[Form of ]
2,012,500 Shares
(subject to increase up to 2,314,375 shares
in the event of an oversubscription)
SE Financial Corp.
(a Pennsylvania corporation)
Common Stock
(par value $.10 per share)
AGENCY AGREEMENT
, 2004
--------------------
SANDLER O'NEILL & PARTNERS, L.P.
919 Third Avenue, 6th Floor
New York, New York 10022
Ladies and Gentlemen:
SE Financial Corp., a Pennsylvania corporation (the
"Company"), and St. Edmond's Federal Savings Bank, a federal savings bank (the
"Bank"), hereby confirm their agreement with Sandler O'Neill & Partners, L.P.
("Sandler O'Neill" or the "Agent") with respect to the offer and sale by the
Company of 2,012,500 shares (subject to increase up to 2,314,375 shares in the
event of an oversubscription) of the Company's Common Stock, par value $.10 per
share (the "Common Stock"). The shares of Common Stock to be sold by the Company
are hereinafter called the "Securities."
The Securities are being offered for sale in accordance with
the plan of conversion (the "Plan") adopted by the Board of Directors of the
Bank pursuant to which the Bank intends to convert from a federally chartered
mutual savings bank to a federally chartered stock savings bank and issue all of
its stock to the Company. Pursuant to the Plan, the Company is offering to the
Bank's tax qualified employee benefit plans, including the Employee Stock
Ownership Plan (the "ESOP") (collectively, the "Employee Plans") and to certain
of the Bank's depositors and borrowers rights to subscribe for the Securities in
a subscription offering (the "Subscription Offering"). To the extent Securities
are not subscribed
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for in the Subscription Offering, such Securities may be offered to certain
members of the general public, with preference given to certain natural persons
residing in Philadelphia County, Pennsylvania and Gloucester County, New Jersey,
in a direct community offering (the "Community Offering" and together with the
Subscription Offering, as each may be extended or reopened from time to time,
the "Subscription and Community Offering") to be commenced concurrently with,
during or promptly after the Subscription Offering. It is currently anticipated
by the Bank and the Company that any Securities not subscribed for in the
Subscription and Community Offering will be offered, subject to Section 2
hereof, in a syndicated community offering (the "Syndicated Community
Offering"). The Subscription and Community Offering and the Syndicated Community
Offering are hereinafter referred to collectively as the "Offerings," and the
conversion of the Bank from mutual to stock form, the acquisition of the capital
stock of the Bank by the Company and the Offerings are hereinafter referred to
collectively as the "Conversion." It is acknowledged that the price of the
Securities may be decreased and the number of Securities to be sold in the
Conversion may be increased or decreased as described in the Prospectus (as
hereinafter defined). If the number of Securities is increased or decreased in
accordance with the Plan, the term "Securities" shall mean such greater or
lesser number, where applicable. In the event that a holding company form of
organization is not utilized, all pertinent terms of this Agreement will apply
to the conversion of the Bank from the mutual to stock form of organization and
the sale of the Bank's common stock.
The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form SB-2 (No.
333-112153), including a related prospectus, for the registration of the
Securities under the Securities Act of 1933, as amended (the "Securities Act"),
has filed such amendments thereto, if any, and such amended prospectuses as may
have been required to the date hereof by the Commission in order to declare such
registration statement effective, and will file such additional amendments
thereto and such amended prospectuses and prospectus supplements as may
hereafter be required. Such registration statement (as amended to date, if
applicable, and as from time to time amended or supplemented hereafter) and the
prospectuses constituting a part thereof (including in each case all documents
incorporated or deemed to be incorporated by reference therein and the
information, if any, deemed to be a part thereof pursuant to the rules and
regulations of the Commission under the Securities Act, as from time to time
amended or supplemented pursuant to the Securities Act or otherwise (the
"Securities Act Regulations")), are hereinafter referred to as the "Registration
Statement" and the "Prospectus," respectively, except that if any revised
prospectus shall be used by the Company in connection with the Subscription and
Community Offering or the Syndicated Community Offering which differs from the
Prospectus on file at the Commission at the time the Registration Statement
becomes effective (whether or not such revised prospectus is required to be
filed by the Company pursuant to Rule 424(b) of the Securities Act Regulations),
the term "Prospectus" shall refer to such revised prospectus from and after the
time it is first provided to the Agent for such use.
Concurrently with the execution of this Agreement, the Company
is delivering to the Agent copies of the Prospectus of the Company to be used in
the Subscription and
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Community Offering. Such prospectus contains information with respect to the
Bank, the Company and the Common Stock.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) The Company and the Bank jointly and severally represent and warrant
to the Agent as of the date hereof as follows:
(i) The Registration Statement has been declared effective by the
Commission, no stop order has been issued with respect thereto
and no proceedings therefor have been initiated or threatened by
the Commission. At the time the Registration Statement became
effective and at the Closing Time referred to in Section 2
hereof, the Registration Statement complied and will comply in
all material respects with the requirements of the Securities Act
and the Securities Act Regulations and did not and will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading. The Prospectus, at the
date hereof does not and at the Closing Time referred to in
Section 2 hereof will not, include an untrue statement of a
material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however,
that the representations and warranties in this subsection shall
not apply to statements in or omissions from the Registration
Statement or Prospectus made in reliance upon and in conformity
with information with respect to the Agent furnished to the
Company in writing by the Agent expressly for use in the
Registration Statement or Prospectus (the "Agent Information,"
which the Company and the Bank acknowledge appears only in the
last sentence of the first paragraph of the section entitled
"Market for the Stock" and the third paragraph of the section
"The Offering- Plan of Distribution/Marketing Arrangements" of
the Prospectus).
(ii) The Company has filed with the Department of the Treasury, Office
of Thrift Supervision (the "OTS") the Company's application for
approval of its acquisition of the Bank (the "Holding Company
Application") on Form H-(e)1-S promulgated under the savings and
loan holding company provisions of the Home Owners' Loan Act, as
amended ("HOLA") and the regulations promulgated thereunder. The
Company has received written notice from the OTS of its approval
of the acquisition of the Bank, such approval remains in full
force and effect and no order has been issued by the OTS
suspending or revoking such approval and no proceedings therefor
have been initiated or threatened by the OTS. At the date of such
approval and at the Closing Time referred to in Section 2, the
Holding Company Application complied and will comply in all
material respects with the applicable provisions of HOLA and the
regulations promulgated thereunder.
(iii)Pursuant to the rules and regulations of the OTS governing the
conversion of federally chartered mutual savings banks to stock
form (the "Conversion
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Regulations"), the Bank has filed with the OTS an application for
conversion on Form AC, and has filed such amendments thereto and
supplementary materials as may have been required to the date
hereof (such application, as amended to date, if applicable, and
as from time to time amended or supplemented hereafter, is
hereinafter referred to as the "Conversion Application"),
including copies of the Bank's Proxy Statement, dated
______________, 2004, relating to the Conversion (the "Proxy
Statement"), and the Prospectus and the Conversion Application is
truthful and accurate in all material respects. The OTS has, by
letter dated __________, 2004, approved the Conversion
Application, including the Proxy Statement and Prospectus, such
approval remains in full force and effect and no order has been
issued by the OTS suspending or revoking such approval and no
proceedings therefor have been initiated or, to the knowledge of
the Company or the Bank, threatened by the OTS. At the date of
such approval and at the Closing Time referred to in Section 2,
the Conversion Application complied and will comply in all
material respects with the applicable provisions of the
Conversion Regulations.
(iv) At the time of their use, the Proxy Statement and any other proxy
solicitation materials will comply in all material respects with
the applicable provisions of the Conversion Regulations and will
not contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading. The Company and the Bank will promptly file
the Prospectus and any supplemental sales literature with the
Commission and the OTS. The Prospectus and all supplemental sales
literature, as of the date the Registration Statement became
effective and at the Closing Time referred to in Section 2,
complied and will comply in all material respects with the
applicable requirements of the Conversion Regulations and, at or
prior to the time of their first use, will have received all
required authorizations of the OTS for use in final form.
(v) Neither the SEC nor the OTS has, by order or otherwise, prevented
or suspended the use of the Proxy Statement, the Prospectus or
any supplemental sales literature authorized by the Company or
the Bank for use in connection with the Offerings and no action
by or before any such governmental entity to prevent or suspend
the use of the Proxy Statement, the Prospectus or any
supplemental sales literature is pending, or to the best
knowledge of the Company and the Bank, threatened.
(vi) At the Closing Time referred to in Section 2, the Company and the
Bank will have completed the conditions precedent to the
Conversion in accordance with the Plan, the applicable Conversion
Regulations and all other applicable laws, regulations, decisions
and orders, including all material terms, conditions,
requirements and provisions precedent to the Conversion imposed
upon the Company or the Bank by the OTS, the Federal Deposit
Insurance Corporation (the "FDIC"), or any other regulatory
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authority, other than those which the regulatory authority
permits to be completed after the Conversion.
(vii)FinPro, Inc., which prepared the valuation of the Bank as part of
the Conversion, has advised the Company and the Bank in writing
that it satisfies all requirements for an appraiser set forth in
the Conversion Regulations and any interpretations or guidelines
issued by the OTS and the FDIC with respect thereto.
(viii) The accountants who certified the consolidated financial
statements and supporting schedules of the Bank included in the
Registration Statement have advised the Company and the Bank in
writing that they are independent public accountants within the
meaning of the Code of Ethics of the American Institute of
Certified Public Accountants (the "AICPA"), and such accountants
are, with respect to the Company, the Bank and each subsidiary of
the Bank, independent certified public accountants as required by
the Securities Act and the Securities Act Regulations and such
accountants are not in violation of the auditors independence
requirements of the Sarbanes-Oxley Act of 2002 (the
"Sarbanes-Oxley Act").
(ix) The only direct and indirect subsidiary of the Bank is SE
Investment Services Corp. (the "Subsidiary"). Except for the
Subsidiary, the Bank does not, directly or indirectly, control
any other corporation, limited liability company, partnership,
joint venture, association, trust or other business organization.
Upon completion of the Conversion, the only direct subsidiary of
the Company will be the Bank.
(x) The consolidated financial statements and the related notes
thereto included in the Registration Statement and the Prospectus
present fairly the financial position of the Company, the Bank
and the Subsidiary at the dates indicated and the results of
operations, retained earnings and cash flows for the periods
specified, and comply as to form in all material respects with
the applicable accounting requirements of the Securities Act
Regulations and the Conversion Regulations; except as otherwise
stated in the Registration Statement, said financial statements
have been prepared in conformity with accounting principles
generally accepted in the United States applied on a consistent
basis; and the supporting schedules and tables included in the
Registration Statement present fairly the information required to
be stated therein. The other financial, statistical and pro forma
information and related notes included in the Prospectus present
fairly the information shown therein on a basis consistent with
the audited and unaudited financial statements included in the
Prospectus, and as to the pro forma adjustments, the adjustments
made therein have been consistently applied on the basis
described therein. The capitalization, liabilities, assets,
properties and business of the Company and the Bank conform in
all material respects to the descriptions contained in the
Prospectus and, neither the Company nor the Bank has any material
liabilities of any kind, contingent or otherwise, except as
disclosed in the Registration Statement or the Prospectus.
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(xi) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as
otherwise stated therein (A) there has been no material adverse
change in the financial condition, results of operations,
business affairs or prospects of the Company, the Bank and the
Subsidiary considered as one enterprise, whether or not arising
in the ordinary course of business consistent with past practice,
and (B) except for transactions specifically referred to or
contemplated in the Prospectus, there have been no transactions
entered into by the Company, the Bank or the Subsidiary, other
than those in the ordinary course of business consistent with
past practice, which are material with respect to the Company,
the Bank and its subsidiaries, considered as one enterprise.
(xii)The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of
Pennsylvania with corporate power and authority to own, lease and
operate its properties and to conduct its business as described
in the Prospectus and to enter into and perform its obligations
under this Agreement; and the Company is duly qualified as a
foreign corporation to transact business and is in good standing
in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to
so qualify in any other jurisdiction would not have a material
adverse effect on the financial condition, results of operations
or business affairs or prospects of the Company, the Bank and the
Subsidiary, considered as one enterprise.
(xiii) Upon consummation of the Conversion, the authorized, issued and
outstanding capital stock of the Company will be as set forth in
the Prospectus under "Capitalization" (except for subsequent
issuances, if any, pursuant to reservations, agreements or
employee benefit plans referred to in the Prospectus) [except for
shares issued in connection with the initial capitalization of
the Company, which shares will be cancelled upon consummation of
the Conversion]; no shares of Common Stock or other capital stock
of the Company have been or will be issued and outstanding prior
to the Closing Time referred to in Section 2; at the time of
Conversion, the Securities will have been duly authorized for
issuance and, when issued and delivered by the Company pursuant
to the Plan against payment of the consideration calculated as
set forth in the Plan and stated on the cover page of the
Prospectus, will be duly and validly issued and fully paid and
non-assessable; the terms and provisions of the Common Stock and
the capital stock of the Company conform to all statements
relating thereto contained in the Prospectus; the certificates
representing the shares of Common Stock conform to the
requirements of applicable law and regulations; and the issuance
of the Securities is not subject to preemptive or other similar
rights.
(xiv)The Bank has been duly organized and, as of the date hereof, is
validly existing as a federally chartered savings bank in mutual
form and upon consummation
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of the Conversion will be a federally chartered savings bank in
stock form, in both instances with full corporate power and
authority to own, lease and operate its properties and to conduct
its business as described in the Prospectus; the Company, the
Bank and the Subsidiary have obtained all licenses, permits and
other governmental authorizations currently required for the
conduct of their respective businesses or required for the
conduct of their respective businesses as contemplated by the
Holding Company Application and the Conversion Application,
except where the failure to obtain such licenses, permits or
other governmental authorizations would not have a material
adverse effect on the financial condition, results of operations,
business affairs or prospects of the Company, the Bank and the
Subsidiary considered as one enterprise; all such licenses,
permits and other governmental authorizations are in full force
and effect and the Company, the Bank and the Subsidiary are in
all material respects in compliance therewith; neither the
Company, the Bank nor the Subsidiary has received notice of any
proceeding or action relating to the revocation or modification
of any such license, permit or other governmental authorization
which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, might have a material
adverse effect on the financial condition, results of operations,
business affairs or prospects of the Company, the Bank and the
Subsidiary, considered as one enterprise; and the Bank is validly
existing and in good standing under the laws of the United States
and is qualified as a foreign corporation in any jurisdiction in
which the failure to so qualify would have a material adverse
effect on the financial condition, results of operations,
business affairs or prospects of the Company, the Bank and the
Subsidiary considered as one enterprise.
(xv) The Bank is a member in good standing of the Federal Home Loan
Bank of Pittsburgh; the deposit accounts of the Bank are insured
by the FDIC up to the applicable limits. Upon consummation of the
Conversion, the liquidation account for the benefit of eligible
account holders and supplemental eligible account holders of the
Bank will be duly established in accordance with the requirements
of the Plan and the Conversion Regulations. The Bank is a
"qualified thrift lender" within the meaning of 12 U.S.C. Section
1467a(m).
(xvi)Upon consummation of the Conversion, the authorized capital stock
of the Bank will be 8,000,000 shares of common stock, par value
$.10 per share (the "Bank Common Stock") and 2,000,000 shares of
preferred stock, par value $.10 per share (the "Bank Preferred
Stock"), and the issued and outstanding capital stock of the Bank
will be ______ shares of Bank Common Stock and no shares of the
Bank Preferred Stock, and no shares of Bank Common Stock or Bank
Preferred Stock have been or will be issued prior to the Closing
Time referred to in Section 2; and as of the Closing Time
referred to in Section 2, all of the issued and outstanding
capital stock of the Bank will be duly authorized, validly issued
and fully paid and nonassessable and have been issued in
compliance with all federal and state securities laws. The shares
of Bank Common Stock to be issued to the Company will have been
duly authorized for issuance and, when issued and delivered by
the Bank pursuant to the Plan against
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payment of the consideration calculated as set forth in the Plan
and as described in the Prospectus, will be duly and validly
issued and fully paid and nonassessable, and all such Bank Common
Stock will be owned beneficially and of record by the Company
free and clear of any security interest, mortgage, pledge, lien,
encumbrance or legal or equitable claim; the terms and provisions
of the Bank Common Stock and the Bank Preferred Stock conform to
all statements relating thereto contained in the Prospectus, and
the certificates representing the shares of the Bank Common Stock
will conform with the requirements of applicable laws and
regulations; and the issuance of the Bank Common Stock is not
subject to preemptive or similar rights; and there are no other
warrants, options or rights of any kind to acquire additional
shares of Bank Common Stock or any shares of Bank Preferred
Stock.
(xvii) The Subsidiary has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has full corporate power and
authority to own, lease and operate its properties and to conduct
its business as described in the Registration Statement and
Prospectus, and is duly qualified to transact business and is in
good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to
so qualify would not have a material adverse effect on the
financial condition, results of operations, business affairs or
prospects of the Company, the Bank and the Subsidiary considered
as one enterprise; the activities of the Subsidiary are permitted
to subsidiaries of a federally chartered savings bank and a
savings and loan holding company by the rules, regulations,
resolutions and practices of the OTS; all of the issued and
outstanding capital stock of the Subsidiary has been duly
authorized and validly issued, is fully paid and nonassessable
and is owned by the Bank, directly, free and clear of any
security interest, mortgage, pledge, lien, encumbrance or legal
or equitable claim; and there are no warrants, options or rights
of any kind to acquire shares of capital stock of the Subsidiary.
(xviii) The Company and the Bank have taken all corporate action
necessary for them to execute, deliver and perform this
Agreement, and this Agreement has been duly executed and
delivered by, and is the valid and binding agreement of, the
Company and the Bank, enforceable in accordance with its terms,
except as may be limited by bankruptcy, insolvency or other laws
affecting the enforceability of the rights of creditors generally
and judicial limitations on the right of specific performance and
except as the enforceability of indemnification and contribution
provisions may be limited by applicable securities laws.
(xix)Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus and prior
to the Closing Time, except as otherwise may be indicated or
contemplated therein, none of the Company, the Bank or the
Subsidiary will have (A) issued any securities or incurred any
liability or obligation, direct or contingent, or borrowed money,
except borrowings in the ordinary course of
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business consistent with past practice from the same or similar
sources and in similar amounts as indicated in the Prospectus, or
(B) entered into any transaction or series of transactions which
are material in light of the business of the Company, the Bank
and the Subsidiary, taken as a whole, excluding the origination,
purchase and sale of loans or the purchase or sale of investment
securities or mortgaged-backed securities in the ordinary course
of business consistent with past practice.
(xx) No approval of any regulatory or supervisory or other public
authority is required in connection with the execution and
delivery of this Agreement or the issuance of the Securities that
has not been obtained and a copy of which has been delivered to
the Agent, except as may be required under the "blue sky" or
state securities laws of various jurisdictions.
(xxi)Neither the Company, the Bank nor the Subsidiary is in violation
of its certificate of incorporation, organization certificate,
articles of incorporation or charter, as the case may be, or
bylaws (and the Bank will not be in violation of its charter or
bylaws in stock form upon consummation of the Conversion); and
neither the Company, the Bank nor the Subsidiary is in default
(nor has any event occurred which, with notice or lapse of time
or both, would constitute a default) in the performance or
observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement,
note, lease or other instrument to which the Company, the Bank or
the Subsidiary is a party or by which it or any of them may be
bound, or to which any of the property or assets of the Company,
the Bank or the Subsidiary is subject, except for such defaults
that would not, individually or in the aggregate, have a material
adverse effect on the financial condition, results of operations,
business affairs or prospects of the Company, the Bank and the
Subsidiary considered as one enterprise.
(xxii) The consummation of the Conversion, the execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated herein have been duly authorized by all
necessary corporate action on the part of the Company and the
Bank and do not and will not conflict with or constitute a breach
of, or default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of
the Company, the Bank or the Subsidiary pursuant to, any
contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which the Company, the Bank or the Subsidiary
is a party or by which it or any of them may be bound, or to
which any of the property or assets of the Company, the Bank or
the Subsidiary is subject, except for such defaults that would
not, individually or in the aggregate, have a material adverse
effect on the financial condition, results of operations,
business affairs or prospects of the Company, the Bank and the
Subsidiary considered as one enterprise; nor will such action
result in any violation of the provisions of the certificate of
incorporation, organization certificate, articles of
incorporation or charter or by-laws of the Company, the Bank or
the
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Subsidiary, or any applicable law, administrative regulation or
administrative or court decree.
(xxiii) No labor dispute with the employees of the Company, the Bank
or the Subsidiary exists or, to the knowledge of the Company or
the Bank, is imminent or threatened; and the Company and the Bank
are not aware of any existing or threatened labor disturbance by
the employees of any of its principal suppliers or contractors
which might be expected to result in any material adverse change
in the financial condition, results of operations, business
affairs or prospects of the Company, the Bank and the Subsidiary
considered as one enterprise.
(xxiv) Each of the Company, the Bank and the Subsidiary have good and
marketable title to all properties and assets for which ownership
is material to the business of the Company, the Bank or the
Subsidiary and to those properties and assets described in the
Prospectus as owned by them, free and clear of all liens,
charges, encumbrances or restrictions, except such as are
described in the Prospectus or are not material in relation to
the business of the Company, the Bank or the Subsidiary
considered as one enterprise; and all of the leases and subleases
material to the business of the Company, the Bank or the
Subsidiary under which the Company, the Bank or the Subsidiary
hold properties, including those described in the Prospectus, are
valid and binding agreements of the Company, the Bank and the
Subsidiary in full force and effect, enforceable in accordance
with their terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization and similar
laws of general applicability relating to or affecting creditors'
rights or general principles of equity).
(xxv)None of the Company, the Bank nor the Subsidiary are in
violation of any directive from the Commission, the OTS or the
FDIC or any other governmental entity to make any material change
in the method of conducting their respective businesses; the Bank
and the Subsidiary have conducted and are conducting their
business so as to comply in all material respects with all
applicable statutes, regulations and administrative and court
decrees (including, without limitation, all regulations,
decisions, directives and orders of the Commission, the OTS and
the FDIC). Neither the Company, the Bank nor the Subsidiary is
subject or is party to, or has received any notice or advice that
any of them may become subject or party to, any investigation
with respect to any cease-and-desist order, agreement, consent
agreement, memorandum of understanding or other regulatory
enforcement action, proceeding or order with or by, or is a party
to any commitment letter or similar undertaking to, or is subject
to any directive by, or has been a recipient of any supervisory
letter from, or has adopted any board resolutions at the request
of, any Regulatory Agency (as defined below) that currently
restricts in any material respect the conduct of their business
or that in any material manner relates to their capital adequacy,
their credit policies, their management or their business (each,
a "Regulatory Agreement"), nor has the Company, the Bank or the
Subsidiary been advised by any Regulatory Agency that it is
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considering issuing or requesting any such Regulatory Agreement;
and there is no unresolved violation, criticism or exception by
any Regulatory Agency with respect to any report or statement
relating to any examinations of the Company, the Bank or the
Subsidiary which, in the reasonable judgment of the Company or
the Bank, is expected to result in a Material Adverse Effect. As
used herein, the term "Regulatory Agency" means any federal or
state agency charged with the supervision or regulation of
depositary institutions or holding companies of depositary
institutions, or engaged in the insurance of depositary
institution deposits, or any court, administrative agency or
commission or other governmental agency, authority or
instrumentality having supervisory or regulatory authority with
respect to the Company, the Bank or the Subsidiary.
(xxvi) There is no action, suit or proceeding before or by any court
or governmental agency or body, domestic or foreign, now pending,
or, to the knowledge of the Company or the Bank, threatened,
against or affecting the Company, the Bank or the Subsidiary
which is required to be disclosed in the Registration Statement
(other than as disclosed therein), or which might result in any
material adverse change in the financial condition, results of
operations, business affairs or prospects of the Company, the
Bank and the Subsidiary considered as one enterprise, or which
might materially and adversely affect the properties or assets
thereof or which might materially and adversely affect the
consummation of the Conversion or the performance of this
Agreement; all pending legal or governmental proceedings to which
the Company, the Bank or any subsidiary is a party or of which
any of their respective property or assets is the subject which
are not described in the Registration Statement, including
ordinary routine litigation incidental to the business, are
considered in the aggregate not material; and there are no
contracts or documents of the Company or any of its subsidiaries
which are required to be filed as exhibits to the Registration
Statement or the Conversion Application which have not been so
filed.
(xxvii) The Bank has obtained opinions of its outside legal and tax
counsel, Malizia Spidi & Fisch, PC, with respect to the legality
of the Securities to be issued and the state and local income tax
and federal income tax consequences of the Conversion (including
franchise tax, sales or use tax, license fee on foreign
corporations, stock transfer tax, real property transfer gain tax
and real estate transfer tax), copies of which are filed as
exhibits to the Registration Statement; all material aspects of
the aforesaid opinions are accurately summarized in the
Prospectus; the facts and representations upon which such
opinions are based are truthful, accurate and complete in all
material respects; and neither the Bank (including the
Subsidiary) nor the Company has taken or will take any action
inconsistent therewith.
(xxviii) The Company is not and, upon completion of the Conversion and
the Offerings and sale of the Common Stock and the application of
the net proceeds therefrom, will not be, required to be
registered under the Investment Company Act of 1940, as amended.
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(xxix) All of the loans represented as assets on the most recent
consolidated financial statements or in selected consolidated
financial and other data of the Bank included in the Prospectus
meet or are exempt from all requirements of federal, state or
local law pertaining to lending, including without limitation
truth in lending (including the requirements of Regulations Z and
12 C.F.R. Part 226 and Section 563.99), real estate settlement
procedures, consumer credit protection, equal credit opportunity
and all disclosure laws applicable to such loans, except for
violations which, if asserted, would not result in a material
adverse effect on the financial condition, results of operations,
business affairs or prospects of the Company, the Bank and the
Subsidiary considered as one enterprise.
(xxx)To the knowledge of the Company and the Bank, with the exception
of the intended loan to the Bank's ESOP by the Company to enable
the ESOP to purchase shares of Common Stock in an amount of up to
8.0% of the Common Stock issued in the Conversion, none of the
Company, the Bank or employees of the Bank has made any payment
of funds of the Company or the Bank as a loan for the purchase of
the Common Stock or made any other payment of funds prohibited by
law, and no funds have been set aside to be used for any payment
prohibited by law.
(xxxi) To the knowledge of the Company, there are no affiliations or
associations (as such terms are defined by the National
Association of Securities Dealers, Inc. ("NASD")) between any
member of the NASD and any of the Company's officers or
directors.
(xxxii) The Company, the Bank and the Subsidiary carries, or is
covered by, insurance in such amounts and covering such risks as
is adequate for the conduct of their respective businesses and
the value for their respective properties as is customary for
companies engaged in similar industries
(xxxiii) The Company, the Bank and the Subsidiary maintain a system of
internal accounting controls sufficient to provide reasonable
assurance that (a) transactions are executed in accordance with
management's general or specific authorizations; (b) transactions
are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (c) access to
assets is permitted only in accordance with management's general
or specific authorization; and (d) the recorded accountability
for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.
(xxxiv) The Company, the Bank and the Subsidiary are in compliance in
all material respects with the applicable financial recordkeeping
and reporting requirements of the Currency and Foreign
Transaction Reporting Act of 1970, as amended, and the rules and
regulations thereunder. The Bank has established compliance
programs to
-13-
ensure compliance with the requirements of the USA Patriot Act
and all applicable regulations promulgated thereunder. The Bank
is in compliance in all material respects with the USA Patriot
Act and all applicable regulations promulgated thereunder, and
there is no charge, investigation, action, suit or proceeding
before any court, regulatory authority or governmental agency or
body pending or, to the best knowledge of the Company and the
Bank, threatened regarding the Bank's compliance with the USA
Patriot Act or any regulations promulgated thereunder.
(xxxv) The Company and the Bank have not relied on Agent or its
counsel for any legal, tax or accounting advice in connection
with the Conversion.
(xxxvi) The records of eligible account holders, supplemental eligible
account holders, and other depositors are accurate and complete
in all material respects.
(xxxvii) The Company, the Bank and the Subsidiary is in compliance in
all material respects with all presently applicable provisions of
the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA)
has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company, the Bank or the Subsidiary,
respectively, would have any liability; each of the Company, the
Bank and the Subsidiary has not incurred and does expect to incur
liability under (i) Title IV of ERISA with respect to termination
of, or withdrawal from, any "pension plan" or (ii) Sections 412
or 4971 of the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations
thereunder (the "Code"); and each "pension plan" for which the
Company, the Bank and the Subsidiary would have any liability
that is intended to be qualified under Section 401(a) of the Code
is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which would
cause the loss of such qualification.
(xxxviii)None of the Company, the Bank nor the Subsidiary nor any
properties owned or operated by the Company, the Bank or the
Subsidiary is in violation of or liable under any Environmental
Law (as defined below), except for such violations or liabilities
that, individually or in the aggregate, would not have a material
adverse effect on the financial condition, results of operations
or business affairs of the Company, the Bank and the Subsidiary
considered as one enterprise. There are no actions, suits or
proceedings, or demands, claims, notices or investigations
(including, without limitation, notices, demand letters or
requests for information from any environmental agency)
instituted or pending, or to the knowledge of the Company or the
Bank threatened, relating to the liability of any property owned
or operated by the Company, the Bank or the Subsidiary, under any
Environmental Law. For purposes of this subsection, the term
"Environmental Law" means any federal, state, local or foreign
law, statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, order, judgment, decree,
injunction or agreement with any regulatory authority relating to
(i) the protection, preservation or restoration of the
-14-
environment (including, without limitation, air, water, vapor,
surface water, groundwater, drinking water supply, surface soil,
subsurface soil, plant and animal life or any other natural
resource), and/or (ii) the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling,
production, release or disposal of any substance presently
listed, defined, designated or classified as hazardous, toxic,
radioactive or dangerous, or otherwise regulated, whether by type
or by quantity, including any material containing any such
substance as a component.
(xxxix) The Company, the Bank and the Subsidiary have filed all
federal income and state and local income and franchise tax
returns required to be filed and have made timely payments of all
taxes shown as due and payable in respect of such returns, and no
deficiency has been asserted with respect thereto by any taxing
authority. The Company and the Bank have no knowledge of any tax
deficiency which has been asserted or could be asserted against
the Company, the Bank or the Subsidiary.
(xl) The Company has received approval, subject to regulatory approval
to consummate the Offerings and issuance, to have the Securities
quoted on the OTC Electronic Bulletin Board effective as of the
Closing Time referred to in Section 2 hereof.
(xli)The Company has filed a registration statement for the Common
Stock under Section 12(g) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") and such registration statement
was declared effective concurrent with the effectiveness of the
Registration Statement.
(xlii) The Company is in compliance with the applicable provisions of
the Sarbanes-Oxley Act and will use its best efforts to comply
with those provisions of the Sarbanes-Oxley Act that will become
effective in the future upon their effectiveness.
(xliii) There is no contract or other document of a character required
to be described in the Registration Statement or the Prospectus
or to be filed as an exhibit to the Registration Statement or
Conversion Application which is not described or filed as
required.
(xliv) The Company has established and maintains disclosure controls
and procedures (as such term is defined in Rule 13a-14 and 15d-14
under the Exchange Act); such disclosure controls and procedures
(A) are designed to ensure that material information relating to
the Company including its Subsidiary, is made known to the
Company's Chief Executive Officer and its principal financial
officer by others within those entities, particularly during the
periods in which the periodic reports required under the Exchange
Act are being prepared, (B) have been (or will be) evaluated for
effectiveness as of a date within 90 days prior to the filing of
the Company's most recent annual or quarterly report filed with
the Commission and (C) are effective to perform the functions for
which they were established; the Company's auditors and the Audit
Committee of the Board of Directors have been advised of: (i) any
significant
-15-
deficiencies in the design or operation of internal controls
which could adversely affect the Company's ability to record,
process, summarize, and report financial data and (ii) any fraud,
whether or not material, that involves management or other
employees who have a role in the Company's internal controls; and
such deficiencies or fraud have either been disclosed in the
Prospectus or are not material to the Company, the Bank and the
Subsidiary considered as one enterprise; and since the date of
the most recent evaluation of such disclosure controls and
procedures, there have been no significant changes in internal
controls or in other factors that could significantly affect
internal controls, including any corrective actions with regard
to significant deficiencies, material weaknesses or fraud.
(b) Any certificate signed by any officer of the Company or the Bank or
the Subsidiary and delivered to either of the Agent or counsel for the
Agent shall be deemed a representation and warranty by the Company or
the Bank to each Agent and, for purposes of the opinion to be
delivered to the Agent pursuant to Section 5(b)(2) hereof, to the
counsel for the Agent as to the matters covered thereby.
SECTION 2. APPOINTMENT OF SANDLER O'NEILL; SALE AND DELIVERY OF THE
SECURITIES; CLOSING.
On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
hereby appoints Sandler O'Neill as its Agent to consult with and advise the
Company, and to assist the Company with the solicitation of subscriptions and
purchase orders for Securities, in connection with the Company's sale of Common
Stock in the Subscription and Community Offering and the Syndicated Community
Offering. On the basis of the representations and warranties herein contained,
and subject to the terms and conditions herein set forth, Sandler O'Neill
accepts such appointment and agrees to use its best efforts to assist the
Company with the solicitation of subscriptions and purchase orders for
Securities in accordance with this Agreement; provided, however, that the Agent
shall not be obligated to take any action which is inconsistent with any
applicable laws, regulations, decisions or orders. The services to be rendered
by Sandler O'Neill pursuant to this appointment include the following: (i)
consulting as to the securities marketing implications of any aspect of the Plan
or related corporate documents; (ii) reviewing with the Board of Directors of
the Bank the financial impact of the independent appraiser's appraisal of the
common stock; (iii) reviewing all offering documents, including the Prospectus,
stock order forms and related offering materials (it being understood that
preparation and filing of such documents is the sole responsibility of the
Company and the Bank and their counsel); (iv) assisting in the design and
implementation of a marketing strategy for the Offerings; (v) assisting Bank
management in scheduling and preparing for meetings with potential investors and
broker-dealers; and (vi) providing such other general advice and assistance as
may be requested to promote the successful completion of the Conversion.
The appointment of the Agent hereunder shall terminate upon
the earlier to occur of (a) forty-five (45) days after the last day of the
Subscription and Community Offering, unless the Company and the Agent agree in
writing to extend such period and the OTS agrees
-16-
to extend the period of time in which the Securities may be sold, or (b) the
receipt and acceptance of subscriptions and purchase orders for all of the
Securities, or (c) the completion of the Syndicated Community Offering.
If any of the Securities remain available after the expiration
of both the Subscription and Community Offering, at the request of the Company
and the Bank, Sandler O'Neill will seek to form a syndicate of registered
brokers or dealers ("Selected Dealers") to assist in the solicitation of
purchase orders of such Securities on a best efforts basis, subject to the terms
and conditions set forth in a selected dealers' agreement (the "Selected
Dealers' Agreement"), substantially in the form set forth in Exhibit A to this
Agreement. Sandler O'Neill will endeavor to limit the aggregate fees to be paid
by the Company and the Bank under any such Selected Dealers' Agreement to an
amount competitive with gross underwriting discounts charged at such time for
underwritings of comparable amounts of stock sold at a comparable price per
share in a similar market environment; provided, however, that the aggregate
fees payable to Sander O'Neill and Selected Dealers shall not exceed 7.0% of the
aggregate Purchase Price of the Securities sold by such Selected Dealers. Sander
O'Neill will endeavor to distribute the Securities among the Selected Dealers in
a fashion which best meets the distribution objective of the Company and the
requirements of the Plan, which may result in limiting the allocation of stock
to certain Selected Dealers. It is understood that in no event shall Sandler
O'Neill be obligated to act as a Selected Dealer or to take or purchase any
Securities.
In the event the Company is unable to sell at least the total
minimum of the Securities, as set forth on the cover page of the Prospectus,
within the period herein provided, this Agreement shall terminate and the
Company shall refund to any persons who have subscribed for any of the
Securities the full amount which it may have received from them, together with
interest as provided in the Prospectus, and no party to this Agreement shall
have any obligation to the others hereunder, except for the obligations of the
Company and the Bank as set forth in Sections 4, 6(a) and 7 hereof and the
obligations of the Agent as provided in Sections 6(b) and 7 hereof. Appropriate
arrangements for placing the funds received from subscriptions for Securities or
other offers to purchase Securities in special interest-bearing accounts with
the Bank until all Securities are sold and paid for were made prior to the
commencement of the Subscription Offering, with provision for refund to the
purchasers as set forth above, or for delivery to the Company if the total
minimum of the Securities are sold.
If at least the total minimum of Securities, as set forth on
the cover page of the Prospectus, are sold, the Company agrees to issue or have
issued the Securities sold and to release for delivery certificates for such
Securities at the Closing Time against payment therefor by release of funds from
the special interest-bearing accounts referred to above. The closing shall be
held at the offices of Malizia Spidi & Fisch, PC, at 10:00 a.m., Eastern time,
or at such other place and time as shall be agreed upon by the parties hereto,
on a business day to be agreed upon by the parties hereto. The Company shall
notify the Agent by telephone, confirmed in writing, when funds shall have been
received for all the Securities. Certificates for Securities shall be delivered
directly to the purchasers thereof in accordance with their
-17-
directions. Notwithstanding the foregoing, certificates for Securities purchased
through Selected Dealers shall be made available to the Agent for inspection at
least 48 hours prior to the Closing Time at such office as the Agent shall
designate. The hour and date upon which the Company shall release for delivery
all of the Securities, in accordance with the terms hereof, is herein called the
"Closing Time."
The Company will pay any stock issue and transfer taxes which
may be payable with respect to the sale of the Securities.
In addition to the reimbursement of the expenses specified in
Section 4 hereof, the Agent will receive the following compensation for its
services hereunder:
(a) one percent (1.0%) of the aggregate purchase price of the
Securities sold in the Subscription and Community Offering; and
(b) with respect to any Securities sold by an NASD member firm
(including Sandler O'Neill) under the Selected Dealers' Agreement in
the Syndicated Community Offering, (i) the compensation payable to
Selected Dealers under any Selected Dealers' Agreement and (ii) any
sponsoring dealer's fees. Any fees payable to Sandler O'Neill and other
NASD member firms in the Syndicated Community Offering for Securities
sold by Sandler O'Neill or such firms under any such agreement shall be
limited to seven percent (7.0%) of the aggregate purchase price of such
Securities.
If this Agreement is terminated by the Agent in accordance
with the provisions of Section 9(a) hereof or the Conversion is terminated by
the Company, no fee shall be payable by the Company to Sandler O'Neill;
provided, however, that the Company shall reimburse the Agent for all of its
reasonable out-of-pocket expenses incurred prior to termination, including the
reasonable fees and disbursements of counsel for the Agent in accordance with
the provisions of Section 4 hereof, which expenses shall not exceed $50,000. In
addition, the Company shall be obligated to pay the fees and expenses as
contemplated by the provisions of Section 4 hereof in the event of any such
termination.
All fees payable to the Agent hereunder shall be payable in
immediately available funds at Closing Time, or upon the termination of this
Agreement, as the case may be. In recognition of the long lead times involved in
the conversion process, the Bank has made an advance payment to the Agent in the
amount of $25,000, which shall be credited against any fees or reimbursement of
expenses payable hereunder.
SECTION 3. COVENANTS OF THE COMPANY. The Company and the Bank covenant with
the Agent as follows:
(a) The Company and the Bank will prepare and file such
amendments or supplements to the Registration Statement, the
Prospectus, the Conversion Application and the Proxy Statement as may
hereafter be required by the Securities Act Regulations or the
Conversion Regulations or as may hereafter be requested by the Agent.
-18-
Following completion of the Subscription and Community Offering, in the
event of a Syndicated Community Offering, the Company and the Bank will
(i) promptly prepare and file with the Commission a post-effective
amendment to the Registration Statement relating to the results of the
Subscription and Community Offering, any additional information with
respect to the proposed plan of distribution and any revised pricing
information or (ii) if no such post-effective amendment is required,
will file with, or mail for filing to, the Commission a prospectus or
prospectus supplement containing information relating to the results of
the Subscription and Community Offering and pricing information
pursuant to Rule 424 of the Securities Act Regulations, in either case
in a form acceptable to the Agent. The Company and the Bank will notify
the Agent immediately, and confirm the notice in writing, (i) of the
effectiveness of any post-effective amendment of the Registration
Statement, the filing of any supplement to the Prospectus and the
filing of any amendment to the Conversion Application, (ii) of the
receipt of any comments from the OTS or the Commission with respect to
the transactions contemplated by this Agreement or the Plan, (iii) of
any request by the Commission or the OTS for any amendment to the
Registration Statement or the Conversion Application or any amendment
or supplement to the Prospectus or for additional information, (iv) of
the issuance by the OTS of any order suspending the Offerings or the
use of the Prospectus or the initiation of any proceedings for that
purpose, (v) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose, and (vi) of the receipt
of any notice with respect to the suspension of any qualification of
the Securities for offering or sale in any jurisdiction. The Company
and the Bank will make every reasonable effort to prevent the issuance
of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(b) The Company and the Bank will give the Agent notice of its
intention to file or prepare any amendment to the Holding Company
Application, the Conversion Application or Registration Statement
(including any post-effective amendment) or any amendment or supplement
to the Prospectus (including any revised prospectus which the Company
proposes for use in connection with the Syndicated Community Offering
of the Securities which differs from the prospectus on file at the
Commission at the time the Registration Statement becomes effective,
whether or not such revised prospectus is required to be filed pursuant
to Rule 424(b) of the Securities Act Regulations), will furnish the
Agent with copies of any such amendment or supplement a reasonable
amount of time prior to such proposed filing or use, as the case may
be, and will not file any such amendment or supplement or use any such
prospectus to which the Agent or counsel for the Agent may object.
(c) The Company and the Bank will deliver to the Agent as many
signed copies and as many conformed copies of the Conversion
Application and the Registration Statement as originally filed and of
each amendment thereto (including exhibits filed therewith or
incorporated by reference therein) as the Agent may
-19-
reasonably request, and from time to time such number of copies of the
Prospectus as the Agent may reasonably request.
(d) During the period when the Prospectus is required to be
delivered, the Company and the Bank will comply, at their own expense,
with all requirements imposed upon them by the OTS, by the applicable
Conversion Regulations, as from time to time in force, and by the
Nasdaq, the Securities Act, the Securities Act Regulations, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the rules and regulations of the Commission promulgated thereunder,
including, without limitation, Regulation M under the Exchange Act, so
far as necessary to permit the continuance of sales or dealing in
shares of Common Stock during such period in accordance with the
provisions hereof and the Prospectus.
(e) If any event or circumstance shall occur as a result of
which it is necessary, in the opinion of counsel for the Agent, to
amend or supplement the Prospectus in order to make the Prospectus not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, the Company and the Bank will forthwith amend
or supplement the Prospectus (in form and substance satisfactory to
counsel for the Agent) so that, as so amended or supplemented, the
Prospectus will not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances existing at the time it is
delivered to a purchaser, not misleading, and the Company and the Bank
will furnish to the Agent a reasonable number of copies of such
amendment or supplement. For the purpose of this subsection, the
Company and the Bank will each furnish such information with respect to
itself as the Agent may from time to time reasonably request.
(f) The Company and the Bank will take all necessary action,
in cooperation with the Agent, to qualify the Securities for offering
and sale under the applicable securities laws of such states of the
United States and other jurisdictions as the Conversion Regulations may
require and as the Agent and the Company have agreed; provided,
however, that the Company and the Bank shall not be obligated to file
any general consent to service of process or to qualify as a foreign
corporation in any jurisdiction in which it is not so qualified. In
each jurisdiction in which the Securities have been so qualified, the
Company and the Bank will file such statements and reports as may be
required by the laws of such jurisdiction to continue such
qualification in effect for a period of not less than one year from the
effective date of the Registration Statement.
(g) The Company authorizes Sandler O'Neill and any Selected
Dealer to act as agent of the Company in distributing the Prospectus to
persons entitled to receive subscription rights and other persons to be
offered Securities having record addresses in the states or
jurisdictions set forth in a survey of the securities or "blue sky"
laws of the various jurisdictions in which the Offerings will be made
(the "Blue Sky Survey").
-20-
(h) The Company will make generally available to its security
holders as soon as practicable, but not later than 60 days after the
close of the period covered thereby, an earnings statement (in form
complying with the provisions of Rule 158 of the 1933 Act Regulations)
covering a twelve month period beginning not later than the first day
of the Company's fiscal quarter next following the "effective date" (as
defined in said Rule 158) of the Registration Statement.
(i) During the period ending on the third anniversary of the
expiration of the fiscal year during which the closing of the
transactions contemplated hereby occurs, the Company will furnish to
its stockholders as soon as practicable after the end of each such
fiscal year an annual report (including consolidated balance sheets and
consolidated statements of income, stockholders' equity and cash flows,
certified by independent public accountants) and, as soon as
practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the
effective date of the Registration Statement), consolidated summary
financial information of the Company, the Bank and the Subsidiary for
such quarter in reasonable detail. In addition, such annual report and
quarterly consolidated summary financial information shall be made
public through the issuance of appropriate press releases at the same
time or prior to the time of the furnishing thereof to stockholders of
the Company.
(j) During the period ending on the third anniversary of the
expiration of the fiscal year during which the closing of the
transactions contemplated hereby occurs, the Company will furnish to
the Agent (i) as soon as publicly available, a copy of each report or
other document of the Company furnished generally to stockholders of
the Company or furnished to or filed with the Commission under the
Exchange Act or any national securities exchange or system on which any
class of securities of the Company is listed, and (ii) from time to
time, such other information concerning the Company as the Agent may
reasonably request.
(k) The Company and the Bank will conduct the Conversion in
all material respects in accordance with the Plan, the Conversion
Regulations and all other applicable regulations, decisions and orders,
including all applicable terms, requirements and conditions precedent
to the Conversion imposed upon the Company or the Bank by the OTS.
(l) The Company and the Bank will use the net proceeds
received by it from the sale of the Securities in the manner specified
in the Prospectus under "Use of Proceeds."
(m) The Company will report the use of proceeds from the
Offerings on its first periodic report filed with the Commission
pursuant to Section 13(a) or 15(d) of the Exchange Act and on any
subsequent periodic reports as may be required pursuant to Rule 463 of
the Securities Act Regulations.
-21-
(n) The Company will maintain the effectiveness of the
Exchange Act Registration Statement for not less than three years and
will comply in all material respects with its filing obligations under
the Exchange Act. The Company will use its best efforts to effect and
maintain the quotation of the Common Stock on the OTC Electronic
Bulletin Board and, once quoted on the OTC Electronic Bulletin Board
the Company will comply with all applicable corporate governance
standards required by the OTC Electronic Bulletin Board. The Company
will file with the OTC Electronic Bulletin Board all documents and
notices required by the OTC Electronic Bulletin Board of companies that
have issued securities that are traded in the over-the-counter market
and quotations for which are reported by the OTC Electronic Bulletin
Board.
(o) 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 National Association
of Securities Dealers, Inc.'s "Interpretation Relating to Free-Riding
and Withholding."
(p) Other than in connection with any employee benefit plan or
arrangement described in the Prospectus, the Company will not, without
the prior written consent of the Agent, sell or issue, contract to sell
or otherwise dispose of, any shares of Common Stock other than the
Securities for a period of 180 days following the Closing Time.
(q) During the period beginning on the date hereof and ending
on the later of the fifth anniversary of the Closing Time or the date
on which the Agent receives full payment in satisfaction of any claim
for indemnification or contribution to which it may be entitled
pursuant to Sections 6 or 7, respectively, neither the Company nor the
Bank shall, without the prior written consent of the Agent, take or
permit to be taken any action that could result in the Bank Common
Stock becoming subject to any security interest, mortgage, pledge, lien
or encumbrance.
(r) The Company and the Bank will comply with the conditions
imposed by or agreed to with the OTS in connection with its approval of
the Holding Company Application and the Conversion Application.
(s) During the period ending on the first anniversary of the
Closing Time, the Bank will comply with all applicable law and
regulation necessary for the Bank to continue to be a "qualified thrift
lender" within the meaning of 12 U.S.C. Section 1467a(m).
(t) The Company shall not deliver the Securities until the
Company and the Bank have satisfied each condition set forth in Section
5 hereof, unless such condition is waived in writing by the Agent.
-22-
(u) The Company or the Bank will furnish to Sandler O'Neill as
early as practicable prior to the Closing Date, but no later than two
(2) full business days prior thereto, a copy of the latest available
unaudited interim consolidated financial statements of the Bank and the
Subsidiary which have been read by S.R. Snodgrass, A.C., as stated in
their letters to be furnished pursuant to subsections (e) and (f) of
Section 5 hereof.
(v) Each of the Company and the Bank will conduct its business
in compliance in all material respects with all applicable federal and
state laws, rules, regulations, decisions, directives and orders,
including all decisions, directives and orders of the Commission, the
OTC Electronic Bulletin Board and the OTS.
(w) The Bank will not amend the Plan in any manner that would
affect the sale of the Securities or the terms of this Agreement
without the consent of the Agent.
(x) The Company and the Bank will not, prior to the Closing
Time, incur any liability or obligation, direct or contingent, or enter
into any material transaction, other than in the ordinary course of
business consistent with past practice, except as contemplated by the
Prospectus.
(y) The Company and the Bank will use all reasonable efforts
to comply with, or cause to be complied with, the conditions precedent
to the several obligations of the Agent specified in Section 5 hereof.
(z) The Company and the Bank will provide the Agent with any
information necessary to carry out the allocation of the Securities in
the event of an oversubscription, and such information will be accurate
and reliable in all material respects.
(aa) The Company and the Bank will notify the Agent when funds
have been received for the minimum number of Securities set forth in
the Prospectus.
(ab) The Company and the Bank shall cause the Company to be
registered as a savings and loan holding company within 90 days of
Closing Time.
SECTION 4. PAYMENT OF EXPENSES. The Company and the Bank
jointly and severally agree to pay all expenses incident to the performance of
their obligations under this Agreement, including but not limited to (i) the
cost of obtaining all securities and bank regulatory approvals, (ii) the
preparation, printing and filing of the Registration Statement, the Conversion
Application and the Holding Company Application, each as originally filed and of
each amendment thereto, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the purchasers in the Offerings, (iv) the
fees and disbursements of the Company's and the Bank's counsel, accountants
appraiser and other advisors, (v) the qualification of the Securities under
securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the fees and disbursements of the Agent's counsel in
connection therewith and in connection with the preparation of the Blue Sky
Survey, (vi) the printing and delivery to the Agent (in such quantities as the
Agent shall reasonably request) of copies of the
-23-
Registration Statement as originally filed and of each amendment thereto and the
printing and delivery of the Prospectus and any amendments or supplements
thereto to the purchasers in the Offerings and the Agent (in such quantities as
the Agent shall reasonably request), (vii) the printing and delivery to the
Agent of copies of a Blue Sky Survey, and (viii) the fees and expenses incurred
in connection with the listing of the Securities on the OTC Electronic Bulletin
Board. In the event the Agent incurs any such fees and expenses on behalf of the
Bank or the Company, the Bank will reimburse the Agent for such fees and
expenses whether or not the Conversion is consummated; provided, however, that
the Agent shall not incur any substantial expenses on behalf of the Bank or the
Company pursuant to this Section without the prior approval of the Bank.
The Company and the Bank jointly and severally agree to pay certain
expenses incident to the performance of the Agent's obligations under this
Agreement, regardless of whether the Conversion is consummated, including (i)
the filing fees paid or incurred by the Agent in connection with all filings
with the National Association of Securities Dealers, Inc., and (ii) all
reasonable out of pocket expenses incurred by the Agent relating to the
Offerings, including, without limitation, advertising, promotional, syndication
and travel expenses and fees and expenses of the Agent's counsel, up to a
maximum of $50,000 with respect to the expenses contemplated by this clause
(ii); provided, however, that the Agent shall document the expenses contemplated
by clause (ii) to the reasonable satisfaction of the Bank. All fees and expenses
to which the Agent is entitled to reimbursement under this paragraph of this
Section 4 shall be due and payable upon receipt by the Company or the Bank of a
written accounting therefor setting forth in reasonable detail the expenses
incurred by the Agent.
SECTION 5. CONDITIONS OF AGENT'S OBLIGATIONS. The Company, the
Bank and the Agent agree that the issuance and the sale of Securities and all
obligations of the Agent hereunder are subject to the accuracy of the
representations and warranties of the Company and the Bank herein contained as
of the date hereof and the Closing Time, to the accuracy of the statements of
officers and directors of the Company and the Bank made pursuant to the
provisions hereof, to the performance by the Company and the Bank of their
obligations hereunder, and to the following further conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued under the Securities Act or
proceedings therefor initiated or threatened by the Commission, no
order suspending the Offerings or authorization for final use of the
Prospectus shall have been issued or proceedings therefor initiated or
threatened by the OTS and no order suspending the sale of the
Securities in any jurisdiction shall have been issued.
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(b) At Closing Time, the Agent shall have received:
(1) The favorable opinion, dated as of Closing Time, of
Malizia Spidi & Fisch, PC, counsel for the Company and the
Bank, in form and substance satisfactory to counsel for the
Agent, to the effect that:
(i) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of
Pennsylvania.
(ii) The Company has full corporate power and authority to own, lease
and operate its properties and to conduct its business as
described in the Registration Statement and Prospectus and to
enter into and perform its obligations under this Agreement.
(iii)The Company is duly qualified as a foreign corporation to
transact business and is in good standing in the State of New
Jersey and in each other jurisdiction in which such qualification
is required whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to
so qualify would not have a material adverse effect upon the
financial condition, results of operations, business affairs or
prospects of the Company, the Bank and the Subsidiary, considered
as one enterprise. The Company will be registered as a savings
and loan holding company under HOLA within 90 days of the Closing
Time.
(iv) Upon consummation of the Conversion, the authorized, issued and
outstanding capital stock of the Company will be as set forth in
the Prospectus under "Capitalization" and no shares of Common
Stock have been or will be issued and outstanding prior to the
Closing Time.
(v) The Securities have been duly and validly authorized for issuance
and sale and, when issued and delivered by the Company pursuant
to the Plan against payment of the consideration calculated as
set forth in the Plan, will be duly and validly issued and fully
paid and non-assessable.
(vi) The issuance of the Securities is not subject to preemptive or
other similar rights arising by operation of law or, to the best
of their knowledge and information, otherwise.
(vii)Upon completion of the Conversion, the issuance of the
Securities will be in compliance with all conditions imposed upon
the
-25-
Company and the Bank, by the OTS under the terms of their written
approval or notice of intention not to object, as applicable.
(viii) The Bank has been at all times since 1995 and prior to the
Closing Time duly organized, and is validly existing and in good
standing under the laws of the United States of America as a
federally chartered savings bank of mutual form, and, at Closing
Time, has become duly organized, validly existing and in good
standing under the laws of the United States of America as a
federally chartered savings bank of stock form, in both instances
with full corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the
Registration Statement and the Prospectus and to enter into and
perform its obligations under this Agreement; and the Bank is
duly qualified as a foreign corporation in each jurisdiction in
which the failure to so qualify would have a material adverse
effect upon the financial condition, results of operations,
business affairs or prospects of the Bank.
(ix) The Bank is a member in good standing of the Federal Home Loan
Bank of Pittsburgh and the deposit accounts of the Bank are
insured by the FDIC up to the applicable limits.
(x) The Subsidiary is the only direct or indirect subsidiary of the
Bank. The Subsidiary of the Bank has been duly incorporated and
is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, and the Subsidiary
has full corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the
Registration Statement and is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which the failure to so qualify would have a
material adverse effect upon the financial condition, results of
operations, business affairs or prospects of the Company, the
Bank and the Subsidiary, taken as a whole; the activities of the
Subsidiary are permitted to subsidiaries of a savings and loan
holding company and of a federally chartered savings bank by the
rules, regulations, resolutions and practices of the OTS; all of
the issued and outstanding capital stock of the Subsidiary has
been duly authorized and validly issued, is fully paid and
non-assessable and is owned by the Bank, directly or through
subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity.
(xi) Upon consummation of the Conversion, all of the issued and
outstanding capital stock of the Bank when issued and delivered
pursuant to the Plan against payment of consideration calculated
as set forth in the Plan and set forth in the Prospectus, will be
duly authorized
-26-
and validly issued and fully paid and nonassessable, and all such
capital stock will be owned beneficially and of record by the Company
free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity.
(xii)The OTS has duly approved the Holding Company Application and
the Conversion Application; such approvals remain in full force
and effect and no action is pending, or to the best of such
counsel's knowledge after due inquiry, threatened respecting the
Holding Company Application or the Conversion Application or the
acquisition by the Company of all of the Bank's issued and
outstanding capital stock; the Holding Company Application and
the Conversion Application comply as to form with the applicable
requirements of the OTS, includes all documents required to be
filed as exhibits thereto, and is, to the best of such counsel's
knowledge after due inquiry, truthful, accurate and complete; and
the Company is duly authorized to become a savings and loan
holding company and is duly authorized to own all of the issued
and outstanding capital stock of the Bank to be issued pursuant
to the Plan.
(xiii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, (A) have
been duly and validly authorized by all necessary action on the
part of each of the Company and the Bank, and this Agreement
constitutes the legal, valid and binding agreement of each of the
Company and the Bank, enforceable in accordance with its terms,
except as rights to indemnity and contribution hereunder may be
limited under applicable law (it being understood that such
counsel may avail itself of customary exceptions concerning the
effect of bankruptcy, insolvency or similar laws and the
availability of equitable remedies); (B) will not result in any
violation of the provisions of the charter or by-laws of the
Company, the Bank or the Subsidiary; and, (C) will not conflict
with or constitute a breach of, or default under, and no event
has occurred which, with notice or lapse of time or both, would
constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance, that, individually
or in the aggregate, would have a material adverse effect on the
financial condition, results of operations, business affairs or
prospects of the Company, the Bank and the Subsidiary considered
as one enterprise, upon any property or assets of the Company,
the Bank or the Subsidiary pursuant to any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to
which the Company, the Bank or the Subsidiary 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 Bank or the Subsidiary is subject.
-27-
(xiv)The Prospectus has been duly authorized by the OTS for final use
pursuant to the Conversion Regulations and no action is pending,
or to the best of such counsel's knowledge after due inquiry, is
threatened, by the OTS to revoke such authorization.
(xv) The Registration Statement is effective under the Securities Act
and no stop order suspending the effectiveness of the
Registration Statement has been issued under the Securities Act
or, to the best of such counsel's knowledge after due inquiry,
proceedings therefor initiated or threatened by the Commission.
(xvi)No further approval, authorization, consent or other order of
any public board or body is required in connection with the
execution and delivery of this Agreement, the issuance of the
Securities and the consummation of the Conversion, except as may
be required under the securities or Blue Sky laws of various
jurisdictions as to which no opinion need be rendered.
(xvii) At the time the Registration Statement became effective, the
Registration Statement (other than the financial statements and
statistical data included therein, as to which no opinion need be
rendered) complied as to form in all material respects with the
requirements of the Securities Act and the Securities Act
Regulations and the Conversion Regulations.
(xviii) The Common Stock conforms to the description thereof contained
in the Prospectus, and the form of certificate used to evidence
the Common Stock is in due and proper form and complies with all
applicable statutory requirements.
(xix)There are no legal or governmental proceedings pending or
threatened against or affecting the Company, the Bank or the
Subsidiary which are required, individually or in the aggregate,
to be disclosed in the Registration Statement and Prospectus,
other than those disclosed therein, and all pending legal or
governmental proceedings to which the Company, the Bank or the
Subsidiary is a party or to which any of their property is
subject which are not described in the Registration Statement,
including ordinary routine litigation incidental to the business,
are, considered in the aggregate, not material.
(xx) The information in the Prospectus under "Risk Factors - We
Operate in a Highly Regulated Environment and May Be Adversely
Affected by Changes in Laws and Regulations," "Dividend Policy,"
"Business of St. Edmond's Federal Savings Bank- Legal
Proceedings",
-28-
"Taxation," "Regulation," "The Conversion - Effects of the
Conversion," "-Liquidation Account" "Restrictions on Acquisitions
of SE Financial Corp." and "Description of Capital Stock," to the
extent that it constitutes matters of law, summaries of legal
matters, documents or proceedings, or legal conclusions, has been
reviewed by them and is complete and accurate in all material
respects.
(xxi)There are no contracts, indentures, mortgages, loan agreements,
notes, leases or other instruments required to be described or
referred to in the Registration Statement or to be filed as
exhibits thereto other than those described or referred to
therein or filed as exhibits thereto, and the descriptions
thereof or references thereto are correct, and no default exists,
and no event has occurred which, with notice or lapse of time or
both, would constitute a default, in the due performance or
observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument so described, referred
to or filed.
(xxii) The Plan has been duly authorized by the Board of Directors of
the Company and the Board of Directors of the Bank and, the OTS's
approval of the Plan remains in full force and effect; the Bank's
charter has been amended, effective upon consummation of the
Conversion and the filing of such amended charter with the OTS,
to authorize the issuance of permanent capital stock; the Company
and the Bank have conducted the Conversion in all material
respects in accordance with applicable requirements of the
Conversion Regulations, the Plan and all other applicable
regulations, decisions and orders thereunder, including all
material applicable terms, conditions, requirements and
conditions precedent to the Conversion imposed upon the Company
or the Bank by the OTS and, no order has been issued by the OTS
to suspend the Conversion or the Offerings and no action for such
purpose has been instituted or threatened by the OTS; and, to the
best of such counsel's knowledge after due inquiry, no person has
sought to obtain review of the final action of the OTS in
approving the Conversion Application or the Holding Company
Application.
(xxiii) To the best of such counsel's knowledge after due inquiry, the
Company and the Bank and the Subsidiary have obtained all
licenses, permits and other governmental authorizations currently
required for the conduct of their respective businesses as
described in the Registration Statement and Prospectus, and all
such licenses, permits and other governmental authorizations are
in full force and effect, and the
-29-
Company and the Bank and the Subsidiary are in all material
respects complying therewith.
(xxiv) Neither the Company, the Bank nor the Subsidiary is in
violation of its certificate of incorporation, organization
certificate, articles of incorporation or charter, as the case
may be, or bylaws (and the Bank will not be in violation of its
charter in stock form upon consummation of the Conversion) or in
default (nor has any event occurred which, with notice or lapse
of time or both, would constitute a default) in the performance
or observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement,
note, lease or other instrument to which the Company, the Bank or
the Subsidiary is a party or by which the Company, the Bank or
the Subsidiary or any of their property may be bound.
(xxv)The Company is not and, upon completion of the Conversion and
the Offerings and the sale of the Common Stock and the
application of the net proceeds therefrom, will not be required
to be registered as an investment company under the Investment
Company Act of 1940.
(xxvi) The Company is in compliance with the applicable provisions of
the Sarbanes-Oxley Act.
(2) The favorable opinion, dated as of Closing Time, of Luse
Gorman Pomerenk & Schick, P.C., counsel for the Agent, with
respect to the matters set forth in [Section 5(b)(1)(i), (iv),
(v), (vi) (solely as to preemptive rights arising by operation
of law), (ix), (xi), (xii), (xiii), (xv), (xvi) and (xvii)]
and such other matters as the Agent may reasonably require.
(3) In giving their opinions required by subsections (b)(l)
and (b)(2), respectively, of this Section, Malizia Spidi &
Fisch, PC and Luse Gorman Pomerenk & Schick, P.C. shall each
additionally state that nothing has come to their attention
that would lead them to believe that the Registration
Statement (except for financial statements and schedules and
other financial or statistical data included therein, as to
which counsel need make no statement), at the time it became
effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or
that the Prospectus (except for financial statements and
schedules and other financial or statistical data included
therein, as to which counsel need make no statement), at the
time the Registration Statement became effective or at Closing
Time, included an untrue statement of a material fact or
omitted to state a material fact necessary in order to make
the statements therein, in the light of the circumstances
under which they were
-30-
made, not misleading. In giving their opinions, Malizia
Spidi & Fisch, PC and Luse Gorman Pomerenk & Schick, P.C.
may rely as to matters of fact on certificates of officers
and directors of the Company and the Bank and certificates
of public officials, and Luse Gorman Pomerenk & Schick, P.C.
may also rely on the opinion of Malizia Spidi & Fisch, PC.
(c) At Closing Time referred to in Section 2, the Company and the Bank
shall have completed in all material respects the conditions precedent
to the Conversion in accordance with the Plan, the applicable
Conversion Regulations and all other applicable laws, regulations,
decisions and orders, including all terms, conditions, requirements
and provisions precedent to the Conversion imposed upon the Company or
the Bank by the OTS, or any other regulatory authority other than
those which the OTS permits to be completed after the Conversion.
(d) At Closing Time, there shall not have been, since the date hereof
or since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change
in the financial condition, results of operations, business affairs or
prospects of the Company, the Bank and the Subsidiary considered as
one enterprise, whether or not arising in the ordinary course of
business consistent with past practice, and the Agent shall have
received a certificate of the Chief Executive Officer and President of
the Company and the Bank and the chief financial or chief accounting
officer of the Company and of the Bank, dated as of Closing Time, to
the effect that (i) there has been no such material adverse change,
(ii) there shall have been no material transaction entered into by the
Company or the Bank from the latest date as of which the financial
condition of the Company or the Bank as set forth in the Registration
Statement and the Prospectus other than transactions referred to or
contemplated therein and transactions in the ordinary course of
business consistent with past practice, (iii) neither the Company nor
the Bank shall have received from the OTS any direction (oral or
written) to make any material change in the method of conducting its
business with which it has not complied (which direction, if any,
shall have been disclosed to the Agent) or which materially and
adversely would affect the business affairs, financial condition,
results of operations or prospects of the Company, the Bank or the
Subsidiary, (iv) the representations and warranties in Section 1
hereof are true and correct with the same force and effect as though
expressly made at and as of the Closing Time, (v) the Company and the
Bank have complied with all agreements and satisfied all conditions on
their part to be performed or satisfied at or prior to Closing Time,
(vi) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have
been initiated or threatened by the Commission and (vii) no order
suspending the Offerings or the authorization for final use of the
Prospectus has been issued and no proceedings for that purpose have
been initiated or threatened by the OTS or the FDIC and no person has
sought to obtain regulatory or judicial review of the action of the
OTS in approving the Plan in accordance with the Conversion
Regulations nor has any person sought
-31-
to obtain regulatory or judicial review of the action of the OTS in
approving the Holding Company Application.
(e) At the Closing Time, the Agent shall have received a certificate
of the Chief Executive Officer and President of the Company and of the
Bank and the Chief Financial Officer of the Company and of the Bank,
dated as of Closing Time, to the effect that (i) they have reviewed
the contents of the Registration Statement and the Prospectus; (ii)
based on each of their knowledge, the Registration Statement and the
Prospectus do not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements made therein, in light of the circumstances under which
such statements were made, not misleading; (iii) based on each of
their knowledge, the financial statements and other financial
information included in the Registration Statement and the Prospectus
fairly present the financial condition and results of operations of
the Bank and the Subsidiary as of and for the dates and periods
covered by the Registration Statement and the Prospectus; (iv) they
are responsible for establishing and maintaining internal controls;
(v) they have designed such internal controls to ensure that material
information relating to the Company, the Bank and the Subsidiary is
made known to them; (vi) they have evaluated the effectiveness of
their internal controls; and (vii) they have disclosed to S.R.
Snodgrass, A.C. and the audit committee (A) all significant
deficiencies in the design or operation of internal controls which
could adversely affect the Company's and the Bank's ability to record,
process, summarize, and report financial data, and have identified for
the Company's and the Bank's auditors any material weaknesses in
internal controls and (B) any fraud, whether or not material, that
involves management or other employees who have a significant role in
the Company's and the Bank's internal controls.
(f) At the time of the execution of this Agreement, the Agent shall
have received from S.R. Snodgrass, A.C. a letter dated such date, in
form and substance satisfactory to the Agent, to the effect that (i)
they are independent public accountants with respect to the Company,
the Bank and the Subsidiary within the meaning of the Code of Ethics
of the American Institute of Certified Public Accountants, the
Securities Act and the Securities Act Regulations and the Conversion
Regulations and they are not in violation of the auditor independence
requirements of the Sarbanes-Oxley Act; (ii) it is their opinion that
the consolidated financial statements and supporting schedules
included in the Registration Statement and covered by their opinions
therein comply as to form in all material respects with the applicable
accounting requirements of the Securities Act and the Securities Act
Regulations; (iii) based upon limited procedures as agreed upon by the
Agent and S.R. Snodgrass, A.C. set forth in detail in such letter,
nothing has come to their attention which causes them to believe that
(A) the unaudited financial statements and supporting schedules of the
Bank and its subsidiary included in the Registration Statement do not
comply as to form in all material respects with the applicable
accounting requirements of the Securities Act, the Securities Act
Regulations and the Conversion Regulations or are not presented in
conformity with generally accepted accounting principles applied on a
basis substantially consistent with that of the audited financial
statements included in the Registration Statement and the
-32-
Prospectus, [(B) the unaudited amounts of net interest income and net
income set forth under "Selected Consolidated Financial and Other
Data" in the Registration Statement and Prospectus do not agree with
the amounts set forth in unaudited consolidated financial statements
as of and for the dates and periods presented under such captions or
such amounts were not determined on a basis substantially consistent
with that used in determining the corresponding amounts in the audited
financial statements included in the Registration Statement,] (C) at a
specified date not more than five days prior to the date of this
Agreement, there has been any increase in the consolidated long term
or short term debt of the Bank and the Subsidiary or any decrease in
consolidated total assets, the allowance for loan losses, total
deposits or net worth of the Bank and the Subsidiary, in each case as
compared with the amounts shown in the October 31, 2003 balance sheet
included in the Registration Statement or, (D) during the period from
October 31, 2003 to a specified date not more than five days prior to
the date of this Agreement, there were any decreases, as compared with
the corresponding period in the preceding year, in total interest
income, net interest income, net interest income after provision for
loan losses, income before income tax expense or net income of the
Bank and the Subsidiary, except in all instances for increases or
decreases which the Registration Statement and the Prospectus disclose
have occurred or may occur; and (iv) in addition to the examination
referred to in their opinions and the limited procedures referred to
in clause (iii) above, they have carried out certain specified
procedures, not constituting an audit, with respect to certain
amounts, percentages and financial information which are included in
the Registration Statement and the Prospectus and which are specified
by the Agent, and have found such amounts, percentages and financial
information to be in agreement with the relevant accounting, financial
and other records of the Company, the Bank and the Subsidiary
identified in such letter.
(g) At Closing Time, the Agent shall have received from S.R.
Snodgrass, A.C. a letter, dated as of Closing Time, to the effect that
they reaffirm the statements made in the letter furnished pursuant to
subsection (d) of this Section, except that the specified date
referred to shall be a date not more than five days prior to Closing
Time.
(h) At Closing Time, the Securities shall have been approved for
quotation on the OTC Electronic Bulletin Board upon notice of issuance.
(i) At Closing Time, the Agent shall have received a letter from
FinPro, Inc., dated as of the Closing Time, confirming its appraisal.
(j) At Closing Time, counsel for the Agent shall have been furnished
with such documents and opinions as they may require for the purpose of
enabling them to pass upon the issuance and sale of the Securities as
herein contemplated and related proceedings, or in order to evidence
the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Company in connection with the issuance and
sale of the
-33-
Securities as herein contemplated shall be satisfactory in form and
substance to the Agent and counsel for the Agent.
(k) At any time prior to Closing Time, (i) there shall not have
occurred any material adverse change in the financial markets in
the United States or elsewhere or any outbreak of hostilities or
escalation thereof or other calamity or crisis the effect of
which, in the judgment of the Agent, are so material and adverse
as to make it impracticable to market the Securities or to
enforce contracts, including subscriptions or orders, for the
sale of the Securities, and (ii) trading generally on either the
American Stock Exchange, the New York Stock Exchange or the
Nasdaq Stock Market shall not have been suspended, and minimum or
maximum prices for trading shall not have been fixed, or maximum
ranges for prices for securities have been required, by either of
said Exchanges or by order of the Commission or any other
governmental authority, and a banking moratorium shall not have
been declared by either Federal, Pennsylvania or New York
authorities.
SECTION 6. INDEMNIFICATION.
(a) The Company and the Bank, jointly and severally, agree to indemnify
and hold harmless the Agent, each person, if any, who controls the Agent, within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, and its respective partners, directors, officers, employees and agents as
follows:
(i) from and against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, related to or arising out
of the Conversion or any action taken by the Agent where acting as
agent of the Company or the Bank or otherwise as described in Section 2
hereof.
(ii) from and against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, based upon or arising out
of any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement (or any amendment thereto), or
the omission or alleged omission therefrom of a material fact required
to be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Proxy Statement or
Prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(iii) from and against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or of any claim whatsoever described in
clauses (i) or (ii)
-34-
above, if such settlement is effected with the written consent of the
Company or the Bank, which consent shall not be unreasonably withheld;
and
(iv) from and against any and all expense whatsoever, as incurred
(including, subject to Section 6(c) hereof, the fees and
disbursements of counsel chosen by the Agent), reasonably
incurred in investigating, preparing for or defending against any
litigation, or any investigation, proceeding or inquiry by any
governmental agency or body, commenced or threatened, or any
claim pending or threatened whatsoever described in clauses (i)
or (ii) above, to the extent that any such expense is not paid
under (i), (ii) or (iii) above;
provided, however, that the indemnification provided for in this paragraph (a)
shall not apply to any loss, liability, claim, damage or expense to the extent
arising out of any untrue statement or alleged untrue statement of a material
fact contained in the Prospectus (or any amendment or supplement thereto) or the
omission or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading which was made in reliance upon and in conformity with
the Agent Information. Notwithstanding the foregoing, the indemnification
provided for in this paragraph (a) shall not apply to the Bank to the extent
that such indemnification by the Bank would constitute a covered transaction
under Section 23A of the Federal Reserve Act.
(b) The Agent agrees to indemnify and hold harmless the Company, the
Bank, their directors, each of their officers who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, of a material fact made in the Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with the Agent
Information.
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
which it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of any such
action. In no event shall the indemnifying parties be liable for fees and
expenses of more than one counsel (in addition to no more than one local counsel
in each separate jurisdiction in which any action or proceeding is commenced)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances.
(d) The Company and the Bank also agree that the Agent shall not have
any liability (whether direct or indirect, in contract or tort or otherwise) to
the Bank, the Company, its security holders or the Bank's or the Company's
creditors relating to or arising out of the
-35-
engagement of the Agent pursuant to, or the performance by the Agent of the
services contemplated by, this Agreement, except to the extent that any loss,
claim, damage or liability is found in a final judgment by a court of competent
jurisdiction to have resulted primarily from the Agent's bad faith, willful
misconduct or gross negligence.
(e) In addition to, and without limiting, the provisions of Section
(6)(a)(iv) hereof, in the event that the Agent, any person, if any, who controls
the Agent within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act or any of its partners, directors, officers, employees or
agents is requested or required to appear as a witness or otherwise gives
testimony in any action, proceeding, investigation or inquiry brought by or on
behalf of or against the Company, the Bank, the Agent or any of its respective
affiliates or any participant in the transactions contemplated hereby in which
the Agent or such person or agent is not named as a defendant, the Company and
the Bank jointly and severally agree to reimburse the Agent or such other person
for all reasonable and necessary out-of-pocket expenses incurred by it or them
in connection with preparing or appearing as a witness or otherwise giving
testimony and to compensate the Agent in an amount to be mutually agreed upon.
SECTION 7. CONTRIBUTION. In order to provide for just and
equitable contribution in circumstances in which the indemnity agreement
provided for in Section 6 hereof is for any reason held to be unenforceable by
the indemnified parties although applicable in accordance with its terms, the
Company, the Bank and the Agent shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by said
indemnity agreement incurred by the Company or the Bank and the Agent, as
incurred, in such proportions (i) that the Agent is responsible for that portion
represented by the percentage that the maximum aggregate marketing fees
appearing on the cover page of the Prospectus bears to the maximum aggregate
gross proceeds appearing thereon and the Company and the Bank are jointly and
severally responsible for the balance or (ii) if, but only if, the allocation
provided for in clause (i) is for any reason held unenforceable, in such
proportion as is appropriate to reflect not only the relative benefits to the
Company and the Bank on the one hand and the Agent on the other, as reflected in
clause (i), but also the relative fault of the Company and the Bank on the one
hand and the Agent on the other, as well as any other relevant equitable
considerations; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section, each person, if any,
who controls the Agent within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act shall have the same rights to contribution as the
Agent, and each director of the Company, each director of the Bank, each officer
of the Company who signed the Registration Statement, and each person, if any,
who controls the Company or the Bank within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Company and the Bank. Notwithstanding anything to the
contrary set forth herein, to the extent permitted by applicable law, in no
event shall the Agent be required to contribute an aggregate amount in excess of
the aggregate marketing fees to which the Agent is entitled and actually paid
pursuant to this Agreement.
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SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO
SURVIVE DELIVERY. All representations, warranties and agreements contained in
this Agreement, or contained in certificates of officers of the Company or the
Bank submitted pursuant hereto, shall remain operative and in full force and
effect, regardless of any investigation made by or on behalf of any Agent or
controlling person, or by or on behalf of the Company, and shall survive
delivery of the Securities.
SECTION 9. TERMINATION OF AGREEMENT.
(a) The Agent may terminate this Agreement, by notice to the Company,
at any time at or prior to Closing Time (i) if there has been, since the date of
this Agreement or since the respective dates as of which information is given in
the Registration Statement, any material adverse change in the financial
condition, results of operations, business affairs or prospects of the Company
or the Bank, or the Company, the Bank and the Subsidiary considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any material adverse change in the financial markets in
the United States or elsewhere or any outbreak of hostilities or escalation
thereof or other calamity or crisis the effect of which, in the judgment of the
Agent, are so material and adverse as to make it impracticable to market the
Securities or to enforce contracts, including subscriptions or orders, for the
sale of the Securities, (iii) if trading generally on the Nasdaq Stock Market,
the American Stock Exchange or the New York Stock Exchange has been suspended,
or minimum or maximum prices for trading have been fixed, or maximum ranges for
prices for securities have been required, by either of said exchanges or by
order of the Commission or any other governmental authority, or if a banking
moratorium has been declared by either Federal, Pennsylvania or New York
authorities, (iv) if any condition specified in Section 5 shall not have been
fulfilled when and as required to be fulfilled; (v) if there shall have been
such material adverse change in the condition or prospects of the Company or the
Bank or the prospective market for the Company's securities as in the Agent's
good faith opinion would make it inadvisable to proceed with the offering, sale
or delivery of the Securities; (vi) if, in the Agent's good faith opinion, the
price for the Securities established by FinPro, Inc. is not reasonable or
equitable under then prevailing market conditions, or (vii) if the Conversion is
not consummated on or prior to December 31, 2004.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Sections 2 and 4 hereof relating to the reimbursement of expenses
and except that the provisions of Sections 6 and 7 hereof shall survive any
termination of this Agreement.
SECTION 10. NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication. Notices to the
Agent shall be directed to the Agent at 919 Third Avenue, 6th Floor, New York,
New York 10022, attention of Catherine A. Lawton, General Counsel, facsimile
number (212) 466-7711; notices to the Company and the Bank shall
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be directed to either of them at 1901-03 East Passyunk Avenue, Philadelphia, PA
19148-2220, attention of Frank S. DePaolo, President.
SECTION 11. PARTIES. This Agreement shall inure to the benefit
of and be binding upon the Agent, the Company and the Bank and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Agent, the Company and the Bank and their respective successors and the
controlling persons and partners, and officers and directors referred to in
Sections 6 and 7 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein or therein contained. This Agreement and all conditions and
provisions hereof and thereof are intended to be for the sole and exclusive
benefit of the Agent, the Company and the Bank and their respective successors,
and said controlling persons and partners and officers and directors and their
heirs and legal representatives, and for the benefit of no other person, firm or
corporation.
SECTION 12. ENTIRE AGREEMENT; AMENDMENT. This Agreement
represents the entire understanding of the parties hereto with reference to the
transactions contemplated hereby and supersedes any and all other oral or
written agreements heretofore made, except for the engagement letter dated
January [8], 2004, by and between the Agent and the Company and the Bank,
relating to the Agent's providing conversion agent services to the Company and
the Bank in connection with the Conversion. No waiver, amendment or other
modification of this Agreement shall be effective unless in writing and signed
by the parties hereto.
SECTION 13. GOVERNING LAW AND TIME. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to agreements made and to be performed in said State without regard
to the conflicts of laws provisions thereof. Unless otherwise noted, specified
times of day refer to Eastern time.
SECTION 14. SEVERABILITY. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
SECTION 15. HEADINGS. Sections headings are not to be
considered part of this Agreement, are for convenience and reference only, and
are not to be deemed to be full or accurate descriptions of the contents of any
paragraph or subparagraph.
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If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Agent, the Company and the Bank in accordance with its
terms.
Very truly yours,
SE FINANCIAL CORP.
----------------------------------------------
By: Frank S. DePaolo
Title: President and Chief Executive Officer
ST. EDMOND'S FEDERAL SAVINGS BANK
----------------------------------------------
By: Frank S. DePaolo
Title: President and Chief Executive Officer
CONFIRMED AND ACCEPTED, as of the date first above written:
SANDLER O'NEILL & PARTNERS, L.P.
By: Sandler O'Neill & Partners Corp.,
the sole general partner
By:
--------------------------------------------------
[Name]
Vice President
-39-
Exhibit A
SE FINANCIAL CORP.
______________ SHARES
(MAXIMUM OFFERED IN CONVERSION)
COMMON STOCK
(PAR VALUE $.10 PER SHARE)
SELECTED DEALER'S AGREEMENT
_______________, 2004
We have agreed to assist SE Financial Corp. (the "Company") in
connection with the offer and sale of shares (the "Shares") of common stock, par
value $.10 per share (the "Common Stock"), of the Company, to be issued in
connection with the conversion of St. Edmond's Federal Savings Bank, a federally
chartered savings bank (the "Bank"), from mutual to stock form. The Company in
connection with its plan to effect such conversion, offered _____________ Shares
for subscription by certain of the Bank's depositors and borrowers, and the
Bank's employee stock ownership plan in a subscription offering, and certain
members of the general public in a concurrent direct community offering. The
Shares which were not subscribed for pursuant to such subscription and direct
community offerings are being offered to the public in a syndicated community
offering (the "Syndicated Community Offering") in accordance with the conversion
regulations of the Office of Thrift Supervision (the "OTS"). The Shares, the
bases on which the number of Shares to be issued may change, and certain of the
terms on which they are being offered are more fully described in the enclosed
Prospectus (the "Prospectus").
We are offering to Selected Dealers (of which you are one) the
opportunity to participate in the solicitation of offers to buy the Shares in
the Syndicated Community Offering and we will pay you a fee in the amount of
_____________ percent (________) of the dollar amount of the Shares sold on
behalf of the Company by you. The number of Shares sold by you shall be
determined based on the authorized designation of your firm on the order form or
forms for such Shares accompanying the funds transmitted for payment therefor
(whether in the form of a check payable to the Bank or a withdrawal from an
existing account at the Bank) to the special account established by the Company
for the purpose of holding such funds. It is understood, of course, that payment
of your fee will be made only out of compensation received by us for the Shares
sold on behalf of the Company by you, as evidenced in accordance with the
preceding sentence. The Bank has requested us to invite you to become a
"Sponsoring Dealer," that is, a Selected
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Dealer who solicits offers which result in the sale on behalf of the Bank of at
least ___________ Shares. You may become a Sponsoring Dealer (subject to your
fulfillment of the requirement in the preceding sentence) by checking the box on
the confirmation at the end of this letter. If you become a Sponsoring Dealer,
you shall be entitled to an additional fee in the amount of _______ percent
(______%) of the dollar amount of the Shares sold on behalf of the Company by
you as evidenced in the manner set forth above.
Each order form for the purchase of Shares must set forth the identity,
address and tax identification number of each person ordering Shares regardless
of whether the Shares will be registered in street name or in the purchaser's
name. Such order form should clearly identify your firm.
As soon as practicable after all the Shares are sold, we will remit to
you, out of our compensation as provided above, the fees to which you are
entitled hereunder, including your Sponsoring Dealer fee.
This offer is made subject to the terms and conditions herein set forth
and is made only to Selected Dealers which are (i) members in good standing of
the National Association of Securities Dealers, Inc. ("NASD") which agree to
comply with all applicable rules of the NASD, including, without limitation, the
NASD's Interpretation With Respect to Free-Riding and Withholding and Rule 2740
of the NASD's Conduct Rules, or (ii) foreign dealers not eligible for membership
in the NASD which agree (A) not to sell any Shares within the United States, its
territories or possessions or to persons who are citizens thereof or residents
therein and (B) in making other sales to comply with the above-mentioned NASD
Interpretation, Rules 2730, 2740 and 2750 of the above-mentioned Conduct Rules
as if they were NASD members and Rule 2420 of such Conduct Rules as it applies
to non-member brokers or dealers in a foreign country.
Orders for Shares will be strictly subject to confirmation and we,
acting on behalf of the Company, reserve the right in our absolute discretion to
reject any order in whole or in part, to accept or reject orders in the order of
their receipt or otherwise, and to allot. Neither you nor any other person is
authorized by the Company, the 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 Shares. No Selected Dealer is authorized to act as agent
for us when soliciting offers to buy the Shares from the public or otherwise. No
Selected Dealer shall engage in any transaction prohibited by Regulation M
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), with respect to the Common Stock during the offering.
We and each Selected Dealer assisting in selling Shares pursuant hereto
agree to comply with the applicable requirements of the Exchange Act and
applicable rules and regulations issued by the Board of Governors of the Federal
Reserve System and the OTS. In addition, we and each Selected Dealer confirm
that the Securities and Exchange Commission (the "Commission") interprets Rule
15c2-8 promulgated under the Exchange Act as requiring that a prospectus be
supplied to each person who is expected to receive a confirmation of sale 48
hours prior to delivery of such person's order form.
-41-
We and each Selected Dealer further agree to the extent that our
customers desire to pay for Shares with funds held by or to be deposited with
us, in accordance with the interpretation of the Commission of Rule 15c2-4
promulgated under the Exchange Act either (a) upon receipt of an executed order
form or direction to execute an order form on behalf of a customer to forward
the syndicated community offering price for the Shares ordered on or before
12:00 noon on the business day following receipt or execution of an order form
by us to the Bank for deposit in a segregated account or (b) to solicit
indications of interest in which event (i) we will subsequently contact any
customers indicating interest to confirm the interest and give instructions to
execute and return an order form or to receive authorization to execute an order
form on their behalf, (ii) we will mail acknowledgments of receipt of orders to
each customer confirming interest on the business day following such
confirmation, (iii) we will debit accounts of such customers on the fifth
business day (the "debit date") following receipt of the confirmation referred
to in (i), and (iv) we will forward completed order forms together with such
funds to the Bank on or before 12:00 noon on the next business day following the
debit date for deposit in a segregated account. We acknowledge that if the
procedure in (b) is adopted, our customer's funds are not required to be in
their accounts until the debit date. We and each Selected Dealer further
acknowledge that, in order to use the foregoing "sweep arrangements," we comply
with the net capital requirements for broker/dealers under Rule 15c3-1(a)(1) of
the Exchange Act.
Unless earlier terminated by us, this Agreement shall terminate 45 full
business days after the date hereof, but may be extended by us for an additional
period or periods not exceeding 30 full business days in the aggregate. We may
terminate this Agreement or any provisions hereof at any time by written or
telegraphic notice to you. Of course, our obligations hereunder are subject to
the successful completion of the offering, including the sale of all of the
Shares.
You agree that at any time or times prior to the termination of this
Agreement you will, upon our request, report to us the number of Shares sold on
behalf of the Company by you under this Agreement.
We shall have full authority to take such actions as we may deem
advisable in respect to all matters pertaining to the offering. We shall be
under no liability to you except for lack of good faith and for obligations
expressly assumed by us in this Agreement.
Upon application to us, we will inform you as to the states in which we
believe the Shares have been qualified for sale under, or are exempt from the
requirements of, the respective "blue sky" laws of such states, but we assume no
responsibility or obligation as to your rights to sell Shares in any state.
Additional copies of the Prospectus and any supplements thereto will be
supplied in reasonable quantities upon request.
Any notice from us to you shall be deemed to have been duly given if
mailed, telephoned or telegraphed to you at the address to which this Agreement
is mailed.
This Agreement shall be construed in accordance with the laws of the
State of New York.
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Please confirm your agreement hereto by signing and returning the
confirmation accompanying this letter at once to us at Sandler O'Neill &
Partners, L.P., 919 Third Avenue, 6th Floor, New York, New York 10022. The
enclosed duplicate copy will evidence the agreement between us.
Very truly yours,
SANDLER O'NEILL & PARTNERS, L.P.
By: Sandler O'Neill & Partners Corp.,
the sole general partner
By:
-------------------------------------
[Name]
Vice President
CONFIRMED AND ACCEPTED As of the date first above written:
[NAME OF SELECTED DEALER]
By:
-------------------------------
Name:
Title: