Exhibit 1.2
Up to 4,485,000 Shares
(subject to increase up to 5,157,750 shares
in the event of an increase in the pro forma market value
of the Company's Common Stock)
CHARTER FINANCIAL CORP.
(a federally-chartered corporation)
Common Stock
(par value $0.01 per share)
AGENCY AGREEMENT
____________________,2001
Sandler ▇'▇▇▇▇▇ & Partners, L.P.
Two World Trade Center, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
First Charter, MHC, a federal mutual holding company (the "MHC"),
Charter Financial Corp., a federally-chartered corporation (the "Company"), and
CharterBank, a federal savings bank (the "Bank"), hereby confirm their agreement
with Sandler ▇'▇▇▇▇▇ & Partners, L.P. ("Sandler ▇'▇▇▇▇▇" or the "Agent") with
respect to the offer and sale by the Company of 4,485,000 shares (subject to
increase up to 5,157,750 shares in the event of an increase in the pro forma
market value of the Company's Common Stock) 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 reorganization and stock issuance (the "Plan") duly adopted by the Board of
Directors of the Bank pursuant to which the Bank intends to reorganize from a
federally chartered mutual savings bank to a federally chartered stock savings
bank and issue all of its stock to the Company, and the Company will become a
majority-owned subsidiary of the MHC. Pursuant to the Plan, the Company is
offering to the Bank's tax qualified employee benefit plans, including the
Employee Stock Ownership Plan (the "ESOP") (collectively, the "Employee Plans")
and to certain of the Bank's depositors and borrowers rights to subscribe for
the Securities in a subscription offering (the "Subscription Offering"). To the
extent Securities are not subscribed for in the Subscription Offering, such
Securities may be offered to certain members of the general public, with
preference given to certain natural persons residing in ▇▇▇▇▇ and ▇▇▇▇▇▇
Counties, Georgia and Chamber and ▇▇▇ Counties, Alabama, in a direct community
offering (the "Community Offering" and together with the Subscription and
Community 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
Bank and the Company 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," and the reorganization
of the Bank from mutual to stock form, the formation of the MHC, the acquisition
of the capital stock of the Bank by the Company and the Offerings are
hereinafter referred to collectively as the "Reorganization." It is acknowledged
that the number of Securities to be sold in the Reorganization 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
"SEC") a registration statement on Form S-1 (No. 333-____), 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, if
any, and such amended prospectuses as may have been required to the date hereof
by the SEC 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 SEC 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 SEC at the time the Registration
Statement becomes effective (whether or not such revised prospectus is required
to be filed by the Company pursuant to Rule 424(b) of the Securities Act
Regulations), the term "Prospectus" shall refer to such revised prospectus from
and after the time it is first provided to the Agent for such use.
Concurrently with the execution of this Agreement, the Company is
delivering to the Agent copies of the Prospectus of the Company to be used in
the Subscription and Community Offering. Such prospectus contains information
with respect to the Company, the Bank, the MHC and the Common Stock.
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SECTION 1. Representations and Warranties.
(a) The Company, the Bank 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 SEC, no stop order has been issued with respect thereto
and no proceedings therefor have been initiated or, to the knowledge of the
Company, the Bank, and the MHC, threatened by the SEC. 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 Bank, and the MHC acknowledge appears only in the sections
captioned "Market for the Common Stock" and the first two paragraphs of the
section "The Reorganization and the Offering - Marketing Arrangements" of
the Prospectus).
(ii) The Company and the MHC have filed with the
Department of the Treasury, Office of Thrift Supervision (the "OTS") the
Company's and the MHC's application for approval of acquisition of the Bank
(the "Holding Company Application") on Form H-(e)1 promulgated under the
savings and loan holding company provisions of the Home Owners' Loan Act,
as amended ("HOLA") and the regulations promulgated thereunder. The Company
and the MHC have received written notice from the OTS of their approval of
the acquisition of the Bank, such approval remains in full force and effect
and no order has been issued by the OTS suspending or revoking such
approval and no proceedings therefor have been initiated or, to the
knowledge of the Company, the MHC or the Bank, threatened by the OTS. At
the date of such approval and at the Closing Time referred to in Section 2,
the Holding Company Application complied and will comply in all material
respects with the applicable provisions of HOLA and the regulations
promulgated thereunder.
(iii) Pursuant to the rules and regulations of the OTS (the
"OTS Regulations"), the Bank has filed with the OTS a Notice of Mutual
Holding Company Reorganization on Form MHC-1 (the "Form MHC-1") and an
Application for Approval of Minority Stock Issuance by a Savings
Association Subsidiary of a Mutual Holding Company on Form MHC-2 (the "Form
MHC-2"), and has filed such amendments thereto and supplementary materials
as may have been required to the date hereof (such applications, as
3
amended to date, if applicable, and as from time to time amended or
supplemented hereafter, are hereinafter referred to as the "MHC
Application" and, together with the Holding Company Application, the
"Reorganization Application"), including copies of the Bank's Proxy
Statement, dated ______________, 2001, relating to the Reorganization (the
"Proxy Statement"), and the Prospectus. The OTS has, by letter dated
__________, 2001, approved the MHC Application, including the Proxy
Statement 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 Bank or the MHC, 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 OTS Regulations.
(iv) At the time of their use, the Proxy Statement and
any other proxy solicitation materials will comply in all material respects
with the applicable provisions of the OTS Regulations and will not contain
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The Company, the
Bank and the MHC will promptly file the Prospectus and any supplemental
sales literature with the SEC 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 OTS 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.
(v) Neither the SEC 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, or the Bank or the
MHC for use in connection with the Offerings.
(vi) At the Closing Time referred to in Section 2, the
Company, the Bank and the MHC will have completed the conditions precedent
to the Reorganization in accordance with the Plan, the applicable OTS
Regulations and all other applicable laws, regulations, decisions and
orders, including all material terms, conditions, requirements and
provisions precedent to the Reorganization imposed upon the Company, the
Bank or the MHC by the OTS, the Federal Deposit Insurance Corporation (the
"FDIC"), or any other regulatory authority, other than those which the
regulatory authority permits to be completed after the Reorganization.
(vii) RP Financial, LC., which prepared the valuation of
the Bank as part of the Reorganization, has advised the Company, the Bank
and the MHC in writing that it satisfies all requirements for an appraiser
set forth in the OTS Regulations and any interpretations or guidelines
issued by the Superintendent and the FDIC with respect thereto.
(viii) The accountants who certified the consolidated
financial statements and supporting schedules of the Bank included in the
Registration Statement have advised
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the Company, the Bank 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 MHC, the Bank and each
subsidiary of the Bank, independent certified public accountants as
required by the Securities Act and the Securities Act Regulations.
(ix) The only subsidiaries of the Bank are Charter
Holdings, Inc. and Charter Insurance Corporation.
