1
EXHIBIT 5.0
[MULDOON, MURPHY & FAUCETTE LETTERHEAD]
November 2, 1998
Board of Directors
Security of Pennsylvania Financial Corp.
31 W. Broad Street
Hazleton, Pennsylvania 18201
Re: The issuance of up to a 1,587,000 shares of
Security of Pennsylvania Financial Corp. Common Stock
Gentlemen:
You have requested our opinion concerning certain matters of Delaware
law in connection with the conversion of Security Savings Association of
Hazleton (the "Association"), a Pennsylvania-chartered savings association,
from the mutual to the stock form of ownership (the "Conversion"), and the
related subscription offering, community offering and syndicated community
offering (the "Offerings") by Security of Pennsylvania Financial Corp., (the
"Company"), a Delaware corporation and the proposed holding company for the
Association, of up to 1,314,450 shares of its common stock, par value $.01 per
share ("Common Stock") (1,511,617 shares if the estimated valuation range is
increased up to 15% to reflect changes in market and financial conditions
following commencement of the Offerings) and the issuance of 65,550 shares to
Security Savings Charitable Foundation, (the "Foundation") a privately-owned
charitable foundation formed by the Company, (75,383 shares if the estimated
valuation range is increased up to 15% to reflect changes in market and
financial conditions following commencement of the Offerings).
We understand that the Company will loan to the trust for the
Association's Employee Stock Ownership Plan (the "ESOP") the funds the ESOP
trust will use to purchase shares of Common Stock for which the ESOP trust
subscribes pursuant to the Offerings and for purposes of rendering the opinion
set forth in paragraph 2 below, we assume that: (a) the Board of Directors of
the Company (the "Board") has duly authorized the loan to the ESOP trust (the
"Loan"); (b) the ESOP serves a valid corporate purpose for the Company; (c) the
Loan will be made at an interest rate and on other terms that are fair to the
Company; (d) the terms of the Loan will be set forth in customary and
appropriate documents including, without limitation, a
2
Board of Directors
Security of Pennsylvania Financial Corp.
November 2, 1998
Page 2
promissory note representing the indebtedness of the ESOP trust to the Company
as a result of the Loan; and (e) the closing for the Loan and for the sale of
Common Stock to the ESOP trust will be held after the closing for the sale of
the other shares of Common Stock sold in the Offerings and the receipt by the
Company of the proceeds thereof and the receipt by the Company of the proceeds
thereof.
In connection with your request for our opinion, you have provided to
us and we have reviewed the Company's certificate of incorporation filed with
the Delaware Secretary of State on August 20, 1998 (the "Certificate of
Incorporation"); the Company's Bylaws; the Company's Registration Statement on
Form SB-2, as initially filed with the Securities and Exchange Commission on
September 11, 1998 and as amended on November 2, 1998 (the "Registration
Statement"); a consent of the sole incorporator of the Company; the plan of
Conversion; the form of gift instrument (the "Gift Instrument") whereby, and in
accordance with the terms of which, shares will be granted to the Foundation;
the ESOP trust agreement and the ESOP Loan agreement; resolutions of the Board
concerning the organization of the Company, the Offerings and designation of a
pricing committee of the Board (the "Pricing Committee"), and the form of stock
certificate approved by the Board to represent shares of Common Stock. We have
also been furnished a certificate of the Delaware Secretary of State certifying
the Company's good standing as a Delaware corporation. Capitalized terms used
but not defined herein shall have the meaning given them in the Certificate of
Incorporation.
In rendering this opinion, we have relied upon the opinion of Morris,
Nichols, Arsht & Tunnell as to matters of Delaware law upon which opinion we
believe we are justified in relying. We have examined the opinion of Morris,
Nichols, Arsht & Tunnell which opinion is in form satisfactory to us.
Based upon and subject to the foregoing, and limited in all respects to
matters of Delaware law, it is our opinion that:
1. The Company has been duly organized and is validly existing in
good standing as a corporation under the laws of the State of Delaware.
2. Upon the due adoption by the Pricing Committee of a resolution
fixing the number of shares of Common Stock to be sold in the Offerings, the
Common Stock to be issued in the Offerings (including the shares to be issued to
the ESOP trust) will be duly authorized and, when such shares are sold and paid
for in accordance with the terms set forth in the prospectus which is included
in the Registration Statement and such resolution of the Pricing Committee, and
certificates representing such shares in the form provided to us are duly and
properly issued, will be validly issued, fully paid and nonassessable.
3
Board of Directors
Security of Pennsylvania Financial Corp.
November 2, 1998
Page 3
3. The Foundation Shares have been duly and validly authorized for
issuance and sale, and when issued and delivered by the Company as provided in
the Gift Instrument against payment therefor, and a certificate representing
such shares in a form provided to us is duly and properly issued, such shares
will be duly issued, fully paid and nonassessable.
The following provisions of the Certificate of Incorporation
may not be given effect by a court applying Delaware law, but in our opinion
the failure to give effect to such provisions will not affect the duly
authorized, validly issued, fully paid and nonassessable status of the Common
Stock:
1. (a) Subsections C.3 and C.6 of Article FOURTH and Section
D of Article EIGHTH, which grant the Board the
authority to construe and apply the provisions of
those Articles, subsection C.4 of Article FOURTH, to
the extent that subsection obligates any person to
provide to the Board the information such subsection
authorizes the Board to demand, and the provision of
Subsection C.7 of Article EIGHTH empowering the Board
to determine the Fair Market Value of property offered
or paid for the Company's stock by an Interested
Stockholder, in each case to the extent, if any, that
a court applying Delaware law were to impose equitable
limitations upon such authority; and
(b) Article NINTH, which authorizes the Board to consider
the effect of any offer to acquire the Company on
constituencies other than stockholders in evaluating
any such offer.
We assume no obligation to advise you of any events that occur
subsequent to the date of this opinion.
Very truly yours,
/s/ MULDOON, MURPHY & FAUCETTE
MULDOON, MURPHY & FAUCETTE