Up to 5,750,000 Shares
(subject to increase up to 6,612,500 shares)
Peoples Federal Bancshares, Inc.
(a Maryland corporation)
Common Stock
(par value $0.01 per share)
AGENCY AGREEMENT
May 14, 2010
SANDLER O'NEILL & PARTNERS, L.P.
919 Third Avenue, 6th Floor
New York, New York 10022
Ladies and Gentlemen:
Peoples Federal Bancshares, Inc., a Maryland corporation (the "Company"),
Peoples Federal Bancorp, Inc., a federal "mid-tier" holding company (the
"Mid-Tier Company"), Peoples Federal MHC, a federal mutual holding company (the
"MHC"), and Peoples Federal Savings Bank, a federally chartered stock savings
bank (the "Bank"), hereby confirm their agreement with Sandler O'Neill &
Partners, L.P. ("Sandler O'Neill" or the "Agent") with respect to the offer and
sale by the Company of up to 5,750,000 shares of the Company's common stock
(subject to increase up to 6,612,500 shares in the event of an increase in the
pro forma market value of the Company's common stock), par value $0.01 per share
(the "Common Stock"). The shares of Common Stock to be sold by the Company in
the Offerings (as defined below) are hereinafter called the "Securities." In
addition, as described herein, the Company expects to contribute a number of
shares equal to 8% of the shares of Common Stock sold in the Offerings, up to a
maximum of 460,000 shares of Common Stock, to a charitable foundation (the
"Foundation") to be established by the Company, such shares hereinafter being
referred to as the "Foundation Shares."
The Securities are being offered for sale and the Foundation Shares are
being contributed in accordance with the Plan of Conversion and Reorganization
(the "Plan") adopted by the Boards of Directors of the Mid-Tier Company, the MHC
and the Bank pursuant to which the MHC intends to convert from the mutual to
stock holding company form of organization pursuant to the following steps: (i)
the Mid-Tier Company will establish the Company as a first-tier Maryland
chartered stock holding company subsidiary; (ii) the MHC will merge with and
into the Mid-Tier Company with the Mid-Tier Company as the resulting entity (the
"MHC Merger") pursuant to an Agreement and Plan of Merger, whereby the shares of
Mid-Tier Company common stock held by the MHC will be canceled and members of
the MHC will constructively receive liquidation interests in the Mid-Tier
Company in exchange for their ownership interests in the MHC; (iii) immediately
after the MHC Merger, the Mid-Tier Company will merge with the Company, with the
Company as the resulting entity (the "Mid-Tier Merger"), pursuant to an
Agreement and Plan of Merger, whereby the Bank will become the wholly-owned
subsidiary of the Company, and the liquidation interests in the Mid-Tier Company
constructively received by the members of the MHC immediately prior to the
Conversion will automatically, without further action on the part of the holders
thereof, be exchanged for an interest in a liquidation account in the Company
("Liquidation Account"); (iv) immediately after the Mid-Tier Merger, the Company
will offer for sale the Securities; and (v) the Company will contribute at least
50% of the net proceeds of the Offerings to the Bank in exchange for common
stock of the Bank and a liquidation account established in the Bank ("Bank
Liquidation Account").
Pursuant to the Plan, the Company will offer to certain depositors and
borrowers of the Bank and to the Bank's tax qualified employee benefit plans,
including the Bank's employee stock ownership plan (the "ESOP") and the Bank's
401(k) Plan (collectively, the "Employee Plans") rights to subscribe for the
Securities in a subscription offering (the "Subscription Offering"). To the
extent Securities are not subscribed for in the Subscription Offering, such
Securities may be offered to certain members of the general public in a
community offering (the "Community Offering"), with preference given to natural
persons residing in the Massachusetts counties of Suffolk, Norfolk and
Middlesex, and finally to other members of the general public. The Community
Offering, which together with the Subscription Offering, as each may be extended
or reopened from time to time, are herein referred to as the "Subscription and
Community Offering," is expected to be commenced concurrently with the
Subscription Offering. Any Securities not subscribed for in the Subscription and
Community Offering may be offered, subject to Section 2 hereof, in a syndicated
community offering (the "Syndicated Community Offering"). The Subscription and
Community Offering and the Syndicated Community Offering are hereinafter
referred to collectively as the "Offerings." The conversion and reorganization
of the MHC from mutual to stock holding company form, the formation of the
Company, the related mergers, the constructive receipt by members of the MHC of
liquidation interests in the Mid-Tier Company in exchange for their ownership
interests in the MHC and the subsequent automatic exchange of such liquidation
interests for an interest in a Liquidation Account in the Company, the
contribution by the Company of at least 50% of the net proceeds of the Offerings
to the Bank in exchange for common stock of the Bank and the Bank Liquidation
Account, and the Offerings are hereinafter referred to collectively as the
"Conversion." It is acknowledged that the number of Securities to be sold in the
Conversion may be increased or decreased as described in the Prospectus (as
hereinafter defined). If the number of Securities is increased or decreased in
accordance with the Plan, the term "Securities" shall mean such greater or
lesser number, where applicable.
In connection with the Conversion and pursuant to the terms of the Plan as
described in the Prospectus, the Company has established the Foundation.
Immediately following the consummation of the Conversion, subject to the
approval of the establishment of the Foundation by the Company and compliance
with certain conditions as may be imposed by regulatory authorities, the Bank
will contribute newly issued shares of Common Stock in an amount equal to 8% of
the Securities sold in the Offering, up to a maximum of 460,000 shares of Common
Stock (subject to increase to 529,000 shares), or between 340,000 and 460,000
shares of Common Stock.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-165525), including a
related prospectus, for the registration and sale of the Securities and the
Foundation Shares under the Securities Act of 1933, as amended (the "Securities
Act"), has filed such amendments thereto, if any, and such amended prospectuses
as may have been required to the date hereof by the Commission in order to
declare such registration statement effective, and will file such additional
amendments thereto and such amended prospectuses and prospectus supplements as
may hereafter be required. Such registration statement (as amended to date, if
applicable, and as from time to time amended or supplemented hereafter) and the
prospectuses constituting a part thereof (including in each case all documents
incorporated or deemed to be incorporated by reference therein and the
information, if any, deemed to be a part thereof pursuant to the rules and
regulations of the Commission under the Securities Act, as from time to time
amended or supplemented pursuant to the Securities Act or otherwise (the
"Securities Act Regulations")), are hereinafter referred to as the "Registration
Statement" and the "Prospectus," respectively, except that if any revised
prospectus shall be used by the Company in connection with the Subscription and
Community Offering or the Syndicated Community Offering which differs from the
Prospectus on file at the Commission at the time the Registration Statement
becomes effective (whether or not such revised prospectus is required to be
filed by the Company pursuant to Rule 424(b) of the Securities Act Regulations),
the term "Prospectus" shall refer to such revised prospectus from and after the
time it is first provided to the Agent for such use.
Concurrently with the execution of this Agreement, the Company is
delivering to the Agent copies of the Prospectus of the Company to be used in
the Subscription and Community Offering. Such prospectus contains information
with respect to the Bank, the Mid-Tier Company, the Company, the MHC and the
Common Stock.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) The Company, the Mid-Tier Company, the Bank and the MHC jointly and
severally represent and warrant to the Agent as of the date hereof as follows:
(i) The Company qualifies as a "smaller reporting company" under
Securities Exchange Act of 1934 Rule 12b-2 and is entitled to file the
Registration Statement as such. The Registration Statement has been
declared effective by the Commission, no stop order has been issued with
respect thereto and no proceedings therefor have been initiated or, to the
knowledge of the Company, the Mid-Tier Company, the MHC and the Bank,
threatened by the Commission. At the time the Registration Statement became
effective, at Applicable Time (as defined in Section 1(a)(iii)(1) hereof),
and at the Closing Time referred to in Section 2 hereof, the Registration
Statement complied and will comply in all material respects with the
requirements of the Securities Act and the Securities Act Regulations and
did not and will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading. The Prospectus as of the date hereof
does not, and at the Closing Time referred to in Section 2 hereof will not,
include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the representations and warranties in this subsection shall
not apply to statements in or omissions from the Registration Statement or
Prospectus made in reliance upon and in conformity with information with
respect to the Agent furnished to the Company in writing by the Agent
expressly for use in the Registration Statement or Prospectus (which the
Company, the Mid-Tier Company, the MHC and the Bank acknowledge appears
only in the second sentence of the section entitled "Summary - Market for
Common Stock" and the third sentence of the section entitled "Market for
the Common Stock" in the Prospectus") (the "Agent Information").
(ii) At the time of filing the Registration Statement relating to the
offering of the Securities and as of the date hereof, the Company was not,
and is not, an ineligible issuer, as defined in Rule 405. At the time of
the filing of the Registration Statement and at the time of the use of any
issuer free writing prospectus, as defined in Rule 433(h), the Company met
the conditions required by Rules 164 and 433 for the use of a free writing
prospectus. If required to be filed, the Company has filed any issuer free
writing prospectus related to the offered Securities at the time it is
required to be filed under Rule 433 and, if not required to be filed, will
retain such free writing prospectus in the Company's records pursuant to
Rule 433(g) and if any issuer free writing prospectus is used after the
date hereof in connection with the offering of the Securities, the Company
will file or retain such free writing prospectus as required by Rule 433.
(iii) As of the Applicable Time, neither (i) the Issuer-Represented
General Free Writing Prospectus(es) issued at or prior to the Applicable
Time and the Statutory Prospectus, all considered together (collectively,
the "General Disclosure Package"), nor (ii) any individual
Issuer-Represented Limited-Use Free Writing Prospectus, when considered
together with the General Disclosure Package, included any untrue statement
of a material fact or omitted to state any material fact necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The preceding sentence does not apply
to statements in or omissions from any Prospectus included in the
Registration Statement relating to the offered Securities or any
Issuer-Represented Free Writing Prospectus based upon and in conformity
with the Agent Information. As used in this paragraph and elsewhere in this
Agreement:
1. "Applicable Time" means each and every date when a potential
purchaser submitted a subscription or otherwise committed to purchase
Securities.
2. "Statutory Prospectus", as of any time, means the Prospectus
relating to the offered Securities that is included in the
Registration Statement relating to the offered Securities immediately
prior to that time, including any document incorporated by reference
therein.
3. "Issuer-Represented Free Writing Prospectus" means any "issuer
free writing prospectus," as defined in Rule 433(h), relating to the
offered Securities. The term does not include any writing exempted
from the definition of prospectus pursuant to clause (a) of Section
2(a)(10) of the 1933 Act, without regard to Rule 172 or Rule 173.
4. "Issuer-Represented General Free Writing Prospectus" means any
Issuer-Represented Free Writing Prospectus that is intended for
general distribution to prospective investors.
5. "Issuer-Represented Limited-Use Free Writing Prospectus" means
any Issuer-Represented Free Writing Prospectus that is not an
Issuer-Represented General Free Writing Prospectus. The term
Issuer-Represented Limited-Use Free Writing Prospectus also includes
any "bona fide electronic road show," as defined in Rule 433, that is
made available without restriction pursuant to Rule 433(d)(8)(ii) or
otherwise, even though not required to be filed with the Commission.
(iv) Each Issuer-Represented Free Writing Prospectus, as of its date
of first use and at all subsequent times through the completion of the
Offerings and sale of the offered Securities or until any earlier date that
the Company notified or notifies the Agent (as described in the next
sentence), did not, does not and will not include any information that
conflicted, conflicts or will conflict with the information contained in
the Registration Statement relating to the offered Securities, including
any document incorporated by reference therein that has not been superseded
or modified. If at any time following the date of first use of an
Issuer-Represented Free Writing Prospectus there occurred or occurs an
event or development as a result of which such Issuer-Represented Free
Writing Prospectus conflicted or would conflict with the information
contained in the Registration Statement relating to the offered Securities
or included or would include an untrue statement of a material fact or
omitted or would omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances prevailing at
that subsequent time, not misleading, the Company has notified or will
notify promptly the Agent so that any use of such Issuer-Represented
Free-Writing Prospectus may cease until it is amended or supplemented and
the Company has promptly amended or will promptly amend or supplement such
Issuer-Represented Free Writing Prospectus to eliminate or correct such
conflict, untrue statement or omission. The foregoing two sentences do not
apply to statements in or omissions from any Issuer-Represented Free
Writing Prospectus based upon and in conformity with written information
furnished to the Company by the Agent specifically for use therein.
(v) The Company has filed with the OTS the Company's application for
approval of its acquisition of the Bank, which includes applications with
respect to the MHC Merger and the Mid-Tier Merger (the "Holding Company
Application") on Form H-(e)1-S promulgated under the savings and loan
holding company provisions of the Home Owners' Loan Act, as amended (the
"HOLA") and the regulations promulgated thereunder. The Company has
received written notice from the OTS of its approval of the acquisition of
the Bank, such approval remains in full force and effect and no order has
been issued by the OTS suspending or revoking such approval and no
proceedings therefor have been initiated or, to the knowledge of the
Company, the Mid-Tier Company, the MHC or the Bank, threatened by the OTS.
At the date of such approval and at the Closing Time referred to in Section
2 hereof, the Holding Company Application complied and will comply in all
material respects with the applicable provisions of HOLA and the
regulations promulgated thereunder and the Holding Company Application is
truthful and accurate in all material respects.
(vi) Pursuant to the rules and regulations of the OTS (the "OTS
Regulations"), the MHC has filed with the OTS an Application for Approval
of Conversion on Form AC, and has filed such amendments thereto and
supplementary materials as may have been required to the date hereof (such
application, as amended to date, if applicable, and as from time to time
amended or supplemented hereafter, is hereinafter referred to as the
"Conversion Application"). The Offerings and the Plan have been duly
adopted by the Boards of Directors of the MHC, the Mid-Tier Company and the
Bank and such adoption has not since been rescinded or revoked. The
Conversion Application has been approved by the OTS. The Prospectus and the
proxy statement for the solicitation of proxies from MHC members for the
special meeting to approve the Plan (the "Members' Proxy Statement"), all
included as part of the Conversion Application, have been approved for use
by the OTS, such approval remains in full force and effect and no order has
been issued by the OTS suspending or revoking such approval and no
proceedings therefor have been initiated or, to the knowledge of the
Company, the Mid-Tier Company, the MHC or the Bank, threatened by the OTS.
At the date of such approval and at the Closing Time referred to in Section
2 hereof, the Conversion Application complied and will comply in all
material respects with the applicable provisions of the OTS Regulations.
(vii) At the time of their use, the Members' Proxy Statement and any
other proxy solicitation materials will comply in all material respects
with the applicable provisions of the OTS Regulations and the applicable
rules and regulations of the Commission under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), as from time to time amended or
supplemented pursuant to the Exchange Act or otherwise (the "Exchange Act
Regulations") (the Securities Act Regulations and the Exchange Act
Regulations are collectively referred to herein as the "Commission
Regulations"), and will not contain an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The Company, the Mid-Tier Company, the MHC and the Bank will
promptly file the Prospectus and any supplemental sales literature with the
Commission and the OTS. The Prospectus and all supplemental sales
literature, as of the date the Registration Statement became effective and
at the Closing Time referred to in Section 2 hereof, complied and will
comply in all material respects with the applicable requirements of the OTS
Regulations and the Securities Act Regulations and, at or prior to the time
of their first use, will have received all required authorizations of the
OTS and Commission for use in final form.
(viii) None of the Commission, the OTS, or any "Blue Sky" authority
has, by order or otherwise, prevented or suspended the use of the Members'
Proxy Statement, the Prospectus or any supplemental sales literature
authorized by the Company, the Mid-Tier Company, the MHC or the Bank for
use in connection with the Offerings, and no proceedings for such purposes
are pending or threatened.
(ix) At the Closing Time referred to in Section 2 hereof, the Company,
the Mid-Tier Company, the MHC and the Bank will have completed the
conditions precedent to the Conversion in accordance with the Plan, the
applicable OTS Regulations and all other applicable laws, regulations,
decisions and orders, including all material terms, conditions,
requirements and provisions precedent to the Conversion imposed upon the
Company, the Mid-Tier Company, the MHC or the Bank by the OTS, or any other
regulatory authority, other than those which the regulatory authority
permits to be completed after the Conversion. The Conversion, the Offerings
and other transactions contemplated hereby do not and will not require any
material consent, approval, authorization or permit or filing with any
other governmental agency or regulatory authority, except as disclosed in
the Prospectus.
(x) RP Financial, LC. (the "Appraiser"), which prepared the valuation
of the Bank as part of the Conversion, has advised the Company, the
Mid-Tier Company, the MHC and the Bank in writing that it satisfies all
requirements for an appraiser set forth in the OTS Regulations and any
interpretations or guidelines issued by the OTS or its staff with respect
thereto.
(xi) Shatswell, MacLeod & Company, P.C., the accountants who audited
and reported on the consolidated financial statements of the MHC included
in the Registration Statement have advised the Company, the Mid-Tier
Company, the MHC and the Bank in writing that they are independent public
accountants within the meaning of Rule 101 of the American Institute of
Certified Public Accountants (the "AICPA"), that they are registered with
the Public Company Accounting Oversight Board (the "PCAOB"), and such
accountants are, with respect to the Company, the Mid-Tier Company, the MHC
and the Bank, independent certified public accountants as required by the
Securities Act, the Securities Act Regulations and OTS Regulations and such
accountants are not in violation of the auditors independence requirements
of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act").
(xii) The only direct subsidiary of the MHC is the Mid-Tier Company.
The only direct subsidiaries of the Mid-Tier Company are the Bank and the
Company. The Bank has no subsidiaries. Except as stated in this paragraph
(xii), none of the Company, the Mid-Tier Company, the MHC, and the Bank,
directly or indirectly, control any other corporation, limited liability
company, partnership, joint venture, association, trust or other business
organization. Upon completion of the Conversion, the only direct subsidiary
of the Company will be the Bank.
(xiii) The consolidated financial statements and the related notes
thereto included in the Registration Statement and the Prospectus present
fairly the financial position of the MHC, the Mid-Tier Company, and the
Bank at the dates indicated and the results of operations, retained
earnings, stockholders' equity and cash flows for the periods specified,
and comply as to form with the applicable accounting requirements of the
Securities Act Regulations and the OTS Regulations; except as otherwise
stated in the Registration Statement and Prospectus, said financial
statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis. The other 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 included in
the Prospectus, and as to the pro forma adjustments, the adjustments made
therein have been consistently applied on the basis described therein.
(xiv) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein: (A) there has been no material adverse change in the financial
condition, results of operations, business affairs or prospects of the
Company, the Mid-Tier Company, the MHC, and Bank, whether or not arising in
the ordinary course of business, (B) except for transactions specifically
referred to or contemplated in the Registration Statement and Prospectus,
there have been no transactions entered into by the Company, the Mid-Tier
Company, the MHC, or the Bank, other than those in the ordinary course of
business, which are material with respect to the Company, the Mid-Tier
Company, the MHC and the Bank, (C) the capitalization, liabilities, assets,
properties and business of the Company, the Mid-Tier Company, the MHC and
the Bank conform in all material respects to the descriptions contained in
the Prospectus and none of the Company, the Mid-Tier Company, the MHC, or
the Bank has any material liabilities of any kind, contingent or otherwise,
except as disclosed in the Registration Statement or the Prospectus and (D)
none of the Company, the Mid-Tier Company, the MHC, or the Bank has issued
any securities or incurred any liability or obligation, direct or
contingent, or borrowed money, except borrowings in the ordinary course of
business consistent with past practice from the same or similar sources and
in similar amounts as indicated in the Prospectus, except that the Company
has issued 100 shares of its Common Stock to the Mid-Tier Company in
connection with its formation, which shares will be cancelled prior to the
Closing Time.
(xv) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Maryland with
full corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectus and to enter
into and perform its obligations under this Agreement and the transactions
contemplated hereby; and the Company is duly qualified to transact business
and is in good standing in the Commonwealth of Massachusetts and in each
other jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of business,
except where the failure to so qualify would not have a material adverse
effect on the financial condition, results of operations, business affairs
or prospects of the Company, the Mid-Tier Company, the MHC and the Bank,
considered as one enterprise (a "Material Adverse Effect").
(xvi) Upon consummation of the Conversion and the contribution of the
Foundation Shares as described in the Prospectus, the authorized, issued
and outstanding capital stock of the Company will be within the range as
set forth in the Prospectus under "Capitalization" (except for subsequent
issuances, if any, pursuant to reservations, agreements or employee benefit
plans referred to in the Prospectus); except as set forth elsewhere in this
Agreement, no shares of Common Stock have been or will be issued and
outstanding prior to the Closing Time referred to in Section 2 hereof; at
the time of the Conversion, the Securities will have been duly authorized
for issuance and, when issued and delivered by the Company pursuant to the
Plan against payment of the consideration calculated as set forth in the
Plan and stated on the cover page of the Prospectus, will be duly and
validly issued and fully paid and nonassessable; the terms and provisions
of the Common Stock and the other capital stock of the Company conform to
all statements relating thereto contained in the Prospectus; the
certificates representing the shares of Common Stock will conform to the
requirements of applicable law and regulations; and the issuance of the
Securities and the Foundation Shares is not subject to preemptive or other
similar rights except for subscription rights granted under the Plan in
accordance with OTS regulations.
(xvii) The Mid-Tier Company has been duly chartered and is validly
existing as a federally-chartered savings and loan holding company under
the laws of the United States of America with full corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and to enter into and perform its
obligations under this Agreement and the transactions contemplated hereby.
The MHC has been duly chartered and is validly existing and in good
standing as a mutual holding company under the laws of the United States of
America with full corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Prospectus
and to enter into and perform its obligations under this Agreement and the
transactions contemplated hereby.
(xviii) Each of the Mid-Tier Company and the MHC is duly qualified to
transact business in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify would not have
a Material Adverse Effect on the financial condition, results of
operations, business affairs or prospects of the Company, the Mid-Tier
Company, the MHC, and the Bank, considered as one enterprise.
(xix) The MHC has no capital stock. All holders of the savings, demand
or other authorized accounts of the Bank, and certain borrowers of the
Bank, are members of the MHC.
(xx) The Bank has been duly organized and is validly existing as a
federally-chartered savings association in stock form with full corporate
power and authority to own, lease and operate its properties and to conduct
its business as described in the Prospectus and to enter into and perform
its obligations under this Agreement and the transactions contemplated
hereby. Upon consummation of the Conversion, the Bank will continue to be a
federally chartered savings association in stock form. The Mid-Tier
Company, the Company, the MHC, and the Bank have obtained all licenses,
permits and other governmental authorizations currently required for the
conduct of their respective businesses or required for the conduct of their
respective businesses as contemplated by the Holding Company Application
and the Conversion Application, except where the failure to obtain such
licenses, permits or other governmental authorizations would not have a
Material Adverse Effect on the financial condition, results of operations
or business affairs of the Company, the Mid-Tier Company, the MHC, and the
Bank, considered as one enterprise. All such licenses, permits and other
governmental authorizations are in full force and effect and the Mid-Tier
Company, the Company, the MHC, and the Bank are in all material respects in
compliance therewith. Neither the Mid-Tier Company, the Company, the MHC
nor the Bank has received notice of any proceeding or action relating to
the revocation or modification of any such license, permit or other
governmental authorization which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, might have a
Material Adverse Effect on the financial condition, results of operations
or business affairs of the Company, the Mid-Tier Company, the MHC, and the
Bank, considered as one enterprise. The Bank is duly qualified to transact
business and is in good standing under the laws of the United States and in
each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of business,
except where the failure to so qualify would not have a Material Adverse
Effect on the financial condition, results of operations or business
affairs of the Company, the Mid-Tier Company, the MHC, and the Bank,
considered as one enterprise.
(xxi) The Bank is a member in good standing of the Federal Home Loan
Bank of Boston; the deposit accounts of the Bank are insured by the FDIC up
to the applicable limits and upon consummation of the Conversion, the
liquidation account for the benefit of eligible account holders and
supplemental eligible account holders will be duly established in
accordance with the requirements of the OTS Regulations. The Bank is a
"qualified thrift lender" within the meaning of 12 U.S.C. Section 1467a(m).
(xxii) The authorized capital stock of the Company consists of
100,000,000 shares of common stock, par value $0.01 per share (the "Company
Common Stock") and 50,000,000 shares of preferred stock, par value $0.01
per share (the "Company Preferred Stock") of which 100 shares of Company
Common Stock and no shares of Company Preferred Stock are issued and
outstanding as of the date hereof. The authorized capital stock of the
Mid-Tier Company consists of 7,000,000 shares of common stock, par value
$0.01 per share (the "Mid-Tier Company Common Stock") and 3,000,000 shares
of preferred stock, par value $0.01 per share (the "Mid-Tier Company
Preferred Stock"), of which 100 shares of Mid-Tier Company Common Stock and
0 shares of Mid-Tier Company Preferred Stock are issued and outstanding as
of the date hereof. The authorized capital stock of the Bank consists of
1,000 shares of common stock, par value $1.00 per share (the "Bank Common
Stock") and 0 shares of preferred stock (the "Bank Preferred Stock"), of
which 100 shares of Bank Common Stock are issued and outstanding as of the
date hereof. No additional shares of Company Common Stock, Mid-Tier Company
Common Stock or Bank Common Stock, and no shares of Company Preferred
Stock, Mid-Tier Company Preferred Stock or Bank Preferred Stock will be
issued prior to the Closing Time referred to in Section 2 hereof. The
issued and outstanding shares of Company Common Stock, Mid-Tier Company
Common Stock and 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 100
shares of Mid-Tier Company Common Stock beneficially and of record free and
clear of any security interest, mortgage, pledge, lien, encumbrance, claim
or equity. The terms and provisions of the Company Common Stock and
Mid-Tier Company Common Stock conform to all statements relating thereto
contained in the Prospectus. The shares of Bank Common Stock to be issued
to the Company will have been duly authorized for issuance and, when issued
and delivered by the Bank pursuant to the Plan against payment of the
consideration described in the Plan and in the Prospectus, will be duly and
validly issued and fully paid and nonassessable, and all such Bank Common
Stock will be owned beneficially and of record by the Company, free and
clear of any security interest, mortgage, pledge, lien, encumbrance or
legal or equitable claim; and the certificates representing the shares of
the Bank Common Stock will conform with the requirements of applicable laws
and regulations. The issuance of the Bank Common Stock is not subject to
preemptive or similar rights.
(xxiii) The Foundation has been duly authorized and incorporated and
is validly existing as a non-stock corporation in good standing under the
laws of the State of Delaware with corporate power and authority to own,
lease and operate its properties and to conduct its business as described
in the Prospectus; the Foundation will not be a savings and loan holding
company as a result of the issuance of shares of Common Stock to it in
accordance with the terms of the Plan and in the amounts as described in
the Prospectus; no approvals are required to establish the Foundation and
to contribute the shares of Common Stock thereto as described in the
Prospectus other than those imposed by the OTS; except as specifically
disclosed in the Prospectus and the Registration Statement, there are no
agreements and/or understandings, written or oral, between the Company
and/or the Bank and the Foundation with respect to the control, directly or
indirectly, over the voting and the acquisition or disposition of the
Foundation Shares; at the time of the Conversion, the Foundation Shares
will have been duly authorized for issuance and, when issued and
contributed by the Company pursuant to the Plan, will be duly and validly
issued and fully paid and non-assessable; and the issuance of the
Foundation Shares is not subject to preemptive or similar rights. The
issuance of the Foundation Shares to the Foundation pursuant to the Plan
has been registered pursuant to the Registration Statement.
(xxiv) The Company, the Mid-Tier Company, the MHC and the Bank have
taken all corporate action necessary for them to execute, deliver and
perform this Agreement and the transactions contemplated hereby, and this
Agreement has been duly executed and delivered by, and is the valid and
binding agreement of, the Company, the Mid-Tier Company, the MHC and the
Bank, enforceable against each of them in accordance with its terms, except
as may be limited by bankruptcy, insolvency or similar laws and the
availability of equitable remedies.
(xxv) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus and prior to the
Closing Time, except as otherwise may be indicated or contemplated therein,
none of the Company, the Mid-Tier Company, the MHC or the Bank will have
(A) except as otherwise set forth herein issued any securities or incurred
any liability or obligation, direct or contingent, or borrowed money,
except borrowings in the ordinary course of business from the same or
similar sources and in similar amounts as indicated in the Prospectus, or
(B) entered into any transaction or series of transactions which is
material in light of the business of each of the Company, the Mid-Tier
Company, the MHC and the Bank.
(xxvi) No approval of any regulatory or supervisory or other public
authority is required of the Company, the Mid-Tier Company, the MHC or the
Bank in connection with the execution and delivery of this Agreement or the
issuance of the Securities and the Foundation Shares that has not been
obtained and a copy of which has been delivered to the Agent, except as may
be required under the securities laws of various jurisdictions.
(xxvii) None of the Company, the Mid-Tier Company, the MHC, or the
Bank is in violation of their respective charters or certificates of
incorporation, organization certificates, articles of incorporation or
bylaws; and none of the Company, the Mid-Tier Company, the MHC, or the Bank
is in default (nor has any event occurred which, with notice or lapse of
time or both, would constitute a default) in the performance or observance
of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Company, the Mid-Tier Company, the MHC, or the Bank
is a party or by which it or any of them may be bound, or to which any of
the property or assets of the Company, the Mid-Tier Company, the MHC, or
the Bank is subject, except for such defaults that would not, individually
or in the aggregate, have a Material Adverse Effect on the financial
condition, results of operations, business affairs or prospects of the
Company, the Mid-Tier Company, the MHC, or the Bank, considered as one
enterprise; and there are no contracts or documents of the Company, the
Mid-Tier Company, the MHC, or the Bank that are required to be filed as
exhibits to the Registration Statement or the Conversion Application that
have not been so filed.
(xxviii) The Conversion, the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated
herein, have been duly authorized by all necessary corporate action on the
part of the Company, the Mid-Tier Company, the MHC and the Bank, do not and
will not conflict with or constitute a breach of, or default under, or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company, the Mid-Tier Company, the MHC
or the Bank pursuant to any contract, indenture, mortgage, loan agreement,
note, lease or other instrument to which the Company, the Mid-Tier Company,
the MHC or the Bank is a party or by which it or any of them may be bound,
or to which any of the property or assets of the Company, the Mid-Tier
Company, the MHC or the Bank is subject, except for such conflicts,
breaches or defaults that would not, individually or in the aggregate, have
a Material Adverse Effect on the financial condition, results of
operations, business affairs or prospects of the Company, the Mid-Tier
Company, the MHC and the Bank, considered as one enterprise; nor will such
action result in any violation of the provisions of the respective
certificate of incorporation, organization certificate, articles of
incorporation or charter or bylaws of the Company, the Mid-Tier Company,
the MHC or the Bank, or any applicable law, administrative regulation or
administrative or court decree.
(xxix) No labor dispute with the employees of the Company, the
Mid-Tier Company, the MHC or the Bank exists or, to the knowledge of the
Company, the Mid-Tier Company, the MHC or the Bank, is imminent or
threatened; and the Company, the Mid-Tier Company, the MHC and the Bank are
not aware of any existing or threatened labor disturbance by the employees
of any of its principal suppliers or contractors that might be expected to
result in any Material Adverse Effect on the financial condition, results
of operations, business affairs or prospects of the Company, the Mid-Tier
Company, the MHC and the Bank, considered as one enterprise.
(xxx) Each of the Company, the Mid-Tier Company, the MHC, and the Bank
has good and marketable title to all properties and assets for which
ownership is material to the business of the Company, the Mid-Tier Company,
the MHC, or the Bank and to those properties and assets described in the
Prospectus as owned by them, free and clear of all liens, charges,
encumbrances or restrictions, except such as are described in the
Prospectus or are not material in relation to the business of the Company,
the Mid-Tier Company, the MHC, or the Bank, considered as one enterprise;
and all of the leases and subleases material to the business of the
Company, the Mid-Tier Company, the MHC, or the Bank under which the
Company, the Mid-Tier Company, the MHC, or the Bank hold properties,
including those described in the Prospectus, are valid and binding
agreements of the Company, the Mid-Tier Company, the MHC, or the Bank,
enforceable in accordance with their terms, except as may be limited by
bankruptcy, insolvency or similar laws and availability of equitable
remedies.
(xxxi) None of the Company, the Mid-Tier Company, the MHC, or the Bank
is in violation of any order or directive from the OTS, the Commission or
any regulatory authority to make any material change in the method of
conducting its respective businesses; the Company, the Mid-Tier Company,
the MHC and the Bank have conducted and are conducting their business so as
to comply in all material respects with all applicable statutes,
regulations and administrative and court decrees (including, without
limitation, all regulations, decisions, directives and orders of the OTS,
the FDIC and the Commission). Except as disclosed in the Prospectus,
neither the Company, the Mid-Tier Company, the MHC, nor the Bank is subject
or is party to, or has received any notice or advice that any of them may
become subject or party to, any investigation with respect to any
cease-and-desist order, agreement, consent agreement, memorandum of
understanding or other regulatory enforcement action, proceeding or order
with or by, or is a party to any commitment letter or similar undertaking
to, or is subject to any directive by, or has been a recipient of any
supervisory letter from, or has adopted any board resolutions at the
request of, any Regulatory Agency (as defined below) that currently
restricts in any material respect the conduct of their business or that in
any material manner relates to their capital adequacy, their credit
policies, their management or their business (each, a "Regulatory
Agreement"), nor has the Company, the Mid-Tier Company, the MHC, or the
Bank been advised by any Regulatory Agency that it is considering issuing
or requesting any such Regulatory Agreement; and, except as disclosed in
the Prospectus, there is no unresolved violation, criticism or exception by
any Regulatory Agency with respect to any report or statement relating to
any examinations of the Company, the Mid-Tier Company, the MHC, or the Bank
that, in the reasonable judgment of the Company, the Mid-Tier Company, the
MHC or the Bank, is expected to result in a Material Adverse Effect on the
financial condition, results of operations, business affairs or prospects
of the Company, the Mid-Tier Company, the MHC, and the Bank, considered as
one enterprise, or that might materially and adversely affect the
properties or assets thereof or that might materially and adversely affect
the consummation of the Conversion or the performance of this Agreement. As
used herein, the term "Regulatory Agency" means any federal or state agency
charged with the supervision or regulation of depositary institutions or
holding companies of depositary institutions, or engaged in the insurance
of depositary institution deposits, or any court, administrative agency or
commission or other governmental agency, authority or instrumentality
having supervisory or regulatory authority with respect to the Company, the
Mid-Tier Company, the MHC, or the Bank.
(xxxii) There is no action, suit or proceeding before or by any court
or governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company, the Mid-Tier Company, the MHC or the Bank,
threatened, against or affecting the Company, the Mid-Tier Company, the
MHC, or the Bank that is required to be disclosed in the Registration
Statement (other than as disclosed therein), or that might result in any
Material Adverse Effect on the financial condition, results of operations,
business affairs or prospects of the Company, the Mid-Tier Company, the MHC
and the Bank, considered as one enterprise, or that might materially and
adversely affect the properties or assets thereof, the performance of this
Agreement or the consummation of the Conversion; all pending legal or
governmental proceedings to which the Company, the Mid-Tier Company, the
MHC, or the Bank is a party or of which any of their respective property or
assets is the subject that are not described in the Registration Statement,
including ordinary routine litigation incidental to the business, are
considered in the aggregate not material; and there are no material
contracts or documents of the Company, the Mid-Tier Company, the MHC, or
the Bank that are required to be filed as exhibits to the Registration
Statement or Conversion Application that have not been so filed.
(xxxiii) The Company, the Mid-Tier Company, the MHC and the Bank have
obtained (i) an opinion of its counsel, Luse Gorman Pomerenk & Schick,
P.C., with respect to the legality of the Securities to be issued and the
Foundation Shares, and the federal income tax consequences of the
Conversion and (ii) the opinion of Shatswell, MacLeod & Company, P.C. with
respect to the state tax consequences of the Conversion, copies of which
are filed as exhibits to the Registration Statement; all material aspects
of the aforesaid opinions are accurately summarized in the Prospectus; the
facts and representations upon which such opinions are based are truthful,
accurate and complete in all material respects; and neither the Company,
the Mid-Tier Company, the MHC nor the Bank has taken or will take any
action inconsistent therewith.
(xxxiv) The Company is not and, upon completion of the Conversion and
the Offerings and sale of the Common Stock and the application of the net
proceeds therefrom, will not be, required to be registered under the
Investment Company Act of 1940, as amended.
(xxxv) All of the loans represented as assets on the most recent
consolidated financial statements or selected financial information of the
MHC included in the Prospectus meet or are exempt from all requirements of
federal, state or local law pertaining to lending, including, without
limitation, truth in lending (including the requirements of Regulations Z
and 12 C.F.R. Part 226 and Section 563.99), real estate settlement
procedures, consumer credit protection, equal credit opportunity and all
disclosure laws applicable to such loans, except for violations which, if
asserted, would not result in a Material Adverse Effect on the financial
condition, results of operations, business affairs or prospects of the
Company, the Mid-Tier Company, the MHC and the Bank.
(xxxvii) To the knowledge of the Company, the Mid-Tier Company, the
MHC and the Bank, with the exception of the intended loan to the Bank's
ESOP by the Company or a subsidiary formed for that purpose to enable the
ESOP to purchase securities in an amount up to 8% of the Company Common
Stock that will be outstanding following the Conversion (including shares
contributed to the Foundation), none of the Company, the Mid-Tier Company,
the MHC, the Bank or their employees has made any payment of funds of the
Company, the Mid-Tier Company, the MHC or the Bank as a loan for the
purchase of the Common Stock or made any other payment of funds prohibited
by law, and no funds have been set aside to be used for any payment
prohibited by law.
(xxxviii) Each of the Company, the Mid-Tier Company, the MHC, and the
Bank maintains a system of internal accounting controls sufficient to
provide reasonable assurance that (a) transactions are executed in
accordance with management's general or specific authorizations; (b)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and
to maintain asset accountability; (c) access to assets is permitted only in
accordance with management's general or specific authorization; and (d) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(xxxix) The Company, the Mid-Tier Company, the MHC, and the Bank are
in compliance in all material respects with the applicable financial
recordkeeping and reporting requirements of the Currency and Foreign
Transaction Reporting Act of 1970, as amended, and the rules and
regulations thereunder. The Bank has established compliance programs and is
in compliance in all material respects with the requirements of the USA
PATRIOT Act and all applicable regulations promulgated thereunder, and,
except as disclosed in the Prospectus, there is no charge, investigation,
action, suit or proceeding before any court, regulatory authority or
governmental agency or body pending or, to the best knowledge of the
Company, the Mid-Tier Company, the MHC and the Bank, threatened regarding
the Bank's compliance with the USA PATRIOT Act or any regulations
promulgated thereunder.
(xl) None of the Company, the Mid-Tier Company, the MHC, or the Bank
nor any properties owned or operated by the Company, the Mid-Tier Company,
the MHC, or the Bank is in material violation of or liable under any
Environmental Law (as defined below). There are no actions, suits or
proceedings, or demands, claims, notices or investigations (including,
without limitation, notices, demand letters or requests for information
from any environmental agency) instituted or pending, or to the knowledge
of the Company, the Mid-Tier Company, the MHC or the Bank threatened,
relating to the liability of any property owned or operated by the Company,
the Mid-Tier Company, the MHC, the Bank, under any Environmental Law,
except for such actions, suits or proceedings, or demands, claims, notices
or investigations that, individually or in the aggregate, would not have a
Material Adverse Effect on the financial condition, results of operations
or business affairs of the Company, the Mid-Tier Company, the MHC and the
Bank, considered as one enterprise. For purposes of this subsection, the
term "Environmental Law" means any federal, state, local or foreign law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, judgment, decree, injunction or agreement with
any regulatory authority relating to (i) the protection, preservation or
restoration of the environment (including, without limitation, air, water,
vapor, surface water, groundwater, drinking water supply, surface soil,
subsurface soil, plant and animal life or any other natural resource),
and/or (ii) the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or
disposal of any substance presently listed, defined, designated or
classified as hazardous, toxic, radioactive or dangerous, or otherwise
regulated, whether by type or by quantity, including any material
containing any such substance as a component.
(xli) The Company, the Mid-Tier Company, the MHC, and the Bank have
filed all federal, state and local income and franchise tax returns
required to be filed and have made timely payments of all taxes shown as
due and payable in respect of such returns, and no deficiency has been
asserted with respect thereto by any taxing authority. The Company, the
Mid-Tier Company, the MHC and the Bank have no knowledge of any tax
deficiency that has been asserted or could be asserted against the Company,
the Mid-Tier Company, the MHC or the Bank.
(xlii) The Company has received all approvals required to consummate
the Conversion, and to have the Securities and the Foundation Shares quoted
on the Nasdaq Capital Market effective as of the Closing Time referred to
in Section 2 hereof.
(xliii) At or prior to the Closing, the Company will have registered
the Securities and the Foundation Shares under Section 12(b) of the
Exchange Act.
(xliv) There are no affiliations or associations (as such terms are
defined by the Financial Industry Regulatory Authority ("FINRA")) between
any member of the FINRA and any of the MHC's, the Mid-Tier Company's, the
Company's or the Bank's officers or directors.
(xlv) The Company, the Mid-Tier Company, the MHC, and the Bank
carries, or is covered by, insurance in such amounts and covering such
risks as is adequate for the conduct of their respective businesses and the
value for their respective properties as is customary for companies engaged
in similar industries.
(xlvi) The Company, the Mid-Tier Company, the MHC and the Bank have
not relied on the Agent or its counsel for any legal, tax or accounting
advice in connection with the Conversion.
(xlvii) The records of eligible account holders, supplemental eligible
account holders, and other depositors or borrower members are accurate and
complete in all material respects.
(xlviii) The Company, the Mid-Tier Company, the MHC, and the Bank are
in compliance in all material respects with all presently applicable
provisions of the Employee Retirement Income Security Act of 1974, as
amended, including the regulations and published interpretations thereunder
("ERISA"); no "reportable event" (as defined in ERISA) has occurred with
respect to any "pension plan" (as defined in ERISA) for which the Company,
the Mid-Tier Company, the MHC, or the Bank, respectively, would have any
liability; each of the Company, the Mid-Tier Company, the MHC, and the Bank
has not incurred and does expect to incur liability under (i) Title IV of
ERISA with respect to termination of, or withdrawal from, any "pension
plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as
amended, including the regulations and published interpretations thereunder
(the "Code"); and each "pension plan" for which the Company, the Mid-Tier
Company, the MHC, and the Bank would have any liability that is intended to
be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by failure
to act, that would cause the loss of such qualification.
(b) Any certificate signed by any officer of the Company, the Mid-Tier
Company, the MHC or the Bank and delivered to either of the Agent or counsel for
the Agent shall be deemed a representation and warranty by the Company, the
Mid-Tier Company, the MHC or the Bank to the Agent as to the matters covered
thereby.
SECTION 2. APPOINTMENT OF SANDLER O'NEILL; SALE AND DELIVERY OF THE
SECURITIES; CLOSING. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
hereby appoints Sandler O'Neill as its exclusive Agent to consult with and
advise the Company, and to assist the Company with the solicitation of
subscriptions and purchase orders for Securities, in connection with the
Company's sale of Common Stock in the Offerings. On the basis of the
representations and warranties herein contained, and subject to the terms and
conditions herein set forth, Sandler O'Neill accepts such appointment and agrees
to use its best efforts to assist the Company with the solicitation of
subscriptions and purchase orders for Securities in accordance with this
Agreement; provided, however, that the Agent shall not be obligated to take any
action that is inconsistent with any applicable laws, regulations, decisions or
orders. The services to be rendered by Sandler O'Neill pursuant to this
appointment include the following: (i) consulting as to the securities marketing
implications of any aspect of the Plan or related corporate documents; (ii)
reviewing with the Board of Directors financial and securities marketing
implications of the Appraiser's appraisal of the Common Stock; (iii) reviewing
all offering documents, including the Prospectus, stock order form and related
offering materials (it being understood that preparation and filing of such
documents is the sole responsibility of the Company and the Bank and their
counsel); (iv) assisting in the design and implementation of a marketing
strategy for the Offerings; (v) assisting Bank and Company management in
scheduling and preparing for meetings with potential investors and
broker-dealers; and (vi) providing such other general advice and assistance as
may be requested to promote the successful completion of the Offerings.
The appointment of the Agent hereunder shall terminate upon the earlier to
occur of (a) forty-five (45) days after the last day of the Subscription and
Community Offering, unless the Company and the Agent agree in writing to extend
such period and the OTS agrees to extend the period of time in which the
Securities may be sold, or (b) the receipt and acceptance of subscriptions and
purchase orders for all of the Securities, or (c) the completion of the
Syndicated Community Offering.
