EXHIBIT 10.13
Maximum of ___________ Shares
FIRST LEESPORT BANCORP, INC.
(a Pennsylvania corporation)
Common Stock
($5.00 par value)
AGENCY AGREEMENT
__________, ▇▇▇▇
▇▇▇▇▇▇▇ ▇'▇▇▇▇▇ & Partners, L.P.
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
First Leesport Bancorp, Inc. a Pennsylvania corporation (the "Company"),
and Leesport Bank, a Pennsylvania chartered commercial bank (the "Bank"),
confirm their agreement with Sandler ▇'▇▇▇▇▇ & Partners, L.P. ("Sandler ▇'▇▇▇▇▇"
or the "Agent") with respect to the offer and sale by the Company of up to
_________________ shares of Common Stock, par value $5.00 per share, of the
Company ("Common Stock").
The Company is offering ______________ shares of Common Stock to the
holders of record of Common Stock ("Record Date Holder") at the close of
business on ___________, 2001 (the "Record Date"), at a subscription price of
$_____ per share ("Subscription Price") and, subject to the rights of such
holders described below, to certain other purchasers on a standby basis. Each
Record Date Holder will receive one (1) non-transferable subscription right
("Rights") for every two (2) shares of Common Stock held of record at the close
of business on the Record Date. Each Right will enable the holder thereof to
purchase from the Company one share of Common Stock (an "Underlying Share") at
the Subscription Price (the "Basic Subscription Privilege"). Each Record Date
Holder who fully exercises their Basic Subscription Privilege also will be
eligible to subscribe at the Subscription Price for shares of
Common Stock (the "Excess Shares") not otherwise purchased pursuant to the
exercise of the Basic Subscription Privilege up to the total number of
Underlying Shares, subject to availability, proration, and reduction by the
Company in certain circumstances and, in all instances, a limit of two times the
amount eligible for subscription pursuant to the Basic Subscription Privilege
(the "Oversubscription Privilege"). The Rights are evidenced by non-transferable
certificates. The offer and sale of the Underlying Shares pursuant to the
exercise of the Basic Subscription Privilege and the Oversubscription Privilege
are referred to herein as the "Rights Offering."
The Company also intends to enter into Standby Purchase Agreements pursuant
to which an aggregate of ____ institutional investors and high net worth
individuals (the "Standby Purchasers") have severally agreed, subject in each
case to a maximum standby commitment and certain conditions, to acquire from the
Company at the Subscription Price up to an aggregate of ________ of the
Underlying Shares remaining upon completion of the Rights Offering. The Standby
Purchase Agreements will require that the Standby Purchasers agree to purchase
and the Company agrees to sell, and thus guarantee the availability of, an
aggregate minimum of ________ shares of Common Stock ("Additional Shares") at
the Subscription Price if a sufficient number of Underlying Shares are not
available after the exercise of the Basic Subscription Privilege and the
Oversubscription Privilege to satisfy the purchase commitments of the Standby
Purchasers (the "Minimum Standby Obligation"). The Rights Offering and the
offering to Standby Purchasers are together referred to herein as the
"Offering," and the Underlying Shares and the Additional Shares are together
referred to herein as the "Securities."
Record Date Holders may exercise subscription rights by delivering to the
subscription agent a properly completed and executed subscription rights
certificate together with payment in full of the subscription price for each
share subscribed for. Payment may be made only (i) by check or bank draft drawn
upon a U.S. bank, or postal, telegraphic or express money order payable to
American Stock Transfer and Trust Co. ("AST") as subscription agent, or (ii) by
wire transfer of funds to AST for the purpose of accepting subscriptions in
connection with the transactions contemplated hereby.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-68352) including a
prospectus for the registration of the Securities under the Securities Act of
1933, as amended (the "1933 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 prospectus constituting a part
thereof (including in each case all documents, if any, deemed to be part thereof
pursuant to the rules and regulations of the Commission under the 1933 Act, as
from time to time amended or supplemented pursuant to the 1933 Act or otherwise
(the "1933 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 Offering which
differs from the Prospectus on file with 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 1933 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 to be used in the Offering.
Such Prospectus contains information with respect to the Company, the Bank and
the Common Stock.
SECTION 1. Representations and Warranties.
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(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 1933 Act and the 1933 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, in the light of the circumstances
under which they were made, 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 Section of the Prospectus captioned
"The Rights Offering -- Financial Advisor.")
(ii) The Company will promptly file the Prospectus and any
supplemental sales literature with the Commission. The Prospectus and all
supplemental sales literature, as of the date the Registration Statement became
effective and at the Closing Time referred to in Section 2, complied and will
comply in all material respects with the applicable requirements of the 1933 Act
Regulations and, at or prior to the time of their first use, will have received
all required authorizations of the Commission for use in final form.
(iii) No order, directive, request or other correspondence has been
received by the Company or the Bank from the Federal Reserve Board ("FRB"), the
Commonwealth of Pennsylvania Department of Banking ("Banking Department") or the
Federal Deposit Insurance Corporation ("FDIC") which could have the effect of
delaying or canceling the Offering.
(iv) At the Closing Time referred to in Section 2, the Company, its
wholly owned subsidiaries, First Leesport Capital I (the "Trust") and the Bank,
and the Bank's wholly owned subsidiaries, ▇▇▇▇▇▇ & ▇▇▇▇, Inc., First Leesport
Investment Group, Inc., First Leesport Wealth Management, Inc. and Horizon
Realty Solutions, Inc. (each of the Bank's subsidiaries and the Trust are
collectively hereinafter defined as the "Subsidiaries"), will have satisfied any
and all terms, conditions, requirements and provisions imposed upon the Company,
the Bank and the Subsidiaries by any regulatory authority in connection with
this transaction except for any post-closing notices or filings which may be
required, or appropriate waivers shall have been obtained.
