which was prepared by the Company, the MHC and the Bank and filed
with the OTS, was approved by the OTS on , 2003 and the Prospectus,
----------
Members' Proxy Statement and Stockholders' Proxy Statement have each been
authorized for use by the OTS. The establishment and contribution to the
Foundation was approved by the OTS on , 2003. At the time of the
----------
approval of the Conversion Application, including the Prospectus, the Members'
Proxy Statement and the Stockholders' Proxy Statement (including any amendment
or supplement thereto), by the OTS and at all times subsequent thereto until the
Closing Date, the Conversion Application, including the Prospectus, the Members'
Proxy Statement and the Stockholders' Proxy Statement (including any amendment
or supplement thereto), will comply in all material respects with the Conversion
Regulations, except to the extent waived in writing by the OTS and with all
applicable provisions of the Securities Exchange Act of 1934, as amended (the
"1934 Act") and the regulations of the SEC under the 1934 Act (the "1934 Act
Regulations"). The Conversion Application, including the Prospectus, the
Members' Proxy Statement and the Stockholders' Proxy Statement (including any
amendment or supplement thereto), does not include any 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; provided, however, that the
representations and warranties in this Section 6(c) shall not apply to
statements or omissions made in reliance upon and in conformity with written
information furnished to the Company, the MHC, or the Bank by the Agent or its
counsel expressly regarding the Agent for use in the Prospectus contained in the
Conversion Application under the caption "The Conversion - Marketing
Arrangements.
(d) The Holding Company Application has been prepared by the Company in
material conformity with the requirements of the OTS and approved by the OTS. A
conformed copy of the Holding Company Application has been delivered to the
Agent and its counsel, receipt of which is hereby acknowledged by the Agent.
(e) No order has been issued by the OTS, the SEC, any state securities
administrator or the Federal Deposit Insurance Corporation (the "FDIC")
preventing or suspending the use of the Prospectus or any supplemental sales
literature authorized by the Jefferson Parties for use in connection with the
offering and no action by or
6
before any such government entity to revoke any approval, authorization or order
of effectiveness related to the Conversion is pending or, to the best knowledge
of the Jefferson Parties, threatened.
(f) Pursuant to the Conversion Regulations, the Plan has been approved by
the Boards of Directors of the MHC and the Bank and approved by the members of
the MHC and stockholders of the Bank; at the Closing Date, the offer and sale of
the Shares and all actions in connection with the contribution to the Foundation
will have been conducted in all material respects in accordance with the Plan,
the Conversion Regulations, and all other applicable laws, regulations,
decisions and orders, including all terms, conditions, requirements and
provisions precedent to the Conversion imposed upon the MHC or the Bank by the
OTS, the SEC or any other regulatory authority, other than those which the
regulatory authority permits to be completed after the Conversion and in the
manner described in the Prospectus. To the best knowledge of the Jefferson
Parties, no person has sought to obtain review of the final action of the OTS in
approving the Plan or in approving the Conversion Application or the Holding
Company Application pursuant to HOLA or any other statute or regulation.
(g) RP Financial, LC, which prepared the appraisal of the aggregate pro
forma market value of the Common Stock on which the Offerings were based (the
"Appraisal"), has advised the Jefferson Parties in writing that it is
independent with respect to each of the Jefferson Parties within the meaning of
the Conversion Regulations and the Jefferson Parties believe RP Financial, LC to
be expert in preparing appraisals of savings institutions.
(h) Craine, Thompson & Jones, P.C., which certified the financial
statements filed as part of the Registration Statement and the Conversion
Application, has advised the Jefferson Parties that it is an independent
certified public accountant within the meaning of the Code of Ethics of the
AICPA, and Craine, Thompson & Jones, P.C. is, with respect to the Jefferson
Parties and each subsidiary thereof, independent certified public accountants as
required by the 1933 Act and the 1933 Act Regulations.
(i) The financial statements, schedules and notes related thereto that are
included in the Prospectus fairly present in all material respects the financial
condition, results of operations, equity and cash flows of the Bank at the
respective dates indicated and for the respective periods covered thereby and
comply as to form in all material respects with the applicable accounting
requirements of Title 12 of the Code of Federal Regulations, Regulation S-X of
the SEC and generally accepted accounting principles ("GAAP") (including those
requiring the recording of certain assets at their current market value). Such
financial statements, schedules and notes related thereto have been prepared in
accordance with generally accepted accounting principles consistently applied
through the periods involved (except as noted in the Notes to the financial
statements) present fairly in all material respects the information required to
be stated therein and are consistent with the most recent financial statements
and other reports filed by the Bank with the OTS, and any other applicable
regulatory authority, except that accounting principles employed in such
regulatory filings conform to the requirements of the OTS and the SEC and not
necessarily to GAAP. The other
7
financial, statistical and pro forma information and related notes included in
the Prospectus present fairly the information shown therein on a basis
consistent with the audited and unaudited financial statements of the Bank
included in the Prospectus, and as to the pro forma adjustments, the adjustments
made therein have been consistently applied on the basis described therein.
(j) Since the respective dates as of which information is given in the
Registration Statement including the Prospectus: (i) there has not been any
material adverse change in the financial condition, results of operations,
capital, assets, properties or business of the Jefferson Parties, 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 Bank or in the
principal amount of the Bank's assets that are classified by the Bank as
substandard, doubtful or loss or in loans past due 90 days or more or real
estate acquired by foreclosure, by deed-in-lieu of foreclosure or deemed
in-substance foreclosure or any material decrease in equity capital or total
assets of the Bank, nor have the Jefferson Parties issued any securities or
incurred any liability or obligation for borrowing other than in the ordinary
course of business; (iii) there have not been any material transactions entered
into by the Jefferson Parties; (iv) there has not been any material adverse
change in the aggregate dollar amount of the Bank's deposits or its consolidated
net worth; (v) there has been no material adverse change in the Jefferson
Parties' relationship with their insurance carriers, including, without
limitation, cancellation or other termination of the Jefferson Parties fidelity
bond or any other type of insurance coverage; (vi) except as disclosed in the
Prospectus, there has been no material change in management of the Jefferson
Parties, none of which has any material undisclosed liability of any kind,
contingent or otherwise; (vii) none of the Jefferson Parties have sustained any
material loss or interference with its respective business or properties from
fire, flood, windstorm, earthquake, accident or other calamity, whether or not
covered by insurance; (viii) none of the Jefferson Parties is in default in the
payment of principal or interest on any outstanding debt obligations; (ix) the
capitalization, liabilities, assets, properties and business of the Jefferson
Parties conform in all material respects to the descriptions thereof contained
in the Prospectus; and (x) none of the Jefferson Parties have any material
contingent liabilities, except as set forth in the Prospectus.
(k) The Holding Company is a stock corporation duly organized, validly
existing and in good standing under the laws of the State of Tennessee, with
corporate power and authority to own its properties and to conduct its business,
as described in the Prospectus, and is qualified to transact business and will
be in good standing in Tennessee and in each jurisdiction in which the conduct
of business requires such qualification, unless the failure to qualify in one or
more of such jurisdictions would not have a material adverse effect on the
financial condition, results of operation, capital, properties, business affairs
or prospects of the Jefferson Parties taken as a whole (a "Material Adverse
Effect"). As of the Closing Date, the Holding Company will have obtained all
licenses, permits and other governmental authorizations required for the conduct
of its business, except those that individually or in the aggregate would not
have a Material Adverse Effect; and as of the Closing Date, all such licenses,
permits and governmental authorizations will be in full force and effect, and
the Holding
8
Company will be in compliance therewith in all material respects, and the
Holding Company will be in compliance in all material respects with all laws,
rules, regulations and orders applicable to the operation of its business.
(l) As of the date of this Agreement, the Holding Company does not own any
equity securities or any equity interest in any business enterprise.
(m) The Bank has been duly organized and is a validly existing federally
chartered savings association in the stock form of organization and upon the
Conversion will become a wholly-owned subsidiary of the Holding Company, in both
instances duly authorized to conduct its business and own its property as
described in the Registration Statement and the Prospectus; the Bank has
obtained all licenses, permits and other governmental authorizations currently
required for the conduct of its business, except those that individually or in
the aggregate would not have a Material Adverse Effect; all such licenses,
permits and governmental authorizations are in full force and effect, and the
Bank is in compliance with all laws, rules, regulations and orders applicable to
the operation of its business; except where failure to be in compliance would
not have a Material Adverse Effect. The Bank does not own equity securities or
any equity interest in any other active business enterprise except as described
in the Prospectus or as would not be material to the operations of the Bank.
Upon completion of the Conversion, (i) all of the authorized and outstanding
capital stock of the Bank will be owned by the Holding Company free and clear of
any mortgage, pledge, lien, encumbrance, claim or restriction of any kind and
(ii) the Holding Company will have no direct subsidiaries other than the Bank.
At the Closing Date, the Conversion will have been effected in all material
respects in accordance with all applicable statutes, regulations, decisions and
orders; and, except with respect to the filing of certain post-sale,
post-Conversion reports, and documents in compliance with the 1933 Act
Regulations, all terms, conditions, requirements and provisions with respect to
the Conversion imposed by the OTS or any other governmental agency, if any, will
have been complied with by the Jefferson Parties in all material respects or
appropriate waivers will have been obtained and all material notice and waiting
periods will have been satisfied, waived or elapsed.
(n) The MHC has been duly chartered and is validly existing as a mutual
holding company in good standing under the laws of the United States of America
with corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Registration Statement and the
Prospectus; the MHC is qualified to do business as a foreign corporation in each
jurisdiction in which the conduct of its business requires such qualification,
except where the failure to so qualify would not have a Material Adverse Effect.
The MHC has obtained all licenses, permits and other governmental authorizations
currently required for the conduct of its business except where the failure to
obtain such license, permit or authorization would not individually or in the
aggregate have a Material Adverse Effect; all such licenses, permits and
governmental authorizations are in full force and effect, and the MHC is in all
material respects complying with all laws, rules, regulations and orders
applicable to the operation of its business; upon consummation of the
Conversion, the MHC will convert into a federal stock savings association, which
will merge with and into the
9
Bank, with the Bank being the surviving institution. As of the date of this
Agreement, the MHC does not own any equity securities or any equity interest in
any other business enterprise except for the Bank.
(o) The authorized capital stock of the Bank consists of 20,000,000 shares
of common stock, par value $1.00 per share (the "Bank Common Stock") and
10,000,000 shares of preferred stock, par value $1.00 per share (the "Bank
Preferred Stock"), of which shares of Bank Common Stock and no shares of
-------
Bank Preferred Stock are issued and outstanding as of the date hereof; no
additional shares of Bank and no shares of Bank Preferred Stock will be issued
and all outstanding shares of Bank Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable and have been issued in
compliance with all federal and state securities laws; the MHC owns 1,550,000
shares of Bank Common Stock beneficially and of record free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity; the
terms and conditions of the Bank Common Stock conform to all statements relating
thereto contained in the Prospectus; at the time of the consummation of the
Conversion, the Bank shall merge with an interim federal savings association,
with the Bank being the surviving institution, and the shares of common stock of
the Bank held by the shareholders of the Bank other than the MHC shall be
converted into shares of the Holding Company common stock pursuant to the
exchange ratio established pursuant to the Plan.
(p) The only subsidiary of the Bank is Jefferson Service Corporation of
Morristown, Tennessee, Inc. ("JSC"). JSC is duly organized, validly existing and
in good standing under the laws of the State of Tennessee, with full power and
authority to own property and conduct its business; JSC is duly qualified as a
foreign corporation to transact business in each jurisdiction in which failure
to so qualify would have a Material Adverse Effect; JSC holds all licenses,
certificates and permits from governmental authorities necessary for the conduct
of its business, except where failure to hold such licenses, permits or
authorizations would not have a Material Adverse Effect; the activities of JSC
are permitted to be conducted by subsidiaries of a federally chartered savings
institution and of Tennessee corporations.
(q) The Bank is a member of the Federal Home Loan Bank of Cincinnati
("FHLB-Cincinnati"). The deposit accounts of the Bank are insured by the FDIC up
to the maximum limits, and no proceedings for the termination or revocation of
such insurance are pending or, to the best knowledge of the Jefferson Parties,
threatened. Upon consummation of the Conversion, the liquidation account for the
benefit of Eligible Account Holders and Supplemental Eligible Account Holders
will be duly established in accordance with the requirements of the Plan and the
Conversion Regulations.
(r) Upon consummation of the Conversion, the authorized, issued and
outstanding capital stock of the Holding Company will be within the range set
forth in the Prospectus under the caption "Capitalization" and no shares of
Common Stock have been or will be issued and outstanding prior to the Closing
Date (except for the shares issued upon incorporation of the Holding Company);
the Shares and the Foundation Shares have been duly and validly authorized for
issuance and, when issued and
10
delivered by the Holding Company pursuant to the Plan against payment of the
consideration calculated as set forth in the Plan and the Prospectus, will be
duly and validly issued and fully paid and nonassessable; the issuance of the
Shares and the Foundation Shares is not subject to preemptive rights, except for
the subscription rights granted pursuant to the Plan; and the terms and
provisions of the Shares and the Foundation Shares will conform in all material
respects to the description thereof contained in the Prospectus. Upon issuance
of the Shares and the Foundation Shares sold, good title to the Shares will be
transferred from the Holding Company to the purchasers of Shares (or the
Foundation, as appropriate) against payment therefor as set forth in the Plan
and the Prospectus.
(s) None of the Jefferson Parties is (i) in violation of their respective
charters or bylaws, as applicable or (ii) in default in the performance or
observance of any material obligation, agreement, covenant, or condition
contained in any material contract, lease, loan agreement, indenture or other
instrument to which it is a party or by which it or any of its property may be
bound which would result in a Material Adverse Effect. The execution and
delivery of this Agreement and the consummation of the transactions herein
contemplated will not: (i) violate or conflict with the charter or bylaws of any
of the Jefferson Parties; (ii) conflict with, or constitute a breach of or
default under, any material contract, lease or other instrument to which any of
the Jefferson Parties is a party or by which any of the properties of the
Jefferson Parties may be bound, or any applicable law, rule, regulation or
order, except for such conflicts, breaches or defaults that would not
individually or in the aggregate result in a Material Adverse Effect; (iii)
violate any authorization, approval, judgment, decree, order, statute, rule or
regulation applicable to the Jefferson Parties, except for such violations which
would not have a Material Adverse Effect; or (iv) result in the creation of any
material lien, charge or encumbrance upon any property of the Jefferson Parties,
except for such liens, charges or encumbrances that would not individually or in
the aggregate have a Material Adverse Effect.
(t) All documents made available to or delivered or to be made available to
or delivered by the Jefferson Parties or their representatives in connection
with the issuance and sale of the Shares, including records of account holders,
depositors and borrowers of the Bank, or in connection with the Agent's exercise
of due diligence, except for those documents which were prepared by parties
other than the Jefferson Parties or their representatives, to the best knowledge
of the Jefferson Parties, were on the dates on which they were delivered, or
will be on the dates on which they are to be delivered, true, complete and
correct in all material respects.
(u) 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 of the Jefferson
Parties, 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 of the Jefferson
Parties is a party or by which any of their property is bound or affected in any
respect which, in any such case, would have a Material Adverse Effect on the
Jefferson Parties taken as a whole, and such agreements are in full force and
effect; and no other party to any such agreements has
11
instituted or, to the knowledge of any of the Jefferson Parties, threatened any
action or proceeding wherein any of the Jefferson Parties is alleged to be in
default thereunder under circumstances where such action or proceeding, if
determined adversely to any of the Jefferson Parties, would have a Material
Adverse Effect.
(v) The Jefferson Parties have good and marketable title to all assets
which are material to the businesses of the Jefferson Parties, free and clear of
all liens, charges, encumbrances, restrictions or other claims, except such as
are described in the Prospectus or where the absence of good and marketable
title would not have a Material Adverse Effect; and all of the leases and
subleases which are material to the businesses of the Jefferson Parties,
including those described in the Registration Statement or Prospectus, are in
force and effect.
(w) The Jefferson Parties are not in violation of any directive from the
OTS, the FDIC, or any other agency to make any material change in the method of
conducting their respective businesses; the Jefferson Parties have conducted and
are conducting their respective businesses so as to comply in all respects with
all applicable statutes and regulations (including, without limitation,
regulations, decisions, directives and orders of the OTS, the Commission and the
FDIC), except where the failure to so comply would not reasonably be expected to
result in a Material Adverse Effect, and there is no charge, investigation,
action, suit or proceeding before or by any court, regulatory authority or
governmental agency or body pending or, to the knowledge of any of the Jefferson
Parties, threatened, which would reasonably be expected to materially and
adversely affect the Conversion, the performance of this Agreement, or the
consummation of the transactions contemplated in the Plan as described in the
Registration Statement, or which would reasonably be expected to result in a
Material Adverse Effect.
(x) Prior to the Closing Date, the Jefferson Parties will have received an
opinion of their special counsel, Muldoon Murphy & Faucette LLP with respect to
the federal income tax consequences of the Conversion, as described in the
Registration Statement and the Prospectus and an opinion of Craine, Thompson &
Jones, P.C. with respect to the state tax consequences of the Conversion and the
federal income tax consequences of the proposed establishment of, and
contribution to, the Foundation, as described in the Registration Statement and
the Prospectus; and the facts and representations upon which such opinions will
be based, will be truthful, accurate and complete, and none of the Jefferson
Parties will take any action inconsistent therewith.
(y) The MHC and the Bank have filed all required federal and state tax
returns, paid all taxes that have become due and payable, except where permitted
to be extended or where the failure to pay such taxes would not have a Material
Adverse Effect, have made adequate reserves for similar future tax liabilities
to the extent required by GAAP and no deficiency has been asserted with respect
thereto by any taxing authority.
(z) No approval, authorization, consent or other order of any regulatory or
supervisory or other public authority is required for the execution and delivery
by the
12
Jefferson Parties of this Agreement, or the issuance of the Shares, except for
the approval of the OTS, the Commission and the Nasdaq Stock Market, Inc., and
any necessary qualification, notification, or registration or exemption under
the securities or blue sky laws of the various states in which the Shares are to
be offered.
(aa) None of the Jefferson Parties has: (i) issued any securities within
the last 18 months (except for (a) notes to evidence bank loans or other
liabilities in the ordinary course of business or as described in the
Prospectus, and (b) shares of Common Stock issued with respect to the initial
capitalization of the Holding Company, and (c) shares of the Bank issued upon
the exercise of stock options); (ii) had any dealings with respect to sales of
securities 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 Offerings and purchases and sales of
U.S. government and agency and other securities in the ordinary course of
business; or (iii) engaged any intermediary between the Agent and the Jefferson
Parties in connection with the Offerings or the offering of shares of the Common
Stock of the Holding Company, and no person is being compensated in any manner
for such services. Appropriate arrangements have been made for placing the funds
received from subscriptions for Shares in a special interest-bearing account
with the Bank until all Shares are sold and paid for, with provision for refund
to the purchasers in the event that the Conversion is not completed for whatever
reason or for delivery to the Holding Company if all Shares are sold.
(bb) To the best knowledge of the Jefferson Parties, the Jefferson Parties
have not made any payment of funds of the Jefferson Parties as a loan to any
person for the purchase of Shares, except for the Holding Company's loan to the
employee stock ownership plan, the proceeds of which may be used to purchase
Shares, or has made any other payment or loan of funds prohibited by law, and no
funds have been set aside to be used for any payment prohibited by law.
(cc) The Bank complies in all material respects with the applicable
financial record keeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, and the regulations and rules
thereunder.
(dd) The Jefferson Parties have not relied upon Agent or its counsel for
any legal, tax or accounting advice in connection with the Conversion.
(ee) The records used by the Jefferson Parties to determine the identity of
Eligible Account Holders and Supplemental Eligible Account Holders and Other
Members are accurate and complete in all material respects.
(ff) The Jefferson Parties comply with all laws, rules and regulations
relating to environmental protection, and none of them 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 other Federal, state or local
environmental laws and regulations except to the extent that any non-compliance
would not have a Material Adverse Effect;
13
no action, suit, regulatory investigation or other proceeding is pending, or to
the knowledge of the Jefferson Parties, threatened against the Jefferson Parties
relating to environmental protection, nor do the Jefferson Parties have any
reason to believe any such proceedings may be brought against any of them; and,
to the knowledge of the Jefferson 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 facilities or properties owned
or leased by any of the Jefferson Parties or in which the Bank has a security
interest, except to the extent such disposal, release or discharge would not
have a Material Adverse Effect.
(gg) All of the loans represented as assets of the Bank 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 Regulations 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.
(hh) None of the Jefferson Parties is required to be registered as an
investment company under the Investment Company Act of 1940.
(ii) The Foundation has been duly organized and is validly existing as a
private charitable foundation in good standing under the laws of the State of
Tennessee with corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus; the
Foundation will not be a savings and loan holding company within the meaning of
12 C.F.R. Section 574.2(q) as a result of the issuance of the Foundation Shares
to it in accordance with the terms of the Plan and in the amounts as described
in the Prospectus; to the knowledge of the Jefferson Parties, all approvals
required to establish the Foundation and to contribute the Foundation Shares
thereto and cash in an amount equal to $250,000 have been obtained as described
in the Prospectus; except as specifically disclosed in the Prospectus and the
Members' Proxy Statement and Stockholders' Proxy Statement, there are no
agreements and/or understandings, written or oral or otherwise, between any of
the Jefferson Parties and the Foundation with respect to the control, directly
or indirectly, over the voting and the acquisition or disposition of the shares
of Common Stock to be contributed by the Holding Company to the Foundation; the
Foundation Shares to be issued to the Foundation in accordance with the Plan and
as described in the Prospectus will have been duly authorized for issuance and,
when issued and contributed by the Holding Company pursuant to the Plan, will be
duly and validly issued and fully paid and non-assessable.
(jj) The Jefferson Parties have taken all actions necessary to obtain at
Closing a Blue Sky Memorandum from Muldoon Murphy & Faucette LLP.
(kk) Any certificates signed by an officer of any of the Jefferson Parties
and delivered to the Agent or its counsel that refer to this Agreement shall be
deemed to be a representation and warranty by the Jefferson Parties to the Agent
as to the matters
14
covered thereby with the same effect as if such representation and warranty were
set forth herein.
Section 7. Representations and Warranties of the Agent. Agent represents
and warrants to the Jefferson Parties that:
(a) Agent is a duly organized New York corporation and is validly existing
and in good standing under the laws of the State of New York with full power and
authority to provide the services to be furnished to the Jefferson Parties
hereunder.
(b) The execution, delivery and performance of this Agreement and the
Letter Agreement and the consummation of the transactions contemplated herein
and therein have been duly and validly authorized by all necessary corporate
action on the part of Agent, and each of this Agreement and the Letter Agreement
is the legal, valid and binding agreement of Agent, enforceable in accordance
with its terms, except as the legality, validity, binding nature and
enforceability thereof may be limited by (i) bankruptcy, insolvency, moratorium,
reorganization, conservatorship, receivership or other similar laws relating to
or affecting the enforcement of creditors' rights generally, and (ii) general
equity principles regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(c) Each of Agent and its employees, agents and representatives who shall
perform any of the services hereunder shall have, and until the Offerings are
consummated or terminated shall maintain, all licenses, approvals and permits
necessary to perform such services and shall comply in all material respects
with all applicable laws and regulations in connection with the performance of
such services.
(d) No action, suit, charge or proceeding before the Commission, the NASD,
any state securities commission or any court is pending, or to the knowledge of
Agent threatened, against Agent which, if determined adversely to Agent, would
have a material adverse effect upon the ability of Agent to perform its
obligations under this Agreement.
(e) Agent is registered as a broker/dealer pursuant to Section 15(b) of the
1934 Act and is a member in good standing of the NASD.
(f) Any funds received in the Offerings by the Agent will be handled by the
Agent in accordance with Rule 15c2-4 under the 1934 Act to the extent
applicable.
Section 8. Covenants of the Jefferson Parties. The Jefferson Parties hereby
jointly and severally covenant with the Agent as follows:
(a) The Holding Company will not, at any time after the date the
Registration Statement is initially filed, file any amendment or supplement to
the Registration Statement without providing the Agent and its counsel a
reasonable opportunity to review and comment on such amendment or supplement.
The Holding Company will furnish promptly to the Agent and its counsel copies of
all correspondence from the
15
Commission with respect to the Registration Statement and the Holding Company's
responses thereto.
(b) The Jefferson Parties will not, at any time after the date any
Application is approved, file any amendment or supplement to such Application
without providing the Agent and its counsel a reasonable opportunity to review
and comment on such amendment or supplement. The Jefferson Parties will furnish
promptly to the Agent and its counsel copies of all correspondence from the OTS
with respect to the Applications and the Jefferson Parties' responses thereto.
(c) The Jefferson Parties will use their best efforts to cause the OTS to
approve the Holding Company's acquisition of the Bank, and will use their best
efforts to cause any post-effective amendment to the Registration Statement to
be declared effective by the Commission and any post-effective amendment to the
Conversion Application to be approved by the OTS, as applicable, and will
promptly upon receipt of any information concerning the events listed below
notify the Agent (i) when the Registration Statement, as amended, has become
effective; (ii) when the Conversion Application as amended, has received the
approval of the OTS; (iii) when the Holding Company Application, as amended, has
been approved by the OTS; (iv) of the receipt of any comments from the OTS or
any other governmental entity with respect to the Conversion or the transactions
contemplated by this Agreement; (v) of any request by the Commission, the OTS,
or any other governmental entity for any amendment or supplement to the
Registration Statement or the Applications or for additional information; (vi)
of the issuance by the Commission or the OTS, or any other governmental agency
of any order or other action suspending the Offerings or the use of the
Registration Statement or the Prospectus or any other filing of the Jefferson
Parties under the Conversion Regulations or other applicable law, or the threat
of any such action; (vii) of the issuance by the Commission or the OTS, or any
other state authority of any stop order suspending the effectiveness of the
Registration Statement or of the initiation or threat of initiation or threat of
any proceedings for that purpose; or (viii) of the occurrence of any event
mentioned in subsection (f) below. The Jefferson Parties will make every
reasonable effort to prevent the issuance by the Commission, the OTS, or any
other state authority of any order referred to in (vi) and (vii) above and, if
any such order shall at any time be issued, to obtain the lifting thereof at the
earliest possible time.
(d) The Jefferson Parties will deliver to the Agent and to its counsel two
conformed copies of each of the following documents, with all exhibits: the
Applications as originally filed and of each amendment or supplement thereto,
and the Registration Statement, as originally filed and each amendment thereto.
Further, the Jefferson Parties will deliver such additional copies of the
foregoing documents to counsel to the Agent as may be required for any NASD
filings. In addition, the Jefferson Parties will also deliver to the Agent such
number of copies of the Prospectus, as amended or supplemented, as the Agent may
reasonably request.
(e) The Jefferson Parties will furnish to the Agent, from time to time
during the period when the Prospectus (or any later prospectus related to this
offering) is required
16
to be delivered under the 1933 Act or the 1934 Act, such number of copies of
such Prospectus (as amended or supplemented) as the Agent may reasonably request
for the purposes contemplated by the 1933 Act, the 1933 Act Regulations, 1934
Act or the 1934 Act Regulations. The Holding Company authorizes the Agent to use
the Prospectus (as amended or supplemented, if amended or supplemented) in any
lawful manner contemplated by the Plan in connection with the sale of the Shares
by the Agent.
(f) The Jefferson Parties will comply in all material respects with any and
all terms, conditions, requirements and provisions with respect to the
Conversion and the transactions contemplated thereby, including those conditions
relating to the operation of the Foundation, imposed by the Commission, by
applicable state law and regulations, and by the 1933 Act, the 1934 Act, the
1933 Act Regulations and the 1934 Act Regulations, to be complied with prior to
the Closing Date; and when the Prospectus is required to be delivered, the
Jefferson Parties will comply in all material respects, at their own expense,
with all requirements imposed upon them by the OTS, the Conversion Regulations
(except as modified or waived in writing by the OTS), the Commission, by
applicable state law and regulations and by the 1933 Act, the 1934 Act, the 1933
Act Regulations and the 1934 Act Regulations, in each case as from time to time
in force, so far as is necessary to permit the continuance of sales or dealing
in shares of Common Stock during such period in accordance with the provisions
hereof and the Prospectus.
(g) During any period when the Prospectus is required to be delivered, each
of the Jefferson Parties will inform the Agent of any event or circumstance of
which it is or becomes aware as a result of which the Registration Statement
and/or Prospectus, as then supplemented or amended, would include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein not misleading. If it is necessary, in the
reasonable opinion of counsel for the Jefferson Parties, to amend or supplement
the Registration Statement or the Prospectus in order to correct such untrue
statement of a material fact or to make the statements therein not misleading in
light of the circumstances existing at the time of their use, the Jefferson
Parties will, at their expense, prepare, file with the Commission and the OTS,
and furnish to the Agent, a reasonable number of copies of an amendment or
amendments of, or a supplement or supplements to, the Registration Statement and
the Prospectus (after a reasonable time for review by counsel for the Agent)
which will amend or supplement the Registration Statement and/or the 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, not
misleading. For the purpose of this subsection, each of the Jefferson Parties
will furnish such information with respect to itself as the Agent may from time
to time reasonably request.
