1
EXHIBIT 1.2
_________ Shares
(subject to increase up to _________ shares
in the event of an oversubscription)
----------------------
(a Delaware corporation)
Common Stock
(par value $.01 per share)
AGENCY AGREEMENT
________ __, 1998
Sandler O'Neill & Partners, L.P.
Two World Trade Center, 104th Floor
New York, New York 10048
Ladies and Gentlemen:
Security of Pennsylvania Financial Corp., a Delaware corporation (the
"Company"), and Security Savings Association of Hazleton, (the "Association" or
"Security Savings"), currently a Pennsylvania-chartered mutual savings and loan
association which will be converted to a Pennsylvania-chartered permanent
reserve fund stock savings and loan association, 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 __________ shares (subject to
increase up to ___________ shares in the event of an oversubscription) of the
Company's common stock, par value $.01 per share (the "Common Stock"). The
shares of Common Stock to be sold by the Company in the Offerings are
hereinafter called the "Securities." In addition, as described herein, the
Company expects to contribute shares of Common Stock in an amount equal to 5% of
the shares of Common Stock sold in the Offerings (as hereinafter defined) to the
Security Savings Charitable Foundation (the "Foundation"), such shares
hereinafter being referred to as the "Foundation Shares."
The Securities are being offered for sale and the Foundation Shares are
being contributed in accordance with the plan of conversion, as amended (the
"Plan"), adopted by the Board of Directors of the Association pursuant to which
the Association intends to convert from a Pennsylvania-chartered mutual savings
and loan association to a Pennsylvania-chartered permanent reserve fund
2
stock savings and loan association and issue all of its stock to the Company.
Pursuant to the Plan, the Company is offering to certain of the Association's
depositors and borrowers and its tax-qualified employee benefit plans (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 in a community offering (the "Community
Offering"). It is currently anticipated by the Association and the Company that
any Securities not subscribed for in the Subscription and Community Offerings
will be offered, subject to Section 2 hereof, in a syndicated community offering
(the "Syndicated Community Offering"). The Subscription Offering, the Community
Offering and the Syndicated Community Offering hereinafter are referred to
collectively as the "Offerings," and the conversion of the Association from
mutual to stock form, the acquisition of all of the capital stock of the
Association by the Company and the Offerings hereinafter are referred to
collectively as the "Conversion." It is acknowledged that the number of
Securities to be sold in the Conversion may be increased or decreased as
described in the Prospectus (as hereinafter defined). If the number of
Securities is increased or decreased in accordance with the Plan, the term
"Securities" shall mean such greater or lesser number, where applicable. In the
event that a holding company form of organization is not utilized, all pertinent
terms of this Agreement will apply to the conversion of the Association from the
mutual to stock form of organization and the sale of the Association's common
stock.
In connection with the Conversion and pursuant to the terms of the Plan
as described in the Prospectus, the Company has established the Foundation.
Immediately following the consummation of the Conversion, subject to the
approval of the establishment of the Foundation by the members of Association
and compliance with certain conditions as may be imposed by regulatory
authorities, the Company will contribute to the Foundation newly issued shares
of Common Stock in an amount equal to 5% of the Securities sold in the
Conversion. At the minimum, mid-point and maximum of the Estimated Price Range
(as that term is defined in the Prospectus), the contribution to the Foundation
would equal _______, _______ and _______ shares.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form SB-2 (No. 333-63271, including a
related prospectus, for the registration of the Securities and the Foundation
Shares under the Securities Act of 1933, as amended (the "Securities Act"), has
filed such amendments thereto, if any, and such amended prospectuses as may have
been required to the date hereof by the Commission in order to declare such
registration statement effective, and will file such additional amendments
thereto and such amended prospectuses and prospectus supplements as hereafter
may be required. Such registration statement (as amended to date, if applicable,
and as from time to time amended or supplemented hereafter) and the prospectuses
constituting a part thereof (including in each case all documents incorporated
or deemed to be incorporated by reference therein and the information, if any,
deemed to be 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")), hereinafter are referred to as the "Registration Statement" and
the "Prospectus," respectively, except that if any revised prospectus shall be
used by the Company in
2
3
connection with the Subscription Offering, the 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), then the term "Prospectus" shall
refer to such revised prospectus from and after the time it is first provided to
the Agent for such use.
Concurrently with the execution of this Agreement, the Company is
delivering to the Agent copies of the Prospectus of the Company to be used in
the Subscription Offering and the Community Offering. Such Prospectus contains
information with respect to the Association, the Company and the Common Stock.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) The Company and the Association 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 and
the Association, threatened by the Commission. At the time the Registration
Statement became effective and at the Closing Time referred to in Section 2
hereof, the Registration Statement complied and will comply in all material
respects with the requirements of the Securities Act and the Securities Act
Regulations and did not and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading. The Prospectus, at the date
hereof does not and at the Closing Time referred to in Section 2 hereof will
not, include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or Prospectus made in
reliance upon and in conformity with information with respect to the Agent
furnished to the Company in writing by the Agent expressly for use in the
Registration Statement or Prospectus (the "Agent Information," which the Company
and the Association acknowledge appears only in the sections captioned "Market
for Common Stock" and "The Conversion - Marketing and Underwriting Arrangements"
and " -Syndicated Community Offering" of the Prospectus).
(ii) The Company has filed with the Department of the Treasury,
Office of Thrift Supervision (the "OTS") the Company's application on Form
H-(e)1 for approval of its acquisition of the Association (the "Holding Company
Application") under the savings and loan holding company provisions of the Home
Owners' Loan Act, as amended ("HOLA"), and the regulations promulgated
thereunder. No later than the Closing Time, the Company shall have received
written notice from the OTS of its approval of the acquisition of the
Association, such approval shall be in
3
4
full force and effect and no order shall have been issued by the OTS suspending
or revoking such approval and no proceedings therefor shall have been initiated
or, to the knowledge of the Company or the Association, threatened by the OTS.
At the date of such approval, the Holding Company Application complied in all
material respects with the applicable provisions of HOLA and the regulations
promulgated thereunder.
(iii) Pursuant to the rules and regulations of the OTS governing the
conversion of Pennsylvania-chartered mutual savings and loan associations to
stock form (the "Conversion Regulations"), the Association has filed with the
OTS an application for conversion on Form AC, and has filed such amendments
thereto and supplementary materials as may have been required to the date hereof
(such application, as amended to date, if applicable, and as from time to time
amended or supplemented hereafter, is hereinafter referred to as the "Conversion
Application"), including copies of the Association's Proxy Statement, relating
to the Conversion (the "Proxy Statement"), and the Prospectus. The OTS has, by
order dated ____________ __, 1998 (the "Order"), approved the Conversion
Application (which Application includes the Plan) including the waiver of
certain provisions of the Conversion Regulations specified in such Order with
respect to the establishment of and contribution to the Foundation, such
approval remains in full force and effect and no order has been issued by the
OTS suspending or revoking such approval and no proceedings therefor have been
initiated or, to the knowledge of the Company or the Association, threatened by
the OTS. At the date of such approval, the Conversion Application complied in
all material respects with the applicable provisions of the Conversion
Regulations except for those provisions specifically waived by the OTS in the
Order.
(iv) Pursuant to the rules and regulations of the Commonwealth of
Pennsylvania Department of Banking (the "Department") governing the conversion
of Pennsylvania-chartered mutual savings and loan associations to stock form
("State Regulations"), the Association has filed with the Department the
appropriate application(s) and has filed such amendments thereto and
supplementary materials as may have been required to the date hereof (such
application(s), as amended to date, if applicable, and as from time to time
amended or supplemented hereafter, is hereinafter referred to as the "Department
Application"). The Department has, by order dated ______ __, 1998 ("Department
Order"), approved the Department Application, such approval remains in full
force and effect and no order has been issued by the Department suspending or
revoking such approval and no proceedings therefor have been initiated or, to
the knowledge of the Company or the Association, threatened by the Department.
At the date of such approval, the Department Application complied in all
material respects with the applicable provisions of the Department's regulations
except for those provisions specifically waived by the Department in the
approval.
(v) At the time of their use, the Proxy Statement and any other proxy
solicitation materials will comply in all material respects with the applicable
provisions of the Conversion Regulations and regulations of the Department and
will not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The Company and
the Association
4
5
will promptly file any additional supplemental sales literature with the
Commission, the OTS and the Department. The Prospectus and all supplemental
sales literature, as of the dates the Registration Statement, the Conversion
Application and any appropriate application with the Department became effective
and at the Closing Time referred to in Section 2, complied and will comply in
all material respects with the applicable requirements of the Conversion
Regulations and regulations of the Department and, at or prior to the time of
their first use, will have received all required authorizations of the OTS and
the Department for use in final form.
(vi) Neither the SEC, the OTS nor the Department has, by order or
otherwise, prevented or suspended the use of the Prospectus or any supplemental
sales literature authorized by the Company or the Association for use in
connection with the Offerings.
(vii) At the Closing Time referred to in Section 2, the Company and
the Association will have completed the conditions precedent to the Conversion
and the establishment of the Foundation in accordance with the Plan, the
applicable Conversion Regulations and all other applicable laws, regulations,
decisions and orders, including all material terms, conditions, requirements and
provisions precedent to the Conversion imposed upon the Company or the
Association by the OTS, the Department or any other regulatory authority, other
than those which the regulatory authority permits to be completed after the
Conversion.
(viii) Keller & Company, Inc. ("Keller"), which prepared the
valuation of the Association as part of the Conversion, has advised the Company
and the Association in writing that it satisfies all requirements for an
appraiser set forth in the Conversion Regulations and the State Regulations and
any interpretations or guidelines issued by the OTS or the Department, as the
case may be, with respect thereto.
(ix) Parente Randolph Orlando Carey & Associates, which certified the
financial statements and supporting schedules of the Association included in the
Registration Statement, have advised the Company and the Association in writing
that they are independent public accountants within the meaning of the Code of
Ethics of the American Institute of Certified Public Accountants (the "AICPA"),
and such accountants are, with respect to the Company and the Association,
independent certified public accountants as required by the Securities Act and
the Securities Act Regulations.
(x) The financial statements and the related notes thereto included
in the Registration Statement and the Prospectus present fairly the financial
position of the Company and the Association as of and at the dates indicated and
the results of operations, retained earnings and cash flows for the periods
specified, and comply as to form in all material respects with the applicable
accounting requirements of the Securities Act Regulations, the Conversion
Regulations and the State Regulations; except as otherwise stated in the
Registration Statement, said financial statements have been prepared in
conformity with generally accepted accounting principles applied on a consistent
basis; and the supporting schedules and tables included in the Registration
Statement present fairly the information required to be stated therein.
5
6
(xi) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein, (A) there has been no material adverse change in the financial
condition, results of operations or business affairs of the Company and the
Association considered as one enterprise, whether or not arising in the ordinary
course of business, and (B) except for transactions specifically referred to or
contemplated in the Prospectus, there have been no transactions entered into by
the Company or the Association, other than those in the ordinary course of
business, which are material with respect to the Company and the Association
considered as one enterprise.
(xii) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware with
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and to enter into and
perform its obligations under this Agreement; and the Company is duly qualified
as a foreign corporation to transact business and is in good standing in the
Commonwealth of Pennsylvania and in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify
would not have a material adverse effect on the financial condition, results of
operations or business affairs of the Company and the Association considered as
one enterprise.
(xiii) Upon consummation of the Conversion and the contribution of
the Foundation Shares as described in the Prospectus, the authorized, issued and
outstanding capital stock of the Company will be within the range as set forth
in the Prospectus under "Capitalization" (except for subsequent issuances, if
any, pursuant to reservations, agreements or employee benefit plans referred to
in the Prospectus); except for shares issued in connection with the initial
capitalization of the Company, which shares will be canceled upon consummation
of the Conversion, no shares of Common Stock have been or will be issued and
outstanding prior to the Closing Time referred to in Section 2; at the time of
Conversion, the Securities and the Foundation Shares will have been duly
authorized for issuance and, when issued and delivered by the Company pursuant
to the Plan against payment of the consideration calculated as set forth in the
Plan and stated on the cover page of the Prospectus, will be duly and validly
issued and fully paid and non-assessable; the terms and provisions of the Common
Stock and the capital stock of the Company conform and will conform to all
statements relating thereto contained in the Prospectus; the certificates
representing the shares of Common Stock conform to the requirements of
applicable law and regulation and the issuance of the Securities and the
Foundation Shares is not and will not be subject to preemptive or other similar
rights.
(xiv) The Association, as of the date hereof, is a
Pennsylvania-chartered mutual savings and loan association and upon consummation
of the Conversion will be a Pennsylvania-chartered permanent reserve fund stock
savings and loan association, in both instances with full corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Prospectus; the Company and the Association have obtained
all licenses, permits and other governmental authorizations currently required
for the conduct of their respective businesses or required for the conduct of
their respective businesses as contemplated by the Holding
6
7
Company Application, the Conversion Application, and the Department Application,
except where the failure to obtain such licenses, permits or other governmental
authorizations would not have a material adverse effect on the financial
condition, results of operations or business affairs of the Company and the
Association considered as one enterprise; all such licenses, permits and other
governmental authorizations are in full force and effect and the Company and the
Association are in all material respects in compliance therewith; neither the
Company nor the Association has received notice of any proceeding or action
relating to the revocation or modification of any such license, permit or other
governmental authorization which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, might have a material adverse effect
on the financial condition, results of operations or business affairs of the
Company and the Association, considered as one enterprise; and the Association
is in good standing under the laws of the Commonwealth of Pennsylvania and is
qualified as a foreign corporation in any jurisdiction in which the failure to
so qualify would have a material adverse effect on the financial condition,
results of operations or business affairs of the Company and the Association
considered as one enterprise.
(xv) The deposit accounts of the Association are insured by the
Federal Deposit Insurance Corporation ("FDIC") up to applicable limits and upon
consummation of the Conversion, the liquidation account for the benefit of
eligible account holders and supplemental eligible account holders will be duly
established in accordance with the requirements of the Conversion Regulations
and the State Regulations. The Association is a "qualified thrift lender" within
the meaning of 12 U.S.C. Section 1467a(m).
(xvi) Upon consummation of the Conversion, the authorized capital
stock of the Association will be 5,000,000 shares of common stock, par value
$1.00 per share (the "Association Common Stock") and 1,000,000 shares of
preferred stock, par value $1.00 per share (the "Association Preferred Stock"),
and the issued and outstanding capital stock of the Association will be _____
shares of Association Common Stock and no shares of the Association Preferred
Stock, and no shares of Association Common Stock or Association Preferred Stock
have been or will be issued prior to the Closing Time referred to in Section 2;
and as of Closing Time referred to in Section 2, all of the issued and
outstanding capital stock of the Association will be duly authorized, validly
issued and fully paid and nonassessable. The shares of Association Common Stock
to be issued to the Company will have been duly authorized for issuance and,
when issued and delivered by the Association pursuant to the Plan against
payment of the consideration calculated as set forth in the Plan and as
described in the Prospectus, will be duly and validly issued and fully paid and
nonassessable, and all such Association Common Stock will be owned beneficially
and of record by the Company free and clear of any security interest, mortgage,
pledge, lien, encumbrance or legal or equitable claim; the terms and provisions
of the Association Common Stock and the Association Preferred Stock conform to
all statements relating thereto contained in the Prospectus, and the
certificates representing the shares of the Association Common Stock will
conform with the requirements of applicable laws and regulations; and the
issuance of the Association Common Stock is not subject to preemptive or similar
rights.
7
8
(xvii) At the time of the consummation of the Conversion, the
Foundation will be duly incorporated and is validly existing as a non-stock
corporation in good standing under the laws of the State of Delaware with
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus; the Foundation will not be
a savings and loan holding company within the meaning of 12 C.F.R. Section
574.2(q) as a result of the issuance of shares of Common Stock to it in
accordance with the terms of the Plan and in the amounts as described in the
Prospectus; no approvals are required to establish the Foundation and to
contribute the shares of Common Stock thereto as described in the Prospectus
other than those set forth in the OTS and the Department approvals of the
Conversion Application and the Department Application; except as specifically
disclosed in the Prospectus and the Proxy Statement, there are no agreements
and/or understandings, written or oral, between the Company and/or the
Association and the Foundation with respect to the control, directly or
indirectly, over the voting and the acquisition or disposition of the Foundation
Shares; at the time of the Conversion, the Foundation Shares will have been duly
authorized for issuance and, when issued and contributed by the Company pursuant
to the Plan, will be duly and validly issued and fully paid and non-assessable
and the issuance of the Foundation Shares is not subject to preemption or
similar rights.
(xviii) The Company and the Association have taken all corporate
action necessary for them to execute, deliver and perform this Agreement, and
this Agreement has been duly executed and delivered by, and is the valid and
binding agreement of, the Company and the Association, enforceable in accordance
with its terms, except as may be limited by bankruptcy, insolvency or other laws
affecting the enforceability of the rights of creditors generally or the rights
of creditors of a federally insured depository institution and judicial
limitations on the right of specific performance and except as the
enforceability of indemnification and contribution provisions may be limited by
applicable securities laws.
(xix) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus and prior to the Closing
Time, except as otherwise may be specifically described, indicated or
contemplated therein, neither the Company nor the Association will have (A)
issued any securities or incurred any material liability or obligation, direct
or contingent, or borrowed money, except borrowings in the ordinary course of
business from the same or similar sources and in similar amounts as indicated in
the Prospectus, or (B) entered into any transaction or series of transactions
that is material in light of the business of the Company and the Association,
taken as a whole, excluding the origination, purchase and sale of loans or the
purchase or sale of investment securities or mortgage-related securities in the
ordinary course of business.
(xx) No approval of any regulatory or supervisory or other public
authority is required in connection with the execution and delivery of this
Agreement or the issuance of the Securities and the Foundation Shares that has
not been obtained and a copy of which has been delivered to the Agent, except as
may be required under the securities laws of various jurisdictions.
8
9
(xxi) Neither the Company nor the Association is in violation of
its certificate of incorporation or articles of incorporation, as the case may
be, or bylaws (and the Association will not be in violation of its articles of
incorporation or bylaws in stock form upon consummation of the Conversion); and
neither the Company nor the Association 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 or the
Association 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 or the Association is subject,
except for such defaults that would not, individually or in the aggregate, have
a material adverse effect on the financial condition, results of operations or
business of the Company and the Association considered as one enterprise; and
there are no contracts or documents of the Company or the Association which are
required to be filed as exhibits to the Registration Statement, the Conversion
Application or the Department Application which have not been so filed.
(xxii) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated herein have been duly
authorized by all necessary corporate action and do not and will not conflict
with or constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or the Association pursuant to, any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Company or the
Association 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 or the Association is subject,
except for such defaults that would not, individually or in the aggregate, have
a material adverse effect on the financial condition, results of operations or
business affairs of the Company and the Association considered as one
enterprise; nor will such action result in any violation of the provisions of
the certificate of incorporation or articles of incorporation, as the case may
be, or bylaws of the Company or the Association; nor will such action result in
any violation of any applicable law, administrative regulation or administrative
or court decree except for immaterial violations that would not impair the
ability of the Company and the Association to execute, deliver and perform under
this Agreement or consummate the transactions contemplated herein.
(xxiii) No labor dispute with the employees of the Company or the
Association exists or, to the knowledge of the Company or the Association, is
imminent or threatened; and neither the Company nor the Association is not aware
of any existing, imminent or threatened labor disturbance by the employees of
any of its principal suppliers or contractors which might be expected to result
in any material adverse change in the financial condition, results of operations
or business affairs of the Company and the Association considered as one
enterprise.
(xxiv) Each of the Company and the Association has good and
marketable title to all properties and assets for which ownership is material to
the business of the Company and the Association and to those properties and
assets described in the Prospectus as owned by them, free and clear of all
liens, charges, encumbrances or restrictions, except such as are described in
the
9
10
Prospectus or are not material in relation to the business of the Company and
the Association considered as one enterprise; and all of the leases and
subleases material to the business of the Company and the Association under
which the Company or the Association hold properties, including those described
in the Prospectus, are valid and binding agreements of the Company and the
Association, enforceable in accordance with their terms.
(xxv) Neither the Company nor the Association is in violation of
any directive from the OTS, the Department or the FDIC to make any material
change in the method of conducting their respective businesses; the Association
has conducted and are conducting its business so as to comply in all material
respects with all applicable statutes, regulations and administrative and court
decrees (including, without limitation, all regulations, decisions, directives
and orders of the OTS, the Department or the FDIC).
(xxvi) There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company or the Association, threatened, against or
affecting the Company or the Association that is required to be disclosed in
the Registration Statement (other than as disclosed therein), or that might
result in any material adverse change in the financial condition, results of
operations or business affairs of the Company and the Association considered as
one enterprise, or that might materially and adversely affect the properties or
assets thereof or that might materially and adversely affect the consummation
of the Conversion; all pending legal or governmental proceedings to which the
Company or the Association is a party or of which any of their respective
property or assets is the subject that are not described in the Registration
Statement, including ordinary routine litigation incidental to the business,
are considered in the aggregate not material;
(xxvii) The Association has obtained an opinion of its counsel,
Muldoon, Murphy & Faucette, with respect to the legality of the Securities and
the Foundation Shares to be issued and the federal income tax consequences of
the Conversion and an opinion from Parente, Randolph, Orlando, Carey &
Associates in regard to the Pennsylvania income tax consequences of the
Conversion, a copy of each of which is filed as an exhibit to the Registration
Statement; all material aspects of the aforesaid opinions are accurately
summarized in the Prospectus; the facts and representations upon which such
opinions are based are truthful, accurate and complete in all material respects;
and neither the Association nor the Company has taken or will take any action
inconsistent therewith.
(xxviii) The Company is not required to be registered under the
Investment Company Act of 1940, as amended.
(xxix) All of the loans represented as assets on the most recent
consolidated financial statements or consolidated selected financial information
of the Association 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
10
11
protection, equal credit opportunity and all disclosure laws applicable to such
loans, except for violations that, if asserted, would not result in a material
adverse effect on the financial condition, results of operations or business of
the Company and the Association considered as one enterprise.
(xxx) To the knowledge of the Company and the Association, with
the exception of the intended loan to the Association's ESOP by the Company to
enable the ESOP to purchase shares of Common Stock in an amount of up to 8% of
the Common Stock issued in the Conversion (including the shares of Common Stock
to be issued to the Foundation), none of the Company, the Association or
employees of the Association has made any payment of funds of the Company or
the Association as a loan for the purchase of the Common Stock or made any
other payment of funds prohibited by law, and no funds have been set aside to
be used for any payment prohibited by law.
(xxxi) The Company and the Association 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.
(xxxii) Neither the Company nor the Association, nor any properties
owned or operated by the Company or the Association is in violation of or liable
under any Environmental Law (as defined below), except for such violations or
liabilities that, individually or in the aggregate, would not have a material
adverse effect on the financial condition, results of operations or business
affairs of the Company and the Association considered as one enterprise. There
are no actions, suits or proceedings, or demands, claims, notices or
investigations (including, without limitation, notices, demand letters or
requests for information from any environmental agency) instituted or pending,
or to the knowledge of the Company or the Association, threatened, relating to
the liability of any property owned or operated by the Company or the
Association, under any Environmental Law. For purposes of this subsection, the
term "Environmental Law" means any federal, state, local or foreign law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, judgment, decree, injunction or agreement with any
regulatory authority relating to (i) the protection, preservation or restoration
of the environment (including, without limitation, air, water, vapor, surface
water, groundwater, drinking water supply, surface soil, subsurface soil, plant
and animal life or any other natural resource), and/or (ii) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of any substance presently listed,
defined, designated or classified as hazardous, toxic, radioactive or dangerous,
or otherwise regulated, whether by type or by quantity, including any material
containing any such substance as a component.
(xxxiii) The Company and the Association have filed all federal
income and state and local franchise tax returns required to be filed and have
made timely payments of all taxes shown as due and payable in respect of such
returns, and no deficiency has been asserted with respect thereto by any taxing
authority.
11
12
(xxxiv) The Company has received approval, subject to regulatory
approval to consummate the Offerings and issuance, to have the Common Stock
quoted on the American Stock Exchange ("AMEX") effective as of the Closing Time
referred to in Section 2 hereof.
(xxxv) The Company has filed a registration statement for the Common
Stock under Section 12(b) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and has requested that such registration statement be
effective concurrent with the effectiveness of the Registration Statement.
(b) Any certificate signed by any officer of the Company or the
Association and delivered to either of the Agent or counsel for the Agent shall
be deemed a representation and warranty by the Company or the Association to
each 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 hereby 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 that is inconsistent with any
applicable laws, regulations, decisions or orders. The services to be rendered
by Sandler O'Neill pursuant to this appointment include the following: (i)
consulting as to the securities marketing implications of any aspect of the Plan
of Conversion or related corporate documents; (ii) reviewing with the Board of
Directors the independent appraiser's appraisal of the Common Stock; (iii)
reviewing all offering documents, including the Prospectus, stock order form and
related offering materials (it being understood that preparation and filing of
such documents is the sole responsibility of the Company and the Association and
their counsel); (iv) assisting in the design and implementation of a marketing
strategy for the Offerings; (v) providing support to the Company and the
Association in obtaining all requisite regulatory approvals; (vi) assisting
Association management in preparing for meetings with potential investors and
broker-dealers; and (vii) providing such other general advice and assistance as
may be requested to promote the successful completion of the Offerings.
The appointment of the Agent hereunder shall terminate upon the earlier
to occur of (a) forty-five (45) days after the last day of the Community
Offering, unless the Company and the Agent agree in writing to extend such
period and the OTS and the Department agree to extend the period of time in
which the Securities may be sold, (b) the receipt and acceptance of
subscriptions and purchase orders for all of the Securities or (c) the
completion of the Syndicated Community Offering.
12
13
If any of the Securities remain available after the expiration of the
Subscription Offering and the Community Offering, then, at the request of the
Company and the Association, the Agent will seek to form a syndicate of
registered broker-dealers ("Selected Dealers") to assist in the solicitation of
purchase orders of such Securities on a best-efforts basis, subject to the terms
and conditions set forth in a selected dealers' agreement (the "Selected
Dealers' Agreement"), substantially in the form set forth in Exhibit A to this
Agreement. Sandler O'Neill will endeavor to limit the aggregate fees to be paid
by the Company and the Association under any such Selected Dealers' Agreement to
an amount competitive with gross underwriting discounts charged at such time for
underwritings of comparable amounts of stock sold at a comparable price per
share in a similar market environment; provided, however, that the aggregate
fees payable to the Agent and Selected Dealers shall not exceed 5% of the
aggregate Actual Purchase Price (as defined in the Prospectus) of the Securities
sold by such Selected Dealers. The Agent will endeavor to distribute the
Securities among the Selected Dealers in a fashion that best meets the
distribution objective of the Company and the requirements of the Plan, which
may result in limiting the allocation of stock to certain Selected Dealers. It
is understood that in no event shall the Agent 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 that it may have received from them, together with interest as provided
in the Prospectus, and no party to this Agreement shall have any obligation to
the others hereunder, except for the obligations of the Company and the
Association 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 Association
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, is sold, then 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 Muldoon, Murphy & Faucette, at 10:00 a.m., local time, or at
such other place and time as shall be agreed upon by the parties hereto, on a
business day to be agreed upon by the parties hereto. The Company shall notify
the Agent by telephone, confirmed in writing, when funds shall have been
received for all the Securities. Certificates for Securities shall be delivered
directly to the purchasers thereof in accordance with their directions.
Notwithstanding the foregoing, certificates for Securities purchased through
Selected Dealers shall be made available to the Agent for inspection at least 48
hours prior to the Closing Time at such office as the Agent shall designate. The
hour and date upon which the Company shall release for delivery all of the
Securities, in accordance with the terms hereof, is herein called the "Closing
Time."
13
14
The Company will pay any stock issue and transfer taxes that may be
payable with respect to the sale of the Securities.
In addition to reimbursement of the expenses specified in Section 4
hereof, the Agent will receive the following compensation for its services
hereunder:
(a) Two percent (2.0%) of the aggregate Actual Purchase Price (as
defined in the Prospectus) of the Securities sold in the Subscription
Offering to certain eligible account holders and borrowers and in the
Direct Community Offering, excluding in each case shares purchased by
(i) any employee benefit plan of the Association or Company
established for the benefit of their respective directors, officers
and employees, (ii) any foundation or charitable organization
established by the Association in connection with the Conversion and
(iii) any director, officer or employee of the Association or the
Company or members of their immediate families which term shall mean
parents, grandparents, spouse, siblings, children and grandchildren;
and
(b) With respect to any Securities sold by a National Association of
Securities Dealers, Inc. ("NASD") member firm (other than the Agent)
under the Selected Dealers' Agreement in the Syndicated Community
Offering, (i) the compensation payable to Selected Dealers under any
Selected Dealers' Agreement, (ii) any sponsoring dealer's fees; and
(iii) a management fee to the Agent of one and one-half percent
(1.5%). Any fees payable to Sandler O'Neill for Securities sold by
Sandler O'Neill under any such agreement shall be limited to an
aggregate of two percent (2.0%) of the Purchase Price of such
Securities.
If this Agreement is terminated by the Agent in accordance with the
provisions of Section 9(a) hereof or the Conversion is terminated by the
Company, no fee shall be payable by the Company to Sandler O'Neill; however, the
Company shall reimburse the Agent for all of its reasonable out-of-pocket
expenses incurred prior to termination, including the reasonable fees and
disbursements of counsel for the Agent in accordance with the provisions of
Section 4 hereof.
All fees payable to the Agent hereunder shall be payable by wire transfer
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 Association agrees to make advance payments to the
Agent in the aggregate amount of $50,000, $25,000 of which previously has been
paid and the remaining $25,000 of which shall be payable upon execution hereof,
which shall be credited against any fees or reimbursement of expenses payable
hereunder and which will be reimbursed by the Agent to the Association to the
extent not credited against fees or expenses payable to the Agent pursuant to
the terms hereof.
14
15
SECTION 3. COVENANTS OF THE COMPANY AND THE ASSOCIATION.
The Company and the Association covenant with the Agent as follows:
(a) The Company and the Association will prepare and file such amendments
or supplements to the Registration Statement, the Prospectus, the Conversion
Application, the Department Application, and the Proxy Statement as may
hereafter be required by the Securities Act Regulations or the Conversion
Regulations or as may hereafter be reasonably requested by the Agent. Following
completion of the Subscription and Community Offerings, in the event of a
Syndicated Community Offering, the Company and the Association will (i) promptly
prepare and file, to the extent required, with the Commission a post-effective
amendment to the Registration Statement relating to the results of the
Subscription and Community Offerings, any additional information with respect to
the proposed plan of distribution and any revised pricing information or (ii) if
no such post-effective amendment is required, will file with, or mail for filing
to, the Commission a prospectus or prospectus supplement containing information
relating to the results of the Subscription and Community Offerings and pricing
information pursuant to Rule 424(c) of the Securities Act Regulations, in either
case in a form acceptable to the Agent. The Company and the Association will
notify the Agent immediately, and confirm the notice in writing, (i) of the
effectiveness of any post-effective amendment of the Registration Statement, the
filing of any supplement to the Prospectus and the filing of any amendment to
the Conversion Application and any appropriate applications with the Department,
(ii) of the receipt of any comments from the OTS, the Department or the
Commission with respect to the transactions contemplated by this Agreement or
the Plan, (iii) of any request by the Commission, the OTS or the Department for
any amendment to the Registration Statement, the Conversion Application, the
Holding Company Application or the Department Application or any amendment or
supplement to the Prospectus or for additional information, (iv) of the issuance
by either the OTS or the Department of any order suspending the Offerings or the
use of the Prospectus or the initiation of any proceedings for that purpose, (v)
of the issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or the initiation of any proceedings for that
purpose, and (vi) of the receipt of any notice with respect to the suspension of
any qualification of the Securities for offering or sale in any jurisdiction.
The Company and the Association will make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(b) The Company and the Association will (i) give the Agent notice of
their intention to file or prepare any amendment to the Conversion Application,
the Holding Company Application, the Department Application, or the 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); (ii) 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;
15
16
and (iii) not file any such amendment or supplement or use any such prospectus
to which the Agent or counsel for the Agent may reasonably object.
(c) The Company and the Association will deliver to the Agent as many
signed copies and as many conformed copies of the Conversion Application, the
Holding Company Application, the Department Application, and the Registration
Statement as originally filed and of each amendment thereto (including exhibits
filed therewith or incorporated by reference therein) as the Agent may
reasonably request, and from time to time such number of copies of the
Prospectus as the Agent may reasonably request.
(d) During the period when the Prospectus is required to be delivered,
the Company and the Association will comply, at their own expense, with all
requirements imposed upon them by the OTS and the Department, by the applicable
Conversion Regulations and State Regulations, as from time to time in force, and
by the Securities Act, the Securities Act Regulations, the Exchange Act, and the
rules and regulations of the Commission promulgated thereunder, including,
without limitation, Regulation M under the Exchange Act, so far as necessary to
permit the continuance of sales or dealing in shares of Common Stock during such
period in accordance with the provisions hereof and the Prospectus.
(e) If any event or circumstance shall occur as a result of which it is
necessary, in the reasonable opinion of counsel for the Agent, to amend or
supplement the Prospectus in order to make the Prospectus not misleading in the
light of the circumstances existing at the time it is delivered to a purchaser,
then the Company and the Association will forthwith amend or supplement the
Prospectus (in form and substance reasonably satisfactory to counsel for the
Agent) so that, as so amended or supplemented, the Prospectus will not include
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to a purchaser, not
misleading, and the Company and the Association will furnish to the Agent a
reasonable number of copies of such amendment or supplement. For the purpose of
this subsection, the Company and the Association each will furnish such
information with respect to itself as the Agent may from time to time reasonably
request.
(f) The Company and the Association will take all necessary action, in
cooperation with the Agent, to qualify the Securities for offering and sale
under the applicable securities laws of such states of the United States and
other jurisdictions as the Conversion Regulations and State Regulations may
require and as the Agent and the Company have agreed; provided, however, that
the Company and the Association shall not be obligated to file any general
consent to service of process or to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified. In each jurisdiction in which the
Securities have been so qualified, the Company and the Association 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.
16
17
(g) The Company authorizes Sandler O'Neill and any Selected Dealers to
act as agent of the Company in distributing the Prospectus to persons entitled
to receive subscription rights and other persons to be offered Securities having
record addresses in the states or jurisdictions set forth in a survey of the
securities or "blue sky" laws of the various jurisdictions in which the
Offerings will be made (the "Blue Sky Survey").
(h) The Company will make generally available to its security holders as
soon as practicable, but not later than 60 days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 of the Securities Act Regulations) covering a twelve month period
beginning not later than the first day of the Company's fiscal quarter next
following the "effective date" (as defined in said Rule 158) of the Registration
Statement.
(i) During the period ending on the third anniversary of the expiration
of the fiscal year during which the closing of the transactions contemplated
hereby occurs, the Company will furnish to its stockholders as soon as
practicable after the end of each such fiscal year an annual report (including
consolidated statements of financial condition and consolidated statements of
income, stockholders' equity and cash flows, certified by independent public
accountants) and, as soon as practicable after the end of each of the first
three quarters of each fiscal year (beginning with the fiscal quarter ending
after the effective date of the Registration Statement), consolidated summary
financial information of the Company, the Association and the Subsidiaries for
such quarter in reasonable detail. In addition, such annual report and quarterly
consolidated summary financial information shall be made public through the
issuance of appropriate press releases at the same time or prior to the time of
the furnishing thereof to stockholders of the Company.
(j) During the period ending on the third anniversary of the expiration
of the fiscal year during which the closing of the transactions contemplated
hereby occurs, the Company will furnish to the Agent (i) as soon as publicly
available, a copy of each report or other document of the Company furnished
generally to stockholders of the Company or furnished to or filed with the
Commission under the Exchange Act or any national securities exchange or system
on which any class of securities of the Company is listed, and (ii) from time to
time, such other information concerning the Company as the Agent may reasonably
request.
(k) The Company and the Association will conduct the Conversion
(including the formation and operation of the Foundation) in all material
respects in accordance with the Plan, the Conversion Regulations (to the extent
not waived by the provisions of the Order) and all other applicable regulations,
decisions and orders, including all applicable terms, requirements and
conditions precedent to the Conversion imposed upon the Company or the
Association by the OTS and the Department.
(l) The Company and the Association will use the net proceeds received by
them from the sale of the Securities in the manner specified in the Prospectus
under "Use of Proceeds."
17
18
(m) The Company will file with the Commission such information as may be
required pursuant to Rule 463 of the Securities Act Regulations.
(n) The Company will maintain the effectiveness of the Exchange Act
Registration Statement for not less than three years. The Company will file with
the AMEX all documents and notices required by it of companies that have issued
securities that are traded on and quotations for which are reported by the AMEX.
(o) The Company and the Association will take such actions and furnish
such information as are reasonably requested by the Agent in order for the Agent
to ensure compliance with the NASD's "Interpretation Relating to Free-Riding and
Withholding."
(p) Other than in connection with any employee benefit plan or
arrangement described in the Prospectus, the Company will not, without the prior
written consent of the Agent, sell or issue, contract to sell or otherwise
dispose of, any shares of Common Stock other than the Securities or the
Foundation Shares for a period of 180 days following the Closing Time.
(q) During the period beginning on the date hereof and ending on the
later of the third anniversary of the Closing Time or the date on which the
Agent receives full payment in satisfaction of any claim for indemnification or
contribution to which it may be entitled pursuant to Sections 6 or 7 hereof,
respectively, neither the Company nor the Association shall, without the prior
written consent of the Agent, which consent shall not be unreasonably withheld,
take or permit to be taken any action that could result in the Association
Common Stock becoming subject to any security interest, mortgage, pledge, lien
or encumbrance; provided, however, that this covenant shall be null and void if
the Board of Governors of the Federal Reserve System, by regulation, policy
statement or interpretive release, or by written order or written advice
addressed to the Association or the Agent specifically addressing the provisions
of Section 6(a) hereof, permits indemnification of the Agent by the Association
as contemplated by such provisions.
(r) The Company and the Association will comply with the conditions
imposed by or agreed to with the OTS and the Department in connection with its
approval of the Holding Company Application, the Conversion Application and the
Department Application including those conditions relating to the establishment
and the operation of the Foundation; the Company and the Association shall use
their best efforts to ensure that the Foundation submits within the time frames
required by applicable law a request to the Internal Revenue Service to be
recognized as a tax-exempt organization under Section 503(c) of the Internal
Revenue Code of 1986, as amended ("Code"); the Company and the Association will
take no action which will result in the possible loss of the Foundation's
tax-exempt status; and neither the Company nor the Association will contribute
any additional assets to the Foundation until such time that such additional
contributions will be deductible for federal and state income tax purposes.
18
19
(s) During the period ending on the first anniversary of the Closing
Time, the Association will comply with all applicable law and regulation
necessary for the Association to continue to be a "qualified thrift lender"
within the meaning of 12 U.S.C. Section 1467a(m).
(t) The Company shall not deliver the Securities until the Company and
the Association have satisfied each condition set forth in Section 5 hereof,
unless such condition is waived by the Agent.
(u) The Company or the Association will furnish to the Agent as early as
practicable prior to the Closing Date, but no later than two (2) full business
days prior thereto, a copy of the latest available unaudited interim financial
statements of the Association which have been read by Parente, Randolph,
Orlando, Carey & Associates, as stated in their letters to be furnished pursuant
to subsections (e) and (f) of Section 5 hereof.
SECTION 4. PAYMENT OF EXPENSES.
The Company and the Association 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 printing and filing of the Registration Statement
as originally filed and of each amendment thereto, (iii) the preparation,
issuance and delivery of the certificates for the Securities to the purchasers
in the Offerings, (iv) the fees and disbursements of the Company's and the
Association's counsel, accountants, conversion agent, appraiser and other
advisors, (v) the qualification of the Securities under securities laws in
accordance with the provisions of Section 3(f) hereof, including filing fees and
the fees and disbursements of counsel in connection therewith and in connection
with the preparation of the Blue Sky Survey, (vi) the printing and delivery to
the Agent of copies of the Registration Statement as originally filed and of
each amendment thereto and the printing and delivery of the Prospectus and any
amendments or supplements thereto to the purchasers in the Offerings and the
Agent, (vii) the printing and delivery to the Agent of copies of a Blue Sky
Survey (including fees and expenses of blue sky counsel), and (viii) the fees
and expenses incurred in connection with the listing of the Common Stock on the
AMEX. In the event the Agent incurs any such fees and expenses on behalf of the
Association or the Company, the Association will reimburse the Agent for such
fees and expenses whether or not the Conversion is consummated; provided,
however, that the Agent shall not incur any substantial expenses on behalf of
the Association or the Company pursuant to this Section without the prior
approval of the Association.
The Company and the Association jointly and severally agree to pay
certain expenses incident to the performance of the Agent's obligations under
this Agreement, regardless whether the Conversion is 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 expenses up to a maximum of
$50,000 incurred by the Agent relating to the Offerings, including, without
limitation, legal fees, advertising, promotional, syndication and travel
expenses and fees and expenses of the Agent's counsel. All fees and expenses to
which the Agent is entitled to reimbursement under this paragraph
19
20
of this Section 4 shall be due and payable upon receipt by the Company or the
Association of a written accounting therefor setting forth in reasonable detail
the expenses incurred by the Agent.
SECTION 5. CONDITIONS OF AGENT'S OBLIGATIONS.
The Company, the Association and the Agent agree that the issuance and
the sale of Securities and all obligations of the Agent hereunder are subject to
the accuracy of the representations and warranties of the Company and the
Association herein contained as of the date hereof and the Closing Time, to the
accuracy of the statements of officers and directors of the Company and the
Association made pursuant to the provisions hereof, to the performance by the
Company and the Association of their obligations hereunder, and to the following
further conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued under the Securities Act or proceedings
therefor initiated or threatened by the Commission, no order suspending the
Offerings or authorization for final use of the Prospectus shall have been
issued or proceedings therefor initiated or threatened by either the OTS or the
Department, and no order suspending the sale of the Securities in any
jurisdiction shall have been issued.
(b) At Closing Time, the Agent shall have received:
(1) The favorable opinion, dated as of Closing Time, of Muldoon,
Murphy & Faucette, special counsel for the Company and the Association, in form
and substance reasonably satisfactory to counsel for the Agent, to the effect
that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws
of the State of Delaware.
(ii) The Company has full corporate power and authority to
own, lease and operate its properties and to conduct its
business as described in the Registration Statement and
Prospectus and to enter into and perform its obligations
under this Agreement.
(iii) The Company is duly qualified as a foreign corporation
to transact business and is in good standing in the
Commonwealth of Pennsylvania and in each other
jurisdiction in which such qualification is required
whether by reason of the ownership or leasing of property
or the conduct of business, except where the failure to
so qualify would not have a material adverse effect upon
the financial condition, results of operations or
business affairs of the Company and the Association
taken as a whole.
20
21
(iv) Upon consummation of the Conversion and the issuance
of Foundation Shares to the Foundation immediately upon
completion thereof, the authorized, issued and outstanding
capital stock of the Company will be within the range as
set forth in the Prospectus under "Capitalization" and,
except for shares issued upon incorporation of the
Company, which shares shall be canceled prior to or
concurrently with the Closing Time, no shares of Common
Stock have been or will have been issued and outstanding
prior to the Closing Time.
(v) The Securities and the Foundation Shares have been
duly and validly authorized for issuance and sale and,
when issued and delivered by the Company pursuant to the
Plan against payment of the consideration calculated as
set forth in the Plan, will be duly and validly issued and
fully paid and non-assessable.
(vi) The issuance of the Securities and the Foundation Shares
is not subject to preemptive rights arising by operation
of law or, to the knowledge of such counsel, otherwise.
(vii) The Association has been at all times since the date
hereof and prior to the Closing Time validly existing and
in good standing under the laws of the Commonwealth of
Pennsylvania as a Pennsylvania-chartered mutual savings
and loan association, and, at Closing Time, has become
duly organized, validly existing and in good standing
under the laws of the Commonwealth of Pennsylvania as a
Pennsylvania-chartered permanent reserve fund stock
savings and loan association in both instances with full
corporate power and authority to own, lease and operate
its properties and to conduct its business as described in
the Registration Statement and the Prospectus; and the
Association is duly qualified as a foreign corporation in
each jurisdiction in which the failure to so qualify would
have a material adverse effect upon the financial
condition, results of operations or business affairs of
the Association.
(viii) The Association is a member in good standing of the
Federal Home Loan Bank of Pittsburgh and the deposit
accounts of the Association are insured by the FDIC up to
the applicable limits.
(ix) The Foundation has been duly incorporated and is validly
existing as a non-stock corporation in good standing
under the laws of the State of Delaware with corporate
power and authority to own, lease and operate its
properties and to conduct its business as described in
the Prospectus; the Foundation is not a savings and loan
holding
21
22
company within the meaning of 12 C.F.R. Section 574.2(q)
as a result of the issuance of shares of Common Stock to
it in accordance with the terms of the Plan and in the
amounts as described in the Prospectus; no approvals are
required to establish the Foundation and to contribute the
shares of Common Stock thereto as described in the
Prospectus other than those set forth in any written
notice or order of approval or non-objection of the
Conversion, the Conversion Department Application, the
Holding Company Application or the Application, copies of
which were provided to the Agent prior to the Closing
Time.
(x) Upon consummation of the Conversion, all of the issued
and outstanding capital stock of the Association when
issued and delivered pursuant to the Plan against payment
of consideration calculated as set forth in the Plan and
in the Prospectus, will be duly authorized and validly
issued and fully paid and nonassessable, and all such
capital stock will be owned beneficially and of record by
the Company free and clear of any security interest,
mortgage, pledge, lien, encumbrance or claim, legal,
equitable or otherwise.
(xi) The OTS and the Department have approved the Holding
Company Application, the Conversion Application (including
the Foundation) and the Department Application and no
action is pending, or to the best of such counsel's
knowledge, threatened with respect to the Holding Company
Application, the Conversion Application (including
therewith, the establishment of the Foundation and the
contribution of shares of Common Stock thereto) or the
Department Application or the acquisition by the Company
of all of the Association's issued and outstanding capital
stock; to such counsel's knowledge, no person has sought
to obtain review of either the final action of the OTS or
the Department in approving the Conversion Application
(which includes the Plan that provides for the
establishment of the Foundation) and the Holding Company
Application; and the Holding Company Application, the
Conversion Application and the Department Application
comply as to form with the applicable requirements of the
OTS and the Department except as compliance therewith is
specifically waived by the provisions of the Order and the
Department order, includes all documents required to be
filed as exhibits thereto and is to the best of such
counsel's knowledge and information, truthful, accurate
and complete.
(xii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby,
including the establishment
22
23
of the Foundation and the contribution thereto of shares
of Common Stock, have been duly and validly authorized by
all necessary action on the part of each of the Company
and the Association, and this Agreement constitutes the
legal, valid and binding agreement of each of the Company
and the Association, enforceable in accordance with its
terms, except as rights to indemnity and contribution
hereunder may be limited under applicable law (it being
understood that such counsel may avail itself of customary
exceptions concerning the effect of bankruptcy, insolvency
or similar laws and the availability of equitable
remedies); the execution and delivery of this Agreement,
the incurrence of the obligations herein set forth and the
consummation of the transactions contemplated herein will
not result in any violation of the provisions of the
certificate of incorporation, or articles of
incorporation, as the case may be, or bylaws of the
Company or the Association; and, to the best of such
counsel's knowledge, the execution and delivery of this
Agreement, the incurrence of the obligations herein set
forth and the consummation of the transactions
contemplated herein will not conflict with or constitute a
breach of, or default under, and no event has occurred
which, with notice or lapse of time or both, would
constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance that,
individually or in the aggregate, would have a material
adverse effect on the financial condition, results of
operations, business affairs of the Company and the
Association considered as one enterprise or pursuant to
any contract, indenture, mortgage, loan agreement, note,
lease or other instrument to which the Company or the
Association is a party or by which either of them may be
bound, or to which any of the property or assets of the
Company or the Association is subject.
(xiii) The Prospectus has been duly authorized by the OTS
for final use pursuant to the Conversion Regulations and
the Order and no action is pending or, to the best of such
counsel's knowledge, is threatened, by either the OTS to
revoke such authorization.
(xiv) The Registration Statement is effective under the
Securities Act and no stop order suspending the
effectiveness of the Registration Statement has been
issued under the Securities Act or to the best of such
counsel's knowledge and information, proceedings therefor
initiated or threatened by the Commission.
(xv) No further approval, authorization, consent or other
order of any federal or state board or body is required in
connection with the
23
24
execution and delivery of this Agreement, the issuance of
the Securities and the Foundation Shares and the
consummation of the Conversion, except as may be required
under the securities or Blue Sky laws of various
jurisdictions as to which no opinion need be rendered.
(xvi) At the time the Registration Statement became
effective, the Registration Statement (other than the
financial statements and appraisal, financial and
statistical data included therein, as to which no opinion
need be rendered) complied as to form in all material
respects with the requirements of the Securities Act, the
Securities Act Regulations.
(xvii) The Common Stock conforms to the description
thereof contained in the Prospectus, and the form of
certificate used to evidence the Common Stock is in due
and proper form and complies with all applicable statutory
requirements.
(xviii) To the best of such counsel's knowledge, there are
no legal or governmental proceedings pending or threatened
against or affecting the Company, the Association, or the
Foundation that are required individually or in the
aggregate to be disclosed in the Registration Statement
and Prospectus, other than those that are disclosed
therein, and all pending legal or governmental proceedings
to which the Company, the Association, or the Foundation
is a party or to which any of their property is subject
that are not described in the Registration Statement,
including ordinary routine litigation incidental to the
business, are, considered in the aggregate, not material.
(xix) The information in the Prospectus under "Dividend
Policy," "Federal and State Taxation," "Regulation," "The
Conversion - Establishment of the Charitable Foundation,"
"The Conversion - Effects of the Conversion - Tax
Effects," "The Conversion - Tax Aspects," "Restrictions on
Acquisition of the Company and the Association,"
"Description of Capital Stock of the Company" and
"Description of Capital Stock of the Association," to the
extent that it constitutes matters of law, summaries of
legal matters, documents or proceedings, or legal
conclusions, has been reviewed by such counsel and is
accurate in all material respects.
(xx) To the best of such counsel's knowledge, there are no
contracts, indentures, mortgages, loan agreements, notes,
leases or other
24
25
instruments required to be described or referred to in the
Registration Statement or to be filed as exhibits thereto
other than those that are described or referred to therein
or filed as exhibits thereto, the descriptions thereof or
references thereto are correct and no default exists, and
no event has occurred which, with notice or lapse of time
or both, would constitute a default, in the due
performance or observance of any material obligation,
agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease
or other instrument so described, referred to or filed.
(xxi) The Plan and the establishment and funding of the
Foundation have been duly authorized by the Board of
Directors of the Company and the Board of Directors of the
Association and, to the best of such counsel's knowledge,
the OTS's and the Department's approvals of the Plan
remain in full force and effect; the Association's
articles of incorporation have been amended, effective
upon consummation of the Conversion and the filing of such
amended articles of incorporation with the Department, to
authorize the issuance of permanent capital stock; to such
counsel's knowledge, the Company and the Association have
conducted the Conversion and the establishment and funding
of the Foundation in all material respects in accordance
with applicable requirements of the Conversion Regulations
and the State Regulations (except to the extent that the
requirement to comply therewith was waived specifically by
the terms of the Order or the Department Order, as the
case may be), the Plan and all other applicable
regulations, decisions and orders thereunder, including
all material applicable terms, conditions, requirements
and conditions precedent to the Conversion and the
establishment and funding of the Foundation imposed upon
the Company or the Association by the OTS and the
Department and no order has been issued by either the OTS
or the Department to suspend the Offerings and no action
for such purpose has been instituted or, to the best of
such counsel's knowledge, threatened by either the OTS or
the Department.
(xxii) To the best of such counsel's knowledge, the
Company and the Association have obtained all material
licenses, permits and other governmental authorizations
currently required for the conduct of their respective
businesses as described in the Registration Statement and
Prospectus, and all such licenses, permits and other
governmental authorizations are in full force and effect,
and the Company and the Association are in all material
respects complying therewith.
25
26
(xxiii) As of the date hereof, neither the Company nor the
Association is in violation of its certificate of
incorporation or articles of incorporation, as the case
may be (and the Association will not be in violation of
its articles of incorporation in stock form upon
consummation of the Conversion).
(xxiv) The Company is not required to be registered as an
investment company under the Investment Company Act of
1940.
(2) The favorable opinion, dated as of Closing Time, of Elias, Matz,
Tiernan & Herrick L.L.P., counsel for the Agent, with respect to the matters set
forth in Sections 5(b)(1)(i), (iv), (v), (vi) (solely as to preemptive rights
arising by operation of law), (xii), (xvi) and (xvii) and such other matters as
the Agent may reasonably require.
(3) In giving their opinions required by subsections (b)(l) and
(b)(2), respectively, of this Section 5, Muldoon, Murphy & Faucette and Elias,
Matz, Tiernan & Herrick L.L.P. 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, the notes thereto and other
financial, statistical and appraisal 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, statistical or appraisal data included therein, as to which counsel
need make no statement), at the time the Registration Statement became effective
or at Closing Time, included an untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading. In
giving their opinions, Muldoon, Murphy & Faucette and Elias, Matz, Tiernan &
Herrick L.L.P. may rely as to matters of fact on certificates of officers and
directors of the Company and the Association and certificates of public
officials, and as to matters of Delaware law upon the opinion of Morris,
Nichols, Arsht & Tunnell, and as to matters of Pennsylvania law, upon the
opinion of _________________, General Counsel of the Company and the
Association, which opinions shall be in form and substance reasonably
satisfactory to counsel for the Agent, and Elias, Matz, Tiernan & Herrick L.L.P.
also may rely upon the opinions of Muldoon, Murphy & Faucette and Morris,
Nichols, Arsht & Tunnell and _________________, General Counsel of the Company
and the Association, except as to Section 5(b)(i)(xvi) hereof. For purposes of
opinions required hereunder, no proceedings shall be deemed to be pending, no
order or stop order shall be deemed to be issued, and no action shall be deemed
to be instituted unless, in each case, either a director or executive officer of
the Company or the Association or the firm giving the opinion shall have
received a copy of such proceedings, order, stop order or action. The opinions
of Muldoon, Murphy & Faucette and Elias, Matz, Tiernan & Herrick L.L.P. shall be
governed by the provisions of the Legal Opinion Accord ("Accord") of the
American Bar Association Section of Business Law (1991) and the term "knowledge"
as used herein shall have the meaning set forth in the Accord for the term
"Actual Knowledge."
26
27
(c) At Closing Time, there shall not have been, since the date hereof or
since the respective dates as of which information is given in the Registration
Statement and the Prospectus, any material adverse change in the financial
condition, results of operations or business affairs of the Company, the
Association and the Subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Agent shall have received a
certificate of the President and Chief Executive Officer of the Company and of
the Association and the chief financial or chief accounting officer of the
Company and of the Association, dated as of Closing Time, to the effect that (i)
there has been no such material adverse change, (ii) there shall have been no
material transaction entered into by the Company or the Association from the
latest date as of which the financial condition of the Company or the
Association as set forth in the Registration Statement and the Prospectus other
than transactions referred to or contemplated therein and transactions in the
ordinary cause of business, (iii) neither the Company nor the Association shall
have received from either the OTS or the Department any direction (oral or
written) to make any material change in the method of conducting its business
with which it has not complied (which direction, if any, shall have been
disclosed to the Agent) or which materially and adversely would affect the
business, financial condition or results of operations of the Company or the
Association, (iv) the representations and warranties in Section 1 hereof are
true and correct with the same force and effect as though expressly made at and
as of the Closing Time, (v) the Company and the Association have complied with
all agreements and satisfied all conditions on their part to be performed or
satisfied at or prior to Closing Time, (vi) no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been initiated or threatened by the Commission and (vii)
no order suspending the Offerings or the authorization for final use of the
Prospectus has been issued and no proceedings for that purpose have been
initiated or threatened by either the OTS or the Department and no person has
sought to obtain regulatory or judicial review of the action of either the OTS
or the Department in approving the Plan in accordance with the Conversion
Regulations or the OTS approval of the Holding Company Application.
(d) At the time of the execution of this Agreement, the Agent shall have
received from Parente, Randolph, Orlando, Carey & Associates 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 and the
Association within the meaning of the Code of Ethics of the AICPA, the
Securities Act and the Securities Act Regulations, the Conversion Regulations
and the State Regulations; (ii) it is their opinion that the consolidated
financial statements and supporting schedules included in the Registration
Statement and covered by their opinion 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 set forth in
detail in such letter, nothing has come to their attention which causes them to
believe that (A) the unaudited financial statements and supporting schedules of
the Association included in the Registration Statement do not comply as to form
in all material respects with the applicable accounting requirements of the
Securities Act and the Securities Act Regulations, the Conversion Regulations
and the State Regulations or are not presented in conformity with generally
accepted accounting principles applied on a basis substantially consistent with
that of the audited financial statements included in the Registration Statement
and the Prospectus, (B) the unaudited amounts of net interest income and net
27
28
income set forth under "Selected Financial and Other Data of the Association" in
the Prospectus do not agree with the amounts set forth in the 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) as of the date of the
most recent financial statements available prior to the date of this Agreement,
there has been any increase in the consolidated long-term or short-term debt of
the Association or any decrease in consolidated total assets, the allowance for
loan losses, total deposits or net worth of the Association, in each case as
compared with the amounts shown in the June 30, 1998 balance sheet included in
the Registration Statement or, (D) during the period from June 30, 1998 to the
date of the most recent financial statements available prior to the date of this
Agreement, there were any decreases, as compared with the corresponding period
in the preceding year, in total interest income, net interest income, net
interest income after provision for loan losses, income before income tax
expense or net income of the Association, 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 opinion 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 Association and the Subsidiaries identified in such letter.
(e) At Closing Time, the Agent shall have received from Parente,
Randolph, Orlando, Carey & Associates letter, dated as of Closing Time, to the
effect that they reaffirm the statements made in the letter furnished pursuant
to subsection (d) of this Section, except that the specified date referred to
shall be a date not more than five days prior to Closing Time.
(f) At Closing Time, the Securities shall have been approved for listing
on the AMEX upon notice of issuance.
(g) At Closing Time, the Agent shall have received a letter from Keller,
dated as of the Closing Time, confirming its appraisal.
(h) At Closing Time, counsel for the Agent shall have been furnished with
such documents and opinions as they may reasonably require for the purpose of
enabling them to pass upon the issuance and sale of the Securities and the
Foundation Shares 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
and the Foundation Shares as herein contemplated shall be satisfactory in form
and substance to the Agent and counsel for the Agent.
28
29
(i) 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 it, in the judgment of the Agent, are so material
and adverse as to make it impracticable to market the Securities or to enforce
contracts, including subscriptions or orders, for the sale of the Securities,
and (ii) trading generally on either the AMEX or the New York Stock Exchange
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
Federal authorities.
SECTION 6. INDEMNIFICATION.
(a) The Company and the Association, jointly and severally, agree to
indemnify and hold harmless the Agent and its affiliates and their respective
partners, directors, officers and employees agents and controlling persons
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act as follows:
(i) from and against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, related to or arising out of the Conversion
(including the establishment of the Foundation and the contribution of the
Foundation Shares thereto by the Company) or any action taken by the Agent where
acting as agent of the Company or the Association or otherwise as described in
Section 2 hereof;
(ii) from and against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, based upon or arising out of any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), or the omission or alleged
omission therefrom of a material fact required to be stated therein or necessary
to make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in the
Prospectus (or any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
(iii) from and against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim whatsoever
described in clauses (i) or (ii) above, if such settlement is effected with the
written consent of the Company or the Association, 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),
29
30
reasonably incurred in investigating, preparing for or defending against any
litigation, or any investigation, proceeding or inquiry by any governmental
agency or body, commenced or threatened, or any claim whatsoever described in
clauses (i) or (ii) above, to the extent that any such expense is not paid under
(i), (ii) or (iii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense (i) to the extent arising out of any untrue
statement or alleged untrue statement of a material fact contained in the
Prospectus (or any amendment or supplement thereto) or omission or alleged
omission therefrom of a material fact necessary in order to make the statements
therein, in light of the circumstance under which they were made, not misleading
which was made in reliance upon and in conformity with written information
relating to the Agent furnished to the Company or the Association by the Agent
expressly for use in the Prospectus (or any amendment or supplement thereto),
which information the Company and the Association acknowledge is included only
in the sections captioned "Market for the Common Stock," "The Conversion -
Marketing and Underwriting Arrangements" and "Syndicated Community Offering" of
the Prospectus ("Agent's Information") or (ii) provided, however, that this
indemnity agreement shall not apply to any loss, liability, claim, damage or
expense found in a final judgment by a court of competent jurisdiction to have
resulted primarily from the bad faith, willful misconduct or gross negligence of
the Agent seeking indemnification hereunder. Notwithstanding the foregoing, the
indemnification provided for in this paragraph (a) shall not apply to the
Association to the extent that such indemnification by the Association would
constitute an impermissible covered transaction under Section 23A of the Federal
Reserve Act.
(b) The Agent agrees to indemnify and hold harmless the Company, the
Association, 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 Registration Statement (or any
amendment or supplement thereto) in the Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with the Agent's
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.
30
31
(d) The Company and the Association also agree that the Agent shall not
have any liability (whether direct or indirect, in contract or tort or
otherwise) to the Association, the Company, its security holders or the
Association's or the Company's creditors relating to or arising out of the
engagement of the Agent pursuant to, or the performance by the Agent of the
services contemplated by, this Agreement, except to the extent that any loss,
claim, damage or liability is found in a final judgment by a court of competent
jurisdiction to have resulted primarily from the Agent's bad faith, willful
misconduct or gross negligence.
(e) In addition to, and without limiting, the provisions of Section
6(a)(iv) hereof, in the event that any Agent, any person, if any, who controls
the Agent within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act or any of its partners, directors, officers and employees 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 Association, the Agent or any of their respective
affiliates or any participant in the transactions contemplated hereby in which
the Agent or such person or agent is not named as a defendant, the Company and
the Association jointly and severally agree to reimburse the Agent for all
reasonable and necessary out-of-pocket expenses incurred by it in connection
with preparing or appearing as a witness or otherwise giving testimony and to
compensate the Agent in an amount to be mutually agreed upon.
SECTION 7. CONTRIBUTION.
In order to provide for just and equitable contribution in circumstances
in which the indemnity agreement provided for in Section 6 hereof is for any
reason held to be unenforceable by the indemnified parties although applicable
in accordance with its terms, the Company, the Association and the Agent shall
contribute to the aggregate losses, liabilities, claims, damages and expenses of
the nature contemplated by said indemnity agreement incurred by the Company or
the Association and the Agent, as incurred, in such proportions (i) that the
Agent is responsible for that portion represented by the percentage that the
maximum aggregate marketing fees appearing on the cover page of the Prospectus
bears to the maximum aggregate gross proceeds appearing thereon and the Company,
the Association and the Subsidiaries are jointly and severally responsible for
the balance or (ii) if, but only if, the allocation provided for in clause (i)
is for any reason held unenforceable, in such proportion as is appropriate to
reflect not only the relative benefits to the Company and the Association on the
one hand and the Agent on the other, as reflected in clause (i), but also the
relative fault of the Company and the Association on the one hand and the Agent
on the other, as well as any other relevant equitable considerations; provided,
however, that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section, each person, if any, who
controls the Agent within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act shall have the same rights to contribution as the
Agent, and each director of the Company, each director of the Association, each
officer of the Company who signed the Registration Statement, and each person,
if any, who controls the Company or the Association within the meaning of
Section 15 of the Securities Act or Section
31
32
20 of the Exchange Act shall have the same rights to contribution as the Company
and the Association. 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 or the
Association submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of any Agent or
controlling person, or by or on behalf of the Company, and shall survive
delivery of the Securities.
SECTION 9. TERMINATION OF AGREEMENT.
(a) The Agent may terminate this Agreement, by notice to the Company, at
any time at or prior to Closing Time (i) if there has been, since the date of
this Agreement or since the respective dates as of which information is given in
the Registration Statement, any material adverse change in the financial
condition, results of operations or business affairs of the Company or the
Association, or the Company, the Association or the Subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business, or
(ii) if there has occurred any material adverse change in the financial markets
in the United States or elsewhere or any outbreak of hostilities or escalation
thereof or other calamity or crisis the effect of which it, in the judgment of
the Agent, are so material and adverse as to make it impracticable to market the
Securities or to enforce contracts, including subscriptions or orders, for the
sale of the Securities, (iii) or if trading generally on either 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 or New York authorities, (iv) if any condition
specified in Section 5 shall not have been fulfilled when and as required to be
fulfilled; (v) if there shall have been such material adverse change in the
condition or prospects of the Company or the Association 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 Company is not reasonable or equitable under then
prevailing market conditions; or (vii) if the Conversion is not consummated on
or prior to March 31, 1998.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof relating to the reimbursement of expenses and
except that the provisions of Sections 6 and 7 hereof shall survive any
termination of this Agreement.
32
33
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 747 Middle Neck Road, Great Neck, New York 10024, attention of Mark B. Cohen,
with a copy to Philip Ross Bevan, Esq., Elias, Matz, Tiernan & Herrick L.L.P.,
734 15th Street N.W., Washington, D.C. 20005; notices to the Company and the
Association shall be directed to either of them at Security Savings Association
of Hazleton, 31 West Broad Street, Hazleton, Pennsylvania 18201, attention of
Richard C. Laubach, President and Chief Executive Officer, with a copy to
Douglas P. Faucette, Esq., Muldoon, Murphy & Faucette, 5101 Wisconsin Avenue,
N.W., Washington, D.C. 20016.
SECTION 11. PARTIES.
This Agreement shall inure to the benefit of and be binding upon the
Agent, the Company and the Association and their respective successors. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person, firm or corporation, other than the Agent, the Company and the
Association and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein or therein contained. This
Agreement and all conditions and provisions hereof and thereof are intended to
be for the sole and exclusive benefit of the Agent, the Company and the
Association and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation.
SECTION 12. ENTIRE AGREEMENT; AMENDMENT.
This Agreement represents the entire understanding of the parties hereto
with reference to the transactions contemplated hereby and supersedes any and
all other oral or written agreements heretofore made. 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
33
34
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.
34
35
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
among the Agent, the Company and the Association in accordance with its terms.
Very truly yours,
SECURITY OF PENNSYLVANIA FINANCIAL CORP.
By:
-----------------------------
Richard C. Laubach
President and Chief Executive Officer
SECURITY SAVINGS ASSOCIATION
OF HAZLETON
By:
-----------------------------
Richard C. Laubach
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:
-------------------
Catherine A. Lawton
Principal
35