(x) The consolidated financial statements and the
related notes thereto included in the Registration Statement and the
Prospectus present fairly the financial position of the Bank and its
consolidated subsidiaries at the dates indicated and the results of
operations, equity 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 OTS Regulations;
except as otherwise stated in the Registration Statement, said financial
statements have been prepared in conformity with generally accepted
accounting principles 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.
(xi) 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 or business affairs of the
Company, the MHC, the Bank and the Bank's subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and
(B) except for transactions specifically referred to or contemplated in the
Prospectus, there have been no transactions entered into by the Company,
the MHC, the Bank or any of the Bank's subsidiaries, other than those in
the ordinary course of business, which are material with respect to the
Company, the MHC, the Bank and the Bank's subsidiaries, considered as one
enterprise.
(xii) The Company has been duly incorporated and is
validly existing as a corporation 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 States of Georgia and Alabama and in each jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure to
so qualify would not have a material adverse effect on the financial
condition, results of operations or business affairs of the Company, the
MHC, the Bank and the Bank's subsidiaries, considered as one enterprise.
(xiii) 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" (except for subsequent
issuances, if any, pursuant to reservations,
5
agreements or employee benefit plans referred to in the Prospectus); no
shares of Common Stock have been or will be issued and outstanding prior to
the Closing Time referred to in Section 2; at the time of Reorganization,
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.
(xiv) The Bank, as of the date hereof, is a federally
chartered savings bank in mutual form and upon consummation of the
Reorganization will be a federally chartered savings bank in stock form, in
both instances with full corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus; the Company, the MHC, the Bank and the Bank's subsidiaries have
obtained all licenses, permits and other governmental authorizations
currently required for the conduct of their respective businesses or
required for the conduct of their respective businesses as contemplated by
the Holding Company Application and the 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 or business affairs of the Company, the
MHC, the Bank and the Bank's subsidiaries considered as one enterprise; all
such licenses, permits and other governmental authorizations are in full
force and effect and the Company, the MHC, the Bank and the Bank's
subsidiaries are in all material respects in compliance therewith; neither
the Company, the MHC, the Bank nor any of the Bank's subsidiaries has
received notice of any proceeding or action relating to the revocation or
modification of any such license, permit or other governmental
authorization which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, might have a material adverse
effect on the financial condition, results of operations or business
affairs of the Company, the MHC, the Bank and the Bank's subsidiaries,
considered as one enterprise; and the Bank is validly existing under the
laws of the United States and is qualified to transact business as a
foreign corporation in any jurisdiction in which the failure to so qualify
would have a material adverse effect on the financial condition, results of
operations or business affairs of the Company, the MHC, the Bank and the
Bank's subsidiaries considered as one enterprise.
(xv) The deposit accounts of the Bank are insured by the
FDIC up to the applicable limits and upon consummation of the
Reorganization, the liquidation account for the benefit of eligible account
holders and supplemental eligible account holders will be duly established
in accordance with the requirements of the OTS Regulations. The Bank is a
"qualified thrift lender" within the meaning of 12 U.S.C. Section 1467a(m).
(xvi) Upon consummation of the Reorganization, the
authorized capital stock of the Bank will be ________ shares of common
stock, par value $___ per share (the "Bank Common Stock") and ________
shares of preferred stock, par value $____ per share
6
(the "Bank Preferred Stock"), and the issued and outstanding capital stock
of the Bank will be [1,000] shares of Bank Common Stock and no shares of
the Bank Preferred Stock, and no shares of Bank Common Stock or Bank
Preferred Stock have been or will be issued prior to the Closing time
referred to in Section 2; and as of Closing Time referred to in Section 2,
all of the issued and outstanding capital stock of the Bank will be duly
authorized, validly issued and fully paid and nonassessable and have been
issued in compliance with all federal and state securities laws. The shares
of Bank Common Stock to be issued to the Company will have been duly
authorized for issuance and, when issued and delivered by the Bank pursuant
to the Plan against payment of the consideration calculated as set forth in
the Plan and as described in the Prospectus, will be duly and validly
issued and fully paid and nonassessable, and all such Bank Common Stock
will be owned beneficially and of record by the Company free and clear of
any security interest, mortgage, pledge, lien, encumbrance or legal or
equitable claim; the terms and provisions of the Bank Common Stock and the
Bank Preferred Stock conform to all statements relating thereto contained
in the Prospectus, and the certificates representing the shares of the Bank
Common Stock will conform with the requirements of applicable laws and
regulations; and the issuance of the Bank Common Stock is not subject to
preemptive or similar rights.
(xvii) Upon consummation of the Reorganization, the
authorized capital stock of the Company will be 30,000,000 shares of common
stock, par value $0.01 per share (the "Company Common Stock") and 5,000,000
shares of preferred stock, no par value per share (the "Company Preferred
Stock"), and the issued and outstanding capital stock of the Company will
be within the range set forth in the Prospectus and no shares of Company
Common Stock or Company Preferred Stock have been or will be issued prior
to the Closing Time referred to in Section 2; and as of Closing Time
referred to in Section 2, all of the issued and outstanding capital stock
of the Company will be duly authorized, validly issued and fully paid and
nonassessable and have been issued in compliance with all federal and state
securities laws. The shares of Company Common Stock to be issued to the MHC
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 as described in the Prospectus,
will be duly and validly issued and fully paid and nonassessable, and all
such Company Common Stock will be owned beneficially and of record by the
MHC free and clear of any security interest, mortgage, pledge, lien,
encumbrance or legal or equitable claim; the terms and provisions of the
Company Common Stock and the Company Preferred Stock conform to all
statements relating thereto contained in the Prospectus, and the
certificates representing the shares of the Company Common Stock will
conform with the requirements of applicable laws and regulations; and the
issuance of the Company Common Stock is not subject to preemptive or
similar rights.
(xviii) Each direct and indirect subsidiary of the Bank
has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has full
corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Registration Statement and
Prospectus, and is duly qualified to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or
7
leasing of property or the conduct of business, except where the failure to
so qualify would not have a material adverse effect on the financial
condition, results of operations or business affairs of the Company, the
MHC, the Bank and the Bank's subsidiaries considered as one enterprise; the
activities of each such subsidiary are permitted to subsidiaries of a
federally chartered savings bank by the rules, regulations, resolutions and
practices of the OTS; all of the issued and outstanding capital stock of
each such subsidiary has been duly authorized and validly issued, is fully
paid and nonassessable and is owned by the Bank, directly, free and clear
of any security interest, mortgage, pledge, lien, encumbrance or legal or
equitable claim.
(xix) The Company, the MHC and the Bank have taken all
corporate action necessary for them 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 Bank,
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.
(xx) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus and
prior to the Closing Time, except as otherwise may be indicated or
contemplated therein, none of the Company, the MHC, the Bank or any
subsidiary of the Bank 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 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 MHC, the Bank and the Bank's
subsidiaries, taken as a whole, 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.
(xxi) No approval of any regulatory or supervisory or
other public authority is required in connection with the execution and
delivery of this Agreement or the issuance of the Securities that has not
been obtained and a copy of which has been delivered to the Agent, except
as may be required under the securities laws of various jurisdictions.
(xxii) Neither the Company, the MHC, the Bank nor any of
the Bank's subsidiaries is in violation of its certificate of
incorporation, organization certificate, articles of incorporation or
charter, as the case may be, or bylaws (and the Bank will not be in
violation of its charter or bylaws in stock form upon consummation of the
Reorganization); and neither the Company, the MHC, the Bank nor any of the
Bank's subsidiaries 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 MHC, the Bank or
any of the Bank's subsidiaries is
8
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 MHC, the Bank or any of the Bank's
subsidiaries 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 or business of the Company, the
MHC, the Bank and the Bank's subsidiaries considered as one enterprise; and
there are no contracts or documents of the Company, the MHC, the Bank or
any of the Bank's subsidiaries which are required to be filed as exhibits
to the Registration Statement or the Reorganization Application which have
not been so filed.
(xxiii) 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 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 MHC, the Bank or any of the Bank's
subsidiaries pursuant to, any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Company, the MHC,
the Bank or any of the Bank's subsidiaries 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 MHC, the Bank or any of the Bank's subsidiaries 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 or business affairs of the Company, the MHC, the Bank and the
Bank's subsidiaries 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 by-laws of the Company, the MHC, the Bank or any of the Bank's
subsidiaries, or any applicable law, administrative regulation or
administrative or court decree.
(xxiv) No labor dispute with the employees of the
Company, the MHC, the Bank or any of the Bank's subsidiaries exists or, to
the knowledge of the Company, the MHC or the Bank, is imminent or
threatened; and neither the Company, the MHC, the Bank nor any of the
Bank's subsidiaries are 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 or business
affairs of the Company, the MHC, the Bank and the Bank's subsidiaries
considered as one enterprise.
(xxv) Each of the Company, the MHC, the Bank and the
Bank's subsidiaries have good and marketable title to all properties and
assets for which ownership is material to the business of the Company, the
MHC, the Bank or the Bank's subsidiaries 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 MHC, the Bank or the Bank's subsidiaries considered as one enterprise;
and all of the leases and subleases material to the business of the
Company, the MHC, the Bank or the Bank's subsidiaries under which the
Company, the MHC, the Bank or the Bank's subsidiaries hold properties,
including those described in the Prospectus, are valid and binding
agreements of
9
the Company, the MHC, the Bank and the Bank's subsidiaries, 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).
(xxvi) None of the Company, the MHC, the Bank nor the
Bank's subsidiaries are in violation of any directive from the OTS or the
FDIC to make any material change in the method of conducting their
respective businesses; the Bank and its subsidiaries have conducted and are
conducting their business so as to comply in all material respects with all
applicable statutes, regulations and administrative and court decrees
(including, without limitation, all regulations, decisions, directives and
orders of the OTS or the FDIC).
(xxvii) 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 Bank,
threatened, against or affecting the Company, the MHC, the Bank or any of
the Bank's subsidiaries 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 or business affairs of the Company, the MHC, the Bank and the
Bank's subsidiaries 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; all
pending legal or governmental proceedings to which the Company, the MHC,
the Bank or any subsidiary 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, the MHC, the Bank or any of the
Bank's subsidiaries which are required to be filed as exhibits to the
Registration Statement or the Reorganization Application which have not
been so filed.
(xxviii) The Company, the MHC and the Bank have obtained an
opinion of their counsel, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇, with respect to the
legality of the Securities to be issued and the federal income tax
consequences of the Reorganization, and (ii) the opinion of ▇▇▇▇▇▇ & Bird
LLP with respect to the state and local income tax consequences of the
Reorganization (including franchise tax, sales or use tax, license fee on
foreign corporations, stock transfer tax, real property transfer gain tax
and real estate transfer tax), copies of which are filed as exhibits to the
Registration Statement; all material aspects of the aforesaid opinions are
accurately summarized in the Prospectus; the facts and representations upon
which such opinions are based are truthful, accurate and complete in all
material respects; and neither the Bank, the MHC nor the Company has taken
or will take any action inconsistent therewith.
(xxix) The Company is not required to be registered under
the Investment Company Act of 1940, as amended.
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(xxx) All of the loans represented as assets on the
most recent consolidated financial statements or selected consolidated
financial and other data of the Bank included in the Prospectus meet or are
exempt from all requirements of federal, state or local law pertaining to
lending, including without limitation truth in lending (including the
requirements of Regulations Z and 12 C.F.R. Part 226 and Section 563.99),
real estate settlement procedures, consumer credit protection, equal credit
opportunity and all disclosure laws applicable to such loans, except for
violations which, if asserted, would not result in a material adverse
effect on the financial condition, results of operations or business of the
Company, the MHC, the Bank and the Bank's subsidiaries considered as one
enterprise.
(xxxi) To the knowledge of the Company, the MHC and the
Bank, with the exception of the intended loan to the Bank's ESOP by the
Company to enable the ESOP to purchase shares of Common Stock in an amount
of up to 8.0% of 49.9% of the outstanding Common Stock issued in the
Reorganization, none of the Company, the MHC, the Bank or employees of the
Bank has made any payment of funds of the Company, the MHC or the Bank as a
loan for the purchase of the Common Stock or made any other payment of
funds prohibited by law, and no funds have been set aside to be used for
any payment prohibited by law.
(xxxii) The Company, the MHC, the Bank and the Bank's
subsidiaries are in compliance in all material respects with the applicable
financial record keeping and reporting requirements of the Currency and
Foreign Transaction Reporting Act of 1970, as amended, and the rules and
regulations thereunder.
(xxxiii) None of the Company, the MHC, the Bank nor the
Bank's subsidiaries nor any properties owned or operated by the Company,
the MHC, the Bank or the Bank's subsidiaries 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, the Bank and the Bank's
subsidiaries considered as one enterprise. There are no actions, suits or
proceedings, or demands, claims, notices or investigations (including,
without limitation, notices, demand letters or requests for information
from any environmental agency) instituted or pending, or to the knowledge
of the Company, the MHC or the Bank threatened, relating to the liability
of any property owned or operated by the Company, the MHC, the Bank or the
Bank's subsidiaries, 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
11
or dangerous, or otherwise regulated, whether by type or by quantity,
including any material containing any such substance as a component.
(xxxiv) The Company, the MHC, the Bank and the Bank's
subsidiaries 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.
(xxxv) The Company has received approval, subject to
regulatory approval to consummate the Offerings and issuance, to have the
Securities quoted on the National Market System of the National Association
of Securities Dealers' Automated Quotation System ("Nasdaq National
Market") effective as of the Closing Time referred to in Section 2 hereof.
(xxxvi) The Company has filed 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 was
declared effective concurrent with the effectiveness of the Registration
Statement.
(b) Any certificate signed by any officer of the
Company, the MHC or the Bank 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 Bank to each Agent as to the matters covered thereby.
SECTION 2. Appointment of Sandler ▇'▇▇▇▇▇; Sale and
Delivery of the Securities; Closing.
On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
hereby appoints Sandler ▇'▇▇▇▇▇ 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, Sandler ▇'▇▇▇▇▇
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 Sandler ▇'▇▇▇▇▇ pursuant to this appointment include the following: (i)
consulting as to the securities marketing implications of any aspect of the Plan
of Reorganization or related corporate documents; (ii) reviewing with the Board
of Directors the independent appraiser's appraisal of the Common Stock; (iii)
reviewing all offering documents, including the Prospectus, stock order forms
and related offering materials (it being understood that preparation and filing
of such documents is the sole responsibility of the Company, the MHC and the
Bank and their counsel); (iv) assisting in the design and implementation of a
marketing strategy for the Offerings; (v) assisting the Company, the MHC and the
Bank in obtaining all requisite regulatory approvals; (vi) assisting Bank
management in preparing for meetings with potential investors and broker-
12
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) forty-five (45) days after the last day of the
Subscription and Community Offering, unless the Company and the Agent agree in
writing to extend such period and the OTS agrees to extend the period of time in
which the Shares may be sold, or (b) the receipt and acceptance of subscriptions
and purchase orders for all of the Securities, or (c) the completion of the
Syndicated Community Offering.
If any of the Securities remain available after the expiration of the
Subscription and Community Offering, at the request of the Company and subject
to Sandler ▇'▇▇▇▇▇'▇ continued satisfaction of the following conditions (i)
Sandler ▇'▇▇▇▇▇'▇ satisfaction with its investigation of the Bank's business,
financial condition and results of operations, (ii) preparation of offering
materials that are satisfactory to Sandler ▇'▇▇▇▇▇ and its counsel, (iii)
compliance with all relevant legal and regulatory requirements to the reasonable
satisfaction of Sandler ▇'▇▇▇▇▇'▇ counsel, (iv) agreement that the price
established by the independent appraiser is reasonable and (v) market conditions
at the time of the proposed Syndicated Community Offering, Sandler ▇'▇▇▇▇▇ 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. Sandler ▇'▇▇▇▇▇ will endeavor to
limit the aggregate fees to be paid by the Company under any such Selected
Dealers' Agreement to an amount competitive with gross underwriting discounts
charged at such time for underwritings of comparable amounts of stock sold at a
comparable price per share in a similar market environment; provided, however,
that the aggregate fees payable to ▇▇▇▇▇▇ ▇'▇▇▇▇▇ and Selected Dealers shall not
exceed 7.0% of the aggregate Purchase Price of the Securities sold by such
Selected Dealers. ▇▇▇▇▇▇ ▇'▇▇▇▇▇ 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, which may result in
limiting the allocation of stock to certain Selected Dealers. It is understood
that in no event shall Sandler ▇'▇▇▇▇▇ 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 and the Bank as
set forth in Sections 4, 6(a) and 7 hereof and the obligations of the Agent as
provided in Sections 6(b) and 7 hereof. Appropriate arrangements for placing
the funds received from subscriptions for Securities or other offers to purchase
Securities in special interest-bearing accounts with the Bank until all
Securities are sold and paid for were made prior to the commencement of the
Subscription Offering, with provision for refund to the purchasers as set forth
above, or for delivery to the Company if all Securities are sold.
13
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
Washington, D.C. offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Wood, at __:___ __.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.
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 fee of one and one-quarter percent (1.25%) of the aggregate
Actual Purchase Price (as defined in the Prospectus) of the Securities sold
in the Subscription and Community Offering, excluding in each case shares
purchased by (i) any employee benefit plan of the Company, the MHC or the
Bank established for the benefit of their respective directors, officers
and employees and (ii) any director, officer or employee of the Company,
the MHC or the Bank or members of their immediate families (which term
shall mean parents, grandparents, spouse, siblings, children and
grandchildren);
(b) with respect to any Securities sold by an NASD member firm
(other than Sandler ▇'▇▇▇▇▇) under the Selected Dealers' Agreement in the
Syndicated Community Offering, (i) the compensation payable to Selected
Dealers under any Selected Dealers' Agreement, (ii) any sponsoring dealer's
fees; and (iii) a management fee to Sandler ▇'▇▇▇▇▇ of one and one-quarter
percent (1.25%). Any fees payable to Sandler ▇'▇▇▇▇▇ for Securities sold by
Sandler ▇'▇▇▇▇▇ under any such agreement shall be limited to an aggregate
of two and one-half percent (2.5%) of the Actual Purchase Price of such
Securities; and
(c) with respect to the performance of the following services as
conversion agent (i) consolidation of accounts and development of a central
file, (ii) preparation of proxy, order and/or request Forms, (iii)
organization and supervision of the conversion center, (iv) proxy
solicitation and special meeting services and (v) subscription services,
Sandler ▇'▇▇▇▇▇ shall receive a fee of $15,000.
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 Sandler ▇'▇▇▇▇▇; however, the
Company shall reimburse the Agent for all of its
14
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. In recognition of the long lead times involved
in the Reorganization process, the Bank has previously made an advance payment
to the Agent in the amount of $25,000, which shall be credited against any fees
or reimbursement of expenses payable hereunder.
SECTION 3. Covenants of the Company, the Bank and the MHC. The
Company, the Bank and the MHC covenant with the Agent as follows:
(a) The Company, the Bank and the MHC will prepare and file such
amendments or supplements to the Registration Statement, the Prospectus,
the Reorganization Application and the Proxy Statement as may hereafter be
required by the Securities Act Regulations or the OTS Regulations or as may
hereafter be requested by the Agent. Following completion of the
Subscription and Community Offering, in the event of a Syndicated Community
Offering, the Company will (i) promptly prepare and file with the SEC a
post-effective amendment to the Registration Statement relating to the
results of the Subscription and Community Offering, any additional
information with respect to the proposed plan of distribution and any
revision to the number of Securities to be sold in the Reorganization or
(ii) if no such post-effective amendment is required, will file with, or
mail for filing to, the SEC 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 MHC and the Bank will notify the Agent immediately,
and confirm the notice in writing, (i) of the effectiveness of any post-
effective amendment of the Registration Statement, the filing of any
supplement to the Prospectus and the filing of any amendment to the
Reorganization Application, (ii) of the receipt of any comments from the
OTS or the SEC with respect to the transactions contemplated by this
Agreement or the Plan, (iii) of any request by the SEC or the OTS for any
amendment to the Registration Statement or the Reorganization 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 SEC 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 Bank
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 Bank and the MHC will give the Agent notice of
its intention to file or prepare any amendment to the Reorganization
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
15
connection with the Syndicated Community Offering of the Securities which
differs from the prospectus on file at the SEC at the time the Registration
Statement becomes effective, whether or not such revised prospectus is
required to be filed pursuant to Rule 424(b) of the Securities Act
Regulations), will furnish the Agent with copies of any such amendment or
supplement a reasonable amount of time prior to such proposed filing or
use, as the case may be, and will not file any such amendment or supplement
or use any such prospectus to which the Agent or counsel for the Agent may
object.
(c) The Company, the Bank and the MHC will deliver to the Agent as
many signed copies and as many conformed copies of the Reorganization
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.
(d) During the period when the Prospectus is required to be
delivered, the Company, and the Bank and the MHC will comply, at their own
expense, with all requirements imposed upon them by the OTS, by the
applicable OTS Regulations, as from time to time in force, and by the
Securities Act, the Securities Act Regulations, the Exchange Act, and the
rules and regulations of the SEC 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 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 will furnish to the Agent a reasonable number of copies of such
amendment or supplement. For the purpose of this subsection, the Company,
the Bank 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 will take all necessary action, in cooperation with
the Agent, to qualify the Securities for offering and sale under the
applicable securities laws of such states of the United States and other
jurisdictions as the OTS Regulations may require and as the Agent and the
Company have agreed; provided, however, that neither the Company, the Bank
nor the MHC shall be obligated to file any general consent to service of
process or to qualify as a foreign corporation in any jurisdiction in which
it is not so qualified. In each jurisdiction in which the Securities have
been so qualified, the Company will file such statements and reports as may
be required by the laws of such jurisdiction to continue such
16
qualification in effect for a period of not less than one year from the
effective date of the Registration Statement.
(g) The Company authorizes Sandler ▇'▇▇▇▇▇ 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 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) During the period ending on the third anniversary of the
expiration of the fiscal year during which the closing of the transactions
contemplated hereby occurs, the Company will furnish to its stockholders as
soon as practicable after the end of each such fiscal year an annual report
(including consolidated statements of financial condition and consolidated
statements of income, stockholders' equity and cash flows, certified by
independent public accountants) and, as soon as practicable after the end
of each of the first three quarters of each fiscal year (beginning with the
fiscal quarter ending after the effective date of the Registration
Statement), consolidated summary financial information of the Company, the
Bank and the Bank's subsidiaries 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) During the period ending on the third anniversary of the
expiration of the fiscal year during which the closing of the transactions
contemplated hereby occurs, the Company will furnish to the Agent (i) as
soon as publicly available, a copy of each report or other document of the
Company furnished generally to stockholders of the Company or furnished to
or filed with the SEC 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 Bank and the MHC will conduct the
Reorganization in all material respects in accordance with the Plan, the
OTS Regulations and all other applicable regulations, decisions and orders,
including all applicable terms, requirements and conditions precedent to
the Reorganization imposed upon the Company, the MHC or the Bank by the
OTS.
17
(l) The Company, the Bank 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 report the use of proceeds from the offerings
on its first periodic report filed with the SEC pursuant to Section 13(a)
or 15(d) of the Exchange Act and on any subsequent periodic reports as may
be required pursuant to Rule 463 of the Securities Act Regulations.
(n) The Company will maintain the effectiveness of the Exchange Act
Registration Statement for not less than three years. The Company will use
its best efforts to effect the listing of the Common Stock on the Nasdaq
National Market System. 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.
(o) The Company 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."
(p) 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.
(q) During the period beginning on the date hereof and ending on the
later of the third anniversary of the Closing Time or the date on which the
Agent receives full payment in satisfaction of any claim for
indemnification or contribution to which it may be entitled pursuant to
Sections 6 or 7, respectively, neither the Company, the MHC nor the Bank
shall, without the prior written consent of the Agent, take or permit to be
taken any action that could result in the Bank Common Stock becoming
subject to any security interest, mortgage, pledge, lien or encumbrance.
(r) The Company, the MHC and the Bank will comply with the
conditions imposed by or agreed to with the OTS in connection with its
approval of the Holding Company Application and the MHC Application.
(s) During the period ending on the first anniversary of the Closing
Time, the Bank will comply with all applicable law and regulation necessary
for the Bank to continue to be a "qualified thrift lender" within the
meaning of 12 U.S.C. Section 1467a(m).
18
(t) The Company shall not deliver the Securities until the Company
and the Bank have satisfied each condition set forth in Section 5 hereof,
unless such condition is waived by the Agent.
(u) The Company or the Bank will furnish to Sandler ▇'▇▇▇▇▇ 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 Bank and the Subsidiaries
which have been read by KPMG LLP, as stated in their letters to be
furnished pursuant to subsections (e) and (f) of Section 5 hereof.
SECTION 4. Payment of Expenses. The Company, the MHC and the Bank
jointly and severally agree to pay all expenses incident to the performance of
their obligations under this Agreement, including but not limited to (i) the
cost of obtaining all securities and bank regulatory approvals, (ii) the
preparation, printing and filing of the Registration Statement, the Holding
Company Application and the MHC Application, each 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, the MHC's and the Bank'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 listing of the Securities on the Nasdaq
National Market. In the event the Agent incurs any such fees and expenses on
behalf of the Bank, the MHC or the Company, the Bank 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 of the Bank, the MHC or the Company pursuant to this Section without the
prior approval of the Bank.
The Company and the Bank jointly and severally agree to pay certain
expenses incident to the performance of the Agent's obligations under this
Agreement, regardless of whether the 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, legal fees and expenses (up to a
maximum of $75,000, excluding fees and expenses of such counsel relating to the
qualification of the Securities under securities laws in accordance with the
provisions of Section 3(f) hereof), advertising, promotional, syndication, and
travel expenses. 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 or the Bank of a written accounting therefor setting
forth in reasonable detail the expenses incurred by the Agent.
SECTION 5. Conditions of Agent's Obligations. The Company, the MHC,
the Bank and the Agent agree that the issuance and the sale of Securities and
all obligations of the
19
Agent hereunder are subject to the accuracy of the representations and
warranties of the Company, the MHC and the Bank herein contained as of the date
hereof and the Closing Time, to the accuracy of the statements of officers and
directors of the Company, the MHC and the Bank made pursuant to the provisions
hereof, to the performance by the Company, the MHC and the Bank of their
obligations hereunder, and to the following further conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued under the Securities Act or proceedings
therefor initiated or threatened by the SEC, 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
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Wood, counsel for the Company, the MHC and the
Bank, 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 federal stock corporation under the laws of the
United States, and the MHC has been duly incorporated and is
validly existing as a federal mutual holding company under the
laws of the United States.
(ii) Each of the Company and the MHC 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) Each of the Company and the MHC is duly qualified as a
foreign corporation to transact business and is in good standing
in the States of Georgia and Alabama 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 or business affairs of the Company, the MHC, the Bank
and the Bank's subsidiaries, 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
20
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) The Bank has been at all times since 1954 and prior to
the Closing Time duly organized and validly existing under the
laws of the United States of America as a federally chartered
savings bank of mutual form, and, at Closing Time, has become
duly organized and validly existing under the laws of the United
States of America as a federally chartered savings bank of stock
form, in both instances 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 Bank is duly qualified as a foreign
corporation in each jurisdiction in which the failure to so
qualify would have a material adverse effect upon the financial
condition, results of operations or business affairs of the Bank.
(viii) The Bank is a member of the Federal Home Loan Bank of
Atlanta and the deposit accounts of the Bank are insured by the
FDIC up to the applicable limits.
(ix) Each direct and indirect subsidiary of the Bank has
been duly incorporated and is validly existing as a corporation
in good standing under the laws of the jurisdiction of its
incorporation, has full corporate power and authority to own,
lease and operate its properties and to conduct its business as
described in the Registration Statement and 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 or business of the Company, the
MHC, the Bank and the Bank's subsidiaries, taken as a whole; the
activities of each such subsidiary are permitted to subsidiaries
of a savings association holding company and of a federally
chartered savings bank by the rules, regulations, resolutions and
practices of the OTS; all of the issued and outstanding capital
stock of each such subsidiary has been duly authorized and
validly issued, is fully paid and non-assessable and is owned by
the Bank, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or
equity.
(x) Upon consummation of the Reorganization, all of the
issued and outstanding capital stock of the Bank 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
21
owned beneficially and of record by the Company free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim
or equity.
(xi) The OTS has duly approved the Holding Company
Application and the MHC Application and no action is pending, or
to the best of such counsel's knowledge, threatened respecting
the Holding Company Application or the MHC Application or the
acquisition by the Company of all of the Bank's issued and
outstanding capital stock; the Holding Company Application and
the MHC Application comply 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 and
information, truthful, accurate and complete; the Company is duly
authorized to become a savings association holding company and is
duly authorized to own all of the issued and outstanding capital
stock of the Bank to be issued pursuant to the Plan; and the MHC
is duly authorized to become a federal mutual holding company and
is duly authorized to own a majority of the issued and
outstanding capital stock of the Company.
(xii) 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 MHC and the Bank, and this
Agreement constitutes the legal, valid and binding agreement of
each of the Company, the MHC and the Bank, 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 by-laws of the Company, the MHC, the Bank or any of the Bank's
subsidiaries; 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 aggregate,
would have a material adverse effect on the financial condition,
results of operations or business affairs of the Company, the
MHC, the Bank and the Bank's subsidiaries considered as one
enterprise, upon any property or assets of the Company, the MHC,
the Bank or the Bank's subsidiaries pursuant to any contract,
indenture, mortgage, loan agreement, note, lease or other
instrument to which the Company, the MHC, the Bank or the Bank's
subsidiaries 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,
the Bank or the Bank's subsidiaries is subject.
(xiii) The Prospectus has been duly authorized by the OTS for
final use pursuant to the OTS Regulations and no action is
pending, or to the best
22
of such counsel's knowledge, is threatened, by the OTS to revoke
such authorization.
(xiv) 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, proceedings
therefor initiated or threatened by the SEC.
(xv) 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.
(xvi) 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 OTS Regulations.
(xvii) 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.
(xviii) There are no legal or governmental proceedings
pending or threatened against or affecting the Company, the MHC,
the Bank or the Bank's subsidiaries which are required,
individually or in the aggregate, to be 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, the Bank or any of the Bank's
subsidiaries 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.
(xix) The information in the Prospectus under "Our Policy
Regarding Dividends," "Business of CharterBank - Legal
Proceedings," "Regulation of CharterBank and Charter Financial -
Taxation," "The Reorganization and the Offering - Effects of
Reorganization," "- Liquidation Rights," and "- Tax Aspects,"
"Restrictions on Acquisitions of Charter Financial and
CharterBank" and "Description of Capital Stock of Charter
Financial," to the extent that it constitutes matters of law,
summaries of legal
23
matters, documents or proceedings, or legal conclusions, has been
reviewed by them and is complete and accurate in all material
respects.
(xx) 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.
(xxi) The Plan has been duly authorized by the Boards of
Directors of the Company, the MHC, the Bank and, the OTS's
approval of the Plan remains in full force and effect; the Bank's
charter has been amended, effective upon consummation of the
Reorganization and the filing of such amended charter with the
OTS, to authorize the issuance of permanent capital stock; to the
best of such counsel's knowledge, the Company, the MHC and the
Bank have conducted the Reorganization in all material respects
in accordance with applicable requirements of the OTS
Regulations, the Plan and all other applicable regulations,
decisions and orders thereunder, including all material
applicable terms, conditions, requirements and conditions
precedent to the Reorganization imposed upon the Company, the MHC
or the Bank by the OTS and, no order has been issued by the OTS
to suspend the Reorganization or 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, no person has sought to
obtain review of the final action of the OTS in approving the MHC
Application or the Holding Company Application.
(xxii) To the best of such counsel's knowledge, the Company,
the MHC and the Bank and the Bank's subsidiaries 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 Prospectus, and
all such licenses, permits and other governmental authorizations
are in full force and effect, and the Company, the MHC and the
Bank and the Bank's subsidiaries are in all material respects
complying therewith.
(xxiii) Neither the Company, the MHC, the Bank nor any of
the Bank's subsidiaries is in violation of its certificate of
incorporation, organization certificate, articles of
incorporation or charter, as the case may
24
be, or bylaws (and the Bank will not be in violation of its
charter in stock form upon consummation of the Reorganization)
or, to the best of such counsel's knowledge, 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 MHC, the Bank or any
of the Bank's subsidiaries is a party or by which the Company,
the MHC, the Bank or any of the Bank's subsidiaries or any of
their property may be bound.
(xxiv) The Company is not required to be registered as an
investment company under the Investment Company Act of 1940.
(xxv) The Bank is a "qualified thrift lender" within the meaning
of 12 U.S.C. Section 1467a(m).
(2) The favorable opinion, dated as of Closing Time, of
▇▇▇▇▇▇▇ Spidi & ▇▇▇▇▇, PC, 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), (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, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇ and
▇▇▇▇▇▇▇ Spidi & ▇▇▇▇▇, PC 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, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Wood and
▇▇▇▇▇▇▇ Spidi & ▇▇▇▇▇, PC may rely as to matters of fact on
certificates of officers and directors of the Company, the MHC and the
Bank and certificates of public officials, and as to certain matters
of Georgia and Alabama law upon the opinion of [▇▇▇▇▇▇ & Bird LLC],
which opinions shall be in form and substance satisfactory to counsel
for the Agent, and ▇▇▇▇▇▇▇ Spidi & ▇▇▇▇▇, PC may also rely on the
opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Wood.
(c) At Closing Time referred to in Section 2, the Company, the MHC
and the Bank shall have completed in all material respects the conditions
precedent to the Reorganization in accordance with the Plan, the applicable
OTS Regulations and all other
25
applicable laws, regulations, decisions and orders, including all terms,
conditions, requirements and provisions precedent to the Reorganization
imposed upon the Company, the MHC or the Bank by the OTS, or any other
regulatory authority other than those which the OTS permits to be completed
after the 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 or business affairs of the
Company, the MHC, the Bank and the Bank's subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and
the Agent shall have received a certificate of the President and Chief
Executive Officer of the Company, the MHC and the Bank, and the chief
financial or chief accounting officer of the Company, the MHC and of the
Bank, dated as of Closing Time, to the effect that (i) there has been no
such material adverse change, (ii) there shall have been no material
transaction entered into by the Company, the MHC or the Bank from the
latest date as of which the financial condition of the Company, the MHC or
the Bank as set forth in the Registration Statement and the Prospectus
other than transactions referred to or contemplated therein and
transactions in the ordinary cause of business, (iii) neither the Company,
the MHC nor the Bank 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, financial condition or results of operations of the
Company, the MHC the Bank or the Bank's subsidiaries, (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 MHC and the Bank have complied with all
agreements and satisfied all conditions on their part to be performed or
satisfied at or prior to Closing Time, (vi) no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been initiated or threatened by the SEC
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 accordance with the OTS Regulations nor has any
person sought to obtain regulatory or judicial review of the action of the
OTS in approving the Holding Company Application.
(e) At the time of the execution of this Agreement, the Agent shall
have received from KPMG LLP 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 MHC, the Bank and the
Bank's subsidiaries within the meaning of the Code of Ethics of the
American Institute of Certified Public Accountants, the Securities Act and
the Securities Act Regulations and the OTS Regulations; (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 KPMG LLP set forth
26
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 Bank and its subsidiaries included in the Registration
Statement do not comply as to form in all material respects with the
applicable accounting requirements of the Securities Act, the Securities
Act Regulations and the OTS Regulations or are not presented in conformity
with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements
included in the Registration Statement and the Prospectus, (B) the
unaudited amounts of net interest income and net income set forth under
"Selected Consolidated Financial and Other Data" in the 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 Bank and its subsidiaries
or any decrease in consolidated total assets, the allowance for loan
losses, total deposits or net worth of the Bank and its subsidiaries, in
each case as compared with the amounts shown in the December 31, 2000
balance sheet included in the Registration Statement or, (D) during the
period from December 31, 2000 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 Bank and its
subsidiaries, 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 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 MHC, the Bank and the
Bank's subsidiaries identified in such letter.
(f) At Closing Time, the Agent shall have received from KPMG LLP a
letter, dated as of Closing Time, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection (d) of this
Section, except that the specified date referred to shall be a date not
more than five days prior to Closing Time.
(g) At Closing Time, the Securities shall have been approved for
listing on the Nasdaq National Market upon notice of issuance.
(h) At Closing Time, the Agent shall have received a letter from RP
Financial, LC., dated as of the Closing Time, confirming its appraisal.
(i) 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
27
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.
(j) 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 SEC or any other governmental authority, and a banking moratorium shall
not have been declared by either Federal or New York authorities.
28
SECTION 6. Indemnification.
(a) The Company, the MHC and the Bank, jointly and severally, agree
to indemnify and hold harmless the Agent, each person, if any, who controls the
Agent, within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, and its respective partners, directors, officers, employees
and agents as follows:
(i) from and against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, related to or arising out of the
Reorganization or any action taken by the Agent where acting as agent of
the Company, the MHC or the Bank or otherwise as described in Section 2
hereof; provided, however, that this indemnity agreement shall not apply to
any loss, liability, claim, damage or expense found in a final judgment by
a court of competent jurisdiction to have resulted primarily from the bad
faith, willful misconduct or gross negligence of the Agent seeking
indemnification hereunder.
(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;
(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 MHC or the Bank,
which consent shall not be unreasonably withheld; and
(iv) from and against any and all expense whatsoever, as incurred
(including, subject to Section 6(c) hereof, the fees and disbursements of
counsel chosen by the Agent), reasonably incurred in investigating,
preparing 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
29
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.
(b) The Agent agrees to indemnify and hold harmless the Company, the
Bank, the MHC, their directors, each of their officers who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act against any and all loss, liability, claim, damage and expense described in
the indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, of a material fact made in the Prospectus (or any amendment or
supplement thereto) 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 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 MHC and the Bank also agree that the Agent shall
not have any liability (whether direct or indirect, in contract or tort or
otherwise) to the Company, the Bank, the MHC, members of the MHC, security
holders of the Company or the Bank's, the MHC 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 MHC, the Bank, the Agent or any of its
respective affiliates or any participant in the transactions contemplated hereby
in which the Agent or such person or agent is not named as a defendant, the
Company, the MHC and the Bank 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
30
for any reason held to be unenforceable by the indemnified parties although
applicable in accordance with its terms, the Company, the MHC, the Bank and the
Agent shall contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by said indemnity agreement incurred by the
Company, the MHC or the Bank and the Agent, as incurred, in such proportions (i)
that the Agent is responsible for that portion represented by the percentage
that the maximum aggregate marketing fees appearing on the cover page of the
Prospectus bears to the maximum aggregate gross proceeds appearing thereon and
the Company, the MHC and the Bank are jointly and severally responsible for the
balance or (ii) if, but only if, the allocation provided for in clause (i) is
for any reason held unenforceable, in such proportion as is appropriate to
reflect not only the relative benefits to the Company, the MHC and the Bank on
the one hand and the Agent on the other, as reflected in clause (i), but also
the relative fault of the Company, the MHC and the Bank on the one hand and the
Agent on the other, as well as any other relevant equitable considerations;
provided, however, that no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section, each person, if any, who
controls the Agent within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act shall have the same rights to contribution as the
Agent, and each director of the Company, the MHC or the Bank, each officer of
the Company who signed the Registration Statement, and each person, if any, who
controls the Company, the MHC or the Bank within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act shall have the same rights
to contribution as the Company, the MHC and the Bank. Notwithstanding anything
to the contrary set forth herein, to the extent permitted by applicable law, in
no event shall the Agent be required to contribute an aggregate amount in excess
of the aggregate marketing fees to which the Agent is entitled and actually paid
pursuant to this Agreement.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement, or contained in certificates of officers of the Company, the MHC or
the Bank submitted pursuant hereto, shall remain operative and in full force and
effect, regardless of any investigation made by or on behalf of any Agent or
controlling person, or by or on behalf of the Company, the MHC or the Bank 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 or business affairs of the Company, the MHC,
the Bank or the Bank's subsidiaries, or the Company, the MHC, the Bank and the
Bank's subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (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
31
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 SEC or any other
governmental authority, or if a banking moratorium has been declared by either
Federal or New York 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 MHC or the Bank or the prospective market for the Company's
securities as in the Agent's good faith opinion would make it inadvisable to
proceed with the offering, sale or delivery of the Securities; (vi) if, in the
Agent's good faith opinion, the price for the Securities established by RP
Financial, LC. is not reasonable or equitable under then prevailing market
conditions, or (vii) if the Reorganization is not consummated on or prior to
_________, 2001.
(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 Section 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 Two World Trade Center, 104th Floor, New York,
New York 10048, attention of ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Principal, with a copy to ▇▇▇▇
▇. Spidi, Esq., ▇▇▇▇▇▇▇ Spidi & ▇▇▇▇▇, PC, ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇; notices to the Company, the MHC and the Bank shall
be directed to any of them at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
attention of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President and CEO, with a copy to V. ▇▇▇▇▇▇
▇▇▇▇▇▇▇, Esq., ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇.
SECTION 11. Parties. This Agreement shall inure to the benefit of and
be binding upon the Agent, the Company, the MHC and the Bank and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Agent, the Company, the MHC and the Bank and their respective
successors and the controlling persons 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 MHC and the Bank and their respective
successors, and said controlling persons 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 March 1, 2001 by and
between the Agent and the Company, the MHC and the Bank, relating to the Agent's
providing Reorganization agent services to the Company, the MHC and the
32
Bank in connection with the Reorganization. No waiver, amendment or other
modification of this Agreement shall be effective unless in writing and signed
by the parties hereto.
SECTION 13. Governing Law and Time. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York applicable
to agreements made and to be performed in said State without regard to the
conflicts of laws provisions thereof. Unless otherwise noted, specified times of
day refer to Eastern time.
SECTION 14. Severability. Any term or provision of this Agreement
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.
33
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 Bank in accordance with its
terms.
Very truly yours,
CHARTER FINANCIAL CORP.
By: _______________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Executive Officer
CHARTERBANK
By: _______________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Executive Officer
FIRST CHARTER, MHC
By: _______________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Executive Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
Sandler ▇'▇▇▇▇▇ & Partners, L.P.
By: Sandler ▇'▇▇▇▇▇ & Partners Corp.,
the sole general partner
By: _________________________________
Vice President
34
EXHIBIT A
CHARTER FINANCIAL CORP.
(a federally-chartered corporation)
Up to 4,485,000 Shares
(subject to increase up to 5,157,750 shares
in the event of an increase in the pro forma market value
of the Company's Common Stock)
Common Stock
(Par Value $0.01 Per Share)
SELECTED DEALER'S AGREEMENT
______________, 2001
Ladies and Gentlemen:
We have agreed to assist Charter Financial Corp. (the "Company") in connection
with the offer for sale and issuance of shares (the "Shares") of common stock,
par value $0.01 per share, of the Company, to be issued in connection with the
plan of reorganization and stock issuance (the "Plan") duly adopted by the Board
of Directors of CharterBank, a federal savings bank (the "Bank"), pursuant to
which the Bank intends to reorganize from a federally chartered mutual savings
bank to a federally chartered stock savings bank and issue all of its stock to
the Company, and the Company will become a majority-owned subsidiary of First
Charter, MHC. The Company, in connection with the Plan, offered for sale up to
5,157,750 shares for subscription by the Bank's tax qualified employee benefit
plans, including the Employee Stock Ownership Plan, and to certain of the Bank's
depositors and borrowers rights to subscribe for the Shares in a subscription
offering, and certain members of the general public in a concurrent community
offering. The shares which were not subscribed for pursuant to such subscription
and community offerings are being offered to the public in a syndicated
community offering (the "Syndicated Community Offering") in accordance with the
rules of the Office of Thrift Supervision ("OTS"). The Shares 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
A-1
accompanying the funds transmitted for payment therefor (whether in the form of
a check payable to the Bank or a withdrawal from an existing account at the
Bank) 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
Bank 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
Bank 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 Section 24 of
Article III of the NASD's Rules of Fair Practice, 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 resident therein and (B) in making other sales to comply
with the above-mentioned NASD Interpretation, Sections 8, 24 and 36 of the
above-mentioned Article III as if they were NASD members and Section 25 of such
Article III 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 Bank or by us to give any information or make any
representations other than those contained in the Prospectus in connection with
the offering and 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 stabilizing (as defined in
Regulation M promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) with respect to the Company's common stock during the
offering.
A-2
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 OTS. In addition, we and each Selected
Dealer confirm that the Securities and Exchange Commission (the "SEC")
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 at least 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 SEC 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 p.m. on the
business day following receipt or execution of an order form by us to the Bank
for deposit in a segregated account as agent or trustee for the customer 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 or
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 third 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 Bank on or before 12:00 p.m. 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
A-3
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 New York.
Please confirm your agreement hereto by signing and returning the confirmation
accompanying this letter at once to us at Sandler ▇'▇▇▇▇▇ & Partners, L.P., ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. The enclosed
duplicate copy will evidence the agreement between us.
Very truly yours,
SANDLER ▇'▇▇▇▇▇ & PARTNERS, L.P.
By: _______________________________
Sandler ▇'▇▇▇▇▇ & Partners, L.P.
Two World Trade Center - ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Charter Financial Corp.
-----------------------
Ladies and Gentlemen:
We hereby confirm our agreement to all the terms and conditions stated in the
foregoing letter. We acknowledge receipt of the Prospectus relating to the
Shares and we further state that in agreeing thereto we have relied upon the
Prospectus and no other statement whatsoever, written or oral. We confirm that
we are (i) a member on good standing of the National Association of Securities
Dealers, Inc. ("NASD"), and 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 Section 24 of Article III of the NASD's Rules
of Fair Practice, or (ii) a foreign dealer not eligible for membership in the
NASD and agree (A) not to sell any Shares of Charter Financial Corp. within the
United States, its territories or possessions or to persons who are citizens
thereof or resident therein and (B) in making other sales to comply with the
above-mentioned NASD Interpretation, Section 8, 24 and 26 of the above-mentioned
Article III as if we were an NASD member and Section 25 of such Article III as
it applies to a non-member broker or dealer in a foreign country.
[__] We wish to become a "Sponsoring Dealer."
Dated: ______________________
______________________________________
(Please print or type name of firm
By: ______________________________________
