3,105,000 Shares
(subject to increase up to 3,570,750 shares
in the event of an increase in the pro forma market
value of the Company's Common Stock)
Gateway Community Financial Corp.
(a federally chartered mid-tier stock holding company)
Common Stock
(par value $.01 per share)
AGENCY AGREEMENT
___________, 2007
SANDLER O'NEILL & PARTNERS, L.P.
919 Third Avenue, 6th Floor
New York, New York 10022
Ladies and Gentlemen:
Gateway Community Financial Corp., a federally chartered mid-tier stock
holding company (the "Company"), Gateway Community Financial, MHC, a federally
chartered mutual holding company (the "MHC"), and Gloucester County Federal
Savings Bank, a federally chartered savings bank (the "Bank"), hereby confirm
their agreement with Sandler O'Neill & Partners, L.P. ("Sandler O'Neill" or the
"Agent") with respect to the offer and sale by the Company of up to 3,105,000
shares (subject to increase up to 3,570,750 shares in the event of an increase
in the pro forma market value of the Company's common stock) of the Company's
common stock, par value $.10 per share (the "Common Stock"). The shares of
Common Stock to be sold by the Company in the Offerings (as defined below) are
hereinafter called the "Securities." In addition, as described herein, the
Company will issue up to 3,795,000 shares (subject to increase of up to
4,364,250 shares in the event of an increase in the pro forma market value of
the Company's Common Stock) of Common Stock to the MHC, such shares hereafter
being referred to as the "MHC Shares."
The Securities are being offered for sale and the MHC Shares are being
issued all in accordance with the Stock Issuance Plan (the "Plan") adopted by
the Boards of Directors of the Company and the MHC, which provides for a stock
offering, in compliance with regulations of the Office of Thrift Supervision
(the "OTS"), of up to 49.9% of the Common Stock of the
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Company. However, the Company currently plans to sell approximately 45.0% of its
Common Stock in accordance with the Plan. As a result of the sale of its Common
Stock under the Plan, the Company will be approximately 55.0% owned by the MHC.
Pursuant to the Plan, the Company will offer to certain depositors and
borrowers of the Bank and to the Bank's tax qualified employee benefit plans,
including the Bank's employee stock ownership plan (the "ESOP") (collectively,
the "Employee Plans"), rights to subscribe for the Securities in a subscription
offering (the "Subscription Offering"). To the extent Securities are not
subscribed for in the Subscription Offering, such Securities may be offered to
certain members of the general public and to other persons in a community
offering (the "Community Offering"), with preference given first to natural
persons residing in Gloucester and Camden Counties, New Jersey, and second to
other persons in New Jersey and third to the general public to whom the Company
delivers a Prospectus (as hereinafter defined). The Community Offering, which
together with the Subscription Offering, as each may be extended or reopened
from time to time, are herein referred to as the "Subscription and Community
Offering," may be commenced concurrently with, during or after, the Subscription
Offering. It is currently anticipated by the Bank and the Company that any
Securities not subscribed for in the Subscription and Community Offering will be
offered, subject to Section 2 hereof, in a syndicated community offering (the
"Syndicated Community Offering"). The Subscription and Community Offering and
the Syndicated Community Offering are hereinafter referred to collectively as
the "Offerings." The Securities may be offered to the general public in a public
offering (the "Public Offering") in lieu of or subsequent to the Syndicated
Community Offering. If there is a Public Offering, the Public Offering will be
governed by a separate definitive purchase agreement. It is acknowledged that
the number of Securities to be sold in the Offerings may be increased or
decreased as described in the Prospectus. If the number of Securities is
increased or decreased in accordance with the Plan, the term "Securities" shall
mean such greater or lesser number, where applicable.
In connection with the Offerings and pursuant to terms of the Plan as
described in the Prospectus, the Company will issue shares to the MHC. The
Company will issue shares of Common Stock to the MHC in an amount equal to
approximately 55.0% of the number of shares of Common Stock that will be
outstanding following the Offerings, or up to 3,795,000 shares of Common Stock
(subject to increase in certain circumstances to 4,364,250 shares).
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-141520), including a
related prospectus, for the registration of the Securities under the Securities
Act of 1933, as amended (the "Securities Act"), has filed such amendments
thereto, if any, and such amended prospectus as may have been required to the
date hereof by the Commission in order to declare such registration statement
effective, and will file such additional amendments thereto and such amended
prospectuses and prospectus supplements as may hereafter be required. Such
registration statement (as amended to date, if applicable, and as from time to
time amended or supplemented hereafter) and the prospectus constituting a part
thereof (including in each case all documents incorporated or deemed to be
incorporated by reference therein and the information, if any, deemed to be a
part thereof pursuant to the rules and regulations of the Commission under the
Securities Act, as from time to time amended or supplemented pursuant to the
Securities Act or otherwise (the "Securities Act Regulations")), are hereinafter
referred to as the "Registration
2
Statement" and the "Prospectus," respectively, except that if any revised
prospectus shall be used by the Company in connection with the Subscription and
Community Offering or the Syndicated Community Offering which differs from the
Prospectus on file at the Commission at the time the Registration Statement
becomes effective (whether or not such revised prospectus is required to be
filed by the Company pursuant to Rule 424(b) of the Securities Act Regulations),
the term "Prospectus" shall refer to such revised prospectus from and after the
time it is first provided to the Agent for such use.
Concurrently with the execution of this Agreement, the Company is
delivering to the Agent copies of the Prospectus of the Company to be used in
the Offerings. Such Prospectus contains information with respect to the Bank,
the Company, the MHC and the Common Stock.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) The Company, the Bank and the MHC jointly and severally represent
and warrant to the Agent as of the date hereof as follows:
(i) The Registration Statement has been declared effective by
the Commission, no stop order has been issued with respect thereto and
no proceedings therefor have been initiated or, to the knowledge of the
Company, the MHC and the Bank, threatened by the Commission. At the
time the Registration Statement became effective and at the Closing
Time referred to in Section 2 hereof, the Registration Statement
complied and will comply in all material respects with the requirements
of the Securities Act and the Securities Act Regulations and did not
and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading. The Prospectus, at the date
hereof does not and at the Closing Time referred to in Section 2 hereof
will not, include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; provided, however, that the representations and
warranties in this subsection shall not apply to statements in or
omissions from the Registration Statement or Prospectus made in
reliance upon and in conformity with information with respect to the
Agent furnished to the Company in writing by the Agent expressly for
use in the Registration Statement or Prospectus (the "Agent
Information"), which the Company, the MHC and the Bank acknowledge
appears only in the second sentence of the section "Summary - Market
for Gateway Community Financial Corp.'s Common Stock," and in the third
sentence of the first paragraph of the section "Market for the Stock."
(ii) At the time of filing the Registration Statement relating
to the offering of the Securities and at the date hereof, the Company
was not, and is not, an ineligible issuer, as defined in Rule 405 of
the Securities Act Regulations. At the time of the filing of the
Registration Statement and at the time of the use of any issuer free
writing prospectus, as defined in Rule 433(h) of the Securities Act
Regulations, the Company met the conditions required by Rules 164 and
433 of the Securities Act Regulations for the use of a free writing
prospectus. If required to be filed, the Company has filed any issuer
free writing prospectus related to the offered Securities at the time
it is required to be filed under Rule 433 of the Securities Act
Regulations and, if not required to
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be filed, will retain such free writing prospectus in the Company's
records pursuant to Rule 433(g) of the Securities Act Regulations and
if any issuer free writing prospectus is used after the date hereof in
connection with the offering of the Securities the Company will file
or retain such free writing prospectus as required by Rule 433 of the
Securities Act Regulations.
(iii) As of the Applicable Time, neither (i) the
Issuer-Represented General Free Writing Prospectus(es) issued at or
prior to the Applicable Time and the Statutory Prospectus, all
considered together (collectively, the "General Disclosure Package"),
nor (ii) any individual Issuer-Represented Limited-Use Free Writing
Prospectus issued at or prior to the Applicable Time, when considered
together with the General Disclosure Package, included any untrue
statement of a material fact or omitted to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The preceding
sentence does not apply to statements or omissions made in reliance
upon and in conformity with written information furnished to the
Company by the Agent expressly for use therein. As used in this
paragraph and elsewhere in this Agreement:
1. "Applicable Time" means each and every date when a
potential purchaser submitted a subscription or otherwise
committed to purchase Securities.
2. "Statutory Prospectus," as of any time, means the most
recent Prospectus that is included in the Registration
Statement immediately prior to the Applicable Time,
including any document incorporated by reference therein.
3. "Issuer-Represented Free Writing Prospectus" means any
"issuer free writing prospectus," as defined in Rule 433 of
the Securities Act Regulations, relating to the offered
Securities in the form filed or required to be filed with
the Commission or, if not required to be filed, in the form
retained in the Company's records pursuant to Rule 433(g)
under the Securities Act Regulations.
4. "Issuer-Represented General Free Writing Prospectus"
means any Issuer-Represented Free Writing Prospectus that is
intended for general distribution to prospective investors.
5. "Issuer-Represented Limited-Use Free Writing Prospectus"
means any Issuer-Represented Free Writing Prospectus that is
not an Issuer-Represented General Free Writing Prospectus.
The term Issuer-Represented Limited-Use Free Writing
Prospectus also includes any "bona fide electronic road
show," as defined in Rule 433 of the Securities Act
Regulations, that is made available without restriction
pursuant to
4
Rule 433(d)(8)(ii) of the Securities Act Regulations or
otherwise, even though not required to be filed with the
Commission.
(iv) Each Issuer-Represented Free Writing Prospectus, as of
its date of first use and at all subsequent times through the
completion of the Offerings and sale of the offered Securities or until
any earlier date that the Company notified or notifies the Agent (as
described in the next sentence), did not, does not and will not include
any information that conflicted, conflicts or will conflict with the
information contained in the Registration Statement, including any
document incorporated by reference therein that has not been superseded
or modified. If at any time following the date of first use of an
Issuer-Represented Free Writing Prospectus there occurred or occurs an
event or development as a result of which such Issuer-Represented Free
Writing Prospectus conflicted or would conflict with the information
contained in the Registration Statement relating to the offered
Securities or included or would include an untrue statement of a
material fact or omitted or would omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances prevailing at that subsequent time, not misleading, the
Company has notified or will notify promptly the Agent so that any use
of such Issuer-Represented Free-Writing Prospectus may cease until it
is amended or supplemented and the Company has promptly amended or will
promptly amend or supplement such Issuer-Represented Free Writing
Prospectus to eliminate or correct such conflict, untrue statement or
omission. The foregoing two sentences do not apply to statements in or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by the Agent expressly for use
therein.
(v) Pursuant to the rules and regulations of the OTS, as from
time to time amended or supplemented (the "OTS Regulations"), the
Company has filed with the OTS an Application for Approval of a
Minority Stock Issuance by a Subsidiary of a Mutual Holding Company
(Form MHC-2), and has filed such amendments thereto and supplementary
materials as may have been required to the date hereof (the Form MHC-2,
as amended to date, if applicable, and referred to as the "MHC
Application"). The Boards of Directors of the Company and the MHC have
duly adopted the Plan and such adoption has not since been rescinded or
revoked. The MHC Application has been approved by the OTS, such
approval remains in full force and effect and no order has been issued
by the OTS suspending or revoking such approval and no proceedings
therefor have been initiated or, to the knowledge of the Company, the
Bank or the MHC, threatened by the OTS. At the date of such approval
and at the Closing Time referred to in Section 2, the MHC Application
complied and will comply in all material respects with the applicable
provisions of the OTS Regulations and the MHC Application is truthful
and accurate in all material respects.
(vi) The Company 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 at the Closing Time referred to in
Section 2, complied and will comply in all material respects with the
applicable requirements of the OTS Regulations and, at or prior to the
time of their first use, will have received all required authorizations
of the OTS for use in final form.
5
(vii) None of the Commission, the OTS or any state securities
("Blue Sky") authority has, by order or otherwise, prevented or
suspended the use of the Prospectus or any supplemental sales
literature authorized by the Company, the MHC or the Bank for use in
connection with the Offerings, and no proceedings for such purposes are
pending or, to the knowledge of the Company, the MHC or the Bank,
threatened.
(viii) The Offerings and other transactions contemplated
hereby do not and will not require any material consent, approval,
authorization or permit or filing with any other governmental agency or
regulatory authority other than the OTS and the Commission, except as
disclosed in the Prospectus.
(ix) At the Closing Time referred to in Section 2, the
Offerings will have been effected in all material respects in the
manner described in the Prospectus and in accordance with the Plan, the
OTS Regulations and all other applicable material laws, regulations,
decisions and orders, including in compliance in all material respects
with all terms, conditions, requirements and provisions precedent to
the Offerings imposed upon the Company, the Bank or the MHC by the
Commission, the OTS or any other regulatory or Blue Sky authority.
(x) Feldman Financial Advisers, Inc., (the "Appraiser"), which
prepared the valuation of the common stock of the Company as part of
the Plan, has advised the Company, the MHC and the Bank in writing that
it satisfies all requirements for an appraiser set forth in the OTS
Regulations and any interpretations or guidelines issued by the OTS or
its staff with respect thereto.
(xi) S.R. Snodgrass, A.C., the accountants who audited and
reported on the consolidated financial statements and supporting
schedules of the Company and its subsidiaries included in the
Registration Statement, has advised the Company, the MHC and the Bank
in writing that they are independent public accountants within the
meaning of the Code of Ethics of the American Institute of Certified
Public Accountants (the "AICPA"), that they are registered with the
Public Company Accounting Oversight Board ("PCAOB") and such
accountants are, with respect to the Company, the MHC and the Bank,
independent certified registered public accountants as required by, and
are not in violation of the auditor independence requirements of, the
Securities Act, the Securities Act Regulations and OTS Regulations and
each accountant is not in violation of the auditors independence
requirements of the Sarbanes-Oxley Act of 2002.
(xii) The only direct subsidiary of the Company is the Bank.
The Bank has no subsidiaries. Except for the Bank and except as set
forth in the Prospectus, none of the Company, the MHC or the Bank,
directly or indirectly, controls any other corporation, limited
liability company, partnership, joint venture, association, trust or
other business organization.
(xiii) The consolidated financial statements and the related
schedules and notes thereto included in the Registration Statement and
the Prospectus present fairly the financial position of the Company and
the Bank at the dates indicated and the results of operations, changes
in equity and cash flows for the periods specified, and comply as to
6
form with the applicable accounting requirements of the Securities Act
Regulations and the OTS Regulations; except as otherwise stated in the
Registration Statement and Prospectus, said financial statements have
been prepared in conformity with generally accepted accounting
principles applied on a consistent basis; and the supporting schedules
and tables included in the Registration Statement and Prospectus
present fairly the information required to be stated therein. The other
financial, statistical and pro forma information and related notes
included in the Prospectus present fairly the information shown therein
on a basis consistent with the audited and unaudited financial
statements included in the Prospectus, and as to the pro forma
adjustments, the adjustments made therein have been consistently
applied on the basis described therein.
(xiv) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise stated therein (A) there has been no material adverse change
in the financial condition, results of operations, business affairs or
prospects of the Company, the MHC and the Bank, considered as one
enterprise, whether or not arising in the ordinary course of business
and (B) except for transactions specifically referred to or
contemplated in the Registration Statement and Prospectus, there have
been no transactions entered into by the Company, the MHC or the Bank,
other than those in the ordinary course of business consistent with
past practice, which are material with respect to the Company, the MHC
and the Bank, considered as one enterprise. The capitalization,
liabilities, assets, properties and business of the Company, the MHC
and the Bank conform in all material respects to the descriptions
contained in the Prospectus and none of the Company, the MHC or the
Bank has any material liabilities of any kind, contingent or otherwise,
except as disclosed in the Registration Statement or the Prospectus and
none of the Company, the MHC or the Bank have issued any securities or
incurred any liability or obligation, direct or contingent, or borrowed
money, except borrowings in the ordinary course of business consistent
with past practice from the same or similar sources and in similar
amounts as indicated in the Prospectus.
(xv) The Company has been duly organized and is validly
existing as a stock holding company chartered under the laws of the
United States of America with full corporate power and authority to
own, lease and operate its properties, to conduct its business as
described in the Registration Statement and the Prospectus, and to
enter into and perform its obligations under this Agreement and the
transactions contemplated hereby; and the Company is duly qualified to
transact business and is in good standing under the laws of the United
States of America and in each other jurisdiction in which such
qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure to so qualify would not have a material adverse effect on the
financial condition, results of operations, business affairs or
prospects of the Company, the MHC and the Bank, considered as one
enterprise (a "Material Adverse Effect"). The Company conducts business
exclusively in the State of New Jersey.
(xvi) Upon completion of the Offerings and the issuance of the
MHC Shares as described in the Prospectus, the issued and outstanding
capital stock of the Company will be within the range as set forth in
the Prospectus under "Capitalization" (except for
7
subsequent issuances, if any, pursuant to reservations, agreements or
employee benefit plans referred to in the Prospectus). The authorized
capital stock of the Company consists of 25,000,000 shares of Common
Stock and 5,000,000 shares of serial preferred stock, par value $.10
per share, and the issued and outstanding capital stock of the Company
at the date hereof is, and immediately prior to the Closing Time will
be, __________ shares of Common Stock, all of which are beneficially
owned and of record by the MHC free and clear of any security
interest, mortgage, pledge, lien, encumbrance or legal or equitable
claim; at the date hereof and at the Closing Time, the Securities and
the MHC Shares will have been duly authorized for issuance and, in the
case of the Securities, when issued and delivered by the Company
pursuant to the Plan against payment of the consideration calculated
as set forth in the Plan and stated on the cover page of the
Prospectus, in the case of the MHC Shares, when issued by the Company
pursuant to the Plan, will be duly and validly issued and fully paid
and nonassessable; the terms and provisions of the Common Stock and
the other capital stock of the Company conform in all material
respects to all statements relating thereto contained in the
Prospectus; the certificates representing the shares of Common Stock
will conform to the requirements of applicable law and regulations;
and the issuance of the Securities and the MHC Shares is not subject
to preemptive or other similar rights, except for subscription rights
granted pursuant to the Plan in accordance with the OTS Regulations.
(xvii) The MHC has been duly organized and is validly existing
as a mutual holding company chartered under the laws of the United
States of America with full corporate power and authority to own, lease
and operate its properties, to conduct its business as described in the
Registration Statement and the Prospectus, and to enter into and
perform its obligations under this Agreement and consummate the
transactions contemplated hereby; and the MHC is duly qualified to
transact business and is in good standing under the laws of the United
States of America and in any other jurisdiction in which such
qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure to so qualify would not have a Material Adverse Effect.
(xviii) The MHC has no capital stock. All holders of the
savings, demand or other authorized accounts of the Bank and certain
borrowers of the Bank are members of the MHC. The MHC does not own any
equity securities or any equity interest in any business enterprise
except as described in the Prospectus.
(xix) The Bank has been duly organized and is validly existing
as a savings bank chartered under the laws of the United States of
America with full corporate power and authority to own, lease and
operate its properties, to conduct its business as described in the
Registration Statement and the Prospectus, and to enter into and
perform its obligations under this Agreement and the transactions
contemplated hereby; and the Bank is duly qualified to transact
business and is in good standing under the laws of the United States of
America and in any other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure to so qualify would
not have a Material Adverse Effect.
8
(xx) The authorized capital stock of the Bank consists of
25,000,000 shares of common stock, par value $0.10 per share ("Bank
Common Stock") and 5,000,000 shares of serial preferred stock, par
value $0.10 per share, and the issued and outstanding capital stock of
the Bank is 10,000 shares of Bank Common Stock, all of which are owned
beneficially and of record by the Company free and clear of any
security interest, mortgage, pledge, lien, encumbrance or legal or
equitable claim. All of the issued and outstanding Bank Common Stock
has been duly authorized, validly issued and fully paid and
nonassessable; the terms and provisions of the Bank Common Stock
conform to all statements relating thereto contained in the Prospectus,
and the certificates representing the shares of the Bank Common Stock
comply with the requirements of applicable laws and regulations; the
issuance of Bank Common Stock is not subject to preemptive or similar
rights; and there are no outstanding warrants, options or rights of any
kind to acquire additional shares of Bank Common Stock.
(xxi) The Company, the MHC and the Bank have each obtained all
licenses, permits and other governmental authorizations currently
required for the conduct of their respective businesses, except where
the failure to obtain such licenses, permits or other governmental
authorizations would not have a Material Adverse Effect; all such
licenses, permits and other governmental authorizations are in full
force and effect and the Company, the MHC and the Bank are in all
material respects in compliance therewith; none of the Company, the
MHC, the Bank or any Subsidiary has received notice of any proceeding
or action relating to the revocation or modification of any such
license, permit or other governmental authorization which, singularly
or in the aggregate, if the subject of an unfavorable decision, ruling
or finding, might have a Material Adverse Effect.
(xxii) Reserved.
(xxiii) The Bank is a member in good standing of the Federal
Home Loan Bank of New York; the deposit accounts of the Bank are
insured by the FDIC up to the applicable limits. The Bank is a
"qualified thrift lender" within the meaning of 12 U.S.C. Section
1467a(m).
(xxiv) The Company, the MHC and the Bank have taken all
corporate action necessary for them to execute, deliver and perform
this Agreement and the transactions contemplated hereby, and this
Agreement has been duly executed and delivered by, and is the valid and
binding agreement of, the Company, the MHC and the Bank, enforceable
against each of them in accordance with its terms, except as may be
limited by bankruptcy, insolvency or other laws affecting the
enforceability of the rights of creditors generally and judicial
limitations on the right of specific performance and except as the
enforceability of indemnification and contribution provisions may be
limited by applicable securities laws.
(xxv) No approval of any regulatory or supervisory or other
public authority is required in connection with the execution and
delivery of this Agreement or the issuance of the Securities that has
not been obtained and a copy of which has been delivered to the Agent,
except as may be required under the "Blue Sky" or securities laws of
various jurisdictions.
9
(xxvi) None of the Company, the MHC or the Bank is in
violation of their respective certificate of incorporation,
organization certificate, articles of incorporation or charter, as the
case may be, or bylaws or other written corporate governance
requirements or guidelines; and none of the Company, the MHC or the
Bank is in default (nor has any event occurred which, with notice or
lapse of time or both, would constitute a default) in the performance
or observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note,
lease or other instrument to which the Company, the MHC or the Bank is
a party or by which it or any of them may be bound, or to which any of
the property or assets of the Company, the MHC or the Bank is subject,
except for such defaults that would not, individually or in the
aggregate, have a Material Adverse Effect; and there are no contracts
or documents of the Company, the MHC or the Bank which are required to
be filed as exhibits to the Registration Statement or the MHC
Application which have not been so filed.
(xxvii) The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated herein,
have been duly authorized by all necessary corporate action on the part
of the Company, the MHC and the Bank, and do not and will not conflict
with or constitute a breach of, or default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company, the MHC or the Bank pursuant to, any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Company, the MHC or the Bank is a party or by
which it or any of them may be bound, or to which any of the property
or assets of the Company, the MHC or the Bank is subject, except for
such conflicts, breaches or defaults that would not, individually or in
the aggregate, have a Material Adverse Effect, nor will such action
result in any violation of the provisions of the respective charter or
bylaws of the Company, the MHC or the Bank, or any applicable law,
administrative regulation or administrative or court decree.
(xxviii) No labor dispute with the employees of the Company,
the MHC or the Bank exists or, to the knowledge of the Company, the MHC
or the Bank, is imminent or threatened; and the Company, the MHC and
the Bank are not aware of any existing or threatened labor disturbance
by the employees of any of its principal suppliers or contractors which
might be expected to have a Material Adverse Effect.
(xxix) Each of the Company, the MHC and the Bank has good and
marketable title to all of their properties and assets for which
ownership is material to the business of the Company, the MHC or the
Bank and to those properties and assets described in the Prospectus as
owned by them, free and clear of all liens, charges, encumbrances or
restrictions, except as such are described in the Prospectus or are not
material in relation to the business of the Company, the MHC or the
Bank, considered as one enterprise; and all of the leases and subleases
material to the business of the Company, the MHC or the Bank under
which the Company, the MHC or the Bank hold properties, including those
described in the Prospectus, are valid and binding agreements of the
Company, the MHC or the Bank, in full force and effect, enforceable in
accordance with their terms except as may be limited by bankruptcy,
insolvency or other laws affecting the enforceability of the rights of
creditors generally and judicial limitations on the right of specific
10
performance and except as the enforceability of indemnification and
contribution provisions may be limited by applicable securities laws.
(xxx) None of the Company, the MHC or the Bank is in violation
of any order or directive from the OTS, the FDIC, the Commission or any
regulatory authority to make any material change in the method of
conducting its respective businesses; the Company, the MHC and the Bank
have conducted and are conducting their respective businesses so as to
comply with all applicable statutes, regulations and administrative and
court decrees (including, without limitation, all regulations,
decisions, directives and orders of the OTS, the FDIC and the
Commission). Except as disclosed in the Registration Statement, neither
the Company, the MHC nor the Bank is subject or is party to, or has
received any notice or advice that any of them may become subject or
party to, any investigation with respect to any cease-and-desist order,
agreement, consent agreement, memorandum of understanding or other
regulatory enforcement action, proceeding or order with or by, or is a
party to any commitment letter or similar undertaking to, or is subject
to any directive by, or has been a recipient of any supervisory letter
from, or has adopted any board resolutions at the request of, any
Regulatory Agency (as defined below) that currently restricts the
conduct of their business or that in any manner relates to their
capital adequacy, their credit policies, their management or their
business (each, a "Regulatory Agreement"), nor has the Company, the MHC
or the Bank been advised by any Regulatory Agency that it is
considering issuing or requesting the issuance of any additional
Regulatory Agreement; and there is no unresolved violation, criticism
or exception by any Regulatory Agency with respect to any report or
statement relating to any examinations of the Company, the MHC or the
Bank which is expected to have a Material Adverse Effect, or which
might materially and adversely affect the properties or assets thereof
or which might adversely affect the consummation of the Offerings or
the performance of this Agreement. As used herein, the term "Regulatory
Agency" means any federal or state agency charged with the supervision
or regulation of depositary institutions or holding companies of
depositary institutions, or engaged in the insurance of depositary
institution deposits, or any court, administrative agency or commission
or other governmental agency, authority or instrumentality having
supervisory or regulatory authority with respect to the Company, the
MHC or the Bank.
(xxxi) There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now pending,
or, to the knowledge of the Company, the MHC or the Bank, threatened,
against or affecting the Company, the MHC or the Bank which is required
to be disclosed in the Registration Statement (other than as disclosed
therein), or which might result in any material adverse change in the
financial condition, results of operations, business affairs or
prospects of the Company, the MHC and the Bank, considered as one
enterprise, or which might materially and adversely affect the
properties or assets thereof, or which might adversely affect the
consummation of the Offerings, or the performance of this Agreement;
all pending legal or governmental proceedings to which the Company, the
MHC or the Bank is a party or of which any of their respective property
or assets is the subject which are not described in the Registration
Statement, including ordinary routine litigation incidental to their
business, are in the aggregate not material.
11
(xxxii) The Company, the MHC and the Bank have obtained
opinions of its counsel, Malizia Spidi & Fisch, P.C., with respect to
(i) the legality of the Securities and the MHC Shares to be issued, and
(ii) certain federal income tax consequences of the Offerings and the
Plan, copies of which are filed as exhibits to the Registration
Statement; all material aspects of the aforesaid opinion is accurately
summarized in the Prospectus under "The Offering - Material Federal and
State Tax Consequences of the Offering," the facts and representations
upon which such opinion is based are truthful, accurate and complete in
all material respects, and neither the Company, the MHC, nor the Bank
has taken or will take any action inconsistent therewith.
(xxxiii) The Company is not and, upon completion of the
Offerings and sale of the Securities and the application of the net
proceeds therefrom, will not be, required to be registered as an
"investment company" as that term is defined under the Investment
Company Act of 1940, as amended.
(xxxiv) All of the loans represented as assets on the most
recent consolidated financial statements or consolidated selected
financial information of the Company included in the Prospectus meet or
are exempt from all requirements of federal, state or local law
pertaining to lending, including without limitation truth in lending
(including the requirements of Regulations Z and 12 C.F.R. Part 226 and
Section 563.99), real estate settlement procedures, consumer credit
protection, equal credit opportunity and all disclosure laws applicable
to such loans, except for violations which, if asserted, would not
result in a Material Adverse Effect.
(xxxv) To the knowledge of the Company, the MHC and the Bank,
with the exception of the intended loan to the Bank's ESOP by the
Company to enable the ESOP to purchase securities in an amount up to
3.60% of the Common Stock outstanding after the Offerings (including
the MHC Shares), none of the Company, the MHC, the Bank or their
employees has made any payment of funds of the Company, the MHC or the
Bank as a loan for the purchase of the Common Stock or made any other
payment of funds prohibited by law, and no funds have been set aside to
be used for any payment prohibited by law.
(xxxvi) Each of the Company, the MHC and the Bank maintains a
system of internal accounting controls sufficient to provide reasonable
assurance that (a) transactions are executed in accordance with
management's general or specific authorizations; (b) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability; (c) access to assets is permitted only
in accordance with management's general or specific authorization; and
(d) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(xxxvii) The Company, the MHC and the Bank are in compliance
in all material respects with the applicable financial recordkeeping
and reporting requirements of the Currency and Foreign Transaction
Reporting Act of 1970, as amended, and the rules and regulations
thereunder. The Bank has established compliance programs and is in
12
compliance in all material respects with the requirements of the USA
Patriot Act and all applicable regulations promulgated thereunder.
There is no charge, investigation, action, suit or proceeding before
any court, regulatory authority or governmental agency or body pending
or, to the best knowledge of the Company, the MHC and the Bank,
threatened regarding the Bank's compliance with the USA Patriot Act or
any regulations promulgated thereunder.
(xxxviii) None of the Company, the MHC or the Bank nor any
properties owned or operated by the Company, the MHC or the Bank 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 result in a Material Adverse Effect. There are no
actions, suits or proceedings, or demands, claims, notices or
investigations (including, without limitation, notices, demand letters
or requests for information from any environmental agency) instituted
or pending, or to the knowledge of the Company, the MHC or the Bank,
threatened, relating to the liability of any property owned or operated
by the Company, the MHC or the Bank, under any Environmental Law,
except for such actions, suits or proceedings, or demands, claims,
notices or investigations that, individually or in the aggregate, would
not have a Material Adverse Effect. 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.
(xxxix) The Company, the MHC and the Bank have timely filed
all federal, state and local income and franchise tax returns required
to be filed and have made timely payments of all taxes shown as due and
payable in respect of such returns, and no deficiency has been asserted
with respect thereto by any taxing authority. No tax deficiency has
been asserted, and the Company, the MHC and the Bank have no knowledge
of any tax deficiency which could be asserted against the Company, the
MHC or the Bank.
(xl) The Company has, or will have, received all approvals
required to consummate the Offerings and to have the Securities listed
on the Nasdaq Global Market effective as of the Closing Time referred
to in Section 2 hereof.
(xli) [Reserved]
(xlii) There are no affiliations or associations (as such
terms are defined by the National Association of Securities Dealers,
Inc. ("NASD")) between any member of the NASD and any of the Company's,
the MHC's or the Bank's officers or directors.
13
(xliii) The Company, the MHC and the Bank carries, or is
covered by, insurance in such amounts and covering such risks as is
adequate for the conduct of their respective businesses and the value
for their respective properties as is customary for companies engaged
in similar industries.
(xliv) The Company, the MHC and the Bank have not relied on
Agent or its counsel for any legal, tax or accounting advice in
connection with the Offerings.
(xlv) The records of eligible account holders, supplemental
eligible account holders, and other members are accurate and complete
in all material respects.
(xlvi) The Company, the MHC and the Bank is each in compliance
in all material respects with all presently applicable provisions of
the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder
("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in ERISA) for which the
Company, the MHC or the Bank, respectively, would have any liability;
each of the Company, the MHC and the Bank has not incurred and does not
expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Sections
412 or 4971 of the Internal Revenue Code of 1986, as amended, including
the regulations and published interpretations thereunder (the "Code");
and each "pension plan" for which the Company, the MHC and the Bank
would have any liability that is intended to be qualified under Section
401(a) of the Code is so qualified and nothing has occurred, whether by
action or by failure to act, which would cause the loss of such
qualification.
(xlvii) At the time the Company's securities are registered
pursuant to Section 12 of the Exchange Act, the Company shall have
established and maintain disclosure controls and procedures (as such
term is defined in Rule 13a-14 and 15d-14 under the Exchange Act),
which (i) are designed to ensure that material information relating to
the Company, including its consolidated subsidiaries, is made known to
the Company's principal executive officer and its principal financial
officer by others within those entities; and (ii) are effective in all
material respects to perform the functions for which they were
established. There (i) are not any significant deficiencies in the
design or operation of internal controls which could adversely affect
the Company's ability to record, process, summarize, and report
financial data, or (ii) has not been any fraud, whether or not
material, that involves management or other employees who have a
significant role in the Company's internal controls. Since the date of
the most recent evaluation of the Company's disclosure controls and
procedures, there have been no significant changes in internal controls
or in other factors that could significantly affect internal controls,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
(xlviii) The Company is in compliance with the applicable
provisions of the Sarbanes-Oxley Act of 2002, the rules and regulations
of the Commission thereunder, and the Nasdaq corporate governance rules
applicable to the Company, and will use its best efforts to comply with
those provisions of the Sarbanes-Oxley Act of 2002 and the
14
Nasdaq corporate governance rules that will become effective in the
future upon their effectiveness.
(xlix) Any certificate signed by any officer of the Company,
the MHC or the Bank and delivered to either of the Agent or counsel for
the Agent shall be deemed a representation and warranty by the Company,
the MHC or the Bank to the Agent as to the matters covered thereby.
SECTION 2. APPOINTMENT OF SANDLER O'NEILL; SALE AND DELIVERY
OF THE SECURITIES; CLOSING. On the basis of the representations and
warranties herein contained and subject to the terms and conditions
herein set forth, the Company hereby appoints Sandler O'Neill as its
Agent to consult with and advise the Company, and to assist the Company
with the solicitation of subscriptions and purchase orders for
Securities, in connection with the Company's sale of Common Stock in
the Offerings. On the basis of the representations and warranties
herein contained, and subject to the terms and conditions herein set
forth, Sandler O'Neill accepts such appointment and agrees to use its
best efforts to assist the Company with the solicitation of
subscriptions and purchase orders for Securities in accordance with
this Agreement; provided, however, that the Agent shall not be
obligated to take any action which is inconsistent with any applicable
laws, regulations, decisions or orders. The services to be rendered by
Sandler O'Neill pursuant to this appointment include the following: (i)
consulting as to the financial and securities market implications of
the Plan of Stock Issuance and any related corporate documents; (ii)
reviewing with the Board the financial impact of the Offering on the
Company and the Bank based on the independent appraiser's appraisal of
the shares of common stock; (iii) reviewing all offering documents,
including the Prospectus, stock order forms and related offering
materials (it being understood that preparation and filing of such
documents is the sole responsibility of the Company and its counsel);
(iv) assisting in the design and implementation of a marketing strategy
for the Offering; (v) assisting management of the Company in scheduling
and preparing for meetings with potential investors and broker-dealers
in connection with the Offering; and (vi) providing such other general
advice and assistance as may be requested to promote the successful
completion of the Offering.
The appointment of the Agent hereunder shall terminate upon
the earlier to occur of (a) forty-five (45) days after the last day of
the Subscription and Community Offering, unless the Company and the
Agent agree in writing to extend such period and the OTS agrees to
extend the period of time in which the Securities may be sold, or (b)
the receipt and acceptance of subscriptions and purchase orders for all
of the Securities, or (c) the completion of the Syndicated Community
Offering.
If any of the Securities remain available after the expiration
of the Subscription and Community Offering, at the request of the
Company and the Bank, Sandler O'Neill will seek to form a syndicate of
registered brokers or dealers ("Selected Dealers") to assist in the
solicitation of purchase orders of such Securities on a best efforts
basis. Sandler O'Neill will endeavor to distribute the Securities among
the Selected Dealers in a fashion which best meets the distribution
objectives of the Company and the requirements of the Plan, which may
result in limiting the allocation of stock to certain
15
Selected Dealers. It is understood that in no event shall Sandler
O'Neill be obligated to act as a Selected Dealer or to take or
purchase any Securities.
In the event the Company is unable to sell at least the total
minimum of the Securities, as set forth on the cover page of the
Prospectus, within the period herein provided, this Agreement shall
terminate and the Company shall refund to any persons who have
subscribed for any of the Securities the full amount which it may have
received from them, together with interest as provided in the
Prospectus, and no party to this Agreement shall have any obligation to
the others hereunder, except for the obligations of the Company, the
MHC and the Bank as set forth in Sections 4, 6(a) and 7 hereof and the
obligations of the Agent as provided in Sections 6(b) and 7 hereof.
Appropriate arrangements for placing the funds received from
subscriptions for Securities or other offers to purchase Securities in
special interest-bearing accounts with the Bank until all Securities
are sold and paid for were made prior to the commencement of the
Subscription Offering, with provision for refund to the purchasers as
set forth above, or for delivery to the Company if all Securities are
sold.
If at least the total minimum of Securities, as set forth on
the cover page of the Prospectus, are sold, the Company agrees to issue
or have issued the Securities sold and to release for delivery
certificates for such Securities at the Closing Time against payment
therefor by release of funds from the special interest-bearing accounts
referred to above. The closing shall be held at the offices of Malizia
Spidi & Fisch, P.C., at 10:00 a.m., Eastern Time, or at such other
place and time as shall be agreed upon by the parties hereto, on a
business day to be agreed upon by the parties hereto. The Company shall
notify the Agent when funds shall have been received for all the
Securities. Certificates for Securities shall be delivered directly to
the purchasers thereof in accordance with their directions.
Notwithstanding the foregoing, certificates for Securities purchased
through Selected Dealers shall be made available to the Agent for
inspection at least 48 hours prior to the Closing Time at such office
as the Agent shall designate. The hour and date upon which the Company
shall release for delivery all of the Securities, in accordance with
the terms hereof, is herein called the "Closing Time."
The Company will pay any stock issue and transfer taxes which
may be payable with respect to the sale of the Securities.
In addition to the reimbursement of the expenses specified in
Section 4 hereof, the Agent will receive the following compensation for
its services hereunder:
(a) A fee of 1.0% of the aggregate Actual Purchase Price of
the shares of common stock sold in the Subscription Offering and Direct
Community Offering, excluding in each case shares purchased by or on
behalf of (i) the Gloucester County Federal Savings Bank Employee Stock
Ownership Plan, and (ii) any director, officer or employee of the
Company or members of their immediate families. For purposes of this
letter, the term "Actual Purchase Price" shall mean the price at which
the shares of the Company's common stock are sold in the Offering; and
16
(b) With respect to any shares of the common stock sold by the
Agent or any other NASD member firm under any selected dealers
agreements in a Syndicated Community Offering, the Company agrees to
pay: (a) the sales commission payable to the selected dealer under such
agreement, and (b) a management fee to the Agent of 1.0% of the
aggregate Actual Purchase Price of the shares of common stock sold in
the Syndicated Community Offering on a best efforts basis, subject to
the terms and conditions set forth in a selected dealers agreement.
Agent will endeavor to limit the aggregate fees to be paid by the
Company under any such selected dealers agreements to an amount
competitive with gross underwriting discounts charged at such time for
underwritings of comparable amounts of stock sold at a comparable price
per share in a similar market environment. Any fees payable to the
Agent and other NASD member firms for Securities sold by the Agent
under any such agreement shall be limited to an aggregate of 6.5% of
the aggregate purchase price of the Securities sold by the Agent and
other NASD member firms.
If this Agreement is terminated by the Agent in accordance
with the provisions of Section 9(a) hereof, no fee shall be payable by
the Company to Sandler O'Neill: provided, however, that the Company
shall reimburse the Agent for all of its reasonable out-of-pocket
expense incurred prior to termination, including the reasonable fees
and disbursements of counsel for the Agent in accordance with the
provisions of Section 4 hereof. In addition, the Company shall be
obligated to pay the fees and expense as contemplated by the provisions
of Section 4 hereof in the event of any such termination.
All fees payable to the Agent hereunder shall be payable in
immediately available funds at Closing Time, or upon the termination of
this Agreement, as the case may be. In recognition of the long lead
times involved in the conversion process, the Bank has made an advance
payment to the Agent in the aggregate amount of $25,000, which shall be
credited against any fees or reimbursement of expenses payable
hereunder and any unearned portion thereof shall be refunded.
SECTION 3. COVENANTS OF THE COMPANY, THE MHC AND THE BANK. The
Company, the MHC and the Bank covenant with the Agent as follows:
(a) The Company, the MHC and the Bank will prepare and file
such amendments or supplements to the Registration Statement, the
Prospectus, the Plan, and the MHC Application as may hereafter be
required by the Securities Act Regulations or the OTS Regulations or as
may hereafter be reasonably requested by the Agent. Following
completion of the Subscription and Community Offering, in the event of
a Syndicated Community Offering, the Company, the MHC and the Bank will
(i) promptly prepare and file with the Commission a post-effective
amendment to the Registration Statement relating to the results of the
Subscription and Community Offering, any additional information with
respect to the proposed plan of distribution and any revised pricing
information, or (ii) if no such post-effective amendment is required,
will, if required, file with the Commission a prospectus or prospectus
supplement containing information relating to the results of the
Subscription and Community Offering and pricing information pursuant to
Rule 424 of the Securities Act Regulations, in either case in a form
acceptable to the Agent. The Company, the MHC and the Bank will notify
the
17
Agent immediately, and confirm the notice in writing (i) of the
effectiveness of any post-effective amendment of the Registration
Statement, the filing of any supplement to the Prospectus and the
filing of any amendment to the Plan or the MHC Application, (ii) of
the receipt of any comments from the OTS or the Commission with
respect to the transactions contemplated by this Agreement or the
Plan, (iii) of any request by the Commission or the OTS for any
amendment to the Registration Statement or the Plan or any amendment
or supplement to the Prospectus or for additional information, (iv) of
the issuance by the OTS of any order suspending the Offerings or the
use of the Prospectus or the initiation of any proceedings for that
purpose, (v) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose, and (vi) of the
receipt of any notice with respect to the suspension of any
qualification of the Securities for offering or sale in any
jurisdiction. The Company, the MHC and the Bank will make every
reasonable effort to prevent the issuance of any stop order and, if
any stop order is issued, to obtain the lifting thereof at the
earliest possible moment.
(b) The Company represents and agrees that, unless it obtains
the prior written consent of the Agent and the Agent represents and
agrees that, unless it obtains the prior written consent of the
Company, it will not make any offer relating to the offered Securities
that would constitute an "issuer free writing prospectus," as defined
in Rule 433 of the Securities Act Regulations, or that would constitute
a "free writing prospectus," as defined in Rule 405 of the Securities
Act Regulations, required to be filed with the Commission. Any such
free writing prospectus consented to by the Company and the Agent is
hereinafter referred to as a "Permitted Free Writing Prospectus." The
Company represents that it has and will comply with the requirements of
Rule 433 of the Securities Act Regulations applicable to any Permitted
Free Writing Prospectus, including timely Commission filing where
required, legending and record keeping. The Company represents that it
will satisfy the conditions in Rule 433 to avoid a requirement to file
with the Commission any electronic road show.
(c) The Company, the MHC and the Bank will give the Agent
notice of its intention to file or prepare any amendment to the MHC
Application, the Plan or Registration Statement (including any
post-effective amendment) or any amendment or supplement to the
Prospectus (including any revised prospectus which the Company proposes
for use in connection with the Syndicated Community Offering of the
Securities which differs from the prospectus on file at the Commission
at the time the Registration Statement becomes effective, whether or
not such revised prospectus is required to be filed pursuant to Rule
424(b) of the Securities Act Regulations), will furnish the Agent with
copies of any such amendment or supplement a reasonable amount of time
prior to such proposed filing or use, as the case may be, and will not
file any such amendment or supplement or use any such prospectus to
which the Agent or counsel for the Agent may object.
(d) The Company, the MHC and the Bank will deliver to the
Agent as many signed copies and as many conformed copies of the MHC
Application and the Registration Statement as originally filed and of
each amendment thereto (including exhibits filed therewith or
incorporated by reference therein) as the Agent may
18
reasonably request, and from time to time such number of copies of the
Prospectus as the Agent may reasonably request.
(e) During the period when the Prospectus is required to be
delivered, the Company, the MHC and the Bank will comply, at their own
expense, with all requirements imposed upon them by the Commission, the
OTS, by the applicable OTS Regulations, as from time to time in force,
and by the Nasdaq Global Market, the Securities Act, the Securities Act
Regulations, the Exchange Act, and the rules and regulations of the
Commission promulgated thereunder, including, without limitation,
Regulation M under the Exchange Act, so far as necessary to permit the
continuance of sales or dealing in shares of the Securities during such
period in accordance with the provisions hereof and the Prospectus.
(f) If any event or circumstance shall occur as a result of
which it is necessary, in the reasonable opinion of counsel for the
Agent, to amend or supplement the Registration Statement or Prospectus
in order to make the Prospectus not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, the
Company, the MHC and the Bank will forthwith amend or supplement the
Registration Statement or Prospectus (in form and substance
satisfactory to counsel for the Agent) so that, as so amended or
supplemented, the Registration Statement or Prospectus will not include
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to a purchaser, not
misleading, and the Company, the MHC and the Bank will furnish to the
Agent a reasonable number of copies of such amendment or supplement.
For the purpose of this subsection, the Company, the MHC and the Bank
will each furnish such information with respect to itself as the Agent
may from time to time reasonably request.
(g) The Company, the MHC and the Bank will take all necessary
action, in cooperation with the Agent, to qualify the Securities for
offering and sale under the applicable securities laws of such states
of the United States and other jurisdictions as the OTS Regulations may
require and as the Agent and the Company have agreed; provided,
however, that none of the Company, the MHC or the Bank shall be
obligated to file any general consent to service of process or to
qualify as a foreign corporation in any jurisdiction in which it is not
so qualified. In each jurisdiction in which the Securities have been so
qualified, the Company, the MHC and the Bank will file such statements
and reports as may be required by the laws of such jurisdiction to
continue such qualification in effect for a period of not less than one
year from the effective date of the Registration Statement.
(h) The Company authorizes Sandler O'Neill and any Selected
Dealer to act as agent of the Company in distributing the Prospectus to
persons entitled to receive subscription rights and other persons to be
offered Securities having record addresses in the states or
jurisdictions set forth in a survey of the securities or "blue sky"
laws of the various jurisdictions in which the Offerings will be made
(the "Blue Sky Survey").
19
(i) The Company will make generally available to its security
holders as soon as practicable, but not later than 60 days after the
close of the period covered thereby, an earnings statement covering a
twelve month period beginning not later than the first day of the
Company's fiscal quarter next following the effective date of the
Registration Statement (as defined in Rule 158 of the Securities Act
Regulations) that will satisfy the provisions of Section 11(a) of the
Securities Act.
(j) During the period ending on the third anniversary of the
expiration of the fiscal year during which the closing of the
transactions contemplated hereby occurs, the Company will furnish to
its stockholders as soon as practicable after the end of each such
fiscal year an annual report (including consolidated statements of
financial condition and consolidated statements of income,
stockholders' equity and cash flows, certified by independent public
accountants) and, as soon as practicable after the end of each of the
first three quarters of each fiscal year (beginning with the fiscal
quarter ending after the effective date of the Registration Statement),
the Company will make available to its stockholders consolidated
summary financial information of the Company and the Bank for such
quarter in reasonable detail. In addition, the Company will use its
reasonable best efforts to make public such annual report and quarterly
consolidated summary financial information through the issuance of
appropriate press releases at the same time or prior to the time of the
furnishing thereof to stockholders of the Company.
(k) During the period ending on the third anniversary of the
expiration of the fiscal year during which the closing of the
transactions contemplated hereby occurs, the Company will furnish to
the Agent (i) as soon as publicly available, a copy of each report or
other document of the Company furnished generally to stockholders of
the Company or furnished to or filed with the Commission under the
Exchange Act or any national securities exchange or system on which any
class of securities of the Company is listed, and (ii) from time to
time, such other information concerning the Company as the Agent may
reasonably request. For purposes of this paragraph, any document filed
electronically with the Commission shall be deemed furnished to the
Agent.
(l) The Company will promptly inform the Agent upon its
receipt of service with respect to any material litigation or
administrative action instituted with respect to the Offerings.
(m) Each of the Company and the Bank will use the net proceeds
received by it from the sale of the Securities in the manner specified
in the Prospectus under "Use of Proceeds."
(n) The Company will report the use of proceeds from the
Offerings on its first periodic report filed pursuant to Sections 13(a)
and 15(d) of the Exchange Act and on any subsequent periodic reports as
may be required pursuant to Rule 463 of the Securities Act Regulations.
(o) The Company will maintain the effectiveness of the
Exchange Act Registration Statement for not less than three years and
will comply in all material respects with its filing obligations under
the Exchange Act during such period. The
20
Company will use its best efforts to effect and maintain the listing
of the Common Stock on the Nasdaq Global Market for not less than
three years.
(p) The Company and the Bank will take such actions and
furnish such information as are reasonably requested by the Agent in
order for the Agent to ensure compliance with Rule 2790 of the National
Association of Securities Dealers, Inc. and all related rules.
(q) Other than in connection with any employee benefit plan or
arrangement described in the Prospectus, the Company will not, without
the prior written consent of the Agent, sell or issue, contract to sell
or otherwise dispose of, any shares of Common Stock other than the
Securities and the MHC Shares for a period of 180 days following the
Closing Time.
(r) During the period beginning on the date hereof and ending
on the later of the fifth anniversary of the Closing Time or the date
on which the Agent receives full payment in satisfaction of any claim
for indemnification or contribution to which it may be entitled
pursuant to Sections 6 or 7 made prior to the fifth anniversary of the
Closing Time, respectively, none of the Company, the MHC or the Bank
shall, without the prior written consent of the Agent, take or permit
to be taken any action that could result in the Bank Common Stock
becoming subject to any security interest, mortgage, pledge, lien or
encumbrance.
(s) The Company, the MHC and the Bank will comply with the
conditions imposed by or agreed to with the OTS in connection with its
approval of the MHC Application, including the Plan.
(t) During the period ending on the first anniversary of the
Closing Time, the Bank will comply with all applicable laws and
regulations necessary for the Bank to continue to be a "qualified
thrift lender" within the meaning of 12 U.S.C. Section 1467a(m).
(u) The Company shall not deliver the Securities until the
Company, the MHC and the Bank have satisfied each condition set forth
in Section 5 hereof, unless such condition is waived by the Agent.
(v) The Company, the MHC and the Bank will furnish to Sandler
O'Neill as early as practicable prior to the Closing Date, but no later
than three (3) full business days prior thereto, a copy of the latest
available unaudited interim consolidated financial statements of the
Company which have been read by S.R. Snodgrass, A.C., as stated in
their letters to be furnished pursuant to subsections (f) and (g) of
Section 5 hereof.
(w) During the period in which the Prospectus is required to
be delivered, each of the Company, the MHC and the Bank will conduct
its business in compliance in all material respects with all applicable
federal and state laws, rules, regulations, decisions, directives and
orders, including all decisions, directives and orders of the
Commission, the Nasdaq Global Market and the OTS.
21
(x) The Bank will not amend the Plan in any manner that would
affect the sale of the Securities or the terms of this Agreement
without the consent of the Agent.
(y) The Company, the MHC and the Bank will not, prior to the
Closing Time, incur any liability or obligation, direct or contingent,
or enter into any material transaction, other than in the ordinary
course of business consistent with past practice, except as
contemplated by the Prospectus.
(z) The Company, the MHC and the Bank will use all reasonable
efforts to comply with, or cause to be complied with, the conditions
precedent to the several obligations of the Agent specified in Section
5 hereof.
(aa) The Company, the MHC and the Bank will provide the Agent
with any information necessary to carry out the allocation of the
Securities in the event of an oversubscription, and such information
will be accurate and reliable in all material respects.
(bb) The Company, the MHC and the Bank will notify the Agent
when funds have been received for the minimum number of Securities set
forth in the Prospectus.
(cc) The Company, the MHC and the Bank will (i) complete the
conditions precedent to the Offerings in accordance with the Plan, the
applicable OTS Regulations and all other applicable laws, regulations,
decisions and orders, including all material terms, conditions,
requirements and provisions precedent to the Offerings imposed upon the
Company, the MHC or the Bank by the Commission or the OTS or any other
regulatory authority or Blue Sky authority, and to comply with those
which the regulatory authority permits to be completed after the
Offerings; and (ii) conduct the Offerings in the manner described in
the Prospectus and in accordance with the Plan, the OTS Regulations and
all other applicable material laws, regulations, decisions and orders,
including in compliance with all terms, conditions, requirements and
provisions precedent to the Offerings imposed upon the Company, the MHC
and the Bank by the Commission, the OTS, the FDIC or any other
regulatory or Blue Sky authority.
(dd) The Company will file a registration statement for the
Securities under Section 12(b) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") prior to the Closing Time.
SECTION 4. PAYMENT OF EXPENSES. The Company, the MHC and the
Bank jointly and severally agree to pay all expenses incident to the
performance of their obligations under this Agreement, including but
not limited to (i) the cost of obtaining all securities and bank
regulatory approvals, (ii) the preparation, printing and filing of the
Registration Statement and the Plan as originally filed and of each
amendment thereto, (iii) the preparation, issuance and delivery of the
certificates for the Securities purchased in the Offerings, (iv) the
fees and disbursements of the Company's, the MHC's and the Bank's
counsel, conversion agent, accountants, appraiser and other advisors,
(v) the qualifications of the Securities under securities laws in
accordance with the provisions of Section 3(g) hereof, including filing
fees and the fees and disbursements of counsel in
22
connection therewith and in connection with the preparation of the
Blue sky Survey, (vi) the printing and delivery to the Agent of copies
of the Registration Statement as originally filed and of each
amendment thereto and the printing and delivery of the Prospectus and
any amendments or supplements thereto to the purchasers in the
Offerings and the Agent (in such quantities as the Agent shall
reasonably request), (vii) the printing and delivery to the Agent of
copies of a blue Sky Survey, and (viii) the fees and expenses incurred
in connection with the listing of the Securities on the Nasdaq Global
market. In the event the Agent incurs any such fees and expenses on
behalf of the Company, the MHC or the Bank, the Bank will reimburse
the Agent for such fees and expenses whether or not the Offerings are
consummated; provided, however, that the Agent shall not incur any
substantial expense on behalf of the Company, the MHC or the Bank
pursuant to this Section without the prior approval of the Bank.
The Company, the MHC and the Bank jointly and severally agree
to pay certain expenses incident to the performance of the Agent's
obligations under this Agreement, regardless of whether the Offerings
are consummated, including (i) the filing fees paid or incurred by the
Agent in connection with all filings with the NASD, and (ii) all
reasonable out-of-pocket expense incurred by the Agent relating to the
Offerings, including without limitation, fees and expenses of the
Agent's counsel, advertising, promotional, syndication and travel
expenses, up to a maximum of $60,000. All fees and expense to which the
Agent is entitled to reimbursement under this paragraph of this Section
4 shall be due and payable upon receipt by the Company, the MHC of the
Bank of a written accounting therefore setting forth in reasonable
detail the expenses incurred by the Agent.
SECTION 5. CONDITIONS OF AGENT'S OBLIGATIONS. The Company, the
MHC, the Bank and the Agent agree that the issuance and the sale of
Securities and all obligations of the Agent hereunder are subject to
the accuracy of the representations and warranties of the Company, the
MHC and the Bank herein contained as of the date hereof and the Closing
Time, to the accuracy of the statements of officers and directors of
the Company, the MHC and the Bank made pursuant to the provisions
hereof, to the performance by the Company, the MHC and the Bank of
their obligations hereunder, and to the following further conditions:
(a) No stop order suspending the effectiveness of the
Registration Statement shall have been issued under the Securities Act
or proceedings therefor initiated or threatened by the Commission, no
order suspending the Offerings or the authorization for final use of
the Prospectus shall have been issued or proceedings therefor initiated
or threatened by the Commission or the OTS, and no order suspending the
sale of the Securities in any jurisdiction shall have been issued.
(b) At Closing Time, the Agent shall have received:
(1) The written opinion, dated as of Closing
Time, of Malizia Spidi & Fisch, P.C., counsel for
the Company, the MHC and the Bank, in form and
substance satisfactory to counsel for the Agent, to
the effect that:
23
(i) The Company has been duly
organized and is validly existing as a
federal stock holding company chartered
under the laws of the United States of
America.
(ii) The MHC has been duly organized
and is validly existing as a federal mutual
holding company chartered under the laws of
the United States of America.
(iii) The Bank has been duly
organized and is validly existing as a
savings bank chartered under the laws of the
United States of America.
(iv) Each of the Company, the MHC
and the Bank has the corporate power and
authority to own, lease and operate its
properties and to conduct its business as
described in the Registration Statement and
the Prospectus and to enter into and perform
its obligations under this Agreement and the
transactions contemplated hereby.
(v) Each of the Company, the MHC and
the Bank is duly qualified as a domestic or
foreign corporation to transact business and
is in good standing under the laws of the
United States of America, in the State of
New Jersey and in each other jurisdiction in
which such qualification is required,
whether by reason of the ownership or
leasing of property or the conduct of
business, except where the failure to so
qualify would not have a Material Adverse
Effect.
(vi) The authorized capital stock of
the Company consists of 25,000,000 shares of
Common Stock and 5,000,000 shares of serial
preferred stock, par value $.10 per share,
and the issued and outstanding capital stock
of the Company is __________ shares of
Common Stock, all of which are owned
beneficially and of record by the MHC free
and clear of any security interest,
mortgage, pledge, lien, encumbrance or legal
or equitable claim; upon consummation of the
Offerings, the issued and outstanding shares
of capital stock of the Company will be
within the range set forth in the Prospectus
under "Capitalization."
(vii) The authorized capital stock
of the Bank consists of 25,000,000 shares of
common stock, par value $0.10 per share, and
5,000,000 shares of preferred stock, par
value $0.10 per share, and the issued and
outstanding capital stock of the Bank is
10,000 shares of common stock, all of which
are owned beneficially and of record by the
Company free and clear of any security
interest, mortgage, pledge, lien,
encumbrance or legal or equitable claim. All
of the issued and outstanding capital stock
of the Bank has
24
been duly authorized, validly issued and
fully paid and nonassessable and has been
issued in compliance with all federal and
state securities laws.
(viii) The Securities have been duly
and validly authorized for issuance and
sale; the Securities, when issued and
delivered by the Company pursuant to the
Plan against payment of the consideration
calculated as set forth in the Plan, will be
duly and validly issued, fully paid and
nonassessable.
(ix) The issuance of the Securities
is not subject to preemptive or other
similar rights arising by operation of law,
or such counsel's knowledge after due
inquiry, otherwise, except for subscription
rights granted pursuant to the Plan.
(x) Each of the Company and the MHC
is registered as a savings and loan holding
company under the Home Owners' Loan Act.
(xi) The Bank is a member in good
standing of the Federal Home Loan Bank of
New York.
(xii) The deposit accounts of the
Bank are insured by the FDIC up to the
applicable limits.
(xiii) The issuance of the
Securities is in compliance with all
conditions imposed upon the Company, the MHC
and the Bank by the OTS under the terms of
their written approval or notice of
intention not to object, as applicable.
(xiv) The OTS has duly approved the
Plan; such approval remains in full force
and effect and no action is pending, or to
the best of such counsel's knowledge
threatened respecting the Plan; the Plan
complies as to form with the applicable
requirements of the OTS, includes all
documents required to be filed as exhibits
thereto, and is, to the best of such
counsel's knowledge after due inquiry,
truthful, accurate and complete.
(xv) The execution and delivery of
this Agreement, the incurrence of the
obligations herein set forth, and the
consummation of the transactions
contemplated hereby, (A) have been duly and
validly authorized by all necessary action
on the part of each of the Company, the MHC
and the Bank, and this Agreement constitutes
the legal, valid and binding agreement of
each of the Company, the MHC and the Bank,
enforceable in accordance with its terms,
except as rights to indemnity and
contribution hereunder may be limited under
applicable law (it
25
being understood that such counsel may avail
itself of customary exceptions concerning
the effect of bankruptcy, insolvency or
similar laws and the availability of
equitable remedies), (B) will not result
in any violation of the provisions of the
certificate of incorporation, organization
certificate, articles of incorporation or
charter, as the case may be, or bylaws of
the Company, the MHC or the Bank, and (C)
will not conflict with or constitute a
breach of, or default under, and no event
has occurred which, with notice or lapse
of time or both, would constitute a default
under, or result in the creation or
imposition of any lien, charge or
encumbrance upon any property or assets of
the Company, the MHC or the Bank pursuant
to any contract, indenture, mortgage, loan
agreement, note, lease or other instrument
to which the Company, the MHC or the Bank
is a party or by which any of them may be
bound, or to which any of the property or
assets of the Company, the MHC or the
Bank is subject that, individually or in the
aggregate, would have a Material Adverse
Effect.
(xvi) Reserved.
(xvii) The Registration Statement
is effective under the Securities Act and no
stop order suspending the effectiveness of
the Registration Statement has been issued
under the Securities Act and no proceedings
therefor initiated or, to the best of such
counsel's knowledge, is threatened by the
Commission.
(xviii) The Prospectus has been
duly authorized by the OTS for final use
pursuant to OTS Regulations and no action
has been taken or is pending, or to the best
of such counsel's knowledge after due
inquiry, is threatened, by the OTS to revoke
such authorization.
(xix) No further approval,
authorization, consent or other order of any
public board or body is required in
connection with the execution and delivery
of this Agreement, the issuance of the
Securities and the consummation of the Plan,
except as may be required under the
securities or "Blue Sky" laws of various
jurisdictions as to which no opinion need be
rendered.
(xx) At the time the Registration
Statement became effective, the Registration
Statement (other than the financial
statements and statistical data included
therein, as to which no opinion need be
rendered) complied as to form in all
material respects with the applicable
requirements of the Securities Act and the
Securities Act Regulations.
26
(xxi) The Common Stock conforms to
the description thereof contained in the
Prospectus, and the form of certificate used
to evidence the Common Stock is in due and
proper form and complies with all applicable
statutory requirements.
(xxii) There are no legal or
governmental proceedings pending or
threatened against or affecting the Company,
the MHC or the Bank which are required,
individuals or in the aggregate, to be
disclosed in the Registration Statement and
Prospectus, other than those disclosed
therein, and all pending legal or
governmental proceedings to which the
Company, the MHC or the Bank is a party or
to which any of their property is subject
which are not described in the Registration
Statement, including ordinary routine
litigation incidental to the business, are,
considered in the aggregate, not material.
(xxiii) The information in the
Prospectus under the captions "Risk Factors
- Provisions in our charter and bylaws
limiting the rights of stockholders may
deter potential takeovers and may reduce the
trading price of our stock," "- Persons who
purchase stock in the offering will own a
minority of Gateway Community Financial
Corp.'s common stock and will not be able to
exercise voting control over most matters
put to a vote of stockholders, including any
proposal regarding the acquisition of
Gateway Community Financial Corp.," - "We
operate in a highly regulated environment
and may be adversely affected by changes in
laws and regulations," "Our Policy Regarding
Dividends," "Regulation," "Taxation," "The
Offering," "Restrictions on Acquisition of
Gateway Community Financial Corp.," and
"Description of Capital Stock," to the
extent that it constitutes matters of law,
summaries of legal matters, documents or
proceedings, or legal conclusions, has been
reviewed by them and is complete and
accurate in all material respects.
(xxiv) There are no contracts,
indentures, mortgages, loan agreements,
notes, leases or other instruments required
to be described or referred to in the
Registration Statement and Prospectus or to
be filed as exhibits thereto other than
those described or referred to therein or
filed as exhibits thereto and the
descriptions thereof or references thereto
are correct, and no default exists, and no
event has occurred which, with notice or
lapse of time or both, would constitute a
default, in the due performance or
observance of any material obligation,
agreement or covenant contained in any
contract, indenture, mortgage, loan
agreement, note, lease or other instrument
so described, related to or filed.
27
(xxv) The Plan has been duly
authorized by the Boards of Directors of the
Company, the MHC and the Bank, and the OTS'
approval of the Plan remains in full force
and effect; the Company, the MHC and the
Bank have conducted the Offerings in all
material respects in accordance with
applicable requirements of the OTS
Regulations, the Plan and all other
applicable regulations, decisions and orders
thereunder, including all material
applicable terms, conditions, requirements
and conditions precedent to the Offerings
imposed upon the Company, the MHC or the
Bank by the OTS and, no order has been
issued by the OTS to suspend the Offerings
and no action for such purpose has been
instituted or threatened by the OTS; and, to
the best of such counsel's knowledge after
due inquiry, no person has sought to obtain
review of the final action of the OTS in
approving the Plan.
(xxvi) To the best of such counsel's
knowledge after due inquiry, the Company,
the MHC and the Bank have obtained all
licenses, permits and other governmental
approvals and authorizations currently
required for the conduct of their respective
businesses as described in the Registration
Statement and Prospectus, and all such
licenses, permits and other governmental
authorizations are in full force and effect,
and the Company, the MHC and the Bank are in
all material respects complying therewith.
(xxvii) (A) None of the Company, the
MHC or the Bank is in violation of their
respective certificates of incorporation,
organization certificate, articles of
incorporation or charter, as the case may
be, or bylaws and (B) the Company, the MHC
and the Bank is not in default (nor has any
event occurred which, with notice or lapse
of time or both, would constitute a default)
in the performance or observance of any
obligation, agreement, covenant or condition
contained in any contract, indenture,
mortgage, loan agreement, note, lease or
other instrument to which the Company, the
MHC or the Bank is a party or by which the
Company, the MHC or the Bank or any of their
property may be bound.
(xxviii) The Company is not and,
upon completion of the Offerings and the
sale of the Common Stock and the application
of the net proceeds therefrom, will not be
required to be registered as an investment
company under the Investment Company Act of
1940.
(2) The written opinion, dated as of Closing
Time, of Muldoon Murphy & Aguggia LLP, counsel for
the Agent, with respect to the matters set forth in
Section 5(b)(1)(i), (ii), (iii), (vi), (vii), (viii),
(xv(A)),
28
(xvi), (xvii), (xviii), (xix) and (xx) and such
other matters as the Agent may reasonably require.
(3) In addition to giving their opinions
required by subsections (b)(l) and (b)(2),
respectively, of this Section, Malizia Spidi & Fisch,
P.C. and Muldoon Murphy & Aguggia LLP shall each
additionally state that nothing has come to their
attention that would lead them to believe that the
Registration Statement (except for financial
statements and schedules and other financial or
statistical data included therein, as to which
counsel need make no statement), at the time it
became effective, contained an untrue statement of a
material fact or omitted to state a material fact
required to be stated therein or necessary to make
the statements therein not misleading or that the
Prospectus (except for financial statements and
schedules and other financial or statistical data
included therein, as to which counsel need make no
statement), at the time the Registration Statement
became effective or at the Closing Time, or that the
General Disclosure Package as of the Applicable Time,
included or includes an untrue statement of a
material fact or omitted or omits to state a material
fact necessary in order to make the statements
therein, in the light of the circumstances under
which they were made, not misleading.
In giving their opinions, Malizia Spidi & Fisch, P.C. and Muldoon
Murphy & Aguggia LLP may rely as to matters of fact on certificates of officers
and directors of the Company, the MHC and the Bank and certificates of public
officials, and Muldoon Murphy & Aguggia LLP may also rely on the opinion of
Malizia Spidi & Fisch, P.C. with respect to matters set forth in Section
5(b)(1)(i), (ii), (iii), (vi), (vii), (viii), (xv(A)),(xvi), (xvii), (xviii),
(xix) and (xx).
(c) At Closing Time referred to in Section 2, the Company, the MHC and
the Bank shall have completed in all material respects the conditions precedent
to the Offerings in accordance with the Plan, the applicable OTS Regulations and
all other applicable laws, regulations, decisions and orders, including all
terms, conditions, requirements and provisions precedent to the Offerings
imposed upon the Company, the MHC or the Bank by the OTS, or any other
regulatory authority other than those which the OTS permits to be completed
after the Offerings.
(d) At Closing Time, there shall not have been, since the date hereof
or since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change in the
financial condition, results of operations, business affairs or prospects of the
Company, the MHC and the Bank, considered as one enterprise, whether or not
arising in the ordinary course of business consistent with past practice, and
the Agent shall have received a certificate of the President and Chief Executive
Officer of the Company, of the MHC and of the Bank and the Chief Financial or
Chief Accounting Officer of the Company, of the MHC and of the Bank, dated as of
Closing Time, to the effect that (i) there has been no such material adverse
change, (ii) there shall have been no material transaction entered into by the
Company, the MHC or the Bank from the latest date as of which the financial
condition of the Company, the MHC or the Bank, as set forth in the Registration
Statement and the Prospectus other than transactions referred to or contemplated
therein and transactions in the
29
ordinary course of business consistent with past practice, (iii) neither the
Company, the MHC nor the Bank shall have received from the OTS or the FDIC any
order or direction (oral or written) to make any material change in the method
of conducting its business with which it has not complied (which order or
direction, if any, shall have been disclosed in writing to the Agent) or which
materially and adversely would affect the business, financial condition, results
of operations or prospects of the Company, the MHC or the Bank, considered as
one enterprise, (iv) the representations and warranties in Section 1 hereof are
true and correct with the same force and effect as though expressly made at and
as of the Closing Time, (v) each of the Company, the MHC and the Bank has
complied with all agreements and satisfied all conditions on their part to be
performed or satisfied at or prior to Closing Time, (vi) no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been initiated or, to the best of their
knowledge after inquiry, threatened by the Commission, and (vii) no order
suspending the Subscription and Community Offering or Syndicated Community
Offering or the authorization for final use of the Prospectus has been issued
and no proceedings for that purpose have been initiated or, to the best of their
knowledge, threatened by the OTS and no person has sought to obtain regulatory
or judicial review of the action of the OTS in approving the Plan in accordance
with the OTS Regulations.
(e) At the Closing Time, the Agent shall have received a certificate of
the Chief Executive Officer and President of the Company, of the MHC and of the
Bank and the Chief Financial Officer of the Company, of the MHC and of the Bank,
dated as of Closing Time, to the effect that: (i) they have reviewed the
contents of the Registration Statement and the Prospectus; (ii) based on each of
their knowledge, the Registration Statement and the Prospectus do not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in light of the
circumstances under which such statements were made, not misleading; and (iii)
based on each of their knowledge, the financial statements and other financial
information included in the Registration Statement and the Prospectus fairly
present the financial condition and results of operations of the Company and any
subsidiary as of and for the dates and periods covered by the Registration
Statement and the Prospectus.
(f) At the time of the execution of this Agreement, the Agent shall
have received from S.R. Snodgrass, A.C. a letter dated such date, in form and
substance satisfactory to the Agent, to the effect that: (i) they are
independent public accountants with respect to the Company, the MHC and the Bank
within the meaning of the Code of Ethics of the AICPA, the Securities Act and
the Securities Act Regulations and the OTS Regulations, they are registered with
the PCAOB, and they are not in violation of the auditor independence
requirements of the Sarbanes-Oxley Act; (ii) it is their opinion that the
consolidated financial statements and supporting schedules included in the
Registration Statement and covered by their opinions therein comply as to form
in all material respects with the applicable accounting requirements of the
Securities Act and the Securities Act Regulations; (iii) based upon limited
procedures as agreed upon by the Agent and S.R. Snodgrass, A.C. set forth in
detail in such letter, nothing has come to their attention which causes them to
believe that (A) the unaudited consolidated financial statements and supporting
schedules of the Company included in the Registration Statement do not comply as
to form in all material respects with the applicable accounting requirements of
the Securities Act, the Securities Act Regulations and the OTS Regulations or
are not presented in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the audited
consolidated financial statements included in the
30
Registration Statement and the Prospectus, (B) the unaudited amounts of net
interest income and net income set forth under "Selected Consolidated Financial
and Other Data" in the Registration Statement and Prospectus do not agree with
the amounts set forth in unaudited consolidated financial statements as of and
for the dates and periods presented under such captions or such amounts were not
determined on a basis substantially consistent with that used in determining the
corresponding amounts in the audited financial statements included in the
Registration Statement, (C) at a specified date not more than five (5) days
prior to the date of this Agreement, there has been any increase in the
long-term or short-term debt of the Company or any decrease in consolidated
total assets, the allowance for loan losses, total deposits or stockholders'
equity of the Company, in each case as compared with the amounts shown in the
consolidated statements of financial conditions included in the Registration
Statement or, (D) during the period from March 31, 2007 to a specified date not
more than five (5) days prior to the date of this Agreement, there were any
decreases, as compared with the corresponding period in the preceding fiscal
year, in total interest income, net interest income, net interest income after
provision for loan losses, income before income tax expense or net income of the
Company, except in all instances for increases or decreases which the
Registration Statement and the Prospectus disclose have occurred or may occur;
and (iv) in addition to the examination referred to in their opinions and the
limited procedures referred to in clause (iii) above, they have carried out
certain specified procedures, not constituting an audit, with respect to certain
amounts, percentages and financial information which are included in the
Registration Statement and Prospectus and which are specified by the Agent, and
have found such amounts, percentages and financial information to be in
agreement with the relevant accounting, financial and other records of the
Company, the MHC and the Bank identified in such letter.
(g) At Closing Time, the Agent shall have received from S.R. Snodgrass,
A.C. a letter, dated as of Closing Time, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection (f) of this
Section, except that the specified date referred to shall be a date not more
than five (5) days prior to Closing Time.
(h) At Closing Time, the Securities shall have been approved for
quotation on the Nasdaq Global Market upon notice of issuance.
(i) At Closing Time, the Agent shall have received a letter from the
Appraiser, dated as of the Closing Time, confirming its appraisal.
(j) At Closing Time, counsel for the Agent shall have been furnished
with such documents and opinions as they may require for the purpose of enabling
them to pass upon the issuance and sale of the Securities as herein contemplated
and related proceedings, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company in connection with
the issuance and sale of the Securities as herein contemplated shall be
satisfactory in form and substance to the Agent and counsel for the Agent.
(k) At any time prior to Closing Time (i) there shall not have occurred
any material adverse change in the financial markets in the United States or
elsewhere or any outbreak of hostilities or escalation thereof or other calamity
or crisis the effect of which, in the judgment of the Agent, is so material and
adverse as to make it impracticable to market the Securities or to
31
enforce contracts, including subscriptions or orders, for the sale of the
Securities, and (ii) trading generally on either the American Stock Exchange,
the New York Stock Exchange, the Nasdaq Global Select Stock Market or the Nasdaq
Global Market shall not have been suspended, and minimum or maximum prices for
trading shall not have been fixed, or maximum ranges for prices for securities
have been required, by either of said Exchanges or by order of the Commission or
any other governmental authority, and a banking moratorium shall not have been
declared by either Federal, New Jersey or New York authorities.
SECTION 6. INDEMNIFICATION.
(a) The Company, the MHC and the Bank, jointly and severally, agree to
indemnify and hold harmless the Agent, each person, if any, who controls the
Agent, within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, and its respective partners, directors, officers, employees
and agents as follows:
(i) from and against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, related to or arising out
of the Offerings or any action taken by the Agent where acting as agent
of the Company, the MHC or the Bank or otherwise as described in
Section 2 hereof; provided, however, that this indemnity agreement
shall not apply to any loss, liability, claim, damage or expense found
in a final judgment by a court of competent jurisdiction to have
resulted primarily from the bad faith, willful misconduct or gross
negligence of the Agent;
(ii) from and against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, based upon or arising out
of any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, the General Disclosure
Package, any Issuer-Represented Free Writing or Limited-Use Free
Writing Prospectus, when considered together with the General
Disclosure Package, or any amendment or supplement thereto, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Prospectus (or any
amendment or supplement thereto), or any General Disclosure Package or
any Issuer-Represented Free Writing or Limited-Use Free Writing
Prospectus, or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
(iii) from and against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or of any claim whatsoever described in
clauses (i) or (ii) above, if such settlement is effected with the
written consent of the Company, the MHC or the Bank, which consent
shall not be unreasonably withheld; and
(iv) from and against any and all expense whatsoever, as
incurred (including, subject to Section 6(c) hereof, the fees and
disbursements of counsel chosen by the Agent), reasonably incurred in
investigating, preparing or defending against any
32
litigation, or any investigation, proceeding or inquiry by any
governmental agency or body, commenced or threatened, or any claim
pending or threatened whatsoever described in clauses (i) or (ii)
above, to the extent that any such expense is not paid under clause
(i), (ii) or (iii) above;
provided, however, that the indemnification provided for in this paragraph (a)
shall not apply to any loss, liability, claim, damage or expense that arises out
of any untrue statement or alleged untrue statement of a material fact contained
in the Prospectus (or any amendment or supplement thereto), or any
Issuer-Represented Free Writing Prospectus, or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading
which was made in reliance upon and in conformity with the Agent Information.
Notwithstanding the foregoing, the indemnification provided for in this
paragraph (a) shall not apply to the Bank to the extent that such
indemnification would constitute a covered transaction under Section 23A of the
Federal Reserve Act.
(b) The Agent agrees to indemnify and hold harmless the Company, the
MHC and the Bank, their directors, each of their officers who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act against any and all loss, liability, claim, damage and expense described in
the indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, of a material fact made in the Prospectus (or any amendment or
supplement thereto), the General Disclosure Package, the Limited-Use Free
Writing Prospectus or any Issuer-Represented Free Writing Prospectus in reliance
upon and in conformity with the Agent Information.
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
which it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of any such
action. In no event shall the indemnifying parties be liable for fees and
expenses of more than one counsel (in addition to no more than one local counsel
in each separate jurisdiction in which any action or proceeding is commenced)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances.
(d) The Company, the MHC and the Bank also agree that the Agent shall
not have any liability (whether direct or indirect, in contract or tort or
otherwise) to the MHC and its members, the Bank, the Company's, the MHC's or the
Bank's creditors relating to or arising out of the engagement of the Agent
pursuant to, or the performance by the Agent of the services contemplated by,
this Agreement, except to the extent that any loss, claim, damage or liability
is found in a final judgment by a court of competent jurisdiction to have
resulted primarily from the Agent's bad faith, willful misconduct or gross
negligence.
(e) In addition to, and without limiting, the provisions of Section
(6)(a)(iv) hereof, in the event that the Agent, any person, if any, who controls
the Agent within the meaning of
33
Section 15 of the Securities Act or Section 20 of the Exchange Act or any of its
partners, directors, officers, employees or agents is requested or required to
appear as a witness or otherwise gives testimony in any action, proceeding,
investigation or inquiry brought by or on behalf of or against the Company, the
MHC, the Bank, the Agent or any of its respective affiliates or any participant
in the transactions contemplated hereby in which the Agent or such person or
agent is not named as a defendant, the Company, the MHC, and the Bank, jointly
and severally, agree to reimburse the Agent and its partners, directors,
officers, employees or agents for all reasonable and necessary out-of-pocket
expenses incurred by them in connection with preparing or appearing as a witness
or otherwise giving testimony and to compensate the Agent and its partners,
directors, officers, employees or agents in an amount to be mutually agreed
upon.
SECTION 7. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 hereof is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Company, the MHC,
the Bank and the Agent shall contribute to the aggregate losses, liabilities,
claims, damages and expenses of the nature contemplated by said indemnity
agreement incurred by the Company, the MHC or the Bank and the Agent, as
incurred, in such proportions (i) that the Agent is responsible for that portion
represented by the percentage that the maximum aggregate marketing fees in the
Offerings bears to the maximum aggregate gross proceeds in the Offerings and the
Company, the MHC and the Bank are jointly and severally responsible for the
balance or (ii) if, but only if, the allocation provided for in clause (i) is
for any reason held unenforceable, in such proportion as is appropriate to
reflect not only the relative benefits to the Company, the MHC and the Bank on
the one hand and the Agent on the other, as reflected in clause (i), but also
the relative fault of the Company, the MHC and the Bank on the one hand and the
Agent on the other, as well as any other relevant equitable considerations;
provided, however, that no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section, each person, if any, who
controls the Agent within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act shall have the same rights to contribution as the
Agent, and each director of the Company, the MHC and the Bank, each officer of
the Company who signed the Registration Statement, and each person, if any, who
controls the Company, the MHC or the Bank within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act shall have the same rights
to contribution as the Company, the MHC and the Bank. Notwithstanding anything
to the contrary set forth herein, to the extent permitted by applicable law, in
no event shall the Agent be required to contribute an aggregate amount in excess
of the aggregate marketing fees to which the Agent is entitled and actually paid
pursuant to this Agreement.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement, or contained in certificates of officers of the Company, the MHC or
the Bank submitted pursuant hereto, shall remain operative and in full force and
effect, regardless of any investigation made by or on behalf of the Agent or any
controlling person, or by or on behalf of the Company, and shall survive
delivery of the Securities.
34
SECTION 9. TERMINATION OF AGREEMENT.
(a) The Agent may terminate this Agreement, by notice to the Company,
at any time at or prior to Closing Time (i) if there has been, since the date of
this Agreement or since the respective dates as of which information is given in
the Registration Statement, any material adverse change in the financial
condition, results of operations, business affairs or prospects of the Company,
the MHC or the Bank, considered as one enterprise, whether or not arising in the
ordinary course of business, (ii) if there has occurred any material adverse
change in the financial markets in the United States or elsewhere or any
outbreak of hostilities or escalation thereof or other calamity or crisis the
effect of which, in the judgment of the Agent, is so material and adverse as to
make it impracticable to market the Securities or to enforce contracts,
including subscriptions or orders, for the sale of the Securities, (iii) if
trading generally on the Nasdaq Global Market, Nasdaq Global Select Market, the
American Stock Exchange or the New York Stock Exchange has been suspended, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices for securities have been required, by either of said Exchanges or by
order of the Commission or any other governmental authority, or if a banking
moratorium has been declared by either Federal, New Jersey or New York
authorities, (iv) if any condition specified in Section 5 shall not have been
fulfilled when and as required to be fulfilled; (v) if there shall have been
such material adverse changes in the condition or prospects of the Company, the
MHC or the Bank or the prospective market for the Company's Securities as in the
Agent's good faith opinion would make it inadvisable to proceed with the
offering, sale or delivery of the Securities; (vi) if, in the Agent's good faith
opinion, the price for the Securities established by the Appraiser is not
reasonable or equitable under then prevailing market conditions, or (vii) if the
Offerings are not consummated on or prior to December 31, 2007.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Sections 2 and 4 hereof relating to the reimbursement of expenses
and except that the provisions of Sections 6 and 7 hereof shall survive any
termination of this Agreement.
SECTION 10. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Agent
shall be directed to the Agent at 919 Third Avenue, 6th Floor, New York, New
York 10022, attention of General Counsel, with a copy to Muldoon Murphy &
Aguggia LLP, 5101 Wisconsin Avenue, N.W., Washington, D.C. 20016, attention of
Lori M. Beresford; notices to the Company, the MHC and the Bank shall be
directed to any of them at Gloucester County Federal Savings Bank, 381 Egg
Harbor Road, Sewell, New Jersey 08080-9219, attention of Robert C. Ahrens, with
a copy to Malizia Spidi & Fisch, P.C., 901 New York Avenue, NW, Suite 210 East,
Washington, DC 20001, attention of Samuel J. Malizia.
SECTION 11. PARTIES. This Agreement shall inure to the benefit of and
be binding upon the Agent, the Company, the MHC and the Bank and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Agent, the Company, the MHC and the Bank and their respective
successors and the controlling persons and the partners, officers and directors
referred to in Sections 6 and 7 and their heirs and legal representatives, any
legal or equitable right,
35
remedy or claim under or in respect of this Agreement or any provision herein or
therein contained. This Agreement and all conditions and provisions hereof and
thereof are intended to be for the sole and exclusive benefit of the Agent, the
Company, the MHC and the Bank and their respective successors, and said
controlling persons, partners, officers and directors and their heirs, partners,
legal representatives, and for the benefit of no other person, firm or
corporation.
SECTION 12. ENTIRE AGREEMENT; AMENDMENT. This Agreement represents the
entire understanding of the parties hereto with reference to the transactions
contemplated hereby and supersedes any and all other oral or written agreements
heretofore made, except for the engagement letter dated December 12, 2006, by
and between the Agent, the Company, the MHC and the Bank, relating to the
Agent's providing conversion agent services to the Company and the Bank. No
waiver, amendment or other modification of this Agreement shall be effective
unless in writing and signed by the parties hereto.
SECTION 13. GOVERNING LAW AND TIME. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in said State without regard to the
conflicts of laws provisions thereof. Unless otherwise noted, specified times of
day refer to Eastern Time.
SECTION 14. SEVERABILITY. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
SECTION 15. HEADINGS. Sections headings are not to be considered part
of this Agreement, are for convenience and reference only, and are not to be
deemed to be full or accurate descriptions of the contents of any paragraph or
subparagraph.
[The next page is the signature page]
36
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Agent on the one hand, and the Company, the MHC and the Bank on the
other in accordance with its terms.
Very truly yours,
GATEWAY COMMUNITY FINANCIAL CORP.
By: _______________________________________________
Name: Robert C. Ahrens
Title: President and Chief Executive Officer
GLOUCESTER COUNTY FEDERAL SAVINGS BANK
By: _______________________________________________
Name: Robert C. Ahrens
Title: President and Chief Executive Officer
GATEWAY COMMUNITY FINANCIAL, MHC
By: _______________________________________________
Name: Robert C. Ahrens
Title: President and Chief Executive Officer
CONFIRMED AND ACCEPTED, as of the date first above written:
SANDLER O'NEILL & PARTNERS, L.P.
By: Sandler O'Neill & Partners Corp.,
the sole general partner
By: ____________________________________________
Name: ______________________________________
An Officer of the Corporation