(h) Pursuant to the terms of the Plan, the Holding Company will endeavor in
good faith, in cooperation with the Agent, to register or to qualify the Shares
for offering and sale or to exempt such Shares from registration and to exempt
the Holding Company and its officers, directors and employees from registration
as broker-dealers,
17
under the applicable securities laws of the jurisdictions in which the Offerings
will be conducted; provided, however, that the Holding Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation to do business in any jurisdiction in which it is not so
qualified. In each jurisdiction where any of the Shares shall have been
registered or qualified as above provided, the Holding Company will make and
file such statements and reports as are required by the applicable regulatory
authority in connection with such registration or qualification for a period of
not less than one year from the effective date of the Registration Statement.
(i) The Company and the Bank shall duly establish and maintain the
liquidation account for the benefit of Eligible Account Holders and Supplemental
Eligible Account Holders in accordance with the requirements of the Conversion
Regulations and such Eligible Account Holders and Supplemental Eligible Account
Holders who continue to maintain their savings accounts in the Bank will have an
inchoate interest in their pro rata portion of the liquidation account, which
shall have a priority superior to that of the holders of the Common Shares in
the event of a complete liquidation of the Company or the Bank.
(j) The Holding Company and the Bank will not sell or issue, contract to
sell or otherwise dispose of, for a period of 90 days after the date hereof, any
shares of their capital stock or securities convertible into or exercisable for
shares of their capital stock, without the Agent's prior written consent other
than in connection with any plan or arrangement described in the Prospectus,
including existing stock benefit plans.
(k) For a period of three years from the date of this Agreement, the
Holding Company will furnish to the Agent, as soon as practical after such
information is available (i) a copy of each report of the Holding Company
furnished to or filed with the Commission under the 1934 Act or any national
securities exchange or system on which any class of securities of the Holding
Company is listed or quoted, (ii) a copy of each report of the Holding Company
mailed to holders of Common Stock, (iii) each press release and material news
item and article released by the Holding Company and/or Bank, and (iv) from
time-to-time, such other publicly available information concerning the Jefferson
Parties as the Agent may reasonably request.
(l) The Jefferson Parties will use the net proceeds from the sale of the
Common Stock in the manner set forth in the Prospectus under the caption "Use of
Proceeds."
(m) The Jefferson Parties will distribute the Prospectus or other offering
materials in connection with the offering and sale of the Common Stock only in
accordance with the Conversion Regulations of the OTS, the 1933 Act, the 1934
Act, the 1933 Act Regulations and the 1934 Act Regulations, and the laws of any
state in which the shares are qualified for sale.
(n) Prior to the Closing Date, the Holding Company shall register its
Common Stock under Section 12(b) or 12(g) of the 1934 Act, and will request that
such registration statement shall be effective no later than the completion of
the Conversion.
18
The Holding Company shall maintain the effectiveness of such registration for
not less than three years or such shorter period as may be required by
applicable law.
(o) For so long as the Shares are registered under the 1934 Act, the
Holding Company will furnish to its stockholders as soon as practicable after
the end of each fiscal year such reports and other information as are required
to be furnished to its stockholders under the 1934 Act.
(p) The Jefferson Parties will maintain appropriate arrangements for
depositing all funds received from persons mailing subscriptions for or orders
to purchase Shares on an interest bearing basis as described in the Prospectus
until the Closing Date and satisfaction of all conditions precedent to the
release of the Holding Company's obligation to refund payments received from
persons subscribing for or ordering Shares in the Offerings, in accordance with
the Plan as described in the Prospectus, or until refunds of such funds have
been made to the persons entitled thereto or withdrawal authorizations canceled
in accordance with the Plan and as described in the Prospectus. The Jefferson
Parties will maintain such records of all funds received to permit the funds of
each subscriber to be separately insured by the FDIC (to the maximum extent
allowable) and to enable the Jefferson Parties to make the appropriate refunds
of such funds in the event that such refunds are required to be made in
accordance with the Plan and as described in the Prospectus.
(q) The Holding Company will register as a unitary savings and loan holding
company under the HOLA.
(r) The Jefferson Parties will take such actions and furnish such
information as are reasonably requested by the Agent in order for the Agent to
ensure compliance with the "Interpretation of the Board of Governors of the NASD
on Free Riding and Withholding."
(s) The Jefferson Parties will conduct their businesses in compliance in
all material respects with all applicable federal and state laws, rules,
regulations, decisions, directives and orders, including all decisions,
directives and orders of the Commission, the FDIC and the OTS.
(t) The Jefferson Parties shall comply with any and all terms, conditions,
requirements and provisions with respect to the Conversion and the transactions
contemplated thereby imposed by the OTS, the Conversion Regulations, the
Commission, the 1933 Act and the 1933 Act Regulations, the 1934 Act and the 1934
Act Regulations to be complied with subsequent to the Closing Date. The Holding
Company will comply with all provisions of all undertakings contained in the
Registration Statement.
(u) The Jefferson Parties will not amend the Plan without notifying the
Agent prior thereto.
(v) The Holding Company shall provide the Agent with any information
necessary to allow the Agent to manage the allocation process in order to permit
the
19
Holding Company to carry out the allocation of the Shares in the event of an
oversubscription, and such information shall be accurate and reliable in all
material respects.
(w) Prior to the Closing Date, the Jefferson Parties will inform the Agent
of any event or circumstances of which it is aware as a result of which the
Registration Statement and/or Prospectus, as then amended or supplemented, would
contain an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading.
(x) The Holding Company will not deliver the Shares until the Jefferson
Parties have satisfied or caused to be satisfied each condition set forth in
Section 10 hereof, unless such condition is waived in writing by the Agent.
(y) Prior to the Closing Date, the Plan shall have been approved by the
voting members of the MHC and the stockholders of the Bank in accordance with
the Plan and the Conversion Regulations and the applicable provisions, if any,
of the Bank's and MHC's charter and bylaws.
(z) On or before the Closing Date, the Jefferson Parties will have used
their best efforts to obtain approval for quotation of shares of the Common
Stock on the Nasdaq National Market System by the Closing Date and will use its
best efforts to maintain such quotation and will have completed all conditions
precedent to the Conversion specified in the Plan and the offer and sale of the
Shares will have been conducted in all material respects in accordance with the
Plan, the Conversion Regulations (except as modified or waived in writing by the
OTS) and with all other applicable laws, regulations, decisions and orders,
including all terms, conditions, requirements and provisions precedent to the
Conversion imposed upon any of the Jefferson Parties by the OTS, the Commission
or any other regulatory authority and in the manner described in the Prospectus.
(aa) The Holding Company shall notify the Agent when funds shall have been
received for the minimum number of Shares set forth in the Prospectus.
(bb) The officers and directors of the Jefferson Parties shall not sell or
transfer any shares of Bank Common Stock or Common Stock of the Holding Company
commencing on the date hereof and continuing for a period of 90 days following
the Closing Date (the "Restricted Period"), as set forth in the lock-up
agreements executed by each such officer and director concurrently with the
execution of this Agreement. The Jefferson Parties shall not assist such
officers or directors in connection with the sale or transfer of shares of Bank
Common Stock or Common Stock of the Holding Company during the Restricted
Period.
(cc) Other than as permitted by the Conversion Regulations, the HOLA, the
1933 Act, the 1933 Act Regulations and the laws of any state in which the Shares
are registered or qualified for sale or exempt from registration, none of the
Jefferson Parties
20
will distribute any prospectus, offering circular or other offering material in
connection with the offer and sale of the Shares.
(dd) 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 or set forth in an amendment or
supplement thereto, none of the Jefferson Parties will have: (i) 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, or (ii) entered into any
transaction which is material in light of the business and properties of the
Jefferson Parties, taken as a whole.
(ee) The Jefferson Parties shall use their best efforts to ensure that the
Foundation submits within the time frames required by applicable law a request
to the Internal Revenue Service to be recognized as a tax-exempt organization
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the
"Code"); the Jefferson Parties will take no action which will result in the
possible loss of the Foundation's tax-exempt status; and none of the Jefferson
Parties will contribute any additional assets to the Foundation until such time
that such additional contributions will be deductible for federal and state
income tax purposes.
Section 9. Payment of Expenses. Whether or not the Conversion is completed
or the sale and exchange of the Shares by the Holding Company is consummated,
the Jefferson Parties will pay for all their expenses incident to the
performance of this Agreement customarily borne by issuers, including without
limitation: (a) the preparation and filing of the Application; (b) the
preparation, printing, filing, delivery and mailing of the Registration
Statement, including the Prospectus, and all documents related to the Offerings
and proxy solicitation; (c) all filing fees and expenses in connection with the
qualification or registration of the Shares for offer and sale by the Holding
Company or the Bank under the securities or "Blue Sky" laws, including without
limitation filing fees, reasonable legal fees and disbursements of counsel in
connection therewith, and in connection with the preparation of a blue sky law
survey; (d) the filing fees of the NASD related to the Agent's fairness filing
under NASD Rule 2710; (e) fees and expenses related to the preparation of the
independent appraisal; (f) fees and expenses related to auditing and accounting
services; (g) expenses relating to advertising, temporary personnel, investor
meetings and stock information center; (h) transfer agent fees and costs of
preparation and distribution of stock certificates; and (i) Nasdaq application
and listing fees. The Jefferson Parties also agree to reimburse Agent for
reasonable out-of-pocket expenses, including costs of travel, meals and lodging,
photocopying, telephone, facsimile and couriers, as well as legal fees and
expenses, incurred by Agent in connection with the services hereunder. Agent
will not incur legal fees in excess of $35,000 (including counsel's
out-of-pocket expenses) without the approval of the Bank. The Agent will not
incur other out-of-pocket expenses in excess of $25,000 without prior approval
of the Bank. In the event that the Agent incurs any expenses on behalf of the
Jefferson Parties, the Jefferson Parties will pay or reimburse the Agent for
such expenses regardless of whether the Conversion is successfully completed,
and such reimbursements will not be
21
included in the expense limitations set forth in the following paragraph. The
Jefferson Parties acknowledge, however, that such limitations may be increased
by the mutual consent of the Bank and Agent in the event of delay in the
Offering requiring the Agent to utilize a Syndicated Community Offering, a delay
as a result of circumstances requiring material additional work by Agent or its
counsel or an update of the financial information in tabular form contained in
the Prospectus for a period later than December 31, 2002. Not later than two
days prior to the Closing Date, the Agent will provide the Bank with a detailed
accounting of all reimbursable expenses to be paid at the Closing in next day
funds. In the event the Bank determines to abandon or terminate the Plan prior
to Closing, payment of such expenses shall be made in next day funds on the date
such determination is made.
Section 10. Conditions to the Agent's Obligations. The obligations of the
Agent hereunder and the occurrence of the Closing and the Conversion are subject
to the condition that all representations and warranties of the Jefferson
Parties herein contained are, at and as of the commencement of the Offerings and
(except to the extent such representations and warranties speak as of an earlier
date) at and as of the Closing Date, true and correct, the condition that the
Jefferson Parties shall have performed, in all material respects, all of their
obligations hereunder to be performed on or before such dates and to the
following further conditions:
(a) At the Closing Date, the Jefferson Parties shall have conducted the
Conversion in all material respects in accordance with the Plan, the Conversion
Regulations and all other applicable laws, regulations, decisions and orders,
including all terms, conditions, requirements and provisions precedent to the
Conversion imposed upon them by the OTS, the SEC or any other authority
government.
(b) The Registration Statement shall have been declared effective by the
SEC, the Conversion Application and Holding Company Application shall have been
approved by the OTS and no stop order or other action suspending the
effectiveness of the Registration Statement shall have been issued under the
1933 Act or proceedings therefor initiated or, to the knowledge of the Jefferson
Parties, threatened by the Commission or any state authority and no order or
other action suspending the authorization for use of the Prospectus or the
consummation of the Conversion shall have been issued, or proceedings therefor
initiated or, to the knowledge of the Jefferson Parties, threatened by the OTS,
the Commission, or any other governmental body.
(c) At the Closing Date, the Agent shall have received:
(1) The opinion, dated as of the Closing Date, of Muldoon Murphy &
Faucette LLP and/or local counsel acceptable to the Agent, in form and
substance satisfactory to the Agent and counsel for the Agent to the effect
that:
(i) The Holding Company is a corporation duly organized and
validly existing and in good standing under the laws of the State of
Tennessee, with corporate power and authority to own its properties
and
22
to conduct its business currently conducted by the MHC, as described
in the Prospectus.
(ii) The Bank is a validly existing federally chartered stock
savings association, and upon consummation of the Conversion, the Bank
will continue to be a validly existing federally chartered stock
savings association, with full power and authority to own its
properties and to conduct its business as described in the Prospectus;
the activities of the Bank as described in the Prospectus are
permitted by federal law and the rules and regulations of the FDIC and
the OTS (or valid waivers granted it by the FDIC and OTS from such
rules and regulations; all of the capital stock of the Bank to be
outstanding upon completion of the Conversion will be validly issued,
fully paid and nonassessable and will be owned of record and
beneficially by the Holding Company, free and clear of any mortgage,
pledge, lien, encumbrance, claim or restriction.
(iii) The activities of the MHC, as described in the Prospectus,
are permitted under applicable federal law (or valid waivers granted
by the OTS from such law). To such counsel's actual knowledge, each of
the Jefferson Parties has obtained all licenses, permits, and other
governmental authorizations that are material for the conduct of its
business, and all such licenses, permits and other governmental
authorizations are, to such counsel's actual knowledge, in full force
and effect, and to such counsel's actual knowledge, the Jefferson
Parties comply therewith in all material respects.
(iv) The Bank is a member in good standing of the Federal Home
Loan Bank of Cincinnati. The Bank is an insured depository institution
under the provisions of the Federal Deposit Insurance Act, as amended,
and to such counsel's knowledge, no proceedings for the termination or
revocation of the federal deposit insurance of the Bank are pending or
threatened.
(v) Upon consummation of the Conversion, and the issuance of
Foundation Shares to the Foundation immediately upon completion
thereof subject to compliance with all conditions imposed upon the
Foundation and the contribution thereof by the OTS under the terms of
the OTS' approval order, in an amount as described in the Prospectus,
(a) the authorized, issued and outstanding capital stock of the
Holding Company will be within the range set forth in the Prospectus
under the caption "Capitalization," and no shares of Common Stock have
been or will be issued and outstanding prior to the Closing Date
(except for the shares issued upon incorporation of the Holding
Company); (b) the shares to be subscribed for in the Offerings and the
Foundation Shares will have been duly and validly authorized for
issuance, and when issued and delivered by the Holding Company
pursuant to the Plan against payment of the consideration calculated
as set forth in the Plan, will be duly and
23
validly issued and fully paid and nonassessable; and (c) the issuance
of the Shares and the Foundation Shares is not subject to preemptive
rights under the charter or bylaws of the Holding Company, or arising
or outstanding by operation of law or under any contract, indenture,
agreement, instrument or other document known to such counsel, except
for the subscription rights under the Plan. To such counsel's
knowledge, upon issuance of the Shares and the Foundation Shares, good
title to the Shares and the Foundation Shares will be transferred from
the Holding Company to the purchasers thereof against payment
therefor, subject to such claims as may be asserted against the
purchasers thereof by third-party claimants.
(vi) The Jefferson Parties have full corporate power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby and by the Plan, including the
establishment of the Foundation and the contribution thereto of the
Foundation Shares. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby, including
the establishment of the Foundation and the contribution thereto of
the Foundation Shares, have been duly authorized by all necessary
corporate action on the part of the Jefferson Parties; and this
Agreement constitutes a valid, legal and binding obligation of each of
the Jefferson Parties, enforceable in accordance with its terms,
except as rights to indemnity and contribution thereunder may be
limited under applicable law, and subject to the qualification that
(i) enforcement thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization or other laws (including the laws of
fraudulent conveyance) or judicial decisions affecting the
enforceability of creditors' rights generally, the rights of creditors
of savings banks or financial institutions, the accounts of which are
insured by the FDIC, and (ii) enforcement thereof is subject to
general equity principles (regardless of whether such enforceability
is considered in a proceeding in equity or at law) and to the effect
of certain laws and judicial decisions upon the availability of
injunctive relief and enforceability of equitable remedies, including
the remedies of specific performance and self-help.
(vii) Pursuant to the Conversion Regulations, the Plan and the
establishment and funding of the Foundation has been duly approved by
the required vote of the MHC's members and Bank stockholders and duly
adopted by the required vote of the directors of the Holding Company,
the MHC and the Bank.
(viii) The Plan complies in all material respects with the
Conversion Regulations; the Conversion Application and the Holding
Company Application, including the establishment of the Foundation and
the contribution thereto of the Foundation Shares, have been approved
by the OTS, and no action has been taken and, to such counsel's
knowledge, none is pending or threatened by the OTS, SEC or any other
24
governmental authority to revoke such approval or to suspend the
Offerings or the use of the Prospectus, and subject to the
satisfaction of any conditions set forth in such approvals, no further
approval, registration, authorization, consent or other order of any
federal or state regulatory agency, public board or body is required
in connection with the execution and delivery of this Agreement, the
offer, sale and issuance of the Shares and the Foundation Shares and
the consummation of the Conversion, except as may be required under
the securities or "Blue Sky" laws of various jurisdictions as to which
no opinion need be rendered. To the knowledge of such counsel, no
person has sought to obtain regulatory or judicial review of the final
action of the OTS approving the Plan, the Conversion Application, the
Holding Company Application or the Prospectus.
(ix) The Registration Statement has become effective under the
1933 Act and to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued, or
proceedings for that purpose have been instituted or threatened, by
the Commission.
(x) The terms and provisions of the Shares and the Foundation
Shares conform to the description thereof contained in the
Registration Statement and the Prospectus, and the forms of
certificates proposed to be used to evidence the Shares are in due and
proper form in compliance with applicable laws.
(xi) At the time the Conversion Application, including the
Prospectus and Members' Proxy Statement and Stockholders' Proxy
Statement contained therein, was approved by the OTS, the Conversion
Application, including the Prospectus and Members' Proxy Statement and
Stockholders' Proxy Statement contained therein, as amended or
supplemented, complied as to form in all material respects with the
requirements of the Conversion Regulations (other than the financial
statements, notes to financial statements, financial tables or other
financial and statistical data included therein and the appraisal
valuation and the business plan as to which counsel need express no
opinion).
(xii) At the time that the Registration Statement became
effective and as of the Closing Date, the Registration Statement,
including the Prospectus (as amended or supplemented) (other than the
financial statements, notes to financial statements, financial tables
or other financial and statistical data included therein and the
appraisal valuation and the business plan as to which counsel need
express no opinion), complied as to form in all material respects with
the requirements of the 1933 Act and the rules and regulations
promulgated thereunder.
25
(xiii) To such counsel's knowledge, there are no legal or
governmental proceedings pending, or threatened (i) asserting the
invalidity of this Agreement, (ii) seeking to prevent the Conversion
or the offer, sale or issuance of the Shares, or (iii) which are
required to be disclosed in the Registration Statement and Prospectus,
other than those disclosed therein.
(xiv) The information in the Prospectus under the captions
"Questions and Answers About the Stock Offering," "Summary -- The
Conversion," "Summary -- The Offering," "Risk Factors -- Various
factors could make takeover attempts more difficult to achieve," "Risk
Factors -- There is a decrease in the rights of shareholders under our
Tennessee charter and bylaws," "Risk Factors -- We operate in a highly
regulated environment and we may be adversely affected by changes in
laws and regulations," "Use of Proceeds," "Our Dividend Policy," "Our
Management," "Regulation and Supervision," "Federal and State
Taxation," "Comparison of Shareholder Rights," "Restrictions on
Acquisition of Jefferson Bancshares and Jefferson Federal,"
"Description of Jefferson Bancshares Capital Stock," and "The
Conversion," to the extent that such information constitutes matters
of law, summaries of legal matters, documents or proceedings, or legal
conclusions, has been reviewed by such counsel and is accurate in all
material respects. The descriptions in the Prospectus of statutes or
regulations are accurate summaries and fairly present the information
required to be shown.
(xv) None of the Jefferson Parties are required to be registered
as an investment company under the Investment Company Act of 1940.
(xvi) To such counsel's actual knowledge, none of the Jefferson
Parties is in violation of its Certificate of Organization and Bylaws
or its Charter and Bylaws, as appropriate, or in default or violation
of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which it is a party or by which it or its property may
be bound, except for such defaults or violations which would not have
a Material Adverse Effect; the execution and delivery of this
Agreement, the incurrence of the obligations herein set forth and the
consummation of the transactions contemplated herein do not (a), to
such counsel's actual knowledge, conflict with or constitute a breach
of, or default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the
Jefferson Parties pursuant to any material contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which any
of the Jefferson Parties is a party or by which any of them may be
bound, or to which any of the property or assets of the Jefferson
Parties are subject (other than the establishment of the liquidation
account), (b) result in any violation of the provisions of the Charter
or Bylaws of the Jefferson Parties or, (c) result in any violation of
26
any applicable federal or state law, act, regulation (except that no
opinion with respect to the securities and blue sky laws of various
jurisdictions or the rules or regulations of the NASD and/or The
Nasdaq Stock Market need be rendered) or, to such counsel's actual
knowledge, order or court order, writ, injunction or decree.
(xvii) The Holding Company's Charter and Bylaws comply in all
material respects with the laws of the State of Tennessee. The Bank's
Charter and Bylaws comply in all material respects with federal law.
(xviii) To such counsel's actual knowledge, none of the Jefferson
Parties is in violation of any directive from the OTS or the FDIC of
which such counsel is aware to make any material change in the method
of conducting its respective business.
(xix) To such counsel's knowledge, there are no material
contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments required to be described or referred to in the
Conversion Application, the Registration Statement or the Prospectus
or required to be filed as exhibits thereto other than those described
or referred to therein or filed as exhibits thereto in the Conversion
Application, the Registration Statement or the Prospectus. The
description in the Conversion Application, the Registration Statement
and the Prospectus of such documents and exhibits is accurate in all
material respects and fairly presents the information required to be
shown.
(xx) Jefferson Service Corporation of Morristown, Tennessee, Inc.
("JSC") is validly existing as a corporation under the laws of the
jurisdiction of its incorporation, has full corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the
Prospectus; the activities of JSC, as described in the Registration
Statement and the Prospectus, are permitted of a Tennessee corporation
and to subsidiaries of a federally-chartered stock savings bank under
the rules and regulations of the OTS; to the best of such counsel's
knowledge, the Bank owns all of the capital stock of JSC free and
clear of any material security interest, mortgage, pledge, lien,
encumbrance, claim or equity.
(xxi) The Foundation has been duly incorporated and is validly
existing as a non-stock corporation in good standing under the laws of
the State of Tennessee with corporate power and authority to own,
lease and operate its properties and to conduct its business as
described in the Prospectus; the Foundation is not a savings and loan
holding company within the meaning of 12 C.F.R. Section 574.2(q) as a
result of the issuance of the Foundation Shares to it in accordance
with the terms of the Plan and in the amounts as described in the
Prospectus; no approvals are required to establish the Foundation and
to contribute the Foundation
27
Shares and cash amounts thereto as described in the Prospectus other
than those set forth in the OTS' approval order; the Foundation Shares
to be issued to the Foundation in accordance with the Plan and as
described in the Prospectus will have been duly authorized for
issuance and, when issued and contributed by the Company pursuant to
the Plan, will be duly and validly issued and fully paid and
non-assessable.
The opinion may be limited to matters governed by the laws of the
United States and the corporate laws of the State of Tennessee. In
rendering such opinion, such counsel may rely (A) as to matters involving
the application of laws of any jurisdiction other than the United States,
to the extent such counsel deems proper and specified in such opinion, upon
the opinion of counsel reasonably acceptable to the Agent, as long as such
other opinion indicates that the Agent may rely on the opinion, and (B) as
to matters of fact, to the extent such counsel deems proper, on
certificates of responsible officers of the Jefferson Parties and public
officials; provided copies of any such opinion(s) or certificates of public
officials are delivered to Agent together with the opinion to be rendered
hereunder by special counsel to the Jefferson Parties. In rendering such
opinion, all statements contained therein "to our knowledge" or "to our
attention" or "known to us" means the knowledge, following reasonable
investigation, of the attorneys who have worked on the transactions
contemplated herein. The Agent's counsel may rely for purposes of its own
opinion on the opinion of Muldoon Murphy & Faucette LLP whose opinion shall
expressly authorize such reliance. The opinion of such counsel for the
Jefferson Parties shall state that it has no reason to believe that the
Agent is not reasonably justified in relying thereon.
(xxii) A letter of Muldoon Murphy & Faucette LLP which shall
state that during the preparation of the Registration Statement and
the Prospectus, Muldoon Murphy & Faucette LLP participated in
conferences with certain officers of and other representatives of the
Jefferson Parties, counsel to the Agent, representatives of the
independent public accountants for the Jefferson Parties and
representatives of the Agent at which the contents of the Registration
Statement and the Prospectus and related matters were discussed and
has considered the matters required to be stated therein and the
statements contained therein and, although (without limiting the
opinions provided pursuant to Section 10(c)(1)), Muldoon Murphy &
Faucette LLP has not independently verified the accuracy, completeness
or fairness of the statements contained in the Registration Statement
and Prospectus, on the basis of the foregoing, nothing has come to the
attention of Muldoon Murphy & Faucette LLP that caused Muldoon Murphy
& Faucette LLP to believe that the Registration Statement at the time
it was declared effective by the Commission and as of the date of such
letter, contained or contains any untrue statement of a material fact
or omitted to state any material fact required to be stated therein or
necessary to make the statements therein in light of the circumstances
under which they were made not misleading (it being
28
understood that counsel need express no comment or opinion with
respect to statements, notes to financial statements, schedules and
other financial and statistical data included, or statistical or
appraisal methodology employed, in the Registration Statement or
Prospectus, the appraisal valuation or the business plan).
(xxiii) A Blue Sky Memorandum from Muldoon Murphy & Faucette LLP
relating to the offering, including Agent's participation therein, and
should be furnished to Agent with a copy thereof addressed to Agent or
upon which Muldoon Murphy & Faucette LLP shall state Agent may rely.
The Blue Sky Memorandum will relate to the necessity of obtaining or
confirming exemptions, qualifications or the registration of the
common stock under applicable state securities law.
(d) Concurrently with the execution of this Agreement, the Agent shall
receive a letter from Craine, Thompson & Jones, P.C., dated the date hereof and
addressed to the Agent, such letter (i) confirming that Craine, Thompson &
Jones, P.C. is a firm of independent public accountants within the meaning of
the 1933 Act and the 1933 Act Regulations, and stating in effect that in Craine,
Thompson & Jones, P.C.'s opinion the financial statements of the Bank included
in the Prospectus comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act and the 1934 Act and the related rules
and regulations of the Commission thereunder; (ii) stating in effect that, on
the basis of certain agreed upon procedures (but not an audit examination in
accordance with generally accepted auditing standards) consisting of a review
(in accordance with Statement of Auditing Standards No. 71) of the latest
available unaudited consolidated interim financial statements of the Bank
prepared by the Jefferson Parties, a reading of the minutes of the meetings of
the Board of Directors of the Bank and committees thereof and stockholders and
consultations with officers of the Bank responsible for financial and accounting
matters, nothing came to their attention which caused them to believe that: (A)
such unaudited consolidated financial statements included in the Prospectus are
not in conformity with generally accepted accounting principles applied on a
basis substantially consistent with that of the audited financial statements
included in the Prospectus; or (B) during the period from the date of the latest
unaudited consolidated financial statements included in the Prospectus to a
specified date not more than five business days prior to the date of the
Prospectus, 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 loss allowance, total assets, stockholders' equity or there was
any change in common stock outstanding (other than for stock option plans) at
the date of such letter as compared with amounts shown in the latest unaudited
statement of condition or there was any decrease in net income, non-interest
income, provision for loan losses or net income after provision or increase in
non-interest expense of the Bank for the period commencing immediately after the
period covered by the latest unaudited income statement and ended not more than
five business days prior to the date of the Prospectus as compared to the
corresponding period in the preceding year; and (iii) stating that, in addition
to the audit examination referred to in its opinion included in the
29
Prospectus and the performance of the procedures referred to in clause (ii) of
this subsection (c), they have compared with the general accounting records of
the Bank, which are subject to the internal controls of the accounting system of
the Bank and other data prepared by the Jefferson Parties from accounting
records, to the extent specified in such letter, such amounts and/or percentages
set forth in the Prospectus as the Agent may reasonably request, and they have
found such amounts and percentages to be in agreement therewith (subject to
rounding).
(e) At the Closing Date, the Agent shall receive a letter from Craine,
Thompson & Jones, P.C. dated the Closing Date, addressed to the Agent,
confirming the statements made by its letter delivered by it pursuant to
subsection (d) of this Section 10, the "specified date" referred to in clause
(ii)(B) thereof to be a date specified in such letter, which shall not be more
than three business days prior to the Closing Date.
(f) At the Closing Date, counsel to the Agent shall have been furnished
with such documents and opinions as counsel for the Agent may require for the
purpose of enabling them to advise the Agent with respect to the issuance and
sale of the Shares and the issuance of the Foundation Shares as herein
contemplated and related proceedings, or in order to evidence the accuracy of
any of the representations and warranties, or the fulfillment of any of the
conditions herein contained.
(g) At the Closing Date, the Agent shall receive a certificate of the Chief
Executive Officer and Chief Financial Officer of each of the Jefferson Parties,
dated the Closing Date, to the effect that: (i) they have examined the
Registration Statement and at the time the Registration Statement became
authorized for final use, the Prospectus did not contain an untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein not misleading; (ii) there has not been, since the respective
dates as of which information is given in the Registration Statement, any
Material Adverse Effect otherwise than as set forth or contemplated in the
Registration Statement; (iii) the representations and warranties contained in
Section 6 of this Agreement are true and correct with the same force and effect
as though made at and as of the Closing Date; (iv) the Jefferson Parties have
complied in all material respects with all material agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to the Closing
Date including the conditions contained in this Section 10; (v) no stop order
has been issued or, to their knowledge, is threatened, by the Commission or any
other governmental body; (vi) no order suspending the Offering, the Conversion,
the acquisition of all of the shares of the Bank by the Holding Company, the
transactions required under the Plan to consummate the Conversion or the
effectiveness of the Prospectus has been issued and to their knowledge, no
proceedings for any such purpose have been initiated or threatened by the OTS,
the Commission, or any other federal or state authority; and (vii) to their
knowledge, no person has sought to obtain regulatory or judicial review of the
action of the OTS in approving the Plan or to enjoin the Conversion.
(h) At the Closing Date, the Agent shall receive a letter from RP
Financial, LC, dated as of the Closing Date, (i) confirming that said firm is
independent of the Jefferson
30
Parties and is experienced and expert in the area of corporate appraisals, (ii)
stating in effect that the Appraisal complies in all material respects with the
applicable requirements of the Conversion Regulations, and (iii) further stating
that its opinion of the aggregate pro forma market value of the Jefferson
Parties, as converted, expressed in the appraisal as most recently updated,
remains in effect.
(i) None of the Jefferson Parties shall have sustained, since the date of
the latest financial statements included in the Registration Statement and
Prospectus, any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth in the Registration Statement and the Prospectus, and since
the respective dates as of which information is given in the Registration
Statement and the Prospectus, there shall not have been any Material Adverse
Effect that is in the Agent's reasonable judgment sufficiently material and
adverse as to make it impracticable or inadvisable to proceed with the Offerings
or the delivery of the Shares on the terms and in the manner contemplated in the
Prospectus.
(j) Prior to and at the Closing Date, in the reasonable opinion of the
Agent there shall have been no material adverse change in the financial
condition or in the earnings, business affairs or prospects of any of the
Jefferson Parties independently, or the Jefferson Parties taken as a whole, from
and as of the latest dates as of which such condition is set forth in the
Prospectus, except as referred to therein.
(k) At or prior to the Closing Date, the Agent shall receive (i) a copy of
the Conversion Application and a copy of the letter from the OTS approving the
Conversion Application, (ii) a copy of the order from the Commission declaring
the Registration Statement effective, (iii) an executed copy of the charter of
the Holding Company, (iv) a copy of the letter from the OTS approving the
Holding Company Application, (v) a certificate from the FDIC evidencing the
Bank's insurance of accounts, and (vi) any other documents that Agent shall
reasonably request.
(l) 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 Jones 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); (ii) a
general moratorium on the operations of federally-insured financial institutions
or a general moratorium on the withdrawal of deposits from commercial banks or
other federally-insured financial institutions declared by either federal or
state authorities; or (iii) there shall not have occurred any material adverse
change in the financial markets
31
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.
(m) All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to the Agent and to counsel for the Agent. Any certificate
signed by an officer of the MHC, the Holding Company or the Bank and delivered
to the Agent or to counsel for the Agent shall be deemed a representation and
warranty by the MHC, the Holding Company or the Bank, as the case may be, to the
Agent as to the statements made therein.
Section 11. Indemnification.
(a) The Jefferson Parties jointly and severally agree to indemnify and hold
harmless the Agent, its officers, directors, agents, attorneys, servants and
employees and each person, if any, who controls the Agent within the meaning of
Section 15 of the 1933 Act or Section 20(a) of the 1934 Act, against any and all
loss, liability, claim, damage or expense whatsoever (including but not limited
to settlement expenses, subject to the limitation set forth in the last sentence
of subsection (c) below), joint or several, that the Agent or any of such
officers, directors, agents, attorneys, servants, employees and controlling
Persons (collectively, the "Related Persons") may suffer or to which the Agent
or the Related Persons may become subject under all applicable federal and state
laws or otherwise, and to promptly reimburse the Agent and any Related Persons
upon written demand for any reasonable expenses (including reasonable fees and
disbursements of counsel and Agent's time spent according to normal hourly
rates) incurred by the Agent or any Related Persons in connection with
investigating, preparing or defending any actions, proceedings or claims
(whether commenced or threatened) to the extent such losses, claims, damages,
liabilities or actions: (i) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment or supplement thereto), the Prospectus (or
32
any amendment or supplement thereto), the Applications, or other instrument or
document of the Jefferson Parties or based upon written information supplied by
any of the Jefferson Parties filed in any state or jurisdiction to register or
qualify any or all of the Shares under the securities laws thereof
(collectively, the "Blue Sky Applications"), or any application or other
document, advertisement, or communication ("Sales Information") prepared, made
or executed by or on behalf of any of the Jefferson Parties with its consent or
based upon information furnished by or on behalf of any of the Jefferson
Parties, in order to qualify or register the Shares under the securities laws
thereof, (ii) arise out of or are based upon the omission or alleged omission to
state in any of the foregoing documents or information, a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; (iii) arise from
any theory of liability whatsoever relating to or arising from or based upon the
Registration Statement (or any amendment or supplement thereto), the Prospectus
(or any amendment or supplement thereto), the Applications, any Blue Sky
Applications or Sales Information or other documentation distributed in
connection with the Offerings; or (iv) result from any claims made with respect
to the accuracy, reliability and completeness of the records identifying the
Eligible Account Holders and Supplemental Eligible Account Holders or Other
Members or for any denial or reduction of a subscription or order to purchase
Common Stock, whether as a result of a properly calculated allocation pursuant
to the Plan or otherwise, based upon such records; provided, however, that no
indemnification is required under this subsection (a) to the extent such losses,
claims, damages, liabilities or actions arise out of or are based upon any
untrue material statements or alleged untrue material statements in, or material
omission or alleged material omission from, the Registration Statement (or any
amendment or supplement thereto) or the Prospectus (or any amendment or
supplement thereto), the Applications, the Blue Sky Applications or Sales
Information or other documentation distributed in connection with the Conversion
made in reliance upon and in conformity with information furnished to the
Jefferson Parties by the Agent or its representatives (including counsel) with
respect to the Agent expressly for use in the Registration Statement (or any
amendment or supplement thereto) or Prospectus (or any amendment or supplement
thereto) under the caption "The Conversion - Marketing Arrangements" except for
information derived from the Prospectus. Provided further, that the Jefferson
Parties will not be responsible for any loss, liability, claim, damage or
expense to the extent a court of competent jurisdiction finds they result
primarily from material oral misstatements by the Agent to a purchaser or
prospective purchaser of Shares which are not based upon information in the
Registration Statement or Prospectus, or from actions taken or omitted to be
taken by the Agent in bad faith or from the Agent's gross negligence or willful
misconduct and the Agent agrees to repay to the Jefferson Parties any amounts
advanced to it by the Jefferson Parties in connection with matters as to which
it is found by a court of competent jurisdiction not to be entitled to
indemnification hereunder.
(b) The Agent agrees to indemnify and hold harmless the Jefferson Parties,
their directors and officers, agents, attorneys, servants and employees and each
person, if any, who controls any of the Jefferson Parties within the meaning of
Section 15 of the 1933 Act or Section 20(a) of the 1934 Act against any and all
loss, liability, claim, damage or expense whatsoever (including but not limited
to settlement expenses, subject to the limitation set forth in the last sentence
of subsection (c) below), joint or several, which they, or any of them, may
suffer or to which they, or any of them, may become subject under all applicable
federal and state laws or otherwise, and to promptly reimburse the Jefferson
Parties and any such persons upon written demand for any reasonable expenses
(including out-of-pocket expenses, fees and disbursements of counsel) incurred
by them in connection with investigating, preparing or defending any actions,
proceedings or claims (whether commenced or threatened) to the extent such
losses, claims, damages, liabilities or actions arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment or supplement thereto), the
Applications or any Blue Sky Applications or Sales Information or are based upon
the omission or alleged omission to state in any of the foregoing documents a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the
33
circumstances under which they were made, not misleading; provided, however,
that the Agent's obligations under this Section 11(b) shall exist only if and
only to the extent that such untrue statement or alleged untrue statement was
made in, or such material fact or alleged material fact was omitted from, the
Applications, Registration Statement (or any amendment or supplement thereto) or
the Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with information furnished to the Jefferson Parties by the Agent or
its representatives (including counsel) expressly for use under the caption "The
Conversion - Marketing Arrangements."
(c) Each indemnified party shall give prompt written notice to each
indemnifying party of any action, proceeding, claim (whether commenced or
threatened), or suit instituted against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve it from any liability which it may have on account of this Section 11,
Section 12 or otherwise, unless the failure to give such notice promptly results
in material prejudice to the indemnifying party. An indemnifying party may
participate at its own expense in the defense of such action. In addition, if it
so elects within a reasonable time after receipt of such notice, an indemnifying
party, jointly with any other indemnifying parties receiving such notice, may
assume the defense of such action with counsel chosen by it reasonably
acceptable to the indemnified parties that are defendants in such action, unless
such indemnified parties reasonably object to such assumption on the ground that
there may be legal defenses available to them that are different from or in
addition to those available to such indemnifying party. If an indemnifying party
assumes the defense of such action, the indemnifying parties shall not be liable
for any fees and expenses of counsel for the indemnified parties incurred
thereafter in connection with such action, proceeding or claim, other than
reasonable costs of investigation. In no event shall the indemnifying parties be
liable for the fees and expenses of more than one separate firm of attorneys
(unless an indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from or in
addition to those of other indemnified parties) for all indemnified parties in
connection with any one action, proceeding or claim or separate but similar or
related actions, proceedings or claims in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall be
liable for any settlement of any action, proceeding or suit, which settlement is
effected without its prior written consent. Neither the Jefferson Parties nor
the Agent shall, without the written consent of the other, settle or compromise
any claim against them or it based upon circumstances giving rise to an
indemnification claim against the other party hereunder unless such settlement
or compromise provides that the indemnified party shall be unconditionally and
irrevocably released from all liability in respect to such claim.
(d) The agreements contained in this Section 11 and in Section 12 hereof
and the representations and warranties of the Jefferson Parties set forth in
this Agreement shall remain operative and in full force and effect regardless of
(i) any investigation made by or on behalf of the Agent or its officers,
directors, controlling persons, agents, attorneys, servants or employees or by
or on behalf of any of the Jefferson Parties or any officers, directors,
controlling persons, agents, attorneys , servants or employees of any of the
Jefferson Parties; (ii) delivery of and payment hereunder for the Shares; or
34
(iii) any termination of this Agreement. Notwithstanding the prior sentence,
Sections 11 and 12 hereof are subject to and limited by Section 23A of the
Federal Reserve Act, as applicable.
Section 12. Contribution.
In order to provide for just and equitable contribution in circumstances in
which the indemnification provided for in Section 11 is due in accordance with
its terms but is found in a final judgment by a court to be unavailable from the
Jefferson Parties or the Agent, the Jefferson Parties and the Agent shall
contribute to the aggregate losses, claims, damages and liabilities of the
nature contemplated by such indemnification (including any investigation, legal
and other expenses incurred in connection therewith and any amount paid in
settlement of any action, suit, or proceeding of any claims asserted, but after
deducting any contribution received by the Jefferson Parties or the Agent from
persons other than the other party thereto, who may also be liable for
contribution) in such proportion so that (i) the Agent is responsible for that
portion represented by the percentage that the fees paid to the Agent pursuant
to Section 4 of this Agreement (not including expenses) ("Agent's Fees), less
any portion of Agent's Fees paid by Agent to Assisting Brokers, bear to the
total proceeds received by the Jefferson Parties from the sale of the Shares in
the Offering, net of all expenses of the Offering, except Agent's fees and (ii)
the Jefferson Parties shall be responsible for the balance. If, however, the
allocation provided above is not permitted by applicable law or if the
indemnified party failed to give the notice required under Section 11 above,
then each indemnifying party shall contribute to such amount paid or payable to
such indemnified party in such proportion as is appropriate to reflect not only
such relative fault of the Jefferson Parties on the one hand and the Agent on
the other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions, proceedings or claims in
respect thereof), but also the relative benefits received by the Jefferson
Parties on the one hand and the Agent on the other from the Offering, as well as
any other relevant equitable considerations. The relative benefits received by
the Jefferson Parties on the one hand and the Agent on the other hand shall be
deemed to be in the same proportion as the total proceeds from the Offering,
except Agent's fees, net of all expenses of the Offering, received by the
Jefferson Parties bear, with respect to the Agent, to the total fees (not
including expenses) received by the Agent less the portion of such fees paid by
the Agent to Assisting Brokers. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Jefferson Parties on the one hand or the
Agent on the other and the parties relative intent, good faith, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Jefferson Parties and the Agent agree that it would not be just
and equitable if contribution pursuant to this Section 12 were determined by
pro-rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 12.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or action, proceedings or claims in respect
thereof) referred to above in this Section 12 shall be deemed to include any
legal or other expenses
35
reasonably incurred by such indemnified party in connection with investigating
or defending any such action, proceeding or claim. It is expressly agreed that
the Agent shall not be liable for any loss, liability, claim, damage or expense
or be required to contribute any amount which in the aggregate exceeds the
amount paid (excluding reimbursable expenses) to the Agent under this Agreement
less the portion of such fees paid by the Agent to Assisting Brokers. It is
understood and agreed that the above-stated limitation on the Agent's liability
is essential to the Agent and that the Agent would not have entered into this
Agreement if such limitation had not been agreed to by the parties to this
Agreement. No person found guilty of any fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
with respect to any loss or liability arising from such misrepresentation from
any person who was not found guilty of such fraudulent misrepresentation. The
duties, obligations and liabilities of the Jefferson Parties and the Agent under
this Section 12 and under Section 11 shall be in addition to any duties,
obligations and liabilities which the Jefferson Parties and the Agent may
otherwise have. For purposes of this Section 12, each of the Agent's and the
Jefferson Parties' officers, directors and, controlling persons within the
meaning of the 1933 Act and the 1934 Act shall have the same rights to
contribution as the Jefferson Parties and the Agent. Any party entitled to
contribution, promptly after receipt of notice of commencement of any action,
suit, claim or proceeding against such party in respect of which a claim for
contribution may be made against another party under this Section 12, will
notify such party from whom contribution may be sought, but the omission to so
notify such party shall not relieve the party from whom contribution may be
sought from any other obligation it may have hereunder or otherwise than under
this Section 12.
Section 13. Survival.
(a) All representations, warranties and indemnities and other statements
contained in this Agreement, or contained in certificates of officers of the
Jefferson Parties or the Agent submitted pursuant hereto, shall remain operative
and in full force and effect, regardless of any termination or cancellation of
this Agreement or any investigation made by or on behalf of the Agent or its
controlling persons, or by or on behalf of the Jefferson Parties and shall
survive the issuance of the Shares, and any legal representative, successor or
assign of the Agent, any of the Jefferson Parties, and any indemnified person
shall be entitled to the benefit of the respective agreements, indemnities,
warranties and representations.
(b) The provisions of Paragraph 8 of the Letter Agreement, "Additional
Services," shall survive the issuance of the Shares (but not any termination or
cancellation of this Agreement) for a period of one (1) year, and any legal
representative, successor or assign of the Agent, and any of the Jefferson
Parties shall be entitled during such period to the benefit of the agreements
contained therein.
Section 14. Termination. Agent may terminate this Agreement by giving the
notice indicated below in this Section at any time after this Agreement becomes
effective as follows:
36
(a) In the event (i) the Plan is abandoned or terminated by the Holding
Company; (ii) the Holding Company fails to consummate the sale of the minimum
number of Shares prior to , 2003 in accordance with the provisions of
-----------
the Plan or as required by the Conversion Regulations and applicable law; or
(iii) immediately prior to commencement of the Offering, the Agent terminates
this relationship because in its opinion, which shall have been formed in good
faith after reasonable determination and consideration of all relevant factors,
there has been a failure to satisfactorily disclose all relevant information in
the Prospectus or the existence of market conditions which might render the sale
of the Shares inadvisable, this Agreement shall terminate and the Jefferson
Parties shall refund 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 in accordance with Section 2 hereof and any such termination shall
be without liability of any party to any other party except as otherwise
provided in Sections 2, 4, 9, 11 and 12 hereof.
(b) If any of the conditions specified in Section 10 hereof shall not have
been fulfilled when and as required by this Agreement, or by ,
-------------
2003, or waived in writing by the Agent, this Agreement and all of the Agent's
obligations hereunder may be canceled by the Agent by notifying the Bank of such
cancellation in writing at any time at or prior to the Closing Date, and any
such cancellation shall be without liability of any party to any other party
except as otherwise provided in Sections 2, 4, 9, 11 and 12 hereof.
(c) If Agent elects to terminate this Agreement as provided in this
Section, the Bank and the MHC shall be notified by the Agent as provided in
Section 15 hereof.
(d) If this Agreement is terminated in accordance with the provisions of
this Agreement, the Agent shall retain the advisory and management fee paid to
it pursuant to Section 4 and the Jefferson Parties shall reimburse the Agent for
any of its other actual, accountable, reasonable out-of-pocket expenses pursuant
to Section 9, including without limitation, communication, legal and travel
expenses.
Section 15. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to Agent shall be
directed to Keefe, Bruyette & Woods, Inc., 211 Bradenton Drive, Dublin, Ohio
43017, Attention: Mr. Harold Hanley (with a copy to Silver, Freedman & Taff,
L.L.P., 1700 Wisconsin Avenue, N.W., Washington, D.C. 20007, Attention: Dave M.
Muchnikoff); notices to the Jefferson Parties shall be directed to Jefferson
Bancshares, Inc., 120 Evans Avenue, Morristown, Tennessee 37814, Attention:
Anderson L. Smith, President and Chief Executive Officer (with a copy to Muldoon
Murphy & Faucette LLP, 5101 Wisconsin Avenue, N.W., Washington, D.C. 20016,
Attention: Paul M. Aguggia, Esq.)
Section 16. Parties. This Agreement shall inure to the benefit of and be
binding upon the Agent and the Jefferson Parties, and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
parties hereto and their respective
37
successors and the controlling persons and officers and directors referred to in
Sections 11 and 12 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provisions herein contained. It is understood and agreed that this Agreement is
the exclusive agreement among the parties, supersedes any prior Agreement among
the parties and may not be varied except by a writing signed by all parties,
except for Paragraphs 4, 10 and 11 of the Letter Agreement, which are not hereby
superseded.
Section 17. Partial Invalidity. In the event that any term, provision or
covenant herein or the application thereof to any circumstances or situation
shall be invalid or unenforceable, in whole or in part, the remainder hereof and
the application of said term, provision or covenant to any other circumstance or
situation shall not be affected thereby, and each term, provision or covenant
herein shall be valid and enforceable to the full extent permitted by law.
Section 18. Construction and Waiver of Jury Trial. This Agreement shall be
construed in accordance with the laws of the State of New York. Each of the
Jefferson Parties and the Agent 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 19. Counterparts. This Agreement may be executed in separate
counterparts, each of which so executed and delivered shall be an original, but
all of which together shall constitute but one and the same instrument.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
38
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon this instrument
along with all counterparts will become a binding agreement between you and us
in accordance with its terms.
Very truly yours,
JEFFERSON BANCSHARES, MHC
By:
-------------------------------------
Anderson L. Smith
President and Chief Executive Officer
JEFFERSON BANCSHARES, INC.
By:
-------------------------------------
Anderson L. Smith
President and Chief Executive Officer
JEFFERSON FEDERAL SAVINGS AND LOAN
ASSOCIATION OF MORRISTOWN
By:
-------------------------------------
Anderson L. Smith
President and Chief Executive Officer
The foregoing Agency Agreement is
hereby confirmed and accepted as of
the date first set forth above.
KEEFE, BRUYETTE & WOODS, INC.
By:
-------------------------------------
Harold Hanley
39