If any of the Securities remain available after the expiration of the
Subscription and Community Offering, at the request of the Company and the Bank,
Sandler O'Neill will seek to form a syndicate of registered brokers or dealers
("Selected Dealers") to assist in the solicitation of purchase orders of such
Securities on a best efforts basis, subject to the terms and conditions set
forth in a master selling agreement (the "Selected Dealers' Agreement"),
substantially in the form set forth in Exhibit D to this Agreement. Sandler
O'Neill will endeavor to limit the aggregate fees to be paid by the Company, the
Mid-Tier Company, the MHC and the Bank under any such Selected Dealers'
Agreement to an amount competitive with gross underwriting discounts charged at
such time for underwritings of comparable amounts of stock sold at a comparable
price per share in a similar market environment; provided, however, that the
aggregate fees payable to Sandler O'Neill and Selected Dealers shall not exceed
6% of the aggregate Actual Purchase Price of the Securities sold by such
Selected Dealers. Sandler O'Neill will endeavor to distribute the Securities
among the Selected Dealers in a fashion that best meets the distribution
objectives of the Company and the Bank and the requirements of the Plan, which
may result in limiting the allocation of stock to certain Selected Dealers. It
is understood that in no event shall Sandler O'Neill be obligated to act as a
Selected Dealer or to take or purchase any Securities.
In the event the Company is unable to sell at least the total minimum of
the Securities, as set forth on the cover page of the Prospectus, within the
period herein provided, this Agreement shall terminate and the Company shall
refund to any persons who have subscribed for any of the Securities the full
amount that it may have received from them, together with interest as provided
in the Prospectus, and no party to this Agreement shall have any obligation to
the others hereunder, except for the obligations of the Company, the Mid-Tier
Company, the MHC and the Bank as set forth in Sections 4, 6(a) and 7 hereof and
the obligations of the Agent as provided in Sections 6(b) and 7 hereof.
Appropriate arrangements for placing the funds received from subscriptions for
Securities or other offers to purchase Securities in special interest-bearing
accounts with the Bank until all Securities are sold and paid for were made
prior to the commencement of the Subscription Offering, with provision for
refund to the purchasers as set forth above, or for delivery to the Company if
all Securities are sold.
If at least the total minimum of Securities, as set forth on the cover page
of the Prospectus, are sold, the Company agrees to issue or have issued the
Securities sold and to release for delivery certificates for such Securities at
the Closing Time against payment therefor by release of funds from the special
interest-bearing accounts referred to above. The closing shall be held at the
offices of Luse Gorman Pomerenk & Schick, P.C., at 10:00 a.m., Eastern Standard
Time, or at such other place and time as shall be agreed upon by the parties
hereto, on a business day to be agreed upon by the parties hereto. The Company
shall notify the Agent by telephone, confirmed in writing, when funds shall have
been received for all the Securities. Certificates for Securities shall be
delivered directly to the purchasers thereof in accordance with their
directions. Notwithstanding the foregoing, certificates for Securities purchased
through Selected Dealers shall be made available to the Agent for inspection at
least 24 hours prior to the Closing Time at such office as the Agent shall
designate. The hour and date upon which the Company shall release for delivery
all of the Securities, in accordance with the terms hereof, is herein called the
"Closing Time."
The Company will pay any stock issue and transfer taxes that may be payable
with respect to the sale of the Securities.
In addition to the reimbursement of the expenses specified in Section 4
hereof, the Agent will receive the following compensation for its services
hereunder:
(a) One percent (1.0%) of the aggregate purchase price of the Securities
sold in the Subscription and Community Offering, in each case only if the
Conversion is consummated, excluding in each case shares (i) purchased by any
employee stock ownership plan or other tax-qualified plans (except individual
retirement accounts) of the Company, the Mid-Tier Company or the Bank
established for the benefit of their respective directors, officers and
employees, (ii) purchased by any director, officer or employee of the Company,
the Mid-Tier Company, or the Bank or members of their immediate families (which
term shall mean parents, grandparents, spouse, siblings, children and
grandchildren), and (iii) contributed to the Foundation; and
(b) With respect to any Securities sold by a FINRA member firm (other than
Sandler O'Neill) under the Selected Dealers' Agreement in the Syndicated
Community Offering, (i) the compensation payable to Selected Dealers under any
Selected Dealers' Agreement; and (ii) a management fee to Sandler O'Neill of
1.0% of the aggregate purchase price of the Securities sold in the Syndicated
Community Offering. Any fees payable to Sandler O'Neill for Securities sold
under any such agreement shall be limited to an aggregate of 6% of the purchase
price of the Securities sold by Sandler O'Neill and other FINRA member firms
under the Selected Dealers' Agreement.
If this Agreement is terminated by the Agent in accordance with the
provisions of Section 9(a) hereof or the Conversion is terminated by the
Company, no fee shall be payable by the Company to Sandler O'Neill; provided,
however, that the Company shall reimburse the Agent for all of its reasonable
out-of-pocket expenses up to $170,000 incurred prior to termination, including
the reasonable fees and disbursements of counsel for the Agent in accordance
with the provisions of Section 4 hereof. In addition, the Company shall be
obligated to pay the fees and expenses as contemplated by the provisions of
Section 4 hereof in the event of any such termination.
All fees payable to the Agent hereunder shall be payable in immediately
available funds at Closing Time, or upon the termination of this Agreement, as
the case may be. In recognition of the long lead times involved in the
conversion process, the Bank has made an advance payment to the Agent in the
aggregate amount of $25,000, which shall be credited against any fees or
reimbursement of expenses payable hereunder and any unearned portion thereof
shall be refunded.
In addition to the appointment described above, the Agent has been
appointed as records management agent in connection with the Offering, the terms
of which are set forth in the letter agreement, dated January 22, 2010, as
amended on May 11, 2010, between the MHC, the Mid-Tier Company, the Bank and the
Agent (a copy of which is attached hereto as Exhibit A) (the "Records Agent
Letter Agreement").
SECTION 3. COVENANTS OF THE COMPANY, THE MID-TIER COMPANY, THE MHC AND THE
BANK. The Company, the Mid-Tier Company, the MHC and the Bank covenant with the
Agent as follows:
(a) The Company, the Mid-Tier Company, the MHC and the Bank will prepare
and file such amendments or supplements to the Registration Statement, the
Prospectus, the Conversion Application and the Members' Proxy Statement as may
hereafter be required by the Commission Regulations or the OTS Regulations or as
may hereafter be requested by the Agent. Following completion of the
Subscription and Community Offering, in the event of a Syndicated Community
Offering, the Company, the Mid-Tier Company, the MHC and the Bank will (i)
promptly prepare and file with the Commission a post-effective amendment to the
Registration Statement relating to the results of the Subscription and Community
Offering, any additional information with respect to the proposed plan of
distribution and any revised pricing information or (ii) if no such
post-effective amendment is required, will file with the Commission a prospectus
or prospectus supplement containing information relating to the results of the
Subscription and Community Offering and pricing information pursuant to Rule 424
of the Securities Act Regulations, in either case in a form acceptable to the
Agent. The Company, the Mid-Tier Company, the MHC and the Bank will notify the
Agent immediately, and confirm the notice in writing, (i) of the effectiveness
of any post-effective amendment of the Registration Statement, the filing of any
supplement to the Prospectus and the filing of any amendment to the Conversion
Application, (ii) of the receipt of any comments from the OTS or the Commission
with respect to the transactions contemplated by this Agreement or the Plan,
(iii) of any request by the Commission or the OTS for any amendment to the
Registration Statement or the Conversion Application or any amendment or
supplement to the Prospectus or for additional information, (iv) of the issuance
by the OTS of any order suspending the Offerings or the use of the Prospectus or
the initiation of any proceedings for that purpose, (v) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose, and (vi) of the
receipt of any notice with respect to the suspension of any qualification of the
Securities for offering or sale in any jurisdiction. The Company, the Mid-Tier
Company, the MHC and the Bank will make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(b) The Company represents and agrees that, unless it obtains the prior
consent of the Agent and the Agent represents and agrees that, unless it obtains
the prior consent of the Company, it has not made and will not make any offer
relating to the offered Securities that would constitute an "issuer free writing
prospectus," as defined in Rule 433, or that would constitute a "free writing
prospectus," as defined in Rule 405, required to be filed with the Commission.
Any such free writing prospectus consented to by the Company and the Agent is
hereinafter referred to as a "Permitted Free Writing Prospectus." The Company
represents that it has and will comply with the requirements of Rule 433
applicable to any Permitted Free Writing Prospectus, including timely Commission
filing where required, legending and record keeping. The Company need not treat
any communication as a free writing prospectus if it is exempt from the
definition of prospectus pursuant to Clause (a) of Section 2(a)(10) of the 1933
Act without regard to Rule 172 or 173.
(c) The Company, the Mid-Tier Company, the MHC and the Bank will give the
Agent notice of its intention to file or prepare any amendment to the Conversion
Application or Registration Statement (including any post-effective amendment)
or any amendment or supplement to the Prospectus (including any revised
prospectus that the Company proposes for use in connection with the Syndicated
Community Offering of the Securities that differs from the prospectus on file at
the Commission at the time the Registration Statement becomes effective, whether
or not such revised prospectus is required to be filed pursuant to Rule 424(b)
of the Securities Act Regulations), will furnish the Agent with copies of any
such amendment or supplement a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file any such amendment or
supplement or use any such prospectus to which the Agent or counsel for the
Agent may object.
(d) The Company, the Mid-Tier Company, the MHC and the Bank will deliver to
the Agent as many signed copies and as many conformed copies of the Holding
Company Application, the Conversion Application and the Registration Statement
as originally filed and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein) as the Agent may reasonably
request, and from time to time such number of copies of the Prospectus as the
Agent may reasonably request.
(e) During the period when the Prospectus is required to be delivered, the
Company, the Mid-Tier Company, the MHC and the Bank will comply, at their own
expense, with all requirements imposed upon them by the OTS, by the applicable
OTS Regulations, as from time to time in force, and by the Nasdaq, Securities
Act, the Securities Act Regulations, the Exchange Act, and the rules and
regulations of the Commission promulgated thereunder, including, without
limitation, Regulation M under the Exchange Act, so far as necessary to permit
the continuance of sales or dealing in shares of Common Stock during such period
in accordance with the provisions hereof and the Prospectus.
(f) If any event or circumstance shall occur as a result of which it is
necessary, in the reasonable opinion of counsel for the Agent, to amend or
supplement the Registration Statement or Prospectus in order to make the
Prospectus not misleading in the light of the circumstances existing at the time
it is delivered to a purchaser, the Company, the Mid-Tier Company, the MHC and
the Bank will forthwith amend or supplement the Registration Statement or
Prospectus (in form and substance satisfactory to counsel for the Agent) so
that, as so amended or supplemented, the Registration Statement or Prospectus
will not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances existing at the time it is delivered to a purchaser, not
misleading, and the Company, the Mid-Tier Company, the MHC and the Bank will
furnish to the Agent a reasonable number of copies of such amendment or
supplement. For the purpose of this subsection, the Company, the Mid-Tier
Company, the MHC and the Bank will each furnish such information with respect to
itself as the Agent may from time to time reasonably request.
(g) The Company, the Mid-Tier Company, the MHC and the Bank will take all
necessary action, in cooperation with the Agent, to qualify the Securities for
offering and sale under the applicable securities laws of such states of the
United States and other jurisdictions as the OTS Regulations may require and as
the Agent and the Company have agreed; provided, however, that neither the
Company, the Mid-Tier Company, the MHC nor the Bank shall be obligated to file
any general consent to service of process or to qualify as a foreign corporation
in any jurisdiction in which it is not so qualified. In each jurisdiction in
which the Securities have been so qualified, the Company, the Mid-Tier Company,
the MHC and the Bank will file such statements and reports as may be required by
the laws of such jurisdiction to continue such qualification in effect for a
period of not less than one year from the effective date of the Registration
Statement.
(h) The Company authorizes Sandler O'Neill and any Selected Dealer to act
as agent of the Company in distributing the Prospectus to persons entitled to
receive subscription rights and other persons to be offered Securities having
record addresses in the states or jurisdictions set forth in the Blue Sky Survey
(as hereinafter defined).
(i) The Company will make generally available to its security holders as
soon as practicable, but not later than 60 days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 of the Securities Act Regulations) covering a twelve month period
beginning not later than the first day of the Company's fiscal quarter next
following the "effective date" (as defined in said Rule 158) of the Registration
Statement.
(j) During the period ending on the third anniversary of the expiration of
the fiscal year during which the closing of the transactions contemplated hereby
occurs, the Company will furnish to its stockholders as soon as practicable
after the end of each such fiscal year an annual report (including consolidated
statements of financial condition and consolidated statements of income,
stockholders' equity and cash flows, certified by independent public
accountants) and, as soon as practicable after the end of each of the first
three quarters of each fiscal year (beginning with the fiscal quarter ending
after the effective date of the Registration Statement), consolidated summary
financial information of the Company and the Bank for such quarter in reasonable
detail. In addition, such annual report and quarterly consolidated summary
financial information shall be made public through the issuance of appropriate
press releases at the same time or prior to the time of the furnishing thereof
to stockholders of the Company.
(k) During the period ending on the third anniversary of the expiration of
the fiscal year during which the closing of the transactions contemplated hereby
occurs, the Company will furnish to the Agent (i) as soon as publicly available,
a copy of each report or other document of the Company furnished generally to
stockholders of the Company or furnished to or filed with the Commission under
the Exchange Act or any national securities exchange or system on which any
class of securities of the Company is listed, and (ii) from time to time, such
other information concerning the Company as the Agent may reasonably request.
For purposes of this paragraph, any document filed electronically with the
Commission shall be deemed furnished to the Agent.
(l) The Company, the Mid-Tier Company, the MHC and the Bank will conduct
the Conversion, including the formation of the Foundation, in all material
respects in accordance with the Plan, the OTS Regulations, the Commission
Regulations and all other applicable regulations, decisions and orders,
including all applicable terms, requirements and conditions precedent to the
Conversion imposed upon the Company, the Mid-Tier Company, the MHC or the Bank
by the OTS and the Commission.
(m) The Company, the Mid-Tier Company, the MHC and the Bank will comply, at
their own expense, with all requirements imposed by the Commission, the OTS, and
Nasdaq or pursuant to the applicable Commission Regulations, OTS Regulations,
and Nasdaq regulations as from time to time in force.
(n) The Company will promptly inform the Agent upon its receipt of service
with respect to any material litigation or administrative action instituted with
respect to the Conversion or the Offerings.
(o) Each of the Company and the Bank will use the net proceeds received by
it from the sale of the Securities in the manner specified in the Prospectus
under "Use of Proceeds."
(p) The Company will report the use of proceeds from the Offerings on its
first periodic report filed pursuant to Sections 13(a) and 15(d) of the Exchange
Act and on any subsequent periodic reports as may be required pursuant to Rule
463 of the Securities Act Regulations.
(q) The Company will maintain the effectiveness of the Exchange Act
Registration Statement for not less than three years and will comply in all
material respects with its filing obligations under the Exchange Act. For three
years, the Company will use its best efforts to effect and maintain the listing
of the Common Stock on the Nasdaq Capital Market and, once listed on the Nasdaq
Capital Market, the Company will comply with all applicable corporate governance
standards required by the Nasdaq Capital Market. The Company will file with the
Nasdaq Capital Market all documents and notices required by the Nasdaq Capital
Market of companies that have issued securities that are traded in the
over-the-counter market and quotations for which are reported by the Nasdaq
Capital Market.
(r) The Company and the Bank will take such actions and furnish such
information as are reasonably requested by the Agent in order for the Agent to
ensure compliance with the Financial Industry Regulatory Authority's Conduct
Rule 2790.
(s) Other than in connection with any employee benefit plan or arrangement
described in the Prospectus, the Company will not, without the prior written
consent of the Agent, sell or issue, contract to sell or otherwise dispose of,
any shares of Common Stock other than the Securities or the Foundation Shares
for a period of 180 days following the Closing Time.
(t) During the period beginning on the date hereof and ending on the later
of the third anniversary of the Closing Time or the date on which the Agent
receives full payment in satisfaction of any claim for indemnification or
contribution to which it may be entitled pursuant to Sections 6 or 7 hereof,
respectively, made prior to the third anniversary of the Closing Time, neither
the Company, the Mid-Tier Company, the MHC nor the Bank shall, without the prior
written consent of the Agent, take or permit to be taken any action that could
result in the Company Common Stock, the Mid-Tier Common Stock or the Bank Common
Stock becoming subject to any security interest, mortgage, pledge, lien or
encumbrance, with the exception of the intended loan to the Bank's ESOP by the
Company or a subsidiary thereof to enable the ESOP to purchase securities in an
amount up to 8% of the Company Common Stock that will be outstanding following
the Conversion (including shares contributed to the Foundation).
(u) The Company, the Mid-Tier Company, the MHC and the Bank will comply
with the conditions imposed by or agreed to with the OTS in connection with its
approval of the Holding Company Application and the Conversion Application,
including those conditions relating to the establishment and the operation of
the Foundation; the Company, the Mid-Tier Company, the MHC and the Bank shall
use their best efforts to ensure that the Foundation submits within the time
frames required by applicable law a request to the Internal Revenue Service to
be recognized as a tax-exempt organization under Section 501(c)(3) of the Code;
the Company, the Mid-Tier Company, the MHC and the Bank will take no action
which will result in the possible loss of the Foundation's tax exempt status;
and neither the Company, the Mid-Tier Company, the MHC nor the Bank will
contribute any additional assets to the Foundation until such time that such
additional contributions will be deductible for federal and state income tax
purposes.
(v) During the period ending on the first anniversary of the Closing Time,
the Bank will comply with all applicable law and regulation necessary for the
Bank to continue to be a "qualified thrift lender" within the meaning of 12
U.S.C. Section 1467a(m).
(w) The Company shall not deliver the Securities until the Company, the
Mid-Tier Company, the MHC and the Bank have satisfied each condition set forth
in Section 5 hereof, unless such condition is waived by the Agent.
(x) The MHC, the Mid-Tier Company, the Company or the Bank will furnish to
the Agent as early as practicable prior to the Closing Date, but no later than
two (2) full business days prior thereto, a copy of the latest available
unaudited interim consolidated financial statements of the MHC, which have been
read by Shatswell, MacLeod & Company, P.C., as stated in their letters to be
furnished pursuant to subsections (e) and (f) of Section 5 hereof.
(y) During the period in which the Prospectus is required to be delivered,
each of the Company, the Mid-Tier Company, the MHC and the Bank will conduct its
business 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 OTS and the Nasdaq
Capital Market.
(z) The Bank will not amend the Plan in any manner that would affect the
sale of the Securities or the terms of this Agreement without the consent of the
Agent.
(aa) The Company, the Mid-Tier Company, the MHC and the Bank will not,
prior to the Closing Time, incur any liability or obligation, direct or
contingent, or enter into any material transaction, other than in the ordinary
course of business consistent with past practice, except as contemplated by the
Prospectus.
(bb) The Company, the Mid-Tier Company, the MHC and the Bank will use all
reasonable efforts to comply with, or cause to be complied with, the conditions
precedent to the several obligations of the Agent specified in Section 5 hereof.
(cc) The Company, the Mid-Tier Company, the MHC and the Bank will provide
the Agent with any information necessary to carry out the allocation of the
Securities in the event of an oversubscription, and such information will be
accurate and reliable in all material respects.
(dd) The Company, the Mid-Tier Company, the MHC and the Bank will notify
the Agent when funds have been received for the minimum number of Securities set
forth in the Prospectus.
(ee) The Company, the Mid-Tier Company, the MHC and the Bank will (i) use
their best efforts to complete the conditions precedent to the Offerings and the
Conversion in accordance with the Plan, the applicable OTS Regulations and all
other applicable laws, regulations, decisions and orders, including all material
terms, conditions, requirements and provisions precedent to the Conversion and
the Offerings imposed upon the Company, the Mid-Tier Company, the MHC or the
Bank by the Commission, the OTS or any other regulatory authority or Blue Sky
authority, and to comply with those which the regulatory authority permits to be
completed after the Conversion and the Offerings; and (ii) conduct the
Conversion and the Offerings in the manner described in the Prospectus and in
accordance with the Plan, the OTS Regulations and all other applicable material
laws, regulations, decisions and orders, including in compliance with all terms,
conditions, requirements and provisions precedent to the Conversion and the
Offerings imposed upon the Company, the Mid-Tier Company, the MHC and the Bank
by the Commission, the OTS, the FDIC or any other regulatory or Blue Sky
authority.
(ff) The Bank will maintain appropriate arrangements for depositing all
funds received from persons mailing or delivering subscriptions for or orders to
purchase Securities in the Offering with the Bank on an interest-bearing basis
until the Closing Date and satisfaction of all conditions precedent to the
release of the Company's or the Bank's obligation to refund payments received
from persons subscribing for or ordering Shares in the Offering in accordance
with the Plan and 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
Bank will maintain such records of all funds received to permit the funds of
each subscriber to be separately insured by the FDIC (to the maximum extent
allowable) and to enable the Bank to make the appropriate refunds of such funds
in the event that such refunds are required to be made in accordance with the
Plan and as described in the Prospectus.
(gg) The Company will comply with the applicable provisions of the
Sarbanes-Oxley Act, the rules and regulations of the Commission thereunder, and
the Nasdaq corporate governance rules applicable to it, and will use its best
efforts to comply with those provisions of the Sarbanes-Oxley Act and the Nasdaq
corporate governance rules that will become effective in the future upon their
effectiveness.
SECTION 4. PAYMENT OF EXPENSES. The Company, the Mid-Tier Company, the MHC
and the Bank jointly and severally agree to pay all expenses incident to the
performance of their obligations under this Agreement, including but not limited
to (i) the cost of obtaining all securities and bank regulatory approvals, (ii)
the preparation, printing and filing of the Registration Statement and the
Conversion Application as originally filed and of each amendment thereto, (iii)
the preparation, issuance and delivery of the certificates for the Securities
purchased in the Offerings, (iv) the fees and disbursements of the Company's,
the Mid-Tier Company's, the MHC's and the Bank's counsel, conversion agent,
accountants, appraiser and other advisors, (v) the qualification of the
Securities under the securities laws in accordance with the provisions of
Section 3(g) hereof, including filing fees and the fees and disbursements of
counsel in connection therewith and in connection with the preparation of the
Blue Sky Survey, (vi) the printing and delivery to the Agent of copies of the
Registration Statement as originally filed and of each amendment thereto and the
printing and delivery of the Prospectus and any amendments or supplements
thereto to the purchasers in the Offerings and the Agent, (vii) the printing and
delivery to the Agent of copies of a Blue Sky Survey, and (viii) the fees and
expenses incurred in connection with the listing of the Securities on the Nasdaq
Capital Market. In the event the Agent incurs any such fees and expenses on
behalf of the Company, the Mid-Tier Company, the MHC or the Bank, the Bank will
reimburse the Agent for such fees and expenses whether or not the Conversion is
consummated; provided, however, that the Agent shall not incur any substantial
expenses on behalf of the Company, the Mid-Tier Company, the MHC or the Bank
pursuant to this Section without the prior approval of the Bank.
The Company, the Mid-Tier Company, the MHC and the Bank jointly and
severally agree to pay certain expenses incident to the performance of the
Agent's obligations under this Agreement, regardless of whether the Conversion
is consummated, including (i) the filing fees paid or incurred by the Agent in
connection with all filings with the FINRA, and (ii) all reasonable
out-of-pocket expenses up to $170,000 incurred by the Agent relating to the
Offerings, including without limitation, fees and expenses of the Agent's
counsel, advertising, promotional, syndication and travel expenses; provided,
however, that the Agent shall document such expenses to the reasonable
satisfaction of the MHC, the Mid-Tier Company, the Company and the Bank. All
fees and expenses to which the Agent is entitled to reimbursement under this
paragraph of this Section 4 shall be due and payable upon receipt by the
Company, the Mid-Tier Company, the MHC or the Bank of a written accounting
therefor setting forth in reasonable detail the expenses incurred by the Agent.
SECTION 5. CONDITIONS OF AGENT'S OBLIGATIONS. The Company, the Mid-Tier
Company, the MHC, the Bank and the Agent agree that the issuance and the sale of
Securities and all obligations of the Agent hereunder are subject to the
accuracy of the representations and warranties of the Company, the Mid-Tier
Company, the MHC and the Bank herein contained as of the date hereof and the
Closing Time, to the accuracy of the statements of officers and directors of the
Company, the Mid-Tier Company, the MHC and the Bank made pursuant to the
provisions hereof, to the performance by the Company, the Mid-Tier Company, the
MHC and the Bank of their obligations hereunder, and to the following further
conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued under the Securities Act or proceedings
therefor initiated or threatened by the Commission, no order suspending the
Offerings or authorization for final use of the Prospectus shall have been
issued or proceedings therefor initiated or threatened by the Commission or the
OTS and no order suspending the sale of the Securities in any jurisdiction shall
have been issued.
(b) At Closing Time, the Agent shall have received:
(1) The favorable opinion, dated as of Closing Time, of Luse
Gorman Pomerenk & Schick, P.C., counsel for the Company, the Mid-Tier
Company, the MHC and the Bank, in form and substance satisfactory to
counsel for the Agent as attached hereto as Exhibit B.
(2) The favorable opinion, dated as of Closing Time, of Bingham
McCutchen, counsel for the Agent, as attached hereto as Exhibit C.
(3) In addition to giving their opinions required by subsections
(b)(l) and (b)(2), respectively, of this Section, Luse Gorman Pomerenk
& Schick, P.C. and Bingham McCutchen LLP shall each additionally state
that nothing has come to their attention that would lead them to
believe that the Registration Statement (except for financial
statements and schedules and other financial or statistical data
included therein, as to which counsel need make no statement), at the
time it became effective, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that the
Prospectus (except for financial statements and schedules and other
financial or statistical data included therein, as to which counsel
need make no statement), at the time the Registration Statement became
effective or at Closing Time, or (if applicable) that the General
Disclosure Package as of the Applicable Time, included or includes an
untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading.
(c) At Closing Time referred to in Section 2 hereof, the Company, the
Mid-Tier Company, the MHC and the Bank shall have completed in all material
respects the conditions precedent to the Conversion in accordance with the Plan,
the applicable OTS Regulations and all other applicable laws, regulations,
decisions and orders, including all terms, conditions, requirements and
provisions precedent to the Conversion imposed upon the Company, the Mid-Tier
Company, the MHC or the Bank by the OTS, or any other regulatory authority other
than those which the OTS permits to be completed after the Conversion.
(d) At Closing Time, there shall not have been, since the date hereof or
since the respective dates as of which information is given in the Registration
Statement and the Prospectus, any material adverse change in the financial
condition, results of operations, business affairs or prospects of the Company,
the Mid-Tier Company, the MHC and the Bank, considered as one enterprise,
whether or not arising in the ordinary course of business consistent with past
practice, and the Agent shall have received a certificate of the President
and/or Chief Executive Officer of the Company, of the Mid-Tier Company, of the
MHC and of the Bank and the chief financial or chief accounting officer of the
Company, of the Mid-Tier Company, of the MHC and of the Bank, dated as of
Closing Time, to the effect that (i) there has been no such material adverse
change, (ii) there shall have been no material transaction entered into by the
Company, the Mid-Tier Company, the MHC or the Bank from the latest date as of
which the financial condition of the Company, the Mid-Tier Company, the MHC or
the Bank, as set forth in the Registration Statement and the Prospectus other
than transactions referred to or contemplated therein and transactions in the
ordinary course of business consistent with past practice (iii) neither the
Company, the Mid-Tier Company, the MHC nor the Bank shall have received from the
OTS any order or direction (oral or written) to make any material change in the
method of conducting its business with which it has not complied (which order or
direction, if any, shall have been disclosed in writing to the Agent) or which
materially and adversely would affect the business, financial condition, results
of operations or prospects of the Company, the Mid-Tier Company, the MHC or the
Bank, considered as one enterprise, (iv) the representations and warranties in
Section 1 hereof are true and correct with the same force and effect as though
expressly made at and as of the Closing Time, (v) each of the Company, the
Mid-Tier Company, the MHC and the Bank have complied with all agreements and
satisfied all conditions on their part to be performed or satisfied at or prior
to Closing Time, (vi) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been initiated or threatened by the Commission and (vii) no order suspending the
Subscription and Community Offering or Syndicated Community Offering or the
authorization for final use of the Prospectus has been issued and no proceedings
for that purpose have been initiated or threatened by the OTS and no person has
sought to obtain regulatory or judicial review of the action of the OTS in
approving the Plan in accordance with the OTS Regulations nor has any person
sought to obtain regulatory or judicial review of the action of the OTS in
approving the Conversion Application.
(e) At the Closing Time, the Agent shall have received a certificate of the
Chief Executive Officer and/or President of the MHC, the Mid-Tier Company, the
Company and the Bank and the Chief Financial Officer of the MHC, the Mid-Tier
Company, the Company and the Bank, dated as of Closing Time, to the effect that
(i) they have reviewed the contents of the Registration Statement and the
Prospectus; (ii) based on each of their knowledge, the Registration Statement
and the Prospectus do not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements made
therein, in light of the circumstances under which such statements were made,
not misleading; and (iii) based on each of their knowledge, the financial
statements and other financial information included in the Registration
Statement and the Prospectus fairly present the financial condition and results
of operations of the MHC, the Mid-Tier Company and the Bank as of and for the
dates and periods covered by the Registration Statement and the Prospectus.
(f) As of the date hereof, the Agent shall have received from Shatswell,
MacLeod & Company, P.C. a letter dated such date, in form and substance
satisfactory to the Agent, to the effect that: (i) they are independent public
accountants with respect to the Company, the Mid-Tier Company, the MHC and the
Bank within the meaning of the Code of Ethics of the AICPA, the Securities Act
and the Securities Act Regulations and the OTS Regulations, they are registered
with the PCAOB, and they are not in violation of the auditor independence
requirements of the Sarbanes-Oxley Act; (ii) it is their opinion that the
consolidated financial statements and supporting schedules included in the
Registration Statement and covered by their opinions therein comply as to form
in all material respects with the applicable accounting requirements of the
Securities Act and the Securities Act Regulations; (iii) based upon limited
procedures as agreed upon by the Agent and Shatswell, MacLeod & Company, P.C.
set forth in detail in such letter, nothing has come to their attention which
causes them to believe that (A) the unaudited consolidated financial statements
and supporting schedules of the MHC included in the Registration Statement do
not comply as to form in all material respects with the applicable accounting
requirements of the Securities Act, the Securities Act Regulations and the OTS
Regulations or are not presented in conformity with generally accepted
accounting principles applied on a basis substantially consistent with that of
the audited consolidated financial statements included in the Registration
Statement and the Prospectus, (B) the unaudited amounts of net interest income
and net income set forth under "Selected Consolidated Financial and Other Data"
in the Prospectus do not agree with the amounts set forth in unaudited
consolidated financial statements as of and for the dates and periods presented
under such captions or such amounts were not determined on a basis substantially
consistent with that used in determining the corresponding amounts in the
audited financial statements included in the Registration Statement, (C) at a
specified date not more than five (5) business days prior to the date of this
Agreement, there has been any increase in the consolidated long term or short
term debt of the MHC or any decrease in consolidated total assets, the allowance
for loan losses, total deposits or net worth of the MHC, in each case as
compared with the amounts shown in the December 31, 2009 consolidated statements
of financial conditions included in the Registration Statement or, (D) during
the period from December 31, 2009 to a specified date not more than five (5)
business days prior to the date of this Agreement, there were any decreases, as
compared with the corresponding period in the preceding fiscal year, in total
interest income, net interest income, net interest income after provision for
loan losses, income before income tax expense or net income of the MHC, except
in all instances for increases or decreases which the Registration Statement and
the Prospectus disclose have occurred or may occur; and (iv) in addition to the
examination referred to in their opinions and the limited procedures referred to
in clause (iii) above, they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages and
financial information that are included in the Registration Statement and
Prospectus and that are specified by the Agent, and have found such amounts,
percentages and financial information to be in agreement with the relevant
accounting, financial and other records of the Company, the Mid-Tier Company,
the MHC and the Bank identified in such letter.
(g) At Closing Time, the Agent shall have received from Shatswell, MacLeod
& Company, P.C. a letter, dated as of Closing Time, to the effect that they
reaffirm the statements made in the letter furnished pursuant to subsection (f)
of this Section, except that the specified date referred to shall be a date not
more than five (5) days prior to Closing Time.
(h) At Closing Time, the Securities shall have been approved for quotation
on the Nasdaq Capital Market upon notice of issuance.
(i) At Closing Time, the Agent shall have received a letter from the
Appraiser, dated as of the Closing Time, confirming its appraisal.
(j) At Closing Time, counsel for the Agent shall have been furnished with
such documents and opinions as they may require for the purpose of enabling them
to pass upon the issuance and sale of the Securities and the Foundation Shares
as herein contemplated and related proceedings, or in order to evidence the
accuracy of any of the representations or warranties, or the fulfillment of any
of the conditions, herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Securities and the Foundation
Shares as herein contemplated shall be satisfactory in form and substance to the
Agent and counsel for the Agent.
(k) At any time prior to Closing Time, (i) there shall not have occurred
any material adverse change in the financial markets in the United States or
elsewhere or any outbreak of hostilities or escalation thereof or other calamity
or crisis the effect of which, in the judgment of the Agent, are so material and
adverse as to make it impracticable to market the Securities or to enforce
contracts, including subscriptions or orders, for the sale of the Securities,
and (ii) trading generally on either the American Stock Exchange, the New York
Stock Exchange or the Nasdaq Stock Market shall not have been suspended, and
minimum or maximum prices for trading shall not have been fixed, or maximum
ranges for prices for securities have been required, by either of said Exchanges
or by order of the Commission or any other governmental authority, and a banking
moratorium shall not have been declared by either Federal, Maryland, New York or
Massachusetts authorities.
(l) A memorandum relating to the necessity of obtaining or confirming
exemptions, qualifications or the registration of the Securities under
applicable state securities law (the "Blue Sky Survey") from Luse Gorman
Pomerenk & Schick, P.C. relating to the Offering, including Agent's
participation therein, shall have been furnished prior to the mailing of the
Prospectus to the Company with a copy thereof addressed to Agent or upon which
Luse Gorman Pomerenk & Schick, P.C. shall state the Agent may rely.
SECTION 6. INDEMNIFICATION.
(a) The Company, the Mid-Tier Company, the MHC and the Bank, jointly and
severally, agree to indemnify and hold harmless the Agent, each person, if any,
who controls the Agent, within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, and its respective partners, directors,
officers, employees and agents as follows:
(i) from and against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, related to or arising out of the
Conversion (including the establishment of the Foundation and the
contribution of the Foundation Shares thereto by the Company) and the
Offerings or any action taken by the Agent where acting as agent of the
Company, the Mid-Tier Company, the MHC or the Bank or otherwise as
described in Section 2 hereof;
(ii) from and against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, based upon or arising out of any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), or the omission or
alleged omission therefrom of a material fact required to be stated therein
or necessary to make the statements therein not misleading or arising out
of any untrue statement or alleged untrue statement of a material fact
contained in the Members' Proxy Statement or Prospectus (or any amendment
or supplement thereto), or any Issuer-Represented Free Writing Prospectus,
or the omission or alleged omission therefrom of a material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(iii) from and against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid
in settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever described in clauses (i) or (ii) above, if such settlement is
effected with the written consent of the Company, the Mid-Tier Company, the
MHC or the Bank, which consent shall not be unreasonably withheld; and
(iv) from and against any and all expense whatsoever, as incurred
(including, subject to Section 6(c) hereof, the fees and disbursements of
counsel chosen by the Agent), reasonably incurred in investigating,
preparing or defending against any litigation, or any investigation,
proceeding or inquiry by any governmental agency or body, commenced or
threatened, or any claim pending or threatened whatsoever described in
clauses (i) or (ii) above, to the extent that any such expense is not paid
under clause (i), (ii) or (iii) above;
provided, however, that the indemnification provided for in this paragraph (a)
shall not apply to any loss, liability, claim, damage or expense that (i) arises
out of any untrue statement or alleged untrue statement of a material fact
contained in the Prospectus (or any amendment or supplement thereto), or any
Issuer-Represented Free Writing Prospectus, or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading
which was made in reliance upon and in conformity with the Agent Information, or
(ii) is primarily attributable to the gross negligence, willful misconduct or
bad faith of the Agent.
(b) The Agent agrees to indemnify and hold harmless the Company and the
Bank, their directors, each of their officers who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, of a material fact made in the Prospectus (or any amendment or
supplement thereto), or any Issuer-Represented Free Writing Prospectus, in
reliance upon and in conformity with the Agent Information.
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
that it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of any such
action. In no event shall the indemnifying parties be liable for fees and
expenses of more than one counsel (in addition to no more than one local counsel
in each separate jurisdiction in which any action or proceeding is commenced)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances.
(d) The Company, the Mid-Tier Company, the MHC and the Bank also agree that
the Agent shall not have any liability (whether direct or indirect, in contract
or tort or otherwise) to the MHC, the Mid-Tier Company and its security holders,
the Company and its security holders or the MHC's, the Mid-Tier Company's, the
Bank's or the Company's creditors relating to or arising out of the engagement
of the Agent pursuant to, or the performance by the Agent of the services
contemplated by, this Agreement, except to the extent that any liability is
found in a final judgment by a court of competent jurisdiction to have resulted
primarily from the Agent's bad faith, willful misconduct or gross negligence.
(e) In addition to, and without limiting, the provisions of Section
(6)(a)(iv) hereof, in the event that the Agent, any person, if any, who controls
the Agent within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act or any of its partners, directors, officers, employees or
agents is requested or required to appear as a witness or otherwise gives
testimony in any action, proceeding, investigation or inquiry brought by or on
behalf of or against the Company, the Mid-Tier Company, the MHC, the Bank, the
Agent or any of its respective affiliates or any participant in the transactions
contemplated hereby in which the Agent or such person or agent is not named as a
defendant, the Company, the Mid-Tier Company, the MHC and the Bank jointly and
severally agree to reimburse the Agent and its partners, directors, officers,
employees or agents for all reasonable and necessary out-of-pocket expenses
incurred by them in connection with preparing or appearing as a witness or
otherwise giving testimony and to compensate the Agent and its partners,
directors, officers, employees or agents in an amount to be mutually agreed
upon.
SECTION 7. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 hereof is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Company, the
Mid-Tier Company, the MHC, the Bank, and the Agent shall contribute to the
aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by said indemnity agreement incurred by the Company, the Mid-Tier
Company, the MHC or the Bank and the Agent, as incurred, in such proportions (i)
that the Agent is responsible for that portion represented by the percentage
that the maximum aggregate marketing fees appearing on the cover page of the
Prospectus bears to the maximum aggregate gross proceeds appearing thereon and
the Company, the Mid-Tier Company, the MHC and the Bank are jointly and
severally responsible for the balance or (ii) if, but only if, the allocation
provided for in clause (i) is for any reason held unenforceable, in such
proportion as is appropriate to reflect not only the relative benefits to the
Company, the Mid-Tier Company, the MHC and the Bank on the one hand and the
Agent on the other, as reflected in clause (i), but also the relative fault of
the Company, the Mid-Tier Company, the MHC and the Bank on the one hand and the
Agent on the other, as well as any other relevant equitable considerations;
provided, however, that no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section, each person, if any, who
controls the Agent within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act shall have the same rights to contribution as the
Agent, and each director of the Company, the Mid-Tier Company, the MHC and the
Bank, each officer of the Company who signed the Registration Statement, and
each person, if any, who controls the Company, the Mid-Tier Company, the MHC or
the Bank within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act shall have the same rights to contribution as the Company, the
Mid-Tier Company, the MHC and the Bank. Notwithstanding anything to the contrary
set forth herein, to the extent permitted by applicable law, in no event shall
the Agent be required to contribute an aggregate amount in excess of the
aggregate marketing fees to which the Agent is entitled and actually paid
pursuant to this Agreement.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this Agreement, or
contained in certificates of officers of the Company, the Mid-Tier Company, the
MHC or the Bank submitted pursuant hereto, shall remain operative and in full
force and effect, regardless of any investigation made by or on behalf of any
Agent or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities.
SECTION 9. TERMINATION OF AGREEMENT
(a) The Agent may terminate this Agreement, by notice to the Company, at
any time at or prior to the Closing Time (i) if there has been, since the date
of this Agreement or since the respective dates as of which information is given
in the Registration Statement, any material adverse change in the financial
condition, results of operations, business affairs or prospects of the Company,
the Mid-Tier Company, the MHC or the Bank, considered as one enterprise, whether
or not arising in the ordinary course of business, (ii) if there has occurred
any material adverse change in the financial markets in the United States or
elsewhere or any outbreak of hostilities or escalation thereof or other calamity
or crisis the effect of which, in the judgment of the Agent, are so material and
adverse as to make it impracticable to market the Securities or to enforce
contracts, including subscriptions or orders, for the sale of the Securities,
(iii) if trading generally on the Nasdaq Capital Market, the American Stock
Exchange or the New York Stock Exchange has been suspended, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by either of said Exchanges or by order of the
Commission or any other governmental authority, or if a banking moratorium has
been declared by either Federal, Maryland, New York or Massachusetts
authorities, (iv) if any condition specified in Section 5 hereof shall not have
been fulfilled when and as required to be fulfilled; (v) if there shall have
been such material adverse change in the condition or prospects of the Company,
the Mid-Tier Company, the MHC or the Bank or the prospective market for the
Company's Securities as in the Agent's good faith opinion would make it
inadvisable to proceed with the offering, sale or delivery of the Securities;
(vi) if, in the Agent's good faith opinion, the price for the Securities
established by the Appraiser is not reasonable or equitable under then
prevailing market conditions, or (vii) if the Conversion is not consummated on
or prior to May 14, 2011.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Sections 2 and 4 hereof relating to the reimbursement of expenses
and except that the provisions of Sections 6 and 7 hereof shall survive any
termination of this Agreement.
SECTION 10. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Agent
shall be directed to the Agent at 919 Third Avenue, 6th Floor, New York, New
York 10048, attention of Catherine A. Lawton, Principal, with a copy to Neal J.
Curtin, Esquire at Bingham McCutchen LLP, 1 Federal Street, Boston, MA
02110-1726; notices to the Company, the Mid-Tier Company, the MHC and the Bank
shall be directed to any of them at 435 Market Street, Brighton, Massachusetts
02135, Attention of Maurice H. Sullivan, Jr., Chairman and Chief Executive
Officer, and Thomas J. Leetch, President and Chief Operating Officer, with a
copy to Lawrence Spaccasi, Esquire and Steven Lanter, Esquire at Luse Gorman
Pomerenk & Schick, P.C., 5335 Wisconsin Avenue, NW, Suite 780, Washington, D.C.
20015.
SECTION 11. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the Agent, the Company, the Mid-Tier Company, the MHC and the Bank
and their respective successors. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Agent, the Company, the Mid-Tier Company, the MHC
and the Bank and their respective successors and the controlling persons and the
partners, officers and directors referred to in Sections 6 and 7 hereof and
their heirs and legal representatives, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision herein or therein
contained. This Agreement and all conditions and provisions hereof and thereof
are intended to be for the sole and exclusive benefit of the Agent, the Company,
the Mid-Tier Company, the MHC and the Bank and their respective successors, and
said controlling persons, partners, officers and directors and their heirs,
partners, legal representatives, and for the benefit of no other person, firm or
corporation.
SECTION 12. ENTIRE AGREEMENT; AMENDMENT. This Agreement represents the
entire understanding of the parties hereto with reference to the transactions
contemplated hereby and supersedes any and all other oral or written agreements
heretofore made, except for the Records Agent Letter Agreement, the terms of
which shall expressly survive the execution of this Agreement. No waiver,
amendment or other modification of this Agreement shall be effective unless in
writing and signed by the parties hereto.
SECTION 13. GOVERNING LAW AND TIME. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in said State without regard to the
conflicts of laws provisions thereof. Unless otherwise noted, specified times of
day refer to Eastern time.
SECTION 14. SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
SECTION 15. HEADINGS. Sections headings are not to be considered part of
this Agreement, are for convenience and reference only, and are not to be deemed
to be full or accurate descriptions of the contents of any paragraph or
subparagraph.
SECTION 16. WAIVER OF TRIAL BY JURY. Each of the Company, the MHC, the
Mid-Tier Company, the Bank, 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 17. COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which so executed and delivered shall be an original, but
all of which together shall constitute but one and the same instrument.
SECTION 18. NO THIRD PARTY BENEFICIARIES. This agreement is made solely for
the benefit of and will be binding upon the parties hereto and their respective
successors and the directors, officers and controlling persons and the agents
thereof to the extent stated hereunder, and no other person will have any right
or obligation hereunder.
[The next page is the signature page]
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Agent on the one hand, and the Company, the Mid-Tier Company, the MHC and
the Bank on the other in accordance with its terms.
Very truly yours,
PEOPLES FEDERAL MHC
(a Federal corporation)
By: /s/ Maurice H. Sullivan, Jr.
--------------------------------
Title: Chairman
PEOPLES FEDERAL BANCORP, INC.
(a Federal corporation)
By: /s/ Maurice H. Sullivan, Jr.
--------------------------------
Title: Chairman
PEOPLES FEDERAL BANCSHARES, INC.
(a Maryland corporation)
By: /s/ Maurice H. Sullivan, Jr.
--------------------------------
Title: Chairman
PEOPLES FEDERAL SAVINGS BANK
By: /s/ Maurice H. Sullivan, Jr.
--------------------------------
Title: Chairman
CONFIRMED AND ACCEPTED,
as of the date first above written:
SANDLER O'NEILL & PARTNERS, L.P.
By: Sandler O'Neill & Partners Corp.,
the sole general partner
By: /s/ Jennifer Docherty
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Jennifer Docherty, Authorized Signatory
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