PHSB Financial Corporation
(a Pennsylvania-chartered corporation)
Up to 2,731,250 Shares
of
Common Stock
(Par Value $.10 Per Share)
(subject to increase up to 3,140,937 shares)
$10.00 Per Share
November __, 2001
SALES AGENCY AGREEMENT
----------------------
Trident Securities,
A Division of McDonald Investments, Inc.
0000 Xxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Dear Sirs:
PHS Bancorp, MHC a Pennsylvania-chartered corporation ("MHC"), PHS
Bancorp, Inc., a Pennsylvania-chartered stock corporation (the "Mid-Tier Holding
Company"), PHSB Financial Corporation, a newly chartered Pennsylvania stock
corporation (the "Company"), and Peoples Home Savings Bank (the "Bank")
(collectively, the "Primary Parties") in this Agreement (the "Agreement"),
hereby confirm as of the date above their respective agreements with Trident
Securities, a Division of McDonald Investments Inc., ("Trident"), a
broker-dealer registered with the Securities and Exchange Commission
("Commission") and a member of the National Association of Securities Dealers,
Inc. ("NASD"), as follows:
1. Introduction. The MHC, in accordance with the Plan of Conversion and
Reorganization adopted August 16, 2001, and subsequently amended (the "Plan"),
intends to convert from a Pennsylvania-chartered mutual holding company to a
newly formed Pennsylvania-chartered stock form corporation, PHSB Financial
Corporation, which will offer stock for sale on a priority basis to (i) eligible
account holders; (ii) the employee stock ownership plan of the Bank; (iii)
Supplemental Account Holders; and (iv) Current Depositors. Pursuant to the Plan,
the Company is offering up to 2,731,250 shares of common stock, par value $.10
per share (the "Common Stock") (subject to an increase up to 3,140,937 shares),
in a subscription offering (the "Subscription Offering"), and, if necessary, (i)
a community offering (the "Community Offering") and/or (ii) syndicated community
offering ("Syndicated Community Offering").
Pursuant to the Plan, the Company will offer and sell shares of its
Common Stock (the "Shares") in the Subscription Offering, Community Offering,
and Syndicated Community
Offering (the "Offerings") and issue up to 1,849,430 shares of the Company to
existing public shareholders of the Mid-Tier Holding Company in exchange for
such shares (the "Exchange") so that, upon completion of the Offerings, 100% of
the outstanding Common Stock of the Company will be publicly held. The Company
will sell the Shares in the Offerings at $10.00 per share (the "Purchase
Price"). If the number of Shares is increased or decreased in accordance with
the Plan, the term "Shares" shall mean such greater or lesser number, where
applicable.
Pursuant to the Plan, in the Subscription Offering, the Company will
offer the Shares in descending order of priority to: (1) the Bank's depositors
with aggregate account balances of $50 or more on June 30, 2000 (the "Eligible
Account Holders"), subject to the allocation procedures and purchase limitations
set forth in the Plan; (2) the Tax-Qualified Employee Stock Benefit Plans (as
such term is defined in the Plan); and (3) the Bank's depositors with aggregate
account balances of $50 or more on September 30, 2001 (the "Supplemental
Eligible Account Holders"); (4) Current Depositors, e.g. the Bank's depositors
on [October 31], 2001. The Company may offer Shares, if any, during the
Subscription Offering, and in a Community Offering with first preference to
people residing within Beaver and Xxxxxxxx Counties, Pennsylvania, and then to
current stockholders of the Mid-Tier Holding Company. Depending on market
conditions, Shares available for sale but not subscribed for in the Subscription
Offering or purchased in the Community Offering may be offered in the Syndicated
Community Offering to the general public on a best efforts basis.
The Company has filed with the U.S. Securities and Exchange Commission
(the "Commission") a Registration Statement on Form SB-2 (File No. 333-69180) in
order to register the Shares under the Securities Act of 1933, as amended (the
"1933 Act"), and has filed such amendments thereto as have been required to the
date hereof (the "Registration Statement"). The prospectus, as amended, included
in the Registration Statement at the time it initially became effective is
hereinafter called the "Prospectus," except that if any prospectus is filed by
the Holding Company pursuant to Rule 424(b) or (c) of the regulations of the
Commission under the 1933 Act differing from the prospectus included in the
Registration Statement at the time it initially becomes effective, the term
"Prospectus" shall refer to the prospectus filed pursuant to Rule 424(b) or (c)
from and after the time said prospectus is filed with the Commission and shall
include any supplements and amendments thereto from and after their dates of
effectiveness or use, respectively.
The Company and the Bank have been advised by Trident that it will
utilize its best efforts to assist the Company and the Bank with the sale of the
Shares in the Offerings. Prior to the execution of the Agreement, the Company
has delivered to Trident a prospectus dated as of the date hereof and all
supplements thereto to be used in the Offerings. Such prospectus contains
information with respect to the MHC, Mid-Tier Holding Company, Company, the
Bank, the Shares and the Conversion.
2. Representations and Warranties.
(a) The Primary Parties jointly and severally represent and warrant
to Trident that:
(i) The MHC, the Mid-Tier Holding Company, and the Company
have all such power, authority, authorizations, approvals and
orders as may be required to
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enter into this Agreement, and, as of the Closing Date, the
MHC and the Mid-Tier Holding Company and Company will have all
such power, authority, authorizations, approvals and orders as
may be required to carry out the provisions and conditions
hereof and to issue and sell the Shares as provided herein and
as described in the Prospectus. The consummation of the
Conversion, the execution, delivery and performance of this
Agreement and the letter agreement between Trident and MHC,
Mid-Tier Holding Company and the Bank and the consummation of
the transactions contemplated herein have been duly and
validly authorized by all necessary corporate action on the
part of the MHC, the Mid-Tier Holding Company and the Company.
This Agreement has been validly executed and delivered by the
Primary Parties, and is a valid, legal and binding obligation
of the Primary Parties, in each case enforceable in accordance
with its terms, except as the legality, validity, binding
nature and enforceability thereof may be limited by (i)
bankruptcy, insolvency, moratorium, reorganization,
conservatorship, receivership or other similar laws relating
to or affecting the enforcement of creditors' rights
generally, (ii) general equity principles regardless of
whether such enforceability is considered in a proceeding in
equity or at law, and (iii) the extent, if any, that the
provisions of Sections hereof may be unenforceable as against
public policy.
(ii) The Registration Statement was filed with, and was
declared effective by, the Commission on ___________, 2001. No
stop order has been issued with respect to the Prospectus. To
the best knowledge of the Primary Parties, no proceedings
related to the Prospectus have been initiated or threatened by
the Commission. At the time the Registration Statement,
including the Prospectus contained therein (including any
amendment or supplement thereto), became effective, the
Registration Statement complied as to form in all material
respects with the 1933 Act and the regulations promulgated
thereunder. The Registration Statement, including the
Prospectus contained therein (including any amendment or
supplement thereto) at the time such Registration Statement
became effective, did not contain an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading, and at the time any Rule 424(b) or (c) Prospectus
was filed with the Commission and at the Closing Date the
Registration Statement, including the Prospectus contained
therein (including any amendment or supplement thereto) and,
when taken together with the Prospectus, any Blue Sky
Application or Sales Information authorized for use by any of
the Primary Parties in connection with the Offerings, 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, in light of the
circumstances under which they were made, not misleading;
provided, however, that the representations and warranties in
this Section 2(a)(ii) shall not apply to statements or
omissions made in reliance upon and in conformity with written
information furnished to the Primary Parties by Trident
expressly regarding Trident or with written statements or
omissions from any sales
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information or information filed pursuant to state securities
or blue sky laws or regulations provided by Trident regarding
Trident.
(iii) The MHC has filed an Application to Convert from the
Mutual to Stock Form of Organization (as amended or
supplemented, the "Conversion Application") with the
Pennsylvania Department of Banking ("Department"), which has
been approved by the Department, and the Bank has filed a
Notice of Intent to Convert to Stock Form pursuant to 12
C.F.R. Section 303.161 ("Notice") with the Federal Deposit
Insurance Corporation ("FDIC"), which has not been objected to
by the FDIC; and the Prospectus and the proxy statement for
the solicitation of proxies from depositors of the Bank for
the special meeting to ratify the Plan ("Proxy Statement")
included as part of the Conversion Application have been
approved for use by the Department. The Company has filed with
the Board of Governors of the Federal Reserve System ("Board")
the Company's application to acquire ownership of the Bank on
Form FRY-3 ("Holding Company Application") [and has received
[is expected to] approval of its acquisition of the Bank from
the Board.] No order has been issued by either the Department
or FDIC preventing or suspending the use of the Prospectus or
Proxy Statement, and no action by or before the Department or
FDIC or any court or other tribunal challenging or seeking to
challenge the Department's or FDIC's approval of the use of
the Prospectus or Proxy Statement or the Department's approval
of the Conversion Application, the FDIC's non-objection to the
conversion or the Board's approval of the Holding Company
application is pending, or to the best knowledge of the
Company and The Bank, threatened.
(iv) The MHC is incorporated as a Pennsylvania corporation,
the Mid-Tier Holding Company is incorporated as a Pennsylvania
corporation, the Company is incorporated as a Pennsylvania
corporation and the Bank is duly organized as a stock savings
bank under the laws of Pennsylvania, and each of them is
validly existing and in good standing under the laws of its
jurisdiction of organization with full power and authority to
own its property and conduct its business as described in the
Registration Statement and Prospectus; the Bank is a member in
good standing of the Federal Home Loan Bank of Pittsburgh; and
the deposit accounts of the Bank are insured by the FDIC up to
the applicable legal limits. Each of the Primary Parties is
qualified to transact business as a foreign corporation in all
jurisdictions except those where non-qualification would
reasonably be expected not to have a Material Adverse Effect
on the condition (financial or otherwise), operations,
business, earnings or properties of the Company, the Bank
considered as one enterprise ("Material Adverse Effect").
(v) The only direct subsidiary of the MHC is the Mid-Tier
Holding Company. The only direct subsidiary of the Mid-Tier
Holding Company is the Bank. The Bank does not have any active
subsidiaries. HOMECO is an inactive wholly owned subsidiary of
the Bank.
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(vi) The Primary Parties have good and marketable title to all
assets material to their respective businesses and to those
assets described in the Prospectus as owned by it, free and
clear of all liens, charges, encumbrances or restrictions,
except for liens for ad valorem taxes not yet due, except as
described in the Prospectus and except as would not, in the
aggregate, have a Material Adverse Effect; and all of the
leases and subleases material to the operations of the Primary
Parties or any Subsidiary, under which it holds properties,
including those described in the Prospectus, are in full force
and effect as described therein.
(vii) The Primary Parties and the Subsidiary have obtained all
licenses, permits and other governmental authorizations
currently required for the conduct of their respective
businesses except where the failure to obtain such licenses,
permits and governmental authorizations would reasonably be
expected not to have a Material Adverse Effect; all such
licenses, permits and other governmental authorizations are in
full force and effect, and the Primary Parties are complying
therewith in all material respects.
(viii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary actions on the
part of each of the Primary Parties, and this Agreement is a
valid and binding obligation of each of the MHC, Mid-Tier
Holding Company, Company and the Bank, enforceable in
accordance with its terms except as the enforceability thereof
may be limited by (a) bankruptcy, insolvency, moratorium,
reorganization, conservatorship, receivership or similar laws
relating to or affecting the enforcement of creditors' rights
generally or the rights of creditors of insured financial
institutions and their holding companies, the accounts of
whose Subsidiary are insured by the FDIC; (b) general equity
principles, regardless of whether such principles are applied
in a proceeding in equity or at law; (c) laws relating to the
safety and soundness of insured depository institutions and
their affiliates, and except to the extent that the provisions
of Sections 8 and 9 hereof may be unenforceable as against
public policy or by applicable law, including without
limitation, Section 23A of the Federal Reserve Act, 12 U.S.C.
Section 371c ("Section 23A").
(ix) Except as described in the Prospectus, there is no
litigation or governmental proceeding pending or, to the best
knowledge of any of the Primary Parties, threatened against or
involving the Primary Parties or any Subsidiary, or any of
their respective assets, which individually or in the
aggregate would reasonably be expected to have a Material
Adverse Effect.
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(x) Each of the Primary Parties has all power, authority,
authorizations, approvals and orders as may be required to
enter into this Agreement, to carry out the provisions and
conditions hereof and, in the case of the Company, to issue
and sell the Shares to be sold by it as provided herein, and
in the case of the Bank, to issue and sell the shares of its
capital stock to be sold to the Company as provided in the
Plan (subject to the issuance of amended Articles of
Incorporation in the form required for an
Pennsylvania-chartered savings bank ("Stock Charter"), a copy
of which is filed as an exhibit to the Conversion
Application).
(xi) The Primary Parties have received the opinion of Xxxxxxx
Spidi & Xxxxx, PC with respect to the federal income tax
consequences of the Conversion to the effect that the
Conversion will constitute a tax-free reorganization under the
Internal Revenue Code of 1986, as amended (the "Code"), and
the Primary Parties have received the opinion of Xxxxxxx Spidi
& Xxxxx, PC with respect to the state income tax
consequences of the Conversion to the effect that Conversion
will not be a taxable transaction for the Company or the Bank
under the laws of Pennsylvania, and the facts and
representations provided by the Company and the Bank and
relied upon in the rendering of such opinions are accurate and
complete, and neither the Company nor the Bank have taken any
action inconsistent therewith.
(xii) Neither of the Primary Parties is in violation of any
rule or regulation of the Department, the FDIC or any state
department or agency regulating the banking or other
activities of the Primary Parties or the Subsidiary that has
resulted or could result in any enforcement action against the
Company, the Bank or the Subsidiary, or their officers or
directors, that might have a Material Adverse Effect.
(xiii) S.R. Xxxxxxxxx XX, the firm that certified the
consolidated financial statements of The Mid-Tier Holding
Company filed as part of the Registration Statement and the
Conversion Application, is independent with respect to the
MHC, Mid-Tier Holding Company, the Company, and the Bank, as
required by the Securities Act, the Securities Act
Regulations, the Code of Professional Ethics of the American
Institute of Certified Public Accountants, and nothing has
come to the attention of the Mid-Tier Holding Company, the
Company or The Bank which has caused any of them to believe
that such firm is not independent within the meaning of such
provisions.
6
(xiv) The consolidated financial statements and related notes
which are included in the Registration Statement and the
Prospectus fairly present the financial condition, results of
operations, retained earnings and cash flows of the Mid-Tier
Holding Company on a consolidated basis at the respective
dates thereof and for the respective periods covered thereby
and comply as to form in all material respects with the
applicable accounting requirements of the Securities Act
Regulations and the Department and FDIC Regulations. Such
financial statements have been prepared in accordance with
generally accepted accounting principles ("GAAP") consistently
applied throughout the periods involved, except as set forth
therein, and such financial statements are consistent with
financial statements and other reports filed by the Mid-Tier
Holding Company or the Bank with the Federal Reserve Board
(the "Board"), Department, and FDIC, except as GAAP may
otherwise require. The financial tables in the Prospectus
accurately present the information purported to be shown
thereby at the respective dates thereof and for the respective
periods covered thereby.
(xv) There has been no material change in the financial
condition (financial or otherwise), results of operations,
business, assets or properties, of the MHC or the Mid-Tier
Holding Company, the Company and the Bank, taken as a whole,
since the latest date as of which such condition is set forth
in the Prospectus, except as set forth therein; and the
capitalization, assets, properties and business of each of the
MHC, Mid-Tier Holding Company, the Company and the Bank
conform in all material aspects to the descriptions thereof
contained in the Prospectus. None of the Primary Parties, has
any material liabilities of any kind, contingent or otherwise,
except as set forth in the Prospectus.
(xvi) There has been no breach or default (or the occurrence
of any event which, with notice or lapse of time or both,
would constitute a default) under, or creation or imposition
of any lien, charge or other encumbrance upon any of the
properties or assets of the Primary Parties pursuant to any of
the terms, provisions or conditions of any agreement,
contract, indenture, lease, bond, debenture, note, instrument
or obligation to which the Primary Parties is a party or by
which any of them or any of their respective assets or
properties may be bound or is subject or any violation of any
governmental license or permit or any enforceable published
law, administrative regulation or order or court order, writ,
injunction or decree, which breach, default, lien, charge,
encumbrance or violation could have a Material Adverse Effect;
all agreements which are material to the financial condition,
results of operations, business, assets or properties of the
Primary Parties, taken as a whole, are in full force and
effect, and no party to any such agreement has instituted or,
to the best knowledge of any of the Primary Parties,
threatened any action or proceeding wherein any of the Primary
Parties would be alleged to be in default thereunder.
(xvii) Neither of the Primary Parties is in violation of their
respective articles of incorporation or bylaws. The execution
and delivery of this Agreement and the
7
consummation of the transactions contemplated hereby by the
Company and the Bank do not conflict with or result in a
breach of the articles of incorporation or bylaws of the
Primary Parties, or violate, conflict with or constitute a
material breach or default (or an event which, with notice or
lapse of time or both, would constitute a default) under, give
rise to any right of termination, cancellation or acceleration
contained in, or result in the creation or imposition of any
lien, charge or other encumbrance upon any of the properties
or assets of the Primary Parties pursuant to any of the terms,
provisions or conditions of, any agreement, contract,
indenture, lease, bond, debenture, note, instrument or
obligation to which the Primary Parties are a party (other
than the establishment of a liquidation account pursuant to
the Plan) or violate any governmental license or permit or any
law, administrative regulation or order or court order, writ,
injunction or decree (subject to the satisfaction of certain
conditions imposed by the Department in connection with their
approval of the Conversion Application or FDIC in connection
with its notice of intent not to object to the Notice), which
breach, default, encumbrance or violation could have a
Material Adverse Effect.
(xviii) Subsequent to the respective dates as of which
information is given in the Registration Statement and
Prospectus, except as otherwise may be indicated or
contemplated therein, neither the MHC, Mid-Tier Holding
Company, Company, or the Bank has issued any securities which
will remain issued at the Closing Date (as defined below) or
incurred any liability or obligation, direct or contingent, or
borrowed money, except borrowings or liabilities incurred in
the ordinary course of business, or entered into any other
transaction not in the ordinary course of business and not
consistent with prior practices, which is material in light of
the business of the Company and the Bank, taken as a whole.
(xix) Upon consummation of the Conversion, the authorized,
issued and outstanding equity capital of the Company shall be
within the range set forth in the Prospectus under the heading
"Capitalization", and no equity securities of the Company
shall be outstanding immediately prior to the Closing Date
other than shares of capital stock issued in connection with
the formation of the Company, which shares shall be canceled
on the Closing Date. The issuance and the sale of the Shares
of the Company have been duly authorized by all necessary
action of the Company and approved by the Department and not
objected to by the FDIC and, when issued in accordance with
the terms of the Plan and paid for as set forth in the
Prospectus, shall be validly issued, fully paid and
nonassessable and shall conform in all material respects to
the description thereof contained in the Prospectus; the
issuance of the Shares is not subject to preemptive rights,
except as set forth in the Prospectus; and good title to the
Shares will be transferred by the Company upon issuance
thereof against payment therefor, free and clear of all
claims, encumbrances, security interests and liens against the
Company whatsoever. The issuance and sale of the capital stock
of the Bank to the Company has been duly authorized by all
necessary action of the Bank and the Company and all
appropriate regulatory authorities (subject to the
satisfaction of various conditions imposed by the Department
in connection with its approval of
8
the Conversion Application, the FDIC in connection with its
notice of intention not to object to the Notice and the Board
in connection with its approval of the Holding Company
Application), and such capital stock, when issued in
accordance with the terms of the Plan, will be validly issued,
fully paid and nonassessable and will conform in all material
respects to the description thereof contained in the
Prospectus.
(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 Shares,
except such approvals as have been obtained, except for the
declaration of effectiveness by the Commission of any required
post-effective amendment of the Registration Statement not yet
filed, except as may be required by the "blue sky" or
securities laws of various jurisdictions, and except as may be
required by the conditions of the approval of, or
non-objection to, the Conversion Application by the Department
and the Notice by the FDIC.
(xxi) All contracts and other documents required to be filed
as exhibits to the Registration Statement, the Conversion
Application, Notice or the Holding Company Application have
been filed with the Commission, the Department, the FDIC or
Board or all of them, as the case may be.
(xxii) The Primary Parties have timely filed all required
federal, state and local franchise tax returns, and no
deficiency has been asserted with respect to such returns by
any taxing authorities; and the Primary Parties have paid all
taxes that have become due and, to the best knowledge of the
each of the Primary Parties, have made adequate reserves for
future tax liabilities, except where any failure to make such
filings, payments and reserves, or the assertion of such a
deficiency, would not have a Material Adverse Effect.
(xxiii) All of the loans represented as assets of the Bank as
of the most recent date for which financial condition data is
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 Regulation Z and 12 C.F.R. Part
226), real estate settlement procedures, consumer credit
protection, equal credit opportunity and all disclosure laws
applicable to such loans, except for violations which, if
asserted, would not have a Material Adverse Effect.
(xxiv) To the best knowledge of the Primary Parties, the
records of depositors, account holders, of the Bank delivered
to Trident by the Bank or its agent for use during the
Conversion are believed to be accurate, reliable and complete
in all material respects.
(xxv) To the best knowledge of the MHC, Mid-Tier Holding
Company, the Company and the Bank, none of the MHC, Mid-Tier
Holding Company, the Company or the Bank nor the employees of
the MHC, Mid-Tier Holding
9
Company, the Company or the Bank has made any payment of funds
of the MHC, Mid-Tier Holding Company, the Company or the Bank
prohibited by law, and no funds of the MHC, Mid-Tier Holding
Company, the Company or the Bank have been set aside to be
used for any payment prohibited by law.
(xxvi) To the best knowledge of each of the Primary Parties,
each of the Primary Parties are in compliance with all laws,
rules and regulations relating to environmental protection,
and none of the Primary Parties or Subsidiary is subject to
liability under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, or any
similar law, except for violations which, if asserted, would
not have a Material Adverse Effect. There are no actions,
suits, regulatory investigations or other proceedings pending
or, to the best knowledge of the each of the Primary Parties,
threatened against any of the Primary Parties relating to
environmental protection. To the best knowledge of the each of
the Primary Parties, no disposal, release or discharge of
hazardous or toxic substances, pollutants or contaminants,
including petroleum and gas products, as any of such terms may
be defined under federal, state or local law, has been caused
by any of the Primary Parties or, to the best knowledge of
each of the Primary Parties, except as disclosed in the
Prospectus, has occurred on, in or at any of the facilities or
properties owned or leased by the Primary Parties or on any
properties pledged to any of the Primary Parties as security
for any indebtedness, except such disposal, release or
discharge as would not reasonably be expected to have a
Material Adverse Effect.
(xxvii) All documents delivered by the Primary Parties or
their representatives in connection with the issuance and sale
of the Common Stock, were, on the dates on which they were
delivered, true, complete and correct in all material
respects.
(xxviii) At the Closing Date, each of the Primary Parties will
have completed the conditions precedent to, and will have
conducted the Conversion in all material respects in
accordance with, the Plan, the Department Regulations, FDIC
Regulations and all other applicable laws, regulations,
published decisions and orders, including all terms,
conditions, requirements and provisions precedent to the
Conversion imposed by the Department.
(b) Trident represents and warrants to the Company and the Bank
that:
(i) Trident is registered as a broker-dealer with the NASD.
(ii) Trident is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation,
with full corporate power and authority to provide the
services to be furnished to the MHC, Mid-Tier Holding Company,
the Company and the Bank hereunder.
(iii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been
duly and validly authorized by all
10
necessary action on the part of Trident, and this Agreement is
a legal, valid and binding obligation of Trident, enforceable
in accordance with its terms (except as the enforceability
thereof may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar laws relating to or affecting the
enforcement of creditors' rights generally or the rights of
creditors of registered broker-dealers whose accounts may be
protected by the Securities Investor Protection Corporation or
by general equity principles, regardless of whether such
principles are applied in a proceeding in equity or at law,
and except to the extent that the provisions of Sections 8 and
9 hereof may be unenforceable as against public policy or by
applicable law).
(iv) Trident and, to Trident's best knowledge, its employees,
agents and representatives who shall perform any of the
services required hereunder to be performed by Trident, shall
be duly authorized and shall have all licenses, approvals and
permits necessary to perform such services, and Trident is a
registered selling agent in the jurisdictions in which the
Company is relying on such registration for the sale of the
Shares listed in Exhibit A, and will remain so registered
until the Conversion is consummated or terminated.
(v) The execution and delivery of this Agreement by Trident,
the fulfillment of the terms set forth herein and the
consummation of the transactions contemplated hereby shall not
violate or conflict with the charter or bylaws of Trident or
violate, conflict with or constitute a breach of, or default
(or an event which, with notice or lapse of time, or both,
would constitute a default) under, any agreement, indenture or
other instrument by which Trident is bound or under any
governmental license or permit or any law, administrative
regulation, authorization, approval or order or court decree,
injunction or order which breach, default or violation could
have a material adverse effect on the condition (financial or
otherwise), operations, business, assets or properties of
Trident.
(vi) Any funds received by Trident to purchase Common Stock
will be handled in accordance with Rule 15c2-4 under the
Securities Exchange Act of 1934, as amended ("Exchange Act").
(vii) No action or proceeding against Trident before the
Commission, the NASD, any state securities commission, or any
state or federal court is pending or, to Trident's best
knowledge, threatened concerning Trident's activities as a
broker-dealer which could have a material adverse effect on
the condition (financial or otherwise), operations, business,
assets or properties of Trident or its ability to perform its
obligations under this Agreement.
3. Employment of Trident; Sale and Delivery of the Shares. On the basis
of the representations and warranties herein contained, but subject to the terms
and conditions herein set forth, the Company and the Bank hereby employ Trident
as their agent to utilize its best efforts to assist the Company with the
Company's sale of the Shares in the Offerings, and Trident hereby accepts such
employment. The employment of Trident hereunder shall terminate (a)
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forty-five (45) days after the Subscription Offering closes, unless the Company
and the Bank, with the approval of the Department and FDIC, if required, are
permitted to extend such period of time, or (b) upon consummation of the
Conversion, whichever date shall first occur.
In the event the Company is unable to sell a minimum of 2,125,000
Shares (or such lesser amount as the Department and FDIC may permit) within the
period of Trident's employment, this Agreement shall terminate, and the Company
and the Bank shall refund promptly to any persons who have subscribed for any of
the Shares, the full amount which they 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 other party hereunder, except as set forth in
Sections 3(a), 3(c) and 3(d) below and Sections 6, 8(a), 8(d), 9 and 10 hereof.
Appropriate arrangements for placing the funds received from subscriptions for
Shares in special interest-bearing accounts with the Bank until all Shares are
sold and paid for will be made prior to the commencement of the Subscription
Offering, with provision for prompt refund to the purchasers as set forth above,
or for delivery to the Company if all Shares are sold.
If all conditions precedent to the consummation of the Conversion are
satisfied, including the sale of all Shares required by the Plan to be sold, the
Company agrees to issue or have issued such Shares and to release for delivery
certificates to subscribers for such Shares on or as soon as possible following
the Closing Date against payment to the Company by any means authorized pursuant
to the Prospectus, at the principal executive office of the Bank or at such
other place as shall be agreed upon between the parties hereto. The date upon
which the Company shall release or deliver the Shares sold in the Offerings, in
accordance with the terms hereof, is herein called the "Closing Date."
Trident agrees either (a) upon receipt of an executed order form of a
subscriber to forward to the Bank for deposit in a segregated account the
offering price of the Common Stock ordered on or before twelve noon on the next
business day following receipt of an order form by Trident or (b) to solicit
indications of interest in which event (i) Trident will subsequently contact any
potential subscriber indicating interest to confirm the interest and give
instructions to execute and return an order form or to receive authorization to
execute the order form on the subscriber's behalf, (ii) Trident will mail
acknowledgments of receipt of orders to each subscriber confirming interest on
the business day following such confirmation, (iii) Trident will debit accounts
of such subscribers on the third business day ("Debit Date") following receipt
of the confirmation referred to in (i), and (iv) Trident will forward completed
order forms together with such funds to the Bank on or before twelve noon on the
next business day following the Debit Date for deposit in a segregated account.
Trident acknowledges that if the procedure in (b) is adopted, subscribers' funds
are not required to be in their accounts until the Debit Date.
The Company and the Bank agree to pay Trident the following
compensation and expense reimbursement for its services hereunder as set forth
in Exhibit A hereto:
(a) A management fee in the amount of $25,000, the payment of which is
acknowledged.
12
(b) A commission equal to one and six-tenths percent (1.6%) of the
aggregate dollar amount of the Shares sold in the Subscription
Offering, Community Offering and Public Offering, if any, (excluding
Shares sold to the Bank's directors, executive officers and their
"Associates", as defined in the Plan, and shares sold to the Bank's
employee benefit plans). For stock sold by other NASD member firms
under selected dealers agreements, the commission shall not exceed a
fee to be agreed upon jointly by Trident and the Bank to reflect market
requirements at the time of the stock allocation in a Syndicated
Community offering but it will in no event exceed _______%. All such
fees shall be paid in next-day funds on the Closing Date.
(c) Reimbursement for its reasonable out-of-pocket expenses, including
but not limited to travel, food, lodging and legal fees, incurred by
Trident whether or not the Conversion is consummated in an amount not
to exceed $50,000. Trident shall xxxx the Company and the Bank
periodically for expenses throughout the term of this Agreement. To the
extent not already paid, reimbursement of Trident shall be made in
next-day funds on the Closing Date or, if the Conversion is not
completed and is terminated for any reason, within ten (10) business
days of actual receipt by the Company of a written request from Trident
detailing its allocable expenses. In the event that a resolicitation or
other event causes the offerings to be extended beyond the original
expiration date of the Subscription Offering, as set forth in the
Prospectus, Trident shall be reimbursed for reasonable out-of-pocket
expenses incurred during the extended period as well.
(d) The Company, the Mid-Tier Holding Company, and the MHC shall also
pay all expenses of the Conversion incurred by them or on their behalf
in connection with the Conversion, including but not limited to their
attorneys' fees, NASD filing fees, filing and registration fees, and
attorneys' fees relating to any required state securities laws research
and filings, telephone charges, air freight, rental equipment,
supplies, transfer agent charges, fees relating to auditing and
accounting and costs of printing all documents necessary in connection
with the Conversion.
4. Offering. Subject to the provisions of Section 7 hereof, Trident is
assisting the Company and the Bank on a best efforts basis in offering a minimum
of __________ and a maximum of ____________ Shares, subject to adjustment up to
___________ Shares, in the Offerings, subject to such other adjustments as may
be permitted by the Department and FDIC. The Shares are to be offered to the
public at the price set forth on the cover page of the Prospectus and the first
page of this Agreement.
5. Further Agreements. The Primary Parties jointly and severally
covenant and agree that:
(a) Subsequent to the respective dates as of which information is given
in the Registration Statement and Prospectus and through and including
the Closing Date, except as otherwise may be indicated or contemplated
therein, neither the MHC, Mid-Tier Holding Company, the Company, nor
the Bank will issue any securities which will remain issued at the
Closing Date or incur any liability or obligation, direct or
contingent, or borrow money, except borrowings or liabilities in the
ordinary course of business and
13
consistent with prior practices, which is material in light of the
financial condition or operations of the MHC, Mid-Tier Holding Company,
the Company and the Bank, taken as a whole.
(b) If any Shares remain unsubscribed following completion of the
Subscription Offering and the Community Offerings, the Company (i)
will, if required by the Securities Act Regulations, promptly file with
the Commission a post-effective amendment to such Registration
Statement relating to the results of the Subscription and the 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, if required by the
Securities Act Regulations, file with 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 reasonably acceptable to the Company and Trident.
(c) Upon amendment of the Bank's articles of incorporation and bylaws
as provided in the Department and FDIC Regulations and completion of
the sale by the Company of the Shares as contemplated by the
Prospectus, (i) the Bank's articles of incorporation will provide for a
liquidation account in a manner consistent with the Department and FDIC
requirements and the Plan, and the Bank will continue as a
Pennsylvania-chartered capital stock savings bank with full power and
authority to own its property and conduct its business as described in
the Prospectus, (ii) all of the authorized and outstanding capital
stock of the Bank will be owned of record and beneficially by the
Company, and (iii) the Company will have no direct subsidiary other
than the Bank.
(d) The Company shall deliver to Trident, from time to time, such
number of copies of the Prospectus as Trident reasonably may request.
The Company authorizes Trident to use the Prospectus in any lawful
manner in connection with the offer and sale of the Shares.
(e) The Company will notify Trident immediately, and confirm the notice
in writing, (i) when any post-effective amendment to the Registration
Statement becomes effective or any supplement to the Prospectus has
been filed, (ii) of the issuance by the Commission of any stop order
relating to the Registration Statement or of the initiation or the
threat of any proceedings for that purpose, (iii) of the receipt of any
notice with respect to the suspension of the qualification of the
Shares for offering or sale in any jurisdiction, (iv) of the receipt of
any comments from the staff of the Commission relating to the
Registration Statement, or the Department, FDIC or Board relating to
the applications filed with such agencies and (v) of the issuance by
the Department or FDIC of any stop order relating to the Conversion or
the use of the Prospectus or Proxy Statement or the initiation or
threat of any proceedings for that purpose. If the Commission enters a
stop order relating to the Registration Statement at any time, the
Company will make every reasonable effort to obtain the lifting of such
order at the earliest possible moment.
14
(f) During the time when a prospectus is required to be delivered under
the Securities Act, the Company will comply in all material respects
with all requirements imposed upon it by the Securities Act and by the
Securities Act Regulations to permit the continuance of offers and
sales of or dealings in the Shares in accordance with the provisions
hereof and the Prospectus. If during the period when the Prospectus is
required to be delivered in connection with the offer and sale of the
Shares any event relating to or affecting the Company, the Bank or any
subsidiary, shall occur as a result of which it is necessary, in the
reasonable opinion of counsel for Trident after consultation with
counsel for the Company and the Bank, to amend or supplement the
Prospectus in order to make the Prospectus not false or misleading in
light of the circumstances existing at the time it is delivered to a
purchaser of the Shares, the Company shall prepare and furnish to
Trident a reasonable number of copies of an amendment or amendments or
of a supplement or supplements the Prospectus (in form and substance
reasonably satisfactory to counsel for Trident) which shall amend or
supplement the Prospectus so that, as amended or supplemented, the
Prospectus shall not contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances existing at the time the
Prospectus is delivered to a purchaser of the Shares, not misleading.
The Company will not file or use any amendment or supplement to the
Registration Statement or the Prospectus unless Trident has been first
furnished a copy or to which Trident shall reasonably object after
having been furnished such copy. For the purposes of this subsection
the Company and the Bank shall furnish such information with respect to
themselves as Trident from time to time may reasonably request.
(g) The Company and the Bank will take all necessary action and furnish
to appropriate counsel such information as may be required to qualify
or register the Shares for offer and sale by the Company under the
securities or blue sky laws of such jurisdictions as Trident and the
Company or its counsel may agree upon; provided, however, that the
Company shall not be obligated to qualify as a foreign corporation to
do business under the laws of any such jurisdiction. In each
jurisdiction where such qualification or registration shall be
effected, the Company, unless Trident agrees that such action is not
necessary or advisable in connection with the distribution of the
Shares, shall file and make such statements or reports as are, or
reasonably may be, required by the laws of such jurisdiction.
(h) Appropriate entries will be made in the financial records of the
Bank to establish a liquidation account to the extent required by the
Department and FDIC Regulations.
(i) The Company will file a registration statement for the Common Stock
under Section 12(b) or Section 12(g) of the Exchange Act, as
applicable, prior to completion of the Offerings and shall request that
such registration statement be effective upon or before completion of
the Conversion. The Company shall maintain the effectiveness of such
registration for a minimum period of three (3) years or for such
shorter period as may be required by applicable law.
15
(j) The Company will make generally available to its security holders
as soon as practicable, but not later than 90 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.
(k) For a period of three (3) years from the date of this Agreement,
the Company will furnish to Trident, upon request and as soon as
publicly available after the end of each fiscal year, a copy of its
annual report to shareholders for such year; and the Company will
furnish to Trident (i) as soon as publicly available, a copy of each
report or definitive proxy statement of the Company filed with the
Commission under the Exchange Act or mailed to shareholders, and (ii)
from time to time, such other public information concerning the Company
as Trident may reasonably request.
(l) The Company will use the net proceeds from the sale of the Shares
in the manner set forth in the Prospectus.
(m) The Company will not deliver the Shares until each and every
condition set forth in Section 7 hereof has been satisfied, unless such
condition is waived in writing by Trident.
(n) The Company and the Bank shall advise Trident, if necessary, as to
the allocation of deposits, in the case of Eligible Account Holders and
Supplemental Eligible Account Holders, and votes, in the case of Other
Depositors (as defined in the Plan), and of the Shares in the event of
an oversubscription and shall provide Trident final instructions as to
the allocation of the Shares ("Allocation Instructions') and such
information shall be accurate and reliable. Trident shall be entitled
to rely upon such information and instructions and shall have no
liability related to its reliance thereon, including, without
limitation, any liability for or related to any denial or satisfaction
of any subscription in whole or in part based on its good faith
reliance on such information and instructions.
(o) The Company and the Bank will take such actions and furnish such
information as are reasonably requested by Trident in order for Trident
to comply with the NASD's "Interpretation Relating to Free-Riding and
Withholding."
(p) At the Closing Date, the Company and the Bank will have completed
all conditions precedent to, and shall have conducted the Conversion in
all material respects in accordance with, the Plan, Department and FDIC
Regulations and all other applicable laws, regulations, published
decisions and orders, including all terms, conditions, requirements and
provisions precedent to the Conversion imposed by the Department and
FDIC.
(q) The Company will use its best efforts to obtain approval for and
maintain quotation of its shares of common stock on the Nasdaq National
Market effective on or prior to the Closing Date.
16
(r) The Company will not sell or issue, contract to sell or otherwise
dispose of, for a period of 90 days after the Closing Date, without
Trident's prior written consent, any shares of common stock other than
as described in the Prospectus.
(s) The Company and the Bank will maintain appropriate arrangements for
depositing all funds received from persons mailing subscriptions for or
orders to purchase Common Stock in the Subscription and Community
Offerings on an interest bearing basis at the rate described in the
Prospectus until the Closing Date and satisfaction of all conditions
precedent to the delivery of certificates for the Shares to subscribers
or until refunds of such funds have been made to the persons entitled
thereto in accordance with the Plan and as described in the Prospectus.
6. Payment of Expenses. Whether or not the Reorganization is
consummated, the Company and the Bank shall pay or reimburse Trident for
allocable expenses incurred by Trident relating to the offering of the Shares as
provided in Section 3 hereof; provided, however, that neither the Company nor
the Bank shall pay or reimburse Trident for any of the foregoing expenses
accrued after Trident shall have notified the Company or the Bank of its
election to terminate this Agreement pursuant to Section 11 hereof or after such
time as the Company or the Bank shall have given notice in accordance with
Section 12 hereof that Trident is in breach of this Agreement.
7. Conditions of Trident's Obligations. Except as may be waived by
Trident, the obligations of Trident as provided herein shall be subject to the
accuracy of the representations and warranties contained in Section 2 hereof as
of the date hereof and as of the Closing Date, to the performance by the Company
and the Bank of their obligations hereunder, and to the following conditions:
(a) On the Closing Date, Trident shall receive the favorable opinion of
Xxxxxxx Spidi & Xxxxx, PC, special counsel for the Company and the
Bank, dated the Closing Date, addressed to Trident, in form and
substance satisfactory to counsel for Trident and stating that:
(i) the MHC, Mid-Tier Holding Company and the Bank are each a
corporation duly organized and validly existing as a
corporation in good standing under the laws of the
Commonwealth of Pennsylvania; the Company has been duly
organized and is validly existing as a corporation in good
standing under the laws of the Commonwealth of Pennsylvania;
the Bank is duly organized and validly existing as a stock
savings bank under the laws of Pennsylvania; and the Mid-Tier
Holding Company, the Company and the Bank have full power and
authority to own their properties and conduct their businesses
as described in the Prospectus;
(ii) the Bank is a member of the Federal Home Loan Bank of
Pittsburgh, and the deposit accounts of the Bank are insured
by the FDIC up to the applicable legal limits;
17
(iii) to such counsel's Actual Knowledge, the MHC, Mid-Tier
Holding Company, Company and Bank are each qualified to do
business and is in good standing as a foreign corporation in
all jurisdictions where the conduct of each of their
businesses requires such qualification, except where
non-qualification would reasonably be expected to have a
Material Adverse Effect;
(iv) the activities of the MHC, Mid-Tier Holding Company, and
the Bank, as described in the Prospectus, are permitted for
bank holding companies, mutual holding companies,
Pennsylvania-chartered stock holding companies and
Pennsylvania chartered stock savings banks under applicable
law. To such counsel's Actual Knowledge, the Primary Parties
have obtained all licenses, permits and other governmental
authorizations currently required for the conduct of their
respective businesses except where the failure to obtain such
licenses, permits and governmental authorizations would
reasonably be expected not to have a Material Adverse Effect;
(v) the Plan has been duly adopted by the Boards of Directors
of the MHC, Mid-Tier Holding Company, the Company and the Bank
and approved by the members of the MHC; the Plan complies in
all material respects with, and to such counsel's Actual
Knowledge, the Conversion has been effected by the Company and
the Bank in all material respects in accordance with, the
Department and FDIC and Board Regulations and applicable
Department and FDIC and Board approvals or letters of
non-objection issued thereunder; to such counsel's Actual
Knowledge, all of the terms, conditions, requirements and
provisions with respect to the Plan and Conversion imposed by
the Department, FDIC or the Board, have been complied with by
the Company and the Bank in all material respects except for
reports and items required to be filed or submitted after the
Closing Date; and, to such counsel's Actual Knowledge, no
person has sought to obtain regulatory or judicial review of
the final action of the Department in approving the Plan;
(vi) the Company has authorized Common Stock as set forth in
the Registration Statement and the Prospectus, and the
description thereof in the Registration Statement and the
Prospectus is accurate and complete in all material respects;
(vii) upon amendment of the Bank's articles of incorporation
and bylaws as provided in the Department and FDIC Regulations
and completion of the sale by the Company of the Shares as
contemplated by the Prospectus, (i) the Bank will continue as
a Pennsylvania-chartered capital stock savings bank and to
such counsel's Actual Knowledge with full power and authority
to own its property and conduct its business as described in
the Prospectus, and (ii) all of the authorized and outstanding
capital stock of the Bank will be owned of record and
beneficially by the Company;
(viii) the issuance and sale of the Shares have been duly
authorized by all necessary corporate action on the part of
the Company; the Shares, upon receipt of
18
consideration and issuance in accordance with the terms of the
Plan and this Agreement, will be validly issued, fully paid,
nonassessable and, except as disclosed in the Prospectus, free
of statutory preemptive rights, and purchasers of such shares
from the Company, upon issuance thereof against payment
therefor, will acquire such shares to such counsel's Actual
Knowledge free and clear of all material claims, encumbrances,
security interests and liens created by the Company;
(ix) the form of the certificate used to evidence the Shares
is in proper form and complies in all material respects with
the applicable law of the jurisdiction in which the Company is
incorporated;
(x) the issuance and sale of the capital stock of the Bank to
the Company have been duly authorized by all necessary
corporate action of the Bank and the Company and have received
the approval of the Department and Board and non-objection of
the FDIC, and such capital stock, upon receipt of payment and
issuance in accordance with the terms of the Plan, will be
validly issued and fully paid and, except as disclosed in the
Prospectus, free of preemptive rights; the Company upon
issuance thereof against payment to the Bank of a portion of
the net proceeds from the sale of the Shares, will own such
shares of record and beneficially;
(xi) subject to the satisfaction of the conditions to the
Department's approval of the Conversion Application, FDIC's
non-objection to the conversion and Board approval of the
Holding Company Application, no further approval,
authorization, consent or other order of or action by any
regulatory agency is required of the Company and the Bank in
connection with the execution and delivery of this Agreement,
the issuance and sale of the Shares and the consummation of
the Conversion, except with respect to the issuance of the
Bank's amended articles of incorporation by the Department,
and except as may be required under the blue sky securities
laws of various jurisdictions;
(xii) this agreement has been duly executed and delivered by
the Company, the Mid-Tier Holding Company, the Bank and the
MHC and is enforceable against the Company, the Mid-Tier
Holding Company, the Bank and the MHC (except as the
enforceability thereof may be limited by bankruptcy ,
insolvency, moratorium, reorganization or similar laws
relating to or affecting the enforcement of creditors' rights
generally or the rights of creditors of insured depository
institutions or by general equity principles, regardless of
whether such enforceability is considered in a proceeding in
equity or at law, and except to the extent that the provisions
of Sections 8 and 9 hereof may be unenforceable a against
public policy or pursuant to Section 23A);
(xiii) except as set forth in the Prospectus, to such
counsel's Actual Knowledge, the Bank is not in violation of
any directive from the Department to make any change in the
method of conducting its business and there are no legal or
19
governmental proceedings pending or to such counsel's Actual
Knowledge threatened against or involving the assets of the
Company or the Bank, which violation or proceedings would
reasonably be expected to have a Material Adverse Effect
(provided that for this purpose such counsel need not regard
any litigation or governmental proceeding to be "threatened"
unless the potential litigant or government authority has
manifested to the management of the Company or the Bank, or to
such counsel, a present intention to initiate such litigation
or proceeding);
(xiv) the statements in the Prospectus under the captions
"Regulation", "Taxation", "Effect of Conversion on Rights of
Stockholders", "Restrictions on Acquisition of PHSB Financial
Corporation", "Description of Capital Stock of PHSB Financial
Corporation" and "Business of Peoples Home Savings - Legal
Proceedings" insofar as they are, or refer to, statements of
federal law or legal conclusions (excluding financial or
statistical data or stock valuation information included
therein, as to which an opinion need not be expressed), have
been prepared or reviewed by such counsel and are accurate in
all material respects;
(xv) the Conversion Application and the Holding Company
Application have been approved by the Department, FDIC and
Board, respectively, the FDIC has issued a letter of
non-objection regarding the Notice and the Prospectus and the
Proxy Statement have been authorized for use by the
Department; the Registration Statement and any post-effective
amendment thereto have been declared effective by the
Commission; and no proceedings are pending by or before the
Commission or the Department or FDIC or Board seeking to
revoke or rescind the orders declaring the Registration
Statement or any post-effective amendment thereto effective or
approving the Conversion Application or the Holding Company
Application or not objecting to the Notice and, to such
counsel's Actual Knowledge, no such proceedings are
contemplated or threatened (provided that for this purpose
such counsel need not regard any litigation or governmental
proceeding to be "threatened" unless the potential litigant or
government authority has manifested to the management of the
Company or the Bank, or to such counsel, a present intention
to initiate such litigation or proceeding);
(xvi) the execution and delivery of this Agreement and the
consummation of the Conversion by the Company and the Bank do
not (i) violate or conflict with the charter, articles of
incorporation or bylaws of the MHC, Mid-Tier Holding Company,
the Company, the Bank or the Subsidiary or (ii) violate the
Department, FDIC or Board Regulations or, to such counsel's
Actual Knowledge, any law or administrative regulation or any
court order, writ, injunction or decree to which the MHC,
Mid-Tier Holding Company, the Company and the Bank is a party
(subject to the satisfaction of certain post-closing
conditions imposed by the Department in connection with its
approval of the Conversion Application, the FDIC in connection
with its non-objection to the Notice or the Board in
connection with its approval of the Holding Company
Application);
20
(xvii) the Conversion Application, Notice, the Holding Company
Application, the Registration Statement, the Prospectus and
the Proxy Statement, in each case, as amended and
supplemented, comply as to form in all material respects with
the requirements of the Securities Act, the Securities Act
Regulations, the Department and FDIC Regulations and
regulations of the Board, as the case may be (except as
information provided by Trident with respect to Trident
included therein and financial statements, notes to financial
statements, financial tables and other financial and
statistical data and appraisal information included therein,
as to which no opinion need be rendered); to such counsel's
Actual Knowledge, all documents and exhibits required to be
filed with the Conversion Application, Notice and the
Registration Statement have been so filed; and the
descriptions in the Conversion Application, Notice and the
Registration Statement of the documents filed as exhibits to
the Registration Statement and the Conversion Application, and
Notice are accurate in all material respects.
(xviii) the execution and delivery of this Agreement and the
consummation of the Conversion by the MHC, Mid-Tier Holding
Company, the Company and the Bank do not, to such counsel's
Actual Knowledge, constitute a material breach of or default
(or an event which, will notice or lapse of time or both,
would constitute a default) under, give rise to any right of
termination, cancellation or acceleration contained in, or
result in the creation or imposition of any lien, charge or
other encumbrance upon any of the properties or assets of the
MHC, Mid-Tier Company, the Company or the Bank pursuant to any
of the terms, provisions or conditions of, any agreement,
contract, indenture, bond, lease, debenture, note, instrument
or obligation to which the MHC, Mid-Tier Company, the Company
or the Bank is a party (other than the required establishment
of the liquidation account pursuant to the Plan) which in any
such event would reasonably be expected to result in a
Material Adverse Effect;
In rendering such opinion, such counsel may rely as to matters
of fact on certificates of officers and directors of the Primary
Parties and certificates of public officials delivered pursuant to this
Agreement. Such counsel may assume that any agreement is the valid and
binding obligation of any parties to such agreement other that the
Primary Parties. Such opinion may be governed by, and interpreted in
accordance with, the Legal Opinion Accord ("Accord") of the ABA Section
of Business Law (1991), an, as a consequence, such opinion may be
rendered subject to the qualifications, exceptions, definitions,
limitations on coverage and other limitations, all as more particularly
described in the Accord. Further, references in such opinion to such
counsel's "Actual Knowledge" refers only to counsel's actual knowledge
as defined in the Accord (or knowledge based on certificates) and does
not imply that counsel has undertaken any independent investigation
with any outside persons or as to the accuracy or completeness of any
factual representation or information furnished in connection with the
transactions contemplated by the Agreement. In addition, the "General
Qualifications" set forth in the Accord and other customary assumptions
and limitations may apply to such opinion. Such opinion may be limited
to present statutes, regulations
21
and judicial interpretations and to facts as they presently exist; in
rendering such opinion, such counsel need assume no obligation to
revise or supplement them should the present laws be changed by
legislative or regulatory action, judicial decision or otherwise; and
such counsel need express no view, opinion or belief with respect to
whether any proposed or pending legislation, if enacted, or any
regulations or any policy statements issued by any regulatory agency,
whether or not promulgated pursuant to any such legislation, would
affect the validity of the execution and delivery by the Company and
the Bank of this Agreement or the issuance of the Shares. Further, in
rendering such opinions, Xxxxxxx Spidi & Xxxxx, PC may rely on the
opinion of Xxxxxxxx, Verlihay & Xxxxxxxx with respect to any matter of
Pennsylvania law.
(c) At the Closing Date, Trident shall receive the letter of Xxxxxxx
Spidi & Xxxxx, PC, special counsel for the Company and the Bank,
dated the Closing Date, addressed to Trident, in form and substance
reasonably satisfactory to counsel for Trident and to the effect that:
based on such counsel's participation in conferences with
representatives of the Company, the Bank, the independent appraiser,
the independent certified public accountants, Trident and its counsel,
review of documents and understanding of applicable laws (including the
requirements of Form SB-2 and the character of the Registration
Statement contemplated thereby) and the experience such counsel has
gained in its practice under the Act, nothing has come to such
counsel's attention that would lead it to believe that the Registration
Statement, as amended or supplemented (except as to information in
respect of Trident contained therein and except as to the financial
statements, notes to financial statements, financial tables and other
financial and statistical data and appraisal information contained
therein, as to which such counsel need express no view), at the time it
became effective and at the time any post-effective amendment thereto
became effective, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading, or that the
Prospectus, as amended or supplemented (except as to information in
respect of Trident contained therein and except as to financial
statements, notes to financial statements, financial tables and other
financial and statistical data and appraisal information contained
therein as to which such counsel need express no view), as of its date,
at the time the Prospectus was filed with the Commission under Rule
424(b) of the Securities Act regulations and at the Closing Date,
contained any untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (in issuing
such letter, such counsel may indicate that it has not confirmed the
accuracy or completeness of or otherwise verified the factual
information contained in the Registration Statement or the Prospectus
and that it does not assume any responsibility for the accuracy or
completeness thereof).
(d) Counsel for Trident shall have been furnished such documents as
they reasonably may require for the purpose of enabling them to review
or pass upon the matters required by Trident, and for the purpose of
evidencing the accuracy, completeness or satisfaction of any of the
representations, warranties or conditions herein contained, including
but not
22
limited to, resolutions of the Board of Directors of the Company and
the Bank regarding the authorization of this Agreement and the
transactions contemplated hereby.
(e) Prior to and at the Closing Date, in the reasonable opinion of
Trident, (i) there shall have been no material adverse change in the
financial condition, results of operations, business or prospects of
the Company, the Bank and the Subsidiary, taken as a whole, since the
latest date as of which such condition is set forth in the Prospectus,
except as referred to or contemplated therein; (ii) there shall have
been no transaction entered into by the Company, the Bank or the
Subsidiary after the latest date as of which the financial condition of
the Company or the Bank is set forth in the Prospectus other than
transactions referred to or contemplated therein, transactions in the
ordinary course of business, and transactions which are not material to
the Company, the Bank and the Subsidiary, taken as a whole; (iii) none
of the Company, the Bank nor the Subsidiary shall have received from
the Department, FDIC, Board or Commission any directive (oral or
written) to make any change in the method of conducting their
respective businesses which is material to the business of the Company,
the Bank and the Subsidiary, taken as a whole, with which they have not
complied; (iv) no action, suit or proceeding, at law or in equity or
before or by any federal or state commission, board or other
administrative agency, shall be pending or threatened against the
Company, the Bank or the Subsidiary or affecting any of their
respective assets, wherein an unfavorable decision, ruling or finding
could have a Material Adverse Effect; and (v) the Shares shall have
been qualified or registered for offering and sale by the Company under
the securities or blue sky laws of such jurisdictions as Trident and
the Company shall have agreed upon.
(f) On the Closing Date, Trident shall receive a certificate of the
principal executive officer and the principal financial officer of each
of the Company and the Bank, dated the Closing Date, to the effect
that: (i) they have examined the Prospectus, and the Prospectus does
not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading
with respect to the Company, the Bank or the Subsidiary; (ii) since the
date the Prospectus became authorized for final use, no event has
occurred which should have been set forth in an amendment or supplement
to the Prospectus which has not been so set forth, including
specifically, but without limitation, any material adverse change in
the business, financial condition, or results of operations of the
Company, the Bank or the Subsidiary, and the conditions set forth in
clauses (i) through (v) inclusive of subsection (e) of this Section 7
have been satisfied; (iii) to the best knowledge of such officers, no
order or direction has been issued by the Commission or the Department
or FDIC or Board to suspend the Offerings or the effectiveness of the
Prospectus, and no action for such purposes has been instituted or
threatened by the Commission or the Department or FDIC or Board; (iv)
to the best knowledge of such officers, no person has sought to obtain
review of the final action of the Commissioner or FDIC approving the
Plan, and (v) all of the representations and warranties contained in
Section 2 of this Agreement are true and correct, with the same force
and effect as though expressly made on the Closing Date.
23
(g) At the Closing Date, Trident shall receive, among other documents,
(i) copies of the letter from the Department authorizing the use of the
Prospectus and the Proxy Statement, (ii) a copy of the order of the
Commission declaring the Registration Statement effective; (iii) a copy
of the certificate from the Commissioner evidencing the corporate
existence of Bank; (iv) copies of the certificate from the FDIC
evidencing the insured status of the Bank, (v) a copy of the letter
from the appropriate state authority evidencing the incorporation (and,
if generally available from such authority, good standing) of the
Company and the Subsidiary (vi) a copy of the certificate of
incorporation or articles of incorporation of the Company and the
Subsidiary, each certified by the appropriate state governmental
authority; (vii) if available, a copy of the letter from the Department
approving the Bank's amended articles of incorporation; (viii) a copy
of Board approval of the Company's acquisition of the Bank; and (ix) a
copy of the letter of non-objection from the FDIC.
(h) As soon as available after the Closing Date, Trident shall receive
a certified copy of the Bank's certificate of incorporation as executed
by the appropriate governmental authority.
(i) Concurrently with the execution of this Agreement, Trident
acknowledges receipt of a letter from S.R. Xxxxxxxxx XX, independent
certified public accountants, addressed to Trident and the Company, in
substance and form reasonably satisfactory to counsel for Trident, with
respect to the financial statements of the Bank and certain financial
information contained in the Prospectus.
(j) At the Closing Date, Trident shall receive a letter from S.R.
Xxxxxxxxx XX, independent certified public accountants, dated the
Closing Date and addressed to Trident and the Company, in form and
substance reasonably satisfactory to counsel for Trident, confirming
the statements made by such accountants in the letter delivered by them
pursuant to the preceding subsection and dated as of a specified date
not more than five (5) days prior to the Closing Date.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are, in the reasonable
opinion of Trident and its counsel, satisfactory to Trident and its counsel. Any
certificates signed by an officer or director of the Primary Parties prepared
for Trident's reliance and delivered to Trident or to counsel for Trident shall
be deemed a representation and warranty by the Primary Parties to Trident as to
the statements made therein. If any condition to Trident's obligations hereunder
to be fulfilled prior to or at the Closing Date is not so fulfilled, Trident may
terminate this Agreement or, if Trident so elects, may waive in writing any such
conditions which have not been fulfilled, or may extend the time of their
fulfillment. If Trident terminates this Agreement as aforesaid, the Company and
the Bank shall reimburse Trident for its expenses as provided in Section 3
hereof.
8. Indemnification.
(a) The Primary Parties jointly and severally agree to indemnify and
hold harmless Trident, its officers, directors and employees and each
person, if any, who controls
24
Trident within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act, against all loss, liability, claim,
damage and expense and shall further promptly reimburse such persons
for any legal or other expenses reasonably incurred by each or any of
them in investigating, preparing to defend or defending against any
action, proceeding or claim (whether commenced or threatened) arising
out of or based upon (A) any untrue or alleged untrue statement of a
material fact or the omission or alleged omission of a material fact
required to be stated or necessary to make the statements, in light of
the circumstances under which they were made, not misleading contained
in (i) the Registration Statement or the Prospectus or (ii) any
application (including the Conversion Application and Notice) or other
document or communication (in this Section 8 collectively called
"Application") prepared or executed by or on behalf of the Primary
Parties or based upon written information furnished by or on behalf of
the Primary Parties, filed in any jurisdiction to register or qualify
the Shares under the securities laws thereof or filed with the
Department, FDIC or Commission with respect to the offering of the
Shares, unless such statement or omission was made in reliance upon and
in conformity with information furnished in writing to the Company or
the Bank with respect to Trident by or on behalf of Trident expressly
for use in the Prospectus or any amendment or supplement thereto or in
any Application, as the case may be, (B) any written or unwritten
statement made to a purchaser of the Shares by any director, officer or
employee of the Primary Parties, or (C) the inaccuracy of any
representation or warranty set forth in Section 2(a) above or the
breach of any covenant or agreement of the Primary Parties set forth
herein or (D) the participation by Trident in the Conversion and the
Offering, provided, however, that this indemnification agreement will
not apply to any loss, liability, claim, damage or expense found in a
final judgment by a court of competent jurisdiction to have resulted
from the bad faith, willful misconduct or gross negligence of any other
party who may otherwise be entitled to indemnification pursuant to this
Section (8)(a); and, provided further, however, that this
indemnification will not apply to any suit action or proceeding
instituted by the Primary Parties against Trident, its officers,
directors and each person who controls Trident within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act to enforce
the terms of this Agreement.
(b) The Mid-Tier Holding Company and the Company shall indemnify and
hold Trident harmless for any liability whatsoever arising out of (i)
any instructions given to Trident as set forth in Section 5(o) above or
(ii) any records of account holders and depositors of the Bank
delivered to Trident by the Bank or its agents for use during the
Conversion provided, however that this indemnification shall not apply
to any loss, liability, claim, damage or expense found in a final
judgment of a court of competent jurisdiction to have resulted
primarily from the bad faith, willful misconduct or gross negligence of
Trident or any other party who may otherwise be entitled to
indemnification pursuant to this Section 8(b).
(c) Trident agrees to indemnify and hold harmless the Company and the
Bank, their officers, directors and employees and each person, if any,
who controls the Company and the Bank within the meaning of Section 15
of the Securities Act or Section 20(a) of the Exchange Act, to the same
extent as the foregoing indemnity from the Company and the Bank to
Trident, but only with respect to (A) statements or omissions, if any,
made in the
25
Prospectus or any amendment or supplement thereof, in any Application
or to a purchaser of the Shares in reliance upon, and in conformity
with, information furnished in writing to the Company or the Bank with
respect to Trident by or on behalf of Trident expressly for use in the
Prospectus or any amendment or supplement thereof or in any Application
or (B) the inaccuracy of any representation or warranty set forth in
Section 2(b) above or the breach of any covenant or agreement of
Trident set forth herein.
(d) Promptly after receipt by an indemnified party under this Section 8
of notice of any action, proceeding or claim (whether commenced or
threatened) such indemnified party will, if a claim in respect thereof
is to be made against the indemnifying party under this Section 8,
notify the indemnifying party of such action, proceeding or claim; but
the omission so to notify the indemnifying party will not relieve it
from any liability which it may have to any indemnified party otherwise
than under this Section 8. In case any such action is brought against
any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under
this Section 8 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof other
than the reasonable cost of investigation except as otherwise provided
herein. In the event the indemnifying party elects to assume the
defense of any such action and retain counsel reasonably acceptable to
the indemnified party, the indemnified party may retain additional
counsel, but shall bear the fees and expenses of such counsel unless
(i) the indemnifying party shall have specifically authorized the
indemnified party to retain such counsel or (ii) the parties to such
suit include such indemnifying party and the indemnified party, and
such indemnified party shall have been advised by counsel that there
are substantive or procedural issues which raise conflicts of interest
between the indemnified party and indemnifying party, in which case the
indemnifying party shall not be entitled to assume the defense of such
suit notwithstanding the indemnifying party's obligation to bear the
fees and expenses of such counsel. An indemnifying party against whom
indemnity may be sought shall not be liable to indemnify an indemnified
party under this Section 8 if any settlement of any such action is
effected without such indemnifying party's consent. To the extent
required by law, this Section 8 is subject to and limited by the
provisions of Section 23A.
9. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 8 above is for any reason held to be unavailable to Trident, the
Mid-Tier Holding Company, the Company and/or the Bank other than in accordance
with its terms, the Mid-Tier Holding Company, the Company and the Bank or
Trident shall contribute to the aggregate losses, liabilities, claims, damages,
and expenses of the nature contemplated by said indemnity agreement incurred by
the Mid-Tier Holding Company, the Company and the Bank or Trident (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Mid-Tier Holding Company, the Company and the Bank on the one hand and Trident
on the other from the offering of the Shares or (ii) if the
26
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above, but also the relative fault of the Mid-Tier
Holding Company, the Company or the Bank on the one hand and Trident on the
other hand in connection with the statements, acts or omissions which resulted
in such losses, claims, damages, liabilities or judgments, as well as any other
relevant equitable considerations. The relative benefits received by the
Mid-Tier Holding Company, the Company and the Bank on the one hand and Trident
on the other shall be deemed to be in the same proportion as the total net
proceeds from the Conversion received by the Mid-Tier Holding Company, the
Company and the Bank bear to the total fees received by Trident under this
Agreement. The relative fault of the Mid-Tier Holding Company, the Company or
the Bank on the one hand and Trident on the other shall be determined by
reference to, among other things, whether any untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Mid-Tier Holding Company, the Company or
the Bank or by Trident and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Mid-Tier Holding Company, the Company and the Bank and Trident
agree that it would not be just and equitable if contribution pursuant to this
Section 9 were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in the immediately preceding paragraph. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities or
judgments referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by the indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 9, Trident shall not be required to contribute any amount in excess of
the amount by which fees owed Trident pursuant to this Agreement exceed the
amount of any damages which Trident has otherwise been required to pay by reason
of such untrue or alleged untrue statement, act, omission or alleged omission.
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 is not guilty of such fraudulent misrepresentation. To the extent required
by law, this Section 9 is subject to and limited by the provision of Section
23A.
10. Survival of Agreements, Representations and Indemnities. The
respective indemnities of the MHC, the Company and the Bank and Trident and the
representations and warranties of the MHC, the Company and the Bank and of
Trident set forth in or made pursuant to this Agreement shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of Trident or the Mid-Tier
Holding Company, the Company or the Bank or any controlling person or
indemnified party referred to in Section 8 hereof, and shall survive any
termination or consummation of this Agreement and/or the issuance of the Shares,
and any legal representative of Trident, the Mid-Tier Holding Company, the
Company, the Bank and any such controlling persons shall be entitled to the
benefit of the respective agreements, indemnities, warranties and
representations.
11. Termination. The parties may terminate this Agreement by giving
the notice indicated below in this Section at any time after this Agreement
becomes effective as follows:
27
(a) Trident may terminate this Agreement if any domestic or
international event or act or occurrence has materially disrupted the
United States securities markets such as to make it, in Trident's
reasonable opinion, impracticable to proceed with the offering of the
Shares; or if trading on the New York Stock Exchange shall have
suspended; or if the United States shall have become involved in a war
or major hostilities; or if a general banking moratorium has been
declared by a state or federal authority which has material effect on
the Bank or the Conversion; or if a moratorium in foreign exchange
trading by major international banks or persons has been declared; or
if there shall have been a material change in the capitalization,
financial condition or business of the Company, the Bank and the
Subsidiary, taken as a whole, or if the Company, the Bank and the
Subsidiary, taken as a whole, shall have sustained a material or
substantial loss by fire, flood, accident, hurricane, earthquake,
theft, sabotage or other calamity or malicious act, whether or not said
loss shall have been insured.
(b) The Primary Parties may terminate the Conversion in accordance with
the terms of the Plan. Such termination shall be without liability to
any party, except that the Primary Parties shall be required to fulfill
their obligations pursuant to Sections 3, 6, 8, and 9 of this
Agreement.
(c) The Primary Parties and Trident may terminate this Agreement by
mutual written agreement.
(d) If this Agreement is terminated by Trident for any of the reasons
set forth in subsection (a) or (b) above, and to fulfill their
obligations, if any, pursuant to Sections 3, 6, 8(a), 8(d) and 9 of
this Agreement and upon demand, the Primary Parties shall pay Trident
the full amount so owing thereunder.
(e) If this Agreement is terminated as provided in this Section 11, the
party terminating this Agreement shall notify any non-terminating party
promptly by telephone or telegram, confirmed by letter.
12. Notices. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and shall be mailed, delivered or
telegraphed and confirmed to Trident shall be mailed, delivered or telegraphed
and confirmed to Trident Securities, a Division of McDonald Investments Inc.,
0000 Xxx Xxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxx Xxxxxxxx 00000, Attention: Xx.
Xxxxxxx X. Xxxxxx (with a copy to Xxxx Xxxxxx Xxxxxx Xxxxxxxx & Xxxxxx 0000
Xxxxxxxxx Xxxxxx, XX, Xxxxxxxxxx, XX 00000, Attention: Xxxx Xxxxxx, Esquire) and
if sent to the Company or the Bank, shall be mailed, delivered or telegraphed to
Xxxxx X. Xxxxxx, President, PHS Bancorp, Inc., 000 Xxxxxxxx Xxxx, Xxxxxx Xxxxx,
Xxxxxxxxxxxx 00000 (with a copy to Xxxxxxx Spidi & Xxxxx, PC, 0000 Xxx Xxxx
Xxxxxx, XX, Xxxxx 000 Xxxx, Xxxxxxxxxx, XX 00000, Attention: Xx. Xxxxxx X.
Xxxxxxx, Esquire).
13. Parties. The Company and the Bank shall be entitled to act and rely
on any request, notice, consent, waiver or agreement purportedly given on behalf
of Trident when the same shall have been given by the undersigned or any other
officer of Trident. Trident shall be entitled to act and rely on any request,
notice, consent, waiver or agreement purportedly given on
28
behalf of the Company or the Bank, when the same shall have been given by the
undersigned or any other officer of the Company or the Bank. This Agreement
shall inure solely to the benefit of, and shall be binding upon, Trident, the
Company, the Bank and the controlling and other persons referred to in Section 8
hereof, and their respective successors, legal representatives and assigns, and
no other person shall have or be construed to have any legal or equitable right,
remedy or claim under or in respect of or by virtue of this Agreement or any
provision herein contained.
14. Construction. Unless preempted by federal law, this Agreement shall
be governed by and construed in accordance with the substantive laws of North
Carolina.
15. Counterparts. This Agreement may be executed in separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which together shall constitute but one and the same instrument.
16. Amendment. This Agreement may be amended at any time only by a
writing signed by all parties hereto.
