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5,175,000 Shares
(subject to increase up to 5,951,250 shares
in the event of an oversubscription)
Northeast Pennsylvania Financial Corp.
(a Delaware corporation)
Common Stock
(par value $.01 per share)
AGENCY AGREEMENT
______________ __, 0000
Xxxxxxx X'Xxxxx & Partners, L.P.
Two World Trade Center, 000xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Northeast Pennsylvania Financial Corp., a Delaware corporation (the
"Company"), and First Federal Savings and Loan Association of Hazleton, (the
"Bank" or "First Federal"), currently a federally chartered mutual savings and
loan association which will be converted to a federally chartered capital stock
savings bank, under the name First Federal Bank hereby confirm their agreement
with Sandler X'Xxxxx & Partners, L.P. ("Sandler X'Xxxxx" or the "Agent") with
respect to the offer and sale by the Company of 5,175,000 shares (subject to
increase up to 5,951,250 shares in the event of an oversubscription) of the
Company's common stock, par value $.01 per share (the "Common Stock"). The
shares of Common Stock to be sold by the Company in the Offerings are
hereinafter called the "Securities." In addition, as described herein, the
Company expects to contribute shares of Common Stock in an amount equal to 8%
of the shares of Common Stock sold in the Offerings (as hereinafter defined) to
the First Federal Charitable Foundation (the "Foundation"), such shares
hereinafter being referred to as the "Foundation Shares."
The Securities are being offered for sale and the Foundation Shares
are being contributed in accordance with the plan of conversion (the "Plan")
adopted by the Board of Directors of the Bank pursuant to which the Bank
intends to convert from a federally chartered mutual savings and loan
association to a federally chartered stock savings bank
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and issue all of its stock to the Company. Pursuant to the Plan, the Company
is offering to certain of the Bank's depositors and borrowers and its
tax-qualified employee benefit plans (the "Employee Plans") rights to subscribe
for the Securities in a subscription offering (the "Subscription Offering").
To the extent Securities are not subscribed for in the Subscription Offering,
such Securities may be offered to certain members of the general public in a
community offering (the "Community Offering"). It is currently anticipated by
the Bank and the Company that any Securities not subscribed for in the
Subscription and Community Offerings will be offered, subject to Section 2
hereof, in a syndicated community offering (the "Syndicated Community
Offering"). The Subscription Offering, the Community Offering and the
Syndicated Community Offering hereinafter are referred to collectively as the
"Offerings," and the conversion of the Bank from mutual to stock form, the
acquisition of all of the capital stock of the Bank by the Company and the
Offerings hereinafter are referred to collectively as the "Conversion." It is
acknowledged that the number of Securities to be sold in the Conversion may be
increased or decreased as described in the Prospectus (as hereinafter defined).
If the number of Securities is increased or decreased in accordance with the
Plan, the term "Securities" shall mean such greater or lesser number, where
applicable. In the event that a holding company form of organization is not
utilized, all pertinent terms of this Agreement will apply to the conversion of
the Bank from the mutual to stock form of organization and the sale of the
Bank's common stock.
In connection with the Conversion and pursuant to the terms of the
Plan as described in the Prospectus, the Company has established the
Foundation. Immediately following the consummation of the Conversion, subject
to the approval of the establishment of the Foundation by the members of Bank
and compliance with certain conditions as may be imposed by regulatory
authorities, the Company will contribute to the Foundation newly issued shares
of Common Stock in an amount equal to 8% of the Securities sold in the
Conversion. At the minimum, mid-point and maximum of the Estimated Price Range
(as that term is defined in the Prospectus), the contribution to the Foundation
would equal 306,000, 360,000 and 414,000 shares.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-43281), including a
related prospectus, for the registration of the Securities and the Foundation
Shares under the Securities Act of 1933, as amended (the "Securities Act"), has
filed such amendments thereto, if any, and such amended prospectuses as may
have been required to the date hereof by the Commission in order to declare
such registration statement effective, and will file such additional amendments
thereto and such amended prospectuses and prospectus supplements as hereafter
may be required. Such registration statement (as amended to date, if
applicable, and as from time to time amended or supplemented hereafter) and the
prospectuses constituting a part thereof (including in each case all documents
incorporated or deemed to be incorporated by reference therein and the
information, if any, deemed to be part thereof pursuant to the rules and
regulations of the Commission under the Securities Act, as from time to time
amended or supplemented pursuant to the Securities Act or otherwise (the
"Securities Act Regulations")), hereinafter are referred to as the
"Registration
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Statement" and the "Prospectus," respectively, except that if any revised
prospectus shall be used by the Company in connection with the Subscription
Offering, the Community Offering or the Syndicated Community Offering which
differs from the Prospectus on file at the Commission at the time the
Registration Statement becomes effective (whether or not such revised
prospectus is required to be filed by the Company pursuant to Rule 424(b) of
the Securities Act Regulations), then the term "Prospectus" shall refer to such
revised prospectus from and after the time it is first provided to the Agent
for such use.
Concurrently with the execution of this Agreement, the Company is
delivering to the Agent copies of the Prospectus of the Company to be used in
the Subscription Offering and the Community Offering. Such Prospectus contains
information with respect to the Bank, the Company and the Common Stock.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) The Company and the Bank jointly and severally represent and
warrant to the Agent as of the date hereof as follows:
(i) The Registration Statement has been declared
effective by the Commission, no stop order has been issued with respect thereto
and no proceedings therefor have been initiated or, to the knowledge of the
Company and the Bank, threatened by the Commission. At the time the
Registration Statement became effective and at the Closing Time referred to in
Section 2 hereof, the Registration Statement complied and will comply in all
material respects with the requirements of the Securities Act and the
Securities Act Regulations and did not and will not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. The
Prospectus, at the date hereof does not and at the Closing Time referred to in
Section 2 hereof will not, include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that the representations and warranties in this
subsection shall not apply to statements in or omissions from the Registration
Statement or Prospectus made in reliance upon and in conformity with
information with respect to the Agent furnished to the Company in writing by
the Agent expressly for use in the Registration Statement or Prospectus (the
"Agent Information," which the Company and the Bank acknowledge appears only in
the sections captioned "Market for Common Stock" and "The Conversion -
Marketing and Underwriting Arrangements" and "Syndicated Community Offering" of
the Prospectus).
(ii) The Company has filed with the Department of the
Treasury, Office of Thrift Supervision (the "OTS") the Company's application on
Form H-(e)1-S for approval of its acquisition of the Bank (the "Holding
Company Application") under the savings and loan holding company provisions of
the Home Owners' Loan Act, as amended ("HOLA") and the regulations promulgated
thereunder. The Company has received written notice
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dated __________ __, 1998 from the OTS of its approval of the acquisition of
the Bank, such approval remains in full force and effect and no order has been
issued by the OTS suspending or revoking such approval and no proceedings
therefor have been initiated or, to the knowledge of the Company or the Bank,
threatened by the OTS. At the date of such approval, the Holding Company
Application complied in all material respects with the applicable provisions of
HOLA and the regulations promulgated thereunder.
(iii) Pursuant to the rules and regulations of the OTS
governing the conversion of federally chartered mutual savings and loan
institutions to stock form (the "Conversion Regulations"), the Bank has filed
with the OTS an application for conversion on Form AC, and has filed such
amendments thereto and supplementary materials as may have been required to the
date hereof (such application, as amended to date, if applicable, and as from
time to time amended or supplemented hereafter, is hereinafter referred to as
the "Conversion Application"), including copies of the Bank's Proxy Statement,
dated _____________ __, 1998, relating to the Conversion (the "Proxy
Statement"), and the Prospectus. The OTS has, by order dated ____________ __,
1998 (the "Order"), approved the Conversion Application (which Application
includes the Plan) including the waiver of certain provisions of the Conversion
Regulations specified in such Order with respect to the establishment of and
contribution to the Foundation, such approval remains in full force and effect
and no order has been issued by the OTS suspending or revoking such approval
and no proceedings therefor have been initiated or, to the knowledge of the
Company or the Bank, threatened by the OTS. At the date of such approval, the
Conversion Application complied in all material respects with the applicable
provisions of the Conversion Regulations except for those provisions
specifically waived by the OTS in the Order.
(iv) At the time of their use, the Proxy Statement and any
other proxy solicitation materials will comply in all material respects with
the applicable provisions of the Conversion Regulations and will not contain an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The Company and the Bank will
promptly file the Prospectus and any supplemental sales literature with the
Commission and the OTS. The Prospectus and all supplemental sales literature,
as of the date the Registration Statement became effective and at the Closing
Time referred to in Section 2, complied and will comply in all material
respects with the applicable requirements of the Conversion Regulations and, at
or prior to the time of their first use, will have received all required
authorizations of the OTS for use in final form.
(v) Neither the SEC nor the OTS has not, by order or
otherwise, prevented or suspended the use of the Prospectus or any supplemental
sales literature authorized by the Company or the Bank for use in connection
with the Offerings.
(vi) At the Closing Time referred to in Section 2, the
Company and the Bank will have completed the conditions precedent to the
Conversion and the establishment of the Foundation in accordance with the Plan,
the applicable Conversion Regulations and
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all other applicable laws, regulations, decisions and orders, including all
material terms, conditions, requirements and provisions precedent to the
Conversion imposed upon the Company or the Bank by the OTS or any other
regulatory authority, other than those which the regulatory authority permits
to be completed after the Conversion.
(vii) Xxxxxx & Company, Inc. ("Xxxxxx"), which prepared
the valuation of the Bank as part of the Conversion, has advised the Company
and the Bank in writing that it satisfies all requirements for an appraiser set
forth in the Conversion Regulations and any interpretations or guidelines
issued by the OTS with respect thereto. Xxxxxx, which prepared the opinion
filed as Exhibit __ of the Conversion Application as required by the Conversion
Regulations, satisfies all requirements for an "independent executive
compensation expert" within the meaning of the Conversion Regulations.
(viii) The accountants who certified the consolidated
financial statements and supporting schedules of the Bank included in the
Registration Statement have advised the Company and the Bank in writing that
they are independent public accountants within the meaning of the Code of
Ethics of the American Institute of Certified Public Accountants ("the AICPA"),
and such accountants are, with respect to the Company, the Bank and the
Subsidiary of the Bank (as hereinafter defined), independent certified public
accountants as required by the Securities Act and the Securities Act
Regulations.
(ix) The only subsidiary of the Bank is FIDACO, Inc. (the
"Subsidiary").
(x) The consolidated financial statements and the related
notes thereto included in the Registration Statement and the Prospectus present
fairly the financial position of the Company, the Bank and the Subsidiary as of
and at the dates indicated and the results of operations, retained earnings and
cash flows for the periods specified, and comply as to form in all material
respects with the applicable accounting requirements of the Securities Act
Regulations and the Conversion Regulations; except as otherwise stated in the
Registration Statement, said consolidated financial statements have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis; and the supporting schedules and tables included in the
Registration Statement present fairly the information required to be stated
therein.
(xi) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as otherwise
stated therein, (A) there has been no material adverse change in the financial
condition, results of operations or business affairs of the Company, the Bank
and the Subsidiary considered as one enterprise, whether or not arising in the
ordinary course of business, and (B) except for transactions specifically
referred to or contemplated in the Prospectus, there have been no transactions
entered into by the Company, the Bank or the Subsidiary, other than those in
the ordinary course of business, which are material with respect to the
Company, the Bank and the Subsidiary considered as one enterprise.
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(xii) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware with corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus and to
enter into and perform its obligations under this Agreement; and the Company is
duly qualified as a foreign corporation to transact business and is in good
standing in the Commonwealth of Pennsylvania and in each jurisdiction in which
such qualification is required, whether by reason of the ownership or leasing
of property or the conduct of business, except where the failure to so qualify
would not have a material adverse effect on the financial condition, results of
operations or business affairs of the Company, the Bank and the Subsidiary
considered as one enterprise.
(xiii) Upon consummation of the Conversion and the
contribution of the Foundation Shares as described in the Prospectus, the
authorized, issued and outstanding capital stock of the Company will be as set
forth in the Prospectus under "Capitalization" (except for subsequent
issuances, if any, pursuant to reservations, agreements or employee benefit
plans referred to in the Prospectus); except for shares issued in connection
with the initial capitalization of the Company, which shares will be canceled
upon consummation of the Conversion, no shares of Common Stock have been or
will be issued and outstanding prior to the Closing Time referred to in Section
2; at the time of Conversion, the Securities and the Foundation Shares will
have been duly authorized for issuance and, when issued and delivered by the
Company pursuant to the Plan against payment of the consideration calculated as
set forth in the Plan and stated on the cover page of the Prospectus, will be
duly and validly issued and fully paid and non-assessable; the terms and
provisions of the Common Stock and the capital stock of the Company conform and
will conform to all statements relating thereto contained in the Prospectus;
the certificates representing the shares of Common Stock conform to the
requirements of applicable law and regulation and the issuance of the
Securities and the Foundation Shares is not and will not be subject to
preemptive or other similar rights.
(xiv) The Bank, as of the date hereof, is a federally
chartered savings and loan association in mutual form and upon consummation of
the Conversion will be a federally chartered savings bank in stock form, in
both instances with full corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus; the Company, the Bank and the Subsidiary have obtained all
licenses, permits and other governmental authorizations currently required for
the conduct of their respective businesses or required for the conduct of their
respective businesses as contemplated by the Holding Company Application and
the Conversion Application, except where the failure to obtain such licenses,
permits or other governmental authorizations would not have a material adverse
effect on the financial condition, results of operations or business affairs of
the Company, the Bank and the Subsidiary considered as one enterprise; all such
licenses, permits and other governmental authorizations are in full force and
effect and the Company, the Bank and the Subsidiary are in all material
respects in compliance therewith; neither the Company, the Bank nor the
Subsidiary has received notice of any proceeding or action relating to the
revocation or modification of any such license, permit
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or other governmental authorization which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, might have a material
adverse effect on the financial condition, results of operations or business
affairs of the Company, the Bank and the Subsidiary, considered as one
enterprise; and the Bank is in good standing under the laws of the United
States and is qualified as a foreign corporation in any jurisdiction in which
the failure to so qualify would have a material adverse effect on the financial
condition, results of operations or business affairs of the Company, the Bank
and the Subsidiary considered as one enterprise.
(xv) The deposit accounts of the Bank are insured by the
Federal Deposit Insurance Corporation ("FDIC") up to applicable limits and upon
consummation of the Conversion, the liquidation account for the benefit of
eligible account holders and supplemental eligible account holders will be duly
established in accordance with the requirements of the Conversion Regulations.
The Bank is a "qualified thrift lender" within the meaning of 12 U.S.C. Section
1467a(m).
(xvi) Upon consummation of the Conversion, the authorized
capital stock of the Bank will be ________ shares of common stock, par value
$___ per share (the "Bank Common Stock") and ________ shares of preferred
stock, par value $____ per share (the "Bank Preferred Stock"), and the issued
and outstanding capital stock of the Bank will be 1,000 shares of Bank Common
Stock and no shares of the Bank Preferred Stock, and no shares of Bank Common
Stock or Bank Preferred Stock have been or will be issued prior to the Closing
Time referred to in Section 2; and as of Closing Time referred to in Section 2,
all of the issued and outstanding capital stock of the Bank will be duly
authorized, validly issued and fully paid and nonassessable. The shares of
Bank Common Stock to be issued to the Company will have been duly authorized
for issuance and, when issued and delivered by the Bank pursuant to the Plan
against payment of the consideration calculated as set forth in the Plan and as
described in the Prospectus, will be duly and validly issued and fully paid and
nonassessable, and all such Bank Common Stock will be owned beneficially and of
record by the Company free and clear of any security interest, mortgage,
pledge, lien, encumbrance or legal or equitable claim; the terms and provisions
of the Bank Common Stock and the Bank Preferred Stock conform to all statements
relating thereto contained in the Prospectus, and the certificates representing
the shares of the Bank Common Stock will conform with the requirements of
applicable laws and regulations; and the issuance of the Bank Common Stock is
not subject to preemptive or similar rights.
(xvii) The Foundation has been duly incorporated and is
validly existing as a non-stock corporation in good standing under the laws of
the State of Delaware with corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus; the Foundation will not be a savings and loan holding company
within the meaning of 12 C.F.R. Section 574.2(q) as a result of the issuance of
shares of Common Stock to it in accordance with the terms of the Plan and in
the amounts as described in the Prospectus; no approvals are required to
establish the Foundation and to contribute the shares of Common Stock thereto
as described in the
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Prospectus other than those set forth in the OTS approval of the Conversion
Application; except as specifically disclosed in the Prospectus and the Proxy
Statement, there are no agreements and/or understandings, written or oral,
between the Company and/or the Bank and the Foundation with respect to the
control, directly or indirectly, over the voting and the acquisition or
disposition of the Foundation Shares; at the time of the Conversion, the
Foundation Shares will have been duly authorized for issuance and, when issued
and contributed by the Company pursuant to the Plan, will be duly and validly
issued and fully paid and non-assessable and the issuance of the Foundation
Shares is not subject to preemption or similar rights.
(xviii) Each direct and indirect subsidiary of the Bank has
been duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has full
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and Prospectus,
and is duly qualified to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business except where the
failure to so qualify would not have a material adverse effect on the financial
condition, results of operations or business affairs of the Company, the Bank
and the Subsidiary considered as one enterprise; the activities of the
Subsidiary are permitted to subsidiaries of a federally chartered savings
association by the rules, regulations, resolutions and practices of the OTS;
all of the issued and outstanding capital stock of the Subsidiary has been duly
authorized and validly issued, is fully paid and nonassessable and is owned by
the Bank directly, free and clear of any security interest, mortgage, pledge,
lien, encumbrance or legal or equitable claim.
(xix) The Company and the Bank have taken all corporate
action necessary for them to execute, deliver and perform this Agreement, and
this Agreement has been duly executed and delivered by, and is the valid and
binding agreement of, the Company and the Bank, enforceable in accordance with
its terms, except as may be limited by bankruptcy, insolvency or other laws
affecting the enforceability of the rights of creditors generally or the rights
of creditors of a federally insured depository institution and judicial
limitations on the right of specific performance and except as the
enforceability of indemnification and contribution provisions may be limited by
applicable securities laws.
(xx) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus and prior
to the Closing Time, except as otherwise may be specifically described,
indicated or contemplated therein, neither the Company, the Bank nor the
Subsidiary will have (A) issued any securities or incurred any material
liability or obligation, direct or contingent, or borrowed money, except
borrowings in the ordinary course of business from the same or similar sources
and in similar amounts as indicated in the Prospectus, or (B) entered into any
transaction or series of transactions that is material in light of the business
of the Company, the Bank and the Subsidiary, taken as a whole, excluding the
origination, purchase and sale of loans or the purchase or sale of investment
securities or mortgage-related securities in the ordinary course of business.
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(xxi) No approval of any regulatory or supervisory or other
public authority is required in connection with the execution and delivery of
this Agreement or the issuance of the Securities and the Foundation Shares that
has not has not been obtained and a copy of which has been delivered to the
Agent, except as may be required under the securities laws of various
jurisdictions.
(xxii) Neither the Company, the Bank nor the Subsidiary is
in violation of its certificate of incorporation, organization certificate,
articles of incorporation or charter, as the case may be, or bylaws (and the
Bank will not be in violation of its charter or bylaws in stock form upon
consummation of the Conversion); and neither the Company, the Bank nor the
Subsidiary is in default (nor has any event occurred which, with notice or
lapse of time or both, would constitute a default) in the performance or
observance of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other instrument
to which the Company, the Bank or the Subsidiary is a party or by which it or
any of them may be bound, or to which any of the property or assets of the
Company, the Bank or the Subsidiary is subject, except for such defaults that
would not, individually or in the aggregate, have a material adverse effect on
the financial condition, results of operations or business of the Company, the
Bank and the Subsidiary considered as one enterprise; and there are no
contracts or documents of the Company, the Bank or the Subsidiary which are
required to be filed as exhibits to the Registration Statement or the
Conversion Application which have not been so filed.
(xxiii) The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated herein have
been duly authorized by all necessary corporate action and do not and will not
conflict with or constitute a breach of, or default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company, the Bank or the Subsidiary pursuant to, any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to which
the Company, the Bank or the Subsidiary is a party or by which it or any of
them may be bound, or to which any of the property or assets of the Company,
the Bank or the Subsidiary is subject, except for such defaults that would not,
individually or in the aggregate, have a material adverse effect on the
financial condition, results of operations or business affairs of the Company,
the Bank and the Subsidiary considered as one enterprise; nor will such action
result in any violation of the provisions of the certificate of incorporation,
organization certificate, articles of incorporation or charter, as the case may
be, or bylaws of the Company, the Bank or the Subsidiary; nor will such action
result in any violation of any applicable law, administrative regulation or
administrative or court decree except for immaterial violations that would not
impair the ability of the Company and the Bank to execute, deliver and perform
under this Agreement or consummate the transactions contemplated herein.
(xxiv) No labor dispute with the employees of the Company,
the Bank or the Subsidiary exists or, to the knowledge of the Company, the Bank
or the Subsidiary, is imminent or threatened; and the Company is not aware of
any existing, imminent or
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threatened labor disturbance by the employees of any of its principal suppliers
or contractors which might be expected to result in any material adverse change
in the financial condition, results of operations or business affairs of the
Company, the Bank and the Subsidiary considered as one enterprise.
(xxv) Each of the Company, the Bank and the Subsidiary has
good and marketable title to all properties and assets for which ownership is
material to the business of the Company, the Bank and/or the Subsidiary and to
those properties and assets described in the Prospectus as owned by them, free
and clear of all liens, charges, encumbrances or restrictions, except such as
are described in the Prospectus or are not material in relation to the business
of the Company, the Bank and the Subsidiary considered as one enterprise; and
all of the leases and subleases material to the business of the Company, the
Bank and the Subsidiary under which the Company, the Bank or the Subsidiary
hold properties, including those described in the Prospectus, are valid and
binding agreements of the Company, the Bank and the Subsidiary, enforceable in
accordance with their terms.
(xxvi) None of the Company, the Bank and the Subsidiary is
in violation of any directive from the OTS or the FDIC to make any material
change in the method of conducting their respective businesses; the Bank and
the Subsidiary have conducted and are conducting their business so as to comply
in all material respects with all applicable statutes, regulations and
administrative and court decrees (including, without limitation, all
regulations, decisions, directives and orders of the OTS or the FDIC).
(xxvii) There is no action, suit or proceeding before or by
any court or governmental agency or body, domestic or foreign, now pending, or,
to the knowledge of the Company, the Bank or the Subsidiary, threatened,
against or affecting the Company, the Bank or the Subsidiary that is required
to be disclosed in the Registration Statement (other than as disclosed
therein), or that might result in any material adverse change in the financial
condition, results of operations or business affairs of the Company, the Bank
and the Subsidiary considered as one enterprise, or that might materially and
adversely affect the properties or assets thereof or that might materially and
adversely affect the consummation of the Conversion; all pending legal or
governmental proceedings to which the Company, the Bank or the Subsidiary is a
party or of which any of their respective property or assets is the subject
that are not described in the Registration Statement, including ordinary
routine litigation incidental to the business, are considered in the aggregate
not material; and there are no contracts or documents of the Company, the Bank
or the Subsidiary that are required to be filed as exhibits to the Registration
Statement or the Conversion Application that have not been so filed.
(xxviii) The Bank has obtained an opinion of its
counsel, Xxxxxxx, Xxxxxx & Xxxxxxxx, with respect to the legality of the
Securities and the Foundation Shares to be issued and the federal, Pennsylvania
and local income tax consequences of the Conversion (including franchise tax,
sales or use tax, license fee in foreign corporations stock
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transfer tax, real property transfer gain tax and real estate transfer tax),
copies of which are filed as exhibits to the Registration Statement; all
material aspects of the aforesaid opinions are accurately summarized in the
Prospectus; the facts and representations upon which such opinions are based
are truthful, accurate and complete in all material respects; and neither the
Bank nor the Company has taken or will take any action inconsistent therewith.
(xxix) The Company is not required to be registered under
the Investment Company Act of 1940, as amended.
(xxx) All of the loans represented as assets on the most
recent consolidated financial statements or consolidated selected financial
information of the Bank included in the Prospectus meet or are exempt from all
requirements of federal, state or local law pertaining to lending, including
without limitation truth in lending (including the requirements of Regulations
Z and 12 C.F.R. Part 226 and Section 563.99), real estate settlement
procedures, consumer credit protection, equal credit opportunity and all
disclosure laws applicable to such loans, except for violations that, if
asserted, would not result in a material adverse effect on the financial
condition, results of operations or business of the Company, the Bank and the
Subsidiary considered as one enterprise.
(xxxi) To the knowledge of the Company and the Bank, with
the exception of the intended loan to the Bank's ESOP by the Company to enable
the ESOP to purchase shares of Common Stock in an amount of up to ___% of the
Common Stock issued in the Conversion, none of the Company, the Bank or
employees of the Bank has made any payment of funds of the Company or the Bank
as a loan for the purchase of the Common Stock or made any other payment of
funds prohibited by law, and no funds have been set aside to be used for any
payment prohibited by law.
(xxxii) The Company, the Bank and the Subsidiary are in
compliance in all material respects with the applicable financial recordkeeping
and reporting requirements of the Currency and Foreign Transaction Reporting
Act of 1970, as amended, and the rules and regulations thereunder.
(xxxiii) Neither the Company, the Bank, or the
Subsidiary, nor any properties owned or operated by the Company, the Bank or
the Subsidiary is in violation of or liable under any Environmental Law (as
defined below), except for such violations or liabilities that, individually or
in the aggregate, would not have a material adverse effect on the financial
condition, results of operations or business affairs of the Company, the Bank
and the Subsidiary considered as one enterprise. There are no actions, suits
or proceedings, or demands, claims, notices or investigations (including,
without limitation, notices, demand letters or requests for information from
any environmental agency) instituted or pending, or to the knowledge of the
Company, the Bank or the Subsidiary, threatened, relating to the liability of
any property owned or operated by the Company, the Bank or the Subsidiary
thereof, under any Environmental Law. For purposes of this subsection, the
term "Environmental Law" means any federal, state, local or foreign law,
statute, ordinance, rule,
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regulation, code, license, permit, authorization, approval, consent, order,
judgment, decree, injunction or agreement with any regulatory authority
relating to (i) the protection, preservation or restoration of the environment
(including, without limitation, air, water, vapor, surface water, groundwater,
drinking water supply, surface soil, subsurface soil, plant and animal life or
any other natural resource), and/or (ii) the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
production, release or disposal of any substance presently listed, defined,
designated or classified as hazardous, toxic, radioactive or dangerous, or
otherwise regulated, whether by type or by quantity, including any material
containing any such substance as a component.
(xxxiv) The Company, the Bank and the Subsidiary have filed
all federal income and state and local franchise tax returns required to be
filed and have made timely payments of all taxes shown as due and payable in
respect of such returns, and no deficiency has been asserted with respect
thereto by any taxing authority.
(xxxv) The Company has received approval, subject to
regulatory approval to consummate the Offerings and issuance, to have the
Common Stock quoted on the American Stock Exchange ("AMEX") effective as of the
Closing Time referred to in Section 2 hereof.
(xxxvi) The Company has filed a registration statement for
the Common Stock under Section 12(g) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and has requested that such registration statement
be effective concurrent with the effectiveness of the Registration Statement.
(b) Any certificate signed by any officer of the Company or the
Bank and delivered to either of the Agent or counsel for the Agent shall be
deemed a representation and warranty by the Company or the Bank to each Agent
as to the matters covered thereby.
SECTION 2. APPOINTMENT OF SANDLER X'XXXXX; SALE AND DELIVERY OF THE
SECURITIES; CLOSING.
On the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Company hereby
appoints Sandler X'Xxxxx as its Agent to consult with and advise the Company,
and to assist the Company with the solicitation of subscriptions and purchase
orders for Securities, in connection with the Company's sale of Common Stock in
the Offerings. On the basis of the representations and warranties herein
contained, and subject to the terms and conditions herein set forth, Sandler
X'Xxxxx hereby accepts such appointment and agrees to use its best efforts to
assist the Company with the solicitation of subscriptions and purchase orders
for Securities in accordance with this Agreement; provided, however, that the
Agent shall not be obligated to take any action that is inconsistent with any
applicable laws, regulations, decisions or orders. The services to be rendered
by Sandler X'Xxxxx pursuant to this appointment include the following: (i)
consulting as to the securities marketing implications of any aspect of the
Plan of Conversion or related corporate documents; (ii) reviewing with the
Board of Directors the independent appraiser's appraisal of the Common Stock;
(iii) reviewing all
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offering documents, including the Prospectus, stock order form and related
offering materials (it being understood that preparation and filing of such
documents is the sole responsibility of the Company and the Bank and their
counsel); (iv) assisting in the design and implementation of a marketing
strategy for the Offerings; (v) providing support to the Company and the Bank
in obtaining all requisite regulatory approvals; (vi) assisting Bank management
in preparing for meetings with potential investors and broker-dealers; and
(vii) providing such other general advice and assistance as may be requested to
promote the successful completion of the Offerings.
The appointment of the Agent hereunder shall terminate upon the
earlier to occur of (a) forty-five (45) days after the last day of the
Community Offering, unless the Company and the Agent agree in writing to extend
such period and the OTS agrees to extend the period of time in which the
Securities may be sold, (b) the receipt and acceptance of subscriptions and
purchase orders for all of the Securities or (c) the completion of the
Syndicated Community Offering.
The Company agrees to offer Sandler X'Xxxxx the first right to
act as lead managing underwriter for the Public Offering. The terms of the
Public Offering will be set forth in a separate definitive purchase agreement
in a form satisfactory to Sandler X'Xxxxx and containing customary
representations, warranties, conditions, agreements and indemnities, which
purchase agreement, when executed, will supersede and replace this Agreement
with respect to Securities sold thereunder (the "Purchase Agreement"). This
Agreement is not intended to constitute, and should not be construed as, an
agreement or commitment between the Company, the Bank and Sandler X'Xxxxx
relating to the firm commitment underwriting of any securities, and Sandler
X'Xxxxx may, in its sole judgment and discretion, determine at any time not to
proceed with the proposed firm commitment underwriting. Such proposed
underwriting will be subject, among other things, to: (i) satisfactory
completion by Sandler X'Xxxxx of such due diligence investigation or inquiries
as it may deem appropriate, (ii) approval of the proposed underwriting by
Sandler X'Xxxxx'x commitment committee or such other authorization as may be
required by its internal procedures, (iii) market conditions, which, in the
sole judgment of Sandler X'Xxxxx, shall be satisfactory, and (iv) the execution
and delivery of a definitive Purchase Agreement.
or
If any of the Securities remain available after the expiration of the
Subscription Offering and the Community Offering, then, at the request of the
Company, the Bank and the Subsidiary, the Agent will seek to form a syndicate
of registered broker or dealers ("Selected Dealers") to assist in the
solicitation of purchase orders of such Securities on a best-efforts basis,
subject to the terms and conditions set forth in a selected dealers' agreement
(the "Selected Dealers' Agreement"), substantially in the form set forth in
Exhibit A to this Agreement. Sandler X'Xxxxx will endeavor to limit the
aggregate fees to be paid by the Company and the Bank under any such Selected
Dealers' Agreement to an amount competitive with gross underwriting discounts
charged at such time for underwritings of comparable amounts of stock sold at a
comparable price per share in a similar market
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environment; provided, however, that the aggregate fees payable to the Agent
and Selected Dealers shall not exceed 7% of the aggregate Actual Purchase Price
(as defined in the Prospectus) of the Securities sold by such Selected Dealers.
The Agent will endeavor to distribute the Securities among the Selected Dealers
in a fashion that best meets the distribution objective of the Company and the
requirements of the Plan, which may result in limiting the allocation of stock
to certain Selected Dealers. It is understood that in no event shall the Agent
be obligated to act as a Selected Dealer or to take or purchase any Securities.
In the event the Company is unable to sell at least the total minimum
of the Securities, as set forth on the cover page of the Prospectus, within the
period herein provided, this Agreement shall terminate and the Company shall
refund to any persons who have subscribed for any of the Securities the full
amount that it may have received from them, together with interest as provided
in the Prospectus, and no party to this Agreement shall have any obligation to
the others hereunder, except for the obligations of the Company and the Bank as
set forth in Sections 4, 6(a) and 7 hereof and the obligations of the Agent as
provided in Sections 6(b) and 7 hereof. Appropriate arrangements for placing
the funds received from subscriptions for Securities or other offers to
purchase Securities in special interest-bearing accounts with the Bank until
all Securities are sold and paid for were made prior to the commencement of the
Subscription Offering, with provision for refund to the purchasers as set forth
above, or for delivery to the Company if all Securities are sold.
If at least the total minimum of Securities, as set forth on the cover
page of the Prospectus, is sold, then the Company agrees to issue or have
issued the Securities sold and to release for delivery certificates for such
Securities at the Closing Time against payment therefor by release of funds
from the special interest-bearing accounts referred to above. The closing
shall be held at the offices of Xxxxxxx, Xxxxxx & Xxxxxxxx, at 10:00 a.m.,
local time, or at such other place and time as shall be agreed upon by the
parties hereto, on a business day to be agreed upon by the parties hereto. The
Company shall notify the Agent by telephone, confirmed in writing, when funds
shall have been received for all the Securities. Certificates for Securities
shall be delivered directly to the purchasers thereof in accordance with their
directions. Notwithstanding the foregoing, certificates for Securities
purchased through Selected Dealers shall be made available to the Agent for
inspection at least 48 hours prior to the Closing Time at such office as the
Agent shall designate. The hour and date upon which the Company shall release
for delivery all of the Securities, in accordance with the terms hereof, is
herein called the "Closing Time."
The Company will pay any stock issue and transfer taxes that may be
payable with respect to the sale of the Securities.
In addition to reimbursement of the expenses specified in Section 4
hereof, the Agent will receive the following compensation for its services
hereunder:
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(a) One and one-quarter percent (1.25%) of the aggregate
Actual Purchase Price (as defined in the Prospectus) of the
Securities sold in the Subscription Offering to certain
eligible account holders and borrowers and in the Direct
Community Offering, excluding in each case shares purchased by
(i) any employee benefit plan of the Bank or Company
established for the benefit of their respective directors,
officers and employees, (ii) in any foundation or charitable
organization established by the Bank in connection with the
Conversion and (iii) any director, officer or employee of the
Bank or the Company or members of their immediate families
which term shall mean parents, grandparents, spouse, siblings,
children and grandchildren; and
(b) with respect to any Securities sold by a National
Association of Securities Dealers, Inc. ("NASD") member firm
(other than Sandler X'Xxxxx) under the Selected Dealers'
Agreement in the Syndicated Community Offering, (i) the
compensation payable to Selected Dealers under any Selected
Dealers' Agreement, (ii) any sponsoring dealer's fees; and
(iii) a management fee to Sandler X'Xxxxx of one and
one-quarter percent (1.25%). Any fees payable to Sandler
X'Xxxxx for Securities sold by Sandler X'Xxxxx under any such
agreement shall be limited to an aggregate of one and one
quarter percent (1.25%) of the Purchase Price of such
Securities.
If this Agreement is terminated by the Agent in accordance with the
provisions of Section 9(a) hereof or the Conversion is terminated by the
Company, no fee shall be payable by the Company to Sandler X'Xxxxx; however,
the Company shall reimburse the Agent for all of its reasonable out-of-pocket
expenses incurred prior to termination, including the reasonable fees and
disbursements of counsel for the Agent in accordance with the provisions of
Section 4 hereof.
All fees payable to the Agent hereunder shall be payable in immediate
available funds at Closing Time, or upon the termination of this Agreement, as
the case may be. In recognition of the long lead times involved in the
conversion process, the Bank agrees to make advance payments to the Agent in
the aggregate amount of $50,000, $25,000 of which previously has been paid and
the remaining $25,000 of which shall be payable upon execution hereof, which
shall be credited against any fees or reimbursement of expenses payable
hereunder.
SECTION 3. COVENANTS OF THE COMPANY AND THE BANK.
The Company and the Bank covenant with the Agent as follows:
(a) The Company and the Bank will prepare and file such amendments
or supplements to the Registration Statement, the Prospectus, the Conversion
Application and the Proxy Statement as may hereafter be required by the
Securities Act Regulations or the Conversion Regulations or as may hereafter be
requested by the Agent. Following
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completion of the Subscription and Community Offerings, in the event of a
Syndicated Community Offering, the Company and the Bank will (i) promptly
prepare and file with the Commission a post-effective amendment to the
Registration Statement relating to the results of the Subscription and
Community Offerings, any additional information with respect to the proposed
plan of distribution and any revised pricing information or (ii) if no such
post-effective amendment is required, will file with, or mail for filing to,
the Commission a prospectus or prospectus supplement containing information
relating to the results of the Subscription and Community Offerings and pricing
information pursuant to Rule 424(c) of the Securities Act Regulations, in
either case in a form acceptable to the Agent. The Company and the Bank will
notify the Agent immediately, and confirm the notice in writing, (i) of the
effectiveness of any post-effective amendment of the Registration Statement,
the filing of any supplement to the Prospectus and the filing of any amendment
to the Conversion Application, (ii) of the receipt of any comments from the OTS
or the Commission with respect to the transactions contemplated by this
Agreement or the Plan, (iii) of any request by the Commission or the OTS for
any amendment to the Registration Statement, the Conversion Application or the
Holding Company Application or any amendment or supplement to the Prospectus or
for additional information, (iv) of the issuance by the OTS of any order
suspending the Offerings or the use of the Prospectus or the initiation of any
proceedings for that purpose, (v) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose, and (vi) of the receipt of any
notice with respect to the suspension of any qualification of the Securities
for offering or sale in any jurisdiction. The Company and the Bank will make
every reasonable effort to prevent the issuance of any stop order and, if any
stop order is issued, to obtain the lifting thereof at the earliest possible
moment.
(b) The Company and the Bank will (i) give the Agent notice of
their intention to file or prepare any amendment to the Conversion Application,
the Holding Company Application or the Registration Statement (including any
post-effective amendment) or any amendment or supplement to the Prospectus
(including any revised prospectus which the Company proposes for use in
connection with the Syndicated Community Offering of the Securities which
differs from the prospectus on file at the Commission at the time the
Registration Statement becomes effective, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) of the Securities
Act Regulations); (ii) furnish the Agent with copies of any such amendment or
supplement a reasonable amount of time prior to such proposed filing or use, as
the case may be; and (iii) not file any such amendment or supplement or use any
such prospectus to which the Agent or counsel for the Agent may object.
(c) The Company and the Bank will deliver to the Agent as many
signed copies and as many conformed copies of the Conversion Application and
the Registration Statement as originally filed and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein) as
the Agent may reasonably request, and
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from time to time such number of copies of the Prospectus as the Agent may
reasonably request.
(d) During the period when the Prospectus is required to be
delivered, the Company and the Bank will comply, at their own expense, with all
requirements imposed upon them by the OTS, by the applicable Conversion
Regulations, as from time to time in force, and by the Securities Act, the
Securities Act Regulations, the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the rules and regulations of the Commission
promulgated thereunder, including, without limitation, Regulation M under the
Exchange Act, so far as necessary to permit the continuance of sales or dealing
in shares of Common Stock during such period in accordance with the provisions
hereof and the Prospectus.
(e) If any event or circumstance shall occur as a result of which
it is necessary, in the reasonable opinion of counsel for the Agent, to amend
or supplement the Prospectus in order to make the Prospectus not misleading in
the light of the circumstances existing at the time it is delivered to a
purchaser, then the Company and the Bank will forthwith amend or supplement the
Prospectus (in form and substance satisfactory to counsel for the Agent) so
that, as so amended or supplemented, the Prospectus will not include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
existing at the time it is delivered to a purchaser, not misleading, and the
Company and the Bank will furnish to the Agent a reasonable number of copies of
such amendment or supplement. For the purpose of this subsection, the Company
and the Bank each will furnish such information with respect to itself as the
Agent may from time to time reasonably request.
(f) The Company and the Bank will take all necessary action, in
cooperation with the Agent, to qualify the Securities for offering and sale
under the applicable securities laws of such states of the United States and
other jurisdictions as the Conversion Regulations may require and as the Agent
and the Company have agreed; provided, however, that the Company and the Bank
shall not be obligated to file any general consent to service of process or to
qualify as a foreign corporation in any jurisdiction in which it is not so
qualified. In each jurisdiction in which the Securities have been so
qualified, the Company and the Bank will file such statements and reports as
may be required by the laws of such jurisdiction to continue such qualification
in effect for a period of not less than one year from the effective date of the
Registration Statement.
(g) The Company authorizes Sandler X'Xxxxx and any Selected
Dealers to act as agent of the Company in distributing the Prospectus to
persons entitled to receive subscription rights and other persons to be offered
Securities having record addresses in the states or jurisdictions set forth in
a survey of the securities or "blue sky" laws of the various jurisdictions in
which the Offerings will be made (the "Blue Sky Survey").
(h) The Company will make generally available to its security
holders as soon as practicable, but not later than 60 days after the close of
the period covered thereby, an
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earnings statement (in form complying with the provisions of Rule 158 of the
Securities Act Regulations) covering a twelve month period beginning not later
than the first day of the Company's fiscal quarter next following the
"effective date" (as defined in said Rule 158) of the Registration Statement.
(i) During the period ending on the third anniversary of the
expiration of the fiscal year during which the closing of the transactions
contemplated hereby occurs, the Company will furnish to its stockholders as
soon as practicable after the end of each such fiscal year an annual report
(including consolidated statements of financial condition and consolidated
statements of income, stockholders' equity and cash flows, certified by
independent public accountants) and, as soon as practicable after the end of
each of the first three quarters of each fiscal year (beginning with the fiscal
quarter ending after the effective date of the Registration Statement),
consolidated summary financial information of the Company, the Bank and the
Subsidiary for such quarter in reasonable detail. In addition, such annual
report and quarterly consolidated summary financial information shall be made
public through the issuance of appropriate press releases at the same time or
prior to the time of the furnishing thereof to stockholders of the Company.
(j) During the period ending on the third anniversary of the
expiration of the fiscal year during which the closing of the transactions
contemplated hereby occurs, the Company will furnish to the Agent (i) as soon
as publicly available, a copy of each report or other document of the Company
furnished generally to stockholders of the Company or furnished to or filed
with the Commission under the Exchange Act or any national securities exchange
or system on which any class of securities of the Company is listed, and (ii)
from time to time, such other information concerning the Company as the Agent
may reasonably request.
(k) The Company and the Bank will conduct the Conversion
(including the formation and operation of the Foundation) in all material
respects in accordance with the Plan, the Conversion Regulations (to the extent
not waived by the provisions of the Order) and all other applicable
regulations, decisions and orders, including all applicable terms, requirements
and conditions precedent to the Conversion imposed upon the Company or the Bank
by the OTS.
(l) The Company and the Bank will use the net proceeds received by
them from the sale of the Securities in the manner specified in the Prospectus
under "Use of Proceeds."
(m) The Company will file with the Commission such reports on Form
SR as may be required pursuant to Rule 463 of the Securities Act Regulations,
if such report or substantially similar report is required by the SEC.
(n) The Company will maintain the effectiveness of the Exchange
Act Registration Statement for not less than three years. The Company will
file with the AMEX all
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documents and notices required by it of companies that have issued securities
that are traded in the over-the-counter market and quotations for which are
reported by AMEX.
(o) The Company and the Bank will take such actions and furnish
such information as are reasonably requested by the Agent in order for the
Agent to ensure compliance with the NASD's "Interpretation Relating to
Free-Riding and Withholding."
(p) Other than in connection with any employee benefit plan or
arrangement described in the Prospectus, the Company will not, without the
prior written consent of the Agent, sell or issue, contract to sell or
otherwise dispose of, any shares of Common Stock other than the Securities or
the Foundation Shares for a period of 180 days following the Closing Time.
(q) During the period beginning on the date hereof and ending on
the later of the third anniversary of the Closing Time or the date on which the
Agent receives full payment in satisfaction of any claim for indemnification or
contribution to which it may be entitled pursuant to Sections 6 or 7 hereof,
respectively, neither the Company nor the Bank shall, without the prior written
consent of the Agent, which consent shall not be unreasonably withheld, take or
permit to be taken any action that could result in the Bank Common Stock
becoming subject to any security interest, mortgage, pledge, lien or
encumbrance; provided, however, that this covenant shall be null and void if
the Board of Governors of the Federal Reserve System, by regulation, policy
statement or interpretive release, or by written order or written advice
addressed to the Bank or the Agent specifically addressing the provisions of
Section 6(a) hereof, permits indemnification of the Agent by the Bank as
contemplated by such provisions.
(r) The Company and the Bank will comply with the conditions
imposed by or agreed to with the OTS in connection with its approval of the
Holding Company Application and the Conversion Application including those
conditions relating to the establishment and the operation of the Foundation;
the Company and the Bank shall use their best efforts to ensure that the
Foundation submits within the time frames required by applicable law a request
to the Internal Revenue Service to be recognized as a tax-exempt organization
under Section 503(c) of the Internal Revenue Code of 1986, as amended ("Code");
the Company and the Bank will take no action which will result in the possible
loss of the Foundation's tax-exempt status; and neither the Company nor the
Bank will contribute any additional assets to the Foundation until such time
that such additional contributions will be deductible for federal and state
income tax purposes.
(s) During the period ending on the first anniversary of the
Closing Time, the Bank will comply with all applicable law and regulation
necessary for the Bank to continue to be a "qualified thrift lender" within the
meaning of 12 U.S.C. Section 1467a(m).
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(t) The Company shall not deliver the Securities until the Company
and the Bank have satisfied each condition set forth in Section 5 hereof,
unless such condition is waived by the Agent.
(u) The Company or the Bank will furnish to Sandler X'Xxxxx as
early as practicable prior to the Closing Date, but no later than two (2) full
business days prior thereto, a copy of the latest available unaudited interim
consolidated financial statements of the Bank and the Subsidiaries which have
been read by KPMG Peat Marwick, LLP, as stated in their letters to be furnished
pursuant to subsections (e) and (f) of Section 5 hereof.
SECTION 4. PAYMENT OF EXPENSES.
The Company and the Bank jointly and severally agree to pay all
expenses incident to the performance of their obligations under this Agreement,
including but not limited to (i) the cost of obtaining all securities and bank
regulatory approvals, (ii) the printing and filing of the Registration
Statement as originally filed and of each amendment thereto, (iii) the
preparation, issuance and delivery of the certificates for the Securities to
the purchasers in the Offerings, (iv) the fees and disbursements of the
Company's and the Bank's counsel, accountants, conversion agent, appraiser and
other advisors, (v) the qualification of the Securities under securities laws
in accordance with the provisions of Section 3(f) hereof, including filing fees
and the fees and disbursements of counsel in connection therewith and in
connection with the preparation of the Blue Sky Survey, (vi) the printing and
delivery to the Agent of copies of the Registration Statement as originally
filed and of each amendment thereto and the printing and delivery of the
Prospectus and any amendments or supplements thereto to the purchasers in the
Offerings and the Agent, (vii) the printing and delivery to the Agent of copies
of a Blue Sky Survey (including fees and expenses of blue sky counsel), and
(viii) the fees and expenses incurred in connection with the listing of the
Common Stock on AMEX. In the event the Agent incurs any such fees and expenses
on behalf of the Bank or the Company, the Bank will reimburse the Agent for
such fees and expenses whether or not the Conversion is consummated; provided,
however, that the Agent shall not incur any substantial expenses on behalf of
the Bank or the Company pursuant to this Section without the prior approval of
the Bank.
The Company and the Bank jointly and severally agree to pay certain
expenses incident to the performance of the Agent's obligations under this
Agreement, regardless whether the Conversion is consummated, including (i) the
filing fees paid or incurred by the Agent in connection with all filings with
the NASD, and (ii) all reasonable out-of-pocket expenses incurred by the Agent
relating to the Offerings, including, without limitation, legal fees,
advertising, promotional, syndication and travel expenses and fees and expenses
of the Agent's counsel. All fees and expenses to which the Agent is entitled
to reimbursement under this paragraph of this Section 4 shall be due and
payable upon receipt by the Company or the Bank of a written accounting
therefor setting forth in reasonable detail the expenses incurred by the Agent.
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SECTION 5. CONDITIONS OF AGENT'S OBLIGATIONS.
The Company, the Bank and the Agent agree that the issuance and the
sale of Securities and all obligations of the Agent hereunder are subject to
the accuracy of the representations and warranties of the Company and the Bank
herein contained as of the date hereof and the Closing Time, to the accuracy of
the statements of officers and directors of the Company and the Bank made
pursuant to the provisions hereof, to the performance by the Company and the
Bank of their obligations hereunder, and to the following further conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued under the Securities Act or proceedings
therefor initiated or threatened by the Commission, no order suspending the
Offerings or authorization for final use of the Prospectus shall have been
issued or proceedings therefor initiated or threatened by the OTS and no order
suspending the sale of the Securities in any jurisdiction shall have been
issued.
(b) At Closing Time, the Agent shall have received:
(1) The favorable opinion, dated as of Closing Time, of
Xxxxxxx, Xxxxxx & Xxxxxxxx, special counsel for the Company and the Bank, in
form and substance satisfactory to counsel for the Agent, to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good
standing under the laws of the State of
Delaware.
(ii) The Company has full corporate power and
authority to own, lease and operate its
properties and to conduct its business as
described in the Registration Statement and
Prospectus and to enter into and perform its
obligations under this Agreement.
(iii) The Company is duly qualified as a foreign
corporation to transact business and is in
good standing in the Commonwealth of
Pennsylvania and in each other jurisdiction
in which such qualification is required
whether by reason of the ownership or leasing
of property or the conduct of business,
except where the failure to so qualify would
not have a material adverse effect upon the
financial condition, results of operations or
business affairs of the Company, the Bank and
the Subsidiary taken as a whole.
(iv) Upon consummation of the Conversion and the
issuance of Foundation Shares to the
Foundation immediately upon
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completion thereof, the authorized, issued
and outstanding capital stock of the Company
will be as set forth in the Prospectus under
"Capitalization" and, except for shares
issued upon incorporation of the Company,
which shares shall be canceled prior to or
concurrently with the Closing Time, no shares
of Common Stock have been or will have been
issued and outstanding prior to the Closing
Time.
(v) The Securities and the Foundation Shares have
been duly and validly authorized for issuance
and sale and, when issued and delivered by
the Company pursuant to the Plan against
payment of the consideration calculated as
set forth in the Plan, will be duly and
validly issued and fully paid and
non-assessable.
(vi) The issuance of the Securities and the
Foundation Shares is not subject to
preemptive or other similar rights arising by
operation of law or, to the knowledge of such
counsel, otherwise.
(vii) The Bank has been at all times since the date
hereof and prior to the Closing Time duly
organized and is validly existing and in good
standing under the laws of the United States
of America as a federally chartered savings
bank of mutual form, and, at Closing Time,
has become duly organized, validly existing
and in good standing under the laws of the
United States of America as a federally
chartered savings bank in stock form, in both
instances with full corporate power and
authority to own, lease and operate its
properties and to conduct its business as
described in the Registration Statement and
the Prospectus; and the Bank is duly
qualified as a foreign corporation in each
jurisdiction in which the failure to so
qualify would have a material adverse effect
upon the financial condition, results of
operations or business affairs of the Bank.
(viii) 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 limits.
(ix) The Subsidiary has been duly incorporated and
is validly existing as a corporation in good
standing under the laws of the jurisdiction
of its incorporation, has full corporate
power and authority to own, lease and operate
its properties and to conduct its business as
described in the Registration Statement and
is duly qualified as a foreign corporation to
transact
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business and is in good standing in each
jurisdiction in which the failure to so
qualify would have a material adverse effect
upon the financial condition, results of
operations or business of the Bank and the
Subsidiary, taken as a whole; the activities
of the Subsidiary are permitted to a
subsidiary of a savings association holding
company and of a federally chartered savings
association by the rules, regulations,
resolutions and practices of the OTS; all of
the issued and outstanding capital stock of
the Subsidiary has been duly authorized and
validly issued, is fully paid and
non-assessable and, to the best of such
counsel's knowledge, is owned by the Bank
directly or through the Subsidiary, free and
clear of any security interest, mortgage,
pledge, lien, encumbrance or claim, legal,
equitable or otherwise.
(x) The Foundation has been duly incorporated and
is validly existing as a non-stock
corporation in good standing under the laws
of the State of Delaware with corporate power
and authority to own, lease and operate its
properties and to conduct its business as
described in the Prospectus; the Foundation
is not a savings and loan holding company
within the meaning of 12 C.F.R. Section
574.2(q) as a result of the issuance of
shares of Common Stock to it in accordance
with the terms of the Plan and in the amounts
as described in the Prospectus; no approvals
are required to establish the Foundation and
to contribute the shares of Common Stock
thereto as described in the Prospectus other
than those set forth in any written notice or
order of approval or non-objection of the
Conversion, the Conversion Application or the
Holding Company Application, copies of which
were provided to the Agent prior to the
Closing Time.
(xi) Upon consummation of the Conversion, all of
the issued and outstanding capital stock of
the Bank when issued and delivered pursuant
to the Plan against payment of consideration
calculated as set forth in the Plan set forth
in the Prospectus, will be duly authorized
and validly issued and fully paid and
nonassessable, and all such capital stock
will be owned beneficially and of record by
the Company free and clear of any security
interest, mortgage, pledge, lien, encumbrance
or claim, legal, equitable or otherwise.
(xii) The OTS has duly approved the Holding Company
Application and the Conversion Application
and no action is pending, or to
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the best of such counsel's knowledge,
threatened with respect to the Holding
Company Application or the Conversion
Application (including therewith, the
establishment of the Foundation and the
contribution of shares of Common Stock
thereto) or the acquisition by the Company of
all of the Bank's issued and outstanding
capital stock; the Holding Company
Application and the Conversion Application
comply with the applicable requirements of
the OTS except as compliance therewith is
specifically waived by the provisions of the
Order, includes all documents required to be
filed as exhibits thereto and is to the best
of such counsel's knowledge and information,
truthful, accurate and complete; and the
Company is duly authorized to become a
savings association holding company and to
establish the Foundation and is duly
authorized to own all of the issued and
outstanding capital stock of the Bank to be
issued pursuant to the Plan.
(xiii) The execution and delivery of this Agreement
and the consummation of the transactions
contemplated hereby, including the
establishment of the Foundation and the
contribution thereto of shares of Common
Stock, have been duly and validly authorized
by all necessary action on the part of each
of the Company and the Bank, and this
Agreement constitutes the legal, valid and
binding agreement of each of the Company and
the Bank, enforceable in accordance with its
terms, except as rights to indemnity and
contribution hereunder may be limited under
applicable law (it being understood that such
counsel may avail itself of customary
exceptions concerning the effect of
bankruptcy, insolvency or similar laws and
the availability of equitable remedies); the
execution and delivery of this Agreement, the
incurrence of the obligations herein set
forth and the consummation of the
transactions contemplated herein will not
result in any violation of the provisions of
the certificate of incorporation, articles of
incorporation or charter, as the case may be,
or bylaws of the Company, the Bank or the
Subsidiary; and, to the best of such
counsel's knowledge, the execution and
delivery of this Agreement, the incurrence of
the obligations herein set forth and the
consummation of the transactions contemplated
herein will not conflict with or constitute a
breach of, or default under, and no default
exists, and no event has occurred which, with
notice or lapse of time or both, would
constitute a default under, or result in the
creation or imposition of any lien, charge or
encumbrance that, individually or in the
aggregate, would have a material adverse
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effect on the financial condition, results of
operations or business affairs of the
Company, the Bank and the Subsidiary
considered as one enterprise upon any
property or assets of the Company, the Bank
or the Subsidiary pursuant to any contract,
indenture, mortgage, loan agreement, note,
lease or other instrument to which the
Company, the Bank or the Subsidiary is a
party or by which any of them may be bound,
or to which any of the property or assets of
the Company, the Bank or the Subsidiary is
subject.
(xiv) The Prospectus has been duly authorized by
the OTS for final use pursuant to the
Conversion Regulations and the Order and no
action is pending or, to the best of such
counsel's knowledge, is threatened, by the
OTS to revoke such authorization.
(xv) The Registration Statement is effective under
the Securities Act and no stop order
suspending the effectiveness of the
Registration Statement has been issued under
the Securities Act or to the best of such
counsel's knowledge and information,
proceedings therefor initiated or threatened
by the Commission.
(xvi) No further approval, authorization, consent
or other order of any federal or state board
or body is required in connection with the
execution and delivery of this Agreement, the
issuance of the Securities and the Foundation
Shares and the consummation of the
Conversion, except as may be required under
the securities or Blue Sky laws of various
jurisdictions as to which no opinion need be
rendered.
(xvii) At the time the Registration Statement became
effective, the Registration Statement (other
than the financial statements and appraisal,
financial and statistical data included
therein, as to which no opinion need be
rendered) complied as to form in all material
respects with the requirements of the
Securities Act, the Securities Act
Regulations and the Conversion Regulations.
(xviii) The Common Stock conforms to the description
thereof contained in the Prospectus, and the
form of certificate used to evidence the
Common Stock is in due and proper form and
complies with all applicable statutory
requirements.
(xix) To the best of such counsel's knowledge,
there are no legal or governmental
proceedings pending or threatened against or
affecting the Company, the Bank, the
Subsidiary or the
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Foundation that are required individually or
in the aggregate to be disclosed in the
Registration Statement and Prospectus, other
than those that are disclosed therein, and
all pending legal or governmental proceedings
to which the Company, the Bank, the
Subsidiary or the Foundation is a party or to
which any of their property is subject that
are not described in the Registration
Statement, including ordinary routine
litigation incidental to the business, are,
considered in the aggregate, not material.
(xx) The information in the Prospectus under
"Dividend Policy," "Federal and State
Taxation," "Regulation," "The Conversion -
Establishment of the Charitable Foundation,"
"The Conversion - Tax Aspects," "Restrictions
on Acquisition of the Company and the Bank,"
"Description of Capital Stock of the Company"
and "Description of Capital Stock of the
Bank," to the extent that it constitutes
matters of law, summaries of legal matters,
documents or proceedings, or legal
conclusions, has been reviewed by such
counsel and is complete and accurate in all
material respects.
(xxi) To the best of such counsel's knowledge,
there are no contracts, indentures,
mortgages, loan agreements, notes, leases or
other instruments required to be described or
referred to in the Registration Statement or
to be filed as exhibits thereto other than
those that are described or referred to
therein or filed as exhibits thereto the
descriptions thereof or references thereto
are correct and no default exists, and no
event has occurred which, with notice or
lapse of time or both, would constitute a
default, in the due performance or observance
of any material obligation, agreement,
covenant or condition contained in any
contract, indenture, mortgage, loan
agreement, note, lease or other instrument so
described, referred to or filed.
(xxii) The Plan and the establishment and funding of
the Foundation have been duly authorized by
the Board of Directors of the Company and the
Board of Directors of the Bank and, to the
best of such counsel's knowledge, the OTS's
approval of the Plan remains in full force
and effect; the Bank's charter has been
amended, effective upon consummation of the
Conversion and the filing of such amended
charter with the OTS, to authorize the
issuance of permanent capital stock; to such
counsel's knowledge, the Company and the Bank
have conducted the Conversion and the
establishment and funding of
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the Foundation in all material respects in
accordance with applicable requirements of
the Conversion Regulations (except to the
extent that the requirement to comply
therewith was waived specifically by the
terms of the Order), the Plan and all other
applicable regulations, decisions and orders
thereunder, including all material applicable
terms, conditions, requirements and
conditions precedent to the Conversion and
the establishment and funding of the
Foundation imposed upon the Company, the Bank
or the Subsidiary by the OTS and no order has
been issued by the OTS to suspend the
Offerings and no action for such purpose has
been instituted or, to the best of such
counsel's knowledge, threatened by the OTS;
and, to such counsel's knowledge, no person
has sought to obtain review of the final
action of the OTS in approving the Conversion
Application (which includes the Plan that
provides for the establishment of the
Foundation) and the Holding Company
Application.
(xxiii) To the best of such counsel's knowledge, the
Company, the Bank and the Subsidiary have
obtained all material licenses, permits and
other governmental authorizations currently
required for the conduct of their respective
businesses as described in the Registration
Statement and Prospectus, and all such
licenses, permits and other governmental
authorizations are in full force and effect,
and the Company, the Bank and the Subsidiary
are in all material respects complying
therewith.
(xxiv) Neither the Company, the Bank nor the
Subsidiary is in violation of its certificate
of incorporation, articles of incorporation
or charter, as the case may be (and the Bank
will not be in violation of its charter in
stock form upon consummation of the
Conversion); to such counsel's knowledge, the
Company, the Bank and the Subsidiary are not
in default (nor has any event occurred which,
with notice or lapse of time or both, would
constitute a default) in the performance or
observance of any obligation, agreement,
covenant or condition contained in any
contract, indenture, mortgage, loan
agreement, note, lease or other instrument to
which the Company, the Bank or the Subsidiary
is a party or by which the Company, the Bank
or the Subsidiary or any of their property
may be bound.
(xxv) The Company is not required to be registered
as an investment company under the Investment
Company Act of 1940.
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(2) The favorable opinion, dated as of Closing Time, of
Elias, Matz, Xxxxxxx & Xxxxxxx L.L.P., counsel for the Agent, with respect to
the matters set forth in Sections 5(b)(1)(i), (iv), (v), (vi) (solely as to
preemptive rights arising by operation of law), (xiii), (xvii) and (xviii) and
such other matters as the Agent may reasonably require.
(3) In giving their opinions required by subsections
(b)(l) and (b)(2), respectively, of this Section 5, Xxxxxxx, Xxxxxx & Xxxxxxxx
and Elias, Matz, Xxxxxxx & Xxxxxxx L.L.P. shall each additionally state that
nothing has come to their attention that would lead them to believe that the
Registration Statement (except for financial statements, the notes thereto and
other financial, statistical and appraisal data included therein, as to which
counsel need make no statement), at the time it became effective, contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus (except for financial statements and
schedules and other financial, statistical or appraisal data included therein,
as to which counsel need make no statement), at the time the Registration
Statement became effective or at Closing Time, included an untrue statement of
a material fact or omitted to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading. In giving their opinions, Xxxxxxx, Xxxxxx & Xxxxxxxx and
Elias, Matz, Xxxxxxx & Xxxxxxx L.L.P. may rely as to matters of fact on
certificates of officers and directors of the Company and the Bank and
certificates of public officials, and as to certain matters of Delaware law
upon the opinion of Morris, Nichols, Arsht & Xxxxxxx, and as to certain matters
of Pennsylvania law, upon the opinion of [___________________, GENERAL COUNSEL
OF THE COMPANY AND THE BANK], which opinions shall be in form and substance
satisfactory to counsel for the Agent, and Elias, Matz, Xxxxxxx & Xxxxxxx
L.L.P. also may rely upon the opinions of Xxxxxxx, Xxxxxx & Xxxxxxxx and
Morris, Nichols, Arsht & Xxxxxxx [AND ___________________, GENERAL COUNSEL OF
THE COMPANY AND THE BANK,] except as to paragraph (xvii) hereof. The opinions
of Xxxxxxx, Xxxxxx & Xxxxxxxx and Elias, Matz, Xxxxxxx & Xxxxxxx L.L.P. shall
be governed by the provisions of the Legal Opinion Accord ("Accord") of the
American Bar Association Section of Business Law (1991) and the term
"knowledge" as used herein shall have the meaning set forth in the Accord for
the term "Actual Knowledge."
(c) At Closing Time, there shall not have been, since the date
hereof or since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change in the
financial condition, results of operations or business affairs of the Company,
the Bank and the Subsidiary considered as one enterprise, whether or not
arising in the ordinary course of business, and the Agent shall have received a
certificate of the President and Chief Executive Officer of the Company and of
the Bank and the chief financial or chief accounting officer of the Company and
of the Bank, dated as of Closing Time, to the effect that (i) there has been no
such material adverse change, (ii) there shall have been no material
transaction entered into by the Company or the Bank from the latest date as of
which the financial condition of the Company or the Bank as set forth in the
Registration Statement and the Prospectus other than transactions referred to
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29
or contemplated therein and transactions in the ordinary cause of business,
(iii) neither the Company nor the Bank shall have received from the OTS any
direction (oral or written) to make any material change in the method of
conducting its business with which it has not complied (which direction, if
any, shall have been disclosed to the Agent) or which materially and adversely
would affect the business, financial condition or results of operations of the
Company or the Bank, (iv) the representations and warranties in Section 1
hereof are true and correct with the same force and effect as though expressly
made at and as of the Closing Time, (v) the Company and the Bank have complied
with all agreements and satisfied all conditions on their part to be performed
or satisfied at or prior to Closing Time, (vi) no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been initiated or threatened by the Commission and (vii)
no order suspending the Offerings or the authorization for final use of the
Prospectus has been issued and no proceedings for that purpose have been
initiated or threatened by the OTS and no person has sought to obtain
regulatory or judicial review of the action of the OTS in approving the Plan in
accordance with the Conversion Regulations or the OTS approval of the Holding
Company Application.
(d) At the time of the execution of this Agreement, the Agent
shall have received from KPMG Peat Marwick LLP a letter dated such date, in
form and substance satisfactory to the Agent, to the effect that (i) they are
independent public accountants with respect to the Company, the Bank and the
Subsidiary within the meaning of the Code of Ethics of the AICPA, the
Securities Act and the Securities Act Regulations and the Conversion
Regulations; (ii) it is their opinion that the consolidated financial
statements and supporting schedules included in the Registration Statement and
covered by their opinion therein comply as to form in all material respects
with the applicable accounting requirements of the Securities Act and the
Securities Act Regulations; (iii) based upon limited procedures set forth in
detail in such letter, nothing has come to their attention which causes them to
believe that (A) the unaudited financial statements and supporting schedules of
the Bank and the Subsidiary included in the Registration Statement do not
comply as to form in all material respects with the applicable accounting
requirements of the Securities Act and the Securities Act Regulations and the
Conversion Regulations or are not presented in conformity with generally
accepted accounting principles applied on a basis substantially consistent with
that of the audited financial statements included in the Registration Statement
and the Prospectus, (B) the unaudited amounts of net interest income and net
income set forth under "Selected Consolidated Financial and Other Data of the
Bank" in the Prospectus do not agree with the amounts set forth in the
consolidated financial statements as of and for the dates and periods presented
under such captions or such amounts were not determined on a basis
substantially consistent with that used in determining the corresponding
amounts in the audited financial statements included in the Registration
Statement, (C) as of the date of the most recent financial statements available
prior to the date of this Agreement, there has been any increase in the
consolidated long-term or short-term debt of the Bank or any decrease in
consolidated total assets, the allowance for loan losses, total deposits or net
worth of the Bank and the Subsidiary, in each case as compared with the amounts
shown in the December 31, 1996 balance sheet included
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30
in the Registration Statement or, (D) during the period from December 31, 1996
to the date of the most recent financial statements available prior to the date
of this Agreement, there were any decreases, as compared with the corresponding
period in the preceding year, in total interest income, net interest income,
net interest income after provision for loan losses, income before income tax
expense or net income of the Bank and the Subsidiary, except in all instances
for increases or decreases which the Registration Statement and the Prospectus
disclose have occurred or may occur; and (iv) in addition to the examination
referred to in their opinion and the limited procedures referred to in clause
(iii) above, they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages and
financial information which are included in the Registration Statement and
Prospectus and which are specified by the Agent, and have found such amounts,
percentages and financial information to be in agreement with the relevant
accounting, financial and other records of the Company, the Bank and the
Subsidiary identified in such letter.
(e) At Closing Time, the Agent shall have received from KPMG Peat
Marwick LLP a letter, dated as of Closing Time, to the effect that they
reaffirm the statements made in the letter furnished pursuant to subsection (d)
of this Section, except that the specified date referred to shall be a date not
more than five days prior to Closing Time.
(f) At Closing Time, the Securities shall have been approved for
listing on the AMEX upon notice of issuance.
(g) At Closing Time, the Agent shall have received a letter from
Xxxxxx & Company, Inc., dated as of the Closing Time, confirming its appraisal.
(h) At Closing Time, counsel for the Agent shall have been
furnished with such documents and opinions as they may require for the purpose
of enabling them to pass upon the issuance and sale of the Securities and the
Foundation Shares as herein contemplated and related proceedings, or in order
to evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Securities
and the Foundation Shares as herein contemplated shall be satisfactory in form
and substance to the Agent and counsel for the Agent.
(i) At any time prior to Closing Time, (i) there shall not have
occurred any material adverse change in the financial markets in the United
States or elsewhere or any outbreak of hostilities or escalation thereof or
other calamity or crisis the effect of which it, in the judgment of the Agent,
are so material and adverse as to make it impracticable to market the
Securities or to enforce contracts, including subscriptions or orders, for the
sale of the Securities, and (ii) trading generally on either the American Stock
Exchange or the New York Stock Exchange shall not have been suspended, and
minimum or maximum prices for trading shall not have been fixed, or maximum
ranges for prices for securities have been required, by either of said
Exchanges or by order of the Commission or any other
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31
governmental authority, and a banking moratorium shall not have been declared
by Federal authorities.
SECTION 6. INDEMNIFICATION.
(a) The Company and the Bank, jointly and severally, agree to
indemnify and hold harmless the Agent and its affiliates and their respective
partners, directors, officers and employees agents and controlling persons
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act as follows:
(i) from and against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, related to or arising out of the
Conversion (including the establishment of the Foundation and the contribution
of the Foundation Shares thereto by the Company) or any action taken by the
Agent where acting as agent of the Company or the Bank or otherwise as
described in Section 2 hereof; provided, however, that this indemnity agreement
shall not apply to any loss, liability, claim, damage or expense found in a
final judgment by a court of competent jurisdiction to have resulted primarily
from the bad faith, willful misconduct or gross negligence of the Agent seeking
indemnification hereunder;
(ii) from and against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, based upon or arising out of any
untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment thereto), or the omission or
alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out of any
untrue statement or alleged untrue statement of a material fact contained in
the Prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
(iii) from and against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or of any claim
whatsoever described in clauses (i) or (ii) above, if such settlement is
effected with the written consent of the Company or the Bank, which consent
shall not be unreasonably withheld; and
(iv) from and against any and all expense whatsoever, as
incurred (including, subject to Section 6(c) hereof, the fees and disbursements
of counsel chosen by the Agent), reasonably incurred in investigating,
preparing for or defending against any litigation, or any investigation,
proceeding or inquiry by any governmental agency or body, commenced or
threatened, or any claim whatsoever described in clauses (i) or (ii) above, to
the extent that any such expense is not paid under (i), (ii) or (iii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage
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or expense to the extent arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Prospectus (or any amendment or
supplement thereto) or omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in light of the
circumstance under which they were made, not misleading which was made in
reliance upon and in conformity with written information relating to the Agent
furnished to the Company or the Bank by the Agent expressly for use in the
Registration Statement (or any amendment or supplement thereto) or the
Prospectus (or any amendment or supplement thereto), which information the
Company and the Bank acknowledge is included only in the sections captioned
"Market for the Common Stock," "The Conversion - Marketing and Underwriting
Arrangements" and "Syndicated Community Offering" of the Prospectus ("Agent's
Information"). Notwithstanding the foregoing, the indemnification provided for
in this paragraph (a) shall not apply to the Bank in the event that it is found
in a final judgement by a court of competent jurisdiction to constitute an
impermissible covered transaction under Section 23A of the Federal Reserve Act.
(b) The Agent agrees to indemnify and hold harmless the Company,
the Bank, their directors and trustees, each of their officers who signed the
Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, of a material fact made in the Registration
Statement (or any amendment or supplement thereto) in the Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with the
Agent's Information.
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure
to so notify an indemnifying party shall not relieve such indemnifying party
from any liability which it may have otherwise than on account of this
indemnity agreement. An indemnifying party may participate at its own expense
in the defense of any such action. In no event shall the indemnifying parties
be liable for fees and expenses of more than one counsel (in addition to no
more than one local counsel in each separate jurisdiction in which any action
or proceeding is commenced) separate from their own counsel for all indemnified
parties in connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances.
(d) The Company and the Bank also agree that the Agent shall not
have any liability (whether direct or indirect, in contract or tort or
otherwise) to the Bank, the Company, its security holders or the Bank's or the
Company's creditors relating to or arising out of the engagement of the Agent
pursuant to, or the performance by the Agent of the services contemplated by,
this Agreement, except to the extent that any loss, claim, damage or liability
is found in a final judgment by a court of competent jurisdiction to have
resulted primarily from the Agent's bad faith, willful misconduct or gross
negligence.
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(e) In addition to, and without limiting, the provisions of
Section 6(a)(iv) hereof, in the event that any Agent, any person, if any, who
controls the Agent within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act or any of its partners, directors, officers and
employees is requested or required to appear as a witness or otherwise gives
testimony in any action, proceeding, investigation or inquiry brought by or on
behalf of or against the Company, the Bank, the Agent or any of their
respective affiliates or any participant in the transactions contemplated
hereby in which the Agent or such person or agent is not named as a defendant,
the Company and the Bank jointly and severally agree to reimburse the Agent for
all reasonable and necessary out-of-pocket expenses incurred by it in
connection with preparing or appearing as a witness or otherwise giving
testimony and to compensate the Agent in an amount to be mutually agreed upon.
SECTION 7. CONTRIBUTION.
In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 6 hereof
is for any reason held to be unenforceable by the indemnified parties although
applicable in accordance with its terms, the Company, the Bank and the Agent
shall contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by said indemnity agreement incurred by the
Company or the Bank and the Agent, as incurred, in such proportions (i) that
the Agent is responsible for that portion represented by the percentage that
the maximum aggregate marketing fees appearing on the cover page of the
Prospectus bears to the maximum aggregate gross proceeds appearing thereon and
the Company, the Bank and the Subsidiary are jointly and severally responsible
for the balance or (ii) if, but only if, the allocation provided for in clause
(i) is for any reason held unenforceable, in such proportion as is appropriate
to reflect not only the relative benefits to the Company and the Bank on the
one hand and the Agent on the other, as reflected in clause (i), but also the
relative fault of the Company and the Bank on the one hand and the Agent on the
other, as well as any other relevant equitable considerations; provided,
however, that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section, each person, if any, who
controls the Agent within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act shall have the same rights to contribution as
the Agent, and each director of the Company, each trustee of the Bank, each
officer of the Company who signed the Registration Statement, and each person,
if any, who controls the Company or the Bank within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act shall have the same
rights to contribution as the Company and the Bank. Notwithstanding anything
to the contrary set forth herein, to the extent permitted by applicable law, in
no event shall the Agent be required to contribute an aggregate amount in
excess of the aggregate marketing fees to which the Agent is entitled and
actually paid pursuant to this Agreement.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY.
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All representations, warranties and agreements contained in this
Agreement, or contained in certificates of officers of the Company or the Bank
submitted pursuant hereto, shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of any Agent or
controlling person, or by or on behalf of the Company, and shall survive
delivery of the Securities.
SECTION 9. TERMINATION OF AGREEMENT.
(a) The Agent may terminate this Agreement, by notice to the
Company, at any time at or prior to Closing Time (i) if there has been, since
the date of this Agreement or since the respective dates as of which
information is given in the Registration Statement, any material adverse change
in the financial condition, results of operations or business affairs of the
Company or the Bank, or the Company, the Bank or the Subsidiary considered as
one enterprise, whether or not arising in the ordinary course of business, or
(ii) if there has occurred any material adverse change in the financial markets
in the United States or elsewhere or any outbreak of hostilities or escalation
thereof or other calamity or crisis the effect of which it, in the judgment of
the Agent, are so material and adverse as to make it impracticable to market
the Securities or to enforce contracts, including subscriptions or orders, for
the sale of the Securities, (iii) or if trading generally on either the
American Stock Exchange or the New York Stock Exchange has been suspended, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices for securities have been required, by either of said Exchanges or by
order of the Commission or any other governmental authority, or if a banking
moratorium has been declared by either Federal or New York authorities, (iv) if
any condition specified in Section 5 shall not have been fulfilled when and as
required to be fulfilled; (v) if there shall have been such material adverse
change in the condition or prospects of the Company or the Bank or the
prospective market for the Company's securities as in the Agent's good faith
opinion would make it inadvisable to proceed with the offering, sale or
delivery of the Securities; (vi) if in the Agent's good faith opinion, the
price for the Securities established by the Company is not reasonable or
equitable under then prevailing market conditions; or (vii) if the Conversion
is not consummated on or prior to June 30, 1998.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except
as provided in Section 4 hereof relating to the reimbursement of expenses and
except that the provisions of Sections 6 and 7 hereof shall survive any
termination of this Agreement.
SECTION 10. NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any
standard form of telecommunication. Notices to the Agent shall be directed to
the Agent at 000 Xxxxxx Xxxx Xxxx, Xxxxx Xxxx, Xxx Xxxx 00000, attention of
Xxxx X. Xxxxx, with a copy to Xxxxxx Xxxx Xxxxx, Esq., Elias, Matz, Xxxxxxx &
Xxxxxxx L.L.P., 000 00xx Xxxxxx X.X., Xxxxxxxxxx,
00
00
X.X. 00000; notices to the Company and the Bank shall be directed to either of
them at First Federal Savings & Loan Association of Hazleton, 00 X. Xxxxx
Xxxxxx, Xxxxxxxx, Xxxxxxxxxxxx 00000, attention of E. Xxx Xxxxx, President and
Chief Executive Officer, with a copy to Xxxxxx X. Xxxxxxxx, Esq., Xxxxxxx,
Xxxxxx & Xxxxxxxx, 0000 Xxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000.
SECTION 11. PARTIES.
This Agreement shall inure to the benefit of and be binding upon the
Agent, the Company and the Bank and their respective successors. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person, firm or corporation, other than the Agent, the Company and the
Bank and their respective successors and the controlling persons and officers
and directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein or therein contained. This
Agreement and all conditions and provisions hereof and thereof are intended to
be for the sole and exclusive benefit of the Agent, the Company and the Bank
and their respective successors, and said controlling persons and officers and
directors and their heirs and legal representatives, and for the benefit of no
other person, firm or corporation.
SECTION 12. ENTIRE AGREEMENT; AMENDMENT.
This Agreement represents the entire understanding of the parties
hereto with reference to the transactions contemplated hereby and supersedes
any and all other oral or written agreements heretofore made. No waiver,
amendment or other modification of this Agreement shall be effective unless in
writing and signed by the parties hereto.
SECTION 13. GOVERNING LAW AND TIME.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York applicable to agreements made and to be
performed in said State without regard to the conflicts of laws provisions
thereof. Unless otherwise noted, specified times of day refer to Eastern time.
SECTION 14. SEVERABILITY.
Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
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SECTION 15. HEADINGS.
Sections headings are not to be considered part of this Agreement, are
for convenience and reference only, and are not to be deemed to be full or
accurate descriptions of the contents of any paragraph or subparagraph.
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement among the Agent, the Company and the Bank in accordance with its
terms.
Very truly yours,
NORTHEAST PENNSYLVANIA
FINANCIAL CORP.
By:
-------------------------------------
E. Xxx Xxxxx
President and Chief Executive Officer
FIRST FEDERAL SAVINGS & LOAN
ASSOCIATION OF HAZLETON
By:
-------------------------------------
E. Xxx Xxxxx
President and Chief Executive Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
SANDLER X'XXXXX & PARTNERS, L.P.
By: Sandler X'Xxxxx & Partners Corp.,
the sole general partner
By:
---------------------------------------
Xxxx X. Xxxxx
Principal
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