EXHIBIT 1.2
17,566,250 Shares
(subject to increase up to 20,201,188 shares
in the event of an oversubscription)
KNBT BANCORP, INC.
(a Pennsylvania corporation)
Common Stock
(par value $.01 per share)
AGENCY AGREEMENT
August ___, 0000
XXXXXXX X'XXXXX & PARTNERS, L.P.
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
KNBT Bancorp, Inc., a Pennsylvania corporation (the "Company"), and
Keystone Savings Bank, a Pennsylvania chartered mutual savings bank (the
"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 17,566,250 shares (subject to increase up to 20,201,188 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
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
Keystone Nazareth 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 Pennsylvania chartered mutual savings bank to a Pennsylvania
chartered stock savings bank and issue all of its stock to the Company. Pursuant
to the Plan, the Company is offering to the Bank's tax qualified employee
benefit plans, including the Employee Stock Ownership Plan (the "ESOP")
(collectively, the "Employee Plans") and to certain of the Bank's depositors
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, with preference given to natural persons residing in the
counties in Pennsylvania in which the Bank has branch offices, in a direct
community offering (the "Community Offering" and together with the
Subscription Offering, as each may be extended or reopened from time to time,
the "Subscription and Community Offering") to be commenced concurrently with,
during or promptly after the Subscription Offering. It is currently anticipated
by the Bank and the Company that any Securities not subscribed for in the
Subscription and Community Offering will be offered, subject to Section 2
hereof, in a syndicated community offering (the "Syndicated Community
Offering"). The Subscription and Community Offering and the Syndicated Community
Offering are hereinafter referred to collectively as the "Offerings," and the
conversion of the Bank from mutual to stock form, the acquisition of the capital
stock of the Bank by the Company and the Offerings are hereinafter referred to
collectively as the "Conversion." It is acknowledged that the price of the
Securities may be decreased and 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 depositors of the Bank
and compliance with certain conditions as may be imposed by regulatory
authorities, the Company will contribute newly issued shares of Common Stock in
an amount equal to 8% of the Securities sold in the Offering, or between
1,038,700 and 1,405,300 shares of Common Stock (or 1,616,100 shares if up to
20,201,188 shares are sold in the Conversion).
Immediately following the completion of the Conversion, the Company will
acquire First Colonial Group, Inc. ("First Colonial") in a merger transaction
(the "Merger") pursuant to an Agreement and Plan of Merger (the "Merger
Agreement") dated as of March 5, 2003. First Colonial is the holding company of
Nazareth National Bank and Trust Company ("Nazareth"). The Merger will be
accomplished in accordance with the laws of the United States and the laws of
the Commonwealth of Pennsylvania and applicable regulations of the Federal
Deposit Insurance Corporation (the "FDIC"), the Commonwealth of Pennsylvania
Department of Banking ("Department of Banking"), the Office of the Comptroller
of the Currency (the "OCC") and the Board of Governors of the Federal Reserve
System (the "FRB"), which laws and regulations are collectively referred to as
the "Merger Regulations," and together with the Conversion Regulations, the
"Reorganization Regulations." Sandler X'Xxxxx is serving as financial advisor to
the Company and the Bank in connection with the Merger. Pursuant to the terms of
the Merger Agreement, upon consummation of the Merger, each outstanding share of
common stock of First Colonial ("First Colonial Common Stock") will be converted
into the right to receive 3.7 shares (the "Exchange Ratio") of Company Common
Stock (the "Merger Shares") and each outstanding option to purchase First
Colonial Common Stock will be converted into the right to acquire a number of
shares of Company Common Stock equal to the number of shares of First Colonial
Common Stock subject to such option multiplied by the Exchange Ratio. The
Conversion and the Merger are separate, distinct transactions. The Merger will
not occur without the Conversion; however, the Conversion
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will proceed whether or not the Merger occurs. The Conversion and the Merger are
collectively referred to herein as the "Reorganization." The Reorganization will
not be consummated until all conditions to the consummation of both the
Conversion and the Merger have been satisfied or waived. In the event the Merger
is terminated, the Conversion will not be consummated until all conditions to
the consummation of the Conversion have been satisfied or waived.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-105899), including a
related prospectus, for the registration of the Securities, the Foundation
Shares and the Merger 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 may hereafter be required. Such registration statement (as
amended to date, if applicable, and as from time to time amended or supplemented
hereafter) and the 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 a part thereof pursuant to the
rules and regulations of the Commission under the Securities Act, as from time
to time amended or supplemented pursuant to the Securities Act or otherwise (the
"Securities Act Regulations")), are hereinafter referred to as the "Registration
Statement" and the "Prospectus," respectively, except that if any revised
prospectus shall be used by the Company in connection with the Subscription and
Community Offering or the Syndicated Community Offering which differs from the
Prospectus on file at the Commission at the time the Registration Statement
becomes effective (whether or not such revised prospectus is required to be
filed by the Company pursuant to Rule 424(b) of the Securities Act Regulations),
the term "Prospectus" shall refer to such revised prospectus from and after the
time it is first provided to the Agent for such use.
Concurrently with the execution of this Agreement, the Company is
delivering to the Agent copies of the Prospectus of the Company to be used in
the Subscription and Community Offering. Such Prospectus contains information
with respect to the Bank, the Company, the Common Stock and the Merger.
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
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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 last sentence of the second paragraph of the
section entitled "Market for KNBT Common Stock" and the second
paragraph of the section "The Conversion- Marketing Arrangements" of
the Prospectus).
(ii) The Company has filed with the Federal Reserve Board (the
"FRB") the Company's application for approval of its acquisition of
the Bank (the "Holding Company Application") on Form FR Y-1
promulgated under the bank holding company provisions of the Bank
Holding Company Act of 1956, as amended (the "BHCA") and the
regulations promulgated thereunder. The Company has received written
notice from the FRB 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 FRB 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 FRB. At the date of such
approval and at the Closing Time referred to in Section 2, the
Holding Company Application complied and will comply in all material
respects with the applicable provisions of BHCA and the regulations
promulgated thereunder.
(iii) The Company has filed with the Department of Banking the
Company's application for approval of its acquisition of the Bank
(the "PA Holding Company Application") on the appropriate form
promulgated under the bank holding company provisions of the banking
law of the Commonwealth of Pennsylvania, as amended (the "PA Banking
Law") and the regulations promulgated thereunder. The Company has
received written notice from the Department of Banking 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 Department
of Banking 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 Department of Banking. At the date of
such approval and at the Closing Time referred to in Section 2, the
PA Holding Company Application complied and will comply in all
material respects with the applicable provisions of PA Banking Law
and the regulations promulgated thereunder.
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(iv) Pursuant to the rules and regulations of the Department of
Banking governing the conversion of Pennsylvania- chartered mutual
savings banks to stock form (the "Conversion Regulations"), the Bank
has filed with the Department of Banking an application for
conversion on the appropriate form, 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 ______________, 2003,
relating to the Conversion (the "Proxy Statement"), and the
Prospectus and the Conversion Application is truthful and accurate
in all material respects. The Department of Banking, by letter dated
__________, 2003, has approved the Conversion Application, including
the Proxy Statement and Prospectus, such approval remains in full
force and effect and no order has been issued by the Department of
Banking 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 Department of Banking. At the date of
such approval and at the Closing Time referred to in Section 2, the
Conversion Application complied and will comply in all material
respects with the applicable provisions of the Conversion
Regulations.
(v) Pursuant to the rules and regulations of the FDIC
governing the conversion of state- chartered mutual savings banks to
stock form (the "FDIC Conversion Regulations"), the Bank has filed
with the FDIC a notice for conversion on the appropriate form, and
has filed such amendments thereto and supplementary materials as may
have been required to the date hereof (such notice, as amended to
date, if applicable, and as from time to time amended or
supplemented hereafter, is hereinafter referred to as the "FDIC
Conversion Notice"), including copies of the Proxy Statement, and
the Prospectus and the FDIC Conversion Notice is truthful and
accurate in all material respects. The FDIC, by letter dated
__________, 2003, granted its conditional non-objection to the FDIC
Conversion Notice, including the Proxy Statement and Prospectus,
such non-objection remains in full force and effect and no order has
been issued by the FDIC suspending or revoking such non-objection
and no proceedings therefor have been initiated or, to the knowledge
of the Company or the Bank, threatened by the FDIC. At the date of
such non-objection and at the Closing Time referred to in Section 2,
the FDIC Conversion Notice complied and will comply in all material
respects with the applicable provisions of the FDIC Conversion
Regulations.
(vi) The Bank has filed with the FDIC the Bank's application
for approval of its merger with Nazareth (the "Bank Merger
Application") on the form of interagency bank merger application
promulgated under the bank merger provisions of the Federal Deposit
Insurance Act, as amended (the "FDIA") and the regulations
promulgated thereunder. The Bank has received written notice from
the FDIC of its
5
approval of the merger with Nazareth, such approval remains in full
force and effect and no order has been issued by the FDIC 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 FDIC. At the date of such approval and at the
Closing Time referred to in Section 2, the Bank Merger Application
complied and will comply in all material respects with the
applicable provisions of FDIA and the regulations promulgated
thereunder.
(vii) The Bank has filed with the Department of Banking the
Bank's application for approval of its merger with Nazareth (the "PA
Bank Merger Application") on the appropriate form of application
promulgated under the bank merger provisions of the PA Banking Law
and the regulations promulgated thereunder. The Bank has received
written notice from the Department of Banking of its approval of the
merger with Nazareth, such approval remains in full force and effect
and no order has been issued by the Department of Banking 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 Department of Banking. At the date of such
approval and at the Closing Time referred to in Section 2, the PA
Bank Merger Application complied and will comply in all material
respects with the applicable provisions of the PA Banking Law and
the regulations promulgated thereunder.
(viii) The Bank and Nazareth have filed with the OCC the Bank's
notice of its merger with Nazareth (the "OCC Merger Notice") on the
appropriate form of notice promulgated under the bank merger
provisions of the National Bank Act and the regulations promulgated
thereunder. The Bank has received written notice from the OCC of its
non-objection of the merger with Nazareth, such non-objection
remains in full force and effect and no order has been issued by the
OCC suspending or revoking such non-objection and no proceedings
therefor have been initiated or, to the knowledge of the Company or
the Bank, threatened by the OCC. At the date of such non-objection
and at the Closing Time referred to in Section 2, the OCC Merger
Notice Application complied and will comply in all material respects
with the applicable provisions of the National Bank Act and the
regulations promulgated thereunder.
(ix) 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 the FDIC 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, the FDIC and the
Department of Banking. The Prospectus and all supplemental sales
literature, as of the date the Registration Statement became
effective and at the Closing Time
6
referred to in Section 2, complied and will comply in all material
respects with the applicable requirements of the Conversion
Regulations and the FDIC Conversion Regulations and, at or prior to
the time of their first use, will have received all required
authorizations of the FDIC and the Department of Banking for use in
final form.
(x) Neither the SEC, FDIC, FRB nor the Department of Banking
has, by order or otherwise, prevented or suspended the use of the
Proxy Statement, the Prospectus or any supplemental sales literature
authorized by the Company or the Bank for use in connection with the
Offerings and no action by or before any such governmental entity to
prevent or suspend the use of the Proxy Statement, the Prospectus or
any supplemental sales literature is pending, or to the best
knowledge of the Company and the Bank, threatened.
(xi) 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, the applicable
FDIC Conversion Regulations and all other applicable laws,
regulations, decisions and orders, including all material terms,
conditions, requirements and provisions precedent to the Conversion
imposed upon the Company or the Bank by the Department of Banking,
the FDIC, or any other regulatory authority, other than those which
the regulatory authority permits to be completed after the
Conversion.
(xii) At the Closing Time referred to in Section 2 hereof, the
Company, the Bank, First Colonial and Nazareth will have completed
the conditions precedent to the Merger in accordance with the Merger
Agreement (other than the delivery and exchange of shares), and all
applicable law, regulations, decisions and orders, including all
material terms, conditions, requirements and provisions precedent to
the Merger imposed upon by the Company or the Bank by the
Commission, the Department of Banking, the FDIC, the FRB, the OCC,
any state regulatory or Blue Sky authority or any other regulatory
authority. At the Closing Time, the Company, the Bank, First
Colonial and Nazareth will have completed the conditions precedent
to the Merger in accordance with the Merger Agreement (other than
the delivery of the exchange shares), and all applicable laws,
regulations, decisions and orders, including all material terms,
conditions, requirements and provisions precedent to the Merger
imposed upon the Company, the Bank, First Colonial or Nazareth by
the Department of Banking, the FDIC, the FRB, the OCC or any other
regulatory authority, other than those which the regulatory
authority permits to be completed after the effective time of the
Merger (the "Effective Time").
(xiii) At the time of the approval of the Reorganization
Applications by the applicable regulatory authorities (including any
amendment or supplement thereto)
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and at all times subsequent thereto until the Closing Time referred
to in Section 2 hereof, the Reorganization Applications complied and
will comply in all material respects with the Reorganization
Regulations. The Prospectus contained in the Reorganization
Applications (including any amendment or supplement thereto), at the
time of the approval of the Reorganization Applications by the
applicable regulatory authorities and at all times subsequent
thereto until the Closing Time and the Effective Time, complied and
will comply in all material respects with the Reorganization
Regulations.
(xiv) R.P. Financial, LC. ("RP Financial"), 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 the
FDIC Conversion regulations and any interpretations or guidelines
issued by the Department of Banking and the FDIC with respect
thereto.
(xv) 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 subsidiaries, independent
certified public accountants as required by the Securities Act and
the Securities Act Regulations and such accountants are not in
violation of the auditors independence requirements of the
Xxxxxxxx-Xxxxx Act of 2002 (the "Xxxxxxxx-Xxxxx Act"). The
accountants who certified the consolidated financial statements and
supporting schedules of First Colonial and Nazareth included in the
Registration Statement have advised First Colonial and Nazareth 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 First Colonial, Nazareth and the Subsidiaries (as
hereinafter defined), independent certified public accountants as
required by the Securities Act and the Securities Act Regulations
and such accountants are not in violation of the auditors
independence requirements of the Xxxxxxxx-Xxxxx Act of 2002 (the
"Xxxxxxxx-Xxxxx Act").
(xvi) The only direct and indirect subsidiaries of the Bank are
KLV, Inc. and KLVI, Inc. (the "Subsidiaries"). Except for the
Subsidiaries, the Bank does not, directly or indirectly, control any
other corporation, limited liability company, partnership, joint
venture, association, trust or other business organization. Upon
completion of the Conversion and the Merger, the only direct
subsidiary of the Company will be the Bank.
(xvii) The consolidated financial statements and the related
notes thereto included in the Registration Statement and the
Prospectus present fairly the financial position
8
of each of: (i) the Company, the Bank and the Subsidiaries and (ii)
First Colonial and Nazareth and its subsidiaries at the respective
dates indicated and the results of operations, retained earnings,
equity 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 financial statements have been prepared in
conformity with accounting principles generally accepted in the
United States applied on a consistent basis and are consistent with
financial statements and other reports filed by the Bank with the
Department of Banking and the FDIC, filed by First Colonial with the
FRB and filed by Nazareth with the OCC; and the supporting schedules
and tables included in the Registration Statement present fairly the
information required to be stated therein. The other financial,
statistical and pro forma information and related notes included in
the Prospectus present fairly the information shown therein on a
basis consistent with the audited and unaudited financial statements
included in the Prospectus, and as to the pro forma adjustments, the
adjustments made therein have been consistently applied on the basis
described therein. The capitalization, liabilities, assets,
properties and business of each of the Company and the Bank and
First Colonial and Nazareth conform in all material respects to the
descriptions contained in the Prospectus and, neither the Company
nor the Bank nor First Colonial nor Nazareth has any material
liabilities of any kind, contingent or otherwise, except as
disclosed in the Registration Statement or the Prospectus.
(xviii) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise stated therein (A) there has been no material adverse
change in the financial condition, results of operations, business
affairs or prospects of the Company, the Bank and the Subsidiaries
or First Colonial, Nazareth or their respective subsidiaries,
considered as one enterprise, whether or not arising in the ordinary
course of business, consistent with past practice, (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 Subsidiaries, other than those in the
ordinary course of business consistent with past practice, which are
material with respect to the Company, the Bank and the Subsidiaries,
considered as one enterprise, and (C) except for transactions
specifically referred to or contemplated in the Prospectus, there
have been no transactions entered into by First Colonial, Nazareth
or any of its subsidiaries, other than those in the ordinary course
of business, which are material with respect to First Colonial and
its subsidiaries considered as one enterprise.
(xix) Each of the Company and First Colonial has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the Commonwealth of Pennsylvania, with
corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the
Prospectus
9
and to enter into and perform its obligations under this Agreement;
and each of the Company and First Colonial is duly qualified as a
foreign corporation 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 in any other
jurisdiction would not have a material adverse effect on the
financial condition, results of operations or business affairs or
prospects of the Company, the Bank and the Subsidiaries, considered
as one enterprise on the one hand or the financial condition,
results of operations or business affairs of First Colonial,
Nazareth and its subsidiaries considered as one enterprise on the
other hand.
(xx) Upon consummation of the Conversion and the Merger 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; no shares of Common Stock or other capital stock of
the Company 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 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; at the time of Merger, the
Merger Shares will have been duly authorized for issuance and, when
issued and delivered by the Company pursuant to the Merger Agreement
against payment of the consideration calculated as set forth in the
Merger Agreement, 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 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 regulations; and the issuance of the Securities, the Merger
Shares and the Foundation Shares is not subject to preemptive or
other similar rights.
(xxi) The Bank is a Pennsylvania chartered savings bank in
mutual form, and, upon consummation of the Conversion, will be a
Pennsylvania 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 Subsidiaries 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 Prospectus and, 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, business affairs or prospects of the Company,
the Bank and the Subsidiaries, considered as one enterprise; all
such
10
licenses, permits and other governmental authorizations are in full
force and effect and the Company, the Bank and the Subsidiaries are
in all material respects in compliance therewith; neither the
Company, the Bank nor the Subsidiaries has received notice of any
proceeding or action relating to the revocation or modification of
any such license, permit or other governmental authorization which,
singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, might have a material adverse effect on
the financial condition, results of operations, business affairs or
prospects of the Company, the Bank and the Subsidiaries, considered
as one enterprise; and the Bank is validly existing and in good
standing under the laws of Pennsylvania and is qualified as a
foreign corporation in any jurisdiction in which the failure to so
qualify would have a material adverse effect on the financial
condition, results of operations, business affairs or prospects of
the Company, the Bank and the Subsidiaries, considered as one
enterprise. Nazareth is a national bank with full corporate power
and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus; First Colonial,
Nazareth and its subsidiaries 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 Prospectus
and, 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, business
affairs or prospects of First Colonial and Nazareth and its
subsidiaries, considered as one enterprise; all such licenses,
permits and other governmental authorizations are in full force and
effect and First Colonial, Nazareth and its subsidiaries are in all
material respects in compliance therewith; neither the First
Colonial, Nazareth nor its subsidiaries has received notice of any
proceeding or action relating to the revocation or modification of
any such license, permit or other governmental authorization which,
singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, might have a material adverse effect on
the financial condition, results of operations, business affairs or
prospects of the First Colonial, Nazareth and its subsidiaries,
considered as one enterprise; and Nazareth is validly existing and
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, business affairs or
prospects of First Colonial, Nazareth and its subsidiaries,
considered as one enterprise.
(xxii) The deposit accounts of each of the Bank and Nazareth are
insured by the FDIC up to the applicable limits. Upon consummation
of the Conversion, the liquidation account for the benefit of
Eligible Account Holders (as defined in the Plan) and Supplemental
Eligible Account Holders (as defined in the Plan) of the Bank will
be duly established in accordance with the requirements of the Plan
and the Conversion Regulations.
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(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 ______ 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 upon consummation of the
Conversion, all of the issued and outstanding capital stock of the
Bank will be duly authorized, validly issued and fully paid and
non-assessable and have been issued in compliance with all federal
and state securities laws. 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 non- assessable, 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; and there are no other warrants,
options or rights of any kind to acquire additional shares of Bank
Common Stock or any shares of Bank Preferred Stock. Upon
consummation of the transactions contemplated by the Merger
Agreement, there will be no issued and outstanding shares of capital
stock of either First Colonial or Nazareth and the separate
corporate existence of each of First Colonial and Nazareth shall
have ceased.
(xvii) The Foundation has been duly authorized and 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 holding company withing the meaning of the BHCA and the
applicable regulations of the FRB 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 imposed by the Department of Banking and the FDIC; 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
12
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 preemptive or
similar rights. The Foundation Shares have been registered pursuant
to the Registration Statement.
(xviii) Each of the Subsidiaries of the Bank and each of the
subsidiaries of Nazareth has been duly incorporated and is validly
existing as corporations 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, business affairs or prospects of the Company,
the Bank and the Subsidiaries, considered as one enterprise on the
one hand, or the financial condition, results of operation or
business affairs of First Colonial, Nazareth and its subsidiaries
considered as one enterprise on the other hand; the activities of
the Subsidiaries are permitted to subsidiaries of a Pennsylvania
chartered mutual savings bank and a bank holding company by the
rules, regulations, resolutions and practices of the Department of
Banking, the FRB, the FDIC and any other state or federal authority
having jurisdiction over such matters and the activities of
Nazareth's subsidiaries are permitted to subsidiaries of a national
bank and a bank holding company by the rules, regulations,
resolutions and practices of the OCC and the FRB and any other state
or federal authority having jurisdiction over such matters; all of
the issued and outstanding capital stock of each of the Subsidiaries
and of each of the Nazareth subsidiaries has been duly authorized
and validly issued, is fully paid and non-assessable and is owned by
the Bank or Nazareth, as the case may be, directly, free and clear
of any security interest, mortgage, pledge, lien, encumbrance or
legal or equitable claim; and there are no warrants, options or
rights of any kind to acquire shares of capital stock of the
Subsidiaries or the Nazareth subsidiaries.
(xxix) 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 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.
(xxx) 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
13
otherwise may be indicated or contemplated therein, none of the
Company, the Bank or the Subsidiaries or First Colonial, Nazareth or
its subsidiaries will have (A) issued any securities or incurred any
liability or obligation, direct or contingent, or borrowed money,
except borrowings in the ordinary course of business consistent with
past practice from the same or similar sources and in similar
amounts as indicated in the Prospectus, or (B) entered into any
transaction or series of transactions which are material in light of
the business of the Company, the Bank and the Subsidiaries, taken as
a whole on the one hand or in light of the business of First
Colonial, Nazareth or its subsidiaries, taken as a whole, on the
other hand, excluding the origination, purchase and sale of loans or
the purchase or sale of investment securities or mortgaged-backed
securities in the ordinary course of business consistent with past
practice.
(xxxi) 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, the
Merger Shares and the Foundation Shares that has not been obtained
and a copy of which has been delivered to the Agent, except as may
be required under the "blue sky" or state securities laws of various
jurisdictions.
(xxxii) None of the Company, the Bank, the Subsidiaries, First
Colonial, Nazareth or its subsidiaries 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 none of the Company, the
Bank, the Subsidiaries, First Colonial, Nazareth or its subsidiaries
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, the Subsidiaries, First Colonial, Nazareth or its subsidiaries
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, the
Subsidiaries, First Colonial, Nazareth or its subsidiaries 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, business affairs or prospects of
the Company, the Bank and the Subsidiaries, considered as one
enterprise on the one hand or the financial condition, results of
operations or business of First Colonial, Nazareth and its
subsidiaries considered as one enterprise on the other hand; and
there are no contracts or documents of the Company, the Bank or any
of the Subsidiaries which are required to be filed as exhibits to
the Registration Statement, the Conversion Application or the FDIC
Conversion Notice which have not been so filed.
14
(xxxiii) The consummation of the Conversion and the Merger, the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein have been duly
authorized by all necessary corporate action on the part of the
Company and the Bank and do not and will not conflict with or
constitute a breach of, or default under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property
or assets of the Company, the Bank or the Subsidiaries pursuant to,
any contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which the Company, the Bank or the Subsidiaries
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
Subsidiaries 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, business affairs or
prospects of the Company, the Bank and the Subsidiaries, 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 or bylaws of the
Company, the Bank or the Subsidiaries, or any applicable law,
administrative regulation or administrative or court decree.
(xxxiv) No labor dispute with the employees of the Company, the
Bank or the Subsidiaries exists or, to the knowledge of the Company
or the Bank, is imminent or threatened; and the Company and the Bank
are not aware of any existing or threatened labor disturbance by the
employees of any of its principal suppliers or contractors which
might be expected to result in any material adverse change in the
financial condition, results of operations, business affairs or
prospects of the Company, the Bank and the Subsidiaries, considered
as one enterprise.
(xxxv) Each of the Company, the Bank and the Subsidiaries have
good and marketable title to all properties and assets for which
ownership is material to the business of the Company, the Bank or
the Subsidiaries 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 or the Subsidiaries, considered as one enterprise;
and all of the leases and subleases material to the business of the
Company, the Bank or the Subsidiaries under which the Company, the
Bank or the Subsidiaries hold properties, including those described
in the Prospectus, are valid and binding agreements of the Company,
the Bank and the Subsidiaries in full force and effect, enforceable
in accordance with their terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization and
similar laws of general applicability relating to or affecting
creditors' rights or general principles of equity). Each of First
Colonial, Nazareth and its subsidiaries have good and marketable
title to all properties and assets for which ownership is material
to the business of First Colonial, Nazareth or its subsidiaries and
to those properties and assets described in the Prospectus as owned
15
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 First Colonial, Nazareth
or its subsidiaries, considered as one enterprise; and all of the
leases and subleases material to the business of First Colonial,
Nazareth or its subsidiaries under which First Colonial, Nazareth or
its subsidiaries hold properties, including those described in the
Prospectus, are valid and binding agreements of First Colonial,
Nazareth and its subsidiaries in full force and effect, enforceable
in accordance with their terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization and
similar laws of general applicability relating to or affecting
creditors' rights or general principles of equity).
(xxxvi) None of the Company, the Bank nor the Subsidiaries or
First Colonial, Nazareth or its subsidiaries are in violation of any
directive from the Commission, the Department of Banking, the FRB,
the FDIC, the OCC or any other governmental entity to make any
material change in the method of conducting their respective
businesses; each of the Company, the Bank, the Subsidiaries, First
Colonial, Nazareth and its subsidiaries has conducted and is
conducting its business so as to comply in all material respects
with all applicable statutes, regulations and administrative and
court decrees (including, without limitation, all regulations,
decisions, directives and orders of the Commission, the Department
of Banking, the FRB, the OCC and the FDIC). None of the Company, the
Bank, the Subsidiaries, First Colonial, Nazareth and its
subsidiaries is subject or is party to, or has received any notice
or advice that any of them may become subject or party to, any
investigation with respect to any cease-and-desist order, agreement,
consent agreement, memorandum of understanding or other regulatory
enforcement action, proceeding or order with or by, or is a party to
any commitment letter or similar undertaking to, or is subject to
any directive by, or has been a recipient of any supervisory letter
from, or has adopted any board resolutions at the request of, any
Regulatory Agency (as defined below) that currently restricts in any
material respect the conduct of their business or that in any
material manner relates to their capital adequacy, their credit
policies, their management or their business (each, a "Regulatory
Agreement"), nor has the Company, the Bank, the Subsidiaries, First
Colonial, Nazareth or its subsidiaries been advised by any
Regulatory Agency that it is considering issuing or requesting any
such Regulatory Agreement; and there is no unresolved violation,
criticism or exception by any Regulatory Agency with respect to any
report or statement relating to any examinations of the Company, the
Bank, the Subsidiaries, First Colonial, Nazareth or its subsidiaries
which, in the reasonable judgment of the Company or the Bank, is
expected to have a material adverse effect on the financial
condition, results of operations, business affairs or prospects of
the Company, the Bank and the Subsidiaries, considered as one
enterprise on the one hand, or on the financial condition, results
of operations, business affairs or prospects of First Colonial,
Nazareth or its subsidiaries, considered as one enterprise, on the
other hand. As used herein, the term
16
"Regulatory Agency" means any federal or state agency charged with
the supervision or regulation of depositary institutions or holding
companies of depositary institutions, or engaged in the insurance of
depositary institution deposits, or any court, administrative agency
or commission or other governmental agency, authority or
instrumentality having supervisory or regulatory authority with
respect to the Company, the Bank, the Subsidiaries, First Colonial,
Nazareth or its subsidiaries.
(xxxvii) There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now
pending, or, to the knowledge of the Company or the Bank,
threatened, against or affecting the Company, the Bank or the
Subsidiaries which is required to be disclosed in the Registration
Statement (other than as disclosed therein), or which might result
in any material adverse change in the financial condition, results
of operations, business affairs or prospects of the Company, the
Bank and the Subsidiaries, considered as one enterprise, or which
might materially and adversely affect the properties or assets
thereof or which might materially and adversely affect the
consummation of the Conversion, the Merger, or the performance of
this Agreement; all pending legal or governmental proceedings to
which the Company, the Bank or any subsidiary is a party or of which
any of their respective property or assets is the subject which are
not described in the Registration Statement, including ordinary
routine litigation incidental to the business, are considered in the
aggregate not material; and there are no contracts or documents of
the Company or any of its subsidiaries which are required to be
filed as exhibits to the Registration Statement, the Conversion
Application or the FDIC Conversion Notice which have not been so
filed. 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 First Colonial, Nazareth and its
subsidiaries, threatened, against or affecting First Colonial,
Nazareth and its subsidiaries which is required to be disclosed in
the Registration Statement (other than as disclosed therein), or
which might result in any material adverse change in the financial
condition, results of operations, business affairs or prospects of
First Colonial, Nazareth and its subsidiaries, considered as one
enterprise, or which might materially and adversely affect the
properties or assets thereof or which might materially and adversely
affect the consummation of the Conversion, the Merger, or the
performance of this Agreement; and all pending legal or governmental
proceedings to which First Colonial, Nazareth and its subsidiaries
is a party or of which any of their respective property or assets is
the subject which are not described in the Registration Statement,
including ordinary routine litigation incidental to the business,
are considered in the aggregate not material.
(xxxviii) The Bank has obtained an opinions of its outside legal and
tax counsel, Elias, Matz, Xxxxxxx & Xxxxxxx L.L.P., Washington,
D.C., with respect to the legality of the Securities and the Merger
Shares to be issued and the Foundation Shares and the state and
local income tax and federal income tax consequences of the
17
Conversion and the Merger (including franchise tax, sales or use
tax, license fee on foreign corporations, stock 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 (including the Subsidiaries)
nor the Company has taken or will take any action inconsistent
therewith.
(xxxix) The Bank has received a letter from Xxxxx Xxxxxxxx LLP
with respect to the tax consequences of the Conversion and the
Merger under the laws of the Commonwealth of Pennsylvania; the facts
and representations upon which such letter is based are truthful,
accurate and complete in all material respects; and neither the Bank
(including the Subsidiaries) nor the Company has taken or will take
any action inconsistent therewith.
(xl) The Company is not and, upon completion of the Conversion,
the Merger and the Offerings and sale of the Common Stock and the
application of the net proceeds therefrom, will not be, required to
be registered under the Investment Company Act of 1940, as amended.
(xli) All of the loans represented as assets on the most recent
consolidated financial statements or in selected consolidated
financial and other data of the Bank and Nazareth 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), real estate settlement
procedures, consumer credit protection, equal credit opportunity and
all disclosure laws applicable to such loans, except for violations
which, if asserted, would not result in a material adverse effect on
the financial condition, results of operations, business affairs or
prospects of the Company, the Bank and the Subsidiaries, considered
as one enterprise on the one hand or the financial condition,
results of operations or business of First Colonial, Nazareth or its
subsidiaries considered as one enterprise on the other hand.
(xlii) 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 8% of the Common Stock sold 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 and none of First Colonial, Nazareth or any of
their employees has made any payment of funds prohibited by law or
set aside any funds for any payment prohibited by law.
18
(xliii) To the knowledge of the Company, there are no affiliations
or associations (as such terms are defined by the National
Association of Securities Dealers, Inc. ("NASD")) between any member
of the NASD and any of the Company's officers or directors.
(xliv) The Company, the Bank and the Subsidiaries carries, or is
covered by, insurance in such amounts and covering such risks as is
adequate for the conduct of their respective businesses and the
value for their respective properties as is customary for companies
engaged in similar industries
(xlv) The Company, the Bank and the Subsidiaries maintain a
system of internal accounting controls sufficient to provide
reasonable assurance that (a) transactions are executed in
accordance with management's general or specific authorizations; (b)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (c)
access to assets is permitted only in accordance with management's
general or specific authorization; and (d) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences. First Colonial, Nazareth and its subsidiaries
maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (a) transactions are executed in
accordance with management's general or specific authorizations; (b)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (c)
access to assets is permitted only in accordance with management's
general or specific authorization; and (d) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(xlvi) The Company, the Bank, the Subsidiaries, First Colonial,
Nazareth and its subsidiaries 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. Each
of the Bank and Nazareth has established compliance programs to
ensure compliance with the requirements of the USA Patriot Act and
all applicable regulations promulgated thereunder. Each of the Bank
and Nazareth is in compliance in all material respects with the USA
Patriot Act and all applicable regulations promulgated thereunder,
and there is no charge, investigation, action, suit or proceeding
before any court, regulatory authority or governmental agency or
body pending or, to the best knowledge of the Company and the Bank,
threatened regarding the Bank's compliance with the USA Patriot Act
or any regulations promulgated thereunder, or to the best knowledge
of First Colonial and Nazareth,
19
threatened regarding Nazareth's compliance with the USA Patriot Act
or any regulations promulgated thereunder.
(xlvii) The Company and the Bank have not relied on Agent or its
counsel for any legal, tax or accounting advice in connection with
either the Conversion or the Merger.
(xlviii) The records of Eligible Account Holders (as defined in the
Plan), Supplemental Eligible Account Holders (as defined in the
Plan), and other depositors of the Bank are accurate and complete in
all material respects.
(xlix) The Company, the Bank and the Subsidiaries are in
compliance in all material respects with all presently applicable
provisions of the Employee Retirement Income Security Act of 1974,
as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA)
has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company, the Bank or the Subsidiaries,
respectively, would have any liability; each of the Company, the
Bank and the Subsidiaries has not incurred and does expect to incur
liability under (i) Title IV of ERISA with respect to termination
of, or withdrawal from, any "pension plan" or (ii) Sections 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder (the "Code");
and each "pension plan" for which the Company, the Bank and the
Subsidiaries would have any liability that is intended to be
qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by
failure to act, which would cause the loss of such qualification.
(l) None of the Company, the Bank nor the Subsidiaries nor any
properties owned or operated by the Company, the Bank or the
Subsidiaries 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 Subsidiaries, considered as
one enterprise. None of First Colonial, Nazareth and its
subsidiaries nor any properties owned or operated by First Colonial,
Nazareth and its subsidiaries 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 First Colonial, Nazareth and its
subsidiaries, considered as one enterprise. There are no actions,
suits or proceedings, or demands, claims, notices or investigations
(including, without limitation, notices, demand letters or requests
for information from any environmental agency) instituted or
pending, or to the knowledge of the Company or the Bank threatened,
relating to the liability of any property owned or operated by
20
the Company, the Bank or the Subsidiaries, under any Environmental
Law. 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 First
Colonial, Nazareth and its subsidiaries threatened, relating to the
liability of any property owned or operated by First Colonial,
Nazareth and its subsidiaries, under any Environmental Law. For
purposes of this subsection, the term "Environmental Law" means any
federal, state, local or foreign law, statute, ordinance, rule,
regulation, code, license, permit, authorization, approval, consent,
order, judgment, decree, injunction or agreement with any regulatory
authority relating to (i) the protection, preservation or
restoration of the environment (including, without limitation, air,
water, vapor, surface water, groundwater, drinking water supply,
surface soil, subsurface soil, plant and animal life or any other
natural resource), and/or (ii) the use, storage, recycling,
treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of any substance presently
listed, defined, designated or classified as hazardous, toxic,
radioactive or dangerous, or otherwise regulated, whether by type or
by quantity, including any material containing any such substance as
a component.
(li) The Company, the Bank, the Subsidiaries, First Colonial,
Nazareth and its subsidiaries have filed all federal income and
state and local income and franchise tax returns required to be
filed and have made timely payments of all taxes shown as due and
payable in respect of such returns, and no deficiency has been
asserted with respect thereto by any taxing authority. The Company,
the Bank and the Subsidiaries, have no knowledge of any tax
deficiency which has been asserted or could be asserted against the
Company, the Bank or the Subsidiaries. First Colonial, Nazareth and
its subsidiaries, have no knowledge of any tax deficiency which has
been asserted or could be asserted against First Colonial, Nazareth
and its subsidiaries.
(lii) The Company has received approval, subject to regulatory
approval to consummate the Offerings and issuance, to have the
Securities, the Merger Shares and the Foundation Shares quoted on
the National Market System of the National Association of Securities
Dealers' Automated Quotation System ("Nasdaq National Market")
effective as of the Closing Time referred to in Section 2 hereof.
(liii) 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 such registration
statement was declared effective concurrent with the effectiveness
of the Registration Statement.
(liv) The Company is in compliance with the applicable
provisions of the Xxxxxxxx-Xxxxx Act and will use its best efforts
to comply with those provisions of
21
the Xxxxxxxx-Xxxxx Act that will become effective in the future upon
their effectiveness.
(b) Any certificate signed by any officer of the Company or the Bank or
the Subsidiaries 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 and, for purposes of the opinion to be delivered to the Agent pursuant to
Section 5(b)(2) hereof, to the counsel for the 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 Subscription and Community Offering and the Syndicated Community Offering.
On the basis of the representations and warranties herein contained, and subject
to the terms and conditions herein set forth, Sandler X'Xxxxx accepts such
appointment and agrees to use its best efforts to assist the Company with the
solicitation of subscriptions and purchase orders for Securities in accordance
with this Agreement; provided, however, that the Agent shall not be obligated to
take any action which is inconsistent with any applicable laws, regulations,
decisions or orders. The services to be rendered by Sandler X'Xxxxx pursuant to
this appointment include the following: (i) consulting as to the securities
marketing implications of any aspect of the Plan or related corporate documents;
(ii) reviewing with the Board of Trustees of the Bank the financial and
securities marketing implications of the independent appraiser's appraisal of
the common stock; (iii) reviewing all offering documents, including the
Prospectus, stock order forms and related offering materials (it being
understood that preparation and filing of such documents is the sole
responsibility of the Company and the Bank and their counsel); (iv) assisting in
the design and implementation of a marketing strategy for the Offerings; (v)
assisting 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 Subscription and
Community Offering, unless the Company and the Agent agree in writing to extend
such period and the Department of Banking and the FDIC agree to extend the
period of time in which the Securities may be sold, or (b) the receipt and
acceptance of subscriptions and purchase orders for all of the Securities, or
(c) the completion of the Syndicated Community Offering.
If any of the Securities remain available after the expiration of both the
Subscription and Community Offering, at the request of the Company and the Bank,
Sandler X'Xxxxx will seek to form
22
a syndicate of registered brokers or dealers ("Selected Dealers") to assist in
the solicitation of purchase orders of such Securities on a best efforts basis,
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 environment; provided, however,
that the aggregate fees payable to Xxxxxx X'Xxxxx and Selected Dealers shall not
exceed 7.0% of the aggregate Purchase Price of the Securities sold by such
Selected Dealers. Xxxxxx X'Xxxxx will endeavor to distribute the Securities
among the Selected Dealers in a fashion which 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 Sandler X'Xxxxx be obligated to act as a Selected Dealer
or to take or purchase any Securities.
If any of the Securities remain available after the expiration of the
Subscription and Community Offering and 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.
In the event the Company is unable to sell at least the total minimum of
the Securities, as set forth on the cover page of the Prospectus, within the
period herein provided, this Agreement shall terminate and the Company shall
refund to any persons who have subscribed for any of the Securities the full
amount which it may have received from them, together with interest as provided
in the Prospectus, and no party to this Agreement shall have any obligation to
the others hereunder, except for the obligations of the Company 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 the total minimum of the Securities are
sold.
23
If at least the total minimum of Securities, as set forth on the cover
page of the Prospectus, are sold, the Company agrees to issue or have issued the
Securities sold and to release for delivery certificates for such Securities at
the Closing Time against payment therefor by release of funds from the special
interest-bearing accounts referred to above. The closing shall be held at the
offices of Elias, Matz, Xxxxxxx & Xxxxxxx, L.L.P., 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 which may be
payable with respect to the sale of the Securities, the issuance of the
Foundation Shares or the issuance of the Merger Shares.
In addition to the reimbursement of the expenses specified in Section 4
hereof, the Agent will receive the following compensation for its services
hereunder:
(a) One percent (1.0%) of the aggregate Purchase Price of the Securities
sold in the Subscription and Community Offering, excluding in each case shares
purchased by (i) any employee benefit plan of the Company or the Bank
established for the benefit of their respective directors, officers and
employees, (ii) any trustee, director, officer or employee of the Company or the
Bank 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 an 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 percent (1.0%). 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 percent (1.0%) of the Purchase Price of
the Securities sold by Sandler X'Xxxxx and other NASD member firms under such
Selected Dealer's Agreement.
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; provided,
however, that the Company shall reimburse the Agent for all of its 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. In addition, the Company shall be obligated to pay the fees
and expenses as contemplated by the provisions of Section 4 hereof in the event
of any such termination.
24
All fees payable to the Agent hereunder shall be payable in immediately
available funds at Closing Time, or upon the termination of this Agreement, as
the case may be. In recognition of the long lead times involved in the
conversion process, the Bank agrees to make advance payments to the Agent in the
aggregate amount of $50,000, [all] of which has been previously paid, which
shall be credited against any fees or reimbursement of expenses payable
hereunder.
SECTION 3. COVENANTS OF THE COMPANY. 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 Reorganization
Applications and the Proxy Statement as may hereafter be required by the
Securities Act Regulations or the Reorganization Regulations or as may hereafter
be requested by the Agent. Following completion of the Subscription and
Community Offering, 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 Offering, any additional information with
respect to the proposed plan of distribution and any revised pricing information
or (ii) if no such post-effective amendment is required, will 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 Offering
and pricing information pursuant to Rule 424 of the Securities Act Regulations,
in either case in a form acceptable to the Agent. The Company and the Bank will
notify the Agent immediately, and confirm the notice in writing, (i) of the
approval of any Reorganization Application not heretofore approved, (ii) 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 Reorganization Applications, (iii) of the receipt of any comments from the
Department of Banking, the FDIC, the FRB, the OCC or the Commission with respect
to the transactions contemplated by this Agreement, the Conversion, the Merger
or the Plan, (iv) of any request by the Commission or the Department of Banking,
the FDIC, the FRB, the OCC or any other governmental entity with respect to the
Conversion for any amendment to the Registration Statement or the Reorganization
Applications or any amendment or supplement to the Prospectus or for additional
information, (v) of the issuance by the Commission, the Department of Banking,
the FDIC, the FRB, the OCC or any other governmental entity of any order
suspending the Offerings, the Conversion, the Merger or the use of the
Prospectus or the initiation of any proceedings for that purpose, (vi) of the
issuance by the Commission, the Department of Banking, the FDIC, the FRB, the
OCC or any other state governmental authority of any stop order suspending the
effectiveness of the Registration Statement, the Reorganization Applications or
the initiation of any proceedings for that purpose, and (vii) 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 by the Commission, the FDIC, the
FRB, the OCC or any other governmental authority of any stop order and, if any
stop order is issued, to obtain the lifting thereof at the earliest possible
moment.
25
(b) The Company and the Bank will give the Agent notice of its intention
to file or prepare any amendment to the Reorganization Applications or
Registration Statement (including any post-effective amendment) or any amendment
or supplement to the Prospectus (including any revised prospectus which the
Company proposes for use in connection with the Syndicated Community Offering of
the Securities which differs from the prospectus on file at the Commission at
the time the Registration Statement becomes effective, whether or not such
revised prospectus is required to be filed pursuant to Rule 424(b) of the
Securities Act Regulations), will furnish the Agent with copies of any such
amendment or supplement a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file any such amendment or
supplement or use any such prospectus to which the Agent or counsel for the
Agent may object.
(c) The Company and the Bank will deliver to the Agent as many signed
copies and as many conformed copies of the Reorganization Applications and the
Registration Statement as originally filed and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein) as the
Agent may reasonably request, and from time to time such number of copies of the
Prospectus as the Agent may reasonably request.
(d) During the period when the Prospectus is required to be delivered,
the Company and the Bank will comply, at their own expense, with all
requirements imposed upon them by the Department of Banking, the FDIC or the
FRB, by the applicable Reorganization Regulations, as from time to time in
force, and by the Nasdaq National Market, 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 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, 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 will each 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 or the FDIC Conversion
Regulations may require and as the Agent and the Company have agreed; provided,
26
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 Dealer to
act as agent of the Company in distributing the Prospectus to persons entitled
to receive subscription rights and other persons to be offered Securities having
record addresses in the states or jurisdictions set forth in a survey of the
securities or "blue sky" laws of the various jurisdictions in which the
Offerings will be made (the "Blue Sky Survey").
(h) The Company will make generally available to its security holders as
soon as practicable, but not later than 60 days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 of the 1933 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 Subsidiaries for such
quarter in reasonable detail. In addition, such annual report and quarterly
consolidated summary financial information shall be made public through the
issuance of appropriate press releases at the same time or prior to the time of
the furnishing thereof to stockholders of the Company.
(j) During the period ending on the third anniversary of the expiration
of the fiscal year during which the closing of the transactions contemplated
hereby occurs, the Company will furnish to the Agent (i) as soon as publicly
available, a copy of each report or other document of the Company furnished
generally to stockholders of the Company or furnished to or filed with the
Commission under the Exchange Act or any national securities exchange or system
on which any class of securities of the Company is listed, and (ii) from time to
time, such other information concerning the Company as the Agent may reasonably
request.
(k) The Company and the Bank will conduct the Conversion and the Merger
including the formation and operation of the Foundation in all material respects
in accordance with the Plan,
27
the Merger Agreement, the Conversion Regulations, the FDIC Conversion
Regulations and all other applicable regulations, decisions and orders,
including all applicable terms, requirements and conditions precedent to the
Conversion and the Merger imposed upon the Company or the Bank by the Department
of Banking, the FDIC and the FRB.
(l) The Company and the Bank will use the net proceeds received by it
from the sale of the Securities in the manner specified in the Prospectus under
"Use of Proceeds."
(m) The Company will report the use of proceeds from the Offerings on
its first periodic report filed with the Commission pursuant to Section 13(a) or
15(d) of the Exchange Act and on any subsequent periodic reports as may be
required pursuant to Rule 463 of the Securities Act Regulations.
(n) The Company will maintain the effectiveness of the Exchange Act
Registration Statement for not less than three years and will comply in all
material respects with its filing obligations under the Exchange Act. The
Company will use its best efforts to effect and maintain the listing of the
Common Stock on the Nasdaq National Market and, once listed on the Nasdaq
National Market the Company will comply with all applicable corporate governance
standards required by the Nasdaq National Market. The Company will file with the
Nasdaq Stock Market all documents and notices required by the Nasdaq Stock
Market of companies that have issued securities that are traded in the
over-the-counter market and quotations for which are reported by the Nasdaq
National Market.
(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 National Association of Securities Dealers, Inc.'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 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 fifth anniversary of the Closing Time or the date on which the
Agent receives full payment in satisfaction of any claim for indemnification or
contribution to which it may be entitled pursuant to Sections 6 or 7,
respectively, neither the Company nor the Bank shall, without the prior written
consent of the Agent, take or permit to be taken any action that could result in
the Bank Common Stock becoming subject to any security interest, mortgage,
pledge, lien or encumbrance; 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.
28
(r) The Company and the Bank will comply with the conditions imposed by
or agreed to with the Department of Banking and the FRB in connection with their
approval of the PA Holding Company Application and the Holding Company
Application and with the Department of Banking and the FDIC in connection with
their approval or non-objection of, or non-objection to, 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 501(c)(3) of the Internal Revenue Code of
1986, as amended (the "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) 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 in writing by the Agent.
(t) 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 Xxxxx Xxxxxxxx LLP ("Xxxxx Xxxxxxxx"), as stated in their letters
to be furnished pursuant to subsections (e) and (f) of Section 5 hereof.
(u) Each of the Company and the Bank will conduct its business in
compliance in all material respects with all applicable federal and state laws,
rules, regulations, decisions, directives and orders, including all decisions,
directives and orders of the Commission, the Nasdaq National Market, the
Department of Banking, the FDIC and the FRB.
(v) The Bank will not amend the Plan in any manner that would affect the
sale of the Securities or the terms of this Agreement.
(w) The Company and the Bank will not, prior to the Closing Time, incur
any liability or obligation, direct or contingent, or enter into any material
transaction, other than in the ordinary course of business consistent with past
practice, except as contemplated by the Prospectus.
(x) The Company and the Bank will use all reasonable efforts to comply
with, or cause to be complied with, the conditions precedent to the several
obligations of the Agent specified in Section 5 hereof.
(y) The Company and the Bank will provide the Agent with any information
necessary to carry out the allocation of the Securities in the event of an
over-subscription, and such information will be accurate and reliable in all
material respects.
29
(z) The Company and the Bank will notify the Agent when funds have been
received for the minimum number of Securities set forth in the Prospectus.
(aa) Prior to the Closing Time and unless waived by the Agent, the
Company shall have received the approval of each Reorganization Application
required to consummate the Merger, and all applicable waiting periods shall have
expired.
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 preparation,
printing and filing of the Registration Statement and the Reorganization
Applications, each 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 and the printing and delivery of all other documents
applicable to the Conversion and the Merger, (iv) the fees and disbursements of
the Company's and the Bank's counsel, accountants 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 the Agent's counsel in connection therewith and in connection
with the preparation of the Blue Sky Survey, (vi) the printing and delivery to
the Agent (in such quantities as the Agent shall reasonably request) of copies
of the Registration Statement and Reorganization Applications as originally
filed and of each amendment thereto and the printing and delivery of the
Prospectus and any amendments or supplements thereto to the purchasers in the
Offerings and the Agent (in such quantities as the Agent shall reasonably
request), (vii) the printing and delivery to the Agent of copies of a Blue Sky
Survey, and (viii) the fees and expenses incurred in connection with the listing
of the Securities on the Nasdaq National Market. 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 of whether the Conversion is consummated, including (i)
the filing fees incurred in connection with the review of the Registration
Statement, the Reorganization Applications and any other application, form or
filing by the Commission, the Department of Banking, the FDIC or the FRB, (ii)
the filing fees paid or incurred by the Agent in connection with all filings
with the National Association of Securities Dealers, Inc., and (iii) all
reasonable out of pocket expenses incurred by the Agent relating to the
Offerings, including, without limitation, advertising, promotional, syndication
and travel expenses and fees and expenses of the Agent's counsel, up to a
maximum of $50,000 with respect to the expenses contemplated by this clause
(iii); provided, however, that the Agent shall document the expenses
contemplated by his clause (iii) to the reasonable satisfaction of the Bank. All
fees and expenses to which the Agent is entitled to reimbursement under this
paragraph of this Section 4 shall
30
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.
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 Department of
Banking, the FDIC or the FRB 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 Elias, Matz,
Xxxxxxx & Xxxxxxx, L.L.P., 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
Commonwealth of Pennsylvania.
(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 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 upon the financial condition, results of operations, business
affairs or prospects of the Company, the Bank and the Subsidiaries,
considered as one enterprise.
(iv) Upon consummation of the Conversion and the issuance of
the Foundation Shares to the Foundation immediately upon completion
thereof and upon the completion of the Merger and issuance of the
Merger Shares, the authorized, issued and outstanding capital stock
of the Company will be as set forth in the Prospectus
31
under "Capitalization" and, except for shares issued upon
incorporation of the Company, no shares of Common Stock have been or
will be 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, or contributed by
the Company pursuant to the Plan in the case of the Foundation
Shares, will be duly and validly issued and fully paid and
non-assessable.
(vi) The Merger Shares have been duly and validly authorized
for issuance and sale and, when issued and delivered by the Company
pursuant to the Merger Agreement against payment of the
consideration calculated as set forth in the Merger Agreement, will
be duly and validly issued and fully paid and non-assessable.
(vii) The issuance of the Securities, the Foundation Shares and
the Merger Shares is not subject to preemptive or other similar
rights arising by operation of law or, to the best of their
knowledge and information, otherwise.
(viii) Upon completion of the Conversion and the Merger, the
issuance of the Securities, the Foundation Shares and the Merger
Shares will be in compliance with all conditions imposed upon the
Company and the Bank by the Department of Banking, the FDIC or the
FRB under the terms of their written approval or notice of intention
not to object, as applicable, of the Reorganization Application.
(ix) The Bank has been at all times and prior to the Closing
Time duly organized, and is validly existing and in good standing
under the laws of the Commonwealth of Pennsylvania as a state
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 Commonwealth of Pennsylvania as a state chartered
savings bank of 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, business affairs or prospects of the Bank.
(x) 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.
(xi) The Subsidiaries have been duly incorporated and are
validly existing as corporations in good standing under the laws of
the jurisdiction of its incorporation,
32
and the Subsidiaries have full corporate power and authority to own,
lease and operate their properties and to conduct their business as
described in the Registration Statement and are duly qualified as
foreign corporations to transact business and are 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, business affairs or prospects of the Company, the Bank
and the Subsidiaries, taken as a whole; the activities of the
Subsidiaries are permitted to subsidiaries of a bank holding company
and of a Pennsylvania-chartered savings bank by the rules,
regulations, resolutions and practices of the Department of Banking,
the FDIC and the FRB; all of the issued and outstanding capital
stock of the Subsidiaries have been duly authorized and validly
issued, are fully paid and non-assessable and are owned by the Bank,
directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity.
(xii) 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 holding company
within the meaning of the BHCA and the applicable rules and
regulations of the FRB promulgated thereunder 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 Reorganization
Applications, copies of which were provided to the Agent prior to
the Closing Time; and the Foundation Shares to be contributed to the
Foundation are registered pursuant to the Registration Statement.
(xiii) 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 and set forth in the Prospectus, will be duly
authorized and validly issued and fully paid and non- assessable,
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, claim or equity.
(xiv) The Department of Banking, the FDIC, the FRB and the OCC
have duly approved the Reorganization Applications and no action is
pending, or to the best of such counsel's knowledge after due
inquiry, threatened respecting the Reorganization Applications or
the acquisition by the Company of all of the Bank's issued and
outstanding capital stock; the Reorganization Applications comply as
to form with the applicable requirements of the Department of
Banking, the FDIC, the OCC and the FRB, includes all documents
required to be filed as exhibits thereto, and is, to the
33
best of such counsel's knowledge after due inquiry, truthful,
accurate and complete; and the Company is duly authorized to become
a bank holding company and is duly authorized to own all of the
issued and outstanding capital stock of the Bank to be issued
pursuant to the Plan.
(xv) 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 the
Foundation Shares and the issuance of the Merger Shares in
accordance with the Merger Agreement, (A) 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); (B)
will not result in any violation of the provisions of the charter or
bylaws of the Company, the Bank or the Subsidiaries; and, (C) will
not conflict with or constitute a breach of, or default under, and
no event has occurred which, with notice or lapse of time or both,
would constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance, that, individually or
in the aggregate, would have a material adverse effect on the
financial condition, results of operations, business affairs or
prospects of the Company, the Bank and the Subsidiaries, considered
as one enterprise, upon any property or assets of the Company, the
Bank or the Subsidiaries pursuant to any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which
the Company, the Bank or the Subsidiaries 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 Subsidiaries is subject.
(xvi) The Prospectus has been duly authorized by the Department
of Banking and the FDIC for final use pursuant to the Conversion
Regulations and the FDIC Conversion Regulations and no action is
pending, or to the best of such counsel's knowledge after due
inquiry, is threatened, by the Department of Banking or the FDIC to
revoke such authorization.
(xvii) The Registration Statement is effective under the
Securities Act and no stop order suspending the effectiveness of the
Registration Statement has been issued under the Securities Act or,
to the best of such counsel's knowledge after due inquiry,
proceedings therefor initiated or threatened by the Commission.
(xviii) No further approval, authorization, consent or other
order of any public board or body is required in connection with the
execution and delivery of this Agreement, the issuance of the
Securities, the Merger Shares and the Foundation Shares and the
consummation of the Conversion and the Merger, except as may be
required under
34
the securities or Blue Sky laws of various jurisdictions as to which
no opinion need be rendered.
(xvix) At the time the Registration Statement became effective,
the Registration Statement (other than the financial statements and
statistical data included therein, as to which no opinion need be
rendered) complied as to form in all material respects with the
requirements of the Securities Act and the Securities Act
Regulations, the Conversion Regulations and the FDIC Conversion
Regulations.
(xxx) 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.
(xxxi) There are no legal or governmental proceedings pending or
threatened against or affecting the Company, the Bank or the
Subsidiaries which are required, individually or in the aggregate,
to be disclosed in the Registration Statement and Prospectus, other
than those disclosed therein, and all pending legal or governmental
proceedings to which the Company, the Bank or the Subsidiaries is a
party or to which any of their property is subject which are not
described in the Registration Statement, including ordinary routine
litigation incidental to the business, are, considered in the
aggregate, not material.
(xxxii) The information in the Prospectus under "Summary -
Federal and State Income Tax Consequences of the Conversion and the
Merger," "Risk Factors - KNBT Bancorp Common Stock Value May Suffer
From Anti-Takeover Provisions That May Impede Potential Takeovers
That Management Opposes," Risk Factors - KNBT Bancorp Believes That
Subscription Rights Have No Value and That Subscribers' Tax Basis in
KNBT Bancorp Common Stock Will be the Purchase Price, But the
Internal Revenue Service May Disagree," "Dividends," "Business of
Keystone - Legal Proceedings", "Business of First Colonial -
Supervision and Regulation," "Business of First Colonial - Legal
Proceedings," "Regulation," "Taxation," "The Conversion and the
Merger - Effects of Conversion and the Merger," "The Conversion and
the Merger - Required Approvals," "The Conversion and the Merger -
Keystone Plans to Establish the Keystone Nazareth Charitable
Foundation," "The Conversion and the Merger - Resale of Shares of
KNBT Bancorp Common Stock Issued in the Merger," "The Conversion and
the Merger - Certain Restrictions on Purchase or Transfer of Shares
After the Conversion and the Merger," "The Conversion and the Merger
- Liquidation Rights of Certain Depositors," "The Conversion and the
Merger - Tax Aspects," "Description of KNBT Bancorp Capital Stock,"
and "Restrictions on Acquisition of KNBT Bancorp and Keystone and
Related Anti-Takeover Provisions," to the extent that it constitutes
matters of law, summaries of legal matters, documents or
proceedings, or legal conclusions, has been reviewed by them and is
complete and accurate in all material respects.
35
(xxxii) 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 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.
(xxxiv) 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 Trustees of the Bank, and the
Department of Banking and the FDIC'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 Department of Banking, to authorize the
issuance of permanent capital stock; the Company and the Bank have
conducted the Conversion and the establishment and funding of the
Foundation in all material respects in accordance with applicable
requirements of the Conversion Regulations, the Plan and all other
applicable regulations, decisions and orders thereunder, including
all material applicable terms, conditions, requirements and
conditions precedent to the Conversion imposed upon the Company or
the Bank by the Department of Banking, the FDIC and the FRB and, no
order has been issued by the Department of Banking, the FDIC or the
FRB to suspend the Conversion or the Offerings and no action for
such purpose has been instituted or threatened by the Department of
Banking, the FDIC or the FRB; and, to the best of such counsel's
knowledge after due inquiry, no person has sought to obtain review
of the final action of the Department of Banking, the FDIC or the
FRB in approving the Reorganization Applications.
(xxxv) To the best of such counsel's knowledge after due
inquiry, the Company and the Bank and its subsidiaries have obtained
all licenses, permits and other governmental authorizations
currently required for the conduct of their respective businesses as
described in the Registration Statement and Prospectus, and all such
licenses, permits and other governmental authorizations are in full
force and effect, and the Company and the Bank and its subsidiaries
are in all material respects complying therewith.
(xxxvi) Neither the Company, the Bank nor the Subsidiaries 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
in stock form upon consummation of the Conversion) or 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
36
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Company, the
Bank or the Subsidiaries is a party or by which the Company, the
Bank or the Subsidiaries or any of their property may be bound.
(xxxvii) The Company is not and, upon completion of the
Conversion, the Merger, and the Offerings and the sale of the Common
Stock and the application of the net proceeds therefrom, will not be
required to be registered as an investment company under the
Investment Company Act of 1940.
(xxxviii) Each of the Company and the Bank has the power and
authority to consummate the transactions contemplated by the Merger
Agreement.
(xxxvix) The Merger Agreement has been duly authorized, executed
and delivered by each of the Company and the Bank and constitutes
the valid and binding obligation of each of the Company and the Bank
enforceable in accordance with its terms subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights
and remedies generally and subject, as to enforceability, to general
principles of equity, whether applied in a court of law or a court
of equity.
(xxxvx) To the best knowledge of such counsel all corporate acts
and other proceedings required to be taken by or on the part of the
Company and the Bank to consummate the transactions contemplated by
the Merger Agreement have been properly taken; neither the execution
and delivery of the Merger Agreement, nor the consummation of the
transactions contemplated thereby, with and without the giving of
notice or the lapse of time, or both, will violate any provision of
the certificate of incorporation, charter or bylaws of the Company
or the Bank.
(xxxvxi) Except as disclosed in such opinion, to the knowledge of
such counsel there are no action, suits or proceedings or
investigations (public or private) of any nature pending or
threatened that challenge the validity or propriety of the
transactions contemplated by the Merger Agreement or which seek to
threaten to retrain, enjoin or prohibit or to obtain substantial
damages in connection with the consummation of such transactions.
(xxxvxii) All regulatory and governmental approvals and consents
which are necessary to be obtained by the Company, the Bank and the
Subsidiaries to permit the execution, delivery and performance of
the Merger Agreement have been obtained.
(xxxvxiii) All conditions precedent to consummation of the Merger
have been satisfied, including but not limited to those referenced
in Article VI of the Merger Agreement, all statutory waiting periods
with respect to all regulatory and
37
governmental approvals of the Merger have expired and there are no
facts or circumstances which would preclude the immediate
consummation of the Merger.
(2) The favorable opinion, dated as of Closing Time, of Blank Rome LLP,
counsel for the First Colonial and Nazareth, in form and substance
satisfactory to counsel for the Agent, to the effect that:
(i) First Colonial is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Pennsylvania, and Nazareth is a national bank duly organized and in
existence under the laws of the United States of America
(ii) First Colonial and Nazareth have the power and authority to
carry on their business as described in the Prospectus and to
consummate the transactions contemplated by the Merger Agreement.
(iii) The Merger Agreement has been duly authorized and approved
by First Colonial and the Merger Agreement and the transactions
contemplated thereby have been approved by the requisite vote of
First Colonial's shareholders and duly authorized, executed and
delivered by First Colonial and the Merger Agreement constitutes the
valid and binding obligation of First Colonial enforceable in
accordance with its terms subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies
generally and subject, as to enforceability, to general principles
of equity, whether applied in a court of law or a court of equity.
(iv) To the best knowledge of such counsel, all acts, required to
be taken by or on the part of First Colonial, including the adoption
of the Merger Agreement by the shareholders of First Colonial, and
the necessary approvals, consents, authorizations or notification
required to be taken to consummate the transactions contemplated by
the Merger Agreement, have been property taken or obtained; neither
the execution and delivery of the Merger Agreement nor the
consummation of the transactions contemplated thereby, with or
without the giving of notice or the lapse of time, or both, will (i)
violate any provision of the Certificate of Incorporation, charter
or bylaws; or (ii) to the knowledge of such counsel, violate,
conflict with, result in the material breach or termination of,
constitute a material default under, accelerate the performance
required by, or result in the creation of any material lien, charge
or encumbrance upon any of the properties or assets of First
Colonial or Nazareth pursuant to any indenture, mortgage, deed of
trust, or other agreement or instrument to which First Colonial or
Nazareth are a party or by which it or any of their properties or
assets may be bound, or violate any statute, rule or regulation
applicable to First Colonial or Nazareth, which would have a
material adverse effect on the financial condition, assets,
liabilities, or business of First Colonial or Nazareth; to the
38
knowledge of such counsel, no consent, approval, authorization,
order, registration or qualification of or with any court,
regulatory authority or other governmental body, other than as
specifically contemplated by the Merger Agreement is required for
the consummation by First Colonial or Nazareth of the transactions
contemplated by the Merger Agreement.
(v) To the best knowledge of such counsel, there are no actions,
suits, proceedings or investigations of any nature pending or
threatened that challenge the validity or legality of the
transactions contemplated by the Merger Agreement which seek or
threaten to restrain, enjoin or prohibit (or obtain substantial
damages in connection with) the consummation of such transactions.
(vi) To the best knowledge of such counsel, there is no
litigation, appraisal or other proceeding or governmental
investigation pending or threatened against or relating to the
business or property of First Colonial or Nazareth which would have
a materially adverse effect on the consolidated financial condition
of First Colonial, or any legal impediment to the continued
operation of the properties and business of First Colonial or
Nazareth in the ordinary course after the consummation of the
transactions contemplated by the Merger Agreement.
(vii) All conditions precedent to consummation of the Acquisition
have been satisfied, including but not limited to those referenced
in Article VI of the Merger Agreement, all statutory waiting periods
with respect to all regulatory and governmental approvals of the
Acquisition have expired and there are no facts or circumstances
which would preclude the immediate consummation of the Acquisition.
(3) The favorable opinion, dated as of Closing Time, of Xxxxxxx Xxxxxx &
Xxxxxxxx LLP, counsel for the Agent, with respect to the matters set forth in
Section 5(b)(1)(i), (iv), (v), (vi) (solely as to preemptive rights arising by
operation of law), (xii), (xiii), (xiv), (xvi) and (xvii) and such other matters
as the Agent may reasonably require.
(4) In giving their opinions required by subsections (b)(l), (b)(2) and
(b)(3), respectively, of this Section, Elias, Matz, Xxxxxxx & Xxxxxxx, L.L.P.
and Xxxxxxx Xxxxxx & Xxxxxxxx LLP and Blank Rome LLP shall each additionally
state that nothing has come to their attention that would lead them to believe
that the Registration Statement (except for financial statements and schedules
and other financial or statistical data included therein, as to which counsel
need make no statement), at the time it became effective, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that the Prospectus (except for financial statements and schedules and other
financial or statistical data included therein, as to which counsel need make no
statement), at the time the Registration Statement became effective and 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
39
the light of the circumstances under which they were made, not misleading. In
giving their opinions, Elias, Matz, Xxxxxxx & Xxxxxxx, L.L.P., Xxxxxxx Xxxxxx &
Xxxxxxxx LLP and Blank Rome LLP may rely as to matters of fact on certificates
of officers and directors of the Company and the Bank or First Colonial and
Nazareth, as applicable, and certificates of public officials, and Xxxxxxx
Xxxxxx & Xxxxxxxx LLP may also rely on the opinion of Elias, Matz, Xxxxxxx &
Xxxxxxx, L.L.P.
(c) At Closing Time referred to in Section 2, the Company and the Bank
shall have completed in all material respects the conditions precedent to the
Conversion in accordance with the Plan, the applicable Conversion Regulations
and all other applicable laws, regulations, decisions and orders, including all
terms, conditions, requirements and provisions precedent to the Conversion
imposed upon the Company or the Bank by the Department of Banking, the FDIC or
the FRB, or any other regulatory authority other than those which the Department
of Banking, the FDIC or the FRB permits to be completed after the Conversion.
(d) At Closing Time, there shall not have been, since the date hereof or
since the respective dates as of which information is given in the Registration
Statement and the Prospectus, any material adverse change in the financial
condition, results of operations, business affairs or prospects of the Company,
the Bank and the Subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business consistent with past practice, and
the Agent shall have received a certificate of the Chief Executive Officer of
the Company and of the Bank, the President of the Company and 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 or contemplated therein
and transactions in the ordinary course of business consistent with past
practice, (iii) neither the Company nor the Bank shall have received from the
Department of Banking, the FDIC or FRB 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 affairs, financial
condition, results of operations or prospects of the Company, the Bank or the
Subsidiaries, (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 Department of Banking, the FRB or the FDIC and no
person has sought to obtain regulatory or judicial review of the action of the
Department of Banking, the FRB or the FDIC in approving the Plan in accordance
with the Conversion Regulations nor has any person sought to obtain regulatory
or judicial review of the action of the Department of Banking, the FRB or the
FDIC in approving the Holding Company Application.
40
(e) At the Closing Time, the Agent shall have received a certificate of
the Chief Executive Officer and President of the Company and of the Bank and the
Chief Financial Officer of the Company and of the Bank, dated as of Closing
Time, to the effect that (i) they have reviewed the contents of the Registration
Statement and the Prospectus; (ii) based on each of their knowledge, the
Registration Statement and the Prospectus do not contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements made therein, in light of the circumstances under which such
statements were made, not misleading; (iii) based on each of their knowledge,
the financial statements and other financial information included in the
Registration Statement and the Prospectus fairly present the financial condition
and results of operations of the Bank and the Subsidiaries as of and for the
dates and periods covered by the Registration Statement and the Prospectus; (iv)
they are responsible for establishing and maintaining internal controls; (v)
they have designed such internal controls to ensure that material information
relating to the Company, the Bank and the Subsidiaries is made known to them;
(vi) they have evaluated the effectiveness of their internal controls; and (vii)
they have disclosed to _________ and the audit committee (A) all significant
deficiencies in the design or operation of internal controls which could
adversely affect the Company's and the Bank's ability to record, process,
summarize, and report financial data, and have identified for the Company's and
the Bank's auditors any material weaknesses in internal controls and (B) any
fraud, whether or not material, that involves management or other employees who
have a significant role in the Company's and the Bank's internal controls.
(f) At the time of the execution of this Agreement, the Agent shall have
received from Xxxxx Xxxxxxxx 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, the Subsidiaries, First
Colonial and its subsidiaries within the meaning of the Code of Ethics of the
American Institute of Certified Public Accountants, the Securities Act and the
Securities Act Regulations and the Conversion Regulations and they are not in
violation of the auditor independence requirements of the Xxxxxxxx-Xxxxx Act;
(ii) it is their opinion that the consolidated financial statements and
supporting schedules included in the Registration Statement and covered by their
opinions therein comply as to form in all material respects with the applicable
accounting requirements of the Securities Act and the Securities Act
Regulations; (iii) based upon limited procedures as agreed upon by the Agent and
Xxxxx Xxxxxxxx LLP 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 its subsidiaries and First
Colonial and its subsidiaries included in the Registration Statement do not
comply as to form in all material respects with the applicable accounting
requirements of the Securities Act, the Securities Act Regulations and the
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
Keystone" and "Selected Consolidated Financial and Other Data of First Colonial
Group, Inc." in the Registration Statement and Prospectus do not agree with the
amounts set forth in unaudited consolidated financial statements as of and for
the dates and periods presented under such captions
41
or such amounts were not determined on a basis substantially consistent with
that used in determining the corresponding amounts in the audited financial
statements included in the Registration Statement, (C) at a specified date not
more than five days prior to the date of this Agreement, there has been any
increase in the consolidated long term or short term debt of the Bank and the
Subsidiaries or any decrease in consolidated total assets, the allowance for
loan losses, total deposits or net worth of the Bank and the Subsidiaries, in
each case as compared with the amounts shown in the March 31, 2003 balance sheet
included in the Registration Statement, (D) at a specified date not more than
five days prior to the date of this Agreement, there has been any increase in
the consolidated long term or short term debt of First Colonial and its
subsidiaries or any decrease in consolidated total assets, the allowance for
loan losses, total deposits or stockholder's equity of First Colonial and its
subsidiaries, in each case as compared with the amounts shown in the March 31,
2003 balance sheet included in the Registration Statement, (E) during the period
from December 31, 2002 to a specified date not more than five days 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 Subsidiaries, except
in all instances for increases or decreases which the Registration Statement and
the Prospectus disclose have occurred or may occur, or (F) during the period
from December 31, 2002 to a specified date not more than five days 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 First Colonial and its subsidiaries,
except in all instances for increases or decreases which the Registration
Statement and the Prospectus disclose have occurred or may occur, and (iv) in
addition to the examination referred to in their opinions and the limited
procedures referred to in clause (iii) above, they have carried out certain
specified procedures, not constituting an audit, with respect to certain
amounts, percentages and financial information which are included in the
Registration Statement and the 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 Subsidiaries and of First Colonial and its
subsidiaries identified in such letter.
(g) At Closing Time, the Agent shall have received from Xxxxx Xxxxxxxx
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.
(h) At Closing Time, the Securities shall have been approved for listing
on the Nasdaq National Market upon notice of issuance.
(i) At Closing Time, the Agent shall have received a letter from R.P.
Financial, dated as of the Closing Time, confirming its appraisal.
42
(j) At Closing Time, counsel for the Agent shall have been furnished
with such documents and opinions as they may require for the purpose of enabling
them to pass upon the issuance and sale of the Securities 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
Foundation Shares as herein contemplated shall be satisfactory in form and
substance to the Agent and counsel for the Agent.
(k) At any time prior to Closing Time, (i) there shall not have occurred
any material adverse change in the financial markets in the United States or
elsewhere or any outbreak of hostilities or escalation thereof or other calamity
or crisis the effect of which, in the judgment of the Agent, 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, the New York
Stock Exchange or the Nasdaq Stock Market shall not have been suspended, and
minimum or maximum prices for trading shall not have been fixed, or maximum
ranges for prices for securities have been required, by either of said Exchanges
or by order of the Commission or any other governmental authority, and a banking
moratorium shall not have been declared by either Federal or New York
authorities.
SECTION 6. INDEMNIFICATION.
(a) The Company and the Bank, jointly and severally, agree to indemnify
and hold harmless the Agent, each person, if any, who controls the Agent, within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, and its respective partners, directors, officers, employees and agents as
follows:
(i) from and against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, related to or arising out of the
Reorganization (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 Proxy Statement or Prospectus (or any
amendment or supplement thereto) or the omission or alleged omission
43
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 pending or threatened 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 the indemnification provided for in this paragraph (a)
shall not apply to any loss, liability, claim, damage 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 the
omission or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading which was made in reliance upon and in conformity with
the Agent Information. Notwithstanding the foregoing, the indemnification
provided for in this paragraph (a) shall not apply to the Bank to the extent
that such indemnification by the Bank would constitute a covered transaction
under Section 23A of the Federal Reserve Act.
(b) The Agent agrees to indemnify and hold harmless the Company, the
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 Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with the Agent
Information.
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
which it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of any such
action. In no event shall the indemnifying parties be liable for fees and
expenses of more than one counsel (in addition to no more than one local counsel
in each separate jurisdiction in which any action or proceeding is
44
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.
(e) In addition to, and without limiting, the provisions of Section
(6)(a)(iv) hereof, in the event that the Agent, any person, if any, who controls
the Agent within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act or any of its partners, directors, officers, employees or
agents is requested or required to appear as a witness or otherwise gives
testimony in any action, proceeding, investigation or inquiry brought by or on
behalf of or against the Company, the Bank, the Agent or any of its respective
affiliates or any participant in the transactions contemplated hereby in which
the Agent or such person or agent is not named as a defendant, the Company and
the Bank jointly and severally agree to reimburse the Agent or such other person
for all reasonable and necessary out-of-pocket expenses incurred by it or them
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 and the Bank are jointly and severally responsible for
the balance or (ii) if, but only if, the allocation provided for in clause (i)
is for any reason held unenforceable, in such proportion as is appropriate to
reflect not only the relative benefits to the Company 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
45
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.
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, business affairs or prospects of the Company
or the Bank, or the Company, the Bank and the Subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any material adverse change in the financial markets in
the United States or elsewhere or any outbreak of hostilities or escalation
thereof or other calamity or crisis the effect of which, 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) if trading generally on the Nasdaq Stock Market,
the American Stock Exchange or the New York Stock Exchange has been suspended,
or minimum or maximum prices for trading have been fixed, or maximum ranges for
prices for securities have been required, by either of said exchanges or by
order of the Commission or any other governmental authority, or if a banking
moratorium has been declared by either Federal 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 and the Bank is not reasonable or
equitable under then prevailing market conditions, or (vii) if the Conversion is
not consummated on or prior to ______, 200___.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Sections 2 and 4 hereof relating to the reimbursement of expenses
and except that the provisions of Sections 6 and 7 hereof shall survive any
termination of this Agreement.
46
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 Xxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000, attention of Xxxxxxxxx X. Xxxxxx, General Counsel, facsimile number
(000) 000-0000; notices to the Company and the Bank shall be directed to either
of them at Keystone Savings Bank, 00 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxx
00000, attention of _____________, facsimile number (___) _____________.
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 partners, 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 partners 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, except for the engagement letter dated March 12, 2003, by and
between the Agent and the Company and the Bank, relating to the Agent's
providing conversion agent services to the Company and the Bank in connection
with the Conversion. No waiver, amendment or other modification of this
Agreement shall be effective unless in writing and signed by the parties hereto.
SECTION 13. GOVERNING LAW AND TIME. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in said State without regard to the
conflicts of laws provisions thereof. Unless otherwise noted, specified times of
day refer to Eastern time.
SECTION 14. SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
SECTION 15. HEADINGS. Sections headings are not to be considered part of
this Agreement, are for convenience and reference only, and are not to be deemed
to be full or accurate descriptions of the contents of any paragraph or
subparagraph.
47
[Signature page follows]
48
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Agent, the Company and the Bank in accordance with its terms.
Very truly yours,
KNBT BANCORP, INC.
By:
-----------------------------
Title:
KEYSTONE SAVINGS BANK
By:
-----------------------------
Name:
Title:
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:
---------------------------------
Name:
Title:
49
EXHIBIT D
KNBT BANCORP, INC.
20,201,188 SHARES
(MAXIMUM OFFERED IN CONVERSION)
COMMON STOCK
(PAR VALUE $0.01 PER SHARE)
SELECTED DEALER'S AGREEMENT
August ___, 2003
We have agreed to assist KNBT Bancorp, Inc. (the "Company") in connection
with the offer and sale of shares (the "Shares") of common stock, par value $.01
per share (the "Common Stock"), of the Company, to be issued in connection with
the conversion of Keystone Savings Bank, a Pennsylvania chartered savings bank
(the "Bank"), from mutual to stock form. The Company in connection with its plan
to effect such conversion, offered 20,201,188 Shares for subscription by certain
of the Bank's depositors, the Bank's employee stock ownership plan and the
Company's and the Bank's directors, officers and employees who are not eligible
depositors in a subscription offering, and certain members of the general public
in a concurrent direct community offering. The Shares which were not subscribed
for pursuant to such subscription and direct community offerings are being
offered to the public in a syndicated community offering (the "Syndicated
Community Offering") in accordance with the conversion regulations of the
Pennsylvania Department of Banking (the "Department of Banking") and the Federal
Deposit Insurance Corporation (the "FDIC"). The Shares, the bases on which the
number of Shares to be issued may change, and certain of the terms on which they
are being offered are more fully described in the enclosed Prospectus (the
"Prospectus").
We are offering to Selected Dealers (of which you are one) the opportunity
to participate in the solicitation of offers to buy the Shares in the Syndicated
Community Offering and we will pay you a fee in the amount of _____________
percent (____%) of the dollar amount of the Shares sold on behalf of the Company
by you. The number of Shares sold by you shall be determined based on the
authorized designation of your firm on the order form or forms for such Shares
accompanying the funds transmitted for payment therefor (whether in the form of
a check payable to the Bank or a withdrawal from an existing account at the
Bank) to the special account established by the Company for the purpose of
holding such funds. It is understood, of course, that payment of your fee will
be made only out of compensation received by us for the Shares sold on behalf of
the Company by you, as evidenced in accordance with the preceding sentence. The
Bank has requested us to invite you to become a "Sponsoring Dealer," that is, a
Selected Dealer who solicits offers which result in the sale on behalf of the
Bank of at least 12,983,750 Shares. You may become a
1
Sponsoring Dealer (subject to your fulfillment of the requirement in the
preceding sentence) by checking the box on the confirmation at the end of this
letter. If you become a Sponsoring Dealer, you shall be entitled to an
additional fee in the amount of _______ percent (______%) of the dollar amount
of the Shares sold on behalf of the Company by you as evidenced in the manner
set forth above.
Each order form for the purchase of Shares must set forth the identity,
address and tax identification number of each person ordering Shares regardless
of whether the Shares will be registered in street name or in the purchaser's
name. Such order form should clearly identify your firm.
As soon as practicable after all the Shares are sold, we will remit to
you, out of our compensation as provided above, the fees to which you are
entitled hereunder, including your Sponsoring Dealer fee.
This offer is made subject to the terms and conditions herein set forth
and is made only to Selected Dealers which are (i) members in good standing of
the National Association of Securities Dealers, Inc. ("NASD") which agree to
comply with all applicable rules of the NASD, including, without limitation, the
NASD's Interpretation With Respect to Free-Riding and Withholding and Rule 2740
of the NASD's Conduct Rules, or (ii) foreign dealers not eligible for membership
in the NASD which agree (A) not to sell any Shares within the United States, its
territories or possessions or to persons who are citizens thereof or residents
therein and (B) in making other sales to comply with the above-mentioned NASD
Interpretation, Rules 2730, 2740 and 2750 of the above-mentioned Conduct Rules
as if they were NASD members and Rule 2420 of such Conduct Rules as it applies
to non-member brokers or dealers in a foreign country.
Orders for Shares will be strictly subject to confirmation and we, acting
on behalf of the Company, reserve the right in our absolute discretion to reject
any order in whole or in part, to accept or reject orders in the order of their
receipt or otherwise, and to allot. Neither you nor any other person is
authorized by the Company, the Bank or by us to give any information or make any
representations other than those contained in the Prospectus in connection with
the sale of any of the Shares. No Selected Dealer is authorized to act as agent
for us when soliciting offers to buy the Shares from the public or otherwise. No
Selected Dealer shall engage in any transaction prohibited by Regulation M
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), with respect to the Common Stock during the offering.
We and each Selected Dealer assisting in selling Shares pursuant hereto
agree to comply with the applicable requirements of the Exchange Act and
applicable rules and regulations issued by the Board of Governors of the Federal
Reserve System and the National Association of Securities Dealers, Inc. In
addition, we and each Selected Dealer confirm that the Securities and Exchange
Commission (the "Commission") interprets Rule 15c2-8 promulgated under the
Exchange Act as requiring that a prospectus be supplied to each person who is
expected to receive a confirmation of sale 48 hours prior to delivery of such
person's order form.
2
We and each Selected Dealer further agree to the extent that our customers
desire to pay for Shares with funds held by or to be deposited with us, in
accordance with the interpretation of the Commission of Rule 15c2-4 promulgated
under the Exchange Act either (a) upon receipt of an executed order form or
direction to execute an order form on behalf of a customer to forward the
syndicated community offering price for the Shares ordered on or before 12:00
noon on the business day following receipt or execution of an order form by us
to the Bank for deposit in a segregated account or (b) to solicit indications of
interest in which event (i) we will subsequently contact any customers
indicating interest to confirm the interest and give instructions to execute and
return an order form or to receive authorization to execute an order form on
their behalf, (ii) we will mail acknowledgments of receipt of orders to each
customer confirming interest on the business day following such confirmation,
(iii) we will debit accounts of such customers on the fifth business day (the
"debit date") following receipt of the confirmation referred to in (i), and (iv)
we will forward completed order forms together with such funds to the Bank on or
before 12:00 noon on the next business day following the debit date for deposit
in a segregated account. We acknowledge that if the procedure in (b) is adopted,
our customer's funds are not required to be in their accounts until the debit
date. We and each Selected Dealer further acknowledge that, in order to use the
foregoing "sweep arrangements," we comply with the net capital requirements for
broker/dealers under Rule 15c3-1(a)(1) of the Exchange Act.
Unless earlier terminated by us, this Agreement shall terminate 45 full
business days after the date hereof, but may be extended by us for an additional
period or periods not exceeding 30 full business days in the aggregate. We may
terminate this Agreement or any provisions hereof at any time by written or
telegraphic notice to you. Of course, our obligations hereunder are subject to
the successful completion of the offering, including the sale of all of the
Shares.
You agree that at any time or times prior to the termination of this
Agreement you will, upon our request, report to us the number of Shares sold on
behalf of the Company by you under this Agreement.
We shall have full authority to take such actions as we may deem advisable
in respect to all matters pertaining to the offering. We shall be under no
liability to you except for lack of good faith and for obligations expressly
assumed by us in this Agreement.
Upon application to us, we will inform you as to the states in which we
believe the Shares have been qualified for sale under, or are exempt from the
requirements of, the respective "blue sky" laws of such states, but we assume no
responsibility or obligation as to your rights to sell Shares in any state.
Additional copies of the Prospectus and any supplements thereto will be
supplied in reasonable quantities upon request.
Any notice from us to you shall be deemed to have been duly given if
mailed, telephoned or telegraphed to you at the address to which this Agreement
is mailed.
3
This Agreement shall be construed in accordance with the laws of the State
of New York.
Please confirm your agreement hereto by signing and returning the
confirmation accompanying this letter at once to us at Sandler X'Xxxxx &
Partners, L.P., 000 Xxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000. The
enclosed duplicate copy will evidence the agreement between us.
Very truly yours,
SANDLER X'XXXXX & PARTNERS, L.P.
By: Sandler X'Xxxxx & Partners Corp.,
the sole general partner
By:
---------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED
as of the date first above written:
[NAME OF SELECTED DEALER]
By:
--------------------------------
Name:
Title:
4
