Exhibit 1.1
1,265,000 Shares
(subject to increase up to 1,454,750 shares
in the event of an oversubscription)
AFSALA BANCORP, INC.
(a Delaware corporation)
COMMON STOCK
($0.10 Par Value Per Share)
Subscription Price: $10.00 Per Share
AGENCY AGREEMENT
____________, 1996
Capital Resources, Inc.
1701 K Street, N.W.
Suite 700
Washington, D.C. 20006
Ladies and Gentlemen:
AFSALA Bancorp, Inc. (the "Company") and Amsterdam Federal
Savings and Loan Association, a federally chartered mutual savings and loan
association ("Association"), with its deposit accounts insured by the Savings
Association Insurance Fund ("SAIF") administered by the Federal Deposit
Insurance Corporation ("FDIC"), hereby confirm their agreement with Capital
Resources, Inc. ("Capital Resources") as follows:
SECTION 1. The Offering. The Association, in accordance with
and pursuant to its plan of conversion adopted by the Board of Directors of the
Association (the "Plan"), intends to be converted from a federally-chartered
mutual savings and loan association to a federally-chartered stock savings bank
and will sell all of its issued and outstanding stock to the Company. The
Company will offer and sell its common stock (the "Common Stock") in a
subscription offering ("Subscription Offering") to (1) tax qualified employee
benefit plans of the Association, (2) depositors of the Association as of March
31, 1995 ("Eligible Account Holders"), (3) depositors of the Association as of
June 30, 1996 ("Supplemental Eligible Account Holders"), (4) certain other
deposit account holders and borrower members of the Association ("Other
Members") and (5) to its employees, officers and directors, pursuant to rights
to subscribe for shares of Common Stock (the "Shares"). Subject to the prior
subscription rights of the above-listed parties, the Company may offer for sale
in a public offering (the "Public Offering," and when referred to together with
the Subscription Offering, the "Subscription and Public Offerings") conducted
after the Subscription Offering, the Shares not so subscribed for or ordered in
the Subscription Offering to the general public (all such offerees being
referred to in the aggregate as "Eligible Offerees"). Shares may also be sold in
the Public Offering by a selling group of broker-dealers organized and managed
by Capital Resources. It is acknowledged that the purchase of Shares in the
Subscription and Public Offerings is subject to maximum and minimum purchase
limitations as described in the Plan and that the Company may reject in whole or
in part any subscriptions received from subscribers in the Public Offering.
The Company and the Association desire to retain Capital
Resources to assist the Company with its sale of the Shares in the Subscription
and Public Offerings. By and through this Agreement, the Company and the
Association confirm the retention of Capital Resources to assist the Company and
the Association during the Subscription and Public Offerings.
The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-l (File No.
333-6399) containing an offering prospectus relating to the Subscription and
Public Offerings for the registration of the Shares under the Securities Act of
1933, as amended (the "1933 Act"), and has filed such amendments thereto, if
any, and such amended prospectuses as may have been required to the date hereof
(the "Registration Statement"). The prospectus, as amended, included in the
Registration Statement at the time it initially becomes effective, is
hereinafter called the "Offering Prospectus", except that if any prospectus is
filed by the Company pursuant to Rule 424(b) or (c) of the rules and regulations
of the Commission under the 1933 Act (the "1933 Act Regulations") differing from
the offering prospectus included in the Registration Statement at the time it
initially becomes effective, the term "Offering Prospectus" shall refer to the
offering prospectus filed pursuant to Rule 424(b) or (c) from and after the time
said offering prospectus is filed with or mailed to the Commission for filing.
In accordance with Title 12, Part 563b of the Code of Federal
Regulations (the "Conversion Regulations"), the Association has filed with the
Office of Thrift Supervision (the "OTS") an Application for Approval of
Conversion on Form AC (the "Conversion Application") including the Offering
Prospectus and has filed such amendments thereto, if any, as may have been
required by the OTS. The Conversion Application has been approved by the OTS.
The Company has filed with the OTS its application on Form H-(e)lS (the "Holding
Company Application") to acquire the Association under the Home Owners' Loan
Act, as amended (12 U.S.C. ss. 1467a) ("HOLA").
SECTION 2. Retention of Capital Resources; Compensation; Sale
and Delivery of the Shares. Subject to the terms and conditions herein set
forth, the Company and the Association hereby appoint Capital Resources as their
agent to advise and assist the Company and the Association with the Company's
sale of the Shares in the Subscription and Public Offerings.
On the basis of the representations, warranties, and
agreements herein contained, but subject to the terms and conditions herein set
forth, Capital Resources accepts such appointment and agrees to consult with and
advise the Company and the Association as to matters relating to the Conversion
and the Subscription and Public Offerings. It is acknowledged by the Company and
the Association that Capital Resources shall not be required to purchase any
Shares and shall not be obligated to take any action which is inconsistent with
any applicable laws, regulations, decisions or orders. If requested by the
Company or the Association, Capital Resources also may assemble and manage a
selling group of broker dealers which are members of the National Association of
Securities Dealers, Inc. (the "NASD") to participate in the solicitation of
purchase orders for Shares under a selected dealers' agreement ("Selected
Dealers' Agreement"). The obligations of Capital Resources pursuant to this
Agreement shall terminate upon the completion or termination or abandonment of
the Plan by the Company or the Association or upon termination of the
Subscription and Public Offerings, or if the terms of the Conversion are
substantially amended so as to materially and adversely change the role of
Capital Resources, but in no event later than 45 days after the completion of
the Subscription and Public Offerings (the "End Date"). All fees due to Capital
Resources but unpaid will be payable to Capital Resources in next day funds at
the earlier of the Closing Date (as hereinafter defined) or the End Date. In the
event the Subscription and Public Offerings are extended beyond the End Date,
the Company, the
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Association and Capital Resources may mutually agree to renew this Agreement
under mutually acceptable terms.
In the event the Company is unable to sell a minimum of
935,000 Shares within the period herein provided, this Agreement shall
terminate, and the Company shall refund to any persons who have subscribed for
any of the Shares, the full amount which it may have received from them plus
accrued interest as set forth in the Offering Prospectus; and none of the
parties to this Agreement shall have any obligation to the other parties
hereunder, except as set forth in this Section 2 and in Sections 7, 9 and 10
hereof.
In the event the closing does not occur, the Conversion is
terminated or otherwise abandoned, or the terms of the Conversion are
substantially amended so as to materially and adversely change the role of
Capital Resources, Capital Resources shall be reimbursed for all reasonable
legal fees and out-of-pocket expenses for rendering financial advice to the
Association concerning the structure of the Conversion, preparing a market and
financial analysis, performing due diligence and assisting in the preparation of
the Application for Conversion and the Registration Statement, which shall be
paid upon such termination, abandonment or amendment or within five days of such
event.
If all conditions precedent to the consummation of the
Conversion, including, without limitation, the sale of all Shares required by
the Plan to be sold, are satisfied, the Company agrees to issue or have issued
the Shares sold in the Subscription and Public Offerings and to release for
delivery certificates for such Shares on the Closing Date (as hereinafter
defined) against payment to the Company by any means authorized by the Plan,
provided, however, that no certificates shall be released for such shares until
the conditions specified in Section 7 hereof shall have been complied with to
the reasonable satisfaction of Capital Resources and its counsel. The release of
Shares against payment therefor shall be made on a date and at a time and place
acceptable to the Company, the Association and Capital Resources. The date upon
which the Company shall release or deliver the Shares sold in the Subscription
and Public Offerings, in accordance with the terms hereof, is herein called the
"Closing Date."
Capital Resources shall receive the following compensation for
its services hereunder:
(a) (i) a marketing fee in the amount of (x) two percent
(2.0%) of the aggregate dollar amount of all Shares sold in the Subscription and
Public Offerings, excluding sales made through broker assisted purchases or by
other NASD member firms participating in the Subscription and Public Offerings
pursuant to the Selected Dealers' Agreement, if any (for which Capital
Resources' compensation shall be pursuant to sub-paragraph (ii)) and excluding
shares sold to the Association's Employee Stock Ownership Plan, directors,
officers or employees and any member of such person's immediate family (defined
to include children, spouse, parents, grandparents and grandchildren);
(ii) a management fee in the amount of one percent
and one-half (1.5%) of the aggregate dollar amount of Shares sold through broker
assisted purchases or through selected dealers, if any.
(b) Capital Resources shall be reimbursed for all reasonable
out-of-pocket expenses, including, but not limited to, legal fees, travel,
communications and postage, incurred by it whether or not the Conversion is
successfully completed as set forth in Section 7 hereof. Capital Resources shall
be reimbursed promptly for all out-of-pocket expenses upon receipt by the
Company or the Association of a monthly itemized bill summarizing such expenses
since the date of the last bill, if any, to the date
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of the current bill.
In the event other broker-dealers are assembled and managed by
Capital Resources under a selling syndicate to participate in the Public
Offering pursuant to the Selected Dealers' Agreement or participate in the
Public Offering as assisting brokers, the Company and the Association will be
directly responsible for the payment of selected dealers' commissions to such
participating firms or assisting brokers' commissions up to a maximum of four
percent (4%) and four percent (4%), respectively, of the amount of stock sold by
such firms. Capital Resources' fees are limited to those stated in subparagraph
(a) above and all other brokers will be paid fees based upon the capacity in
which they are acting in the particular stock sale.
All subscription funds received by Capital Resources (and if
by check shall be made payable to the Company) or by other NASD registered
broker-dealers soliciting subscriptions (if any) shall be transmitted (either by
U.S. Mail or similar type of transmittal) to the Company by noon of the
following business day.
SECTION 3. Offering Prospectus; Subscription and Public
Offerings. The Shares are to be initially offered in the Subscription and Public
Offerings at the Purchase Price as set forth on the cover page of the Offering
Prospectus.
SECTION 4. Representations and Warranties. The Company and
the Association jointly and severally represent and warrant to Capital Resources
as follows:
(a) The Registration Statement was declared effective by the
Commission on __________, 1996. At the time the Registration Statement,
including the Offering Prospectus contained therein (including any amendment or
supplement thereto), became effective, the Registration Statement complied in
all material respects with the requirements of the 1933 Act and the 1933 Act
Regulations and the Registration Statement, including the Offering Prospectus
contained therein (including any amendment or supplement thereto), any Blue Sky
Application or any Sales Information (as such terms are defined previously
herein or in Section 8 hereof) authorized by the Company or the Association for
use in connection with the Subscription and Public Offerings did not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and at the time any
Rule 424(b) or (c) Offering Prospectus was filed with or mailed to the
Commission for filing and at the Closing Date referred to in Section 2, the
Registration Statement including the Offering Prospectus contained therein
(including any amendment or supplement thereto), any Blue Sky Application or any
Sales Information (as such terms are defined previously herein or in Section 8
hereof) authorized by the Company or the Association for use in connection with
the Subscription and Public Offerings 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; provided, however, that the representations and warranties
in this Section 4(a) shall not apply to statements in or omissions from such
Registration Statement or Offering Prospectus made in reliance upon and in
conformity with written information furnished to the Company or the Association
by Capital Resources expressly regarding Capital Resources for use under the
caption "The Conversion-Marketing Arrangements."
(b) The Conversion Application, including the Offering
Prospectus, was approved by the OTS on __________, 1996. At the time of the
approval of the Conversion Application, including
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the Offering Prospectus, by the OTS (including any amendment or supplement
thereto) and at all times subsequent thereto until the Closing Date, the
Conversion Application, including the Offering Prospectus, will comply in all
material respects with the Conversion Regulations and any other rules and
regulations of the OTS. The Conversion Application, including the Offering
Prospectus (including any amendment or supplement thereto), does not include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; provided, however,
that representations or warranties in this Section 4(b) shall not apply to
statements or omissions made in reliance upon and in conformity with written
information furnished to the Association by Capital Resources expressly
regarding Capital Resources for use in the Offering Prospectus contained in the
Conversion Application under the caption "The Conversion- Marketing
Arrangements."
(c) The Company has filed with the OTS the Holding Company
Application and will have received, as of the Closing Date, approval of its
acquisition of the Association from the OTS.
(d) No order has been issued by the OTS, the Commission, the
FDIC (and hereinafter reference to the FDIC shall include the SAIF), or to the
best knowledge of the Company or the Association any State regulatory or Blue
Sky authority, preventing or suspending the use of the Offering Prospectus and
no action by or before any such government entity to revoke any approval,
authorization or order of effectiveness related to the Conversion is, to the
best knowledge of the Association or the Company, pending or threatened.
(e) At the Closing Date referred to in Section 2, the Plan
will have been adopted by the Board of Directors of both the Company and the
Association, the Company and the Association will have completed all conditions
precedent to the Conversion and the offer and sale of the Shares will have been
conducted in accordance with the Plan, the Conversion Regulations and all other
applicable laws, regulations, decisions and orders, including all terms,
conditions, requirements and provisions precedent to the Conversion imposed upon
the Company or the Association by the OTS, the Commission or any other
regulatory authority and in the manner described in the Offering Prospectus. At
the Closing Date, no person will have sought to obtain review of the final
action of the OTS, to the knowledge of the Company or the Association, in
approving the Plan or in approving the Conversion or the Company's application
to acquire all of the capital stock and control of the Association pursuant to
the HOLA or any other statute or regulation.
(f) The Association is now a duly organized and validly
existing federally-chartered savings and loan association in mutual form of
organization and upon the Conversion will become a duly organized and validly
existing federally-chartered savings bank in capital stock form of organization,
in both instances duly authorized to conduct its business and own its property
as described in the Registration Statement and the Offering Prospectus; the
Company and the Association have obtained all material licenses, permits and
other governmental authorizations currently required for the conduct of their
respective businesses; all such licenses, permits and governmental
authorizations are in full force and effect, and the Company and the Association
are in all material respects complying with all laws, rules, regulations and
orders applicable to the operation of their businesses; and the Association is
in good standing under the laws of the United States and is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which its ownership of property or leasing of properties or the
conduct of its business requires such qualification, unless the failure to be so
qualified in one or more of such jurisdictions would not have a material adverse
effect on the condition, financial or otherwise, or the business, operations or
income of the Association. The Association does not own
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equity securities or any equity interest in any other business enterprise except
as described in the Offering Prospectus. Upon the completion of the Conversion
of the Association pursuant to the Plan to a federally-chartered stock savings
bank, (i) all of the authorized and outstanding capital stock of the Association
will be owned by the Company, and (ii) the Company will have no direct
subsidiaries other than the Association. The Conversion will have been effected
in all material respects in accordance with all applicable statutes,
regulations, decisions and orders; and except with respect to the filing of
certain post-sale, post-conversion reports and documents in compliance with the
1933 Act Regulations or the OTS's resolutions or letters of approval. All terms,
conditions, requirements and provisions with respect to the Conversion imposed
by the Commission, the OTS and the FDIC, if any, will have been complied with by
the Company and the Association in all material respects or appropriate waivers
will have been obtained and all material notice and waiting periods will have
been satisfied, waived or elapsed.
(g) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware with corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Registration
Statement and the Offering Prospectus, and the Company is qualified to do
business as a foreign corporation in any jurisdiction in which the conduct of
its business requires such qualification, except where the failure to so qualify
would not have a material adverse effect on the business of the Company.
(h) The Association is a member of the Federal Home Loan Bank
of New York ("FHLBNY"); and the deposit accounts of the Association are insured
by the FDIC up to the applicable limits. Upon consummation of the Conversion,
the liquidation account for the benefit of Eligible Account Holders and
Supplemental Eligible Account Holders will be duly established in accordance
with the requirements of the Conversion Regulations.
(i) The Company and the Association have good and marketable
title to all assets owned by them which are material to the business of the
Company and the Association and to those assets described in the Registration
Statement and Offering Prospectus as owned by them, free and clear of all liens,
charges, encumbrances or restrictions, except such as are described in the
Registration Statement and Offering Prospectus or are not materially significant
or important in relation to the business of the Company and the Association; and
all of the leases and subleases material to the business of the Company and the
Association under which the Company or the Association holds properties,
including those described in the Registration Statement and Offering Prospectus,
are in full force and effect.
(j) The Association has received an opinion of its counsel,
Malizia, Spidi, Sloane & Fisch, P.C., with respect to the federal income tax
consequences of the Conversion of the Association from mutual to stock form, the
acquisition of the capital stock of the Association by the Company, the sale of
the Shares, and the reorganization of the Association as described in the
Registration Statement and the Offering Prospectus and an opinion from KPMG Peat
Marwick, LLP ("KPMG") with respect to the State income tax consequences of the
proposed transaction; all material aspects of the opinions of Silver Freedman &
Taff, L.L.P. and KPMG are accurately summarized in the Offering Prospectus; and
the facts and representations upon which such opinions are based are truthful,
accurate and complete, and neither the Association nor the Company will take any
action inconsistent therewith.
(k) The Company and the Association have all such power,
authority, authorizations, approvals and orders as may be required to enter into
this Agreement, to carry out the provisions and conditions hereof and to issue
and sell the Capital Stock of the Association to the Company and Shares to be
sold by the Company as provided herein and as described in the Offering
Prospectus. The
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consummation of the Conversion, the execution, delivery and performance of this
Agreement and the consummation of the transactions herein contemplated have been
duly and validly authorized by all necessary corporate action on the part of the
Company and the Association and this Agreement has been validly executed and
delivered by the Company and the Association and is the valid, legal and binding
agreement of the Company and the Association enforceable in accordance with its
terms (except as the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, reorganization or similar laws relating to or affecting
the enforcement of creditors' rights generally or the rights of creditors of
savings and loan holding companies, the accounts of whose subsidiaries are
insured by the FDIC or by general equity principles regardless of whether such
enforceability is considered in a proceeding in equity or at law, and except to
the extent, if any, that the provisions of Sections 9 and 10 hereof may be
unenforceable as against public policy).
(l) The Company and the Association are not in violation of
any directive which has been delivered to the Company or the Association or of
which management of the Company or the Association has actual knowledge from the
OTS, the Commission, the FDIC or any other agency to make any material change in
the method of conducting their businesses so as to comply in all material
respects with all applicable statutes and regulations (including, without
limitation, regulations, decisions, directives and orders of the OTS, the
Commission and the FDIC) and except as set forth in the Registration Statement
and the Offering Prospectus there is no suit or proceeding or, to the knowledge
of the Company or the Association, charge, investigation or action before or by
any court, regulatory authority or governmental agency or body, pending or, to
the knowledge of the Company or the Association, threatened, which might
materially and adversely affect the Conversion, the performance of this
Agreement or the consummation of the transactions contemplated in the Plan and
as described in the Registration Statement or which might result in any material
adverse change in the condition (financial or otherwise), earnings, capital,
properties, business affairs or business prospects of the Company or the
Association or which would materially affect their properties and assets.
(m) The financial statements which are included in the
Registration Statement and which are part of the Offering Prospectus fairly
present the financial condition, results of operations, retained earnings and
cash flows of the Association at the respective dates thereof and for the
respective periods covered thereby, and comply as to form in all material
respects with the applicable accounting requirements of Title 12 of the Code of
Federal Regulations and generally accepted accounting principles ("GAAP")
(including those requiring the recording of certain assets at their current
market value). Such financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied through the
periods involved, present fairly in all material respects the information
required to be stated therein and are consistent with the most recent financial
statements and other reports filed by the Association with the OTS and the FDIC,
except that accounting principles employed in such filings conform to
requirements of such authorities and not necessarily to generally accepted
accounting principles. The other financial, statistical and pro forma
information and related notes included in the Offering Prospectus present fairly
the information shown therein on a basis consistent with the audited and
unaudited financial statements, if any, of the Association included in the
Offering Prospectus, and as to the pro forma adjustments, the adjustments made
therein have been properly applied on the basis described therein.
(n) Since the respective dates as of which information is
given in the Registration Statement and the Offering Prospectus, except as may
otherwise be stated therein: (i) there has not been any material adverse change,
financial or otherwise, in the condition of the Company or the Association, or
of the Company and the Association considered as one enterprise, or in the
earnings, capital,
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properties, business affairs or business prospects of the Company or the
Association, whether or not arising in the ordinary course of business, (ii)
there has not been (A) an increase of greater than $500,000 in the long term
debt of the Association or (B) an increase of $100,000 or more in loans past due
90 days or more or (C) an increase of $100,000 or more in real estate acquired
by foreclosure or (D) a decrease of $50,000 or more in the allowance for loan
losses or (E) any decrease in total retained earnings or (F) a decrease in net
income from January 1, 1996 to date when compared to the like period in 1995 or
(G) any change in total assets of the Association in an amount greater than
$2,000,000 or (H) any other material change which would require an amendment to
the Offering Prospectus; (iii) the Association has not issued any securities or
incurred any liability or obligation for borrowing other than in the ordinary
course of business; (iv) there have not been any material transactions entered
into by the Company or the Association, except with respect to those
transactions entered into in the ordinary course of business; and (v) the
capitalization, liabilities, assets, properties and business of the Company and
the Association conform in all material respects to the descriptions thereof
contained in the Offering Prospectus, and neither the Company nor the
Association have any material liabilities of any kind, contingent or otherwise,
except as set forth in the Offering Prospectus.
(o) As of the date hereof and as of the Closing Date, neither
the Company nor the Association is in violation of its certificate of
incorporation or charter, respectively, or its bylaws (and the Association will
not be in violation of its charter or bylaws in capital stock form as of the
Closing Date) or in default in the performance or observance of any material
obligation, agreement, covenant, or condition contained in any contract, lease,
loan agreement, indenture or other instrument to which it is a party or by which
it, or any of its property may be bound which would result in a material adverse
change in the condition (financial or otherwise), earnings, capital, properties,
business affairs or business prospects of the Company or Association or which
would materially affect their properties or assets. The consummation of the
transactions herein contemplated will not (i) conflict with or constitute a
breach of, or default under, the certificate of incorporation and bylaws of the
Company, the charter and bylaws of the Association (in either mutual or capital
stock form), or any material contract, lease or other instrument to which the
Company or the Association has a beneficial interest, or any applicable law,
rule, regulation or order; (ii) violate any authorization, approval, judgment,
decree, order, statute, rule or regulation applicable to the Company or the
Association; or (iii) with the exception of the Liquidation Account established
in the Conversion, result in the creation of any material lien, charge or
encumbrance upon any property of the Company or the Association.
(p) No default exists, and no event has occurred which with
notice or lapse of time, or both, would constitute a default on the part of the
Company or the Association, in the due performance and observance of any term,
covenant or condition of any indenture, mortgage, deed of trust, note, bank loan
or credit agreement or any other instrument or agreement to which the Company or
the Association is a party or by which any of them or any of their property is
bound or affected in any respect which, in any such cases, is material to the
Company or the Association; such agreements are in full force and effect; and no
other party to any such agreements has instituted or, to the best knowledge of
the Company or the Association, threatened any action or proceeding wherein the
Company or the Association would or might be alleged to be in default
thereunder.
(q) Upon consummation of the Conversion, the authorized,
issued and outstanding equity capital of the Company will be within the range
set forth in the Registration Statement under the caption "Capitalization," and
no shares of Common Stock have been or will be issued and outstanding prior to
the Closing Date referred to in Section 2; the Shares will have been duly and
validly authorized for issuance and, when issued and delivered by the Company
pursuant to the Plan against payment of the
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consideration calculated as set forth in the Plan and in the Offering
Prospectus, will be duly and validly issued and fully paid and non-assessable;
the issuance of the Shares will not violate any preemptive rights; and the terms
and provisions of the Shares will conform in all material respects to the
description thereof contained in the Registration Statement and the Offering
Prospectus. Upon the issuance of the Shares, good title to the Shares will be
transferred from the Company to the purchasers thereof against payment therefor,
subject to such claims as may be asserted against the purchasers thereof by
third party claimants.
(r) No approval of any regulatory or supervisory or other
public authority is required in connection with the execution and delivery of
this Agreement or the issuance of the Shares, except for the approval of the
OTS, the Commission and any necessary qualification or registration under the
securities or blue sky laws of the various states in which the Shares are to be
offered and as may be required under the regulations-of the National Association
of Securities Dealers, Inc. ("NASD") and the National Association of Securities
Dealers Automated Quotation ("NASDAQ") National Market.
(s) KPMG, which has certified the financial statements of the
Association included in the Registration Statement, are with respect to the
Company and the Association independent public accountants within the meaning of
the Code of Professional Ethics of the American Institute of Certified Public
Accountants and Title 12 of the Code of Federal Regulations, Section 571.2(c)(3)
and the 1933 Act and the 1933 Act Regulations.
(t) The Company and the Association have (subject to all
properly obtained extensions) timely filed all required federal and state tax
returns, have paid all taxes that have become due and payable in respect of such
returns, have made adequate reserves for similar future tax liabilities and no
deficiency has been asserted with respect thereto by any taxing authority.
(u) Appropriate arrangements have been made for placing the
funds received from subscriptions for Shares in special interest-bearing
accounts with the Association until all Shares are sold and paid for, with
provision for refund to the purchasers in the event that the Conversion is not
completed for whatever reason or for delivery to the Company if all Shares are
sold.
(v) The Company and the Association are in compliance in all
material respects with the applicable financial record keeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act of 1970, as
amended, and the regulations and rules thereunder.
(w) To the knowledge of the Company and the Association, none
of the Company, the Association nor employees of the Company or the Association
have made any payment of funds of the Company or the Association as a loan to
any person for the purchase of the Shares.
(x) Prior to the Conversion, the Association was not
authorized to issue shares of capital stock and neither the Company nor the
Association has: (i) issued any securities within the last 18 months (except for
notes to evidence other bank loans and reverse repurchase agreements or other
liabilities); (ii) had any material dealings within the twelve months prior to
the date hereof with any member of the NASD, or any person related to or
associated with such member, other than discussions and meetings relating to the
proposed Subscription and Public Offerings and routine purchases and sales of
U.S. government and agency securities and other investment securities; (iii)
entered into a financial or management consulting agreement except as
contemplated hereunder; and (iv) engaged any intermediary between Capital
Resources and the Company and the Association in connection with the offering of
Common Stock, and no person is being compensated in any manner for such service.
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(y) The Association has no subsidiaries.
Any certificates signed by an officer of the Company or the
Association and delivered to Capital Resources or its counsel that refer to this
Agreement shall be deemed to be a representation and warranty by the Company or
the Association to Capital Resources as to the matters covered thereby with the
same effect as if such representation and warranty were set forth herein.
SECTION 5. Capital Resources represents and warrants to the
Company and the Association that:
(a) Capital Resources is a corporation and is validly existing
in good standing under the laws of the District of Columbia with full power and
authority to provide the services to be furnished to the Company and the
Association hereunder.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary action on the part of Capital Resources, and this
Agreement has been duly and validly executed and delivered by Capital Resources
and is the legal, valid and binding agreement of Capital Resources, enforceable
in accordance with its terms.
(c) Each of Capital Resources and its employees, agents and
representatives who shall perform any of the services hereunder shall be duly
authorized and empowered, and shall have all licenses, approvals and permits
necessary, to perform such services and Capital Resources is a registered
selling agent in the jurisdictions listed in Exhibit A hereto and will remain
registered in such jurisdictions in which the Company is relying on such
registration for the sale of the Shares, until the Conversion is consummated or
terminated.
(d) The execution and delivery of this Agreement by Capital
Resources, the consummation of the transactions contemplated hereby and
compliance with the terms and provisions hereof will not conflict with, or
result in a breach of, any of the terms, provisions or conditions of, or
constitute a default (or event which with notice or lapse of time or both would
constitute a default) under, the certificate of incorporation of Capital
Resources or any agreement, indenture or other instrument to which Capital
Resources is a party or by which its property is bound, or law or regulation by
which Capital Resources is bound.
(e) Funds received by Capital Resources to purchase Common
Stock will be handled in accordance with Rule 15c2-4 under the Securities
Exchange Act of 1934, as amended.
SECTION 6. Covenants of the Company and Association. The
Company and the Association hereby jointly and severally covenant with Capital
Resources as follows:
(a) The Company has filed the Registration Statement with the
Commission. The Company will not, at any time after the date the Registration
Statement is declared effective, file any amendment or supplement to the
Registration Statement without providing Capital Resources and its counsel an
opportunity to review such amendment or file any amendment or supplement to
which amendment Capital Resources or its counsel shall reasonably object.
(b) The Association has filed the Conversion Application
with the OTS. The
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Association will not, at any time after the date the Conversion Application is
approved, file any amendment or supplement to the Conversion Application without
providing Capital Resources and its counsel an opportunity to review such
amendment or supplement or file any amendment or supplement to which amendment
or supplement Capital Resources or its counsel shall reasonably object.
(c) The Company and the Association will use their best
efforts to cause any post-effective amendment to the Registration Statement to
be declared effective by the Commission and any post-effective amendment to the
Conversion Application to be approved by the OTS and will immediately upon
receipt of any information concerning the events listed below notify Capital
Resources and promptly confirm the notice in writing: (i) when the Registration
Statement, as amended, has become effective; (ii) when the Conversion
Application, as amended, has been approved by the OTS; (iii) of the receipt of
any comments from the Commission, the OTS or the FDIC or any other governmental
entity with respect to the Conversion or the transactions contemplated by this
Agreement; (iv) of the request by the Commission, the OTS or the FDIC or any
other governmental entity for any amendment or supplement to the Registration
Statement or for additional information; (v) of the issuance by the Commission,
the OTS, the FDIC or any other governmental entity of any order or other action
suspending the Subscription or Public Offerings or the use of the Registration
Statement or the Offering Prospectus or any other filing of the Company and the
Association under the Conversion Regulations or other applicable law, or the
threat of any such action; (vi) the issuance by the Commission, the OTS or the
FDIC, or any other state authority, of any stop order suspending the
effectiveness of the Registration Statement or of the initiation or threat of
initiation or threat of any proceedings for that purpose; or (vii) of the
occurrence of any event mentioned in paragraph (h) below. The Company and the
Association will make every reasonable effort to prevent the issuance by the
Commission, the OTS or the FDIC, or any other state authority of any such order
and, if any such order shall at any time be issued, to obtain the lifting
thereof at the earliest possible time.
(d) The Company and the Association will provide Capital
Resources and its counsel notice of its intention to file, and reasonable time
to review prior to filing any amendment or supplement to the Conversion
Application or the Holding Company Application and will not file any such
amendment or supplement to which Capital Resources shall reasonably object or
which shall be reasonably disapproved by its counsel.
(e) The Company and the Association will deliver to Capital
Resources and to its counsel two conformed copies of each of the following
documents, with all exhibits: the Conversion Application and the Holding Company
Application, as originally filed and of each amendment or supplement thereto,
and the Registration Statement, as originally filed and each amendment thereto.
Further, the Company and the Association will deliver such additional copies of
the foregoing documents to counsel for Capital Resources as may be required for
any NASD and blue sky filings. In addition, the Company and the Association will
also deliver to Capital Resources such number of copies of the Offering
Prospectus, as amended or supplemented, as Capital Resources may reasonably
request.
(f) The Company will furnish to Capital Resources, from time
to time during the period when the Offering Prospectus (or any later prospectus
related to this Offering) is required to be delivered under the 1933 Act or the
Securities Exchange Act of 1934 (the "1934 Act"), such number of copies of such
prospectus (as amended or supplemented) as Capital Resources may reasonably
request for the purposes contemplated by the 1933 Act or the 1934 Act or the
respective applicable rules and regulations of the Commission thereunder. The
Company authorizes Capital Resources to use the Offering Prospectus (as amended
or supplemented, if amended or supplemented) for any lawful manner in
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connection with the sale of the Shares by Capital Resources.
(g) The Company and the Association will comply in all
material respects with any and all terms, conditions, requirements and
provisions with respect to the Conversion and the transactions contemplated
thereby imposed by the Commission, by applicable state law and regulations, and
by the 1933 Act, the 1934 Act and the rules and regulations of the Commission
promulgated under such statutes, to be complied with prior to or subsequent to
the Closing Date and when the Offering Prospectus is required to be delivered,
the Company and the Association will comply in all material respects, at their
own expense, with all requirements imposed upon them by the OTS, the Conversion
Regulations, the FDIC, the Commission, by applicable state law and regulations
and by the 1933 Act, the 1934 Act and the rules and regulations of the
Commission promulgated under such statutes, including, without limitation, Rule
10b-6 under the 1934 Act, in each case as from time to time in force, 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
Offering Prospectus.
(h) If, at any time during the period when the Offering
Prospectus relating to the Shares is required to be delivered, any event
relating to or affecting the Company or the Association shall occur, as a result
of which it is necessary or appropriate, in the reasonable opinion of counsel
for the Company and the Association or in the reasonable opinion of Capital
Resources' counsel, to amend or supplement the Registration Statement or
Offering Prospectus in order to make the Registration Statement or Offering
Prospectus not misleading in light of the circumstances existing at the time it
is delivered to a purchaser, the Company and the Association will, at their
expense, forthwith prepare, file with the Commission and the OTS and furnish to
Capital Resources a reasonable number of copies of any amendment or amendments
of, or a supplement or supplements to, the Registration Statement or Offering
Prospectus (in form and substance reasonably satisfactory to Capital Resources
and its counsel after a reasonable time for review) which will amend or
supplement the Registration Statement or Offering Prospectus so that as amended
or supplemented it will not contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in light of the circumstances existing at the time the Offering Prospectus
reasonably is delivered to a purchaser, not misleading. For the purpose of this
Agreement, the Company and the Association each will timely furnish to Capital
Resources such information with respect to itself as Capital Resources may from
time to time request.
(i) The Company and the Association will take all necessary
actions, in cooperation with Capital Resources, and furnish to whomever Capital
Resources may direct, such information as may be required to qualify or register
the Shares for offering and sale by the Company under the applicable securities
or blue sky laws of such jurisdictions in which the shares are required under
the Conversion Regulations to be sold or as Capital Resources may reasonably
designate and as reasonably agreed to by the Association; provided, however,
that the Company shall not be obligated to file any general consent to service
of process or to qualify to do business in any jurisdiction in which it is not
so qualified. In each jurisdiction where any of the Shares shall have been
qualified or registered as above provided, the Company will make and file such
statements and reports in each fiscal period as are or may be required by the
laws of such jurisdiction.
(j) The liquidation account for the benefit of account holders
with account balances of $50 or more as of the applicable record dates will be
duly established and maintained in accordance with the requirements of the OTS,
and such Eligible Account Holders and Supplemental Eligible Account Holders who
continue to maintain their savings accounts in the Association will have an
inchoate interest
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in their pro rata portion of the liquidation account which shall have a priority
superior to that of the holders of shares of Common Stock in the event of a
complete liquidation of the Association.
(k) The Company and the Association will not sell or issue,
contract to sell or otherwise dispose of, for a period of 180 days after the
date hereof, without Capital Resources' prior written consent, any shares of
Common Stock other than in connection with any plan or arrangement described in
the Offering Prospectus.
(l) The Company shall register its Common Stock under Section
12(g) of the 1934 Act concurrent with the stock offering pursuant to the Plan
and shall request that such registration be effective upon completion of the
Conversion. The Company shall maintain the effectiveness of such registration
for not less than three years or such shorter period as permitted by the OTS.
(m) During the period during which the Company's common stock
is registered under the 1934 Act or for three years from the date hereof,
whichever period is greater, the Company will furnish to its stockholders as
soon as practicable after the end of each fiscal year an annual report
(including a balance sheet and statements of income, stockholders' equity and
changes in financial position or cash flow statement of the Company as at the
end of and for such year, certified by independent public accountants and
prepared in accordance with Regulation S-X under the 1934 Act).
(n) During the period of three years from the date hereof, the
Company will furnish to Capital Resources: (i) a copy of each report of the
Company furnished to or filed with the Commission under the 1934 Act or any
national securities exchange or system on which any class of securities of the
Company is listed or quoted (including but not limited to, reports on Form 10-K,
10-Q and 8-K and all proxy statements and annual reports to stockholders), a
copy of each report of the Company mailed to its stockholders or filed with the
Commission or the OTS or any other supervisory or regulatory authority or any
national securities exchange or system on which any class of securities of the
Company is listed or quoted, each press release and material news items and
additional public documents and information with respect to the Company or the
Association as Capital Resources may reasonably request, and (ii) from time to
time, such other publicly available information concerning the Company and the
Association as Capital Resources may reasonably request.
(o) The Company and the Association will use the net
proceeds from the sale of the Shares in the manner set forth in the Offering
Prospectus under the caption "Use of Proceeds."
(p) Other than as permitted by the Conversion Regulations, the
1933 Act, the 1933 Act Regulations and the laws of any state in which the Shares
are qualified for sale, neither the Company nor the Association will distribute
any prospectus, offering circular or other offering material in connection with
the offer and sale of the Shares.
(q) The Company will make generally available to its security
holders as soon as practicable, but not later than 90 days after the close of
the period an earnings statement (in form complying with the provisions of Rule
158 under the 1933 Act) 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.
(r) The Company will file with the Commission such reports on
Form SR as may be required pursuant to Rule 463 under the 1933 Act.
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(s) The Company will obtain approval for and maintain
quotation of the shares on the NASDAQ National Market effective on or prior to
the Closing Date.
(t) The Association will maintain appropriate arrangements for
depositing all funds received from persons mailing subscriptions for or orders
to purchase Shares in the Subscription and Public Offerings on an
interest-bearing basis at the rate described in the Offering Prospectus until
the Closing Date and satisfaction of all conditions precedent to the release of
the Association's obligation to refund payments received from persons
subscribing for or ordering Shares in the Subscription and Public Offerings in
accordance with the Plan as described in the Offering 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 Offering Prospectus. The Association 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 Association 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 Offering
Prospectus.
(u) The Company will promptly register as a savings and
loan holding company under the HOLA.
(v) The Company and the Association will take such actions and
furnish such information as are reasonably requested by Capital Resources in
order for Capital Resources to ensure compliance with the "Interpretation of the
Board of Governors of the NASD on Free Riding and Withholding."
(w) The Company will conduct its businesses in compliance in
all material respects with all applicable federal and state laws, rules,
regulations, decisions, directives and orders, including all decisions,
directives and orders of the Commission, the OTS and the FDIC.
(x) The Association will not amend the Plan of Conversion
without Capital Resources' prior written consent in any manner that, in the
reasonable opinion of Capital Resources, would materially and adversely affect
the sale of the Shares or the terms of this Agreement.
(y) The Company shall advise Capital Resources, if necessary,
as to the allocation of the Shares in the event of an oversubscription and shall
provide Capital Resources with any information necessary to assist Capital
Resources in allocating the Shares in such event and such information shall be
accurate and reliable.
SECTION 7. Payment of Expenses. Whether or not this Agreement
becomes effective, the Conversion is completed or the sale of the Shares by the
Company is consummated, the Company and Association jointly and severally agree
to pay directly for or to reimburse Capital Resources for (to the extent that
such expenses have been reasonably incurred by Capital Resources) (a) all filing
fees and expenses incurred in connection with the qualification or registration
of the Shares for offer and sale by the Company under the securities or blue sky
laws of any jurisdictions Capital Resources and the Company may agree upon
pursuant to subsection (i) of Section 6 above, including counsel fees paid or
incurred by the Company, the Association or Capital Resources in connection with
such qualification or registration or exemption from qualification or
registration; (b) all filing fees in connection with all filings with the NASD;
(c) any stock issue or transfer taxes which may be payable with respect to the
sale of the Shares to purchasers in the Conversion; (d) reasonable and necessary
expenses of the Conversion,
-14-
including but not limited to, attorneys' fees, transfer agent, registrar and
other agent charges, fees relating to auditing and accounting or other advisors
and costs of printing all documents necessary in connection with the Conversion;
and (e) out-of-pocket expenses incurred by Capital Resources in connection with
the Conversion or any of the transactions contemplated hereby, including,
without limitation, the fees of its attorneys, and reasonable communication and
travel expenses.
SECTION 8. Conditions to Capital Resources' Obligations.
Capital Resources' obligations hereunder, as to the Shares to be delivered at
the Closing Date, are subject to the condition that all representations and
warranties and other statements of the Company and the Association herein are,
at and as of the commencement of the Subscription and Public Offerings and at
and as of the Closing Date, true and correct in all material respects, the
condition that the Company and the Association shall have performed in all
material respects all of their obligations hereunder to be performed on or
before such dates, and to the following further conditions:
(a) At the Closing Date, the Company and the Association will
have completed the conditions precedent to, and shall have conducted the
Conversion in all material respects in accordance with, the Plan, the Conversion
Regulations and all other applicable laws, regulations, decisions and orders,
including all terms, conditions, requirements and provisions precedent to the
Conversion imposed upon them by the OTS.
(b) The Registration Statement shall have been declared
effective by the Commission and the Conversion Application approved by the OTS
not later than 5:30 p.m. (eastern time) on the date of this Agreement, or with
Capital Resources' consent at a later time and date; and at the Closing Date no
stop order suspending the effectiveness of the Registration Statement shall have
been issued under the 1933 Act or proceedings therefore initiated or threatened
by the Commission or any state authority, and no order or other action
suspending the authorization of the Offering Prospectus or the consummation of
the Conversion shall have been issued or proceedings therefore initiated or, to
the Company's or Association's knowledge, threatened by the Commission, the OTS,
the FDIC or any state authority.
(c) At the Closing Date, Capital Resources shall have
received:
(1) The favorable opinion, dated as of the Closing Date
addressed to Capital Resources and for its benefit, of Malizia, Spidi, Sloane &
Fisch, P.C., counsel for the Company and the Association dated the Closing Date,
addressed to Capital Resources and in form and substance to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware.
(ii) The Company has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Registration Statement and the Offering Prospectus; and the Company is qualified
to do business as a foreign corporation in New York, to the best of such
counsel's knowledge based on the conferences and document review specified in
item (xiii) below, the only state in which it is doing business.
(iii) The Association was a duly organized and is a validly
existing federally-chartered savings and loan association in mutual form of
organization and upon the Conversion will become a duly organized and validly
existing federally-chartered savings bank in capital stock form of organization,
in
-15-
both instances duly authorized to conduct its business and own its property as
described in the Registration Statement; and the Association is in good standing
under the laws of the United States and is duly qualified as a foreign
corporation to transact business and is in good standing in each jurisdiction in
which its ownership of property or leasing of properties or the conduct of its
business requires such qualification unless the failure to be so qualified in
one or more such jurisdictions would not have a material adverse effect on the
condition, financial or otherwise, or the business, operations or income or
business prospects of the Association. The activities of the Association as
described in the Offering Prospectus, insofar as they are material to the
operations and financial condition of the Association, are permitted by the
rules, regulations and resolutions and practices of the OTS or the FDIC and any
other federal or state authorities.
(iv) The Association is a member of the FHLBNY, and the
deposit accounts of the Association are insured by the FDIC up to the maximum
amount allowed under law and to the best of such counsel's knowledge no
proceedings for the termination or revocation of such insurance are pending or
threatened; and the description of the liquidation account as set forth in the
Registration Statement and the Offering Prospectus under the caption "The
Conversion - Effects of Conversion to Stock Form on Depositors and Borrowers of
the Bank - Liquidation Account" has been reviewed by such counsel and is
accurate in all material respects.
(v) Upon consummation of the Conversion, the authorized,
issued and outstanding capital stock of the Company will be as set forth in the
Registration Statement and the Offering Prospectus under the caption
"Capitalization," and no shares of Common Stock have been issued prior to the
Closing Date; at the time of the Conversion, the Shares subscribed for pursuant
to the Offerings will have been duly and validly 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, will be duly and validly
issued and fully paid and non-assessable; and the issuance of the Shares is not
subject to preemptive rights.
(vi) The issuance and sale of the common stock of the
Association to the Company have been duly and validly authorized by all
necessary corporate action on the part of the Company and the Association and,
upon payment therefor in accordance with the terms of the Plan of Conversion,
will be duly and validly issued, fully paid and non-assessable and will be owned
of record by the Company, free and clear of any mortgage, pledge, lien,
encumbrance or claim (legal or equitable).
(vii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary action on the part of the Company and the
Association; and this Agreement is a valid and binding obligation of the Company
and the Association, enforceable in accordance with its terms (except as the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar laws relating to or affecting the enforcement of
creditors' rights generally or the rights of creditors of savings associations
or savings and loan holding companies, the accounts of whose subsidiaries are
insured by the FDIC or by general equity principles, regardless of whether such
enforceability is considered in a proceeding in equity or at law, and except to
the extent, if any, that the provisions of Sections 9 and 10 hereof may be
unenforceable as against public policy).
(viii) The Plan has been duly adopted by the required vote of
the Directors of the Company and the Association and members of the Association.
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(ix) Subject to the satisfaction of the conditions to the
OTS's approval of the Conversion and the Company's application to acquire the
Association, no further approval, registration, authorization, consent or other
order of any regulatory agency, public board or body is required in connection
with the execution and delivery of this Agreement, the issuance of the Shares
and the consummation of the Conversion, except as may be required under the
regulations of the NASD and the NASDAQ National Market. The Conversion has been
consummated in all material respects in accordance with all applicable
provisions of the HOLA, the Conversion Regulations, Federal and State law and
all applicable rules and regulations promulgated thereunder.
(x) The Conversion Application including the Offering
Prospectus as filed with the OTS was complete in all material respects and has
been approved by the OTS. The OTS has issued its order of approval under the
savings and loan holding company provisions of the HOLA, and the purchase by the
Company of all of the issued and outstanding capital stock of the Association
has been authorized by the OTS and no action has been taken, or to counsel's
knowledge is pending or threatened, to revoke any such authorization or
approval.
(xi) The Registration Statement is effective under the 1933
Act and no stop order suspending the effectiveness has been issued under the
1933 Act or proceedings therefor initiated or, to counsel's knowledge,
threatened by the Commission.
(xii) At the time the Conversion Application, including the
Offering Prospectus contained therein, was approved, the Conversion Application
including the Offering Prospectus contained therein (as amended or supplemented,
if so amended or supplemented) complied as to form in all material respects with
the requirements of all applicable federal laws and the rules, regulations,
decisions and orders of the OTS (except as to the financial statements, other
financial data and stock valuation information included therein as to which such
counsel need express no opinion); to the best of such counsel's knowledge, based
on conferences with management of and the independent accountants for the
Company and the Association, and on such investigation of the corporate records
of the Company and the Association as such counsel conducted in connection with
the preparation of the Registration Statement and the Conversion Application,
all material documents and exhibits required to be filed with the Conversion
Application (as amended or supplemented, if so amended or supplemented) have
been so filed. The description in the Conversion Application and the Offering
Prospectus contained therein of such documents and exhibits is accurate in all
material respects and fairly presents the information required to be shown.
(xiii) At the time that the Registration Statement became
effective, (i) the Registration Statement (as amended or supplemented if so
amended or supplemented) (other than the financial statements and other
financial and statistical data and stock valuation information included therein,
as to which no opinion need be rendered), complied as to form in all material
respects with the requirements of the 1933 Act and the 1933 Act Regulations and
(ii) the Offering Prospectus (other than the financial statements and other
financial and statistical data and the stock valuation information included
therein, as to which no opinion need be rendered) complied as to form in all
material respects with the requirements of the 1933 Act, the 1933 Act
Regulations, Conversion Regulations and Federal and State law (other than state
blue sky law as to which we express no opinion). To the best of such counsel's
knowledge based on the conferences and document review specified in item (xiii)
above, all material documents and exhibits required to be filed with the
Registration Statement (as amended or supplemented, if so amended or
supplemented) have been so filed. The description in the Registration Statement
and the Offering Prospectus of such documents and exhibits is accurate in all
material respects and fairly
-17-
presents the information required to be shown. To the best of such counsel's
knowledge, no person has sought to obtain regulatory or judicial review of the
final action of the OTS approving the Conversion Application or in approving the
Holding Company Application.
(xiv) During the course of such counsel's representation of
the Company and the Association, nothing has come to such counsel's attention
that caused it to believe that (i) the Company and the Association have not
conducted the Conversion, in all material respects, in accordance with all
applicable requirements of the Plan and applicable law, and (ii) the Plan, the
Conversion Application, the Registration Statement and the Offering Prospectus
(other than the financial statements and other financial and statistical data
and the stock valuation information included therein as to which no opinion need
be rendered) do not comply in all material respects with all applicable laws,
rules, regulations, decisions and orders including, but not limited to, the
Conversion Regulations, the HOLA, the 1933 Act and 1933 Act Regulations and all
other applicable laws, regulations, decisions and orders, including all
applicable terms, conditions, requirements and provisions precedent to the
Conversion imposed upon it by the OTS, the Commission and the FDIC, if any.
(xv) The terms and provisions of the Common Stock of the
Company conform to the description thereof contained in the Registration
Statement and the Offering Prospectus, and the form of certificates used to
evidence the Shares are in due and proper form.
(xvi) To the best knowledge of such counsel, there are no
legal or governmental proceedings pending or threatened which are required to be
disclosed in the Registration Statement and the Offering Prospectus, other than
those disclosed therein, and all pending legal and governmental proceedings to
which the Company or the Association is a party or of which any of their
property is the subject which are not described in the Registration Statement
and the Offering Prospectus, including ordinary routine litigation incidental to
the business, are, considered in the aggregate, not material; provided that for
this purpose, any litigation or governmental proceeding is not considered to be
"threatened" unless the potential litigant or governmental authority has
manifested to the management of the Company or the Association, or to such
counsel, a present intention to initiate such litigation or proceeding.
(xvii) To the best knowledge of such counsel, the Company and
the Association have obtained all licenses, permits and other governmental
authorizations required for the conduct of their respective businesses, except
where the failure to have such licenses, permits or authorizations would not
have a material adverse effect on the business, operations or income or business
prospects of the Company and the Association, and all such licenses, permits and
other governmental authorizations are in full force and effect, and the Company
and the Association are in all material respects complying therewith.
(xviii) Neither the Company nor the Association is in
contravention of its certificate of incorporation or its charter, respectively,
or its bylaws (and the Association will not be in contravention of its charter
or bylaws in stock form upon consummation of the Conversion) or, to the best
knowledge of such counsel, in contravention of any obligation, agreement,
covenant or condition contained in any material contract, indenture, mortgage,
loan agreement, note, lease or other instrument to which it is a party or by
which it or its property may be bound which contravention would be material to
the business of the Company and the Association considered as one enterprise;
the execution and delivery of this Agreement by the Company and the Association,
the incurring of the obligations herein set forth and the consummation of the
transactions contemplated herein have been duly authorized by all necessary
-18-
corporate action of the Company and the Association, and, to the best knowledge
of such counsel, will not constitute a material breach of, or default under, or
result in the creation or imposition of any material lien, charge or encumbrance
upon any property or assets of the Company or the Association which are material
to their business considered as one enterprise, pursuant to any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to which
the Company or the Association is a party or by which any of them may be bound,
or to which any of the property or assets of the Company or the Association is
subject. In addition, such action will not result in any contravention of the
provisions of the certificate of incorporation or bylaws of the Company or the
Association or any applicable law, act, regulation or order or court order,
writ, injunction or decree. The charter of the Association in stock form has
been approved by the OTS.
(xix) To the best knowledge of such counsel, the Company and
the Association have good and marketable title to all properties and assets
described in the Registration Statement as owned by them, free and clear of all
liens, charges, encumbrances or restrictions, except such as are described in
the Registration Statement or are not material in relation to the business of
the Company and the Association considered as one enterprise; and to the best of
such counsel's knowledge, all of the leases and subleases material to the
business of the Company and the Association under which the Company and the
Association hold properties, as described in the Registration Statement, are in
full force and effect.
(xx) The Company and the Association are not in violation of
any directive from the OTS or the FDIC to make any material change in the method
of conducting their business and the Company and the Association have conducted
and are conducting their business so as to comply in all material respects with
all applicable statutes and regulations (including, without limitation,
regulations, decisions, directives and orders of the OTS and the FDIC).
(xxi) The information in the Registration Statement and
Offering Prospectus under the captions "Regulation," "Certain Restrictions on
Acquisitions of the Company," "The Conversion," "Description of Capital Stock"
and the information in response to Items 7(d)(l), 7(f), 7(g) and 7(i) of the
Form PS of the Conversion Regulations, to the extent that it constitutes matters
of law, summaries of legal matters, documents or proceedings, or legal
conclusions, has been reviewed by such counsel and is correct in all material
respects (except as to the financial statements and other financial data
included therein as to which such counsel need express no opinion).
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other than the
United States, to the extent such counsel deems proper and specified in such
opinion satisfactory to Capital Resources, upon the opinion of other counsel of
good standing (providing that such counsel states that Capital Resources is
justified in relying upon such specified opinion or opinions), and (B) as to
matters of fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company and the Association and public officials
(but not on conclusions of law which may be set forth in said certificates);
provided copies of any such opinion(s) or certificates are delivered pursuant
hereto or to Capital Resources together with the opinion to be rendered
hereunder by special counsel to the Company and the Association. Such counsel
may assume that any agreement is the valid and binding obligation of any parties
to such agreement other than the Company or the Association.
(2) The letter of Malizia, Spidi, Sloane & Fisch, P.C.,
counsel for the Company and the Association addressed to Capital Resources,
dated the Closing Date, in form and substance to the effect that:
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During the preparation of the Conversion Application, the
Registration Statement and the Offering Prospectus, such counsel participated in
conferences with management of, and the independent public accountants for the
Company and the Association. Based upon such conferences and a review of
corporate records of the Company and the Association as such counsel conducted
in connection with the preparation of the Registration Statement and Conversion
Application, nothing has come to their attention that would lead them to believe
that the Conversion Application, the Registration Statement, the Offering
Prospectus, or any amendment or supplement thereto (other than the financial
statements and other financial and statistical data and stock valuation
information included therein, as to which such counsel need express no view),
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(3) The favorable opinion, dated as of the Closing Date, of
Serchuk & Zelermyer, LLP, Capital Resources' counsel, with respect to such
matters as Capital Resources may reasonably require. Such opinion may rely upon
the opinions of counsel to the Company and the Association, and as to matters of
fact, upon certificates of officers and directors of the Company and the
Association delivered pursuant hereto or as such counsel shall reasonably
request.
(d) At the Closing Date, counsel to Capital Resources shall
have been furnished with such documents and opinions as they may reasonably
require for the purpose of enabling them to render the opinion as herein
contemplated and related proceedings or in order to evidence the occurrence or
completeness of any of the representations or warranties, or the fulfillment of
any of the conditions, herein contained.
(e) At the Closing Date, Capital Resources shall receive a
certificate of the Chief Executive Officer and the Chief Financial Officer of
the Company and of the Chief Executive Officer and Chief Financial Officer of
the Association, dated as of such Closing Date, to the effect that: (i) they
have carefully examined the Offering Prospectus and, in their opinion, at the
time the Offering Prospectus became authorized for final use, the Offering
Prospectus did not contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading; (ii)
since the date the Offering Prospectus became authorized for final use, in their
opinion no event has occurred which should have been set forth in an amendment
or supplement to the Offering Prospectus which has not been so set forth,
including specifically, but without limitation, any material adverse change in
the condition, financial or otherwise, or in the earnings, capital, properties,
business prospects or business affairs of the Company or the Association, and
the conditions set forth in this Section 8 have been satisfied; (iii) since the
respective dates as of which information is given in the Registration Statement
and the Offering Prospectus, there has been no material adverse change in the
condition, financial or otherwise, or in the earnings, capital, properties,
business affairs or business prospects of the Company or the Association,
independently, or of the Company and the Association considered as one
enterprise, whether or not arising in the ordinary course of business; (iv) to
the best knowledge of such officers the representations and warranties in
Section 4 are true and correct with the same force and effect as though
expressly made at and as of the Closing Date; (v) the Company and the
Association have complied with all material agreements and satisfied, in all
material respects at or prior to the Closing Date, all obligations required to
be met by such date and will in all material respects comply with all
obligations to be satisfied by them after Conversion; (vi) no stop order
suspending the effectiveness of the Registration Statement has been initiated
or, to the best knowledge of the Company or Association, threatened by the
Commission or any state authority; (vii) no order suspending the Subscription or
Public Offerings, the Conversion, the
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acquisition of all of the shares of the Association by the Company or the
effectiveness of the Offering Prospectus has been issued and to the best
knowledge of the Company or Association, no proceedings for that purpose have
been initiated or threatened by the OTS, the Commission, the FDIC, or any state
authority; and (viii) to the best of their knowledge, no person has sought to
obtain review of the final action of the OTS approving the Plan.
(f) Prior to and at the Closing Date: (i) in the reasonable
opinion of Capital Resources, there shall have been no material adverse change
in the condition, financial or otherwise, or in the earnings, or the business
affairs or business prospects of the Company or the Association independently,
or of the Company or the Association, considered as one enterprise, since the
latest dates as of which such condition is set forth in the Offering Prospectus,
except as referred to therein; (ii) there shall have been no material
transaction entered into by the Company or the Association from the latest date
as of which the financial condition of the Company or the Association is set
forth in the Offering Prospectus other than transactions referred to or
contemplated therein; (iii) the Company or the Association shall not have
received from the OTS or the FDIC any direction (oral or written) to make any
material change in the method of conducting their business with which it has not
complied (which direction, if any, shall have been disclosed to Capital
Resources) and which would reasonably be expected to have a material and adverse
effect on the business, operations or financial condition or income of the
Company or the Association taken as a whole; (iv) neither the Company nor the
Association shall have been in default (nor shall an event have occurred which,
with notice or lapse of time or both, would constitute a default) under any
provision of and agreement or instrument relating to any material outstanding
indebtedness; (v) no action, suit or proceedings, at law or in equity or before
or by any federal or state commission, board or other administrative agency,
shall be pending, or, to the knowledge of the Company or the Association,
threatened against the Company or the Association or affecting any of their
properties wherein an unfavorable decision, ruling or finding would reasonably
be expected to have a material and adverse effect on the business, operations,
financial condition or income of the Company or the Association, taken as a
whole; and (vi) the Shares have been qualified or registered for offering and
sale under the securities or blue sky laws of the jurisdictions as Capital
Resources shall have requested and as agreed to by the Company.
(g) Concurrently with the execution of this Agreement, Capital
Resources shall receive a letter from KPMG, dated the date hereof and addressed
to Capital Resources: (i) confirming that KPMG is a firm of independent public
accountants within the meaning of the 1933 Act and the 1933 Act Regulations and
12 C.F.R. ss. 571.2(c)(3) and no information concerning its relationship with or
interests in the Company and the Association is required to be disclosed in the
Offering Prospectus by the Conversion Regulations or Item 10 of the Registration
Statement, and stating in effect that in KPMG's opinion the financial statements
of the Association as are included in the Offering Prospectus comply as to form
in all material respects with the applicable accounting requirements of the 1933
Act and the related published rules and regulations of the Commission thereunder
and the Conversion Regulations and generally accepted accounting principles;
(ii) stating in effect that, on the basis of certain agreed upon procedures (but
not an audit examination in accordance with generally accepted auditing
standards) consisting of a reading of the latest available unaudited interim
financial statements of the Association prepared by the Association, a reading
of the minutes of the meetings of the Board of Directors and members of the
Association and consultations with officers of the Association responsible for
financial and accounting matters, nothing came to their attention which caused
them to believe that: (A) such unaudited financial statements are not in
conformity with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements included
in the Offering Prospectus; or (B) during the period from the date of the latest
financial statements included in the
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Offering Prospectus to a specified date not more than five business days prior
to the date hereof, there has been (1) an increase of greater than $500,000 in
the long term debt of the Association or (2) an increase of $100,000 or more in
loans past due 90 days or more as of the last day of the month immediately prior
to such specified date or (3) an increase of $100,000 or more in real estate
acquired by foreclosure or (4) a decrease of $50,000 or more in the allowance
for loan losses or (5) any decrease in total retained earnings or (6) a decrease
in net income when compared to the like period in 1995 or (7) any change in
total assets of the Association in an amount greater than $2,000,000 excluding
proceeds from stock subscriptions; and (iii) stating that, in addition to the
audit examination referred to in its opinion included in the Offering Prospectus
and the performance of the procedures referred to in clause (ii) of this
subsection (g), they have compared with the general accounting records of the
Company and/or the Association, as applicable, which are subject to the internal
controls of the Company and/or the Association, as applicable, accounting system
and other data prepared by the Company and/or the Association, as applicable,
directly from such accounting records, to the extent specified in such letter,
such amounts and/or percentages set forth in the Offering Prospectus as Capital
Resources may reasonably request; and they have found such amounts and
percentages to be in agreement therewith (subject to rounding).
(h) At the Closing Date, Capital Resources shall receive a
letter from KPMG, dated the Closing Date, addressed to Capital Resources,
confirming the statements made by its letter delivered by it pursuant to
subsection (g) of this Section 8, except that the "specified date" referred to
in clause (ii)(B) thereof to be a date specified in such letter, which shall not
be more than three business days prior to the Closing Date.
(i) The Company and the Association shall not have sustained
since the date of the latest audited financial statements included in the
Registration Statement and Offering Prospectus any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Registration
Statement and Offering Prospectus, and since the respective dates as of which
information is given in the Registration Statement and Offering Prospectus,
there shall not have been any material change in the long term debt of the
Company or the Association other than debt incurred in relation to the purchase
of Shares by the Company's Tax-Qualified Employee Plans, or any change, or any
development involving a prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of operations of
the Company or the Association, otherwise than as set forth or contemplated in
the Registration Statement and Offering Prospectus, the effect of which, in any
such case described above, is in Capital Resources' reasonable judgment
sufficiently material and adverse as to make it impracticable or inadvisable to
proceed with the Subscription or Public Offerings or the delivery of the Shares
on the terms and in the manner contemplated in the Offering Prospectus.
(j) At or prior to the Closing Date, Capital Resources shall
receive (i) a copy of the letter from the OTS authorizing the use of the
Offering Prospectus, (ii) a copy of the order from the Commission declaring the
Registration Statement effective, (iii) a copy of a certificate from the OTS
evidencing the good standing of the Association, (iv) certificates of good
standing from the States of Delaware and New York evidencing the good standing
of the Company and from the State of New York evidencing that the Company is
duly qualified to do business and in good standing in New York and (v) a copy of
the letter from the OTS approving the Company's Holding Company Application.
(k) As soon as available after the Closing Date, Capital
Resources shall receive a
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certified copy of the Association's stock charter.
(1) Subsequent to the date hereof, there shall not have
occurred any of the following: (i) a suspension or limitation in trading in
securities generally on the New York Stock Exchange or American Stock Exchange
or in the over-the-counter market, or quotations halted generally on the NASDAQ
National Market, or minimum or maximum prices for trading being fixed, or
maximum ranges for prices for securities being required by either of such
exchanges or the NASD or by order of the Commission or any other governmental
authority; (ii) a general moratorium on the operations of commercial banks or
federal savings banks or general moratorium on the withdrawal of deposits from
commercial banks or federal savings banks declared by either federal or state
authorities; (iii) the engagement by the United States in hostilities which have
resulted in the declaration, on or after the date hereof, of a national
emergency or war; or (iv) a material decline in the price of equity or debt
securities if, as to clauses (iii) or (iv), the effect of such hostilities or
decline, in Capital Resources' reasonable judgment, makes it impracticable or
inadvisable to proceed with the Subscription or Public Offerings or the delivery
of the Shares on the terms and in the manner contemplated in the Registration
Statement and the Offering Prospectus.
All such opinions, certifications, letters and documents shall
be in compliance with the provisions hereof only if they are, in the reasonable
opinion of Capital Resources and its counsel, satisfactory to Capital Resources
and its counsel. Any certificates signed by an officer or director of the
Company or the Association and delivered to Capital Resources or its counsel
shall be deemed a representation and warranty by the Company or the Association
to Capital Resources as to the statements made therein.
If any of the conditions specified in this Section shall not
have been fulfilled when and as required by this Agreement, this Agreement and
all of Capital Resources' obligations hereunder may be canceled by Capital
Resources by notifying the Association of such cancellation in writing or by
telegram at any time at or prior to the Closing Date, and any such cancellation
shall be without liability of any party to any other party except as otherwise
provided in Sections 2, 7, 9 and 10 hereof. Notwithstanding the above, if this
Agreement is canceled pursuant to this paragraph, the Company and the
Association jointly and severally agree to reimburse Capital Resources for all
out-of-pocket expenses, (including without limitation the fees and expenses of
Capital Resources' counsel) reasonably incurred by Capital Resources and Capital
Resources' counsel at its normal rates, in connection with the preparation of
the Registration Statement and the Offering Prospectus, and in contemplation of
the proposed Subscription or Public Offerings to the extent provided for in
Sections 2 and 7 hereof.
SECTION 9. Indemnification.
(a) The Company and the Association jointly and severally
agree to indemnify and hold harmless Capital Resources, its officers, directors,
agents and employees and each person, if any, who controls or is under common
control with Capital Resources within the meaning of Section 15 of the 1933 Act
or Section 20(a) of the 1934 Act, against any and all loss, liability, claim,
damage or expense whatsoever (including but not limited to settlement expenses),
joint or several, that Capital Resources or any of them may suffer or to which
Capital Resources and any such persons upon written demand for any expenses
(including fees and disbursements of counsel) incurred by Capital Resources or
any of them in connection with investigating, preparing or defending any
actions, proceedings or claims (whether commenced or threatened) to the extent
such losses, claims, damages, liabilities or actions (i) arise out of or are
based upon any untrue statement or alleged untrue statement of a material
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fact contained in the Registration Statement (or any amendment or supplement
thereto), preliminary or final Offering Prospectus (or any amendment or
supplement thereto), the Conversion Application or any Blue Sky application or
other instrument or document of the Company or the Association or based upon
written information supplied by the Company or the Association filed in any
state or jurisdiction to register or qualify any or all of the Shares or the
subscription rights applicable thereto under the securities laws thereof
(collectively, the "Blue Sky Application"), or any application or other
document, advertisement, oral statement, or communication ("Sales Information")
prepared, made or executed by or on behalf of the Company with its consent or
based upon written or oral information furnished by or on behalf of the Company
or the Association, whether or not filed in any jurisdiction in order to qualify
or register the Shares under the securities laws thereof; (ii) arise out of or
are based upon the omission or alleged omission to state in any of the foregoing
documents or information, a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; or, (iii) arise from any theory of
liability whatsoever relating to or arising from or based upon the Registration
Statement (or any amendment or supplement thereto), preliminary or final
Offering Prospectus (or any amendment or supplement thereto), the Conversion
Application, any Blue Sky Application or Sales Information or other
documentation distributed in connection with the Conversion; provided, however,
that no indemnification is required under this paragraph (a) to the extent such
losses, claims, damages, liabilities or actions arise out of or are based upon
any untrue material statements or alleged untrue material statements in, or
material omission or alleged material omission from, the Registration Statement
(or any amendment or supplement thereto), the Conversion Application, any Blue
Sky Application, the preliminary or final Offering Prospectus (or any amendment
or supplement thereto), or Sales Information made in reliance upon and in
conformity with written information furnished to the Company or the Association
by Capital Resources regarding Capital Resources expressly for use under the
caption "The Conversion - Marketing Arrangements" in the Offering Prospectus nor
is indemnification required for material oral misstatements made by Capital
Resources, which are not based upon information provided by the Association or
the Company orally or in writing or based on information contained in the
Registration Statement (or any amendment or supplement thereto), preliminary or
final Offering Prospectus (or any amendment or supplement thereto), the
Conversion Application, any Blue Sky Application or Sales Information
distributed in connection with the Conversion.
(b) Capital Resources agrees to indemnify and hold harmless
the Company and the Association, their directors and officers, agents, servants
and employees and each person, if any, who controls the Company or the
Association within the meaning of Section 15 of the 1933 Act or Section 20(a) of
the 1934 Act against any and all loss, liability, claim, damage or expense
whatsoever (including but not limited to settlement expenses), joint or several
which they, or any of them, may suffer or to which they, or any of them, may
become subject under all applicable federal and state laws or otherwise, and to
promptly reimburse the Company, the Association and any such persons upon
written demand for any expenses (including fees and disbursements of counsel)
incurred by them, or any of them, in connection with investigating, preparing or
defending any actions, proceedings or claims (whether commenced or threatened)
to the extent such losses, claims, damages, liabilities or actions arise out of
or are based upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or any amendment of supplement
thereto), or the preliminary or final Offering Prospectus (or any amendment or
supplement thereto), or the Conversion Application or any Blue Sky Application
or Sales Information or are based upon the omission or alleged omission to state
in any of the foregoing documents a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that Capital
Resources obligations under this Section 9(b) shall exist only if and only to
the
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extent that such untrue statement or alleged untrue statement was made in, or
such material fact or alleged material fact was omitted from, the Registration
Statement (or any amendment or supplement thereto), the preliminary or final
Offering Prospectus (or any amendment or supplement thereto), or the Conversion
Application, any Blue Sky Application or Sales Information in reliance upon and
in conformity with written information furnished to the Company or the
Association by Capital Resources regarding Capital Resources expressly for use
under the caption "The Conversion - Marketing Arrangements" in the Offering
Prospectus or in the event of oral misstatements made by Capital Resources,
which are not based upon information provided by the Association or the Company
orally or in writing or based on information contained in the Registration
Statement (or any amendment or supplement thereto), preliminary or final
Offering Prospectus (or any amendment or supplement thereto), the Conversion
Application, any Blue Sky Application or Sales Information distributed in
connection with the Conversion.
(c) Each indemnified party shall give prompt written notice to
each indemnifying party of any action, proceeding, claim (whether commenced or
threatened), or suit instituted against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve it from any liability which it may have on account of this Section 9 or
otherwise. An indemnifying party may participate at its own expense in the
defense of such action. In addition, if it so elects within a reasonable time
after receipt of such notice, an indemnifying party, jointly with any other
indemnifying parties receiving such notice, may assume defense of such action
with counsel chosen by it and approved by the indemnified parties that are
defendants in such action, unless such indemnified parties reasonably object to
such assumption on the ground that there may be legal defenses available to them
that are different from or in addition to those available to such indemnifying
party. If an indemnifying party assumes the defense of such action, the
indemnifying parties shall not be liable for any fees and expenses of counsel
for the indemnified parties incurred thereafter in connection with such action,
proceeding or claim, other than reasonable costs of investigation. In no event
shall the indemnifying parties be liable for the fees and expenses of more than
one separate firm of attorneys (and any special counsel that said firm may
retain) for all indemnified parties in connection with any one action,
proceeding or claim or separate but similar or related actions, proceedings or
claims in the same jurisdiction arising out of the same general allegations or
circumstances.
(d) The agreements contained in this Section 9 and in Section
10 hereof and the representations and warranties of the Company and the
Association set forth in this Agreement shall remain operative and in full force
and effect regardless of: (i) any investigation made by or on behalf of Capital
Resources or its officers, directors or controlling persons, agents or employees
or by or on behalf of the Company or the Association or any officers, directors
or controlling persons, agents or employees of the Company or the Association or
any controlling person, director or officer of the Company or the Association;
(ii) delivery of and payment hereunder for the Shares; or (iii) any termination
of this Agreement.
(e) No indemnification by the Association under Section 9(a)
hereof nor contribution under Section 10 hereof shall be effective if the same
shall be deemed to be in violation of any law, rule or regulation applicable to
the Association including, without limitation, Section 23A of the Federal
Reserve Act. If the indemnification or contribution by the Association is not
effective pursuant to the preceding sentence, then the indemnification by
Capital Resources pursuant to Section 9(b) shall be given only to the Company,
its directors and officers, agents, servants and employees and not to the
Association, its directors and officers, agents, servants and employees and the
Association shall not be entitled to any contribution from Capital Resources
pursuant to Section 10.
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SECTION 10. Contribution. In order to provide for just and
equitable contribution in circumstances in which the indemnification provided
for in Section 9 is due in accordance with its terms but is for any reason
unavailable as a result of Section 9(e) or held by a court to be unavailable
from the Company, the Association or Capital Resources, the Company, the
Association and Capital Resources shall contribute to the aggregate losses,
claims, damages and liabilities (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement of any
action, suit or proceeding of any claims asserted, but after deducting any
contribution received by the Company or the Association or Capital Resources
from persons other than the other party thereto, who may also be liable for
contribution) in such proportion so that Capital Resources is responsible for
that portion represented by the percentage that the fees paid to Capital
Resources pursuant to Section 2 of this Agreement (not including expenses) bears
to the gross proceeds received by the Company from the sale of the Shares in the
Subscription and Public Offerings and the Company and the Association shall be
responsible for the balance. If, however, the allocation provided above is not
permitted by applicable law or if the indemnified party failed to give the
notice required under Section 9 above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative fault of the
Company and the Association on the one hand and Capital Resources on the other
in connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions, proceedings or claims in respect
thereof), but also the relative benefits received by the Company and Association
on the one hand and Capital Resources on the other from the offering as well as
any other relevant equitable considerations. The relative benefits received by
the Company and the Association on the one hand and Capital Resources on the
other shall be deemed to be in the same proportion as the total gross proceeds
from the Subscription and Public Offerings (before deducting expenses) received
by the Company bear to the total fees (not including expenses) received by
Capital Resources. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company and/or the Association on the one hand or
Capital Resources on the other and the parties' relative intent, good faith,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company, the Association and Capital Resources agree
that it would not be just and equitable if contribution pursuant to this Section
10 were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this Section 10. The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or action, proceedings or claims
in respect thereof) referred to above in this Section 10 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action, proceeding
or claim. It is expressly agreed that Capital Resources shall not be liable for
any loss, liability, claim, damage or expense or be required to contribute any
amount which in the aggregate exceeds the amount paid (excluding reimbursable
expenses) to Capital Resources under this Agreement. It is understood that the
above-stated limitation on Capital Resources' liability is essential to Capital
Resources and that Capital Resources relied upon such limitation and would not
have entered into this Agreement if such limitation had not been agreed to by
the parties to this Agreement. No person found guilty of any fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any person who was not found guilty of such
fraudulent misrepresentation. The obligations of the Company and the Association
under this Section 10 and under Section 9 shall be in addition to any liability
which the Company and the Association may otherwise have. For purposes of this
Section 10, each of Capital Resources', the Company's or the Association's
officers and directors and each person, if any, who controls Capital Resources
or the Company or the Association within the meaning of the 1933 Act and the
1934 Act shall have the same rights to contribution as the Company and the
Association.
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Any party entitled to contribution, promptly after receipt of notice of
commencement of any action, suit, claim or proceeding against such party in
respect of which a claim for contribution may be made against another party
under this Section 10, will notify such party from whom contribution may be
sought, but the omission to so notify such party shall not relieve the party
from whom contribution may be sought from any other obligation it may have
hereunder or otherwise than under this Section 10.
SECTION 11. Survival of Agreements, Representations and
Indemnities. The respective indemnities of the Company, the Association and
Capital Resources and the representations and warranties and other statements of
the Company and the Association set forth in or made pursuant to this Agreement
shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement or any investigation made by or on behalf of
Capital Resources, the Company, the Association or any indemnified person
referred to in Section 9 hereof, and shall survive the issuance of the Shares,
and any legal representative, successor or assign of Capital Resources, the
Association, and any such indemnified person shall be entitled to the benefit of
the respective agreements, indemnities, warranties and representations.
SECTION 12. Termination. Capital Resources may terminate
this Agreement by giving the notice indicated below in this Section at any time
after this Agreement becomes effective as follows:
(a) In the event the Company fails to sell all of the Shares
within the period specified, and in accordance with the provisions of the Plan
or as required by the Conversion Regulations and applicable law, this Agreement
shall terminate upon refund by the Association to each person who has subscribed
for or ordered any of the Shares the full amount which it may have received from
such person, together with interest as provided in the Offering Prospectus, and
no party to this Agreement shall have any obligation to the other hereunder,
except for payment by the Association and/or the Company as set forth in
Sections 2, 7, 9 and 10 hereof.
(b) If any of the conditions specified in Section 8 shall not
have been fulfilled when and as required by this Agreement, or by the Closing
Date, or waived in writing by Capital Resources, this Agreement and all of
Capital Resources obligations hereunder may be canceled by Capital Resources by
notifying the Association of such cancellation in writing or by telegram at any
time at or prior to the Closing Date, and, any such cancellation shall be
without Liability of any party to any other party except as otherwise provided
in Sections 2, 7, 9 and 10 hereof.
(c) If Capital Resources elects to terminate this Agreement as
provided in this section, the Company and the Association shall be notified as
provided in Section 13 hereof, promptly by Capital Resources by telephone or
telegram, confirmed by letter.
SECTION 13. Notices. All communications hereunder, except
as herein otherwise specifically provided, shall be mailed in writing and if
sent to Capital Resources shall be mailed, delivered or telegraphed and
confirmed to Capital Resources, Inc.,1701 K Street, N.W., Suite 700, Washington,
D.C. 20006 Attention: Catherine Kozlow Rochester (with a copy to Serchuk &
Zelermyer, LLP, 81 Main Street, White Plains, NY 10601, Attention: Clifford S.
Weber, Esq.) and, if sent to the Company and the Association, shall be
mailed, delivered or telegraphed and confirmed to the Company and the
Association at 161 Church Street, Amsterdam, New York, 12010, (Attention: John
M. Lisicki (with a copy to Malizia, Spidi, Sloane & Fisch, P.C., 1301 K
Street, N.W., Suite 700 East Washington, D.C. 20005, Attention: John J. Spidi,
Esq.)
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SECTION 14. Parties. The Company and the Association shall be
entitled to act and rely on any request, notice, consent, waiver or agreement
purportedly given on behalf of Capital Resources when the same shall have been
given by the undersigned. Capital Resources shall be entitled to act and rely on
any request, notice, consent, waiver or agreement purportedly given on behalf or
the Company or the Association, when the same shall have been given by the
undersigned or any other officer of the Company or the Association. This
Agreement shall inure solely to the benefit of, and shall be binding upon,
Capital Resources and the Company, the Association and the controlling persons
referred to in Section 9 hereof, and their respective successors, legal
representatives and assigns, and no other person shall have or be construed to
have any legal or equitable right, remedy or claim under or in respect of or by
virtue of this Agreement or any provision herein contained.
SECTION 15. Closing. The closing for the sale of the Shares
shall take place on the Closing Date at the offices of Capital Resources or such
other location as mutually agreed upon by Capital Resources, the Company and the
Association. At the closing, the Association shall deliver to Capital Resources
in next day funds the commissions, fees and expenses due and owing to Capital
Resources as set forth in Sections 2 and 7 hereof and the opinions and
certificates required hereby and other documents deemed reasonably necessary by
Capital Resources shall be executed and delivered to effect the sale of the
Shares as contemplated hereby and pursuant to the terms of the Offering
Prospectus.
SECTION 16. Partial Invalidity. In the event that any term,
provision or covenant herein or the application thereof to any circumstances or
situation shall be invalid or unenforceable, in whole or in part, the remainder
hereof and the application of said term, provision or covenant to any other
circumstance or situation shall not be affected thereby, and each term,
provision or covenant herein shall be valid and enforceable to the full extent
permitted by law.
SECTION 17. Construction. This Agreement shall be construed
in accordance with the laws of the District of Columbia.
SECTION 18. 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.
Time shall be of the essence of this Agreement.
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If the foregoing correctly sets forth the arrangement among
the Company, the Association and Capital Resources, please indicate acceptance
thereof in the space provided below for that purpose, whereupon this letter and
Capital Resources' acceptance shall constitute a binding agreement.
Very truly yours,
AFSALA BANCORP, INC.
By: ________________________________
John M. Lisicki, President and
Chief Executive Officer
AMSTERDAM FEDERAL SAVINGS AND
LOAN ASSOCIATION
By: ________________________________
John M. Lisicki, President and
Chief Executive Officer
Accepted as of the date first above written.
CAPITAL RESOURCES, INC.
By: _____________________________________
Catherine K. Rochester, President
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