[FORM OF]
MSB FINANCIAL CORP.
(a federal stock corporation)
up to 2,199,375 Shares
(subject to increase up to 2,529,281 shares)
COMMON SHARES
($.10 Par Value)
Subscription Price $10.00 Per Share
AGENCY AGREEMENT
_______________, 2006
Keefe, Bruyette & Woods, Inc.
211 Bradenton Drive
Dublin, Ohio 43017-5034
Ladies and Gentlemen:
MSB Financial Corp., a federal corporation (the "Company") and the
wholly-owned subsidiary of MSB Financial, MHC, a federal mutual holding company
(the "MHC"), and the mid-tier holding company for all of the outstanding capital
stock of Millington Savings Bank, a New Jersey-chartered stock savings bank
located in Millington, New Jersey, (the "Bank"), deposit accounts in which are
insured by the Federal Deposit Insurance Corporation ("FDIC"), hereby confirms
its agreement with Keefe, Bruyette & Woods, Inc. (the "Agent") as follows:
Section 1. The Offering. The Company, in accordance with a plan of
stock issuance adopted by the Board of Directors, (the "Plan") will offer and
sell up to 2,199,375 shares (subject to increase up to 2,529,281) of its common
stock, $.10 par value per share (the "Shares" or "Common Shares"), in a
subscription offering (the "Subscription Offering") to (1) depositors of the
Bank with Qualifying Deposits (as defined in the Plan) as of June 30, 2005
("Eligible Account Holders"), (2) the employee stock ownership plan established
by either the Bank or the Company (the "ESOP"), and (3) depositors of the Bank
with Qualifying Deposits as of September 30, 2006 ("Supplemental Eligible
Account Holders"). Subject to the prior subscription rights of the above-listed
parties, the Company may offer for sale in a community offering (the "Community
Offering" and when referred to together with or subsequent to the Subscription
Offering, the "Subscription and Community Offering") the Shares not subscribed
for or ordered in the Subscription Offering to members of the general public to
whom a copy of the Prospectus (as hereinafter defined) is delivered with a
preference given first to natural persons who are residents of Morris and
Somerset Counties, New Jersey. It is anticipated that shares not subscribed for
in the Subscription and Community Offering may be offered to certain members of
the general public on a best efforts basis through a selected dealers agreement
(the "Syndicated Community Offering") (the Subscription Offering, Community
Offering and
Syndicated Community Offering are collectively referred to as the "Offering").
It is acknowledged that the purchase of Shares in the Offering is subject to the
maximum and minimum purchase limitations as described in the Plan and that the
Company may reject, in whole or in part, any orders received in the Community
Offering or Syndicated Community Offering. The Common Shares offered for sale in
the Offering will represent a minority ownership interest of 45% of the
Company's total outstanding Common Shares.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (File No. __________) (the
"Registration Statement"), containing a prospectus relating to the Offering, for
the registration of the Shares under the Securities Act of 1933 (the "1933
Act"), and has filed such amendments thereof and such amended prospectuses as
may have been required to the date hereof. The term "Registration Statement"
shall include any documents incorporated by reference therein and all financial
schedules and exhibits thereto, as amended, including post-effective amendments.
The prospectus, as amended, on file with the Commission at the time the
Registration Statement initially became effective is hereinafter called the
"Prospectus," except that if any Prospectus is filed by the Company pursuant to
Rule 424(b) or (c) of the rules and regulations of the Commission under the 1933
Act (the "1933 Act Regulations") differing from the prospectus on file at the
time the Registration Statement initially became effective, the term
"Prospectus" shall refer to the prospectus filed pursuant to Rule 424(b) or (c)
from and after the time said prospectus is filed with the Commission.
In accordance with 12 C.F.R. Part 575 (the "Reorganization
Regulations"), the Company has filed with the OTS a Form MHC-2 Application for
Approval of a Minority Stock Issuance by a Subsidiary of a Mutual Holding
Company ("MHC-2 Application"), including the Prospectus and the Valuation
Appraisal Report prepared by RP Financial, LC (the "Appraisal") and has filed
such amendments thereto as may have been required by the OTS. The MHC-2
Application has been approved by the OTS and the related Prospectus has been
authorized for use by the OTS.
Section 2. Retention of Agent; Compensation; Sale and Delivery of the
Shares. Subject to the terms and conditions herein set forth, the Company hereby
appoints the Agent as its exclusive financial advisor and marketing agent (i) to
utilize its best efforts to solicit subscriptions for Common Shares and to
advise and assist the Company with respect to the Company's sale of the Shares
in the Offering, and (ii) to participate in the Offering in the areas of market
making, research coverage and in syndicate formation (if necessary).
On the basis of the representations, warranties, and agreements herein
contained, but subject to the terms and conditions herein set forth, the Agent
accepts such appointment and agrees to consult with and advise the Company and
the Bank as to the matters set forth in the letter agreement, dated June 26,
2006, between the Company and the Agent (a copy of which is attached hereto as
Exhibit A). It is acknowledged by the Company that the Agent shall not be
required to purchase any Shares or be obligated to take any action which is
inconsistent with all applicable laws, regulations, decisions or orders.
The obligations of the Agent pursuant to this Agreement (other than
those set forth in Section 2(a) and (c) hereof) shall terminate upon termination
of the Offering, but in no event later than 45 days after the completion of the
Subscription Offering (the "End Date"). All fees or
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expenses due to the Agent but unpaid will be payable to the Agent in next day
funds at the earlier of the Closing Date (as hereinafter defined) or the End
Date. In the event the Offering is extended beyond the End Date, the Company and
the Agent may agree to renew this Agreement under mutually acceptable terms.
In the event the Company is unable to sell a minimum of 1,625,625
Shares within the period herein provided, this Agreement shall terminate and the
Company shall refund to any persons who have subscribed for any of the Shares
the full amount which it may have received from them plus accrued interest, as
set forth in the Prospectus; and none of the parties to this Agreement shall
have any obligation to the other parties hereunder, except as set forth in this
Section 2 and in Sections 6, 8 and 9 hereof. In the event the Offering is
terminated for any reason not attributable to the action or inaction of the
Agent, the Agent shall be paid the fees due to the date of such termination
pursuant to subparagraphs (a) and (d) below.
If all conditions precedent to the sale of all Shares required by the
Plan to be sold, are satisfied, the Company agrees to issue the Shares sold in
the Offering and to release for delivery certificates for such Shares on the
Closing Date (as hereinafter defined) against payment to the Company by any
means authorized by the Plan; provided, however, that no funds shall be released
to the Company until the conditions specified in Section 7 hereof shall have
been complied with to the reasonable satisfaction of the Agent and its counsel.
The release of Shares against payment therefor shall be made on a date and at a
place acceptable to the Company and the Agent. Certificates for shares shall be
delivered directly to the purchasers in accordance with their directions. The
date upon which the Company shall release or deliver the Shares sold in the
Offering, in accordance with the terms herein, is called the "Closing Date."
The Agent shall receive the following compensation for its services
hereunder:
(a) A management fee of $25,000 payable in four consecutive monthly
installments of $6,250 commencing with the adoption of the Plan. This
fee shall be due as it is earned and shall be non-refundable.
(b) A success fee upon completion of the Offering of 1.00% of the
aggregate purchase price of the Common Shares sold in the Subscription
Offering and Community Offering excluding shares purchased by the
Bank's officers, directors, or employees (or members of their immediate
family) or their IRAs, or the ESOP, tax qualified or stock based
compensation plans or similar plans created by the Bank for some or all
of its directors or employees. The management fee will be applied
against the success fee.
(c) If any of the Common Shares remain available after the Subscription
Offering, at the request of the Company, the Agent will seek to form a
syndicate of registered broker-dealers ("Selected Dealers") to assist
in the sale of such Common Shares on a best efforts basis, subject to
the terms and conditions set forth in the selected dealers agreement.
The Agent will endeavor to distribute the Common Shares among the
Selected Dealers in a fashion which best meets the distribution
objectives of the Bank and the Plan. The Agent will be paid a fee not
to exceed 5.5% of the aggregate Purchase Price of the Shares sold by
the Selected Dealers. The Agent will pass onto the Selected Dealers who
assist in the Syndicated Community Offering an amount competitive with
gross underwriting
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discounts charged at such time for comparable amounts of stock sold at
a comparable price per share in a similar market environment. Fees
with respect to purchases effected with the assistance of Selected
Dealers other than the Agent shall be transmitted by the Agent to such
Selected Dealers. The decision to utilize Selected Dealers will be
made by the Company upon consultation with the Agent. In the event,
with respect to any stock purchases, fees are paid pursuant to this
subparagraph 2(c), such fees shall be in lieu of, and not in addition
to, payment pursuant to paragraph 2(b).
(d) The Company shall reimburse the Agent for reasonable out-of-pocket
expenses, including costs of travel, meals and lodging, photocopying,
telephone, facsimile, couriers not to exceed $20,000. In addition, the
Company will reimburse the Agent for legal fees paid to the Agent's
legal counsel not to exceed $40,000 and expenses of Agent's legal
counsel not to exceed $5,000. The Company will bear the expenses of
the Offering customarily borne by issuers including, without
limitation, regulatory filing fees, SEC, "Blue Sky," and NASD filing
and registration fees; the fees of the Company's accountants,
attorneys, appraiser, transfer agent and registrar, printing, mailing
and marketing expenses associated with the reorganization; and the
fees set forth under this Section 2.
Additional Services. Agent further agrees to provide general financial
advisory assistance to the Company and the Bank for a period of three years
following completion of the Offering, including formation of a dividend policy
and share repurchase program, assistance with shareholder reporting and
shareholder relations matters, general advice on mergers and acquisitions and
other related financial matters, without the payment by the Company and the Bank
of any fees in addition to those set forth in this Section 2 hereof. If,
however, a specific buy side assignment were to develop, Agent would look to
develop a separate and specific engagement letter tailored to such a
transaction, while simultaneously maintaining the elements of this Agreement in
good standing.
As part of the post-Offering financial advisory services, Agent will
specifically conduct the following:
o assistance with financial modeling
o assistance with the formation of dividend policy
o assistance with the formation of a share repurchase program
o assistance with shareholder reporting and shareholder relations
matters
o general advice on mergers and acquisitions and other related
financial matters, including updating the Company on the merger &
acquisition market with specific attention being paid to
comparable transactions in terms of charter, size, region,
capital levels and profitability. Such updates will serve as a
benchmark for understanding how merger and acquisition pricing is
influenced by various profitability and efficiency metrics and
will serve to keep the Company focused on continuing to achieve
further franchise value.
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Full payment of Agent's actual and accountable expenses, advisory fees
and compensation shall be made in next day funds on the earlier of the Closing
Date or a determination by the Bank to terminate or abandon the Offering.
Section 3. Sale and Delivery of Shares. If all conditions precedent to
the sale of all Shares required by the Plan to be sold, are satisfied, the
Company agrees to issue, or have issued, the Shares sold in the Offering and to
release for delivery certificates for such Shares on the Closing Date against
payment to the Company by any means authorized by the Plan; provided, however,
that no funds shall be released to the Company until the conditions specified in
Section 7 hereof shall have been complied with to the reasonable satisfaction of
the Agent and its counsel. The release of Shares against payment therefor shall
be made on a date and at a place acceptable to the Company and the Agent.
Certificates for shares shall be delivered directly to the purchasers in
accordance with their directions.
Section 4. Representations and Warranties of the Company. The Company
represents and warrants to and agrees with the Agent as follows:
(a) The Registration Statement which was prepared by the Company and
the Bank and filed with the Commission has been declared effective by
the Commission, no stop order has been issued with respect thereto and
no proceedings therefor have been initiated or, to the knowledge of
the Company, threatened by the Commission. At the time the
Registration Statement, including the Prospectus contained therein
(including any amendment or supplement), became effective and at the
Closing Date, the Registration Statement complied and will comply in
all material respects with the requirements of the 1933 Act and the
1933 Act Regulations and the Registration Statement, including the
Prospectus contained therein (including any amendment or supplement
thereto), and any information regarding the Company contained in Sales
Information (as such term is defined in Section 8 hereof) authorized
by the Company for use in connection with the Offering, did not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading, and at the time any Rule 424(b) or (c)
Prospectus is filed with the Commission and at the Closing Date
referred to in Section 2 hereof, the Prospectus (including any
amendment or supplement thereto) and any information regarding the
Company contained in Sales Information (as such term is defined in
Section 8 hereof) authorized by the Company for use in connection with
the Offering will contain all statements that are required to be
stated therein in accordance with the 1933 Act and the 1933 Act
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 light of the circumstances under which they
were made, not misleading; provided, however, that the representations
and warranties in this Section 4(a) shall not apply to statements or
omissions made in reliance upon and in conformity with written
information furnished to the Company by the Agent or its counsel
expressly regarding the Agent for use in the Prospectus under the
caption "The Offering-- Plan of Distribution/Marketing Arrangements"
or statements in or omissions from any Sales Information or
information filed pursuant to state securities or blue sky laws or
regulations regarding the Agent.
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(b) The MHC-2 Application, which was prepared by the Company and the
Bank and filed with the OTS, has been approved by the OTS and the
related Prospectus to be delivered to members of the Bank has been
authorized for use by the OTS and the MHC-2 Application complied in
all material respects with the Reorganization Regulations except as
otherwise waived by the OTS. No order has been issued by the OTS or
the FDIC preventing or suspending the use of the Prospectus, and no
action by or before any such government entity to revoke any approval,
authorization or order of effectiveness related to the Offering is, to
the best knowledge of the Company, pending or threatened. At the time
of the approval of the MHC-2 Application, including the Prospectus
(including any amendment or supplement thereto) by the OTS and at all
times subsequent thereto until the Closing Date, the MHC-2
Application, including the Prospectus (including any amendment or
supplement thereto), will comply in all material respects with the
Reorganization Regulations, except to the extent waived or otherwise
approved by the OTS. The MHC-2 Application, including the Prospectus
(including any amendment or supplement thereto), does not include any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the representations and warranties
in this Section 4(b) shall not apply to statements or omissions made
in reliance upon and in conformity with written information furnished
to the Company by the Agent or its counsel expressly regarding the
Agent for use in the Prospectus contained in the MHC-2 Application
under the caption "The Offering--Plan of Distribution/Marketing
Arrangements" or statements in or omissions from any sales information
or information filed pursuant to state securities or blue sky laws or
regulations regarding the Agent.
(c) The Company, the MHC and the Bank have filed 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 on the Closing Date
referred to in Section 2, complied and will comply in all material
respects with the applicable requirements of the Securities Act
Regulations and, at or prior to the time of their first use, will have
received all required authorizations of the OTS and Commission for use
in final form. No approval of any other regulatory or supervisory or
other public authority is required in connection with the distribution
of the Prospectus and any supplemental sales literature that has not
been obtained and a copy of which has been delivered to the Agent. The
Company, the MHC and the Bank have not distributed any offering
material in connection with the Offering except for the Prospectus and
any supplemental sales material that has been filed with the
Registration Statement and the Stock Issuance Application and
authorized for use by the Commission and the OTS. The information
contained in the supplemental sales material filed as an exhibit to
both the Registration Statement and the Stock Issuance Application
does not conflict with information contained in the Registration
Statement and the Prospectus.
(d) The offer and sale of the Shares will have been conducted in all
material respects in accordance with the Plan, the Reorganization
Regulations except to the extent waived or otherwise approved by the
OTS, and all other applicable laws, regulations, decisions and orders,
including all terms, conditions, requirements and provisions precedent
to the Offering imposed upon the MHC, the Company and the Bank by the
OTS, the
6
Commission, or any other regulatory authority and in the manner
described in the Prospectus. To the best knowledge of the MHC, the
Company and the Bank, no person has sought to obtain review of the
final action of the OTS in approving the Offering pursuant to the HOLA
or any other statute or regulation.
(e) The Company is a duly organized and validly existing
federally-chartered corporation; and the Bank is a duly organized and
validly existing New Jersey-chartered savings bank in permanent
capital stock form of organization. Each of the Company and the Bank
is duly authorized to conduct its business and own its property as
described in the Registration Statement and the Prospectus; each of
the Company and the Bank has obtained all licenses, permits and other
governmental authorizations currently required for the conduct of its
business, except those that individually or in the aggregate would not
materially adversely affect the financial condition, results of
operations or business of the Company and the Bank, taken as a whole;
all such licenses, permits and governmental authorizations are in full
force and effect, and each of the Company and the Bank is in
compliance with all material laws, rules, regulations and orders
applicable to the operation of its business, except where failure to
be in compliance would not materially adversely affect the financial
condition, results of operations or business of the Company and the
Bank, taken as a whole; each of the Company and the Bank is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which its ownership of property or
leasing of property or the conduct of its business requires such
qualification, unless the failure to be so qualified in one or more of
such jurisdictions would not have a material adverse effect on the
financial condition, results of operations or business of the Company
and the Bank, taken as a whole. Each of the Company and the Bank does
not own equity securities or any equity interest in any other business
enterprise except as described in the Prospectus or as would not be
material to the operations of the Company or the Bank, as the case may
be. Upon completion of the sale by the Company of the Shares
contemplated by the Prospectus, (i) all of the authorized and
outstanding capital stock of the Bank will be owned by the Company and
(ii) the Company will have no direct subsidiaries other than the Bank.
The Offering will be effected in all material respects in accordance
with all applicable statutes, regulations, decisions and orders; and,
except with respect to the filing of certain post-sale reports and
documents in compliance with the 1933 Act Regulations, the
Reorganization Regulations or letters of approval at the time of the
Closing, all terms, conditions, requirements and provisions with
respect to the Offering imposed by the Commission, the OTS and the
FDIC, if any, will have been complied with by the Company in all
material respects or appropriate waivers will have been obtained and
all material notice and waiting periods will have been satisfied,
waived or elapsed.
(f) The MHC is duly incorporated and validly existing as a corporation
under the laws of the United States of America with corporate power
and authority to own, lease and operate its properties and to conduct
its business as described in the Registration Statement and the
Prospectus, and is qualified to do business as a foreign corporation
in each jurisdiction in which the conduct of its business requires
such qualification, except where the failure to so qualify would not
have a material adverse effect on the financial condition, results of
operations or business of the Company and the Bank, taken as a whole.
The MHC has all licenses, permits and other governmental
authorizations
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currently required for the conduct of its business except those that
individually or in the aggregate would not materially adversely affect
the financial condition, results of operations or business of the
Company and the Bank, taken as a whole; all such licenses, permits and
governmental authorizations are in full force and effect, and the MHC
in all material respects complies with all laws, rules, regulations
and orders applicable to the operation of its business.
(g) The MHC and the Company are registered and in good standing as
savings association holding companies under the Home Owners' Loan Act
of 1933.
(h) The Bank is a member of the Federal Home Loan Bank of New York
("FHLB-New York"). The deposit accounts of the Bank are insured by the
FDIC up to the applicable limits, and no proceedings for the
termination or revocation of such insurance are pending or, to the
best knowledge of the Company or the Bank, threatened. The Bank is a
"qualified thrift lender" within the meaning of 12 U.S.C.
ss.l467(a)(m).
(i) Each of the Company and the Bank, has good and marketable title to
all real property and good title to all other assets material to the
business of the Company and the Bank, taken as a whole, and to those
properties and assets described in the Registration Statement and
Prospectus as owned by it, free and clear of all liens, charges,
encumbrances or restrictions, except such as are described in the
Registration Statement and Prospectus, or are not material to the
business of the Company and the Bank, taken as a whole; and all of the
leases and subleases material to the business of the Company and the
Bank, taken as a whole, under which, the Company or the Bank hold
properties, including those described in the Registration Statement
and Prospectus, are in full force and effect.
(j) The Company has received an opinion of its special counsel,
Malizia Spidi & Fisch, PC, with respect to the federal income tax
consequences of the Offering, all material aspects of such opinion are
accurately summarized in the Registration Statement and the
Prospectus. The Company represents and warrants that the facts upon
which such opinion is based are truthful, accurate and complete. None
of the Company, the Bank or the MHC will take any action inconsistent
therewith.
(k) Each of the Company and the Bank has all such power, authority,
authorizations, approvals and orders as may be required to enter into
this Agreement, to carry out the provisions and conditions hereof and,
with respect to the Company, to issue and sell the Shares to be sold
by it as provided herein and as described in the Prospectus, subject
to approval or confirmation by the OTS of the final appraisal of the
Company including the Bank. The execution, delivery and performance of
this Agreement have been duly and validly authorized by all necessary
corporate action on the part of the Company; and the Offering has been
duly and validly authorized by all necessary corporate action on the
part of the Company. This Agreement has been validly executed and
delivered by the Company and is the valid, legal and binding agreement
of the Company enforceable in accordance with its terms (except as the
enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization or similar laws relating to or affecting
the enforcement of creditors rights generally or the rights of
creditors of
8
savings and loan holding companies or savings banks, as the case may
be, the accounts of whose subsidiaries or of which are insured by the
FDIC, or by general equity principles, regardless of whether such
enforceability is considered in a proceeding in equity or at law, and
except to the extent, if any, that the provisions of Sections 8 and 9
hereof may be unenforceable as against public policy). The Company has
all such power, authority, authorizations, approvals and orders as may
be required to enter into this Agreement, to carry out the provisions
and conditions hereof and to issue and sell the Shares to be sold by
it as provided herein and as described in the Prospectus, subject to
approval or confirmation by the OTS of the final appraisal of the
Company including the Bank.
(l) None the MHC, the Company or the Bank is in violation of any
directive received from the OTS, the FDIC, or any other agency to make
any material change in the method of conducting its business so as to
comply in all material respects with all applicable statutes and
regulations (including, without limitation, regulations, decisions,
directives and orders of the OTS and the FDIC) and, except as may be
set forth in the Registration Statement and the Prospectus, there is
no suit or proceeding or charge or action before or by any court,
regulatory authority or governmental agency or body, pending or, to
the knowledge of the MHC, the Company or the Bank, threatened, which
might materially and adversely affect the Offering, as described in
the Registration Statement and the Prospectus or which might result in
any material adverse change in the financial condition, results of
operations or business of the Company and the Bank, taken as a whole,
or which would materially affect their properties and assets.
(m) The financial statements, schedules and notes related thereto
which are included in the Prospectus fairly present the balance sheet,
income statement, statement of changes in equity capital and statement
of cash flows of the Company on a consolidated basis with the Bank
(except as otherwise stated therein) at the respective dates indicated
and for the respective periods covered thereby and comply as to form
in all material respects with the applicable accounting requirements
of Title 12 of the Code of Federal Regulations. Such financial
statements, schedules and notes related thereto have been prepared in
accordance with generally accepted accounting principles ("GAAP")
consistently applied through the periods involved, present fairly in
all material respects the information required to be stated therein
and are consistent with the most recent financial statements and other
reports filed by the Company and the Bank with the OTS, except that
accounting principles employed in such regulatory filings conform to
the requirements of the OTS and not necessarily to GAAP. The other
financial, statistical and pro forma information and related notes
included in the Prospectus present fairly the information shown
therein on a basis consistent with the audited and unaudited financial
statements of the Company on a consolidated basis with the Bank
(except as otherwise stated therein) included in the Prospectus, and
as to the pro forma adjustments, the adjustments made therein have
been properly applied on the basis described therein.
(n) Since the respective dates as of which information is given in the
Registration Statement including the Prospectus: (i) there has not
been any material adverse change, financial or otherwise, in the
condition of the Company and the Bank and their subsidiaries,
considered as one enterprise, or in the earnings, capital properties
or business of the Company and the Bank, whether or not arising in the
ordinary course of
9
business; (ii) there has not been any material increase in the
long-term debt of the Company or the Bank or in the principal amount
of the Company's or the Bank's assets which are classified by the
Company or the Bank as substandard, doubtful or loss or in loans past
due 90 days or more or real estate acquired by foreclosure, by
deed-in-lieu of foreclosure or deemed in-substance foreclosure or any
material decrease in equity capital or total assets of the Company on
a consolidated basis with the Bank; nor has the MHC, the Company or
the Bank issued any securities (other than in connection with the
incorporation of the Company and the reorganization of the Bank into a
mutual holding company structure) or incurred any liability or
obligation for borrowing other than in the ordinary course of
business; (iii) there have not been any material transactions entered
into by the MHC, the Company or the Bank; (iv) there has not been any
material adverse change in the aggregate dollar amount (on a
consolidated basis with the Bank) of the Company's deposits or its net
worth; (v) there has been no material adverse change in the MHC's, the
Company's or the Bank's relationship with its insurance carriers,
including, without limitation, cancellation or other termination of
the MHC s, the Company's or the Bank's fidelity bond or any other type
of insurance coverage; (vi) except as disclosed in the Prospectus,
there has been no material change in management of the MHC, the
Company or the Bank; (vii) neither the Company nor the Bank has
sustained any material loss or interference with its respective
business or properties from fire, flood, windstorm, earthquake,
accident or other calamity, whether or not covered by insurance;
(viii) none of the MHC, the Company or the Bank has defaulted in the
payment of principal or interest on any outstanding debt obligations;
(ix) the capitalization, liabilities, assets, properties and business
of the MHC, the Company and the Bank conform in all material respects
to the descriptions thereof contained in the Prospectus; and (x)
neither the Company nor the Bank has any material contingent
liabilities, except as set forth in the Prospectus.
(o) None of the MHC, the Company or the Bank is (i) in violation of
its charter or articles of incorporation, as the case may be, or
bylaws, or (ii) in default in the performance or observance of any
material obligation, agreement, covenant, or condition contained in
any material contract, lease, loan agreement, indenture or other
instrument to which it is a party or by which it or any of its
property may be bound. The execution and delivery of this Agreement
and the consummation of the transactions herein contemplated will not:
(i) conflict with or constitute a breach of, or default under, or
result in the creation of any material lien, charge or encumbrance
upon any of the assets of the MHC, the Company or the Bank pursuant to
the Charter or Articles of Incorporation, as the case may be, and
Bylaws of the Company, the MHC or the Bank or any material contract,
lease or other instrument in which the MHC, the Company or the Bank
has a beneficial interest, or any applicable law, rule, regulation or
order; (ii) violate any authorization, approval, judgment, decree,
order, statute, rule or regulation applicable to the MHC, the Company
or the Bank, except for such violations which would not have a
material adverse effect on the financial condition and results of
operations of the Company and the Bank on a consolidated basis; or
(iii) result in the creation of any material lien, charge or
encumbrance upon any property of the Company or the Bank.
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(p) All documents made available to or delivered or to be made
available to or delivered by the MHC, the Company and the Bank or
their representatives in connection with the issuance and sale of the
Shares, including records of account holders and depositors of the
Bank, or in connection with the Agent's exercise of due diligence,
except for those documents which were prepared by parties other than
the MHC, the Company or the Bank or their representatives, to the best
knowledge of the Company, were on the dates on which they were
delivered, or will be on the dates on which they are to be delivered,
true, complete and correct in all material respects.
(q) No default exists, and no event has occurred which with notice or
lapse of time, or both, would constitute a default on the part of the
MHC, the Company or the Bank in the due performance and observance of
any term, covenant or condition of any indenture, mortgage, deed of
trust, note, bank loan or credit agreement or any other instrument or
agreement to which the MHC, the Company or the Bank is a party or by
which any of them or any of their property is bound or affected,
except such defaults which would not have a material adverse affect on
the financial condition or results of operations of the Company and
the Bank, taken as a whole; such agreements are in full force and
effect; and no other party to any such agreements has instituted or,
to the best knowledge of the MHC, the Company or the Bank, threatened
any action or proceeding wherein the MHC, the Company or the Bank
would or might be alleged to be in default thereunder, where such
action or proceeding, if determined adversely to the MHC, the Company
or the Bank, would have a material adverse effect on the financial
condition, results of operations, or business of the Company or the
Bank, taken as a whole.
(r) Upon consummation of the Offering, the authorized, issued and
outstanding equity capital of the Company will be within the range set
forth in the Prospectus under the caption "Capitalization," and no
Shares (other than Shares issued to the MHC) have been or will be
issued and outstanding prior to the Closing Date; the Shares
(including shares issued or to be issued to the MHC) have been duly
and validly authorized for issuance and, when issued and delivered by
the Company pursuant to the Plan against payment of the consideration
calculated as set forth in the Plan and in the Prospectus, will be
duly and validly issued, fully paid and non-assessable, except for
shares purchased by the ESOP with funds borrowed from the Company to
the extent payment therefor in cash has not been received by the
Company; except to the extent that subscription rights and priorities
pursuant thereto exist pursuant to the Plan, no preemptive rights
exist with respect to the Shares; and the terms and provisions of the
Shares will conform in all material respects to the description
thereof contained in the Registration Statement and the Prospectus.
Upon the issuance of the Shares, good title to the Shares will be
transferred from the Company to the purchasers thereof against payment
therefor, subject to such claims as may be asserted against the
purchasers thereof by third-party claimants.
(s) No approval of any regulatory or supervisory or other public
authority is required in connection with the execution and delivery of
this Agreement or the issuance of the Shares, except for the approval
of the Commission and the OTS, and any necessary qualification,
notification, registration or exemption under the securities or blue
sky laws of the various states in which the Shares are to be offered,
and except as may be required
11
under the rules and regulations of the National Association of
Securities Dealers, Inc. ("NASD").
(t) Beard Miller Company LLP, which has certified the audited
financial statements and schedules of the Company and the Bank
included in the Prospectus, has advised the Company and the Bank in
writing that they are, with respect to the Company and the Bank,
independent registered public accountants within the applicable rules
of the Public Company Accounting Oversight Board (United States).
(u) RP Financial, LC, which has prepared the Valuation Appraisal
Report (as amended or supplemented, if so amended or supplemented) of
the Company including the Bank, has advised the Company in writing
that it is independent of the MHC, the Company and the Bank within the
meaning of the Reorganization Regulations.
(v) The Company, the MHC and the Bank have timely filed or extended
all required federal, state and local tax returns; the Company, the
MHC and the Bank have paid all taxes that have become due and payable
in respect of such returns, except where permitted to be extended,
have made adequate reserves for similar future tax liabilities and no
deficiency has been asserted with respect thereto by any taxing
authority.
(w) The Company and the Bank are in compliance in all material
respects with the applicable financial record-keeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, and the regulations and rules thereunder.
(x) To the knowledge of the MHC, the Company and the Bank, none the
MHC, the Company, the Bank or employees of the MHC, the Company or the
Bank has made any payment of funds of the MHC, the Company or the Bank
as a loan for the purchase of the Shares or made any other payment of
funds prohibited by law, and no funds have been set aside to be used
for any payment prohibited by law.
(y) Prior to the Offering, none of the MHC, the Company or the Bank
has: (i) issued any securities within the last 18 months (except for
notes to evidence bank loans and reverse repurchase agreements or
other liabilities in the ordinary course of business or as described
in the Prospectus and except in connection with the Bank's
reorganization into the mutual holding company structure); (ii) had
any material dealings within the 12 months prior to the date hereof
with any member of the NASD, or any person related to or associated
with such member, other than discussions and meetings relating to the
proposed Offering and routine purchases and sales of United States
government and agency and other securities in the ordinary course of
business; (iii) entered into a financial or management consulting
agreement except as contemplated hereunder; and (iv) engaged any
intermediary between the Agent and the MHC, the Company or the Bank in
connection with the offering of the Shares, and no person is being
compensated in any manner for such service. Appropriate arrangements
have been made for placing the funds received from subscriptions for
Shares in a special interest-bearing account with the Bank until all
Shares are sold and paid for, with provision for refund to the
12
purchasers in the event that the Offering is not completed for
whatever reason or for delivery to the Company if all Shares are sold.
(z) The Company, the MHC and the Bank have not relied upon the Agent
or its legal counsel for any legal, tax or accounting advice in
connection with the Offering.
(aa) The records used by the Company and the Bank to determine the
identity of Eligible Account Holders and Supplemental Eligible Account
Holders and Other Depositors are accurate and complete in all material
respects.
(bb) The Company and the MHC are not required to be registered under
the Investment Company Act of 1940, as amended.
(cc) None of the Company, the Bank or the MHC or any properties owned
or operated by the Company, the Bank or the MHC, is in violation of or
liable under any Environmental Law (as defined below), except for such
violations or liabilities that, individually or in the aggregate,
would not have a material adverse effect on the financial condition,
results of operations or business of the Company and the Bank, taken
as a whole. There are no actions, suits or proceedings, or demands,
claims, notices or investigations (including, without limitation,
notices, demand letters or requests for information from any
environmental agency) instituted or pending or, to the knowledge of
the Company, the Bank or the MHC, threatened relating to the liability
of any property owned or operated by the Company, the Bank or the MHC
under any Environmental Law. For purposes of this subsection, the term
"Environmental Law" means any federal, state, local or foreign law,
statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, order, judgment, decree, injunction
or agreement with any regulatory authority relating to (i) the
protection, preservation or restoration of the environment (including,
without limitation, air, water, vapor, surface water, groundwater,
drinking water supply, surface soil, subsurface soil, plant and animal
life or any other natural resource), and/or (ii) the use, storage,
recycling, treatment, generation, transportation, processing,
handling, labeling, production, release or disposal of any substance
presently listed, defined, designated or classified as hazardous,
toxic, radioactive or dangerous, or otherwise regulated, whether by
type or by quantity, including any material containing any such
substance as a component.
(dd) The Company will file a registration statement for the Common
Shares under Section 12(g) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act Registration Statement").
(ee) The Company and its subsidiaries 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
accountability for assets, (C) access to assets is permitted only in
accordance with management's general or specific authorization, and
(D) the recorded accounts or assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect thereto. As of
13
the first report filed by the Company pursuant to Section 13 or 15 of
the 1934 Act, the books, records and accounts and systems of internal
accounting control of the Company and its subsidiaries will comply in
all material respects with the requirements of Section 13(b)(2) of the
1934 Act and the Company will maintain "disclosure controls and
procedures" (as defined in Rule 13a-15(e) under the Exchange Act) that
are effective in ensuring that the information it will be required to
disclose in the reports it files or submits under the Exchange Act is
accumulated and communicated to the Company's management (including
the Company's chief executive officer and chief financial officer) in
a timely manner and recorded, processed, summarized and reported
within the periods specified in the Commission's rules and forms.
(ff) All of the loans represented as assets of the Company or the Bank
in the Prospectus meet or are exempt from all requirements of federal,
state and local law pertaining to lending, including, without
limitation, truth in lending (including the requirements of Regulation
Z and 12 C.F.R. Part 226), real estate settlement procedures, consumer
credit protection, equal credit opportunity and all disclosure laws
applicable to such loans, except for violations which, if asserted,
would not have a material adverse effect on the financial condition,
results of operations, or business of the Company and the Bank, taken
as a whole.
(gg) The Company has taken all actions necessary to obtain at Closing
a Blue Sky Memorandum from Malizia Spidi & Fisch, PC.
(hh) Any certificates signed by an officer of the MHC, the Company or
the Bank pursuant to the conditions of this Agreement and delivered to
the Agent or their counsel that refers to this Agreement shall be
deemed to be a representation and warranty by the MHC, the Company or
the Bank, as the case may be, to the Agent as to the matters covered
thereby with the same effect as if such representation and warranty
were set forth herein.
Section 5. Representations and Warranties of the Agent. The Agent
represents and warrants to the Company and the Bank as follows:
(a) The Agent is a corporation and is validly existing in good
standing under the laws of the State of New York with full power and
authority to provide the services to be furnished to the Company and
the Bank hereunder.
(b) The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly
authorized by all necessary action on the part of the Agent, and this
Agreement has been duly and validly executed and delivered by the
Agent and is a legal, valid and binding agreement of the Agent,
enforceable in accordance with its terms, except as the legality,
validity, binding nature and enforceability thereof may be limited by
(i) bankruptcy, insolvency, moratorium, reorganization,
conservatorship, receivership or other similar laws relating to or
affecting the enforcement of creditors' rights generally, and (ii)
general equity principles regardless of whether such enforceability is
considered in a proceeding in equity or at law.
14
(c) Each of the Agent and its employees, agents and representatives
who shall perform any of the services hereunder shall be duly
authorized and empowered, and shall have all licenses, approvals and
permits necessary to perform such services; and the Agent is a
registered selling agent in each of the jurisdictions in which the
Shares are to be offered by the Company in reliance upon the Agent as
a registered selling agent as set forth in the blue sky memorandum
prepared with respect to the Offering.
(d) The execution and delivery of this Agreement by the Agent, the
consummation of the transactions contemplated hereby and compliance
with the terms and provisions hereof will not conflict with, or result
in a breach of, any of the terms, provisions or conditions of, or
constitute a default (or an event which with notice or lapse of time
or both would constitute a default) under, the Articles of
Incorporation or Bylaws of the Agent or any agreement, indenture or
other instrument to which the Agent is a party or by which it or its
property is bound.
(e) No approval of any regulatory or supervisory or other public
authority is required in connection with the Agent's execution and
delivery of this Agreement, except as may have been received.
(f) There is no suit or proceeding or charge or action before or by
any court, regulatory authority or government agency or body or, to
the knowledge of the Agent, pending or threatened, which might
materially adversely affect the Agent's performance under this
Agreement.
Section 5.1 Covenants of the Company. The Company hereby covenants
with the Agent as follows:
(a) The Company will not, at any time after the date the Registration
Statement is declared effective, file any amendment or supplement to
the Registration Statement without providing the Agent and its counsel
an opportunity to review such amendment or supplement or file any
amendment or supplement to which amendment or supplement the Agent or
its counsel shall reasonably object.
(b) The Company will not, at any time after the MHC-2 Application is
approved by the OTS, file any amendment or supplement to such MHC-2
Application without providing the Agent and its counsel an opportunity
to review such amendment or supplement or file any amendment or
supplement to which amendment or supplement the Agent or its counsel
shall reasonably object.
(c) The Company will use its best efforts to cause any post-effective
amendment to the Registration Statement to be declared effective by
the Commission and any post-effective amendment to the MHC-2
Application to be approved by the OTS and will immediately upon
receipt of any information concerning the events listed below notify
the Agent: (i) when the Registration Statement, as amended, has become
effective; (ii) when the MHC-2 Application, as amended, has been
approved by the OTS; (iii) of any comments from the Commission, the
OTS or any other governmental entity with respect to the Offering
contemplated by this Agreement; (iv) of the request by the Commission,
16
the OTS or any other governmental entity for any amendment or
supplement to the Registration Statement, the MHC-2 Application or for
additional information; (v) of the issuance by the Commission, the OTS
or any other governmental entity of any order or other action
suspending the Offering or the use of the Registration Statement or
the Prospectus or any other filing of the Company or the Bank under
the Reorganization Regulations, or other applicable law, or the threat
of any such action; (vi) of the issuance by the Commission, the OTS or
any authority of any stop order suspending the effectiveness of the
Registration Statement or of the initiation or threat of initiation or
threat of any proceedings for that purpose; or (vii) of the occurrence
of any event mentioned in paragraph (h) below. The Company, the MHC
and the Bank will make every reasonable effort (i) to prevent the
issuance by the Commission, the OTS or any other state authority of
any such order and, (ii) if any such order shall at any time be
issued, to obtain the lifting thereof at the earliest possible time.
(d) The Company will deliver to the Agent and to its counsel two
conformed copies of the Registration Statement and the MHC-2
Application, as originally filed and of each amendment or supplement
thereto, including all exhibits. Further, the Company will deliver
such additional copies of the foregoing documents to counsel to the
Agent as may be required for any NASD filings.
(e) The Company will furnish to the Agent, from time to time during
the period when the Prospectus (or any later prospectus related to
this offering) is required to be delivered under the 1933 Act or the
Securities Exchange Act of 1934 (the "1934 Act"), such number of
copies of such Prospectus (as amended or supplemented) as the Agent
may reasonably request for the purposes contemplated by the 1933 Act,
the 1933 Act Regulations, the 1934 Act or the rules and regulations
promulgated under the 1934 Act (the "1934 Act Regulations"). The
Company authorizes the Agent to use the Prospectus (as amended or
supplemented, if amended or supplemented) in any lawful manner
contemplated by the Plan in connection with the sale of the Shares by
the Agent.
(f) The Company, the MHC and the Bank will comply with any and all
material terms, conditions, requirements and provisions with respect
to the Offering imposed by the Commission, the OTS or the
Reorganization Regulations, and by the 1933 Act, the 1933 Act
Regulations, the 1934 Act and the 1934 Act Regulations to be complied
with prior to or subsequent to the Closing Date and when the
Prospectus is required to be delivered, and during such time period
the Company and the Bank will comply, at their own expense, with all
material requirements imposed upon them by the Commission, the OTS or
the Reorganization Regulations, and by the 1933 Act, the 1933 Act
Regulations, the 1934 Act and the 1934 Act Regulations, including,
without limitation, Rule 10b-5 under the 1934 Act, in each case as
from time to time in force, so far as necessary to permit the
continuance of sales or dealing in the Common Shares during such
period in accordance with the provisions hereof and the Prospectus.
(g) If, at any time during the period when the Prospectus relating to
the Shares is required to be delivered, any event relating to or
affecting the MHC, the Company or the Bank shall occur, as a result of
which it is necessary or appropriate, in the opinion of counsel for
the Company or in the reasonable opinion of the Agent's counsel, to
amend
16
or supplement the Registration Statement or Prospectus in order to
make the Registration Statement or Prospectus not misleading in light
of the circumstances existing at the time the Prospectus is delivered
to a purchaser, the Company will immediately so inform the Agent and
prepare and file, at its own expense, with the Commission and the OTS,
and furnish to the Agent a reasonable number of copies, of an
amendment or amendments of, or a supplement or supplements to, the
Registration Statement or Prospectus (in form and substance reasonably
satisfactory to the Agent and its counsel after a reasonable time for
review) which will amend or supplement the Registration Statement or
Prospectus so that as amended or supplemented it will not contain an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances existing at the time the Prospectus is delivered to a
purchaser, not misleading. For the purpose of this Agreement, the
Company will timely furnish to the Agent such information with respect
to itself, the MHC and the Bank as the Agent may from time to time
reasonably request.
(h) The Company will take all necessary actions in cooperating with
the Agent and furnish to whomever the Agent may direct such
information as may be required to qualify or register the Shares for
offering and sale by it or to exempt such Shares from registration, or
to exempt the Company as a broker-dealer and its officers, directors
and employees as broker-dealers or agents under the applicable
securities or blue sky laws of such jurisdictions in which the Shares
are required under the Reorganization Regulations to be sold or as the
Agent and the Company may reasonably agree upon; provided, however,
that the Company shall not be obligated to file any general consent to
service of process, to qualify to do business in any jurisdiction in
which it is not so qualified, or to register its directors or officers
as brokers, dealers, salesmen or agents in any jurisdiction. In each
jurisdiction where any of the Shares shall have been qualified or
registered as above provided, the Company will make and file such
statements and reports in each fiscal period as are or may be required
by the laws of such jurisdiction.
(i) The Company and the Bank will not sell or issue, contract to sell
or otherwise dispose of, for a period of 90 days after the Closing
Date, without the Agent's prior written consent, any of their shares
of their common stock, other than the Common Shares or other than in
connection with any plan or arrangement described in the Prospectus.
(j) The Company will register its common stock under Section 12(g) of
the 1934 Act. The Company shall maintain the effectiveness of such
registration for not less than three years from the time of
effectiveness or such shorter period as may be required by the OTS.
(k) During the period during which the common stock is registered
under the 1934 Act or for three years from the date hereof, whichever
period is greater, the Company will furnish to its shareholders as
soon as practicable after the end of each fiscal year an annual report
of the Company (including a consolidated balance sheet and statements
of consolidated income, shareholders' equity and cash flows of the
Company and its subsidiaries as at the end of and for such year,
certified by independent public accountants in accordance with
Regulation S-X under the 1933 Act and the 1934 Act).
17
(l) During the period of three years from the date hereof, the Company
will furnish to the Agent: (i) as soon as practicable after such
information is publicly available, a copy of each report of the
Company furnished to or filed with the Commission under the 1934 Act
or any national securities exchange or system on which any class of
securities of the Company is listed or quoted (including, but not
limited to, reports on Forms 10-K or 10-KSB, 10-Q or 10-QSB and 8-K
and all proxy statements and annual reports to stockholders), (ii) a
copy of each other non-confidential report of the Company mailed to
its shareholders or filed with the Commission, the OTS or any other
supervisory or regulatory authority or any national securities
exchange or system on which any class of securities of the Company is
listed or quoted, each press release and material news items and
additional documents and information with respect to the MHC, the
Company or the Bank as the Agent may reasonably request; and (iii)
from time to time, such other nonconfidential information concerning
the MHC, the Company or the Bank as the Agent may reasonably request.
(m) The Company and the Bank will use the net proceeds from the sale
of the Shares in the manner set forth in the Prospectus under the
caption "Use of Proceeds."
(n) Other than as permitted by the Reorganization Regulations, the
Home Owners' Loan Act of 1933, the 1933 Act, the 1933 Act Regulations
and the rules and regulations and the laws of any state in which the
Shares are registered or qualified for sale or exempt from
registration, the Company will not distribute any prospectus, offering
circular or other offering material in connection with the offer and
sale of the Shares.
(o) Reserved.
(p) The Company will maintain appropriate arrangements for depositing
all funds received from persons mailing subscriptions for or orders to
purchase Shares in the Offering with the Bank or another financial
institution whose deposits are insured by the FDIC, on an
interest-bearing basis at the rate described in the Prospectus until
the Closing Date and satisfaction of all conditions precedent to the
release of the Company's or the Bank's obligation to refund payments
received from persons subscribing for or ordering Shares in the
Offering in accordance with the Plan and as described in the
Prospectus or until refunds of such funds have been made to the
persons entitled thereto or withdrawal authorizations canceled in
accordance with the Plan and as described in the Prospectus. The Bank
will maintain such records of all funds received to permit the funds
of each subscriber to be separately insured by the FDIC (to the
maximum extent allowable) and to enable the Bank to make the
appropriate refunds of such funds in the event that such refunds are
required to be made in accordance with the Plan and as described in
the Prospectus.
(q) The will report the use of proceeds of the Offering in accordance
with Rule 463 under the 1933 Act.
(r) Reserved.
18
(s) The Company will notify the Agent and the Agent's counsel of any
amendments to the Plan.
(t) The Company shall assist the Agent, if necessary, in connection
with the allocation of the Shares in the event of an oversubscription
and shall provide the Agent with any information necessary to assist
the Company in allocating the Shares in such event and such
information shall be accurate and reliable in all material respects.
(u) Prior to the Closing Date, the Company will inform the Agent of
any event or circumstances of which it is aware as a result of which
the Registration Statement and/or Prospectus, as then amended or
supplemented, would contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein not misleading.
(v) The Company will not deliver the Shares until the MHC, the Company
and the Bank have satisfied or caused to be satisfied each condition
set forth in Section 7 hereof, unless such condition is waived in
writing by the Agent.
(w) Subsequent to the date the Registration Statement is declared
effective by the Commission and prior to the Closing Date, except as
otherwise may be indicated or contemplated therein or set forth in an
amendment or supplement thereto, neither the MHC, the Company nor the
Bank will have: (i) issued any securities or incurred any liability or
obligation, direct or contingent, for borrowed money, except
borrowings from the same or similar sources indicated in the
Prospectus in the ordinary course of its business, or (ii) entered
into any transaction which is material in light of the business and
properties of the Company and the Bank, taken as a whole.
(x) Until the Closing Date, the MHC, the Company and the Bank will
conduct their businesses in compliance in all material respects with
all applicable federal and state laws, rules, regulations, decisions,
directives and orders, including all decisions, directives and orders
of the Commission, the FDIC and the OTS.
(y) The MHC, the Company and the Bank shall comply in all material
respects with any and all terms, conditions, requirements and
provisions with respect to the Offering imposed by the OTS, the
Reorganization Regulations, the Commission, the 1933 Act and the 1933
Act Regulations, the 1934 Act and the 1934 Act Regulations to be
complied with subsequent to the Closing Date. The Company will comply
with all provisions of all undertakings contained in the Registration
Statement.
(z) The facts and representations provided to Malizia Spidi & Fisch,
PC by the Bank and the Company and upon which Malizia Spidi & Fisch,
PC will base its opinion under Section 7(b)( 1) are and will be
truthful, accurate and complete.
(aa) The Company, the MHC and the Bank will not distribute any
offering material in connection with the Offering except for the
Prospectus and any supplemental sales material that has been filed
with the Registration Statement and the Stock Issuance Application and
authorized for use by the Commission and the OTS. The information
contained in any supplemental sales
19
material (in addition to the supplemental sales material filed as an
exhibit to the Registration Statement and the Stock Issuance
Application) shall not conflict with the information contained in the
Registration Statement and the Prospectus.
Section 6. Payment of Expenses. Whether or not the sale of the Shares
by the Company is consummated, the Company agrees to pay or reimburse the Agent
for: (a) all filing fees in connection with all filings related to the Offering
with the NASD; (b) any stock issue or transfer taxes which may be payable with
respect to the sale of the Shares; (c) subject to Section 2(d), all expenses of
the Offering, including but not limited to the Agent's attorneys' fees and
expenses, blue sky fees, transfer agent, registrar and other agent charges, fees
relating to auditing and accounting or other advisors and costs of printing all
documents necessary in connection with the Offering. In the event the Company is
unable to sell the minimum number of shares necessary to complete the Offering
or the Offering is terminated or otherwise abandoned, the Company shall promptly
reimburse the Agent in accordance with Section 2(d) hereof.
In the event that the Agent incurs any expenses on behalf of the
Company that are customarily borne by the issuer, the Company will pay or
reimburse the Agent for such expenses regardless of whether the Offering is
successfully completed, and such reimbursements will not be included in the
expense limitations set forth in Section 2(d) hereof. The Company acknowledges,
however, that such limitations may be increased by the mutual consent of the
Company and Agent in the event of delay in the Offering requiring the Agent to
utilize a Syndicated Community Offering, a delay as a result of circumstances
requiring material additional work by Agent or its counsel or an update of the
financial information in tabular form contained in the Prospectus for a period
later than June 30, 2006. Not later than two days prior to the Closing Date, the
Agent will provide the Company with an accounting of all reimbursable expenses
to be paid at the Closing in next day funds. In the event the Company determines
to abandon or terminate the Offering prior to Closing, payment of such expenses
shall be made in next day funds on the date such determination is made.
Section 7. Conditions to the Agent's Obligations. The obligations of
the Agent hereunder, as to the Shares to be delivered at the Closing Date, are
subject, to the extent not waived in writing by the Agent, to the condition that
all representations and warranties of the Company, herein are, at and as of the
commencement of the Offering and at and as of the Closing Date, true and correct
in all material respects, the condition that the Company and the Bank shall have
performed all of its obligations hereunder to be performed on or before such
dates, and to the following further conditions:
(a) The Registration Statement shall have been declared effective by
the Commission and the MHC-2 Application shall have been approved by
the OTS not later than 5:30 p.m. on the date of this Agreement, or
with the Agent's consent at a later time and date; and at the Closing
Date, no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings
therefore initiated or threatened by the Commission or any state
authority, and no order or other action suspending the authorization
of the Prospectus or the consummation of the Offering shall have been
issued or proceedings therefore initiated or, to the Company's or the
Bank's knowledge, threatened by the Commission, the OTS, the FDIC or
any other state authority.
20
(b) At the Closing Date, the Agent shall have received:
(1) The favorable opinion, dated as of the Closing Date and addressed
to the Agent and for its benefit, of Malizia Spidi & Fisch, PC, special counsel
for the Company in form and substance to the effect that:
(i) The Company and the MHC have been incorporated and are
validly existing as corporations under the laws of the United
States of America.
(ii) The Company and the MHC have corporate power and authority
to own, lease and operate their properties and to conduct their
business as described in the Registration Statement and the
Prospectus.
(iii) The Bank is a validly existing New Jersey-chartered savings
bank in stock form and is authorized to conduct its business and
own its property as described in the Registration Statement and
the Prospectus. All of the outstanding capital stock of the Bank
is authorized and validly issued, fully-paid and non-assessable
and is owned by the Company, to such counsel's Actual Knowledge,
free and clear of any liens, encumbrances, claims or other
restrictions.
(iv) The Bank is a member of the FHLB-New York. The deposit
accounts of the Bank are insured by the FDIC up to the maximum
amount allowed under law and to such counsel's Actual Knowledge,
no proceedings for the termination or revocation of such
insurance are pending or threatened.
(v) Immediately following the consummation of the Offering, the
authorized, issued and outstanding common shares of capital stock
of the Company will be within the range set forth in the
Prospectus under the caption "Capitalization," and no shares of
capital stock of the Company have been issued prior to the
Closing Date (other than shares of common stock issued to the
MHC); at the time of the Offering, the Common Shares subscribed
for pursuant to the Offering will have been duly and validly
authorized for issuance, and when issued and delivered by the
Company pursuant to the Plan against payment of the consideration
calculated as set forth in the Plan and Prospectus, will be duly
and validly issued and fully paid and non-assessable, except for
shares purchased by the ESOP with funds borrowed from the Company
to the extent payment therefor in cash has not been received by
the Company; except to the extent that subscription rights and
priorities pursuant thereto exist pursuant to the Plan, the
issuance of the Shares is not subject to preemptive rights (other
than subscription rights as provided in the Plan) and the terms
and provisions of the Shares conform in all material respects to
the description thereof contained in the Prospectus. To such
counsel's Actual
21
Knowledge, the Shares will not, when issued, be subject to any
liens, charges, encumbrances or other claims created by the
Company.
(vi) The Company has full corporate power and authority to enter
into this Agreement and to consummate the transactions
contemplated thereby and by the Plan. The execution and delivery
of this Agreement and the consummation of the Offering have been
duly and validly authorized by all necessary action on the part
of the Company and the Bank; and this Agreement is a valid and
binding obligation of the Company, enforceable against the
Company, in accordance with its terms, except as the
enforceability thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium, conservatorship,
receivership or other similar laws now or hereafter in effect
relating to or affecting the enforcement of creditors rights
generally or the rights of creditors of federally chartered
holding companies or New Jersey chartered savings banks, (ii)
general equitable principles, (iii) laws relating to the safety
and soundness of insured depository institutions, and (iv)
applicable law or public policy with respect to the
indemnification and/or contribution provisions contained herein
and except that no opinion need be expressed as to the effect or
availability of equitable remedies or injunctive relief
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(vii) The MHC-2 Application has been approved by the OTS and the
Prospectus has been authorized for use by the OTS and no action
has been taken, and to such counsel's Actual Knowledge none is
pending or threatened, to revoke any such authorization or
approval.
(viii) Based upon the minutes of the proceedings of the Board of
Directors, the Plan has been duly adopted by the required vote of
the directors of the Company.
(ix) Subject to the satisfaction of the conditions to the OTS s
approval of the Offering, no further approval, registration,
authorization, consent or other order of any federal regulatory
agency is required in connection with the execution and delivery
of this Agreement and the issuance of the Shares, except as may
be required under the securities or blue sky laws of various
jurisdictions (as to which no opinion need be rendered) and
except as may be required under the rules and regulations of the
NASD (as to which no opinion need be rendered).
(x) The Registration Statement is effective under the 1933 Act
and no stop order suspending the effectiveness has been issued
under the 1933 Act or proceedings therefor initiated or, to such
counsel's Actual Knowledge, threatened by the Commission.
22
(xi) At the time the MHC-2 Application, including the Prospectus
contained therein, was approved by the OTS, the MHC-2
Application, including the Prospectus contained therein, complied
as to form in all material respects with the requirements of the
Reorganization Regulations except as waived or otherwise approved
by the OTS (other than the financial statements, the notes
thereto, and other tabular, financial, statistical and appraisal
data included therein, as to which no opinion need be rendered).
(xii) At the time that the Registration Statement became
effective, (i) the Registration Statement (as amended or
supplemented, if so amended or supplemented) (other than the
financial statements, the notes thereto, and other tabular,
financial, statistical and appraisal data included therein, as to
which no opinion need be rendered), complied as to form in all
material respects with the requirements of the 1933 Act and the
1933 Act Regulations, and (ii) the Prospectus (other than the
financial statements, the notes thereto, and other tabular,
financial, statistical and appraisal data included therein, as to
which no opinion need be rendered) complied as to form in all
material respects with the requirements of the 1933 Act and the
1933 Act Regulations.
(xiii) The terms and provisions of the shares of common stock of
the Company conform, in all material respects, to the description
thereof contained in the Registration Statement and Prospectus,
and the form of certificate used to evidence the Shares complies
with applicable laws.
(xiv) To such counsel's Actual Knowledge, there are no legal or
governmental proceedings pending or threatened (i) asserting the
invalidity of this Agreement, (ii) seeking to prevent the offer,
sale or issuance of the Shares, or (iii) which are required to be
disclosed in the Registration Statement and Prospectus, other
than those disclosed therein.
(xv) Neither the MHC, the Company nor the Bank are required to be
registered as an investment company under the Investment Company
Act of 1940.
(xvi) To such counsel's Actual Knowledge, neither the MHC, the
Company nor the Bank is in violation of any directive from the
OTS or the FDIC to make any material change in the method of
conducting its respective business.
(xvii) To such counsel's Actual Knowledge, there are no material
contracts, indentures, mortgages, loan agreements, notes, leases
or other instruments required to be described or referred to in
the MHC-2 Application, the Registration Statement or the
Prospectus or required to be filed as exhibits thereto other than
those described or referred to therein or filed as exhibits
thereto in the MHC-2 Application, the Registration
23
Statement or the Prospectus. The description in the MHC-2
Application, the Registration Statement and the Prospectus of
such documents and exhibits is accurate in all material respects
and fairly presents the information required to be shown.
(xviii) Except as waived or otherwise approved by the OTS, the
Plan complies in all material respects with all applicable
federal law, rules, regulations, decisions and orders including,
but not limited to, the Reorganization Regulations; to such
counsel's Actual Knowledge, no order has been issued by the OTS,
the Commission, the FDIC, or any state authority to suspend the
Offering or the use of the Prospectus, and no action for such
purposes has been instituted or threatened by the OTS, the
Commission, the FDIC, or any other state authority and, to such
counsel's Actual Knowledge, no person has sought to obtain
regulatory or judicial review of the final action of the OTS
approving the Plan, the MHC-2 Application or the Prospectus.
(xix) To such counsel's Actual Knowledge, the Company, the MHC
and the Bank have obtained all material licenses, permits and
other governmental authorizations currently required for the
conduct of their businesses as described in the Registration
Statement, and all such licenses, permits and other governmental
authorizations are in full force and effect, and the MHC, the
Company and the Bank are in all material respects complying
therewith.
(xx) To such counsel's Actual Knowledge, none of the MHC, the
Company or the Bank is in violation of its Charter and Bylaws or
in default or violation of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which it is a party
or by which it or its property may be bound, except for such
defaults or violations which would not have a material adverse
impact on the financial condition or results of operations of the
MHC, the Company and the Bank on a consolidated basis; to such
counsel's Actual Knowledge, the execution and delivery of this
Agreement, the incurrence of the obligations herein set forth and
the consummation of the transactions contemplated herein will
not, in any material respect, 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 MHC, the Company or the Bank pursuant to any
material contract, indenture, mortgage, loan agreement, note,
lease or other instrument to which the MHC, the Company or the
Bank is a party or by which any of them may be bound, or to which
any of the property or assets of the MHC, the Company or the Bank
are subject; and such action will not result in any violation of
the provisions of the Charter or Bylaws of the Company, the Bank
or MHC, or result, in any material respect, in any violation of
any applicable federal or state law, act, regulation (except that
no opinion with respect to the securities and
24
blue sky laws of various jurisdictions or the rules or
regulations of the NASD need be rendered) or order or court
order, writ, injunction or decree.
(xxi) Except as waived or otherwise approved by the OTS, the
Company s, Bank's and MHC's Charter and Bylaws each comply in all
material respects with the laws of the United States of America.
(xxii) The information in the Prospectus under the captions
"Regulation," "Taxation," (with respect to federal taxation only)
"The Offering," "Restrictions on the Acquisition of MSB Financial
Corp. and Millington Savings Bank" and "Description of Capital
Stock of MSB Financial Corp.," to the extent that such
information constitutes matters of law, summaries of legal
matters, documents or proceedings, or legal conclusions, has been
reviewed by such counsel and is accurate in all material
respects. The description of the Offering process in the
Prospectus under the caption "The Offering" to the extent that
such information constitutes matters of law, summaries of legal
matters, documents or proceedings, or legal conclusions, has been
reviewed by such counsel and fairly describes such process in all
material respects. The descriptions in the Prospectus of statutes
or regulations are accurate summaries and fairly present, in all
material respects, the information required to be shown. The
information under the caption "The Offering-- Effects of the
Stock Offering -- Material Federal and State Tax Consequences of
the Offering" has been reviewed by such counsel and fairly
describes the federal tax opinions rendered by them to the
Company with respect to such matters.
In addition, such counsel shall state that during the preparation
of the MHC-2 Application, the Registration Statement and the
Prospectus, they participated in conferences with certain
officers of, the independent public and internal accountants for,
and other representatives of, the Company, the MHC and the Bank,
at which conferences the contents of the MHC-2 Application, the
Registration Statement and the Prospectus and related matters
were discussed and, while such counsel have not confirmed the
accuracy or completeness of or otherwise verified the information
contained in the MHC-2 Application, the Registration Statement or
the Prospectus and do not assume any responsibility for such
information, based upon such conferences and a review of
documents deemed relevant for the purpose of rendering their
opinion (relying as to materiality as to factual matters on
certificates of officers and other factual representations by the
Company), nothing has come to their attention that would lead
them to believe that the MHC-2 Application, the Registration
Statement, the Prospectus, or any amendment or supplement thereto
(other than the financial statements, the notes thereto, and
other tabular, financial, statistical and appraisal data included
therein as to which no view need be rendered) contained an untrue
statement of a material fact or omitted to
25
state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances
under which they were made, not misleading.
In giving such opinion, such counsel may rely as to all matters
of fact on certificates of officers or directors of the Company,
the MHC and the Bank and certificates of public officials. Such
counsel's opinion shall be limited to matters governed by federal
laws.
For purposes of such opinion, no proceedings shall be deemed to
be pending, no order or stop order shall be deemed to be issued,
and no action shall be deemed to be instituted unless, in each
case, a director or executive officer of the Company, the MHC or
the Bank shall have received a copy of such proceedings, order,
stop order or action. In addition, such opinion may be limited to
present statutes, regulations and judicial interpretations and to
facts as they presently exist; in rendering such opinion, such
counsel need assume no obligation to revise or supplement it
should the present laws be changed by legislative or regulatory
action, judicial decision or otherwise; and such counsel need
express no view, opinion or belief with respect to whether any
proposed or pending legislation, if enacted, or any proposed or
pending regulations or policy statements issued by any regulatory
agency, whether or not promulgated pursuant to any such
legislation, would affect the validity of the Offering or any
aspect thereof. Such counsel may assume that any agreement is the
valid and binding obligation of any parties to such agreement
other than the Company or the Bank.
(c) A Blue Sky Memorandum from Malizia Spidi & Fisch, PC relating to
the Offering, including Agent's participation therein, and should be
furnished to the Agent with a copy thereof addressed to Agent or upon
which Malizia Spidi & Fisch, PC shall state the Agent may rely. The
Blue Sky Memorandum will relate to the necessity of obtaining or
confirming exemptions, qualifications or the registration of the
Shares under applicable state securities law.
(d) At the Closing Date, the Agent shall receive a certificate of the
Chief Executive Officer and the Chief Financial Officer of the Company
in form and substance reasonably satisfactory to the Agent's Counsel,
dated as of such Closing Date, to the effect that: (i) they have
carefully examined the Prospectus and, in their opinion, at the time
the Prospectus became authorized for final use, the Prospectus did not
contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading;
(ii) since the date the Prospectus became authorized for final use, no
event has occurred which should have been set forth in an amendment or
supplement to the Prospectus which has not been so set forth,
including specifically, but without limitation, any material adverse
change in the condition, financial or otherwise, or in the earnings,
capital, properties or business of the Company, the MHC or the Bank
and the conditions set forth in this Section 7 have been satisfied;
(iii) since the respective dates as of which
26
information is given in the Registration Statement and the Prospectus,
there has been no material adverse change in the condition, financial
or otherwise, or in the earnings, capital or properties of the
Company, the MHC or the Bank independently, or of the Company, the MHC
and the Bank considered as one enterprise, whether or not arising in
the ordinary course of business; (iv) the representations and
warranties in Section 4 are true and correct with the same force and
effect as though expressly made at and as of the Closing Date; (v) the
Company has complied in all material respects with all agreements and
satisfied all conditions on their part to be performed or satisfied at
or prior to the Closing Date and will comply in all material respects
with all obligations to be satisfied by it after the Closing Date;
(vi) no stop order suspending the effectiveness of the Registration
Statement has been initiated or, to the best knowledge of the Company,
the MHC or the Bank, threatened by the Commission or any state
authority; (vii) no order suspending the Offering or the effectiveness
of the Prospectus has been issued and no proceedings for that purpose
are pending or, to the best knowledge of the Company, the MHC or the
Bank, threatened by the OTS, the Commission, the FDIC, or any state
authority; and (viii) to the best knowledge of the MHC, the Company or
the Bank, no person has sought to obtain review of the final action of
the OTS approving the Offering.
(e) None of the MHC, the Company or the Bank shall have sustained,
since the date of the latest financial statements included in the
Registration Statement and Prospectus, any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth in the Registration Statement and the Prospectus,
and since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there shall not have been
any material adverse effect on the financial condition, results of
operations, or business of the MHC, the Company or the Bank that is in
the Agent's reasonable judgment sufficiently material and adverse as
to make it impracticable or inadvisable to proceed with the Offering
or the delivery of the Shares on the terms and in the manner
contemplated in the Prospectus.
(f) Prior to and at the Closing Date: (i) in the reasonable opinion of
the Agent, there shall have been no material adverse change in the
financial condition, results of operations or business of the Company,
the MHC and the Bank considered as one enterprise, from that as of the
latest dates as of which such condition is set forth in the
Prospectus, other than transactions referred to or contemplated
therein; (ii) the Company, the MHC or the Bank shall not have received
from the OTS or the FDIC any direction (oral or written) to make any
material change in the method of conducting their business with which
it has not complied (which direction, if any, shall have been
disclosed to the Agent) or which materially and adversely would affect
the financial condition, results of operations or business of the
Company, the MHC and the Bank taken as a whole; (iii) neither the
Company nor the Bank shall have been in default (nor shall an event
have occurred which, with notice or lapse of time or both, would
constitute a default) under any provision of any agreement or
instrument relating to any outstanding indebtedness; (iv) no action,
suit or proceeding, at law or in equity or before or by any federal or
state commission, board or other administrative agency, not disclosed
in the Prospectus, shall be pending or, to the knowledge of the
Company, the MHC or the Bank, threatened
27
against the Company, the MHC or the Bank or affecting any of their
properties wherein an unfavorable decision, ruling or finding would
materially and adversely affect the financial condition, results of
operations or business of the MHC, the Company and the Bank taken as a
whole; and (v) the Shares shall have been qualified or registered for
offering and sale or exempted therefrom under the securities or blue
sky laws of the jurisdictions as the Agent shall have reasonably
requested and as agreed to by the Company.
(g) Concurrently with the execution of this Agreement, the Agent shall
receive a letter from Beard Miller Company LLP, dated as of the date
hereof and addressed to the Agent: (i) confirming that Beard Miller
Company LLP is a firm of independent registered public accountants
within the applicable rules of the Public Company Accounting Oversight
Board (United States) and stating in effect that in its opinion the
consolidated financial statements and related notes of the Company as
of June 30, 2006 and 2005, and for each of the years in the two year
period ended June 30, 2006, and covered by their opinion included
therein, and any other more recent unaudited financial statements
included in the Prospectus comply as to form in all material respects
with the applicable accounting requirements and related published
rules and regulations of the OTS and the 1933 Act; (ii) stating in
effect that, on the basis of certain agreed upon procedures (but not
an audit in accordance with standards of the Public Company Accounting
Oversight Board (United States)) consisting of a reading of the latest
available consolidated financial statements of the Company prepared by
the Company, a reading of the minutes of the meetings of the Board of
Directors, Executive Committee and Audit Committee of the Company and
the Bank and consultations with officers of the Company and the Bank
responsible for financial and accounting matters, nothing came to
their attention which caused them to believe that: (A) audited
consolidated financial statements and any unaudited interim financial
statements included in the Prospectus are not in conformity with the
1933 Act, applicable accounting requirements of the OTS and accounting
principles generally accepted in the United States of America applied
on a basis substantially consistent with that of the audited
consolidated financial statements included in the Prospectus; or (B)
during the period from the date of the latest financial statements
included in the Prospectus to a specified date not more than three
business days prior to the date of the Prospectus, except as has been
described in the Prospectus, there was any increase in borrowings of
the Company, other than normal deposit fluctuations for the Bank; or
(C) there was any decrease in the net assets of the Company at the
date of such letter as compared with amounts shown in the latest
balance sheet included in the Prospectus; and (iii) stating that, in
addition to the audit referred to in their opinion included in the
Prospectus and the performance of the procedures referred to in clause
(ii) of this subsection (g), they have compared with the general
accounting records of the Company, which are subject to the internal
controls of the Company, the accounting system and other data prepared
by the Company, directly from such accounting records, to the extent
specified in such letter, such amounts and/or percentages set forth in
the Prospectus as the Agent may reasonably request; and they have
found such amounts and percentages to be in agreement therewith
(subject to rounding).
28
(h) At the Closing Date, the Agent shall receive a letter dated the
Closing Date, addressed to the Agent, confirming the statements made
by Beard Miller Company LLP in the letter delivered by it pursuant to
subsection (g) of this Section 7, the "specified date" referred to in
clause (ii) of subsection (g) to be a date specified in the letter
required by this subsection (h) which for purposes of such letter
shall not be more than three business days prior to the Closing Date.
(i) At the Closing Date, the Company shall receive a letter from RP
Financial, LC, dated the Closing Date (i) confirming that said firm is
independent of the Company, the MHC and the Bank and is experienced
and expert in the area of corporate appraisals within the meaning of
Title 12 of the Code of Federal Regulations, Section 563b.200(b), (ii)
stating in effect that the Appraisal prepared by such firm complies in
all material respects with the applicable requirements of Title 12 of
the Code of Federal Regulations, and (iii) further stating that its
opinion of the aggregate pro forma market value of the Company
including the Bank, as most recently updated, remains in effect.
(j) At or prior to the Closing Date, the Agent shall receive: (i) a
copy of the letters from the OTS approving the MHC-2 Application and
authorizing the use of the Prospectus; (ii) a copy of the orders from
the Commission declaring the Registration Statement and the Exchange
Act Registration Statement effective; (iii) a certificate from the OTS
evidencing the valid existence of the MHC, the Company and the Bank;
(iv) a certificate from the FDIC evidencing the Bank's insurance of
accounts; (v) a certificate from the FHLB-New York evidencing the
Bank's membership therein; and (vi) a certified copy of the Company's
Charter and Bylaws.
(k) Subsequent to the date hereof, there shall not have occurred any
of the following; (i) a suspension or limitation in trading in
securities generally on the New York Stock Exchange (the "NYSE") or in
the over-the-counter market, or quotations halted generally on The
Nasdaq Stock Market, or minimum or maximum prices for trading have
been fixed, or maximum ranges for prices for securities have been
required by either of such exchanges or the NASD or by order of the
Commission or any other governmental authority; (ii) a general
moratorium on the operations of commercial banks, or federal savings
and loan associations or a general moratorium on the withdrawal of
deposits from commercial banks or federal savings and loan
associations declared by federal or state authorities; (iii) the
engagement by the United States in hostilities which have resulted in
the declaration, on or after the date hereof, of a national emergency
or war; or (iv) a material decline in the price of equity or debt
securities if the effect of such a declaration or decline, in the
Agent's reasonable judgment, makes it impracticable or inadvisable to
proceed with the Offering or the delivery of the Shares on the terms
and in the manner contemplated in the Registration Statement and the
Prospectus.
(l) At or prior to the Closing Date, counsel to the Agent shall have
been furnished with such documents and opinions as they may reasonably
require for the purpose of enabling them to pass upon the sale of the
Shares as herein contemplated and related proceedings or in order to
evidence the occurrence or completeness of any of the representations
or warranties, or the fulfillment of any of the conditions, herein
contained; and all proceedings taken by the Company in connection with
the sale of the
29
Shares as herein contemplated shall be satisfactory in form and
substance to the Agent and its counsel.
(m) All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to the Agent and to counsel for the
Agent. Any certificate signed by an officer of the Company and
delivered to the Agent or to counsel for the Agent shall be deemed a
representation and warranty by the Company to the Agent as to the
statements made therein.
Section 8. Indemnification.
(a) The Company agrees to indemnify and hold harmless the Agent, its
respective officers and directors, employees and agents, and each
person, if any, who controls the Agent within the meaning of Section
15 of the 1933 Act or Section 20(a) of the 1934 Act, against any and
all loss, liability, claim, damage or expense whatsoever (including,
but not limited to, settlement expenses), joint or several, that the
Agent or any of them may suffer or to which the Agent and any such
persons may become subject under all applicable federal or state laws
or otherwise, and to promptly reimburse the Agent and any such persons
upon written demand for any expense (including all fees and
disbursements of counsel) incurred by the Agent or any of them in
connection with investigating, preparing or defending any actions,
proceedings or claims (whether commenced or threatened) to the extent
such losses, claims, damages, liabilities or actions: (i) arise out of
or are based upon any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement (or any
amendment or supplement thereto), preliminary or final Prospectus (or
any amendment or supplement thereto), the MHC-2 Application (or any
amendment or supplement thereto), or any instrument or document
executed by the Company or based upon written information supplied by
the Company filed in any state or jurisdiction to register or qualify
any or all of the Shares or to claim an exemption therefrom or
provided to any state or jurisdiction to exempt the Company as a
broker-dealer or its officers, directors and employees as
broker-dealers or agents, under the securities laws thereof
(collectively, the "Blue Sky Application"), or any document,
advertisement, oral statement or communication ("Sales Information")
prepared, made or executed by or on behalf of the Company with its
consent and based upon written or oral information furnished by or on
behalf of the Company, whether or not filed in any jurisdiction, in
order to qualify or register the Shares or to claim an exemption
therefrom under the securities laws thereof; (ii) arise out of or are
based upon the omission or alleged omission to state in any of the
foregoing documents or information a material fact required to be
stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading; or
(iii) arise from any theory of liability whatsoever relating to or
arising from or based upon the Registration Statement (or any
amendment or supplement thereto), preliminary or final Prospectus (or
any amendment or supplement thereto), the MHC-2 Application (or any
amendment or supplement thereto), any Blue Sky Application or Sales
Information or other documentation distributed in connection with the
Offering; provided, however, that no indemnification is required under
this paragraph (a) to the extent such losses, claims, damages,
liabilities or actions arise out of or are based upon any untrue
material statement or alleged untrue material statement in, or
30
material omission or alleged material omission from, the Registration
Statement (or any amendment or supplement thereto), preliminary or
final Prospectus (or any amendment or supplement thereto), the MHC-2
Application, any Blue Sky Application or Sales Information made in
reliance upon and in conformity with information furnished in writing
to the Company, by the Agent or its counsel regarding the Agent, and
provided, that it is agreed and understood that the only information
furnished in writing to the Company, by the Agent regarding the Agent
is set forth in the Prospectus under the caption "The Offering--Plan
of Distribution/Marketing Arrangements"; and, provided further, that
such indemnification shall be limited to the extent prohibited by the
Commission, the OTS, the FDIC and the Board of Governors of the
Federal Reserve.
(b) The Agent agrees to indemnify and hold harmless the Company, the
MHC and the Bank, their directors and officers and each person, if
any, who controls the Company, the MHC or the Bank within the meaning
of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act against
any and all loss, liability, claim, damage or expense whatsoever
(including but not limited to settlement expenses), joint or several,
which they, or any of them, may suffer or to which they, or any of
them may become subject under all applicable federal and state laws or
otherwise, and to promptly reimburse the Company, the Bank, and any
such persons upon written demand for any expenses (including
reasonable fees and disbursements of counsel) incurred by them, or any
of them, in connection with investigating, preparing or defending any
actions, proceedings or claims (whether commenced or threatened) to
the extent such losses, claims, damages, liabilities or actions: (i)
arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement
(or any amendment or supplement thereto), the MHC-2 Application (or
any amendment or supplement thereto), the preliminary or final
Prospectus (or any amendment or supplement thereto), any Blue Sky
Application or Sales Information, (ii) are based upon the omission or
alleged omission to state in any of the foregoing documents a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, or (iii) arise from any theory of liability whatsoever
relating to or arising from or based upon the Registration Statement
(or any amendment or supplement thereto), preliminary or final
Prospectus (or any amendment or supplement thereto), the MHC-2
Application (or any amendment or supplement thereto), or any Blue Sky
Application or Sales Information or other documentation distributed in
connection with the Offering; provided, however, that the Agent's
obligations under this Section 8(b) shall exist only if and only to
the extent that such untrue statement or alleged untrue statement was
made in, or such material fact or alleged material fact was omitted
from, the Registration Statement (or any amendment or supplement
thereto), the preliminary or final Prospectus (or any amendment or
supplement thereto), the MHC-2 Application (or any amendment or
supplement thereto), any Blue Sky Application or Sales Information in
reliance upon and in conformity with information furnished in writing
to the Company, by the Agent or its counsel regarding the Agent, and
provided, that it is agreed and understood that the only information
furnished in writing to the Company, by the Agent regarding the Agent
is set forth in the Prospectus under the caption "The Offering--Plan
of Distribution/Marketing Arrangements."
31
(c) Each indemnified party shall give prompt written notice to each
indemnifying party of any action, proceeding, claim (whether commenced
or threatened), or suit instituted against it in respect of which
indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve it from any liability which it
may have on account of this Section 8 or otherwise. An indemnifying
party may participate at its own expense in the defense of such
action. In addition, if it so elects within a reasonable time after
receipt of such notice, an indemnifying party, jointly with any other
indemnifying parties receiving such notice, may assume defense of such
action with counsel chosen by it and approved by the indemnified
parties that are defendants in such action, unless such indemnified
parties reasonably object to such assumption on the ground that there
may be legal defenses available to them that are different from or in
addition to those available to such indemnifying party. If an
indemnifying party assumes the defense of such action, the
indemnifying parties shall not be liable for any fees and expenses of
counsel for the indemnified parties incurred thereafter in connection
with such action, proceeding or claim, other than reasonable costs of
investigation. In no event shall the indemnifying parties be liable
for the fees and expenses of more than one separate firm of attorneys
(and any special counsel that said firm may retain) for each
indemnified party in connection with any one action, proceeding or
claim or separate but similar or related actions, proceedings or
claims in the same jurisdiction arising out of the same general
allegations or circumstances.
Section 9. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 8 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Company, the Agent, the Company and the Agent
shall contribute to the aggregate losses, claims, damages and liabilities
(including any investigation, legal and other expenses incurred in connection
with, and any amount paid in settlement of, any action, suit or proceeding, but
after deducting any contribution received by the Company or the Agent from
persons other than the other parties thereto, who may also be liable for
contribution) in such proportion so that the Agent is responsible for that
portion represented by the percentage that the fees paid to the Agent pursuant
to Section 2 of this Agreement (not including expenses) bears to the gross
proceeds received by the Company from the sale of the Shares in the Offering,
and the Company shall be responsible for the balance. If, however, the
allocation provided above is not permitted by applicable law, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative fault of the Company on the one hand and the Agent on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions, proceedings or claims in respect
thereto), but also the relative benefits received by the Company on the one hand
and the Agent on the other from the Offering (before deducting expenses). The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company on the one hand or the Agent on the other and the parties relative
intent, good faith, knowledge, access to information and opportunity to correct
or prevent such statement or omission. The Company and the Agent agree that it
would not be just and equitable if contribution pursuant to this Section 9 were
determined by pro-rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to above in
this Section 9. The amount paid or payable by an indemnified party as a
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result of the losses, claims, damages or liabilities (or actions, proceedings or
claims in respect thereof) referred to above in this Section 9 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action, proceeding
or claim. It is expressly agreed that the Agent shall not be liable for any
loss, liability, claim, damage or expense or be required to contribute any
amount pursuant to Section 8(b) or this Section 9 which in the aggregate exceeds
the amount paid (excluding reimbursable expenses) to the Agent under this
Agreement. It is understood that the above stated limitation on the Agent's
liability is essential to the Agent and that the Agent would not have entered
into this Agreement if such limitation had not been agreed to by the parties to
this Agreement. No person found guilty of any fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not found guilty of such fraudulent
misrepresentation. The obligations of the Company and the Agent under this
Section 9 and under Section 8 shall be in addition to any liability which the
Company and the Agent may otherwise have. For purposes of this Section 9, each
of the Agent's, the Company's officers and directors and each person, if any,
who controls the Agent or the Company within the meaning of the 1933 Act and the
1934 Act shall have the same rights to contribution as the Agent, or, the
Company. Any party entitled to contribution, promptly after receipt of notice of
commencement of any action, suit, claim or proceeding against such party in
respect of which a claim for contribution may be made against another party
under this Section 9, will notify such party from whom contribution may be
sought, but the omission to so notify such party shall not relieve the party
from whom contribution may be sought from any other obligation it may have
hereunder or otherwise than under this Section 9.
Section 10. Survival of Agreements, Representations and Indemnities.
The respective indemnities of the Company and the Agent, the representations and
warranties and other statements of the Company and the Agent set forth in or
made pursuant to this Agreement and the provisions relating to contribution
shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement or any investigation made by or on behalf of the
Agent, the Company or any controlling person referred to in Section 8 hereof,
and shall survive the issuance of the Shares, and any successor or assign of the
Agent, the Company, and any such controlling person shall be entitled to the
benefit of the respective agreements, indemnities, warranties and
representations.
Section 11. Termination. The Agent may terminate this Agreement by
giving the notice indicated below in this Section 11 at any time after this
Agreement becomes effective as follows:
(a) If any domestic or international event or act or occurrence has
materially disrupted the United States securities markets such as to
make it, in the Agent's reasonable opinion, impracticable to proceed
with the offering of the Shares; or if trading on the NYSE shall have
suspended (except that this shall not apply to the imposition of NYSE
trading collars imposed on program trading); or if the United States
shall have become involved in a war or major hostilities; or if a
general banking moratorium has been declared by a state or federal
authority which has a material effect on the Company on a consolidated
basis; or if a moratorium in foreign exchange trading by major
international banks or persons has been declared; or if there shall
have been a material adverse change in the financial condition,
results of operations or business of the Company on a consolidated
basis, or if the Company on a consolidated basis shall have
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sustained a material or substantial loss by fire, flood, accident,
hurricane, earthquake, theft, sabotage or other calamity or malicious
act, whether or not said loss shall have been insured; or if there
shall have been a material adverse change in the financial condition,
results of operations or business of the Company on a consolidated
basis.
(b) In the event the Company fails to sell the required minimum number
of the Shares by the date when such sales must be completed, in
accordance with the provisions of the Offering or as required by the
Reorganization Regulations, and applicable law, this Agreement shall
terminate upon refund by the Company to each person who has subscribed
for or ordered any of the Shares the full amount which it may have
received from such person, together with interest as provided in the
Prospectus, and no party to this Agreement shall have any obligation
to the other hereunder, except as set forth in Sections 2(a) and (d),
6, 8 and 9 hereof.
(c) If any of the conditions specified in Section 7 shall not have
been fulfilled when and as required by this Agreement, unless waived
in writing, or by the Closing Date, this Agreement and all of the
Agent's obligations hereunder may be cancelled by the Agent by
notifying the Company of such cancellation in writing or by telegram
at any time at or prior to the Closing Date, and any such cancellation
shall be without liability of any party to any other party except as
otherwise provided in Sections 2(a), 2(d), 6, 8 and 9 hereof.
(d) If the Agent elects to terminate this Agreement as provided in
this Section, the Company shall be notified promptly by telephone or
telegram, confirmed by letter.
The Company may terminate this Agreement in the event the Agent is in
material breach of the representations and warranties or covenants contained in
Section 5 and such breach has not been cured after the Company has provided the
Agent with notice of such breach.
This Agreement may also be terminated by mutual written consent of the
parties hereto.
Section 12. Notices. All communications hereunder, except as herein
otherwise specifically provided, shall be mailed in writing and if sent to the
Agent shall be mailed, delivered or telegraphed and confirmed to Keefe, Bruyette
& Woods, 211 Bradenton Drive, Dublin, Ohio 43017-5034, Attention: Charles E.
Sloane (with a copy to Muldoon Murphy & Aguggia, 5101 Wisconsin Avenue, N.W.,
Washington, DC 20016, Attention: Lori M. Beresford) and, if sent to the Company,
shall be mailed, delivered or telegraphed and confirmed to the Company at 1902
Long Hill Road, Millington, New Jersey 07946-0417, Attention: Gary T. Jolliffe
(with a copy to Malizia Spidi & Fisch, PC, 901 New York Avenue, NW, Suite 210
East, Washington, DC 20001, Attention: Samuel J. Malizia).
Section 13. Parties. The Company shall be entitled to act and rely on
any request, notice, consent, waiver or agreement purportedly given on behalf of
the Agent when the same shall have been given by the undersigned. The Agent
shall be entitled to act and rely on any request, notice, consent, waiver or
agreement purportedly given on behalf of the Company, when the same shall have
been given by the undersigned or any other officer of the Company. This
Agreement shall inure solely to the benefit of, and shall be binding upon, the
Agent, the Company, and their respective successors and assigns, and no other
person shall have or be
34
construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provision herein contained. It
is understood and agreed that this Agreement is the exclusive agreement among
the parties hereto, and supersedes any prior agreement among the parties and may
not be varied except in writing signed by all the parties.
Section 14. Closing. The closing for the sale of the Shares shall take
place on the Closing Date at such location as mutually agreed upon by the Agent
and the Company. At the closing, the Company shall deliver to the Agent in next
day funds the commissions, fees and expenses due and owing to the Agent as set
forth in Sections 2 and 6 hereof and the opinions and certificates required
hereby and other documents deemed reasonably necessary by the Agent shall be
executed and delivered to effect the sale of the Shares as contemplated hereby
and pursuant to the terms of the Prospectus.
Section 15. Partial Invalidity. In the event that any term, provision
or covenant herein or the application thereof to any circumstance or situation
shall be invalid or unenforceable, in whole or in part, the remainder hereof and
the application of said term, provision or covenant to any other circumstances
or situation shall not be affected thereby, and each term, provision or covenant
herein shall be valid and enforceable to the full extent permitted by law.
Section 16. Construction. This Agreement shall be construed in
accordance with the laws of the State of New York.
Section 17. Counterparts. This Agreement may be executed in separate
counterparts, each of which so executed and delivered shall be an original, but
all of which together shall constitute but one and the same instrument.
Section 18. Entire Agreement. This Agreement, including schedules and
exhibits hereto, which are integral parts hereof and incorporated as though set
forth in full, constitutes the entire agreement between the parties pertaining
to the subject matter hereof superseding any and all prior or contemporaneous
oral or prior written agreements, proposals, letters of intent and
understandings, and cannot be modified, changed, waived or terminated except by
a writing which expressly states that it is an amendment, modification or
waiver, refers to this Agreement and is signed by the party to be charged. No
course of conduct or dealing shall be construed to modify, amend or otherwise
affect any of the provisions hereof.
35
If the foregoing correctly sets forth the arrangement between the
Company and the Agent, please indicate acceptance thereof in the space provided
below for that purpose, whereupon this letter and the Agent's acceptance shall
constitute a binding agreement.
Very truly yours,
MSB FINANCIAL CORP.
By Its Authorized Representative:
-------------------------------------
President and Chief Executive Officer
Accepted as of the date first above
written
Keefe, Bruyette & Woods, Inc.
- ------------------------------------
Managing Director
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