(v) The accountants who audited the financial statements and
supporting schedules of the Company included in the Registration Statement are
independent public accountants within the meaning of the Code of Ethics of the
American Institute of Certified Public Accountants ("AICPA"); and such
accountants are, with respect to the Company, the Bank and the Subsidiaries,
independent certified public accountants as required by the 1933 Act and the
1933 Act Regulations.
(vi) The consolidated financial statements and the related notes
thereto included in the Registration Statement and the Prospectus present fairly
the financial position of the Company, the Bank and the Subsidiaries at the
dates indicated and the results of their operations, retained earnings and cash
flows for the periods specified and comply as to form in all material respects
with the applicable accounting requirements of the 1933 Act Regulations; except
as otherwise stated in the Registration Statement and the Prospectus, said
financial statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis; and the supporting
schedules and tables included in the Registration Statement and the Prospectus
present fairly the information required to be stated therein.
(vii) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated or
referred to therein, (A) there has been no material adverse change in the
financial condition, results of operations, business or prospects of the
Company, the Bank and the Subsidiaries, taken as a whole (a "Material Adverse
Effect"), whether or not arising in the ordinary course of business, and (B)
there have been no transactions entered into by the Company, the Bank, or any of
the Subsidiaries, other than those in the ordinary course of business, which are
material with respect to the Company, the Bank and the Subsidiaries, taken as a
whole.
(viii) The Company 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 and to
enter into and perform its obligations under this Agreement; and the Company is
duly qualified as a foreign corporation to transact business and is in good
standing in 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.
(ix) The authorized capital stock of the Company consists of
10,000,000 shares of Common Stock, par value $5.00 per share, of which ________
shares are presently issued and outstanding. As of ________, 2001, there were
approximately
________ holders of record of Common Stock. The Company has not authorized the
issuance of, and has not issued, any other shares of capital stock. Except for
the Rights, for options to acquire _______ shares of Common Stock reserved for
issuance pursuant to the Company's 1998 Employee Stock Incentive Plan and its
1998 Independent Directors Stock Option Plan (the "Option Plans"), for the right
of each holder of a share of Common Stock to acquire an additional share of
common stock for each share of Common Stock held, subject to the terms and
conditions specified in the Rights Agreement dated September 19, 2001 between
the Company and American Stock Transfer Company, as Rights Agent (the
"Shareholder Rights Plan"), and as to shares which may be issued pursuant to the
Stock Purchase Agreement by and among the Company, the Bank and the Johnsons
dated October 1, 1999 (the "▇▇▇▇▇▇▇ Stock Purchase Agreement") and as to shares
which may be issued pursuant to the Company's Dividend Reinvestment Plan and
401(k) Plan, Employee Stock Ownership Plan and Non-Employee Director
Compensation Plan, there are no options, warrants, calls, employee benefit or
other plans, preemptive rights or commitments of any character relating to the
authorized but unissued capital stock or any other equity security of the
Company or any securities or obligations convertible into or exchangeable for or
giving any person any right to subscribe for or acquire from the Company any
shares of such capital stock.
(x) Upon completion of the Offering, the authorized equity capital of
the Company will be within the range set forth in the Prospectus under the
caption "Capitalization." The shares of Common Stock to be sold in the Offering
have been duly and validly authorized for issuance and, when issued and
delivered by the Company against payment of the consideration therefor, the
shares of Common Stock will be duly and validly issued, fully paid and
non-assessable and will be free and clear of any security interest, pledge,
lien, encumbrance, claim or equity other than created by the purchaser thereof;
and the issuance of the shares of Common Stock will not be in violation of any
preemptive rights or other rights to subscribe for or to purchase, or any
restriction upon the voting or transfer of, any shares of Common Stock pursuant
to the Company's charter, bylaws or other governing documents or any agreement,
plan or other instrument to which the Company is party or by which it is bound.
The terms and provisions of the shares of Common Stock conform and will conform
in all material respects to the description thereof contained in the Prospectus
and the certificates representing the shares of Common Stock will conform with
the requirements of applicable laws and regulations.
(xi) Each of the Company, the Bank and the Subsidiaries have full
corporate power and authority, and the
Trust has full power and authority pursuant to the trust certificate filed with
the State of Delaware, to own, lease and operate its properties and to conduct
its business as described in the Prospectus.
(xii) The deposit accounts of the Bank are insured by the FDIC up to
the applicable limits.
(xiii) (A) Each of the Bank and the Subsidiaries (other than the
Trust) has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the jurisdiction of its incorporation, has full
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and Prospectus,
and is duly qualified to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure to so qualify would not have a Material Adverse Effect; the activities
of the Bank and the Subsidiaries are permitted to a Pennsylvania chartered
commercial bank under all applicable rules and regulations; all of the issued
and outstanding capital stock of the Bank has been duly authorized and validly
issued, is fully paid and nonassessable and is owned by the Company, free and
clear of any security interest, mortgage, pledge, lien, encumbrance, claim or
equity; and all of the issued and outstanding capital stock of each of the
Subsidiaries (other than the Trust) has been duly authorized and validly issued,
is fully paid and nonassessable and is owned by the Bank, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity.
(B) The Trust has been duly created and is validly existing in
good standing as a business trust under the laws of the State of Delaware, with
the 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; the activities of the Trust
are permitted to a Pennsylvania chartered bank holding company by all applicable
rules and regulations; all of the issued and outstanding capital stock of the
Trust has been duly authorized and validly issued, is fully paid and
nonassessable, and the Trust's common securities are owned by the Company, free
and clear of any security interest, mortgage, pledge, lien, encumbrance, claim
or equity.
(C) Except for the Bank and the Subsidiaries, the Company has
no direct or indirect subsidiary that is a "significant subsidiary" as defined
in Rule 1-02 of Regulation S-X of the rules and regulations of the Commission.
(xiv) 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 of the Company and the Bank, 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.
(xv) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus and prior to the Closing
Date, except as otherwise may be indicated or contemplated therein, none of the
Company, the Bank or the Subsidiaries will have (A) issued any securities or
incurred any liability or obligation, direct or contingent, for borrowed money,
except borrowings in the ordinary course of business from the same or similar
sources indicated in the Prospectus, or (B) entered into any transaction or
series of transactions which is material in light of the business of the
Company, the Bank and the Subsidiaries, taken as a whole, 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 or
otherwise as indicated in the Prospectus.
(xvi) No approval of any regulatory or supervisory or other public
authority is required in connection with the execution and delivery of this
Agreement for the issuance of the Securities, except for the declaration of
effectiveness of any required post-effective amendment to the Registration
Statement by the Commission and as may be required under the securities laws of
various jurisdictions.
(xvii) Neither the Company, the Bank nor any of the Subsidiaries is in
violation of its charter, certificate of trust, bylaws 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 condition contained in any material
contract, indenture, mortgage, loan agreement, note, lease or other instrument
to which the Company, the Bank or any of 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 any of the Subsidiaries is subject.
(xviii) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated herein 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 any of the Subsidiaries pursuant to, any
contract, indenture, mortgage, loan agreement, note, lease or other instrument
to which the Company, the Bank or any of 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 any of the Subsidiaries are subject, nor will such action
result in any violation of the provisions of the charter, certificate of trust,
or by laws, of the Company, the Bank or any of the Subsidiaries, or any
applicable law, administrative regulation or administrative or court decree.
(xix) No labor dispute with the employees of the Company, the Bank or
any of the Subsidiaries exists or, to the knowledge of the Company or the Bank,
is imminent.
(xx) 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, taken as a whole; 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.
(xxi) The statements set forth in the Prospectus under the caption
"Description of Capital Stock," insofar as they purport to constitute a summary
of the terms of the capital stock and options of the Company and under the
captions "Prospectus Summary," "Risk Factors," "The Rights Offering," "Standby
Purchase Agreement," "Management's Discussion and analysis of Financial
Condition and Results of Operations, "Business," "Supervision and Regulation,"
"Executive
Compensation" and "Description of Capital Stock," insofar as they purport to
describe the provisions of the laws and documents referred to therein, are
accurate, complete and fair.
(xxii) Except as disclosed in the Registration Statement and
Prospectus, the Company, the Bank and the Subsidiaries are conducting their
respective businesses in compliance in all material respects with all laws,
rules, regulations, decisions, directives and orders (including, without
limitation, all regulations and orders of, or agreements with, the FRB, the
Banking Department, and the FDIC) applicable to them; there is no action, suit,
investigation or proceeding before or by any government, governmental
instrumentality or court, domestic or foreign, to which the Company, the Bank or
the Subsidiaries is subject, now pending or, to the knowledge of the Company and
the Bank, threatened against or affecting the Company, the Bank or the
Subsidiaries (A) that is required to be disclosed in the Registration Statement
and the Prospectus and not disclosed therein, (B) that could result in any
Material Adverse Effect, (C) that could materially and adversely affect the
properties, assets or leasehold interests of the Company, the Bank and the
Subsidiaries, or (D) that could adversely affect the consummation of the
transactions contemplated in this Agreement; all pending legal or governmental
proceedings to which the Company, the Bank or the Subsidiaries is a party or of
which any of their property is the subject, which are not described in the
Registration Statement and the Prospectus, including ordinary routine litigation
incidental to their respective businesses, would not have a Material Adverse
Effect; and there are no contracts or documents of the Company, the Bank or the
Subsidiaries which would be required to be described in the Registration
Statement and the Prospectus or to be filed as exhibits to the Registration
Statement by the 1933 Act or by the 1933 Act Regulations which have not been so
described and filed.
(xxiii) The Company, the Bank and the Subsidiaries possess such
permits, licenses, approvals, consents and other authorizations (collectively,
"Governmental Licenses") issued by the appropriate federal, state, local or
foreign regulatory agencies or bodies necessary to conduct the business now
operated by the Company, the Bank and the Subsidiaries; the Company, the Bank
and the Subsidiaries are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would not, singly
or in the aggregate, have a Material Adverse Effect; all of the Governmental
Licenses are valid and in full force and effect, except when the invalidity of
such Governmental Licenses or the failure of such Government Licenses to be in
full force and effect would not have a Material Adverse Effect; and neither the
Company, the Bank nor any of the Subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such Government
Licenses which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would result in a Material Adverse Effect.
(xxiv) The Company, the Bank and each of the Subsidiaries own or
possess, or can acquire on reasonable terms, adequate domestic and foreign
patents, patent rights, licenses, trademarks, service marks, trade names,
inventions, copyrights and know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures) (collectively, "intellectual property") necessary to carry on
their respective businesses as presently conducted, and neither the Company, the
Bank, nor any of the Subsidiaries has received any notice of any infringement of
or conflict with asserted rights of others with respect to any intellectual
property which would render any intellectual property invalid or inadequate to
protect the interests of the Company, the Bank or any Subsidiaries therein and
which infringement or conflict, singly or in the aggregate, would have a
Material Adverse Effect.
(xxv) Each of the Company, the Bank and the Subsidiaries is in
compliance in all material respects with all applicable federal, state and local
environmental laws and regulations, including, without limitation, those
applicable to emissions to the environment, waste management, and waste disposal
(collectively, the "Environmental Laws"), except where such noncompliance could
not be reasonably likely to have a Material Adverse Effect, or except as
disclosed in the Prospectus, and to the knowledge of the Company and the Bank,
there are no circumstances that would prevent, interfere with or materially
increase the cost of such compliance in the future.
(xxvi) Except as disclosed in the Prospectus, there is no claim under
any Environmental Law, including common law, pending or, to the knowledge of the
Company and the Bank, threatened against the Company or the Bank (an
"Environmental Claim"), which would be reasonably likely to have a Material
Adverse Effect, and, to the knowledge of the Company and the Bank, under
applicable law, there are no past or present actions, activities, circumstances,
events or incidents, including, without limitation, releases of any material
into the environment that are reasonably likely to form the basis of any
Environmental Claim against the Company, the Bank or the Subsidiaries which
would be reasonably likely to have a Material Adverse Effect.
(xxvii) The Company has obtained an opinion of its counsel, ▇▇▇▇▇▇▇ &
▇▇▇, P.C., with respect to the legality of the Securities issued, a copy of
which is filed as an exhibit to the Registration Statement; the facts and
representations upon which such opinion is based are truthful, accurate and
complete in all material respects, and neither the Company nor the Bank has
taken or will take any action inconsistent therewith.
(xxviii) Each lease of real property (together with any improvements
thereon) and all material personal property to which the Company, the Bank or
any Subsidiary is a party has been duly authorized, executed and delivered, and
is the legal, valid and binding agreement of the Company, the Bank or the
Subsidiaries, enforceable in accordance with its terms, subject, as to
enforceability, to bankruptcy, insolvency, reorganization, moratorium and other
laws of general applicability relating to or affecting creditors' rights and to
general principles of equity.
(xxix) The Company has not taken and shall not take, directly or
indirectly, any action designed to cause or result in, or which has constituted
or which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the Common Stock.
(xxx) The Company is not required to be registered under the
Investment Company Act of 1940, as amended.
(xxxi) The Company, the Bank and the Subsidiaries have filed all
federal income and state and local franchise tax returns required to be filed,
or have received extensions thereof, 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.
(xxxii) The Company has received approval, subject to issuance, to
have the Securities quoted on the National Market System of the National
Association of Securities Dealers' Automated Quotation System ("Nasdaq National
Market") effective on the Closing Date.
(b) Any certificate signed by any officer of the Company or the Bank and
delivered to either of the Agent or to counsel for the Agent shall be deemed a
representation and warranty by the Company or the Bank to each as to the matters
covered thereby.
SECTION 2. Appointment of Sandler ▇'▇▇▇▇▇; Sale and Delivery of
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the Securities; Closing.
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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 ▇'▇▇▇▇▇ as its Agent to consult with and advise the Company
regarding the structure of the Offering, as well as to identify Standby
Purchasers and assist the Bank in negotiating Standby Purchase Agreements with
the Standby Purchasers. On the basis of the representations and warranties
herein contained, and subject to the terms and conditions herein set forth,
Sandler ▇'▇▇▇▇▇ accepts such appointment and agrees to provide services to the
Company as to the matters described below; provided, however, that the Agent
shall not be obligated to sell any minimum number of shares of Common Stock to
any particular category of purchaser or in the aggregate or take any action
which is inconsistent with any applicable laws, regulations, decisions or
orders. The services to be rendered by Sandler ▇'▇▇▇▇▇ pursuant to this
appointment include the following: (i) identifying prospective Standby
Purchasers and assisting in the negotiation of Standby Purchase Agreements with
such Standby Purchasers; (ii) assisting the Company's management in preparing
for meetings with existing shareholders and other potential investors in the
Offering; and (iii) providing such other general advice and assistance as may be
requested and agreed to by Sandler ▇'▇▇▇▇▇ to promote the successful completion
of the Offering.
If at least the total minimum of Securities, as disclosed on the cover 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
subscription agent referred to herein. The closing shall be held at the offices
of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇ LLP, Vienna, Virginia, at 10:00 a.m., Eastern 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. The date
upon which the Company shall release for delivery all of the Securities, in
accordance with the terms hereof, is herein called the "Closing Date." The hour
on the Closing Date at which the Company shall release for delivery all of the
Securities in accordance with the terms hereof is called the "Closing Time."
Appropriate arrangements for placing the funds received from subscriptions
for Securities or other offers to purchase Securities were made prior to the
commencement of the Rights Offering, with provision for refund to the purchasers
as set forth in Section 9 hereof, or for delivery to the Company if all
Securities are sold. The Company shall not be deemed to have received any
subscription offer or exercise of a Right accompanied by a check or comparable
instrument until final payment has been made on such check or instrument. Each
subscriber will pay any stock issue and transfer taxes which may be payable with
respect to the sale of the Securities.
In addition to reimbursement of the expenses specified in Section 4 hereof,
the Agent will receive the following compensation for its services hereunder:
(a) one and one-half percent (1.50%) of the aggregate purchase price of the
Common Stock sold in the Offering pursuant to the exercise of the Rights by
directors, officers and employees of the Company ("Interested Parties");
(b) three percent (3%) of the aggregate purchase price of the Common Stock
sold in the Offering pursuant to the exercise of Rights by persons other than
Interested Parties; and
(c) five percent (5%) of the aggregate purchase price of the Common Stock
committed by Standby Purchasers pursuant to Standby Purchase Agreements.
If this Agreement is terminated by the Agent in accordance with the
provisions of Section 9(a) hereof or the Offering is terminated by the Company,
the Company shall reimburse Sandler ▇'▇▇▇▇▇ for all of its reasonable
out-of-pocket expenses incurred prior to termination, including the reasonable
fees and disbursements of counsel for the Agent, up to an aggregate of $125,000,
(which shall include the $25,000 paid as an advance by the Company to the Agent
prior to the date hereof) upon receipt by the Company or the Bank of a written
accounting therefor setting forth in reasonable detail the expenses incurred by
the Agent.
All fees payable to the Agent hereunder shall be payable in immediately
available funds at the Closing Time, or upon the termination of this Agreement,
as the case may be.
SECTION 3. Covenants of the Company.
-------------------------
The Company covenants with the Agent as follows:
(a) The Company will prepare and file such amendments or supplements to the
Registration Statement and the Prospectus as may hereafter be required by the
1933 Act Regulations or as may hereafter be requested by the Agent. The Company
will notify the Agent immediately, and confirm the notice in writing, (i) of the
effectiveness of any post-effective amendment of the Registration Statement or
the filing of any supplement to the Prospectus, (ii) of the receipt of any
comments from the Commission with respect to the transactions contemplated by
this Agreement, (iii) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or for
additional information, (iv) of the receipt of any order, directive, request or
other correspondence from the applicable regulatory agency with jurisdiction
over the Company and the Bank relating to the Offering, (v) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose,
and (vi) of the receipt of any notice with respect to the suspension of any
qualification of the Securities for offering or sale in any jurisdiction. The
Company will make every reasonable effort to prevent the issuance of any stop
order and, if any stop order is issued, to obtain the withdrawal thereof at the
earliest possible moment.
(b) The Company will give the Agent notice of its intention to file or
prepare any amendment to the Registration Statement (including any
post-effective amendment) or any amendment or supplement to the Prospectus
(including any revised prospectus which the Company proposes for use in
connection with the 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 1933 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 shall object.
(c) The Company will deliver to the Agent as many signed copies and as many
conformed copies of 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 will comply, at its own expense, with all requirements imposed upon it
by the Commission, as from time to time in force, and by the 1933 Act, the 1933
Act Regulations, the Securities Exchange Act of 1934 (the "1934 Act") and the
rules and regulations of the Commission promulgated thereunder, 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
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 will furnish to the Agent a
reasonable number of copies of such amendment or supplement. For the purpose of
this subsection, the Company will furnish such information with respect to
itself as the Agent may from time to time reasonably request.
(f) The Company 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 Agent and the Company have agreed; provided, however, that the Company 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
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 six months from the effective date of the Registration Statement.
(g) The Company authorizes Sandler ▇'▇▇▇▇▇ to act as agent of the Company
in distributing the Prospectus to persons 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 Offering 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 of five years hereafter, the Company will furnish to
its stockholders as soon as practicable after the end of each fiscal year an
annual report (including statements of financial condition and statements of
income, stockholders' equity and cash flows of the Company, the Bank and the
Subsidiaries, 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 of five years hereafter, the Company will furnish to
the Agent (i) as soon as 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 1934 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 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."
(l) The Company will file all documents and notices required by the Nasdaq
National Market and will use its best efforts to maintain the listing of the
Common Stock on the Nasdaq National Market.
(m) The Company 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" in connection with the sale of the Securities.
(n) Other than the Prospectus or as permitted by applicable law, the
Company will not distribute any prospectus or other offering material in
connection with the offer and sale of the Securities and will not publish any
writing which constitutes an offer or prospectus.
(o) The Company will use all reasonable efforts to comply with such
requirements as may be necessary for the Agent or other brokerage firms to make
an active market for the shares of Common Stock.
(p) The Company will cause to be maintained records of all funds submitted
to American Stock Transfer Company, as the Company's subscription agent, in
connection with the Offering, to enable the Company to make appropriate refunds
of such funds in the event that such refunds are required to be made in
accordance with the Offering as described in the Prospectus.
(q) The Company will furnish to you 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 which have been read by ▇▇▇▇▇ ▇▇▇▇▇▇ Company, LLP as stated in their
letters to be furnished pursuant to subsections (d) and (e) of Section 5 hereof.
(r) The Company shall not deliver the Securities until the Company has
satisfied or caused to be satisfied each condition set forth in Section 5
hereof, unless such condition is waived by the Agent.
(s) Subsequent to the respective dates as to which information in given in
the Prospectus and prior to the Closing Date, except as otherwise may be
indicated or contemplated therein, the Company will not (i) issue any
securities, other than pursuant to the Company's existing stock option plans, or
incur any liability or obligation, direct or contingent, for borrowed money,
except borrowings from the same or similar sources indicated in the Prospectus
in the ordinary course of business, or (ii) enter into any transaction, other
than in the ordinary course of business which might result in any material
adverse change in the financial condition, results of operations, or business of
the Company, the Bank and the Subsidiaries, taken as a whole.
(t) During the 180 day period after the Closing Date, the Company will not
without the prior written consent of Sandler ▇'▇▇▇▇▇, directly or indirectly
issue, sell, offer or agree to sell, grant any option for the sale of, or
otherwise dispose of, the Common Stock or any security convertible into,
exchangeable or exercisable for the Common Stock, except for prior commitments
existing on the date hereof as set forth in Section 1(a)(ix) hereof.
SECTION 4. Payment of Expenses.
--------------------
The Company shall pay all expenses incident to the performance of its
obligations under this Agreement, including but not limited to (i) the cost of
obtaining all securities and any necessary regulatory approvals, (ii) the
printing and filing of the Registration Statement as originally filed and of
each amendment thereto, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the purchasers in the Offering, (iv) the fees
and disbursements of the Company's counsel, accountants and other advisors, (v)
the qualification of the Securities under securities laws in accordance with the
provisions of Section 3(f) hereof, including filing fees and the fees and
disbursements of counsel in connection therewith and in connection with the
preparation of the Blue Sky Survey, (vi) the printing and delivery to the Agent
of copies of the Registration Statement as originally filed and of each
amendment thereto and the printing and delivery of the Prospectus and any
amendments or supplements thereto to the purchasers in the Offerings and the
Agent, (vii) the printing and delivery to the Agent of copies of a Blue Sky
Survey, 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 Company, the Company will reimburse
the Agent for such fees and expenses whether or not the Offering is consummated;
provided, however, that the Agent shall not incur any substantial expenses on
behalf of the Company pursuant to this Section without the prior approval of the
Company.
The Company shall pay certain expenses incident to the performance of the
Agent's obligations under this Agreement, including (i) the filing fees paid or
incurred by the Agent in connection with all filings with the National
Association of Securities Dealers, Inc., and (ii) all reasonable out of pocket
expenses incurred by the Agent relating to the Offering, as provided in Section
2 hereof. All fees and expenses to which the Agent is entitled to reimbursement
under this paragraph of this Section 4 shall be due and payable upon receipt by
the
Company 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 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 as of the Closing Date, to the
accuracy of the written statements of officers and directors of the Company made
pursuant to the provisions hereof, to the performance by the Company 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 1933 Act or proceedings therefor
initiated or threatened by the Commission, no order suspending the sale of the
Securities in any jurisdiction shall have been issued, and no order, directive,
request or other correspondence has been received by the Company or the Bank
from the FRB, the Banking Department or the FDIC which could have the effect of
delaying or canceling the Offering.
(b) At Closing Time, the Agent shall have received:
(i) The favorable opinion, dated as of Closing Time, of ▇▇▇▇▇▇▇ &
▇▇▇, P.C., counsel for the Company and the Bank, in form and substance
satisfactory to counsel for the Agent, to the effect that:
(1) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the Commonwealth of
Pennsylvania.
(2) 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.
(3) 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, except where the failure to be so qualified would not
have a Material Adverse Effect.
(4) The authorized capital stock of the Company is correctly set
forth in the Registration Statement and Prospectus under the caption
"Capitalization" and upon consummation of the Offering, the issued and
outstanding capital stock of the Company will be within the range set forth in
the Registration Statement and Prospectus under the caption "Capitalization."
(5) The Securities have been duly and validly authorized for
issuance and sale and, when issued and delivered by the Company pursuant to the
terms of the Offering against payment of the consideration therefor in
accordance with the description set forth in the Prospectus, will be duly and
validly issued and fully paid and non-assessable and will be owned free and
clear of any mortgage, pledge, loan, security interest, encumbrance, or claim
(legal or equitable) other than that created by the purchaser thereof.
(6) The issuance of the Securities is not subject to preemptive
or other similar rights arising by operation of law or, to the best of such
counsel's knowledge, otherwise.
(7) The Bank is duly organized, and is validly existing and in
good standing as a commercial bank under the laws of the Commonwealth of
Pennsylvania, 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 such qualification is required, except
where the failure to be so qualified would not have a Material Adverse Effect.
(8) Each of the Subsidiaries (other than the Trust) has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has full corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Registration Statement and Prospectus, and is duly qualified
to transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify
would not have a Material Adverse Effect; the activities of the Bank and the
Subsidiaries are permitted to a Pennsylvania chartered commercial bank under all
applicable rules and regulations; all of the issued and outstanding capital
stock of the Bank has been duly authorized and validly issued, is fully paid and
nonassessable and is owned by the Company,
free and clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity; and all of the issued and outstanding capital stock of each of
the Subsidiaries (other than the Trust) has been duly authorized and validly
issued, is fully paid and nonassessable and is owned by the Bank, free and clear
of any security interest, mortgage, pledge, lien, encumbrance, claim or equity.
(9) The Trust has been duly created and is validly existing in
good standing as a business trust under the laws of the State of Delaware, with
the 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; the activities of the Trust
are permitted to a Pennsylvania chartered bank holding company by all applicable
rules and regulations; all of the issued and outstanding capital stock of the
Trust has been duly authorized and validly issued, is fully paid and
nonassessable, and the Trust's common securities are owned by the Company, free
and clear of any security interest, mortgage, pledge, lien, encumbrance, claim
or equity.
(10) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated herein 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 any of the Subsidiaries pursuant to, any
contract, indenture, mortgage, loan agreement, note, lease or other instrument
to which the Company, the Bank or any of 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 any of the Subsidiaries are subject except for such liens,
charges or encumbrances which will not have a Material Adverse Effect upon the
Company or any Subsidiary, nor will such action result in any violation of the
provisions of the charter, certificate of trust, or by laws, of the Company, the
Bank or any of the Subsidiaries, or any applicable law, administrative
regulation or administrative or court decree.
(11) The Registration Statement is effective under the 1933 Act
and, to the best of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration
Statement has been issued under the 1933 Act or proceedings therefor initiated
or threatened by the Commission.
(12) 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 or the issuance of the Securities, except as may be
required under the securities or Blue Sky laws of various jurisdictions as to
which no opinion need be rendered.
(13) 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 1933 Act and the 1933 Act
Regulations.
(14) 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.
(15) The statements set forth in the Prospectus under the caption
"Description of Capital Stock," insofar as they purport to constitute a summary
of the terms of the capital stock and options of the Company and under the
captions "Prospectus Summary," "Risk Factors," "The Rights Offering," "Standby
Purchase Agreement," "Management's Discussion and analysis of Financial
Condition and Results of Operations, "Business," "Supervision and Regulation,"
"Executive Compensation" and "Description of Capital Stock," insofar as they
purport to describe the provisions of the laws and documents referred to
therein, are accurate, complete and fair.
(16) There is no action, suit, investigation or proceeding before
or by any government, governmental instrumentality or court, domestic or
foreign, to which the Company the Bank or the Subsidiaries is subject, now
pending or, to the best of such counsel's knowledge, threatened against or
affecting the Company, the Bank or the Subsidiaries (A) that is required to be
disclosed in the Registration Statement and the Prospectus and not disclosed
therein, (B) that could result in any Material Adverse Effect, (C) that could
materially and adversely affect the properties, assets or leasehold interests of
the Company, the Bank and the Subsidiaries, or (D) that could adversely affect
the consummation of the transactions contemplated in this Agreement; and all
pending legal or governmental proceedings to which the Company, the Bank or the
Subsidiaries is a party or of which any of their property is the subject, which
are not described in the Registration Statement and the Prospectus, including
ordinary routine litigation incidental to their respective businesses, would not
have a Material Adverse Effect.
(17) The Company, the Bank and the Subsidiaries possess such
Governmental Licenses issued by the appropriate federal, state, local or foreign
regulatory agencies or bodies necessary to conduct the business now operated by
the Company, the Bank and the Subsidiaries; the Company, the Bank and the
Subsidiaries are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failures so to comply would not, singly
or in the aggregate, have a Material Adverse Effect; all of the Governmental
Licenses are valid and in full force and effect, except when the invalidity of
such Governmental Licenses or the failure of such Government Licenses to be in
full force and effect would not have a Material Adverse Effect; and to such
counsel's knowledge, neither the Company, the Bank nor any of the Subsidiaries
has received any notice of proceedings relating to the revocation or
modification of any such Government Licenses which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect.
(18) 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 and the descriptions thereof or
references thereto are correct.
(19) Neither the Company, the Bank nor any of the Subsidiaries is
in violation of its charter, certificate of trust, bylaws, or, to the best of
such counsel's knowledge, in default (nor has any event occurred which, with
notice or lapse of time or both, would constitute a default) in the performance
or observance of any obligation, agreement, covenant or condition contained in
any contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Company, the Bank or any of the Subsidiaries is a party
or by which the Company, the Bank or any of the Subsidiaries or any of their
property may be bound.
(20) The Company is not required to be registered as an
investment company under the Investment Company Act of 1940.
In addition, such counsel shall state that such counsel has participated in
conferences with officers and representatives of the Company, representatives of
the independent public accountants for the Company and the Agent at which the
contents of the Registration Statement and the Prospectus and related matters
were discussed and, although such counsel is not passing upon and does not
assume any responsibility for and has not verified the accuracy, completeness or
fairness of the statements contained in the Registration Statement and the
Prospectus, and has not made any independent check or verification thereof, on
the basis of the foregoing, no facts have come to the attention of such counsel
that lead such counsel to believe that either the Registration Statement at the
time it became effective, or any amendment thereof made prior to the Closing
Time, as of the date of such amendment, contained an untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
Prospectus as of its date (or any amendment thereof or supplement thereto made
prior to the Closing Time, as of the date of such amendment or supplement) and
as of the Closing Time contained or contains an untrue statement of a material
fact or omitted or omits to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (it being understood
that such counsel need express no belief or opinion with respect to the exhibits
and the financial statements and other financial and statistical data included
therein).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance reasonably satisfactory to Agent's counsel)
of other counsel reasonably acceptable to Agent's counsel, familiar with the
applicable laws; (B) as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company and the Bank and
certificates or other written statements of officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company, the Bank and the Subsidiaries, provided that
copies of any such statements or certificates shall be delivered to Agent's
counsel. The opinion of such counsel for the Company shall state that the
opinion of any such other counsel is in form satisfactory to such counsel and,
in their opinion, the Agent and they are justified in relying thereon.
(ii) The favorable opinion, dated as of Closing Time, of ▇▇▇▇▇▇, ▇▇▇▇
& ▇▇▇▇▇▇, LLP, counsel for the Agent, with respect to the incorporation of the
Company, the validity of the Securities, the Registration Statement, the
Prospectus, as amended or supplemented, and other related matters as the Agent
may reasonably require, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters.
(c) At Closing Time, there shall not have been, since the date hereof or
since the respective dates as of which information is given in the Registration
Statement and the Prospectus, any material adverse change in the financial
condition, results of operations, or business of the Company, the Bank and the
Subsidiaries, taken as a whole, whether or not arising in the ordinary course of
business, and the Agent shall have received a certificate of the President and
Chief Executive Officer of the Company, and the chief financial or chief
accounting officer of the Company, 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, the Bank or any of the
Subsidiaries from the date of the latest statement of financial condition of the
Company, the Bank or the Subsidiaries 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, (iii) except as previously
disclosed in the Prospectus, neither the Company, the Bank nor any of the
Subsidiaries shall have received from the FRB, the Banking Department or the
FDIC any direction (oral or written) to make any material change in the method
of conducting its business with which it has not complied (which direction, if
any, shall have been disclosed to the Agent) or which materially and adversely
would affect the business, financial condition or results of operations of the
Company, the Bank or any of 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, except as to any
such representation or warranty which specifically relates to an earlier date,
(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, directive,
request or other correspondence has been received by the Company, the Bank or
any of the Subsidiaries from the FRB, the
Banking Department or the FDIC which could have the effect of delaying or
canceling the Offering.
(d) At the time of the execution of this Agreement, the Agent shall have
received from ▇▇▇▇▇ ▇▇▇▇▇▇ Company LLP a letter dated such date, in form and
substance satisfactory to the Agent, to the effect that (i) they are independent
certified public accountants with respect to the Company, the Bank and the
Subsidiaries within the meaning of the Code of Ethics of the AICPA, the 1933 Act
and the 1933 Act Regulations; (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 1933 Act
and the 1933 Act Regulations; (iii) based upon limited procedures as agreed upon
by the Agent and ▇▇▇▇▇ ▇▇▇▇▇▇ Company LLP and 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 Company
included in the Registration Statement do not comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act and the
1933 Act 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 set forth under "Summary Selected
Consolidated Financial and Other Data" in the Prospectus 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 and the Prospectus, (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 investment securities or short term debt of the Company
or any decrease in consolidated total assets, allowance for loan losses, total
deposits or shareholders' equity of the Company, in each case as compared with
the amounts shown in the June 30, 2001 balance sheet included in the
Registration Statement or, (D) during the period from June 30, 2001 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 Company, 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 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 and its subsidiaries identified in such letter.
(e) At the Closing Time, the Agent shall have received from ▇▇▇▇▇ ▇▇▇▇▇▇
Company LLP a letter, dated as of Closing Time, to the effect that they reaffirm
the statements made in the letter furnished pursuant to Subsection (d) of this
Section, except that the specified date referred to shall be a date not more
than five days prior to Closing Time.
(f) At the 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 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 as herein contemplated shall be
satisfactory in form and substance to the Agent and counsel for the Agent.
(g) 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 effects 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 New York Stock Exchange or NASDAQ 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 the New York Stock Exchange, the NASDAQ or by order of the Commission
or any other governmental authority, and a banking moratorium shall not have
been declared by Federal, New York or Pennsylvania authorities.
SECTION 6. Indemnification.
----------------
(a) The Company and the Bank, jointly and severally, will indemnify and
hold harmless the Agent against any losses, claims, damages or liabilities,
joint or several, to which the Agent may become subject, under the 1933 Act or
otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are related to the Offering, or any action taken by the
Agent where acting as agent of the Company or as otherwise described on Section
2 hereof, or are based upon an untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse the Agent for any legal or other expenses reasonably incurred by the
Agent in connection with investigating or defending any such action or claim as
such expenses are incurred; provided, however, that the Company and the Bank
shall not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement or the Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by the Agent expressly for use therein, in accordance with the last
sentence of Section 6(b) hereof.
(b) The Agent will indemnify and hold harmless the Company against any
losses, claims, damages or liabilities to which the Company may become subject,
under the 1933 Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in the Registration Statement or the Prospectus or
any such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by the Agent expressly for use therein; and
will reimburse the Company for any legal or other expenses reasonably incurred
by the Company in connection with investigating or defending any such action or
claims as such expenses are incurred. The Company acknowledges for all purposes
of this Agreement that the statements set forth under the caption "The Rights
Offering - Financial Advisor" in the Prospectus constitute the only information
that has been furnished in writing by the Agent for inclusion in the
Registration Statement or the Prospectus, each as amended or supplemented or any
amendment or supplement thereto.
(c) Promptly after receipt by an indemnified party under Subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such Subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(d) The obligations of the Company under this Section 6 shall be in
addition to any liability which the Company and the Bank may otherwise have and
shall extend, upon the same terms and conditions, to each person, if any, who
controls the Agent within the meaning of the 1933 Act or who is an affiliate or
partner of the Agent; and the obligations of the Agent under this Section 6
shall be in addition to any liability which the Agent may otherwise have and
shall extend, upon the same terms and conditions, to each officer and director
of the Company and to each other person, if any, who controls the Company within
the meaning of the 1933 Act or who is an affiliate of the Company.
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 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 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 is 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 on the one hand and the Agent on the
other, as reflected in clause (i), but also the relative fault of the Company 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 ▇▇▇▇ ▇▇▇) 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 1933 Act or Section
20 of the 1934 Act shall have the same rights to contribution as the Agent, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company. 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. Neither party shall be liable for contribution for
claims settled without such party's consent provided such consent is not
unreasonably withheld.
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 submitted pursuant
hereto, shall remain operative and in
full force and effect, regardless of any investigation made by or on behalf of
any Agent or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities.
SECTION 9. Termination of Agreement.
-------------------------
(a) The Agent may terminate this Agreement, by notice to the Company, at
any time at or prior to Closing Time (i) if there has been, since the date of
this Agreement or since the respective dates as of which information is given in
the Registration Statement, any material adverse change in the financial
condition, results of operations, or business of the Company, the Bank and the
Subsidiaries, taken as a whole, whether or not arising in the ordinary course of
business; (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 effects 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 either the New York Stock Exchange or the NASDAQ 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 the New York
Stock Exchange, the NASDAQ or by order of the Commission or any other
governmental authority, or if a banking moratorium has been declared by either
Federal, New York or Pennsylvania 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; or (vi) if the
Company is unable to sell at least the total minimum of Securities, as disclosed
on the cover of the Prospectus, or if the Offering is not consummated for any
other reason, prior to _______, 2002.
(b) If this Agreement is terminated pursuant to this Section, the Company
shall notify the subscription agent and the escrow agent who shall refund to any
persons who have subscribed for any of the Securities the full amount which it
may have received from them, without interest, as provided in the Prospectus,
such termination shall be without liability of any party to any other party
except that the provisions of Section 4 hereof relating to reimbursement of
expenses and the provisions
of Sections 6 and 7 hereof shall survive any termination of this Agreement.
SECTION 10. Notices.
--------
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Agent shall be directed to the Agent
as follows: (i) prior to March 1, 2002, 9 ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and (ii) on or after March 1, 2002, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ___
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Principal, with
a copy to ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇, LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq. and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.;
notices to the Company shall be directed to the Company at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇., Chairman,
President and Chief Executive Officer, with a copy to ▇▇▇▇▇▇▇ & ▇▇▇, P.C., ▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Esq. and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
SECTION 11. Parties.
--------
This Agreement shall inure to the benefit of and be binding upon the Agent,
the Company, 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, the Bank and
their respective successors and the controlling persons and officers and
directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein or therein contained. This
Agreement and all conditions and provisions hereof and thereof are intended to
be for the sole and exclusive benefit of the Agent, the Company, the Bank and
their respective successors, and said controlling persons and officers and
directors and their heirs and legal representatives, and for the benefit of no
other person, firm or corporation.
SECTION 12. Entire Agreement; Amendment.
----------------------------
This Agreement represents the entire understanding of the parties hereto
with reference to the transactions contemplated hereby and supersedes any and
all other oral or written agreements heretofore made other than those
specifically mentioned herein. 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.
Specified times of day refer to Eastern Time unless otherwise noted herein.
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.
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,
First Leesport Bancorp, Inc.
By:_______________________________
Name:
Title:
Leesport Bank
By:_______________________________
Name:
Title:
CONFIRMED AND ACCEPTED, as of the date first above
written:
Sandler ▇'▇▇▇▇▇ & Partners, L.P.
By: Sandler ▇'▇▇▇▇▇ & Partners
Corp., the sole general
partner
By:_______________________________
Name:
Title:
