[MAX #] Shares
(subject to increase up to [SUPERMAX #] shares
in the event of an oversubscription)
ATLANTIC COAST FEDERAL CORPORATION
(a federally chartered mid-tier stock holding company)
Common Stock (par value $0.01 per share)
AGENCY AGREEMENT
__________, 2004
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
1001 Nineteenth Street North 10th Floor Arlington, VA 22209
Ladies and Gentlemen:
Atlantic Coast Federal Corporation, a federally chartered mid-tier stock
holding company of the Association (the "Company"), Atlantic Coast Federal, MHC,
a federally chartered mutual holding company (the "MHC") and Atlantic Coast
Federal, a federal savings and loan association (the "Association"), hereby
confirm their agreement with Friedman, Billings, Ramsey & Co., Inc. ("FBR" or
the "Agent") with respect to the offer and sale by the Company of [Max #] shares
(subject to increase up to [SUPERMAX #] shares in the event of an
oversubscription) of the Company's common stock, par value $0.01 per share (the
"Common Stock"). The shares of Common Stock to be sold by the Company are
hereinafter called the "Securities."
The Securities are being offered for sale in accordance with the Plan of
Stock Issuance, as amended (the "Plan"), adopted by the Boards of Directors of
the Association, the Company and the MHC pursuant to which the Company will
conduct a stock offering of up to 49.9%
of the Common Stock of the Company. The MHC will be required to own at least a
majority of the Common Stock of the Company following consummation of the
Offerings (as defined below).
Pursuant to the Plan, the Company is offering in a subscription offering
by way of nontransferable subscription rights, Common Stock for a purchase price
of $____ per share in descending order of priority to: (i) depositors who had
accounts at the Association with aggregate balances of at least $50.00 on [ERD];
(ii) the Association's tax qualified employee benefit plans (the "Employee
Plans"); and (iii) depositors who had accounts at the Association with aggregate
balances of at least $50 on [SUPP ERD] (the "Subscription Offering"). To the
extent Securities are not subscribed for in the Subscription Offering, such
Securities may be offered to certain members of the general public, with
preference given to certain natural persons residing in the counties in which
the Association's offices are located, in a direct community offering (the
"Community Offering" and together with the Subscription Offering, as each may be
extended or reopened from time to time, the "Subscription and Community
Offering") to be commenced concurrently with, during or promptly after the
Subscription Offering. It is currently anticipated by the Association, the
Company and the MHC that any Securities not subscribed for in the Subscription
and Community Offering will be offered, subject to Section 2 hereof, in a
syndicated community offering (the "Syndicated Community Offering"). The
Subscription and Community Offering and the Syndicated Community Offering are
hereinafter referred to collectively as the "Offerings." It is acknowledged that
the price of the Securities may be decreased and the number of Securities to be
sold in the Offerings may be increased or decreased as described in the
Prospectus (as hereinafter defined). If the number of Securities is increased or
decreased in accordance with the Plan, the term "Securities" shall mean such
greater or lesser number, where applicable.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. _____________),
including a related prospectus, for the registration of the Securities under the
Securities Act of 1933, as amended (the "Securities Act"), has filed such
amendments thereto, and such amended prospectuses as may have been required to
the date hereof by the Commission in order to declare such registration
statement effective, and will file such additional amendments thereto and such
amended prospectuses and prospectus supplements as may hereafter be required.
Such registration statement (as amended to date, if applicable, and as from time
to time amended or supplemented hereafter) and the prospectuses constituting a
part thereof (including in each case all documents incorporated or deemed to be
incorporated by reference therein and the information, if any, deemed to be a
part thereof pursuant to the rules and regulations of the Commission under the
Securities Act, as from time to time amended or supplemented pursuant to the
Securities Act or otherwise (the "Securities Act Regulations")), are hereinafter
referred to as the "Registration Statement" and the "Prospectus," respectively,
except that if any revised prospectus shall be used by the Company in connection
with the Subscription and Community Offering or the Syndicated Community
Offering which differs from the Prospectus on file at the Commission at the time
the Registration Statement becomes effective (whether or not such revised
prospectus is required to be filed by the Company pursuant to Rule
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424(b) of the Securities Act Regulations), the term "Prospectus" shall refer to
such revised prospectus from and after the time it is first provided to the
Agent for such use.
Concurrently with the execution of this Agreement, the Company is
delivering to the Agent copies of the Prospectus of the Company to be used in
the Subscription and Community Offering. Such prospectus contains information
with respect to the Association, the Company, the MHC and the Common Stock.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) The Company, the Association and the MHC jointly and severally
represent and warrant to the Agent as of the date hereof as follows:
(i) The Registration Statement has been declared effective by
the Commission, no stop order has been issued with respect thereto and no
proceedings therefor have been initiated or, to the knowledge of the
Company, the Association or the MHC, threatened by the Commission. At the
time the Registration Statement became effective and at the Closing Time
referred to in Section 2 hereof, the Registration Statement complied and
will comply in all material respects with the requirements of the
Securities Act and the Securities Act Regulations and did not and will
not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus, at the date hereof
does not, and at the Closing Time referred to in Section 2 hereof will
not, include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that the representations and warranties in this
subsection shall not apply to statements in or omissions from the
Registration Statement or Prospectus made in reliance upon and in
conformity with information with respect to the Agent furnished to the
Company in writing by the Agent expressly for use in the Registration
Statement or Prospectus (the "Agent Information," which the Company, the
Association and the MHC acknowledge appears only in [INSERT]).
(ii) Pursuant to the rules and regulations of the Office of
Thrift Supervision (the "OTS") governing minority stock issuances (the
"MHC Regulations"), the Company has filed with the OTS an Application for
Approval of a Minority Stock Issuance by a Savings Association Subsidiary
of a Mutual Holding Company on Form MHC-2, and has filed such amendments
thereto and supplementary materials as may have been required to the date
hereof (such application, as amended to date, if applicable, and as from
time to time amended or supplemented hereafter, is hereinafter referred
to as the "MHC Application"), including the Plan and the Prospectus. The
OTS has, by letter dated _________________, 2004, approved the MHC
Application, including the use of the Plan
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and the Prospectus, such approval remains in full force and effect and no
order has been issued by the OTS suspending or revoking such approval and
no proceedings therefor have been initiated or, to the knowledge of the
Company, the MHC or the Association, threatened by the OTS. At the date
of such approval and at the Closing Time referred to in Section 2, the
MHC Application complied and will comply in all material respects with
the applicable provisions of the MHC Regulations.
(iii) The Company, the Association and the MHC will promptly file
the Prospectus and any supplemental sales literature with the Commission
and the OTS. The Prospectus and all supplemental sales literature, as of
the date the Registration Statement became effective and at the Closing
Time referred to in Section 2, complied and will comply in all material
respects with the applicable requirements of the MHC Regulations and, at
or prior to the time of their first use, will have received all required
authorizations of the OTS for use in final form.
(iv) Neither the Commission nor the OTS has, by order or
otherwise, prevented or suspended the use of the Prospectus or any
supplemental sales literature authorized by the Company, the Association
or the MHC for use in connection with the Offerings.
(v) At the Closing Time referred to in Section 2, the Company,
the Association and the MHC will have completed the conditions precedent
to the Offerings in accordance with the Plan, the applicable MHC
Regulations and all other applicable laws, regulations, decisions and
orders, including all material terms, conditions, requirements and
provisions precedent to the Offerings imposed upon the Company, the
Association or the MHC by the OTS, or any other regulatory authority,
other than those which the regulatory authority permits to be completed
after the Offerings.
(vi) RP Financial, LC., which prepared the valuation of the
Association as part of the Offerings, has advised the Company, the MHC
and the Association in writing that it satisfies all requirements for an
appraiser set forth in the MHC Regulations and any interpretations or
guidelines issued by the OTS with respect thereto.
(vii) The accountants who certified the consolidated financial
statements and supporting schedules of the Association included in the
Registration Statement have advised the Company, the Association and the
MHC in writing that they are independent public accountants within the
meaning of the Code of Ethics of the American Institute of Certified
Public Accountants (the "AICPA"), and such accountants are, with respect
to the Company, the Association and the MHC, independent certified public
accountants as required by the Securities Act and the Securities Act
Regulations.
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(viii) The consolidated financial statements and the related notes
thereto included in the Registration Statement and the Prospectus present
fairly the financial position of the Association, at the dates indicated
and the results of operations, retained earnings and cash flows for the
periods specified, and comply as to form in all material respects with
the applicable accounting requirements of the Securities Act Regulations
and the MHC Regulations; except as otherwise stated in the Registration
Statement, said financial statements have been prepared in conformity
with accounting principles generally accepted in the United States
applied on a consistent basis; and the supporting schedules and tables
included in the Registration Statement present fairly the information
required to be stated therein.
(ix) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, except as otherwise
stated therein (A) there has been no material adverse change in the
financial condition, results of operations, business affairs or prospects
of the Company, the Association and the MHC, considered as one
enterprise, whether or not arising in the ordinary course of business
consistent with past practice, and (B) except for transactions
specifically referred to or contemplated in the Prospectus, there have
been no transactions entered into by the Company, the Association, or the
MHC, other than those in the ordinary course of business consistent with
past practice, which are material with respect to the Company, the
Association, and the MHC, considered as one enterprise.
(x) The Company is duly incorporated and is validly existing as
a corporation in good standing under the laws of the United States with
corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectus and to enter
into and perform its obligations under this Agreement; and the Company is
duly qualified as a foreign corporation to transact business and is in
good standing in the State of Georgia and in each other jurisdiction in
which such qualification is required, whether by reason of the ownership
or leasing of property or the conduct of business, except where the
failure to so qualify would not have a material adverse effect on the
financial condition, results of operations or business affairs or
prospects of the Company, the Association, and the MHC, considered as one
enterprise.
(xi) The MHC is duly incorporated and is validly existing as a
corporation in good standing under the laws of the United States of
America with corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus and
to enter into and perform its obligations under this Agreement; and the
MHC is duly qualified as a foreign corporation to transact business and
is in good standing in the State of Georgia and in each jurisdiction in
which such qualification is required, whether by reason of the ownership
or leasing of property or the conduct of business, except where the
failure to so qualify would not have a material adverse effect on the
financial
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condition, results of operations or business affairs of the Company, the
Association, and the MHC, considered as one enterprise.
(xii) Upon consummation of the Offerings, the authorized, issued
and outstanding capital stock of the Company will be as set forth in the
Prospectus under "Capitalization" (except for subsequent issuances, if
any, pursuant to reservations, agreements or employee benefit plans
referred to in the Prospectus); no shares of Common Stock or other
capital stock of the Company have been or will be issued and outstanding
prior to the Closing Time referred to in Section 2; at the time of the
Offerings, the Securities will have been duly authorized for issuance
and, when issued and delivered by the Company pursuant to the Plan
against payment of the consideration calculated as set forth in the Plan
and stated on the cover page of the Prospectus, will be duly and validly
issued and fully paid and non-assessable; the terms and provisions of the
Common Stock and the capital stock of the Company conform to all
statements relating thereto contained in the Prospectus; the certificates
representing the shares of Common Stock conform to the requirements of
applicable law and regulations; and the issuance of the Securities is not
subject to preemptive or other similar rights.
(xiii) As of the Closing Time referred to in Section 2, the MHC
will not own any equity securities or any equity interest in any business
enterprise except as described in the Prospectus.
(xiv) The Association is a federally chartered savings and loan
association in stock form, with full corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus; the Association, , the Company and the MHC,
have obtained all licenses, permits and other governmental authorizations
currently required for the conduct of their respective businesses or
required for the conduct of their respective businesses as contemplated
by the MHC Application, except where the failure to obtain such licenses,
permits or other governmental authorizations would not have a material
adverse effect on the financial condition, results of operations,
business affairs or prospects of the Company, the Association, and the
MHC considered as one enterprise; all such licenses, permits and other
governmental authorizations are or will be in full force and effect and
the Company, the Association, and the MHC are or will be in all material
respects in compliance therewith; neither the Company, the Association,
nor the MHC has received notice of any proceeding or action relating to
the revocation or modification of any such license, permit or other
governmental authorization which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, might have a
material adverse effect on the financial condition, results of
operations, business affairs or prospects of the Company, the
Association, and the MHC, considered as one enterprise; and the
Association is validly existing and in good standing under the laws of
the United States and is qualified to transact business as a foreign
corporation in any jurisdiction where the failure to so qualify would
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have a material adverse effect on the financial condition, results of
operations, business affairs or prospects of the Company, the
Association, and the MHC considered as one enterprise.
(xv) The deposit accounts of the Association are insured by the
Federal Deposit Insurance Corporation (the "FDIC") up to the applicable
limits. The Association is a "qualified thrift lender" within the meaning
of 12 U.S.C. Section 1467a(m).
(xvi) Upon consummation of the Offerings, all of the issued and
outstanding capital stock of the Association ("Association Common Stock")
will be duly authorized, validly issued and fully paid and nonassessable
and have been issued in compliance with all federal and state securities
laws; and all such Association Common Stock will be owned beneficially
and of record by the Company free and clear of any security interest,
mortgage, pledge, lien, encumbrance or legal or equitable claim; the
terms and provisions of the Association Common Stock conform to all
statements relating thereto contained in the Prospectus, and the
certificates representing the shares of the Association Common Stock will
conform with the requirements of applicable laws and regulations.
(xvii) The Association, the Company and the MHC have taken all
corporate action necessary for it to execute, deliver and perform this
Agreement, and this Agreement has been duly executed and delivered by,
and is the valid and binding agreement of, the Company, the MHC and the
Association, enforceable in accordance with its terms, except as may be
limited by bankruptcy, insolvency or other laws affecting the
enforceability of the rights of creditors generally and judicial
limitations on the right of specific performance and except as the
enforceability of indemnification and contribution provisions may be
limited by applicable securities laws.
(xviii) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus and prior to
the Closing Time referred to in Section 2, except as otherwise may be
indicated or contemplated therein, none of the Company, the Association,
or the MHC will have (A) issued any securities or incurred any liability
or obligation, direct or contingent, or borrowed money, except borrowings
in the ordinary course of business consistent with past practice from the
same or similar sources and in similar amounts as indicated in the
Prospectus, or (B) entered into any transaction or series of transactions
which is material in light of the business of the Company, the
Association, and the MHC, considered as one enterprise, excluding the
origination, purchase and sale of loans or the purchase or sale of
investment securities or mortgaged-backed securities in the ordinary
course of business consistent with past practice.
(xix) 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
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of the Securities that has not been obtained and a copy of which has been
delivered to the Agent, except as may be required under the "blue sky" or
state securities laws of various jurisdictions.
(xx) Neither the Company, the Association, nor the MHC is in
violation of its certificate of incorporation, articles of incorporation
or charter, as the case may be, or bylaws (and the Association and the
Company will not be in violation of their respective charter or bylaws
upon consummation of the Offerings); and neither the Company, the
Association, nor the MHC is in default (nor has any event occurred which,
with notice or lapse of time or both, would constitute a default) in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan agreement,
note, lease or other instrument to which the Company, the Association, or
the MHC is a party or by which it or any of them may be bound, or to
which any of the property or assets of the Company, the Association, or
the MHC is subject, except for such defaults that would not, individually
or in the aggregate, have a material adverse effect on the financial
condition, results of operations, business affairs or prospects of the
Company, the Association, and the MHC considered as one enterprise; and
there are no contracts or documents of the Company, the Association, or
the MHC which are required to be filed as exhibits to the Registration
Statement or the MHC Application which have not been so filed.
(xxi) The consummation of the Offerings, the execution, delivery
and performance of this Agreement and the consummation of the
transactions contemplated herein have been duly authorized by all
necessary corporate action on the part of the Association, the Company
and the MHC, and do not and will not conflict with or constitute a breach
of, or default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company,
the Association or the MHC pursuant to, any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which the
Company, the Association or the MHC is a party or by which it or any of
them may be bound, or to which any of the property or assets of the
Company, the Association, or the MHC is subject, except for such defaults
that would not, individually or in the aggregate, have a material adverse
effect on the financial condition, results of operations, business
affairs or prospects of the Company, the Association, and the MHC
considered as one enterprise; nor will such action result in any
violation of the provisions of the certificate of incorporation,
organization certificate, articles of incorporation or charter or bylaws
of the Company, the MHC and the Association, or any applicable law,
administrative regulation or administrative or court decree. The
execution, delivery and performance of this Agreement and the completion
of the transactions contemplated herein will have been duly authorized by
all necessary corporate action of the Company, the Association and the
MHC, no later than the Closing Time referred to in Section 2 hereof.
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(xxii) No labor dispute with the employees of the Company, the
Association, or the MHC exists or, to the knowledge of the Company, the
MHC or the Association, is imminent or threatened; and the Company, the
Association and the MHC are not aware of any existing or threatened labor
disturbance by the employees of any of its principal suppliers or
contractors which might be expected to result in any material adverse
change in the financial condition, results of operations, business
affairs or prospects of the Company, the Association, and the MHC
considered as one enterprise.
(xxiii) Each of the Company, the Association, and the MHC have
good and marketable title to all properties and assets for which
ownership is material to the business of the Company, the Association, or
the MHC and to those properties and assets described in the Prospectus as
owned by them, free and clear of all liens, charges, encumbrances or
restrictions, except such as are described in the Prospectus or are not
material in relation to the business of the Company, the Association, and
the MHC considered as one enterprise; and all of the leases and subleases
material to the business of the Company, the Association, or the MHC
under which the Company, the Association, or the MHC hold properties,
including those described in the Prospectus, are valid and binding
agreements of the Company, the Association, and the MHC in full force and
effect, enforceable in accordance with their terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization and similar laws of general applicability relating to or
affecting creditors' rights or general principles of equity).
(xxiv) None of the Company, the MHC, nor the Association are in
violation of any directive from the Commission, the OTS or any other
governmental entity to make any material change in the method of
conducting their respective businesses; the Company, the MHC and the
Association have conducted and are conducting their business so as to
comply in all material respects with all applicable statutes, regulations
and administrative and court decrees (including, without limitation, all
regulations, decisions, directives and orders of the Commission, the FDIC
and the OTS). Neither the Company, the MHC nor the Association is subject
or is party to, or has received any notice or advice that any of them may
become subject or party to, any investigation with respect to any
cease-and-desist order, agreement, consent agreement, memorandum of
understanding or other regulatory enforcement action, proceeding or order
with or by, or is a party to any commitment letter or similar undertaking
to, or is subject to any directive by, or has been a recipient of any
supervisory letter from, or has adopted any board resolutions at the
request of, any Regulatory Agency (as defined below) that currently
restricts in any material respect the conduct of their business or that
in any material manner relates to their capital adequacy, their credit
policies, their management or their business (each, a "Regulatory
Agreement"), nor has the Company, the MHC or the Association been advised
by any Regulatory Agency that it is considering issuing or requesting any
such Regulatory Agreement; and there is no unresolved violation,
criticism or exception by any Regulatory Agency with respect to any
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report or statement relating to any examinations of the Company, the MHC
or the Association which, in the reasonable judgment of the Company, the
MHC or the Association, is expected to result in a material adverse
effect on the financial condition, results of operations, or business
affairs or prospects of the Company, the Association, and the MHC,
considered as one enterprise. As used herein, the term "Regulatory
Agency" means any federal or state agency charged with the supervision or
regulation of depositary institutions or holding companies of depositary
institutions, or engaged in the insurance of depositary institution
deposits, or any court, administrative agency or commission or other
governmental agency, authority or instrumentality having supervisory or
regulatory authority with respect to the Company, the Association, the
MHC or .
(xxv) There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now pending,
or, to the knowledge of the Company, the MHC or the Association,
threatened, against or affecting the Company, the Association, or the MHC
which is required to be disclosed in the Registration Statement (other
than as disclosed therein), or which might result in any material adverse
change in the financial condition, results of operations, business
affairs or prospects of the Company, the Association, and the MHC
considered as one enterprise, or which might materially and adversely
affect the properties or assets thereof or which might materially and
adversely affect the consummation of the Reorganization or the
performance of this Agreement; all pending legal or governmental
proceedings to which the Company, the Association, or the MHC is a party
or of which any of their respective property or assets is the subject
which are not described in the Registration Statement, including ordinary
routine litigation incidental to the business, are considered in the
aggregate not material; and there are no contracts or documents of the
Company or any of its subsidiaries which are required to be filed as
exhibits to the Registration Statement or the MHC Application which have
not been so filed.
(xxvi) The Association has obtained opinions of its outside legal
and tax counsel, Luse Gorman Pomerenk & Schick, P.C., with respect to the
legality of the Securities to be issued and the federal income tax
consequences of the Offerings, copies of which are filed as exhibits to
the MHC Application; all material facts and representations used to
render such opinions are truthful, accurate and complete in all material
respects; and neither the Company, the Association nor the MHC has taken
or will take any action inconsistent therewith.
(xxvii) The Company is not and, upon completion of the Offerings
and sale of the Common Stock and the application of the net proceeds
therefrom, will not be, required to be registered under the Investment
Company Act of 1940, as amended.
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(xxviii) All of the loans represented as assets on the most recent
consolidated financial statements or consolidated selected financial and
other information of the Association included in the Prospectus meet or
are exempt from all requirements of federal, state or local law
pertaining to lending, including without limitation truth in lending
(including the requirements of Regulations Z and 12 C.F.R. Part 226),
real estate settlement procedures, consumer credit protection, equal
credit opportunity and all disclosure laws applicable to such loans,
except for violations which, if asserted, would not result in a material
adverse effect on the financial condition, results of operations,
business affairs or prospects of the Company, the Association, and the
MHC considered as one enterprise.
(xxix) To the knowledge of the Company, the MHC and the
Association, with the exception of the intended loan to the Association's
employee stock ownership plan by the Company to enable the employee stock
ownership plan to purchase shares of Common Stock in an amount of up to
8.0% of the Common Stock sold in the Offerings, none of the Company, the
Association, the MHC or employees of the Association have made any
payment of funds of the Company, the Association or the MHC as a loan for
the purchase of the Common Stock or made any other payment of funds
prohibited by law, and no funds have been set aside to be used for any
payment prohibited by law.
(xxx) To the knowledge of the Company, there are no affiliations
or associations (as such terms are defined by the National Association of
Securities Dealers, Inc. ("NASD")) between any member of the NASD and any
of the Company's officers or directors.
(xxxi) The Association carries, or is covered by, insurance in
such amounts and covering such risks as is adequate for the conduct of
its businesses and the value of its properties as is customary for
companies engaged in similar industries. As soon as practicable following
the Closing Time referred to in Section 2 hereof, the Company and the MHC
will carry or be covered by insurance in such amounts and covering such
risks as is adequate for the conduct of their business and the value of
its properties as is customary for companies in similar industries.
(xxxii) The Company, the Association, and the MHC each maintain, a
system of internal accounting controls sufficient to provide reasonable
assurance that: (a) transactions are executed in accordance with
management's general or specific authorizations; (b) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
asset accountability; (c) access to assets is permitted only in
accordance with management's general or specific authorization; and (d)
the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
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(xxxiii) Each of the Company, the Association, and the MHC is in
compliance in all material respects with the applicable financial
recordkeeping and reporting requirements of the Currency and Foreign
Transaction Reporting Act of 1970, as amended, and the rules and
regulations thereunder. The Association has established compliance
programs to ensure compliance with the requirements of the USA Patriot
Act and all applicable regulations promulgated thereunder. The
Association is in compliance in all material respects with the USA
Patriot Act and all applicable regulations promulgated thereunder, and
there is no charge, investigation, action, suit or proceeding before any
court, regulatory authority or governmental agency or body pending or, to
the best knowledge of the Company, the MHC and the Association,
threatened regarding the Association's compliance with the USA Patriot
Act or any regulations promulgated thereunder.
(xxxiv) The Company, the MHC and the Association have not relied
on the Agent or its counsel for any legal, tax or accounting advice in
connection with the Reorganization.
(xxxv) The records of eligible account holders, supplemental
eligible account holders, and other depositors are accurate and complete
in all material respects.
(xxxvi) Each of the Company, the Association, and the MHC is in
compliance in all material respects with all presently applicable
provisions of the Employee Retirement Income Security Act of 1974, as
amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has
occurred with respect to any "pension plan" (as defined in ERISA) for
which the Company, the Association, or the MHC, respectively, would have
any liability; each of the Company, the Association, or the MHC has not
incurred and does expect to incur liability under (i) Title IV of ERISA
with respect to termination of, or withdrawal from, any "pension plan" or
(ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as
amended, including the regulations and published interpretations
thereunder (the "Code"); and each "pension plan" for which the Company,
the Association, and the MHC would have any liability that is intended to
be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by
failure to act, which would cause the loss of such qualification.
(xxxvii) None of the Company, the Association, nor the MHC nor any
properties owned or operated by the Company, the Association, or the MHC
is in violation of or liable under any Environmental Law (as defined
below), except for such violations or liabilities that, individually or
in the aggregate, would not have a material adverse effect on the
financial condition, results of operations or business affairs of the
Company, the MHC, and the Association, considered as one enterprise.
There are no actions, suits or proceedings, or demands, claims, notices
or investigations (including, without limitation, notices, demand
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letters or requests for information from any environmental agency)
instituted or pending, or to the knowledge of the Company, the MHC or the
Association threatened, relating to the liability of any property owned
or operated by the Company, the MHC or the Association under any
Environmental Law. For purposes of this subsection, the term
"Environmental Law" means any federal, state, local or foreign law,
statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, order, judgment, decree, injunction or
agreement with any regulatory authority relating to (i) the protection,
preservation or restoration of the environment (including, without
limitation, air, water, vapor, surface water, groundwater, drinking water
supply, surface soil, subsurface soil, plant and animal life or any other
natural resource), and/or (ii) the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production,
release or disposal of any substance presently listed, defined,
designated or classified as hazardous, toxic, radioactive or dangerous,
or otherwise regulated, whether by type or by quantity, including any
material containing any such substance as a component.
(xxxviii) The Company, the MHC and the Association have filed all
federal income and state and local franchise tax returns required to be
filed and have made timely payments of all taxes shown as due and payable
in respect of such returns, and no deficiency has been asserted with
respect thereto by any taxing authority. The Company, the MHC and the
Association have no knowledge of any tax deficiency which has been
asserted or could be asserted against the Company, the Association or the
MHC.
(xxxix) The Company will file a registration statement for the
Common Stock under Section 12(g) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") and such registration statement will be
declared effective on or prior to the Closing Time referred to in Section
2 hereof.
(xl) The Company is in compliance with the applicable provisions
of the Sarbanes-Oxley Act and will use its best efforts to comply with
those provisions of the Sarbanes-Oxley Act that will become effective in
the future upon their effectiveness.
(b) Any certificate signed by any officer of the Company, the
Association, or the MHC and delivered to either of the Agent to counsel for the
Agent shall be deemed a representation and warranty by the Company, the MHC or
the Association to each Agent and, for purposes of the opinion to be delivered
to the Agent pursuant to Section 5(b)(2) hereof, to the counsel for the Agent as
to the matters covered thereby.
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SECTION 2. APPOINTMENT OF FBR; SALE AND DELIVERY OF THE SECURITIES;
CLOSING.
On the basis of the representations and warranties herein contained and
subject to the terms and conditions herein set forth, the Company hereby
appoints FBR as its Agent to consult with and advise the Company, and to assist
the Company with the solicitation of subscriptions and purchase orders for
Securities, in connection with the Company's sale of Common Stock in the
Subscription and Community Offering and the Syndicated Community Offering. On
the basis of the representations and warranties herein contained, and subject to
the terms and conditions herein set forth, FBR accepts such appointment and
agrees to use its best efforts to assist the Company with the solicitation of
subscriptions and purchase orders for Securities in accordance with this
Agreement; PROVIDED, HOWEVER, that the Agent shall not be obligated to take any
action which is inconsistent with any applicable laws, regulations, decisions or
orders. The services to be rendered by FBR pursuant to this appointment include
the following: (i) consulting as to the securities marketing implications of any
aspect of the Plan or related corporate documents; (ii) reviewing with the
Company's Board of Directors the independent appraiser's appraisal of the common
stock; (iii) reviewing all offering documents, including the Prospectus, stock
order form and related offering materials (it being understood that preparation
and filing of such documents is the sole responsibility of the Company, the
Association and the MHC and their counsel); (iv) assisting in the design and
implementation of a marketing strategy for the Offerings; (v) assisting the
Company, the Association and the MHC in obtaining all requisite regulatory
approvals; (vi) assisting Association management in preparing for meetings with
potential investors and broker-dealers; and (vii) providing such other general
advice and assistance as may be requested to promote the successful completion
of the Offerings.
The appointment of the Agent hereunder shall terminate upon the earlier
to occur of (a) the expiration of the Subscription and Community Offering on
________________, 2004, unless extended by the Company for up to 90 days
following the date of OTS authorization of the Prospectus which is,
________________, 2004, or, if approved by the OTS, for an additional period
after _________________, 2004, or (b) the receipt and acceptance of
subscriptions and purchase orders for all of the Securities, or (c) the
completion of the Syndicated Community Offering.
If any of the Securities remain available after the expiration of the
Subscription and Community Offering, at the request of the Company, the
Association and the MHC, FBR will seek to form a syndicate of registered brokers
or dealers ("Selected Dealers") to assist in the solicitation of purchase orders
of such Securities on a best efforts basis, subject to the terms and conditions
set forth in a selected dealers' agreement (the "Selected Dealers' Agreement"),
substantially in the form set forth in Exhibit A to this Agreement. FBR will
endeavor to limit the aggregate fees to be paid by the Company, the Association
and the MHC under any such Selected Dealers' Agreement to an amount competitive
with gross underwriting discounts charged at such time for underwritings of
comparable amounts of stock sold at a comparable price per share in a similar
market environment;
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PROVIDED, HOWEVER, that the aggregate fees payable to FBR and Selected Dealers
shall not exceed 7% of the actual purchase price of the Securities sold by such
Selected Dealers. FBR will endeavor to distribute the Securities among the
Selected Dealers in a fashion which best meets the distribution objective of the
Company and the requirements of the Plan and applicable law, which may result in
limiting the allocation of stock to certain Selected Dealers. It is understood
that in no event shall FBR be obligated to act as a Selected Dealer or to take
or purchase any Securities.
In the event the Company is unable to sell at least the total minimum of
the Securities, as set forth on the cover page of the Prospectus, within the
period herein provided, this Agreement shall terminate and the Company shall
refund to any persons who have subscribed for any of the Securities the full
amount which it may have received from them, together with interest as provided
in the Prospectus, and no party to this Agreement shall have any obligation to
the others hereunder, except for the obligations of the Company, the Association
and the MHC as set forth in Sections 4, 6(a) and 7 hereof and the obligations of
the Agent as provided in Sections 6(b) and 7 hereof. Appropriate arrangements
for placing the funds received from subscriptions for Securities or other offers
to purchase Securities in special interest-bearing accounts with the Association
until all Securities are sold and paid for were made prior to the commencement
of the Subscription Offering, with provision for refund to the purchasers as set
forth above, or for delivery to the Company if all Securities are sold.
If at least the total minimum of Securities, as set forth on the cover
page of the Prospectus, are sold, the Company agrees to issue or have issued the
Securities sold and to release for delivery certificates for such Securities at
the Closing Time against payment therefor by release of funds from the special
interest-bearing accounts referred to above. The closing shall be held at the
offices of Luse Gorman Pomerenk & Schick, P.C., at ____ a.m., local time, or at
such other place and time as shall be agreed upon by the parties hereto, on a
business day to be agreed upon by the parties hereto. The Company shall notify
the Agent by telephone, confirmed in writing, when funds shall have been
received for all the Securities. Certificates for Securities shall be delivered
directly to the purchasers thereof in accordance with their directions.
Notwithstanding the foregoing, certificates for Securities purchased through
Selected Dealers shall be made available to the Agent for inspection at least 48
hours prior to the Closing Time at such office as the Agent shall designate. The
hour and date upon which the Company shall release for delivery all of the
Securities, in accordance with the terms hereof, is herein called the "Closing
Time."
The Company will pay any stock issue and transfer taxes which may be
payable with respect to the sale of the Securities.
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In addition to the reimbursement of the expenses specified in Section 4
hereof, the Agent will receive the following compensation for its services
hereunder:
(a) a management fee of $25,000, of which $12,500 has been paid
with the remaining $12,500 payable upon receipt of regulatory approval of
the Plan; and
(b) a marketing fee of 0.90% shall be charged based on
aggregate purchase price of the Securities sold in the Subscription and
Community Offering, excluding shares purchased by directors, [SENIOR
MANAGEMENT AND THE EMPLOYEE STOCK OWNERSHIP PLAN]; and
(c) with respect to any Securities sold by an NASD member firm
(including FBR) under the Selected Dealers' Agreement in the Syndicated
Community Offering, (i) the compensation payable to Selected Dealers
under any Selected Dealers' Agreement and (ii) any sponsoring dealer's
fees. Any fees payable to FBR and other NASD member firms in the
Syndicated Community Offering for Securities sold by FBR or such firms
under any such agreement shall be limited to an aggregate of seven
percent (7%) of the actual purchase price of such Securities. In no event
will the total fees payable to FBR and other NASD member firms exceed 7%
of the aggregate dollar amount of the Securities sold in the Offerings.
If this Agreement is terminated by the Agent in accordance with the
provisions of Section 9(a) hereof or the Reorganization is terminated by the
Company, no fee shall be payable by the Company to FBR; however, the Company
shall reimburse the Agent for all of its reasonable out-of-pocket expenses
incurred prior to termination, including the reasonable fees and disbursements
of counsel for the Agent in accordance with the provisions of Section 4 hereof.
All fees payable to the Agent hereunder shall be payable in immediately
available funds at Closing Time, or upon the termination of this Agreement, as
the case may be. The Company has made an advance payment to the Agent in the
amount of $12,500, which shall be credited against any fees or reimbursement of
expenses payable hereunder.
SECTION 3. COVENANTS OF THE COMPANY, THE MHC AND THE ASSOCIATION. The
Company, the MHC and the Association covenant with the Agent as follows:
(a) The Company, the Association and the MHC will prepare and
file such amendments or supplements to the Registration Statement, the
Prospectus and the MHC Application as may hereafter be required by the
Securities Act Regulations or the MHC Regulations or as may hereafter be
requested by the Agent. Following completion of the Subscription and
Community Offering, in the event of a Syndicated Community Offering, the
Company, the Association and the MHC will (i) promptly prepare and file
with the Commission a post-effective amendment to the Registration
Statement relating to the results
-16-
of the Subscription and Community Offering, any additional information
with respect to the proposed plan of distribution and any revised pricing
information or (ii) if no such post-effective amendment is required, will
file with, or mail for filing to, the Commission a prospectus or
prospectus supplement containing information relating to the results of
the Subscription and Community Offering and pricing information pursuant
to Rule 424 of the Securities Act Regulations, in either case in a form
acceptable to the Agent. The Company, the Association and the MHC will
notify the Agent immediately, and confirm the notice in writing, (i) of
the effectiveness of any post-effective amendment of the Registration
Statement, the filing of any supplement to the Prospectus and the filing
of any amendment to the MHC Application, (ii) of the receipt of any
comments from the OTS or the Commission with respect to the transactions
contemplated by this Agreement or the Plan, (iii) of any request by the
Commission or the OTS for any amendment to the Registration Statement,
the MHC Application or any amendment or supplement to the Prospectus or
for additional information, (iv) of the issuance by the OTS of any order
suspending the Offerings or the use of the Prospectus or the initiation
of any proceedings for that purpose, (v) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that
purpose, and (vi) of the receipt of any notice with respect to the
suspension of any qualification of the Securities for offering or sale in
any jurisdiction. The Company, the Association and the MHC will make
every reasonable effort to prevent the issuance of any stop order and, if
any stop order is issued, to obtain the lifting thereof at the earliest
possible moment.
(b) The Company, the Association and the MHC will give the
Agent notice of its intention to file or prepare any amendment to the MHC
Application or Registration Statement (including any post-effective
amendment) or any amendment or supplement to the Prospectus (including
any revised prospectus which the Company proposes for use in connection
with the Syndicated Community Offering of the Securities which differs
from the prospectus on file at the Commission at the time the
Registration Statement becomes effective, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) of the
Securities Act Regulations), will furnish the Agent with copies of any
such amendment or supplement a reasonable amount of time prior to such
proposed filing or use, as the case may be, and will not file any such
amendment or supplement or use any such prospectus to which the Agent or
counsel for the Agent may reasonably object.
(c) The Company, the Association and the MHC will deliver to
the Agent as many signed copies and as many conformed copies of the MHC
Application and the Registration Statement as originally filed and of
each amendment thereto (including exhibits filed therewith or
incorporated by reference therein) as the Agent may reasonably request,
and from time to time such number of copies of the Prospectus as the
Agent may reasonably request.
-17-
(d) During the period when the Prospectus is required to be
delivered, the Company, the Association and the MHC will comply, at their
own expense, with all requirements imposed upon them by the OTS, by the
applicable MHC Regulations, as from time to time in force, and by the
Securities Act, the Securities Act Regulations, the Exchange Act, and the
rules and regulations of the Commission promulgated thereunder,
including, without limitation, Regulation M under the Exchange Act, so
far as necessary to permit the continuance of sales or dealing in shares
of Common Stock during such period in accordance with the provisions
hereof and the Prospectus.
(e) If any event or circumstance shall occur as a result of
which it is necessary, in the opinion of counsel for the Agent, to amend
or supplement the Prospectus in order to make the Prospectus not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, the Company, the Association and the MHC will
forthwith amend or supplement the Prospectus (in form and substance
satisfactory to counsel for the Agent) so that, as so amended or
supplemented, the Prospectus will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances existing at the
time it is delivered to a purchaser, not misleading, and the Company, the
Association and the MHC will furnish to the Agent a reasonable number of
copies of such amendment or supplement. For the purpose of this
subsection, the Company, the Association and the MHC will each furnish
such information with respect to itself as the Agent may from time to
time reasonably request.
(f) The Company, the Association and the MHC will take all
necessary action, in cooperation with the Agent, to qualify the
Securities for offering and sale under the applicable securities laws of
such states of the United States and other jurisdictions as the MHC
Regulations may require and as the Agent and the Company have agreed;
PROVIDED, HOWEVER, that the Company, the Association and the MHC shall
not be obligated to file any general consent to service of process or to
qualify as a foreign corporation in any jurisdiction in which it is not
so qualified. In each jurisdiction in which the Securities have been so
qualified, the Company, the Association and the MHC will file such
statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a period of not
less than one year from the effective date of the Registration Statement.
(g) The Company authorizes FBR and any Selected Dealers to act
as agent of the Company in distributing the Prospectus to persons
entitled to receive subscription rights and other persons to be offered
Securities having record addresses in the states or jurisdictions set
forth in a survey of the securities or "blue sky" laws of the various
jurisdictions in which the Offerings will be made (the "Blue Sky
Survey").
(h) The Company will make generally available to its security
holders as soon as practicable, but not later than 60 days after the
close of the period covered thereby, an
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earnings statement (in form complying with the provisions of Rule 158 of
the Securities Act Regulations) covering a twelve-month period beginning
not later than the first day of the Company's fiscal quarter next
following the "effective date" (as defined in said Rule 158) of the
Registration Statement.
(i) For a period of three years from the date of the completion
of the offering, the Company will furnish to its stockholders as soon as
practicable after the end of each such fiscal year an annual report
(including consolidated statements of financial condition and
consolidated statements of income, stockholders' equity and cash flows,
certified by independent public accountants) and, as soon as practicable
after the end of each of the first three quarters of each fiscal year
(beginning with the fiscal quarter ending after the effective date of the
Registration Statement), consolidated summary financial information of
the Company, the MHC and the Association for such quarter in reasonable
detail. In addition, such annual report and quarterly consolidated
summary financial information shall be made public through the issuance
of appropriate press releases at the same time or prior to the time of
the furnishing thereof to stockholders of the Company.
(j) For a period of three years from the date of the completion
of the offering, the Company will furnish to the Agent (i) as soon as
publicly available, a copy of each report or other document of the
Company furnished generally to stockholders of the Company or furnished
to or filed with the Commission under the Exchange Act or any national
securities exchange or system on which any class of securities of the
Company is listed, and (ii) from time to time, such other information
concerning the Company as the Agent may reasonably request.
(k) The Company, the Association and the MHC will conduct the
Offerings in all material respects in accordance with the Plan, the MHC
Regulations and all other applicable regulations, decisions and orders,
including all applicable terms, requirements and conditions precedent to
the Offerings imposed upon the Company, the Association or the MHC by the
OTS.
(l) The Company, the Association and the MHC will use the net
proceeds received by it from the sale of the Securities in the manner
specified in the Prospectus under ["USE OF PROCEEDS."]
(m) The Company will maintain the effectiveness of the Exchange
Act Registration Statement for not less than three years and will comply
in all material respects with its filing obligations under the Exchange
Act. The Company will file with the Nasdaq Stock Market all documents and
notices required by the Nasdaq Stock Market of companies that have issued
securities that are traded in the over-the-counter market and quotations
for which are reported by the Nasdaq National Market.
-19-
(n) The Company, the Association and the MHC will take such
actions and furnish such information as are reasonably requested by the
Agent in order for the Agent to ensure compliance with the National
Association of Securities Dealers, Inc.'s "Interpretation Relating to
Free-Riding and Withholding."
(o) Other than in connection with any employee benefit plan or
arrangement described in the Prospectus, the Company will not, without
the prior written consent of the Agent, sell or issue, contract to sell
or otherwise dispose of, any shares of Common Stock other than the
Securities for a period of 180 days following the Closing Time.
(p) During the period beginning on the date hereof and ending
on the later of the fifth anniversary of the Closing Time or the date on
which the Agent receives full payment in satisfaction of any claim for
indemnification or contribution to which it may be entitled pursuant to
Sections 6 or 7, respectively, neither the Company, the Association nor
the MHC shall, without the prior written consent of the Agent, take or
permit to be taken any action that could result in the Association Common
Stock becoming subject to any security interest, mortgage, pledge, lien
or encumbrance; PROVIDED, HOWEVER, that this covenant shall be null and
void if the Board of Governors of the Federal Reserve System, by
regulation, policy statement or interpretive release, or by written order
or written advice addressed to the Association or the Agent specifically
addressing the provisions of Section 6(a) hereof, permits indemnification
of the Agent by the Association as contemplated by such provisions.
(q) The Company, the MHC and the Association will comply with
the conditions imposed by or agreed to with the OTS in connection with
its approval of the MHC Application.
(r) During the period ending on the first anniversary of the
Closing Time, the Association will comply with all applicable law and
regulation necessary for the Association to continue to be a "qualified
thrift lender" within the meaning of 12 U.S.C. Section 1467a(m).
(s) The Company shall not deliver the Securities until the
Company, the Association and the MHC have satisfied each condition set
forth in Section 5 hereof that is required to be satisfied at or prior to
the Closing Time, unless such condition is waived by the Agent.
(t) The Company, the Association or the MHC will furnish to FBR
as early as practicable prior to the Closing Date, but no later than two
(2) full business days prior thereto, a copy of the latest available
unaudited interim consolidated financial statements of the Association
which have been read by Crowe Chizek & Company, LLC, as stated in their
letters to be furnished pursuant to subsections (f) and (g) of Section 5
hereof.
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(u) Each of the Company, the MHC and the Association will
conduct its business in compliance in all material respects with all
applicable federal and state laws, rules, regulations, decisions,
directives and orders, including all decisions, directives and orders of
the Commission and the OTS. (v) The Association will not amend the Plan
in any manner that would affect the sale of the Securities or the terms
of this Agreement.
(w) The Company, the MHC and the Association will not, prior to
the Closing Time, incur any liability or obligation, direct or
contingent, or enter into any material transaction, other than in the
ordinary course of business consistent with past practice, except as
contemplated by the Prospectus.
(x) The Company, the MHC and the Association will use all
reasonable efforts to comply with, or cause to be complied with, the
conditions precedent to the several obligations of the Agent specified in
Section 5 hereof.
(y) The Company, the MHC and the Association will provide the
Agent with any information necessary to carry out the allocation of the
Securities in the event of an oversubscription, and such information will
be accurate and reliable in all material respects.
(z) The Company, the MHC and the Association will notify the
Agent when funds have been received for the minimum number of Securities
set forth in the Prospectus.
SECTION 4. PAYMENT OF EXPENSES. The Company, the Association and
the MHC jointly and severally agree to pay all expenses incident to the
performance of their obligations under this Agreement, including but not limited
to (i) the cost of obtaining all securities and Association regulatory
approvals, (ii) the printing and filing of the Registration Statement as
originally filed and of each amendment thereto, (iii) the preparation, issuance
and delivery of the certificates for the Securities to the purchasers in the
Offerings, (iv) the fees and disbursements of the Company's and the
Association's and the MHC's counsel, accountants appraiser and other advisors,
(v) the qualification of the Securities under securities laws in accordance with
the provisions of Section 3(f) hereof, including filing fees and the fees and
disbursements of counsel in connection therewith and in connection with the
preparation of the Blue Sky Survey, (vi) the printing and delivery to the Agent
of copies of the Registration Statement as originally filed and of each
amendment thereto and the printing and delivery of the Prospectus and any
amendments or supplements thereto to the purchasers in the Offerings and the
Agent, (vii) the printing and delivery to the Agent of copies of a Blue Sky
Survey and (viii) the fees and expenses incurred in connection with the
quotation of the Securities on the Nasdaq National Market. In the event the
Agent incurs any such fees and expenses on behalf of the Association, the
Company or the MHC, the Association will reimburse the Agent for such fees and
expenses whether or not the Reorganization is consummated; PROVIDED, HOWEVER,
that the Agent shall not incur any substantial expenses on behalf
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of the Association, the Company or the MHC pursuant to this Section without the
prior approval of the Association.
The Company, the Association and the MHC jointly and severally agree to
pay certain expenses incident to the performance of the Agent's obligations
under this Agreement, regardless of whether the Reorganization is consummated,
including (i) the filing fees paid or incurred by the Agent in connection with
all filings with the National Association of Securities Dealers, Inc. and (ii)
all reasonable out of pocket expenses incurred by the Agent relating to the
Offerings, including, without limitation, advertising, promotional, syndication
and travel expenses, and fees and expenses up to a maximum of $40,000; provided,
however, that the Agent shall document the expenses contemplated by clause (ii)
to the reasonable satisfaction of the Association. All fees and expenses to
which the Agent is entitled to reimbursement under this paragraph of this
Section 4 shall be due and payable upon receipt by the Company, the Association
or the MHC of a written accounting therefor setting forth in reasonable detail
the expenses incurred by the Agent.
SECTION 5. CONDITIONS OF AGENT'S OBLIGATIONS. The Company, the
Association, the MHC and the Agent agree that the issuance and the sale of
Securities and all obligations of the Agent hereunder are subject to the
accuracy of the representations and warranties of the Company, the Association
and the MHC herein contained as of the date hereof and the Closing Time, to the
accuracy of the statements of officers and directors of the Company, the
Association and the MHC made pursuant to the provisions hereof, to the
performance by the Company, the Association and the MHC of their obligations
hereunder, and to the following further conditions:
(a) No stop order suspending the effectiveness of the
Registration Statement shall have been issued under the Securities Act or
proceedings therefor initiated or threatened by the Commission, no order
suspending the Offerings or authorization for final use of the Prospectus
shall have been issued or proceedings therefor initiated or threatened by
the OTS and no order suspending the sale of the Securities in any
jurisdiction shall have been issued.
(b) At Closing Time, the Agent shall have received:
(1) The favorable opinion, dated as of Closing Time, of
Luse Gorman Pomerenk & Schick, P.C., counsel for the Company, the
Association and the MHC, in form and substance satisfactory to
counsel for the Agent, to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation under the laws of the
United States of America as a federally chartered mid-tier
holding company.
-22-
(ii) The Company has full corporate power and authority
to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and
Prospectus and to enter into and perform its obligations
under this Agreement.
(iii) The Company is duly qualified as a foreign
corporation to transact business and is in good standing in
the State of Georgia and in each other jurisdiction in
which such qualification is required whether by reason of
the ownership or leasing of property or the conduct of
business, except where the failure to so qualify would not
have a material adverse effect upon the financial
condition, results of operations, business affairs or
prospects of the Company, the Association, and the MHC,
considered as one enterprise.
(iv) Upon consummation of the Reorganization, the
authorized, issued and outstanding capital stock of the
Company will be as set forth in the Prospectus under
"Capitalization" and no shares of Common Stock have been or
will be issued and outstanding prior to the Closing Time.
(v) The Securities have been duly and validly authorized
for issuance and sale 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.
(vi) The issuance of the Securities is not subject to
preemptive or other similar rights arising by operation of
law or, to the best of their knowledge and information,
otherwise.
(vii) Upon completion of the Reorganization, the issuance
of the Securities will be in compliance with all conditions
imposed upon the Company, the MHC and the Association and
by the OTS under the terms of their written approval or
notice of intention not to object, as applicable.
(viii) The Association has been duly incorporated and is
validly existing under the laws of the United States of
America as a federally chartered savings and loan
association in stock form, with full corporate power and
authority to own, lease and operate its properties and to
conduct its business as described in the Registration
Statement and the Prospectus; and the Association is duly
qualified as a foreign corporation to transact business and
is in good standing in each jurisdiction in which the
failure to so qualify would have a material adverse effect
upon the financial condition, results of operations,
business affairs or prospects of the Association.
-23-
(ix) The Association is a member in good standing of the
Federal Home Loan Bank of Atlanta and the deposit accounts
of the Association are insured by the FDIC up to the
applicable limits.
(x) The MHC is a federal mutual holding company and has
been duly incorporated and is validly existing as a
corporation under the laws of the United States and has
full corporate power and authority to own, lease and
operate its properties and to conduct its business as
described in the Registration Statement and Prospectus to
enter into and perform its obligations under this
Agreement.
(xi) Upon consummation of the Reorganization, all of the
issued and outstanding capital stock of the Association
when issued and delivered pursuant to the Plan against
payment of consideration calculated as set forth in the
Plan and set forth in the Prospectus, will be duly
authorized and validly issued and fully paid and
nonassessable, and all such capital stock will be owned
beneficially and of record by the Company free and clear of
any security interest, mortgage, pledge, lien, encumbrance,
claim or equity.
(xii) The OTS has duly approved the MHC Application and no
action is pending, or to the best of such counsel's
knowledge after due inquiry, threatened respecting the MHC
Application; the MHC Application complies as to form with
the applicable requirements of the OTS, includes all
documents required to be filed as exhibits thereto, and is,
to the best of such counsel's knowledge after due inquiry,
truthful, accurate and complete.
(xiii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, (A)
have been duly and validly authorized by all necessary
action on the part of each of the Company, the Association
and the MHC, and this Agreement constitutes the legal,
valid and binding agreement of each of the Company, the
Association and the MHC, enforceable in accordance with its
terms, except as rights to indemnity and contribution
hereunder may be limited under applicable law (it being
understood that such counsel may avail itself of customary
exceptions concerning the effect of bankruptcy, insolvency
or similar laws and the availability of equitable
remedies), (B) will not result in any violation of the
provisions of the charter or bylaws of the Company, the
MHC, or the Association; and (C) will not conflict with or
constitute a breach of, or default under, and no event has
occurred which, with notice or lapse of time or both, would
constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance, that,
individually or in the
-24-
aggregate, would have a material adverse effect on the
financial condition, results of operations, business
affairs or prospects of the Company, the MHC, and the
Association considered as one enterprise, upon any property
or assets of the Company, the MHC or the Association
pursuant to any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the
Company, the MHC 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, the MHC or the Association is
subject.
(xiv) The Prospectus has been duly authorized by the OTS
for final use pursuant to the MHC Regulations and no action
is pending, or to the best of such counsel's knowledge
after due inquiry, is threatened, by the OTS to revoke such
authorization.
(xv) The Registration Statement is effective under the
Securities Act and no stop order suspending the
effectiveness of the Registration Statement has been issued
under the Securities Act or, to the best of such counsel's
knowledge after due inquiry, proceedings therefor initiated
or threatened by the Commission.
(xvi) No further approval, authorization, consent or other
order of any public board or body is required in connection
with the execution and delivery of this Agreement, the
issuance of the Securities and the consummation of the
Reorganization, except as may be required under the
securities or Blue Sky laws of various jurisdictions as to
which no opinion need be rendered.
(xvii) At the time the Registration Statement became
effective, the Registration Statement (other than the
financial statements and statistical data included therein,
as to which no opinion need be rendered) complied as to
form in all material respects with the requirements of the
Securities Act and the Securities Act Regulations and the
MHC Regulations.
(xviii) The Common Stock conforms to the description
thereof contained in the Prospectus, and the form of
certificate used to evidence the Common Stock is in due and
proper form and complies with all applicable statutory
requirements.
(xix) There are no legal or governmental proceedings
pending or to counsel's knowledge threatened against or
affecting the Company, the MHC or the Association which are
required, individually or in the aggregate, to be
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disclosed in the Registration Statement and Prospectus,
other than those disclosed therein, and all pending legal
or governmental proceedings to which the Company, the MHC
or the Association is a party or to which any of their
property is subject which are not described in the
Registration Statement, including ordinary routine
litigation incidental to the business, are, considered in
the aggregate, not material.
(xx) The information in the Prospectus under [TO BE
INSERTED] to the extent that it constitutes matters of law,
summaries of legal matters, documents or proceedings, or
legal conclusions, has been reviewed by them and is
complete and accurate in all material respects.
(xxi) To the best of such counsel's knowledge, there are
no contracts, indentures, mortgages, loan agreements,
notes, leases or other instruments required to be described
or referred to in the Registration Statement or to be filed
as exhibits thereto other than those described or referred
to therein or filed as exhibits thereto, the descriptions
thereof or references thereto are correct, and no default
exists, and no event has occurred which, with notice or
lapse of time or both, would constitute a default, in the
due performance or observance of any material obligation,
agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other
instrument so described, referred to or filed.
(xxii) The Plan has been duly authorized by the Boards of
Directors of the Company, the Association and the MHC and,
the OTS's approval of the Plan remains in full force and
effect; the Company, the Association and the MHC have
conducted the Offerings in all material respects in
accordance with applicable requirements of the MHC
Regulations, the Plan and all other applicable regulations,
decisions and orders thereunder, including all material
applicable terms, conditions, requirements and conditions
precedent to the Offerings imposed upon the Company, the
Association or the MHC by the OTS and, no order has been
issued by the OTS to suspend the Offerings and no action
for such purpose has been instituted or threatened by the
OTS; and, to the best of such counsel's knowledge after due
inquiry, no person has sought to obtain review of the final
action of the OTS in approving the MHC Application.
(xxiii) To the best of such counsel's knowledge after due
inquiry, the Company, the Association, and the MHC have
obtained all licenses, permits and other governmental
authorizations currently required for the conduct of their
respective businesses as described in the Registration
Statement and
-26-
Prospectus, and all such licenses, permits and other
governmental authorizations are in full force and effect,
and the Company, the Association, and the MHC are in all
material respects complying therewith.
(xxiv) Neither the Company, the Association, nor the MHC is
in violation of its certificate of incorporation,
organization certificate, articles of incorporation or
charter, as the case may be, or bylaws or in default (nor
has any event occurred which, with notice or lapse of time
or both, would constitute a default) in the performance or
observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other instrument to which
the Company, the Association, or the MHC is a party or by
which the Company, the Association, or the MHC or any of
their property may be bound.
(xxv) The Company is not and, upon completion of the
Offerings and the sale of the Securities and the
application of the net proceeds therefrom, will not be
required to be registered as an investment company under
the Investment Company Act of 1940.
(2) The favorable opinion, dated as of Closing Time, of
Muldoon Murphy Faucette & Aguggia LLP, counsel for the Agent, with
respect to the matters set forth in Section 5(b)(1)(i), (iv), (v),
(vi) (solely as to preemptive rights arising by operation of law),
(xii), (xiii), (xiv), (xvi) and (xvii) and such other matters as
the Agent may reasonably require.
(3) In giving their opinions required by subsections
(b)(l) and (b)(2), respectively, of this Section, Luse Gorman
Pomerenk & Schick, P.C. and Muldoon Murphy Faucette & Aguggia LLP
shall each additionally state that nothing has come to their
attention that would lead them to believe that the Registration
Statement (except for financial statements and schedules and other
financial or statistical data included therein, as to which
counsel need make no statement), at the time it became effective,
contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary
to make the statements therein not misleading or that the
Prospectus (except for financial statements and schedules and
other financial or statistical data included therein, as to which
counsel need make no statement), at the time the Registration
Statement became effective or at Closing Time, included an untrue
statement of a material fact or omitted 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. In
giving their opinions, Luse Gorman Pomerenk & Schick, P.C. and
Muldoon Murphy Faucette & Aguggia LLP may rely as to
-27-
matters of fact on certificates of officers and directors of the
Company, the Association and the MHC and certificates of public
officials, and Muldoon Murphy Faucette & Aguggia LLP may also rely
on the opinion of Luse Gorman Pomerenk & Schick, P.C.
(c) At Closing Time referred to in Section 2, the Company, the
Association and the MHC shall have completed in all material respects the
conditions precedent to the Offerings in accordance with the Plan, the
applicable MHC Regulations and all other applicable laws, regulations,
decisions and orders, including all terms, conditions, requirements and
provisions precedent to the Offerings imposed upon the Company, the
Association or the MHC by the OTS, or any other regulatory authority
other than those which the OTS permits to be completed after the
Reorganization.
(d) At Closing Time, there shall not have been, since the date
hereof or since the respective dates as of which information is given in
the Registration Statement and the Prospectus, any material adverse
change in the financial condition, results of operations, business
affairs or prospects of the Company, the Association, and the MHC
considered as one enterprise, whether or not arising in the ordinary
course of business consistent with past practice, and the Agent shall
have received a certificate of the Chief Executive Officer, and the
President of the Company, the Association and the MHC and the chief
financial or chief accounting officer of the Company, the Association and
the MHC, dated as of the Closing Time, to the effect that (i) there has
been no such material adverse change, (ii) there shall have been no
material transaction entered into by the Company, the Association, or the
MHC from the latest date as of which the financial condition of the
Company, the Association, or the MHC as set forth in the Registration
Statement and the Prospectus other than transactions referred to or
contemplated therein and transactions in the ordinary course of business
consistent with past practice, (iii) neither the Company, the Association
nor the MHC shall have received from the OTS any direction (oral or
written) to make any material change in the method of conducting its
business with which it has not complied (which direction, if any, shall
have been disclosed to the Agent) or which materially and adversely would
affect the business affairs, financial condition, results of operations
or prospects of the Company, the Association, or the MHC, (iv) the
representations and warranties in Section 1 hereof are true and correct
with the same force and effect as though expressly made at and as of the
Closing Time, (v) the Company, the Association and the MHC have complied
with all agreements and satisfied all conditions on their part to be
performed or satisfied at or prior to Closing Time, (vi) no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been initiated or
threatened by the Commission and (vii) no order suspending the Offerings
or the authorization for final use of the Prospectus has been issued and
no proceedings for that purpose have been initiated or threatened by the
OTS or the FDIC and no person has sought to obtain regulatory or judicial
review of the action of the OTS in approving the Plan in
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accordance with the MHC Regulations nor has any person sought to obtain
regulatory or judicial review of the action of the OTS in approving the
MHC Application.
(e) At the Closing Time, the Agent shall have received a
certificate of the Chief Executive Officer and President of the Company,
the MHC and of the Association and the Chief Financial Officer of the
Company, the MHC and of the Association, dated as of the Closing Time, to
the effect that: (i) they have reviewed the contents of the Registration
Statement and the Prospectus; (ii) based on each of their knowledge, the
Registration Statement and the Prospectus do not contain any untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements made therein, in light of the
circumstances under which such statements were made, not misleading;
(iii) based on each of their knowledge, the financial statements and
other financial information included in the Registration Statement and
the Prospectus fairly present the financial condition and results of
operations of the Association as of and for the dates and periods covered
by the Registration Statement and the Prospectus; (iv) they are
responsible for establishing and maintaining internal controls; (v) they
have designed such internal controls to ensure that material information
relating to the Company, the MHC and the Association is made known to
them; (vi) they have evaluated the effectiveness of their internal
controls; and (vii) they have disclosed to Crowe Chizek & Company, LLC
(A) all significant deficiencies in the design or operation of internal
controls which could adversely affect the Company's, the MHC's and the
Association's ability to record, process, summarize, and report financial
data, and have identified for the Company's, the MHC's and the
Association's auditors any material weaknesses in internal controls and
(B) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Company's, the MHC's and the
Association's internal controls.
(f) At the time of the execution of this Agreement, the Agent
shall have received from Crowe Chizek & Company, LLC a letter dated such
date, in form and substance satisfactory to the Agent, to the effect
that: (i) they are independent public accountants with respect to the
Company, the Association, , and the MHC within the meaning of the Code of
Ethics of the AICPA, the Securities Act and the Securities Act
Regulations and the MHC Regulations and they are not in violation of the
auditor independence requirements of the Sarbanes-Oxley Act; (ii) it is
their opinion that the consolidated financial statements and supporting
schedules included in the Registration Statement and covered by their
opinions therein comply as to form in all material respects with the
applicable accounting requirements of the Securities Act and the
Securities Act Regulations; (iii) based upon limited procedures as agreed
upon by the Agent and Crowe Chizek & Company, LLC set forth in detail in
such letter, nothing has come to their attention which causes them to
believe that (A) the unaudited financial statements and supporting
schedules of the Association included in the Registration Statement do
not comply as to form in all material respects with the applicable
accounting requirements of the Securities Act, the Securities Act
Regulations
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and the MHC Regulations or are not presented in conformity with generally
accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included in the
Registration Statement and the Prospectus, (B) the unaudited amounts of
net interest income and net income set forth under "Selected Financial
and Other Data" in the Registration Statement and Prospectus do not agree
with the amounts set forth in unaudited consolidated financial statements
as of and for the dates and periods presented under such captions or such
amounts were not determined on a basis substantially consistent with that
used in determining the corresponding amounts in the audited financial
statements included in the Registration Statement, (C) at a specified
date not more than five days prior to the date of this Agreement, there
has been any increase in the consolidated long term or short term debt of
the Association or any decrease in consolidated total assets, the
allowance for loan losses, total deposits or net worth of the
Association, in each case as compared with the amounts shown in the
December 31, 2003 balance sheet included in the Registration Statement
or, (D) during the period from December 31, 2003 to a specified date not
more than five days prior to the date of this Agreement, there were any
decreases, as compared with the corresponding period in the preceding
year, in total interest income, net interest income, net interest income
after provision for loan losses, income before income tax expense or net
income of the Association, except in all instances for increases or
decreases which the Registration Statement and the Prospectus disclose
have occurred or may occur; and (iv) in addition to the examination
referred to in their opinions and the limited procedures referred to in
clause (iii) above, they have carried out certain specified procedures,
not constituting an audit, with respect to certain amounts, percentages
and financial information which are included in the Registration
Statement and the Prospectus and which are specified by the Agent, and
have found such amounts, percentages and financial information to be in
agreement with the relevant accounting, financial and other records of
the Company, the Association, and the MHC identified in such letter.
(g) At Closing Time, the Agent shall have received from Crowe
Chizek & Company, LLC a letter, dated as of Closing Time, to the effect
that they reaffirm the statements made in the letter furnished pursuant
to subsection (e) of this Section, except that the specified date
referred to shall be a date not more than five days prior to Closing
Time.
(h) At Closing Time, the Securities shall have been approved
for listing on the Nasdaq Stock Market or will be listed for quotation on
the OTC Bulletin Board upon notice of issuance.
(i) At Closing Time, the Agent shall have received a letter
from R.P. Financial, LC., dated as of the Closing Time, confirming its
appraisal.
(j) At Closing Time, counsel for the Agent shall have been
furnished with such documents and opinions as they may require for the
purpose of enabling them to pass upon
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the issuance and sale of the Securities as herein contemplated and
related proceedings, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Securities as herein
contemplated shall be satisfactory in form and substance to the Agent and
counsel for the Agent.
(k) At any time prior to Closing Time, (i) there shall not have
occurred any material adverse change in the financial markets in the
United States or elsewhere or any outbreak of hostilities or escalation
thereof or other calamity or crisis the effect of which, in the judgment
of the Agent, are so material and adverse as to make it impracticable to
market the Securities or to enforce contracts, including subscriptions or
orders, for the sale of the Securities, and (ii) trading generally on
either the American Stock Exchange, the New York Stock Exchange or the
Nasdaq Stock Market shall not have been suspended, and minimum or maximum
prices for trading shall not have been fixed, or maximum ranges for
prices for securities have been required, by either of said Exchanges or
by order of the Commission or any other governmental authority, and a
banking moratorium shall not have been declared by either Federal or
Georgia authorities.
SECTION 6. INDEMNIFICATION.
(a) The Company, the Association and the MHC, jointly and
severally, agree to indemnify and hold harmless the Agent, each person, if any,
who controls the Agent, within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, and its respective partners, directors,
officers, employees and agents as follows:
(i) from and against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, related to or arising out of
the Offerings or any action taken by the Agent where acting as agent of
the Company, the Association or the MHC or otherwise as described in
Section 2 hereof;
(ii) from and against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, based upon or arising out of
any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement (or any amendment thereto), or
the omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Proxy Statement or
Prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which
they were made, not misleading;
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(iii) from and against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or any
investigation or proceeding by any governmental agency or body, commenced
or threatened, or of any claim whatsoever described in clauses (i) or
(ii) above, if such settlement is effected with the written consent of
the Company, the Association or the MHC, which consent shall not be
unreasonably withheld; and
(iv) from and against any and all expense whatsoever, as
incurred (including, subject to Section 6(c) hereof, the fees and
disbursements of counsel chosen by the Agent), reasonably incurred in
investigating, preparing for or defending against any litigation, or any
investigation, proceeding or inquiry by any governmental agency or body,
commenced or threatened, or any claim pending or threatened whatsoever
described in clauses (i) or (ii) above, to the extent that any such
expense is not paid under (i), (ii) or (iii) above;
PROVIDED, HOWEVER, that the indemnification provided for in this paragraph (a)
shall not apply to any loss, liability, claim, damage or expense to the extent
arising out of any untrue statement or alleged untrue statement of a material
fact contained in the Prospectus (or any amendment or supplement thereto) or the
omission or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading which was made in reliance upon and in conformity with
the Agent Information. Notwithstanding the foregoing, the indemnification
provided for in this paragraph (a) shall not apply to the Association to the
extent that such indemnification by the Association would constitute a covered
transaction under Section 23A of the Federal Reserve Act.
(b) The Agent agrees to indemnify and hold harmless the
Company, the Association, the MHC and their directors and trustees, each of
their officers who signed the Registration Statement, and each person, if any,
who controls the Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act against any and all loss, liability, claim,
damage and expense described in the indemnity contained in subsection (a) of
this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, of a material fact made in
the Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with the Agent Information.
(c) Each indemnified party shall give notice as promptly
as reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to
so notify an indemnifying party shall not relieve such indemnifying party from
any liability which it may have otherwise than on account of this indemnity
agreement. An indemnifying party may participate at its own expense in the
defense of any such action. In no event shall the indemnifying parties be liable
for fees and expenses of more than one counsel (in addition to no more than one
local counsel in each separate jurisdiction in which any
-32-
action or proceeding is commenced) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances.
(d) The Company, the Association and the MHC also agree
that the Agent shall not have any liability (whether direct or indirect, in
contract or tort or otherwise) to the MHC, the Association, the Company, its
security holders or the Association's, the MHC's or the Company's creditors
relating to or arising out of the engagement of the Agent pursuant to, or the
performance by the Agent of the services contemplated by, this Agreement, except
to the extent that any loss, claim, damage or liability is found in a final
judgment by a court of competent jurisdiction to have resulted primarily from
the Agent's bad faith, willful misconduct or gross negligence.
(e) In addition to, and without limiting, the provisions
of Section (6)(a)(iv) hereof, in the event that any Agent, any person, if any,
who controls the Agent within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act or any of its partners, directors, officers,
employees or agents is requested or required to appear as a witness or otherwise
gives testimony in any action, proceeding, investigation or inquiry brought by
or on behalf of or against the Company, the Association, the MHC, the Agent or
any of its respective affiliates or any participant in the transactions
contemplated hereby in which the Agent or such person or agent is not named as a
defendant, the Company, the Association and the MHC jointly and severally agree
to reimburse the Agent for all reasonable and necessary out-of-pocket expenses
incurred by it in connection with preparing or appearing as a witness or
otherwise giving testimony and to compensate the Agent in an amount to be
mutually agreed upon.
SECTION 7. CONTRIBUTION. In order to provide for just and
equitable contribution in circumstances in which the indemnity agreement
provided for in Section 6 hereof is for any reason held to be unenforceable by
the indemnified parties although applicable in accordance with its terms, the
Company, the Association, the MHC and the Agent shall contribute to the
aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by said indemnity agreement incurred by the Company, the
Association or the MHC and the Agent, as incurred, in such proportions (i) that
the Agent is responsible for that portion represented by the percentage that the
maximum aggregate marketing fees appearing on the cover page of the Prospectus
bears to the maximum aggregate gross proceeds appearing thereon and the Company,
the Association and the MHC are jointly and severally responsible for the
balance or (ii) if, but only if, the allocation provided for in clause (i) is
for any reason held unenforceable, in such proportion as is appropriate to
reflect not only the relative benefits to the Company, the Association and the
MHC on the one hand and the Agent on the other, as reflected in clause (i), but
also the relative fault of the Company, the Association and the MHC on the one
hand and the Agent on the other, as well as any other relevant equitable
considerations; PROVIDED, HOWEVER, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes
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of this Section, each person, if any, who controls the Agent within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have
the same rights to contribution as the Agent, and each director of the Company
and the MHC, each trustee of the Association, each officer of the Company and
the MHC who signed the Registration Statement, and each person, if any, who
controls the Company, the Association or the MHC within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act shall have the same
rights to contribution as the Company, the Association and the MHC.
Notwithstanding anything to the contrary set forth herein, to the extent
permitted by applicable law, in no event shall the Agent be required to
contribute an aggregate amount in excess of the aggregate marketing fees to
which the Agent is entitled and actually paid pursuant to this Agreement.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement, or contained in certificates of officers of the Company, the
Association or the MHC submitted pursuant hereto, shall remain operative and in
full force and effect, regardless of any investigation made by or on behalf of
any Agent or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities.
SECTION 9. TERMINATION OF AGREEMENT.
(a) The Agent may terminate this Agreement, by notice to the
Company, at any time at or prior to Closing Time: (i) if there has been, since
the date of this Agreement or since the respective dates as of which information
is given in the Registration Statement, any material adverse change in the
financial condition, results of operations, business affairs or prospects of the
Company, the Association, or the MHC or the Company, the Association, and the
MHC considered as one enterprise, whether or not arising in the ordinary course
of business; (ii) if there has occurred any material adverse change in the
financial markets in the United States or elsewhere or any outbreak of
hostilities or escalation thereof or other calamity or crisis the effect of
which, in the judgment of the Agent, are so material and adverse as to make it
impracticable to market the Securities or to enforce contracts, including
subscriptions or orders, for the sale of the Securities; (iii) if trading
generally on the Nasdaq Stock Market, the American Stock Exchange or the New
York Stock Exchange has been suspended, or minimum or maximum prices for trading
have been fixed, or maximum ranges for prices for securities have been required,
by either of said Exchanges or by order of the Commission or any other
governmental authority, or if a banking moratorium has been declared by either
Federal or Georgia authorities; (iv) if any condition specified in Section 5
shall not have been fulfilled when and as required to be fulfilled; (v) if there
shall have been such material adverse change in the condition or prospects of
the Company, the Association, or the MHC or the prospective market for the
Company's securities as in the Agent's good faith opinion would make it
inadvisable to proceed with the offering, sale or delivery of the Securities;
(vi) if, in the Agent's good faith opinion, the price for the Securities
established by RP Financial, LC. is not reasonable or
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equitable under then prevailing market conditions; or (vii) if the Offerings are
not consummated on or prior to ________, 2004.
(b) If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Sections 2 and 4 hereof relating to the reimbursement of
expenses and except that the provisions of Sections 6 and 7 hereof shall survive
any termination of this Agreement.
SECTION 10. NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication. Notices to the
Agent shall be directed to the Agent at 1001 Nineteenth Street North, 10th
Floor, Arlington, Virginia 22209, attention of ________________,
_______________, facsimile number (___) ___-____; notices to the Company, the
Association and the MHC shall be directed to any of them at 505 Haines Avenue,
Waycross, Georgia 31501, attention of Robert J. Larison, Jr., President and
Chief Executive Officer, with a copy to Richard S. Garabedian at Luse Gorman
Pomerenk & Schick, P.C., 5535 Wisconsin Avenue, N.W., Washington, D.C. 20005.
SECTION 11. PARTIES. This Agreement shall inure to the benefit of
and be binding upon the Agent, the Company, the Association and the MHC and
their respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Agent, the Company, the Association and the MHC and their respective
successors and the controlling persons and partners, and officers and directors
referred to in Sections 6 and 7 and their heirs and legal representatives, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision herein or therein contained. This Agreement and all conditions
and provisions hereof and thereof are intended to be for the sole and exclusive
benefit of the Agent, the Company, the Association and the MHC and their
respective successors, and said controlling persons and partners and officers
and directors and their heirs and legal representatives, and for the benefit of
no other person, firm or corporation.
SECTION 12. ENTIRE AGREEMENT; AMENDMENT. This Agreement
represents the entire understanding of the parties hereto with reference to the
transactions contemplated hereby and supersedes any and all other oral or
written agreements heretofore made, except for the engagement letter dated April
21, 2003, by and between the Agent and the Company, the Association and the MHC,
relating to the Agent's providing conversion agent services to the Company, the
Association and the MHC in connection with the Offerings. No waiver, amendment
or other modification of this Agreement shall be effective unless in writing and
signed by the parties hereto.
SECTION 13. GOVERNING LAW AND TIME. This Agreement shall be
governed by and construed in accordance with the laws of the State of Virginia
applicable to
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agreements made and to be performed in said State without regard to the
conflicts of laws provisions thereof. Unless otherwise noted, specified times of
day refer to Eastern time.
SECTION 14. SEVERABILITY. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
SECTION 15. HEADINGS. Sections headings are not to be considered
part of this Agreement, are for convenience and reference only, and are not to
be deemed to be full or accurate descriptions of the contents of any paragraph
or subparagraph.
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Agent, the Company, the MHC and the Association in accordance with
its terms.
Very truly yours,
ATLANTIC COAST FEDERAL, MHC
By:
-------------------------------
Name: Robert J. Larison, Jr.
Title: President and CEO
ATLANTIC COAST FEDERAL CORPORATION
By:
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Name: Robert J. Larison, Jr.
Title: President and CEO
ATLANTIC COAST FEDERAL
By:
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Name: Robert J. Larison, Jr.
Title: President and CEO
CONFIRMED AND ACCEPTED,
as of the date first above written:
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
By:
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[NAME]
[TITLE]
-37-
Exhibit A
ATLANTIC COAST FEDERAL CORPORATION
______________ SHARES
(MAXIMUM OFFERED IN OFFERING)
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
SELECTED DEALER'S AGREEMENT
_______________, 2004
We have agreed to assist Atlantic Coast Federal Corporation (the
"Company") in connection with the offer and sale of shares (the "Shares") of
common stock, par value $0.01 per share (the "Common Stock"), of the Company, to
be issued in connection with the Company's minority stock issuance.
The Shares are being offered for sale in accordance with the Plan of
Stock Issuance (the "Plan") adopted by the Boards of Directors of the Company,
Atlantic Coast Federal, MHC (the "MHC") and Atlantic Coast Federal (the
"Association") pursuant to which the Company will conduct a stock offering of up
to 49.9% of the Common Stock of the Company (the "Minority Stock Issuance"). The
Company, in connection with its plan to effect such Minority Stock Issuance,
offered [MAX #] Shares for subscription by certain of the Association's
depositors and the Association's employee stock ownership plan in a subscription
offering, and certain members of the general public in a concurrent direct
community offering. The Shares which were not subscribed for pursuant to such
subscription and direct community offerings are being offered to the public in a
syndicated community offering (the "Syndicated Community Offering") in
accordance with the regulations of the Office of Thrift Supervision (the "OTS").
The Shares, the bases on which the number of Shares to be issued may change, and
certain of the terms on which they are being offered are more fully described in
the enclosed Prospectus (the "Prospectus").
We are offering to Selected Dealers (of which you are one) the
opportunity to participate in the solicitation of offers to buy the Shares in
the Syndicated Community Offering and we will pay you a fee in the amount of
_____________ percent (_____%) of the dollar amount of the Shares sold
on behalf of the Company by you. The number of Shares sold by you shall be
determined based on the authorized designation of your firm on the order form or
forms for such Shares accompanying the funds transmitted for payment therefor
(whether in the form of a check payable to the Association or a withdrawal from
an existing account at the Association) to the special account established by
the Company for the purpose of holding such funds. It is understood, of course,
that payment of your fee will be made only out of compensation received by us
for the Shares sold on behalf of the Company by you, as evidenced in accordance
with the preceding sentence. The Company has requested us to invite you to
become a "Sponsoring Dealer," that is, a Selected Dealer who solicits offers
which result in the sale on behalf of the Company of at least ___________
Shares. You may become a Sponsoring Dealer (subject to your fulfillment of the
requirement in the preceding sentence) by checking the box on the confirmation
at the end of this letter. If you become a Sponsoring Dealer, you shall be
entitled to an additional fee in the amount of _______ percent (______%) of the
dollar amount of the Shares sold on behalf of the Company by you as evidenced in
the manner set forth above.
Each order form for the purchase of Shares must set forth the identity,
address and tax identification number of each person ordering Shares regardless
of whether the Shares will be registered in street name or in the purchaser's
name. Such order form should clearly identify your firm.
As soon as practicable after all the Shares are sold, we will remit to
you, out of our compensation as provided above, the fees to which you are
entitled hereunder, including your Sponsoring Dealer fee.
This offer is made subject to the terms and conditions herein set forth
and is made only to Selected Dealers which are (i) members in good standing of
the National Association of Securities Dealers, Inc. ("NASD") which agree to
comply with all applicable rules of the NASD, including, without limitation, the
NASD's Interpretation With Respect to Free-Riding and Withholding and Rule 2740
of the NASD's Conduct Rules, or (ii) foreign dealers not eligible for membership
in the NASD which agree (A) not to sell any Shares within the United States, its
territories or possessions or to persons who are citizens thereof or residents
therein and (B) in making other sales to comply with the above-mentioned NASD
Interpretation, Rules 2730, 2740 and 2750 of the above-mentioned Conduct Rules
as if they were NASD members and Rule 2420 of such Conduct Rules as it applies
to non-member brokers or dealers in a foreign country.
Orders for Shares will be strictly subject to confirmation and we, acting
on behalf of the Company, reserve the right in our absolute discretion to reject
any order in whole or in part, to accept or reject orders in the order of their
receipt or otherwise, and to allot. Neither you nor any other person is
authorized by the Company, the MHC, the Association or by us to give any
information or make any representations other than those contained in the
Prospectus in connection with the sale of any of the Shares. No Selected Dealer
is authorized to act as agent for us when soliciting offers to buy the Shares
from the public or otherwise. No Selected Dealer shall engage in any transaction
prohibited by Regulation M promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), with respect to the Common Stock during
the offering.
We and each Selected Dealer assisting in selling Shares pursuant hereto
agree to comply with the applicable requirements of the Exchange Act and
applicable rules and regulations issued by the
Board of Governors of the Federal Reserve System and the National Association of
Securities Dealers, Inc. In addition, we and each Selected Dealer confirm that
the Securities and Exchange Commission (the "Commission") interprets Rule 15c2-8
promulgated under the Exchange Act as requiring that a prospectus be supplied to
each person who is expected to receive a confirmation of sale 48 hours prior to
delivery of such person's order form.
We and each Selected Dealer further agree to the extent that our
customers desire to pay for Shares with funds held by or to be deposited with
us, in accordance with the interpretation of the Commission of Rule 15c2-4
promulgated under the Exchange Act either (a) upon receipt of an executed order
form or direction to execute an order form on behalf of a customer to forward
the syndicated community offering price for the Shares ordered on or before
12:00 noon on the business day following receipt or execution of an order form
by us to the Association for deposit in a segregated account or (b) to solicit
indications of interest in which event (i) we will subsequently contact any
customers indicating interest to confirm the interest and give instructions to
execute and return an order form or to receive authorization to execute an order
form on their behalf, (ii) we will mail acknowledgments of receipt of orders to
each customer confirming interest on the business day following such
confirmation, (iii) we will debit accounts of such customers on the fifth
business day (the "debit date") following receipt of the confirmation referred
to in (i), and (iv) we will forward completed order forms together with such
funds to the Association on or before 12:00 noon on the next business day
following the debit date for deposit in a segregated account. We acknowledge
that if the procedure in (b) is adopted, our customer's funds are not required
to be in their accounts until the debit date. We and each Selected Dealer
further acknowledge that, in order to use the foregoing "sweep arrangements," we
comply with the net capital requirements for broker/dealers under Rule
15c3-1(a)(1) of the Exchange Act.
Unless earlier terminated by us, this Agreement shall terminate 45 full
business days after the date hereof, but may be extended by us for an additional
period or periods not exceeding 30 full business days in the aggregate. We may
terminate this Agreement or any provisions hereof at any time by written or
telegraphic notice to you. Of course, our obligations hereunder are subject to
the successful completion of the offering, including the sale of all of the
Shares.
You agree that at any time or times prior to the termination of this
Agreement you will, upon our request, report to us the number of Shares sold on
behalf of the Company by you under this Agreement.
We shall have full authority to take such actions as we may deem
advisable in respect to all matters pertaining to the offering. We shall be
under no liability to you except for lack of good faith and for obligations
expressly assumed by us in this Agreement.
Upon application to us, we will inform you as to the states in which we
believe the Shares have been qualified for sale under, or are exempt from the
requirements of, the respective "blue sky" laws of such states, but we assume no
responsibility or obligation as to your rights to sell Shares in any state.
Additional copies of the Prospectus and any supplements thereto will be
supplied in reasonable quantities upon request.
Any notice from us to you shall be deemed to have been duly given if
mailed, telephoned or telegraphed to you at the address to which this Agreement
is mailed.
This Agreement shall be construed in accordance with the laws of the
State of Virginia.
Please confirm your agreement hereto by signing and returning the
confirmation accompanying this letter at once to us at Friedman, Billings,
Ramsey & Co., Inc., 1001 Nineteenth Street North, 10th Floor, Arlington,
Virginia 22209. The enclosed duplicate copy will evidence the agreement between
us.
Very truly yours,
Friedman, Billings, Ramsey & Co., Inc.
By:
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Name:
Title:
CONFIRMED AND ACCEPTED
As of the date first above written:
[NAME OF SELECTED DEALER]
By:
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Name:
Title: