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EXHIBIT 1.2
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FINGER LAKES BANCORP, INC.
Up to 2,155,593 Shares
(Anticipated Maximum)
COMMON STOCK
($.01 Par Value)
Subscription Price $7.00 Per Share
AGENCY AGREEMENT
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September ________, 2000
Friedman, Billings, Ramsey & Co., Inc.
1001 Nineteenth Street North
Arlington, Virginia 22209
Ladies and Gentlemen:
The Primary Parties, e.g. Finger Lakes Bancorp, Inc. a Delaware corporation
(the "Company"), Finger Lakes Financial Corporation, MHC (the "MHC"), Finger
Lakes Financial Corp. (Finger Lakes Financial"), a federally chartered
corporation owning all of the stock of Savings Bank of the Finger Lakes (the
"Mid-Tier Company") and Savings Bank of the Finger Lakes, Geneva, New York, a
federal stock savings bank (the "Bank"), with its deposit accounts insured by
the Savings Association Insurance Fund ("SAIF") administered by the Federal
Deposit Insurance Corporation ("FDIC"), hereby confirm their agreement with
Friedman, Billings, Ramsey & Co., Inc. (the "Agent") as follows (defined terms
used herein shall have the same definition given in the Prospectus dated
September ______, 2000, unless otherwise defined herein):
Section 1. The Offering. The MHC will convert (the "Conversion") from a
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federally chartered mutual holding company to a Delaware chartered stock
corporation (the "Company").. In connection with the Conversion, each
stockholder of Finger Lakes Financial immediately
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prior to the Conversion ("Public Stockholders") will receive Exchange Shares of
the Company's common stock ("Common Stock," or "Shares") pursuant to a ratio
that will result in Public Stockholders owning in the aggregate immediately
after the Conversion the same percentage of the outstanding shares of Common
Stock, before giving effect to (a) the payment of cash in lieu of fractional
shares; (b) the purchase by such stockholders of additional shares of Common
Stock in the Offering; and (c) subject to an adjustment by the OTS to reflect
the MHC's waiver of certain dividends declared by the Bank in the amount of
$______ million.
Pursuant to the Plan and in connection with the Conversion, the Company is
offering up to 2,155,593 shares of its common stock (the "Conversion Stock") in
a subscription and community offering (the "Offerings"). Conversion Stock is
first being offered in a subscription offering with nontransferable subscription
rights being granted, in the following order of priority, to (i) depositors of
the Bank with account balances of $50.00 or more as of the close of business on
December 31, 1998 ("Eligible Account Holders"); (ii) the employee plans of the
Company, including the Employee Stock Ownership Plan ("ESOP"); (iii) depositors
of the Bank with account balances of $50.00 or more as of the close of business
on June 30, 2000 ("Supplemental Eligible Account Holders") and (iv) depositors
of the Bank as of the close of business on _______________, 2000 (other than
Eligible Account Holders and Supplemental Eligible Account Holders).
Subscription rights will expire if not exercised by Noon, New York time, on
October ___________, 2000, unless extended.
Subject to the prior rights of holders of subscription rights, Conversion
Stock not subscribed for in the Subscription Offering is being offered in the
Community Offering to certain members of the general public to whom a copy of
the Prospectus is delivered, with preference given to natural persons residing
in the Community. The Primary Parties reserve the absolute right to reject or
accept any orders in the Community Offering in whole or in part, either at the
time of receipt of an order or as soon as practicable following the Expiration
Date.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (File No. 333-33418) (the
"Registration Statement") containing a prospectus relating to the Offerings for
the registration of the Shares under the Securities Act of 1933 (the "1933
Act"), and has filed such amendments thereof, if any, and such amended
prospectuses as may have been required to the date hereof. The prospectus, as
amended, on file with the Commission at the time the Registration Statement
initially became effective is hereinafter called the "Prospectus," except that
if any prospectus is filed by the Company pursuant to Rule 424(b) or (c) of the
rules and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations") differing from the prospectus on file at the time the
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Registration Statement initially becomes effective, the term "Prospectus" shall
refer to the prospectus filed pursuant to Rule 424(b) or (c) from and after the
time said prospectus is filed with the Commission.
In accordance with the regulations of the Office of Thrift Supervision
("OTS") governing the conversions of savings associations (the "Conversion
Regulations"), the MHC has filed with the OTS an Application for Conversion on
Form AC (the "Conversion Application"), including the prospectus, and has filed
such amendments thereto, if any, as may have been required by the OTS. The
Conversion Application has been approved by the OTS and the related Prospectus
has been authorized for use by the OTS.
Section 2. Retention of the Agent; Compensation; Sale and Delivery of the
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Shares. Subject to the terms and conditions herein set forth, the Company, the
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MHC and the Bank hereby appoint the Agent as their financial advisor and
marketing agent to utilize its best efforts to solicit subscriptions for Shares
of the Company's Common Stock and to advise and assist the Company and the Bank
with respect to the Company's sale of the Shares in the Offerings and in the
areas of market making, research coverage and syndicate formation (if
necessary).
On the basis of the representations, warranties, and agreements herein
contained, but subject to the terms and conditions herein set forth, the Agent
accepts such appointment and agrees to consult with and advise the Company, the
MHC and the Bank as to the matters set forth in the letter agreement ("Letter
Agreement"), dated February 4, 2000, between the Bank and the Agent (a copy of
which is attached hereto as Exhibit A). It is acknowledged by the Company, the
MHC and the Bank that the Agent shall not be required to purchase any Shares and
shall not be obligated to take any action which is inconsistent with all
applicable laws, regulations, decisions or orders. In the event of a Community
Offering, the Agent will assemble and manage a selling group of broker-dealers
which are members of the National Association of Securities Dealers, Inc. (the
"NASD") to participate in the solicitation of purchase orders for shares under a
selected dealers' agreement ("Selected Dealers' Agreement"), the form of which
is set forth as Exhibit B to this Agreement.
The obligations of the Agent pursuant to this Agreement shall terminate
upon the completion or termination or abandonment of the Plan by the Company or
upon termination of the Offerings, but in no event later than 45 days after the
completion of the Subscription Offering (the "End Date"). All fees or expenses
due to the Agent but unpaid will be payable to the Agent in next day funds at
the earlier of the Closing Date (as hereinafter defined) or the End Date. In
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the event the Offerings are extended beyond the End Date, the Company, the MHC,
the Bank and the Agent may agree to renew this Agreement under mutually
acceptable terms.
In the event the Company is unable to sell a minimum of 1,593,259 Shares
within the period herein provided, this Agreement shall terminate and the
Company shall refund to any persons who have subscribed for any of the Shares,
the full amount which it may have received from them plus accrued interest as
set forth in the Prospectus; and none of the parties to this Agreement shall
have any obligation to the other parties hereunder, except as set forth in this
Section 2 and in Sections 6, 8 and 9 hereof.
In the event the Offerings are terminated for any reason not attributable
to the action or inaction of the Agent, the Agent shall be paid the fees due to
the date of such termination pursuant to subparagraphs (a) and (b) below.
If all conditions precedent to the consummation of the Conversion,
including, without limitation, the sale of all Shares required by the Plan to be
sold, are satisfied, the Company agrees to issue, or have issued, the Shares
sold in the Offering and to release for delivery certificates for such Shares on
the Closing Date (as hereinafter defined) against payment to the Company by any
means authorized by the Plan, provided, however, that no funds shall be released
to the Company until the conditions specified in Section 7 hereof shall have
been complied with to the reasonable satisfaction of the Agent and their
counsel. The release of Shares against payment therefor shall be made on a date
and at a place acceptable to the Company, the MHC, the Bank and the Agent (it
being understood that such date shall not be more than ten business days after
termination of the Offering) or such other time or place as shall be agreed upon
by the Company, the MHC, the Bank and the Agent. Certificates for shares shall
be delivered directly to the purchasers in accordance with their directions.
The date upon which the Company shall release or deliver the Shares sold in the
Offering, in accordance with the terms herein, is called the "Closing Date."
The Agent shall receive the following compensation for its services
hereunder:
(a) A management fee to the Agent in the amount of $50,000, of which
$25,000 has been paid and of which $25,000 will be paid upon OTS
approval of the Plan application. Such fees shall be deemed to be
earned when due. Should the Conversion be terminated for any reason
not attributable to the action or inaction of the Agent, the Agent
shall have earned and be entitled to be paid fees accruing
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through the stage at which point the termination occurred, including
any accrued legal fees expended by the Agent.
(b) A fixed marketing fee of $215,000 (excluding expenses) which shall be
paid provided that the Reorganization and Conversion is consummated.
The management fee of $50,000 will be subtracted from the marketing
fee.
(c) The foregoing fixed marketing fee shall be paid to Agent at closing in
addition to the allocable expenses described below.
(d) The decision to utilize other selected Broker-Dealers will be made
jointly by the Agent and the Bank. Selected broker-dealers who assist
in the subscription or purchase, excluding those shares purchased by
the Bank's officers, directors or employees, tax-qualified or stock
based compensation plans (except IRA's) or similar plan created by the
Bank for some or all of its directors or employees or by member
depositors in the original subscription phase of the offering, will be
paid a fee not to exceed 4% of the aggregate Actual Purchase Price of
the shares of common stock sold by them in the Subscription and/or
Community Offerings. The Agent's fee for such shares shall equal 1.5%
of the aggregate Actual Purchase Price of the shares of common stock
sold by selected broker-dealers in the Subscription and/or Community
Offering. Fees with respect to subscriptions or purchases effected
with the assistance of Registered Representatives employed by a
Broker/Dealer other than the Agent shall be paid to the Agent at
Closing and then transmitted by the Agent to such Broker/Dealer.
(e) The Bank and the Company hereby agree to reimburse the Agent, from
time to time upon the Agent's request, for its reasonable allocable
expenses, including without limitation, accounting, communication,
travel expenses, and legal fees and expenses, whether or not the
Conversion and Reorganization is consummated. Agent agrees to notify
the Company if allocable expenses requiring reimbursement exceed
$15,000 (excluding fees of Agent's counsel of $25,000). The Company
will bear the expenses of the Offerings customarily borne by issuers
including, without limitation, OTS, SEC, "Blue Sky," and NASD filing
and registration fees; the fees of the Company's accountants,
conversion agent, data processor, attorneys, appraiser, transfer agent
and registrar, printing, mailing and marketing expenses associated
with the Conversion; and the fees set forth under this Section 2.
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Full payment of the Agent's actual and accountable expenses, advisory fees
and compensation shall be made in next day funds on the earlier of the Closing
Date or a determination by the Bank to terminate or abandon the Plan.
In the event of an oversubscription or other event, which causes the
Offerings to continue beyond the original expiration date or a resolicitation of
subscribers, the parties agree to renegotiate the expense cap on legal fees
applicable to the Agent.
Section 3. Prospectus; Offering. The Shares are to be initially offered
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in the Offerings at the Purchase Price as defined and set forth on the cover
page of the Prospectus.
Section 4. Representations and Warranties. The Company, the MHC and the
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Bank jointly and severally represent and warrant to the Agent on the date hereof
as follows:
(a) The Registration Statement was declared effective by the
Commission on ________________, 2000. At the time the Registration
Statement, including the Prospectus contained therein (including any
amendment or supplement thereto), became effective, the Registration
Statement complied in all material respects with the requirements of the
1933 Act and the 1933 Act Regulations and the Registration Statement,
including the Prospectus contained therein (including any amendment or
supplement thereto), and any information regarding the Company or the Bank
contained in Sales Information (as such term is defined in Section 8
hereof) authorized by the Company or the Bank for use in connection with
the Offerings, did not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, and at the time any Rule 424(b) or (c)
Prospectus was filed with the Commission and at the Closing Date referred
to in Section 2, the Registration Statement, including the Prospectus
contained therein (including any amendment or supplement thereto), any
information regarding the Company or the Bank contained in Sales
Information (as such term is defined in Section 8 hereof) authorized by the
Company or the Bank for use in connection with the Offerings will not
contain an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that the representations and warranties in this Section 4(a) shall
not apply to statements or omissions made in reliance upon and in
conformity with written information furnished to the Company or the Bank by
the Agent expressly
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regarding the Agent for use in the Prospectus under the caption "The
Conversion-Plan of Distribution and Selling Commissions" or statements in
or omissions from any Sales Information or information filed pursuant to
state securities or blue sky laws or regulations regarding the Agent.
(b) The Conversion Application was approved by the OTS on September
_______, 2000, and the related Prospectus has been authorized for use by
the OTS. At the time of the approval of the Conversion Application,
including the Prospectus (including any amendment or supplement thereto),
by the OTS and at all times subsequent thereto until the Closing Date, the
Conversion Application, including the Prospectus (including any amendment
or supplement thereto), will comply in all material respects with the
Conversion Regulations except to the extent waived by the OTS. The
Conversion Application, including the Prospectus (including any amendment
or supplement thereto), does not include any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided, however, that the
representations and warranties in this Section 4(b) shall not apply to
statements or omissions made in reliance upon and in conformity with
written information furnished to the Company, the MHC or the Bank by the
Agent expressly regarding the Agent for use in the Prospectus contained in
the Conversion Application under the caption "The Conversion-Plan of
Distribution and Selling Commissions" or statements in or omissions from
any sales information or information filed pursuant to state securities or
blue sky laws or regulations regarding the Agent.
(c) No order has been issued by the OTS preventing or suspending the
use of the Prospectus and no action by or before any such government entity
to revoke any approval, authorization or order of effectiveness related to
the Conversion is, to the best knowledge of the Company, the MHC or the
Bank, pending or threatened.
(d) At the Closing Date referred to in Section 2, the Plan will have
been adopted by the Boards of Directors of the Company, the Mid-Tier
Company, the MHC and the Bank and the offer and sale of the Shares will
have been conducted in all material respects in accordance with the Plan,
the Conversion Regulations, and all other applicable laws, regulations,
decisions and orders, including all terms, conditions, requirements and
provisions precedent to the Conversion imposed upon the Company, the MHC or
the Bank by the OTS, the Commission or any other regulatory authority and
in the manner described in the Prospectus. To the best knowledge of the
Company, no person has
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sought to obtain review of the final action of the OTS in approving or
taking no objection to the Plan or in approving or taking no objection to
the Conversion or the Holding Company Application pursuant to the
Conversion Regulations or any other statute or regulation.
(e) The Bank has been organized and is a validly existing federally
chartered savings bank in stock form of organization and upon the
Conversion will continue as such, is duly authorized to conduct its
business and own its property as described in the Registration Statement
and the Prospectus; the Bank has obtained all material licenses, permits
and other governmental authorizations currently required for the conduct of
its business; all such licenses, permits and governmental authorizations
are in full force and effect, and the Bank is in all material respects
complying with all laws, rules, regulations and orders applicable to the
operation of its business; the Bank is existing under the laws of the
United States and is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which its
ownership of property or leasing or property or the conduct of its business
requires such qualification, unless the failure to be so qualified in one
or more of such jurisdictions would not have a material adverse effect on
the condition, financial or otherwise, or the business, operations or
income of the Bank. The Bank does not own equity securities or any equity
interest in any other business enterprise except as described in the
Prospectus or as would not be material to the operations of the Bank. Upon
completion of the sale by the Company of the Shares contemplated by the
Prospectus, (i) all of the authorized and outstanding capital stock of the
Bank will be owned by the Company, and (ii) the Company will have no direct
subsidiaries other than the Bank. The Conversion will have been effected in
all material respects in accordance with all applicable statutes,
regulations, decisions and orders; and, except with respect to the filing
of certain post-sale, post-Conversion reports, and documents in compliance
with the 1933 Act Regulations or the OTS' letters of approval or no
objection taken, all terms, conditions, requirements and provisions with
respect to the Conversion (except those that are conditions subsequent)
imposed by the Commission or the OTS, if any, will have been complied with
by the Company, the MHC and the Bank in all material respects or
appropriate waivers will have been obtained and all material notice and
waiting periods will have been satisfied, waived or elapsed.
(f) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware with
corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Registration Statement and the
Prospectus, and the Company is qualified
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to do business as a foreign corporation in each jurisdiction in which the
conduct of its business requires such qualification, except where the
failure to so qualify would not have a material adverse effect on the
condition, financial or otherwise, or the business, operations or income of
the Company. The Company has obtained all material licenses, permits and
other governmental authorizations currently required for the conduct of its
business; all such licenses, permits and governmental authorizations are in
full force and effect, and the Company is in all material respects
complying with all laws, rules, regulations and orders applicable to the
operation of its business.
(g) The MHC has been duly organized and is a validly existing
federally chartered mutual holding company, with corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the Prospectus, and
the MHC is qualified to do business as a foreign corporation in each
jurisdiction in which the conduct of its business requires such
qualification, except where the failure to so qualify would not have a
material adverse effect on the condition, financial or otherwise, or the
business, operations or income of the MHC. The MHC has obtained all
material licenses, permits and other governmental authorizations currently
required for the conduct of its business; all such licenses, permits and
governmental authorizations are in full force and effect, and the MHC is in
all material respects complying with all laws, rules, regulations and
orders applicable to the operation of its business.
(h) The Bank is a member of the Federal Home Loan Bank of New York
("FHLB-New York"). The deposit accounts of the Bank are insured by the
FDIC up to the applicable limits; and no proceedings for the termination or
revocation of such insurance are pending or, to the best knowledge of the
Company, the MHC or the Bank, threatened. Upon consummation of the
Conversion, the liquidation account for the benefit of Eligible Account
Holders and Supplemental Eligible Account Holders will be duly established
in accordance with the requirements of the Conversion Regulations.
(i) The Company, the MHC and the Bank have good and marketable title
to all real property and other assets material to the business of the
Company, the MHC and the Bank and to those properties and assets described
in the Registration Statement and Prospectus as owned by them, free and
clear of all liens, charges, encumbrances or restrictions, except such as
are described in the Registration Statement and Prospectus or are not
material to the business of the Company, the MHC and the Bank taken as a
whole; and all of the leases and subleases material to the business of the
Company, the
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MHC and the Bank under which the Company, the MHC or the Bank hold
properties, including those described in the Registration Statement and
Prospectus, are in full force and effect.
(j) The Company, the MHC and the Bank have received an opinion of
their special counsel, Luse Lehman Gorman Pomerenk & Schick ("Luse
Lehman"), with respect to the federal income tax consequences of the
conversion of the MHC from mutual to stock form, and the sale of the Shares
as described in the Registration Statement and the Prospectus, and an
opinion from KPMG LLP ("KPMG") with respect to the New York state income
tax consequences of the proposed transaction; all material aspects of the
opinions of Luse Lehman and KPMG are accurately summarized in the
Prospectus; and the facts and representations upon which such opinions are
based are truthful, accurate and complete.
(k) The Company, the MHC and the Bank have all such power, authority,
authorizations, approvals and orders as may be required to enter into this
Agreement, to carry out the provisions and conditions hereof and to issue
and sell the Shares to be sold by the Company as provided herein and as
described in the Prospectus.
(l) The Company, the MHC and the Bank are not in violation of any
directive received from the OTS, the FDIC, or any other agency to make any
material change in the method of conducting their businesses so as to
comply in all material respects with all applicable statutes and
regulations (including, without limitation, regulations, decisions,
directives and orders of the OTS and the FDIC) and, except as set forth in
the Registration Statement and the Prospectus, there is no suit or
proceeding or charge or action before or by any court, regulatory authority
or governmental agency or body, pending or, to the knowledge of the
Company, the MHC and the Bank, threatened, which might materially and
adversely affect the Conversion, the performance of this Agreement or the
consummation of the transactions contemplated in the Plan and as described
in the Registration Statement and the Prospectus or which might result in
any material adverse change in the condition (financial or otherwise),
earnings, capital or properties of the Company, or the Bank, or which would
materially affect their properties and assets.
(m) The financial statements which are included in the Prospectus
fairly present the financial condition, results of operations, retained
earnings and cash flows of the Bank at the respective dates thereof and for
the respective periods covered thereby and comply as to form in all
material respects with the applicable accounting
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requirements of Titles 12 of the Code of Federal Regulations and generally
accepted accounting principles (including those requiring the recording of
certain assets at their current market value). Such financial statements
have been prepared in accordance with generally accepted accounting
principles consistently applied through the periods involved, present
fairly in all material respects the information required to be stated
therein and are consistent with the most recent financial statements and
other reports filed by the Bank with the OTS and the FDIC, except that
accounting principles employed in such regulatory filings conform to the
requirements of such authorities and not necessarily to generally accepted
accounting principles. The other financial, statistical and pro forma
information and related notes included in the Prospectus present fairly the
information shown therein on a basis consistent with the audited and
unaudited financial statements of the Bank included in the Prospectus, and
as to the pro forma adjustments, the adjustments made therein have been
properly applied on the basis described therein.
(n) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus; (i) there has not been any
material adverse change, financial or otherwise, in the condition of the
Company, the MHC, the Bank or in the earnings, capital or properties of the
Company, the MHC or the Bank, whether or not arising in the ordinary course
of business; (ii) there has not been any material increase in the long-term
debt of the Bank or in loans past due 90 days or more or real estate
acquired by foreclosure, by deed-in-lieu of foreclosure or deemed in-
substance foreclosure or any material decrease in surplus and reserves or
total assets of the Bank nor has the Company or the Bank issued any
securities or incurred any liability or obligation for borrowing other than
in the ordinary course of business; (iii) there have not been any material
transactions entered into by the Company, the MHC or the Bank, except with
respect to those transactions entered into in the ordinary course of
business; (iv) the capitalization, liabilities, assets, properties and
business of the Company, the MHC and the Bank conform in all material
respects to the descriptions thereof contained in the Prospectus; and (v)
neither the Company, the MHC nor the Bank has any material contingent
liabilities, except as set forth in the Prospectus.
(o) As of the date hereof and as of the Closing Date, neither the
Company, the MHC nor the Bank is in violation of its articles of
incorporation or bylaws or charter or bylaws, as applicable, or in default
in the performance or observance of any material obligation, agreement,
covenant, or condition contained in any material contract, lease, loan
agreement, indenture or other instrument to which it is a party or by which
it or any of its property may be bound; the consummation of the Conversion,
the execution,
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delivery and performance of this Agreement and the consummation of the
transactions herein contemplated have been duly and validly authorized by
all necessary corporate action on the part of the Company and the Bank and
this Agreement has been validly executed and delivered by the Company, the
MHC and the Bank and is the valid, legal and binding Agreement of the
Company, the MHC and the Bank enforceable in accordance with its terms,
except as the enforceability thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium, conservatorship, receivership or
other similar laws now or hereafter in effect relating to or affecting the
enforcement of creditors' rights generally or the rights of creditors of
Federal savings institutions and their holding companies, (ii) general
equitable principles, (iii) laws relating to the safety and soundness of
insured depository institutions, and (iv) applicable law or public policy
with respect to the indemnification and/or contribution provisions
contained herein, and except that no representation or warranty need be
made as to the effect or availability of equitable remedies or injunctive
relief (regardless of whether such enforceability is considered in a
proceeding in equity or at law). The consummation of the transactions
herein contemplated will not: (i) conflict with or constitute a breach of,
or default under, the articles of incorporation and bylaws of the Company
or the charters and bylaws of the Bank or the MHC (in either mutual or
capital stock form), or any material contract, lease or other instrument to
which the Company, the MHC or the Bank has a beneficial interest, or any
applicable law, rule, regulation or order; (ii) violate any authorization,
approval, judgment, decree, order, statute, rule or regulation applicable
to the Company, the MHC or the Bank, except for such violations which would
not have a material adverse effect on the financial condition and results
of operations of the Company, the MHC and the Bank on a consolidated basis;
or (iii) with the exception of the liquidation account established in the
Conversion, result in the creation of any material lien, charge or
encumbrance upon any property of the Company, the MHC or the Bank.
(p) No default exists, and no event has occurred which with notice or
lapse of time, or both, would constitute a default on the part of the
Company, the MHC or the Bank, in the due performance and observance of any
term, covenant or condition of any indenture, mortgage, deed of trust,
note, bank loan or credit agreement or any other instrument or agreement to
which the Company, the MHC or the Bank is a party or by which any of them
or any of their property is bound or affected except such defaults which
would not have a material adverse effect on the financial condition or
results of operations of the Company, the MHC and the Bank on a
consolidated basis; such agreements are in full force and effect; and no
other party to any such agreements has instituted or, to the best knowledge
of the Company, the MHC or the Bank, threatened
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any action or proceeding wherein the Company, the Bank or the MHC would or
might be alleged to be in default thereunder under circumstances where such
action or proceeding, if determined adversely to the Company, the MHC or
the Bank, would have a material adverse effect on the Company, the MHC and
the Bank, taken as a whole.
(q) Upon consummation of the Conversion, the authorized, issued and
outstanding equity capital of the Company will be within the range set
forth in the Prospectus under the caption "Capitalization"; the Shares will
have been duly and validly authorized for issuance and, when issued and
delivered by the Company pursuant to the Plan against payment of the
consideration calculated as set forth in the Plan and in the Prospectus,
will be duly and validly issued, fully paid and non-assessable; no
preemptive rights exist with respect to the Shares; and the terms and
provisions of the Shares will conform in all material respects to the
description thereof contained in the Registration Statement and the
Prospectus. To the best knowledge of the Company, the MHC and the Bank,
upon the issuance of the Shares, good title to the Shares will be
transferred from the Company to the purchasers thereof against payment
therefor, subject to such claims as may be asserted against the purchasers
thereof by third-party claimants.
(r) No approval of any regulatory or supervisory or other public
authority is required in connection with the execution and delivery of this
Agreement or the issuance of the Shares, except for the approval or non-
objection, as applicable, of the Commission, the OTS, and any necessary
qualification, notification, registration or exemption under the securities
or blue sky laws of the various states in which the Shares are to be
offered, and except as may be required under the rules and regulations of
the NASD and/or the Nasdaq National Market.
(s) KPMG LLP, which has certified the financial statements of the
Bank included in the Prospectus as of December 31, 1999 and 1998 and for
each of the years in the three year period ended December 31, 1999, has
advised the Company, the MHC and the Bank in writing that they are, with
respect to the Company, the MHC and the Bank, independent public
accountants within the meaning of the Code of Professional Ethics of the
American Institute of Certified Public Accountants and Title 121 of the
Code of Federal Regulations and Section 571.2(c)(3).
(t) FinPro which has prepared the Bank's Conversion Valuation
Appraisal Report as of March _______, 2000 (as amended or supplemented, if
so amended or supplemented) (the "Appraisal"), has advised the Company in
writing that it is
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independent of the Company, the MHC and the Bank within the meaning of the
Conversion Regulations.
(u) The Company, the MHC and the Bank have timely filed all required
federal, state and local tax returns; the Company, the MHC and the Bank
have paid all taxes that have become due and payable in respect of such
returns, except where permitted to be extended, have made adequate reserves
for similar future tax liabilities and no deficiency has been asserted with
respect thereto by any taxing authority.
(v) The Company, the MHC and the Bank are in compliance in all
material respects with the applicable financial recordkeeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, and the regulations and rules thereunder.
(w) To the knowledge of the Company, the MHC and the Bank, neither
the Company, the MHC, the Bank nor employees of the Company, the MHC or the
Bank have made any payment of funds of the Company, the MHC or the Bank as
a loan for the purchase of the Shares 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.
(x) Prior to the Conversion, the Bank had _______________ shares of
authorized capital stock, of which ________________ shares were issued and
outstanding, the Company had ____________________ shares of authorized
capital stock, of which ______ shares were issued and outstanding and the
MHC was not authorized to issue shares. Neither the Bank, the Company nor
the MHC has: (i) other than as described in the Prospectus issued any
securities within the last 18 months (except for notes to evidence other
bank loans and reverse repurchase agreements or other liabilities in the
ordinary course of business or as described in the Prospectus); (ii) had
any material dealings within the 12 months prior to the date hereof with
any member of the NASD, or any person related to or associated with such
member, other than discussions and meetings relating to the proposed
offering and routine purchases and sales of United States government and
agency securities; (iii) entered into a financial or management consulting
agreement except as contemplated hereunder and except for the Letter
Agreement set forth in Exhibit A; and (iv) engaged any intermediary between
the Agent and the Company, the MHC and the Bank in connection with the
offering of the Shares, and no person is being compensated in any manner
for such service.
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(y) The Company, the MHC and the Bank have not relied upon the Agent
or the Agent's counsel for any legal, tax or accounting advice in
connection with the Conversion.
(z) The Company is not required to be registered under the Investment
Company Act of 1940, as amended.
Any certificates signed by an officer of the Company, the MHC or the Bank
pursuant to the conditions of this Agreement and delivered to the Agent or its
counsel that refers to this Agreement shall be deemed to be a representation and
warranty by the Company, the MHC or the Bank to the Agent as to the matters
covered thereby with the same effect as if such representation and warranty were
set forth herein.
Section 5. Representations and Warranties of the Agent. The Agent
-------------------------------------------
represents and warrants to the Company, the MHC and the Bank that:
(a) The Agent is a corporation and is validly existing in good
standing under the laws of the State of Delaware with full power and
authority to provide the services to be furnished to the Bank, the MHC
and the Company hereunder.
(b) The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly
authorized by all necessary action on the part of the Agent, and this
Agreement has been duly and validly executed and delivered by the
Agent and is the legal, valid and binding agreement of the Agent,
enforceable in accordance with its terms.
(c) Each of the Agent and its employees, agents and representatives
who shall perform any of the services hereunder shall be duly
authorized and empowered, and shall have all licenses, approvals and
permits necessary to perform such services, including appropriate
licenses and the Company's approvals in the various states in which
securities shall be offered.
(d) The execution and delivery of this Agreement by the Agent, the
consummation of the transactions contemplated hereby and compliance
with the terms and provisions hereof will not conflict with, or result
in a breach of, any of the terms, provisions or conditions of, or
constitute a default (or event which with notice or lapse of time or
both would constitute a default) under, the articles of
15
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incorporation of the Agent or any agreement, indenture or other
instrument to which the Agent is a party or by which it or its
property is bound.
(e) No approval of any regulatory or supervisory or other public
authority is required in connection with the Agent's execution and
delivery of this Agreement, except as may have been received.
(f) There is no suit or proceeding or charge of action before or by
any court, regulatory authority or government agency or body or, to
the knowledge of the Agent, pending or threatened, which might
materially adversely affect the Agent's performance of this Agreement.
Section 5.1 Covenants of the Company, the MHC and the Bank. The Company,
----------------------------------------------
the MHC and the Bank hereby jointly and severally covenant with the Agent as
follows:
(a) The Company has filed the Registration Statement with the
Commission. The Company will not, at any time after the date the
Registration Statement is declared effective, file any amendment or
supplement to the Registration Statement without providing the Agent and
its counsel an opportunity to review such amendment or supplement or file
any amendment or supplement to which amendment or supplement the Agent or
its counsel shall reasonably object.
(b) The MHC has filed the Conversion Application with the OTS. The
Bank will not, at any time after the Conversion Application is approved by
the OTS, file any amendment or supplement to such Conversion Application
without providing the Agent and its counsel an opportunity to review such
amendment or supplement or file any amendment or supplement to which
amendment or supplement the Agent or its counsel shall reasonably object.
(c) The Company and the Bank will use their best efforts to cause any
post-effective amendment to the Registration Statement to be declared
effective by the Commission and any post-effective amendment to the
Conversion Application to be approved by the OTS and will immediately upon
receipt of any information concerning the events listed below notify the
Agent: (i) when the Registration Statement, as amended, has become
effective; (ii) when the Conversion Application, as amended, has been
approved by the OTS; (iii) of any comments from the Commission, the OTS or
any other governmental entity with respect to the Conversion or the
transactions contemplated
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<PAGE>
by this Agreement; (iv) of the request by the Commission, the OTS or any
other governmental entity for any amendment or supplement to the
Registration Statement or the Conversion Application or for additional
information; (v) of the issuance by the Commission, the OTS or any other
governmental entity of any order or other action suspending the Offering or
the use of the Registration Statement or the Prospectus or any other filing
of the Company or the Bank under the Conversion Regulations, or other
applicable law, or the threat of any such action; (vi) the issuance by the
Commission, the OTS or any state authority of any stop order suspending the
effectiveness of the Registration Statement or the approval of the
Conversion Application, or of the initiation or threat of initiation or
threat of any proceedings for any such purpose; or (vii) of the occurrence
of any event mentioned in paragraph (h) below. The Company, the MHC and the
Bank will make every reasonable effort (i) to prevent the issuance by the
Commission, the OTS or any state authority of any such order and, if any
such order shall at any time be issued, (ii) to obtain the lifting thereof
at the earliest possible time.
(d) The Company, the MHC and the Bank will deliver to the Agent and
to its counsel two conformed copies of the Registration Statement and the
Conversion Application, as originally filed and of each amendment or
supplement thereto, including all exhibits. Further, the Company, the MHC
and the Bank will deliver such additional copies of the foregoing documents
to counsel to the Agent as may be required for any NASD and blue sky
filings.
(e) The Company, the MHC and the Bank will furnish to the Agent, from
time to time during the period when the Prospectus (or any later prospectus
related to this offering) is required to be delivered under the 1933 Act or
the Securities Exchange Act of 1934 (the "1934 Act"), such number of copies
of such Prospectus (as amended or supplemented) as the Agent may reasonably
request for the purposes contemplated by the 1933 Act, the 1933 Act
Regulations, the 1934 Act or the rules and regulations promulgated under
the 1934 Act (the "1934 Act Regulations"). The Company authorizes the Agent
to use the Prospectus (as amended or supplemented, if amended or
supplemented) in any lawful manner contemplated by the Plan in connection
with the sale of the Shares by the Agent.
(f) The Company, the MHC and the Bank will comply with any and all
material terms, conditions, requirements and provisions with respect to the
Conversion and the transactions contemplated thereby imposed by the
Commission, the OTS, the Conversion Regulations or the OTS, and by the 1933
Act, the 1933 Act Regulations, the
17
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1934 Act and the 1934 Act Regulations to be complied with prior to or
subsequent to the Closing Date and when the Prospectus is required to be
delivered, the Company, the MHC and the Bank will comply, at their own
expense, with all material requirements imposed upon them by the
Commission, the OTS, the Conversion Regulations or the OTS, and by the 1933
Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations,
including, without limitation, Rule 10b-5 under the 1934 Act, in each case
as from time to time in force, so far as necessary to permit the
continuance of sales or dealing in shares of Common Stock during such
period in accordance with the provisions hereof and the Prospectus.
(g) If, at any time during the period when the Prospectus relating to
the Shares is required to be delivered, any event relating to or affecting
the Company, the MHC or the Bank shall occur, as a result of which it is
necessary or appropriate, in the opinion of counsel for the Company, the
MHC and the Bank or in the reasonable opinion of the Agent's counsel, to
amend or supplement the Registration Statement or Prospectus in order to
make the Registration Statement or Prospectus not misleading in light of
the circumstances existing at the time the Prospectus is delivered to a
purchaser, the Company and the Bank will at their expense, prepare and file
with the Commission and the OTS and furnish to the Agent a reasonable
number of copies of an amendment or amendments of, or a supplement or
supplements to, the Registration Statement or Prospectus (in form and
substance satisfactory to the Agent and its counsel after a reasonable time
for review) which will amend or supplement the Registration Statement or
Prospectus so that as amended or supplemented it will not contain an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in light of the circumstances
existing at the time the Prospectus is delivered to a purchaser, not
misleading. For the purpose of this Agreement, the Company, the MHC and
the Bank each will timely furnish to the Agent such information with
respect to itself as the Agent may from time to time reasonably request.
(h) The Company, the MHC and the Bank will take all necessary
actions, in cooperating with the Agent, and furnish to whomever the Agent
may direct, such information as may be required to qualify or register the
Shares for offering and sale by the Company or to exempt such Shares from
registration, or to exempt the Company as a broker-dealer and its officers,
directors and employees as broker-dealers or agents under the applicable
securities or blue sky laws of such jurisdictions in which the Shares are
required under the Conversion Regulations to be sold or as the Agent and
the Company, the MHC and the Bank may reasonably agree upon; provided,
however, that the
18
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Company shall not be obligated to file any general consent to service of
process or to qualify to do business in any jurisdiction in which it is not
so qualified. In each jurisdiction where any of the Shares shall have been
qualified or registered as above provided, the Company will make and file
such statements and reports in each fiscal period as are or may be required
by the laws of such jurisdiction.
(i) The liquidation account for the benefit of Eligible Account
Holders and Supplemental Eligible Account Holders will be duly established
and maintained by the Bank in accordance with the requirements of the OTS,
and such Eligible Account Holders and Supplemental Eligible Account Holders
who continue to maintain their savings accounts in the Bank will have an
inchoate interest in their pro rata portion of the liquidation account
which shall have a priority superior to that of the holders of shares of
Common Stock in the event of a complete liquidation of the Bank.
(j) The Company, the MHC and the Bank will not sell or issue,
contract to sell or otherwise dispose of, for a period of 90 days after the
Closing Date, without the Agent's prior written consent, any shares of
Common Stock other than the Shares or other than in connection with any
plan or arrangement described in the Prospectus.
(k) The Company shall maintain the effectiveness of the registration
of its Common Stock under Section 12 (g) of the 1934 Act for not less than
three (3) years or such shorter period as may be required by the OTS.
(l) During the period during which the Company's Common Stock is
registered under the 1934 Act or for three years from the date hereof,
whichever period is greater, the Company will furnish to its stockholders
as soon as practicable after the end of each fiscal year an annual report
of the Company (including a consolidated balance sheet and statements of
consolidated income, stockholders' equity and cash flows of the Company and
its subsidiaries as at the end of and for such year, certified by
independent public accountants in accordance with Regulation S-X under the
1933 Act and the 1934 Act).
(m) During the period of three years from the date hereof, the
Company will furnish to the Agent: (i) as soon as practicable after such
information is publicly available, a copy of each report of the Company
furnished to or filed with the Commission under the 1934 Act or any
national securities exchange or system on which any class of securities of
the Company is listed or quoted (including, but not limited to,
19
<PAGE>
reports on Forms 10-K, 10-Q and 8-K and all proxy statements and annual
reports to stockholders), (ii) a copy of each other non-confidential report
of the Company mailed to its stockholders or filed with the Commission, the
OTS or any other supervisory or regulatory authority or any national
securities exchange or system on which any class of securities of the
Company is listed or quoted, each press release and material news items and
additional documents and information with respect to the Company or the
Bank as the Agent may reasonably request; and (iii) from time to time, such
other nonconfidential information concerning the Company or the Bank as the
Agent may reasonably request.
(n) The Company and the Bank will use the net proceeds from the sale
of the Shares in the manner set forth in the Prospectus under the caption
"Use of Proceeds."
(o) Other than as permitted by the Conversion Regulations, the Home
Owners Loan Act of 1933 (the "HOLA"), the 1933 Act, the 1933 Act
Regulations, and the laws of any state in which the Shares are registered
or qualified for sale or exempt from registration, neither the Company, the
MHC nor the Bank will distribute any prospectus, offering circular or other
offering material in connection with the offer and sale of the Shares.
(p) The Company will use its best efforts to (i) encourage and assist
two market makers to maintain a market for the Shares and (ii) continue to
list the Shares on the Nasdaq National Market.
(q) The Bank will maintain appropriate arrangements for depositing
all funds received from persons mailing subscriptions for or orders to
purchase Shares in the Offerings on an interest bearing basis at the rate
described in the Prospectus until the Closing Date and satisfaction of all
conditions precedent to the release of the Bank's obligation to refund
payments received from persons subscribing for or ordering Shares in the
Offerings in accordance with the Plan and as described in the Prospectus or
until refunds of such funds have been made to the persons entitled thereto
or withdrawal authorizations canceled in accordance with the Plan and as
described in the Prospectus. The Bank will maintain such records of all
funds received to permit the funds of each subscriber to be separately
insured by the FDIC (to the maximum extent allowable) and to enable the
Bank to make the appropriate refunds of such funds in the event that such
refunds are required to be made in accordance with the Plan and as
described in the Prospectus.
20
<PAGE>
(r) The Company and the Bank will take such actions and furnish such
information as are reasonably requested by the Agent in order for the Agent
to ensure compliance with the NASD's "Interpretation Relating to Free
Riding and Withholding."
(s) Neither the Bank nor the MHC will amend the Plan of Conversion
without notifying the Agent prior thereto.
(t) The Company shall assist the Agent, if necessary, in connection
with the allocation of the Shares in the event of an oversubscription and
shall provide the Agent with any information necessary to assist the
Company in allocating the Shares in such event and such information shall
be accurate and reliable.
(u) Prior to the Closing Date, the Company, the MHC and the Bank will
inform the Agent of any event or circumstances of which it is aware as a
result of which the Registration Statement, the Conversion Application
and/or Prospectus, as then amended or supplemented, would contain an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein not misleading.
Section 5.2 Covenants of the Agent. The Agent hereby covenants with
----------------------
the Company, the MHC and the Bank as follows:
(a) During the period when the Prospectus is used, the Agent will
comply, in all material respects and at its own expense, with all
requirements imposed upon it by the OTS and, to the extent applicable, by
the 1933 Act and the 1934 Act and the rules and regulations promulgated
thereunder.
(b) The Agent shall return unused prospectuses, if any, to the
Company promptly upon the completion of the Conversion.
(c) The Agent will distribute the Prospectuses or offering materials
in connection with the sales of the common stock only in accordance with
OTS regulations, the 1933 Act and the rules and regulations promulgated
thereunder.
(d) The Agent shall assist the Bank in maintaining arrangements for
the deposit of funds and the making of refunds, as appropriate (as
described in Section 5.1(r)), and shall perform the allocation of shares in
the event of an oversubscription, in
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conformance with the Plan and applicable regulations and based upon
information furnished to the Agent by the Bank (as described in Section
5.1(v)).
Section 6. Payment of Expenses. Whether or not the Conversion is
-------------------
completed or the sale of the Shares by the Company is consummated, the Company,
the MHC and the Bank jointly and severally agree to pay or reimburse the Agent
for any expenses incurred by Agent in connection with the Conversion, including
but not limited to: (a) all filing fees in connection with all filings with the
NASD; (b) any stock issue or transfer taxes which may be payable with respect to
the sale of the Shares; (c) all reasonable expenses of the Conversion including
but not limited to the Agent, attorneys' fees (incurred in connection with the
Conversion), transfer agent, registrar and other agent charges, fees relating to
auditing and accounting or other advisors and costs of printing all documents
necessary in connection with the Conversion; and (d) all other reasonable out-
of-pocket expenses incurred by Agent (including legal fees of $25,000 and
related expenses). Such out-of-pocket expenses include, but are not limited to,
travel, communications and postage. In the event the Company is unable to sell
a minimum of 2,295,000 Shares or the Conversion is terminated or otherwise
abandoned, the Company, the MHC and the Bank shall reimburse the Agent in
accordance with Section 2 hereof but such reimbursement shall not exceed Agent's
actual, accountable out-of-pocket expenses.
Section 7. Conditions to the Agent's Obligations. The Agent's obligations
-------------------------------------
hereunder, as to the Shares to be delivered at the Closing Date, are subject, to
the extent not waived by the Agent, to the condition that all representations
and warranties of the Company, the MHC and the Bank herein are, at and as of the
commencement of the Offerings and at and as of the Closing Date, true and
correct in all material respects, the condition that the Company, the MHC and
the Bank shall have performed all of their obligations hereunder to be performed
on or before such dates, and to the following further conditions:
(a) At the Closing Date, the Company, the MHC and the Bank shall have
conducted the Conversion in all material respects in accordance with the
Plan, the Conversion Regulations, and all other applicable laws,
regulations, decisions and orders, including all terms, conditions,
requirements and provisions precedent to the Conversion imposed upon them
by the OTS.
(b) The Registration Statement shall have been declared effective by
the Commission, the Conversion Application approved by the OTS, not later
than 5:30 p.m. on the date of this Agreement, or with the Agent's consent
at a later time and date; and at the Closing Date, no stop order suspending
the effectiveness of the Registration
22
<PAGE>
Statement shall have been issued under the 1933 Act or proceedings
therefore initiated or threatened by the Commission, or any state authority
and no order or other action suspending the authorization of the Prospectus
or the consummation of the Conversion shall have been issued or proceedings
therefore initiated or, to the Company's, the MHC's or the Bank's
knowledge, threatened by the Commission, the OTS or any state authority.
(c) At the Closing Date, the Agent shall have received:
(1) The favorable opinion, dated as of the Closing Date and
addressed to the Agent and for its benefit, of Luse Lehman, special
counsel for the Company, the MHC and the Bank, in form and substance
to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation under the laws of the State of Delaware and
has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the
Registration Statement and the Prospectus. All of the outstanding
capital stock of the Company is duly authorized and validly issued,
and upon payment therefor, will be fully paid and non-assessable.
(ii) The Bank has been organized and is a validly existing
federal savings bank in capital stock form of organization, authorized
to conduct its business and own its property as described in the
Registration Statement and Prospectus. All of the outstanding capital
stock of the Bank will be authorized and upon payment therefor, will
be validly issued, fully paid and non-assessable and will be owned by
the Company, free and clear of any liens, encumbrances, claims or
other restrictions.
(iii) The MHC has been organized and is a validly existing
federal mutual holding company authorized to conduct its business and
own its property as described in the Registration Statement and
Prospectus.
(iv) The Bank is a member of the FHLB-New York. The
deposit accounts of the Bank are insured by the FDIC up to the maximum
amount allowed under law and no proceedings for the termination or
revocation of such insurance are pending or, to such counsel's Actual
Knowledge, threatened; the
23
<PAGE>
description of the liquidation account as set forth in the Prospectus
under the caption "The Conversion--Liquidation Rights" to the extent
that such information constitutes matters of law and legal conclusions
has been reviewed by such counsel and is accurate in all material
respects.
(v) Upon consummation of the Conversion, the authorized,
issued and outstanding capital stock of the Company will be within the
range set forth in the Prospectus under the caption "Capitalization,"
and except for shares issued upon incorporation of the Company no
shares of Common Stock have been issued prior to the Closing Date; at
the time of the Conversion, the Shares subscribed for pursuant to the
Offerings will have been duly and validly authorized for issuance, and
when issued and delivered by the Company pursuant to the Plan against
payment of the consideration calculated as set forth in the Plan and
the Prospectus, will be duly and validly issued and fully paid and
non-assessable; the issuance of the Shares is not subject to
preemptive rights and the terms and provisions of the Shares conform
in all material respects to the description thereof contained in the
Prospectus. Upon the issuance of the Shares, good title to the Shares
will be transferred from the Company to the purchasers thereof against
payment therefor, subject to such claims as may be asserted against
the purchasers thereof by third-party claimants.
(vi) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been validly
authorized by all necessary action on the part of the Company, the
MHC, and the Bank; and this Agreement is a valid and binding
obligation of the Company, the MHC and the Bank, enforceable in
accordance with its terms, except as the enforceability thereof may be
limited by (i) bankruptcy, insolvency, moratorium, reorganization,
conservatorship, receivership or other similar laws now or hereafter
in effect relating to or affecting the enforcement of creditors'
rights generally or the rights of creditors of savings institutions
and their holding companies, (ii) general equitable principles, (iii)
laws relating to the safety and soundness of insured depository
institutions, and (iv) applicable law or public policy with respect to
the indemnification and/or contribution provisions contained herein,
including, without limitation, the provisions of Section 23A and 23B
of the Federal Reserve Act, and except that no opinion need to be
expressed as to the effect or availability of equitable remedies or
injunctive relief (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
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<PAGE>
(vii) The Conversion Application has been approved by the
OTS and the Prospectus has been authorized for use by the OTS and no
action has been taken, and to such counsel's Actual Knowledge, none is
pending or threatened, to revoke any such authorization or approval.
(viii) The Plan has been adopted by the required vote of
the directors of the Company, the MHC and the Bank and, based upon the
certificate of the inspector of election, by the members of the MHC,
the stockholders of the Company and the stockholders of the Bank.
(ix) Subject to the satisfaction of the conditions to the
OTS' approval of the Conversion, no further approval, registration,
authorization, consent or other order of or notice to any federal or
Delaware regulatory agency is required in connection with the
execution and delivery of this Agreement, the issuance of the Shares
and the consummation of the Conversion, except as may be required
under the securities or blue sky laws of various jurisdictions (as to
which no opinion need be rendered) and except as may be required under
the rules and regulations of the NASD and/or the Nasdaq National
Market (as to which no opinion need be rendered).
(x) The Registration Statement is effective under the
1933 Act and no stop order suspending the effectiveness has been
issued under the 1933 Act or proceedings therefor initiated or, to
such counsel's Actual Knowledge, threatened by the Commission.
(xi) At the time the Conversion Application, including
the Prospectus contained therein, was approved by the OTS, the
Conversion Application, including the Prospectus contained therein,
complied as to form in all material respects with the requirements of
the Conversion Regulations, the HOLA and all applicable rules and
regulations promulgated thereunder (other than the financial
statements, the notes thereto, and other tabular, financial,
statistical and appraisal data and accounting information included
therein, as to which no opinion need be rendered).
(xii) At the time that the Registration Statement became
effective, (i) the Registration Statement (as amended or supplemented,
if so
25
<PAGE>
amended or supplemented) (other than the financial statements, the
notes thereto and other tabular, financial, statistical and appraisal
data included therein, as to which no opinion need be rendered)
complied as to form in all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations, and (ii) the Prospectus
(other than the financial statements, the notes thereto and other
tabular, financial, statistical and appraisal data included therein,
as to which no opinion need be rendered) complied as to form in all
material respects with the requirements of the 1933 Act, the 1933 Act
Regulations, the Conversion Regulations and federal law.
(xiii) The terms and provisions of the Shares of the
Company conform, in all material respects, to the description thereof
contained in the Registration Statement and Prospectus, and the form
of certificate used to evidence the Shares is in proper form.
(xiv) There are no legal or governmental proceedings
pending or to such counsel's Actual Knowledge, threatened which are
required to be disclosed in the Registration Statement and Prospectus,
other than those disclosed therein, and to such counsel's Actual
Knowledge, all pending legal and governmental proceedings to which the
Company, the MHC or the Bank is a party or of which any of their
property is the subject, which are not described in the Registration
Statement and the Prospectus, including ordinary routine litigation
incidental to the Company's, the MHC's or the Bank's business, are,
considered in the aggregate, not material.
(xv) To such counsel's Actual Knowledge, there are no
material contracts, indentures, mortgages, loan agreements, notes,
leases or other instruments required to be described or referred to in
the Conversion Application, the Registration Statement or the
Prospectus or required to be filed as exhibits thereto other than
those described or referred to therein or filed as exhibits thereto in
the Conversion Application, the Registration Statement or the
Prospectus. The description in the Conversion Application, the
Registration Statement and the Prospectus of such documents and
exhibits is accurate in all material respects and fairly presents the
information required to be shown.
(xvi) To such counsel's Actual Knowledge, the Company, the
MHC and the Bank have conducted the Conversion, in all material
respects, in
26
<PAGE>
accordance with all applicable requirements of the Plan and the HOLA
and regulations thereunder, and the Plan complies in all material
respects with all applicable Delaware and federal laws, rules and
regulations including, but not limited to, the Conversion Regulations
(except where a written waiver has been received); no order has been
issued by the OTS, the Commission or any state authority to suspend
the Offerings or the use of the Prospectus, and no action for such
purposes has been instituted or, to such counsel's Actual Knowledge,
threatened by the OTS or the Commission or any state authority and, to
such counsel's Actual Knowledge, no person has sought to obtain
regulatory or judicial review of the final action of the OTS approving
the Plan, the Conversion Application or the Prospectus.
(xvii) To such counsel's Actual Knowledge, the Company, the
MHC and the Bank have obtained all material federal and Delaware
licenses, permits and other governmental authorizations currently
required for the conduct of their businesses and all such licenses,
permits and other governmental authorizations are in full force and
effect, and the Company, the MHC and the Bank are in all material
respects complying therewith, except where the failure to have such
licenses, permits and other governmental authorizations or the failure
to be in compliance therewith would not have a material adverse affect
on the business or operations of the Bank, the MHC and the Company,
taken as a whole.
(xviii) To such counsel's Actual Knowledge, neither the
Company, the MHC nor the Bank is in violation of its articles of
incorporation, bylaws, or charter, as applicable, or, to such
counsel's Actual Knowledge, in default or violation of any obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which it
is a party or by which it or its property may be bound except for such
defaults or violations which would not have a material adverse impact
on the financial condition or results of operations of the Company,
the MHC nor the Bank on a consolidated basis; to such counsel's Actual
Knowledge, the execution and delivery of this Agreement, the
occurrence of the obligations herein set forth and the consummation of
the transactions contemplated herein 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 or the Bank pursuant to any material
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the
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Company, the MHC or the Bank is a party or by which any of them may be
bound, or to which any of the property or assets of the Company, the
MHC or the Bank is subject (other than the establishment of a
liquidation account), and such action will not result in any violation
of the provisions of the articles of incorporation, bylaws or charter,
as applicable, of the Company, the MHC or the Bank, or any applicable
federal or Delaware law, act, regulation (except that no opinion need
be rendered with respect to the securities or blue sky laws of various
jurisdictions or the rules and regulations of the NASD and/or the
Nasdaq National Market) or order or court order, writ, injunction or
decree.
(xix) The Company's articles of incorporation and bylaws
comply in all material respects with the General Corporation Law
("GCL") of the State of Delaware. The Bank's and the MHC's charter
and bylaws comply in all material respects with the HOLA and the rules
and regulations of the OTS.
(xx) To such counsel's Actual Knowledge, neither the
Company, the MHC nor the Bank is in violation of any directive from
the OTS or the FDIC to make any material change in the method of
conducting its respective business.
(xxi) The information in the Prospectus under the captions
"Regulation," "The Conversion," "Restrictions on Acquisition of Finger
Lakes Bancorp" and "Description of Capital Stock of the Bank," and
"Description of Capital Stock of Finger Lakes Bancorp" to the extent
that such information constitutes matters of law, summaries of legal
matters, documents or proceedings, or legal conclusions, has been
reviewed by such counsel and is correct in all material respects. The
description of the Conversion process under the caption "The
Conversion" in the Prospectus has been reviewed by such counsel and is
in all material respects correct. The discussion of statutes or
regulations described or referred to in the Prospectus are accurate
summaries and fairly present the information required to be shown. The
information under the caption "Taxation" has been reviewed by such
counsel and constitutes a correct summary of the opinions rendered by
Luse Lehman and KPMG to the Company, the MHC and the Bank with respect
to such matters.
In giving such opinion, such counsel may rely as to all matters
of fact on certificates of officers or directors of the Company, the
MHC and the Bank and
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certificates of public officials. Such counsel's opinion shall be
limited to matters governed by federal laws and by the State of
Delaware General Corporation Law. With respect to matters involving
the application of Delaware law, such counsel may rely, to the extent
it deems proper and as specified in its opinion, upon the opinion of
local counsel (providing that such counsel states that it believes the
Agent is justified in relying upon such specified opinion or
opinions). The opinion of Luse Lehman shall be governed by the Legal
Opinion Accord ("Accord") of the American Bar Association Section of
Business Law (1991). The term "Actual Knowledge" as used herein shall
have the meaning set forth in the Accord. For purposes of such
opinion, no proceedings shall be deemed to be pending, no order or
stop order shall be deemed to be issued, and no action shall be deemed
to be instituted unless, in each case, a director or executive officer
of the Company, the MHC or the Bank shall have received a copy of such
proceedings, order, stop order or action. In addition, such opinion
may be limited to present statutes, regulations and judicial
interpretations and to facts as they presently exist; in rendering
such opinion, such counsel need assume no obligation to revise or
supplement it should the present laws be changed by legislative or
regulatory action, judicial decision or otherwise; and such counsel
need express no view, opinion or belief with respect to whether any
proposed or pending legislation, if enacted, or any proposed or
pending regulations or policy statements issued by any regulatory
agency, whether or not promulgated pursuant to any such legislation,
would affect the validity of the Conversion or any aspect thereof.
Such counsel may assume that any agreement is the valid and binding
obligation of any parties to such agreement other than the Company,
the MHC or the Bank.
In addition, such counsel shall provide a letter stating that
during the preparation of the Conversion Application, the Registration
Statement and the Prospectus, they participated in conferences with
certain officers of, the independent public and internal accountants
for, and other representatives of the Company, the MHC and the Bank,
at which conferences the contents of the Conversion Application, the
Registration Statement and the Prospectus and related matters were
discussed and, while such counsel has not confirmed the accuracy or
completeness of or otherwise verified the information contained in the
Conversion Application, the Registration Statement or the Prospectus,
and does not assume any responsibility for such information, based
upon such conferences and a review of documents deemed relevant for
the purpose of rendering their
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opinion (relying as to materiality as to factual matters on
certificates of officers and other factual representations by the
Company, the MHC and the Bank), nothing has come to their attention
that would lead them to believe that the Conversion Application, the
Registration Statement, the Prospectus, or any amendment or supplement
thereto (other than the financial statements, the notes thereto,
accounting information and other tabular, financial, statistical and
appraisal data included therein as to which no opinion need be
rendered) contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading.
(2) The favorable opinion, dated as of the Closing Date and
addressed to the Agent and for its benefit, of the Bank's local
counsel, in form and substance to the effect that, to the best of such
counsel's knowledge, (i) the Company, the MHC and the Bank have good
and marketable title to all properties and assets which are material
to the business of the Company, the MHC and the Bank and to those
properties and assets described in the Registration Statement and
Prospectus, as owned by them, free and clear of all liens, charges,
encumbrances or restrictions, except such as are described in the
Registration Statement and Prospectus, or are not material in relation
to the business of the Company, the MHC and the Bank considered as one
enterprise; (ii) all of the leases and subleases material to the
business of the Company, the MHC and the Bank under which the Company,
the MHC and the Bank hold properties, as described in the Registration
Statement and Prospectus, are in full force and effect; (iii) to
counsel's actual knowledge based on certificates of officers, the Bank
is qualified as a foreign corporation to transact business and is in
good standing in each jurisdiction in which its ownership of property
or leasing of property or the conduct of its business requires such
qualification, unless the failure to be so qualified in one or more of
such jurisdictions would not have a material adverse effect on the
condition, financial or otherwise, or the business, operations or
income of the Bank; and (iv) the MHC is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which its ownership of property or leasing of property
or the conduct of its business requires such qualification, unless the
failure to be so qualified in one or more of such jurisdictions would
not have a material adverse effect on the condition, financial or
otherwise, or the business, operations or income of the MHC.
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(3) The favorable opinion, dated as of the Closing Date, of
Nixon Peabody LLP, the Agent's counsel, with respect to such matters
as the Agent may reasonably require. Such opinion may rely and as to
matters of fact, upon certificates of officers and directors of the
Company, the MHC and the Bank delivered pursuant hereto or as such
counsel shall reasonably request.
(d) At the Closing Date, the Agents shall receive a certificate of
the Chief Executive Officer and the Chief Financial Officer of the Company
and a certificate of the Chief Executive Officer and the Chief Financial
Officer of the MHC and the Bank, both dated as of such Closing Date, to the
effect that: (i) they have reviewed the Prospectus and, in their opinion,
at the time the Prospectus became authorized for final use, the Prospectus
did not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading; (ii) since
the date the Prospectus became authorized for final use, no material
adverse change in the condition, financial or otherwise, or in the
earnings, capital, properties or business of the Company, the MHC and the
Bank has occurred and, to their knowledge, no other event has occurred,
which should have been set forth in an amendment or supplement to the
Prospectus which has not been so set forth, and the conditions set forth in
this Section 7 have been satisfied; (iii) since the respective dates as of
which information is given in the Registration Statement and Prospectus,
there has been no material adverse change in the condition, financial or
otherwise, or in the earnings, capital or properties of the Company, the
MHC or the Bank, independently, or of the Company, the MHC and the Bank
considered as one enterprise, whether or not arising in the ordinary course
of business; (iv) the representations and warranties in Section 4 are true
and correct with the same force and effect although expressly made at and
as of the Closing Date; (v) the Company, the MHC and the Bank have complied
in all material respects with all agreements and satisfied all conditions
on their part to be performed or satisfied at or prior to the Closing Date;
(vi) no stop order suspending the effectiveness of the Registration
Statement has been initiated or, to the best knowledge of the Company, the
MHC or the Bank, threatened by the Commission or any state authority; (vii)
no order suspending the Offerings, the Conversion or the effectiveness of
the Prospectus has been issued and no proceedings for that purpose are
pending or, to the best knowledge of the Company, the MHC or the Bank,
threatened by the OTS, the Commission or any state authority; and (viii) to
the best knowledge or the Company or the Bank, no person has sought to
obtain review of the final action of the OTS approving the Plan.
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(e) Prior to and at the Closing Date: (i) in the reasonable opinion
of the Agent, there shall have been no material adverse change in the
condition, financial or otherwise (other than as a result of a change in
law or regulation and affecting the savings association industry as a
whole), or in the earnings or business of the Company, the MHC or the Bank
independently, or of the Company, the MHC and the Bank considered as one
enterprise, from that as of the latest dates as of which such condition is
set forth in the Prospectus other than transactions referred to or
contemplated therein; (iii) the Company, the MHC or the Bank shall not have
received from the OTS or the FDIC any direction (oral or written) to make
any material change in the method of conducting their business with which
it has not complied (which direction, if any, shall have been disclosed to
the Agents) or which materially and adversely would affect the business,
operations or financial condition or income of the Company, the MHC and the
Bank considered as one enterprise; (iv) the Company, the MHC and the Bank
shall not have been in default (nor shall any event have occurred which,
with notice or lapse of time or both, would constitute a default) under any
provision of any agreement or instrument relating to any outstanding
indebtedness; (v) no action, suit or proceedings, at law or in equity or
before or by any federal or state commission, board or other administrative
agency, shall be pending or, to the knowledge of the Company, the MHC or
the Bank, threatened against the Company, the MHC or the Bank or affecting
any of their properties wherein an unfavorable decision, ruling or finding
would materially and adversely affect the business operations, financial
condition or income of the Company, the MHC and the Bank considered as one
enterprise; and (vi) the Shares have been qualified or registered for
offering and sale or exempted therefrom under the securities or blue sky
laws of the jurisdictions as the Agent shall have requested and as agreed
to by the Company and the Bank.
(f) Concurrently with the execution of this Agreement, the Agent
shall receive a letter from KPMG dated as of the date of the Prospectus and
addressed to the Agent: (i) confirming that KPMG is a firm of independent
public accountants within the meaning of Rule 101 of the Code of
Professional Ethics of the American Institute of Certified Public
Accountants and applicable regulations of the OTS and FDIC and stating in
effect that in KPMG's opinion the financial statements of the Company
and/or the Bank (as applicable) as of December 31, 1999 and 1998, and for
each of the three years in the period ended December 31, 1999, as are
included in the Prospectus and covered by their opinion included therein,
comply as to form in all material respects with the applicable accounting
requirements and related published rules and regulations of the OTS, the
FDIC, the SEC and the 1933 Act; (ii) a statement from KPMG in effect that,
on
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the basis of certain agreed upon procedures (but not an audit in accordance
with generally accepted auditing standards) consisting of a reading of the
latest available unaudited interim consolidated financial statements of the
Company prepared by the Company, a reading of the minutes of the meetings
of the Board of Directors of the Company and the Bank and consultations
with officers of the Company and the Bank responsible for financial and
accounting matters, nothing came to their attention which caused them to
believe that: (A) the unaudited financial statements included in the
Prospectus, are not in conformity with the 1933 Act, applicable accounting
requirements of the OTS, the FDIC, and the SEC and generally accepted
accounting principles applied on a basis substantially consistent with that
of the audited financial statements included in the Prospectus; or (B)
during the period from the date of the latest unaudited consolidated
financial statements included in the Prospectus to a specified date not
more than three business days prior to the date of the Prospectus, except
as has been described in the Prospectus, there was any material increase in
borrowings, other than normal deposit fluctuations, by the Company or the
Bank; or (C) there was any decrease in consolidated net assets of the
Company or the Bank at the date of such letter as compared with amounts
shown in the latest unaudited consolidated statement of condition included
in the Prospectus; and (iii) a statement from KPMG that, in addition to the
audit referred to in their opinion included in the Prospectus and the
performance of the procedures referred to in clause (ii) of this subsection
(f), they have compared with the general accounting records of the Company
and the Bank, which are subject to the internal controls of the Company and
the Bank, the accounting system and other data prepared by the Company and
the Bank, directly from such accounting records, to the extent specified in
such letter, such amounts and/or percentages set forth in the Prospectus as
the Agent may reasonably request; and they have reported on the results of
such comparisons.
(g) At the Closing Date, the Agent shall receive a letter from KPMG
dated the Closing Date, addressed to the Agent, confirming the statements
made by them in the letter delivered by them pursuant to subsection (f) of
this Section 7, the "specified date" referred to in clause (ii) of
subsection (f) thereof to be a date specified in such letter, which shall
not be more than three business days prior to the Closing Date.
(h) At the Closing Date, the Agent shall receive a letter from
FinPro, dated the date thereof and addressed to counsel for the Agent (i)
confirming that said firm is independent of the Company, the MHC and the
Bank and is experienced and expert in the area of corporate appraisals
within the meaning of Title 12 of the Code of Federal Regulations, Part
303, (ii) stating in effect that the Appraisal prepared by such firm
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<PAGE>
complies in all material respects with the applicable requirements of Title
12 of the Code of Federal Regulations, and (iii) further stating that their
opinion of the estimated aggregate pro forma market value of the Company,
the MHC and the Bank expressed in their Appraisal dated as of
_________________, 2000, and most recently updated, remains in effect.
(i) The Company, the MHC and the Bank shall not have sustained since
the date of the latest audited financial statements included in the
Prospectus any material loss or interference with their businesses from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Registration
Statement and Prospectus.
(j) At or prior to the Closing Date, the Agent shall receive: (i) a
copy of the letter from the OTS approving the Conversion Application and
authorizing the use of the Prospectus; (ii) a copy of the order from the
Commission declaring the Registration Statement effective; (iii)
certificates from the OTS evidencing the existence of the Bank and the MHC;
(iv) certificates of good standing from the State of Delaware evidencing
the good standing of the Company; (v) a certificate from the FDIC
evidencing the Bank's insurance of accounts, and (vi) a certificate of the
FHLB-New York evidencing the Bank's membership thereof.
(k) Subsequent to the date hereof, there shall not have occurred any
of the following: (i) a suspension or limitation in trading in securities
generally on the New York Stock Exchange or in the over-the-counter market,
or quotations halted generally on the Nasdaq National Market, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices
for securities have been required by either of such exchanges or the NASD
or by order of the Commission or any other governmental authority; (ii) a
general moratorium on the operations of commercial banks or federal savings
associations or a general moratorium on the withdrawal of deposits from
commercial banks or federal savings associations declared by federal or
state authorities; (iii) the engagement by the United States in hostilities
which have resulted in the declaration, on or after the date hereof, of a
national emergency or war; or (iv) a material decline in the price of
equity or debt securities if the effect of such a declaration or decline,
in the Agent's reasonable judgment, makes it impracticable or inadvisable
to proceed with the Offerings or the delivery of the shares on the terms
and in the manner contemplated in the Registration Statement and
Prospectus.
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Section 8. Indemnification.
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(a) The Parties jointly and severally agree to indemnify and hold
harmless the Agent, its officers, directors, agents, servants and employees
and each person, if any, who controls the Agent within the meaning of
Section 15 of the 1933 Act or Section 20(a) of the 1934 Act, against any
and all loss, liability, claim, damage or expense whatsoever (including but
not limited to settlement expenses), joint or several, that the Agent or
any of them may suffer or to which the Agent and any such persons may
become subject under all applicable federal or state laws or otherwise, and
to promptly reimburse the Agent and any such persons upon written demand
for any expense (including fees and disbursements of counsel) incurred by
the Agent or any of them in connection with investigating, preparing or
defending any actions, proceedings or claims (whether commenced or
threatened) to the extent such losses, claims, damages, liabilities or
actions: (i) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment or supplement thereto), preliminary or final Prospectus
(or any amendment or supplement thereto), the Conversion Application (or
any amendment or supplement thereto), or any blue sky application or other
instrument or document executed by the Company, the MHC or the Bank based
upon written information supplied by the Company, the MHC or the Bank filed
in any state or jurisdiction to register or qualify any or all of the
Shares or to claim an exemption therefrom, or provided to any state or
jurisdiction to exempt the Company as a broker-dealer or its officers,
directors and employees as broker-dealers or agents, under the securities
laws thereof (collectively, the "Blue Sky Application"), or any application
or other document, advertisement, oral statement or communication ("Sales
Information") prepared, made or executed by or on behalf of the Company,
the MHC or the Bank with their consent or based upon written or oral
information furnished by or on behalf of the Company, the MHC or the Bank,
whether or not filed in any jurisdiction, in order to qualify or register
the Shares or to claim an exemption therefrom under the securities laws
thereof; (ii) arise out of or based upon the omission or alleged omission
to state in any of the foregoing documents or information, a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
or (iii) arise from any theory of liability whatsoever relating to or
arising from or based upon the Registration Statement (or any amendment or
supplement thereto), preliminary or final Prospectus (or any amendment or
supplement thereto), the Conversion Application (or any amendment or
supplement thereto), any Blue Sky Application or Sales Information or other
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<PAGE>
documentation distributed in connection with the Conversion; provided,
however, that no indemnification is required under this paragraph (a) to
the extent such losses, claims, damages, liabilities or actions arise out
of or are based upon any untrue material statement or alleged untrue
material statements in, or material omission or alleged material omission
from, the Registration Statement (or any amendment or supplement thereto),
preliminary or final Prospectus (or any amendment or supplement thereto),
the Conversion Application, any Blue Sky Application or Sales Information
made in reliance upon and in conformity with information furnished in
writing to the Company or the Bank by the Agent regarding the Agent and
provided further that such indemnification shall be to the extent permitted
by the OTS and the FDIC. The Parties will not be liable to any indemnified
party under the foregoing indemnification and reimbursement provisions, (i)
for any settlement by an indemnified party effected without prior written
consent of the Parties; or (ii) to the extent that any loss, claim, damage
or liability is found in a final judgment by a court to have resulted
primarily from the Agent's gross negligence or willful misconduct. The
Agent shall repay to the Company any amounts paid by the Company for
reimbursement of the Agent's and any indemnified party's expenses in the
event that such expenses were incurred in relation to an act or omission
with respect to which it is finally determined that the Agent has acted in
gross negligence or with willful misconduct. The Parties also agree that no
indemnified party shall have any liability (whether direct or indirect, in
contract or tort or otherwise) to the Company or the Bank or their security
holders or creditors related 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 to have
resulted primarily from the Agent's gross negligence or willful misconduct.
(b) The Agent agrees to indemnify and hold harmless the Company, the
MHC and the Bank, their directors and officers and each person, if any, who
controls the Company, the MHC or the Bank within the meaning of Section 15
of the 1933 Act or Section 20(a) of the 1934 Act against any and all loss,
liability, claim, damage or expense whatsoever (including but not limited
to settlement expenses), joint or several, which they, or any of them, may
suffer or to which they, or any of them may become subject under all
applicable federal and state laws or otherwise, and to promptly reimburse
the Company, the MHC, the Bank, and any such persons upon written demand
for any expenses (including reasonable fees and disbursements of counsel)
incurred by them, or any of them, in connection with investigating,
preparing or defending any actions, proceedings or claims (whether
commenced or threatened) to the extent such losses,
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<PAGE>
claims, damages, liabilities or actions arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement (or any amendment or supplement thereto), the
Conversion Application (or any amendment or supplement thereto) or the
preliminary or final Prospectus (or any amendment or supplement thereto),
or are based upon the omission or alleged omission to state in any of the
foregoing documents a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the
Agent's obligations under this Section 8(b) shall exist only if and only to
the extent (i) that such untrue statement or alleged untrue statement was
made in, or such material fact or alleged material fact was omitted from,
the Registration Statement (or any amendment or supplement thereto), the
preliminary or final Prospectus (or any amendment or supplement thereto) or
the Conversion Application (or any amendment or supplement thereto), any
Blue Sky Application or Sales Information in reliance upon and in
conformity with information furnished in writing to the Company or the Bank
by the Agent regarding the Agent. In no case shall the Agent be liable or
responsible for any amount in excess of the fees received by the Agent
pursuant to Section 2 of this Agreement. The Agent will not be liable to
any indemnified party under the foregoing indemnification and reimbursement
provisions, (i) for any settlement by an indemnified party effected without
its prior written consent; or (ii) to the extent that any loss, claim,
damage or liability is found in a final judgment by a court to have
resulted primarily from the Bank or Company's gross negligence or willful
misconduct. The Bank shall repay to the Agent any amounts paid by the Agent
for reimbursement of the Bank's and any indemnified party's expenses in the
event that such expenses were incurred in relation to an act or omission
with respect to which it is finally determined that the Bank or Company
have acted in gross negligence or with willful misconduct. The Agent also
agrees that no indemnified party shall have any liability (whether direct
or indirect, in contract or tort or otherwise) to the Agent or its security
holders or creditors related to or arising out of the engagement of the
Agent except to the extent that any loss, claim, damage or liability is
found in a final judgment by a court to have resulted primarily from the
Company's or the Bank's gross negligence or willful misconduct.
(c) Each indemnified party shall give prompt written notice to each
indemnifying party of any action, proceeding, claim (whether commenced or
threatened), or suit instituted against it in respect of which indemnity
may be sought hereunder, but failure to so notify an indemnifying party
shall not relieve it from any liability which it may have on account of
this Section 8 or otherwise. An indemnifying party may
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participate at its own expense in the defense of such action. In addition,
if it so elects within a reasonable time after receipt of such notice, an
indemnifying party, jointly with any other indemnifying parties receiving
such notice, may assume defense of such action with counsel chosen by it
and approved by the indemnified parties that are defendants in such action,
unless such indemnified parties reasonably object to such assumption on the
ground that there may be legal defenses available to them that are
different from or in addition to those available to such indemnifying
party. If an indemnifying party assumes the defense of such action, the
indemnifying parties shall not be liable for any fees and expenses of
counsel for the indemnified parties incurred thereafter in connection with
such action, proceeding or claim, other than reasonable costs of
investigation. In no event shall the indemnifying parties be liable for the
fees and expenses of more than one separate firm of attorneys (and any
special counsel that said firm may retain) for each indemnified party in
connection with any one action, proceeding or claim or separate but similar
or related actions, proceedings or claims in the same jurisdiction arising
out of the same general allegations or circumstances.
(d) The agreements contained in this Section 8 and in Section 9
hereof and the representations and warranties of the Company, the MHC and
the Bank set forth in this Agreement shall remain operative and in full
force and effect regardless of: (i) any investigation made by or on behalf
of the Agent or its officers, directors or controlling persons, agents or
employees or by or on behalf of the Company, the MHC or the Bank or any
officers, directors or controlling persons, agents or employees of the
Company, the MHC or the Bank; (ii) deliver of and payment hereunder for the
Shares; or (iii) any termination of this Agreement.
(e) To the extent required by law, this Section 8 is subject to the
provisions of Sections 23A and 23B of the Federal Reserve Act, 12 U.S.C.
Sections 371c and 371c-1 ("Sections 23A and 23B").
Section 9. Contribution. In order to provide for just and equitable
------------
contribution in circumstances in which the indemnification provided for in
Section 8 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Company, the Bank or the Agent, the Company,
the Bank and the Agent shall contribute to the aggregate losses, claims, damages
and liabilities (including any investigation, legal and other expenses incurred
in connection with, and any amount paid in settlement of, any action, suit or
proceeding of any claims asserted, but after deducting any contribution received
by the Company, the Bank or the Agent from persons other than the other party
thereto, who may also be liable for contribution) in
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such proportion so that the Agent shall be responsible for that portion
represented by the percentage that the fees paid to the Agent pursuant to
Section 2 of this Agreement (not including expenses) bears to the gross proceeds
received by the Company from the sale of the Shares in the Offerings and the
Company and the Bank shall be responsible for the balance. If, however, the
allocation provided above is not permitted by applicable law or if the
indemnified party failed to give the notice required under Section 8 above, then
each indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative fault of the Company and the Bank on the one hand and the Agent on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions, proceedings or claims in
respect thereto), but also the relative benefits received by the Company and the
Bank on the one hand and the Agent on the other from the Offerings (before
deducting expenses). The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company and/or the Bank on the one hand or the Agent
on the other and the parties' relative intent, good faith, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Bank and the Agent agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro-rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to above in this Section 9. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions, proceedings or claims in respect thereof)
referred to above in this Section 9 shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action, proceeding or claim. It is expressly
agreed that the Agent shall not be liable for any loss, liability, claim, damage
or expense or be required to contribute any amount which in the aggregate
exceeds the amount paid (excluding reimbursable expenses) to the Agent under
this Agreement. It is understood that the above stated limitation on the Agent's
liability is essential to the Agent and that the Agent would not have entered
into this Agreement if such limitation had not been agreed to by the parties to
this Agreement. No person found guilty of any fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not found guilty of such fraudulent
misrepresentation. The obligations of the Company and the Bank under this
Section 9 and under Section 8 shall be in addition to any liability which the
Company and the Bank may otherwise have. For purposes of this Section 9, each of
the Agent's, the Company's or the Bank's officers and directors and each person,
if any, who controls the Agent or the Company or the Bank within the meaning of
the 1933 Act and the 1934 Act shall have the same rights to contribution as the
Agent, the Company or the Bank. Any party entitled to contribution, promptly
after receipt of
39
<PAGE>
notice of commencement of any action, suit, claim or proceeding against such
party in respect of which a claim for contribution may be made against another
party under this Section 9, will notify such party from whom contribution may be
sought, but the omission to so notify such party shall not relieve the party
from whom contribution may be sought from any other obligation it may have
hereunder or otherwise than under this Section 9. To the extent required by law,
this Section 9 is subject to and limited by the provisions of Sections 23A and
23B.
Section 10. Survival of Agreements, Representations and Indemnities. The
-------------------------------------------------------
respective indemnities of the Company, the Bank and the Agent and the
representations and warranties and other statements of the Company and the Bank
set forth in or made pursuant to this Agreement shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of the Agent, the Company, the Bank or any
controlling person referred to in Section 8 hereof, and shall survive the
issuance of the Shares, and any legal representative, successor or assign of the
Agent, the Company, the Bank, and any such controlling person shall be entitled
to the benefit of the respective agreements, indemnities, warranties and
representations.
Section 11. Termination. The Agent may terminate its obligations under
-----------
this Agreement by giving the notice indicated below in this Section 11 at any
time after this Agreement becomes effective as follows:
(a) In the event the Company fails to sell all of the Shares by
_______________, 2000, and in accordance with the provisions of the Plan or
as required by the Conversion Regulations, and applicable law, this
Agreement shall terminate upon refund by the Bank to each person who has
subscribed for or ordered any of the Shares the full amount which it may
have received from such person, together with interest as provided in the
Prospectus, and no party to this Agreement shall have any obligation to the
other hereunder, except for payment by the Company and/or the Bank as set
forth in Sections 2(a) and (d), 6, 8 and 9 hereof.
(b) If any of the conditions specified in Section 7 shall not have
been fulfilled when and as required by this Agreement unless waived in
writing, or by the Closing Date, this Agreement and all of the Agent's
obligations hereunder may be canceled by the Agent by notifying the
Company, the MHC and the Bank of such cancellation in writing or by
telegram at any time at or prior to the Closing Date, and any such
cancellation shall be without liability of any party to any other party
except as otherwise provided in Sections 2, 6, 8 and 9 hereof.
40
<PAGE>
(c) If the Agent elects to terminate this Agreement as provided in
this Section, the Company, the MHC and the Bank shall be notified promptly
by the Agent by telephone or telegram, confirmed by letter.
The Company, the MHC and the Bank may terminate this Agreement in the event
the Agent is in material breach of the representations and warranties or
covenants contained in Section 5 and such breach has not been cured after the
Company and the Bank have provided the Agent with notice of such breach.
This Agreement may also be terminated by mutual written consent of the
parties hereto.
Section 12. Notices. All communications hereunder, except as herein
-------
otherwise specifically provided, shall be mailed in writing and if sent to the
Agent shall be mailed, delivered or telegraphed and confirmed to Friedman,
Billings, Ramsey & Co., Inc., 1001 19th Street North, Arlington, Virginia
22209-1710, Attention: David Neiswander (with a copy to Nixon Peabody LLP, 1255
23rd Street, N.W., Suite 800, Washington, D.C. 20037, Attention: Raymond J.
Gustini, Esq.) and, if sent to the Company, the MHC and the Bank, shall be
mailed, delivered or telegraphed and confirmed to the Company, the MHC and the
Bank at 470 Exchange Street, Geneva, NY 14456, Attention: G. Thomas Bowers,
President and Chief Executive Officer (with a copy to Luse Lehman, Attention:
Alan Schick, Esq.)
Section 13. Parties. The Company, the MHC and the Bank shall be entitled
-------
to act and rely on any request, notice, consent, waiver or agreement purportedly
given on behalf of the Agent, when the same shall have been given by the
undersigned. The Agent shall be entitled to act and rely on any request,
notice, consent, waiver or agreement purportedly given on behalf of the Company,
the MHC or the Bank, when the same shall have been given by the undersigned or
any other officer of the Company, the MHC or the Bank. This Agreement shall
inure solely to the benefit of, and shall be binding upon, the Agent, the
Company, the MHC, the Bank, and their respective successors, legal
representatives and assigns, and no other person shall have or be construed to
have any legal or equitable right, remedy or claim under or in respect of or by
virtue of this Agreement or any provision herein contained. It is understood
and agreed that this Agreement is the exclusive agreement among the parties
hereto, and supersedes any prior agreement among the parties and may not be
varied except in writing signed by all the parties.
Section 14. Closing. The closing for the sale of the Shares shall take
-------
place on the Closing Date at such location as mutually agreed upon by the Agent
and the Company, the MHC and the Bank. At the closing, the Company, the MHC
41
<PAGE>
and the Bank shall deliver to the Agent in next day funds the commissions, fees
and expenses due and owing to the Agent as set forth in Sections 2 and 6 hereof
and the opinions and certificates required hereby and other documents deemed
reasonably necessary by the Agent shall be executed and delivered to effect the
sale of the Shares as contemplated hereby and pursuant to the terms of the
Prospectus.
Section 15. Partial Invalidity. In the event that any term, provision or
------------------
covenant herein or the application thereof to any circumstance or situation
shall be invalid or unenforceable, in whole or in part, the remainder hereof and
the application of said term, provision or covenant to any other circumstances
or situation shall not be affected thereby, and each term, provision or covenant
herein shall be valid and enforceable to the full extent permitted by law.
Section 16. Construction. This Agreement shall be construed in accordance
------------
with the laws of the State of Delaware.
Section 17. Counterparts. This Agreement may be executed in separate
------------
counterparts, each of which so executed and delivered shall be an original, but
all of which together shall constitute but one and the same instrument.
42
<PAGE>
If the foregoing correctly sets forth the arrangement among the Company,
the MHC, the Bank, and the Agent, please indicate acceptance thereof in the
space provided below for that purpose, whereupon this letter and the Agent's
acceptance shall constitute a binding agreement.
Very truly yours,
FINGER LAKES BANCORP, INC. SAVINGS BANK OF THE FINGER
LAKES
By:___________________________ By:__________________________________
G. Thomas Bowers G. Thomas Bowers
President and Chief Executive President and Chief Executive
Officer Officer
FINGER LAKES FINANCIAL CORPORATION, MHC
By:___________________________
G. Thomas Bowers
President and Chief Executive
Officer
Accepted as of the date first above written
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
By:___________________________
James R. Kleeblatt
Managing Director
43
<PAGE>
EXHIBIT B
FINGER LAKES BANCORP, INC.
Up to 2,155,593 Shares (Anticipated Maximum)
(Par Value $.01 Per Share)
Selected Dealers' Agreement
---------------------------
____________________, 2000
Gentlemen:
We have agreed to assist Savings Bank of the Finger Lakes (the "Bank"), a
federally chartered stock savings bank, and the Bank's federal mutual holding
company, Finger Lakes Financial Corp. (the "MHC"), in connection with the offer
and sale of up to 2,122,545 shares of the conversion common stock, par value
$.01 per share (the "Common Stock") of Finger Lakes Bancorp, Inc. (the
"Company"), a Delaware corporation, to be issued in connection with the
conversion of the MHC. The total number of shares of Common Stock to be offered
may be decreased to a minimum of 25 shares. The price per share has been fixed
at $7.00. The Common Stock, the number of shares to be issued, and certain of
the terms on which they are being offered, are more fully described in the
enclosed Prospectus dated _______________, 2000 (the "Prospectus"). In
connection with the Conversion, the Company, on a best-efforts basis is offering
for sale between 1,593,259 and 2,155,593 shares (the "Shares") of the Common
Stock, in a Subscription Offering, as defined, as contemplated by Office of
Thrift Supervision (the "OTS") Regulation. Any Shares not sold in the
Subscription Offering will be offered to the general public in a community
offering (the "Community Offering") giving preference to residents of the Bank's
Local Community, as defined in the Prospectus.
The Subscription and Community Offerings are being conducted under a Plan
of Conversion (the "Plan") adopted by the Bank and the MHC pursuant to which the
MHC intends to convert from a federal mutual holding company to an interim
federal stock savings bank and simultaneously merge with and into the Company
(the "Conversion"). As part of the Conversion, the Company will sell the Common
Stock to the public as provided for in the Plan. The Subscription and Community
Offerings are further being conducted in accordance with the regulations of the
OTS subject to the restrictions contained in the Plan.
B-1
<PAGE>
The Common Stock is also being offered in accordance with the Plan by
broker/dealers licensed by the National Association of Securities Dealers, Inc.
("NASD"), which have been approved by the Bank ("Approved Brokers").
We are offering the selected dealers (of which you are one) the opportunity
to participate in the solicitation of offers to buy the Common Stock and we will
pay you a fee in the amount of four percent (4%) of the dollar amount of the
Common Stock sold on behalf of the Company by you, as evidenced by the
authorized designation of your firm on the order form or forms for payment
therefor to the special account established by the Bank 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 Common Stock sold on
behalf of the Company by you, as evidenced in accordance with the preceding
sentence. As soon as practicable after the closing date of the offering, we
will remit to you, only out of our compensation as provided above, the fees to
which you are entitled hereunder.
Each order form for the purchase of Common Stock must set forth the
identity and address of each person to whom the certificates for such Common
Stock should be issued and delivered. Such order form also must clearly
identify your firm in order for you to receive compensation. You shall instruct
any subscriber who elects to send his order form to you to make any accompanying
check payable to "Finger Lakes Bancorp, Inc."
This offer is made subject to the terms and conditions herein set forth and
is made only to selected dealers who are members in good standing of the NASD
who are 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.
Orders for Common Stock will be subject to confirmation and we, acting on
behalf of the Company, the MHC and the Bank, reserve the right in our unfettered
discretion to reject any order in whole or in part, to accept or reject orders
in the order of their receipt or otherwise, and to allot. Neither you nor any
other person is authorized by the Company, the MHC and the Bank, or by us to
give any information or make any representations other than those contained in
the Prospectus in connection with the sale of any of the Common Stock. No
selected dealer is authorized to act as agent for us when soliciting offers to
buy the Common Stock from the public or otherwise. No selected dealer shall
engage in any stabilizing (as defined in Rule 10b-7 promulgated under the
Securities Exchange Act of 1934) with respect to the Company's Common Stock
during the offering.
B-2
<PAGE>
We and each selected dealer assisting in selling Common Stock pursuant
hereto agree to comply with the applicable requirements of the Securities
Exchange Act of 1934 and applicable state rules and regulations. Each customer-
carrying selected dealer that is not a $250,000 net capital reporting
broker/dealer agrees that it will not use a sweep arrangement and that it will
transmit all customer checks by noon of the next business day after receipt
thereof. In addition, we and each selected dealer confirm that the Securities
and Exchange Commission interprets Rule 15c2-8 promulgated under the Securities
Exchange Act of 1934 as requiring that a Prospectus be supplied to each person
who is expected to receive a confirmation of sale 48 hours prior to delivery of
such person's order form.
We and each selected dealer further agree that to the extent that your
customers desire to pay for shares with funds held by or to be deposited with
us, in accordance with the interpretations of the Securities and Exchange
Commission of Rule 15c2-4 promulgated under the Securities and Exchange Act of
1934, either (a) upon receipt of an executed order form or direction to execute
an order form on behalf of a customer to forward the offering price of the
Common Stock ordered on or before twelve noon Delaware time of the next business
day following receipt or execution of an order form by us to the Company for
deposit in a segregated account or (b) to solicit indications of interest in
which event (i) we will subsequently contact any customer indicating interest to
confirm the interest and give instructions to execute and return an order form
or to receive authorization to execute the order form on the customer's behalf,
(ii) we will mail acknowledgments of receipt of orders to each customer
confirming interest on the business day following such confirmation, (iii) we
will debit accounts of such customers on the third business day (the "Debit
Date") following receipt of the confirmation referred to in (i), and (iv) we
will forward complete order forms together with such funds to the Company on or
before twelve noon on the next business day and each selected dealer
acknowledges that if the procedure in (b) is adopted, our customers' funds are
not required to be in their accounts until the Debit Date.
Unless earlier terminated by us, this Agreement shall terminate upon the
closing date of the Conversion. We may terminate this Agreement or any
provisions hereof any time by written or telegraphic notice to you. Of course,
our obligations hereunder are subject to the successful completion of the
Conversion.
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 of
Common Stock sold on behalf of the Company by you under this Agreement.
B-3
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We shall have full authority to take such actions as we may deem advisable
in respect of 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 Common Stock has been qualified for sale under, or are exempt from
the requirements of, the respective blue sky laws of such states, but we assume
no responsibility or obligation as to your rights to sell Common Stock in any
state.
Additional copies of the Prospectus and any supplements thereto will be
supplied in reasonable quantities upon request.
Any notice from us to you shall be deemed to have been duly given if
mailed, telephoned, or telegraphed to you at the address to which this Agreement
is mailed.
This Agreement shall be construed in accordance with the laws of the State
of Delaware.
Please confirm your agreement hereto by signing and returning the
confirmations accompanying this letter at once to us at Friedman, Billings,
Ramsey & Co., Inc., Potomac Tower, 1001 Nineteenth Street North, Arlington,
Virginia 22209. The enclosed duplicate copy will evidence the agreement
between us.
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
By:_____________________________
James R. Kleeblatt
Managing Director
CONFIRMED AS OF:
, 2000
B-4
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(Name of Dealer)
By:_____________________________
Its:____________________________
B-5
