EXHIBIT 1
SOMERSET HILLS BANCORP
(a New Jersey corporation)
[__________] Units
Each Unit consisting of one share of Common Stock
and one warrant to purchase one share of common stock
UNDERWRITING AGREEMENT
This Underwriting Agreement is made and entered into this [___] day of
[____], 2002 by and between Somerset Hills Bancorp, a New Jersey corporation
(the "Company") and ▇▇▇▇, ▇▇▇▇ & Co., LLC (the "Underwriter"). The Company
hereby confirms its agreement with the Underwriter with respect to the issue and
sale by the Company and the purchase by the Underwriter of approximately
[__________] of the Company's units (the "Initial Units"), each unit consisting
of one share of the Company's common stock, no par value per share ("Common
Stock") and one warrant to purchase one share of Common Stock (a "Warrant"). The
Company also proposes to issue and sell to the Underwriter, at the Underwriter's
option, up to an additional [_____] units (the "Option Units") as set forth
herein. The term "Units" as used herein, unless indicated otherwise, shall mean
the Initial Units and the Option Units.
The Warrants will be governed by the terms of a warrant agreement (the
"Warrant Agreement") between the Company and the Company's transfer agent, as
warrant agent in the form annexed hereto as EXHIBIT A. Each Warrant shall
entitle the holder to purchase one share of Common Stock at a price initially
fixed at $[___] (subject to adjustment as provided in the Warrant Agreement).
Each Warrant shall be exercisable from the date of Closing until [_____], 2005.
The initial public offering price for the Units, the purchase price to be
paid by the Underwriter for the Units, and the number of Units to be sold to the
Underwriter by the Company shall be agreed upon by the Company and the
Underwriter, and such agreement shall be set forth in a separate written
instrument substantially in the form of EXHIBIT B hereto (the "Price
Agreement"). The Price Agreement may take the form of an exchange of any
standard form of written telecommunication between the Company and the
Underwriter and shall specify such applicable information as is indicated in
EXHIBIT B hereto. The offering of the Units will be governed by this Agreement,
as supplemented by the Price Agreement. From and after the date of the execution
and delivery of the Price Agreement, this Agreement shall be deemed to
incorporate, and all references herein to "this Agreement" shall be deemed to
include, the Price Agreement.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form SB-2 (File No.
[________]) covering the registration of the Units under the Securities Act of
1933, as amended (the "1933 Act"), including the related preliminary prospectus
or prospectuses, and, if such registration statement has not
become effective, the Company will prepare and file, prior to the effective date
of such registration statement, an amendment to such registration statement,
including a final prospectus. Each prospectus used before the time such
registration statement becomes effective is herein called a "preliminary
prospectus." Such registration statement, at the time it becomes effective, is
herein called the "Registration Statement," and the prospectus, included in the
Registration Statement at the time it becomes effective is herein called the
"Prospectus," except that, if any revised prospectus provided to the Underwriter
by the Company for use in connection with the offering of the Units differs from
the prospectus included in the Registration Statement at the time it becomes
effective (whether or not such prospectus is required to be filed pursuant to
Rule 424(b) under the 1933 Act ("Rule 424(b)"), the term "Prospectus" shall
refer to such revised prospectus from and after the time it is first furnished
to the Underwriter for such use.
The Company understands that the Underwriter proposes to make a public
offering of the Units (the "Offering") as soon as possible after the
Registration Statement becomes effective. The Underwriter may assemble and
manage a selling group of broker-dealers that are members of the National
Association of Securities Dealers, Inc. ("NASD") to participate in the
solicitation of purchase orders for the Units.
Section 1. Representations and Warranties.
(a) The Company represents and warrants to and agrees with the Underwriter
that:
(i) The Company meets the requirements for use of Form SB-2 under the
1933 Act and, when the Registration Statement on such form shall become
effective and at all times subsequent thereto up to the Closing Time
referred to below (and, with respect to the Option Units, up to the Option
Closing Date referred to below), (A) the Registration Statement and any
amendments and supplements thereto will comply in all material respects
with the requirements of the 1933 Act and the rules and regulations of the
Commission under the 1933 Act (the "1933 Act Regulations"); (B) neither the
Registration Statement nor any amendment or supplement thereto will contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
and (C) neither the Prospectus nor any amendment or supplement thereto will
include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that this
representation and warranty does not apply to statements or omissions made
in reliance upon and in conformity with information furnished in writing to
the Company by the Underwriter expressly for use in the Registration
Statement or the Prospectus. The statements contained under the caption
"Underwriting" in the Prospectus constitute the only information furnished
to the Company in writing by the Underwriter expressly for use in the
Registration Statement or the Prospectus.
(ii) Documents previously filed either with the Commission, or, if
filed by Somerset Hills Bank (the "Bank"), with the Federal Deposit
Insurance Corporation (the "FDIC"), as predecessor filer to the Company,
complied in all material respects with the
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requirements of the Securities Exchange Act of 1934, as amended (the "1934
Act"), and the rules and regulations of the Commission thereunder (the
"1934 Act Regulations") as adopted by the appropriate federal banking
regulator and, when read together and with the other information in the
Prospectus, at the time the Registration Statement becomes effective and at
all times subsequent thereto up to the Closing Time, will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, in each case after excluding any statement that
does not constitute a part of the Registration Statement or the Prospectus
pursuant to Rule 412 of the 1933 Act Regulations.
(iii) KPMG LLP ("KPMG"), who are reporting upon the audited financial
statements included or incorporated by reference in the Registration
Statement, has advised the Company that it is an independent certified
public accountant as required by the 1933 Act and the 1933 Act Regulations
and within the meaning of the Code of Ethics of the American Institute of
Certified Public Accountants ("AICPA"), and KPMG is, with respect to the
Company and each of its subsidiaries, independent certified public
accountants.
(iv) The consolidated financial statements, audited and, if any,
unaudited (including the notes thereto), included or incorporated by
reference in the Registration Statement present fairly the consolidated
financial position of the Company and its subsidiaries as of the dates
indicated and the consolidated results of operations and cash flows of the
Company and its subsidiaries for the periods specified. Such financial
statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved, except as otherwise stated therein. The financial statement
schedules, if any, included in the Registration Statement present fairly
the information required to be stated therein. The selected financial, pro
forma and statistical data included in the Prospectus are accurate in all
material respects and present fairly the information shown therein and have
been compiled on a basis consistent with that of the audited and, if any,
unaudited consolidated financial statements included or incorporated by
reference in the Registration Statement.
(v) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of New Jersey with corporate
power and authority under such laws to own, lease and operate its
properties and conduct its business as described in the Prospectus. Each
direct and indirect subsidiary of the Company is an entity duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of organization with corporate power and authority under such
laws to own, lease and operate its properties and conduct its business. The
Company and each of its direct and indirect subsidiaries is duly qualified
to transact business as a foreign corporation and is in good standing in
each other jurisdiction in which it owns or leases property of a nature, or
transacts business of a type, that would make such qualification necessary,
except to the extent that the failure to so qualify or be in good standing
would not have a material adverse effect on the condition (financial or
otherwise), earnings, business affairs, assets or business prospects of the
Company and its subsidiaries, considered as one enterprise.
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(vi) The Company is duly registered with the Board of Governors of the
Federal Reserve System as a bank holding company under the Bank Holding
Company Act of 1956, as amended. The Bank is a New Jersey-chartered
commercial bank subsidiary of the Company; and the deposit accounts of the
Bank are insured by the Bank Insurance Fund of the FDIC up to the maximum
allowable limits thereof. The Company has all such power, authority,
authorization, approvals and orders as may be required to enter into this
Agreement and the Warrant Agreement, to carry out the provisions and
conditions hereof and thereof and to issue and sell the Units.
(vii) All of the outstanding shares of capital stock of the Bank and
each of the Company's other subsidiaries have been duly authorized and
validly issued and are fully paid and non-assessable (except to the extent
set forth in N.C.G.S. 53-42 as to the Bank) and are owned by the Company
directly or indirectly, free and clear of any pledge, lien, security
interest, charge, claim, equity or encumbrance of any kind.
(viii) Except for the Bank and ▇▇▇▇▇▇▇▇ Financial Services, Inc., the
Company does not have any "significant subsidiaries" as defined in Rule
1-02 of Regulation S-X of the Commission.
(ix) The Company had at the date indicated a duly authorized and
outstanding capitalization as set forth in the Prospectus under the caption
"Description of the Company's Securities." The capital stock of the Company
and the Warrants conform in all material respects to the description
thereof contained or incorporated by reference in the Prospectus and such
description conforms to the rights set forth in the instruments defining
the same.
(x) This Agreement and the Warrant Agreement have been duly
authorized, executed and delivered by the Company and, when duly executed
by the Underwriter, will constitute the valid and binding agreements of the
Company enforceable against the Company in accordance with their terms,
except as enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles.
(xi) The Units (including the Common Stock and the Warrants
constituting the Units) have been duly and validly authorized by the
Company for issuance and sale to the Underwriter pursuant to this Agreement
and, when issued and delivered by the Company to the Underwriter pursuant
to this Agreement against payment of the consideration set forth herein,
will be validly issued, fully paid and non-assessable and will constitute
valid and legally binding obligations of the Company enforceable in
accordance with their terms. The Units conform in all material respects to
the description thereof in the Prospectus, and such description conforms in
all material respects to the rights set forth in the instruments defining
the same; the holders of the Units will be entitled to the same limitation
of personal liability extended to stockholders of private corporations for
profit organized under the General Corporation Law of the State of New
Jersey; and the issuance of the Units is not subject to any preemptive or
other similar rights.
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(xii) Except for information provided in writing to the Company by the
Underwriter about the Underwriter for use in the Prospectus, the Company
has not relied upon the Underwriter or its legal or other advisors for any
legal, tax or accounting advice.
(xiii) The issuance and sale of the Units by the Company, the
compliance by the Company with all of the provisions of this Agreement and
the Warrant Agreement, and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach of any of
the terms or provisions of, or constitute a default under, any statute or
any order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its properties; and no
consent, approval, authorization, order, license, certificate, permit,
registration or qualification of or with any such court or other
governmental agency or body is required to be obtained by the Company for
the issue and sale of the Units by the Company, or the consummation by the
Company of the transactions contemplated by this Agreement and the Warrant
Agreement, except for such consents, approvals, authorizations, licenses,
certificates, permits, registrations or qualifications as have already been
obtained, or as may be required under the 1933 Act or the 1933 Act
Regulations, the 1934 Act or the 1934 Act Regulations, or state securities
laws.
(xiv) Each person who is an officer or director of the Company or a
director of the Bank has agreed to sign an agreement substantially in the
form attached hereto as EXHIBIT C (the "Lock-up Agreements"). The Company
has provided to counsel for the Underwriter true, accurate and complete
copies of all of the Lock-up Agreements presently in effect or effected
hereby. The Company hereby represents and warrants that it will not release
any of its officers, directors or other shareholders from any Lock-up
Agreements currently existing or hereafter effected without the prior
written consent of the Underwriter.
(xv) The Company has not engaged in any activity that would result in
the Company being, and after giving effect to the offering and sale of the
Units, the Company will not be, an "investment company," or an entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act").
(xvi) All of the outstanding shares of capital stock of the Company
have been duly authorized and validly issued, are fully paid and
non-assessable, and are not subject to the preemptive rights of any
stockholder of the Company.
(xvii) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein, there has not been (A) any material adverse change in the
condition (financial or otherwise), earnings, business affairs, assets or
business prospects of the Company and its subsidiaries, considered as one
enterprise, whether or not arising in the ordinary course of business, (B)
any transaction entered into by the Company or any subsidiary, other than
in the ordinary course of business, that is material to the Company and its
subsidiaries, considered as one enterprise, or (C) any dividend or
distribution of any kind declared, paid or made by the Company on its
capital stock. Neither the Company, the Bank nor any other subsidiary has
any material liability of any nature, contingent or otherwise, except as
set forth in the Prospectus.
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(xviii) Neither the Company, the Bank nor any other subsidiary is in
violation of any provision of its certificate of incorporation, charter or
bylaws or in 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 agreement or instrument to
which it is a party or by which it may be bound or to which any of its
respective properties may be subject, except for such defaults that,
individually or in the aggregate, would not have a material adverse effect
on the condition (financial or otherwise), earnings, business affairs,
assets or business prospects of the Company and its subsidiaries,
considered as one enterprise.
(xix) Except as disclosed in the Prospectus, there is no action, suit
or proceeding before or by any government, governmental instrumentality or
court, domestic or foreign, now pending or, to the knowledge of the
Company, threatened against the Company, the Bank or any other subsidiary
that is required to be disclosed in the Prospectus or that could reasonably
be expected to result in any material adverse change in the condition
(financial or otherwise), earnings, business affairs, assets or business
prospects of the Company and its subsidiaries, considered as one
enterprise, or that could reasonably be expected materially and adversely
to affect the properties or assets of the Company and its subsidiaries,
considered as one enterprise, or that could reasonably be expected
materially and adversely to affect the consummation of the transactions
contemplated in this Agreement; all pending legal or governmental
proceedings to which the Company, the Bank or any other subsidiary is a
party that are not described in the Prospectus, including ordinary routine
litigation incidental to its business, if decided in a manner adverse to
the Company, would not have a material adverse effect on the condition
(financial or otherwise), earnings, business affairs or business prospects
of the Company and its subsidiaries, considered as one enterprise.
(xx) There are no material contracts or documents of a character
required to be described in the Registration Statement or the Prospectus or
to be filed as exhibits to the Registration Statement that are not
described and filed as required.
(xxi) Each of the Company and its direct and indirect subsidiaries,
including the Bank, has good and marketable title to all properties and
assets described in the Prospectus as owned by it, free and clear of all
liens, charges, encumbrances or restrictions, except such as (A) are
described in the Prospectus or (B) are neither material in amount nor
materially significant in relation to the business of the Company and its
subsidiaries, considered as one enterprise; all of the leases and subleases
material to the business of the Company and its subsidiaries, considered as
one enterprise are in full force and effect, and neither the Company, the
Bank nor any other subsidiary has any notice of any material claim that has
been asserted by anyone adverse to the rights of the Company, the Bank or
any other subsidiary under any such lease or sublease or affecting or
questioning the rights of such corporation to the continued possession of
the leased or subleased premises under any such lease or sublease.
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(xxii) Each of the Company and its direct and indirect subsidiaries,
owns, possesses or has obtained all material governmental licenses,
permits, certificates, consents, orders, approvals and other authorizations
necessary to own or lease, as the case may be, and to operate its
properties and to carry on its business as presently conducted, and neither
the Company, the Bank nor any other subsidiary has received any notice of
any restriction upon, or any notice of proceedings relating to revocation
or modification of, any such licenses, permits, certificates, consents,
orders, approvals or authorizations.
(xxiii) No labor problem with the employees of the Company, the Bank
or any other subsidiary exists or, to the best knowledge of the Company, is
imminent that could materially adversely affect the condition (financial or
otherwise), earnings, business affairs or business prospects of the Company
and its subsidiaries, considered as one enterprise, and the Company is not
aware of any existing or imminent labor disturbance by the employees of any
of its, the Bank's or any other subsidiary's principal suppliers,
contractors or customers that could reasonably be expected to materially
adversely affect the condition (financial or otherwise), earnings, business
affairs or business prospects of the Company and its subsidiaries,
considered as one enterprise.
(xxiv) Except as disclosed in the Prospectus, there are no persons
with registration or other similar rights to have any securities of the
Company registered pursuant to the Registration Statement or otherwise
registered by the Company under the 1933 Act.
(xxv) Except as disclosed in the Prospectus, the Company and its
direct and indirect subsidiaries, including the Bank, own or possess all
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets or other unpatented and/or unpatentable
proprietary or confidential information systems or procedures), trademarks,
service marks and trade names (collectively, "patent and proprietary
rights") currently employed by them in connection with the business now
operated by them except where the failure to own, possess or acquire such
patent and proprietary rights would not have a material adverse effect on
the condition (financial or otherwise), earnings, business affairs, assets
or business prospects of the Company and its subsidiaries, considered as
one enterprise. Neither the Company, the Bank nor any other subsidiary has
received any notice or is otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any patent or
proprietary rights, and which infringement or conflict (if the subject of
any unfavorable decision, rule and refinement, singly or in the aggregate)
could reasonably be expected to result in any material adverse change in
the condition (financial or otherwise), earnings, business affairs, assets
or business prospects of the Company and its subsidiaries, considered as
one enterprise.
(xxvi) The Company and each subsidiary of the Company have filed all
federal, state and local income, franchise or other tax returns required to
be filed and have made timely payments of all taxes due and payable in
respect of such returns, and no material deficiency has been asserted with
respect thereto by any taxing authority.
(xxvii) The Units, Common Stock, and Warrants have been approved for
inclusion in the Nasdaq SmallCap market.
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(xxviii) The Company has filed with the NASD all documents and notices
required by the NASD of companies that have issued securities that are
traded in the over-the-counter market and quotations for which are reported
by the Nasdaq SmallCap market.
(xxix) Neither the Company, the Bank nor any other subsidiary of the
Company has taken or will 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, under the
Exchange Act or otherwise, of the price of the Units or the Common Stock.
(xxx) Neither the Company, the Bank nor any other subsidiary is or has
been (by virtue of any action, omission to act, contract to which it is a
party or by which it is bound, or any occurrence or state of facts
whatsoever) in violation of any applicable foreign, federal, state,
municipal or local statutes, laws, ordinances, rules, regulations and/or
orders issued pursuant to foreign, federal, state, municipal or local
statutes, laws, ordinances, rules, or regulations (including those relating
to any aspect of banking, bank holding companies, consumer credit,
truth-in-lending, usury, currency transaction reporting, environmental
protection, occupational safety and health and equal employment practices)
heretofore or currently in effect, except such violations that have been
fully cured or satisfied without recourse or that in the aggregate will not
have a material adverse effect on the condition (financial or otherwise),
earnings, business affairs, assets or business prospects of the Company and
its subsidiaries, considered as one enterprise.
(xxxi) Neither the Company, the Bank nor any other subsidiary has any
agreement or understanding with any person (A) concerning the future
acquisition by the Company or the Bank of a controlling interest in any
entity or (B) concerning the future acquisition by any person of a
controlling interest in the Company, the Bank or any other subsidiary, in
either case that is required by the 1933 Act or the 1933 Act Regulations to
be disclosed by the Company that is not disclosed in the Prospectus.
(b) Any certificate signed by any authorized officer of the Company or the
Bank and delivered to the Underwriter or to counsel for the Underwriter pursuant
to this Agreement shall be deemed a representation and warranty by the Company
to the Underwriter as to the matters covered thereby.
(c) The Underwriter represents and warrants to and agrees with the Company
that:
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(i) The Underwriter is registered as a broker-dealer with the
Commission and is a member of the NASD.
(ii) The Underwriter is validly existing and in good standing as a
limited liability company under the laws of the State of New Jersey with
corporate power and authority to provide the services to be furnished to
the Company hereunder.
(iii) The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated have been duly and
validly authorized by all necessary corporate action on the part of the
Underwriter, and this Agreement is a legal, valid and binding obligation of
the Underwriter, enforceable in accordance with its terms, except as
limited under applicable law and subject to bankruptcy, insolvency,
reorganization or other laws relating to or affecting the enforcement of
creditor's rights generally and equitable principles limiting the right to
obtain specific enforcement or similar equitable relief.
(iv) The Underwriter and, to the Underwriter's knowledge, its
employees, and agents who shall perform any of the services required
hereunder to be performed by the Underwriter shall be duly authorized and
shall have all licenses, approvals and permits necessary to perform such
services.
(v) The execution and delivery of this Agreement by the Underwriter,
the fulfillment of the terms set forth herein and the consummation of the
transactions herein contemplated shall not violate or conflict with the
corporate charter or By-laws of the Underwriter or violate, conflict with
or constitute a breach of, or default (or any event which, with notice or
lapse of time, or both, would constitute a default) under, any material
agreement, indenture or other instrument by which the Underwriter is bound
or under any governmental license or permit or any law, administrative
regulation, authorization, approval or order or court decree, injunction or
order applicable to it.
(vi) There is not now pending or, to the Underwriter's knowledge,
threatened against the Underwriter any material action or proceeding before
the Commission, the NASD, any state securities commission or any state or
federal court concerning the Underwriter's activities as a broker-dealer.
Section 2. Sale and Delivery to the Underwriter; Closing.
(a) On the basis of the representations and warranties herein contained and
subject to the terms and conditions herein set forth, the Company agrees to sell
to the Underwriter, and the Underwriter agrees to purchase from the Company, the
number of Initial Units set forth at the purchase price and terms set forth
herein and in the Price Agreement.
In addition, on the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
hereby grants an option to the Underwriter to purchase all or a portion of the
Option Units in accordance with the terms set forth herein and in the Price
Agreement. The option hereby granted will expire at 5:00 p.m. on the 30th day
after the date the Registration Statement is declared effective by the
Commission (or at 5:00 p.m.
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on the next business day following the 30th day if such 30th day is not a
business day) and may be exercised, solely for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial Units upon notice by the Underwriter to the Company
setting forth the number of Option Units as to which the Underwriter is
exercising the option and the time, date and place of payment and delivery for
the Option Units. Such time and date of delivery (the "Option Closing Date")
shall be determined by the Underwriter but shall not be later than five full
business days after the exercise of said option, nor in any event prior to
Closing Time, as hereinafter defined, nor earlier than the second business day
after the date on which the notice of the exercise of the option shall have been
given.
(b) Payment of the purchase price for, and delivery of certificates for,
the Units, the Common Stock, and the Warrants issuable in connection with the
Initial Units shall be made at such place as shall be agreed upon by the Company
and the Underwriter, at 9:30 a.m. on the third full business day after the
effective date of the Registration Statement, or at such other time not earlier
than three nor more than ten full business days thereafter as the Underwriter
and the Company shall determine (such date and time of payment and delivery
being herein called the "Closing Time"). In addition, in the event that any or
all of the Option Units are purchased by the Underwriter, payment of the
purchase price for, and delivery of certificates for, such Option Units shall be
made at such place as shall be agreed upon by the Company and the Underwriter,
on the Option Closing Date as specified in the notice from the Underwriter to
the Company. Payment for the Initial Units and the Option Units, if any, shall
be made to the Company by wire transfer of immediately available funds, against
delivery of certificates for the Common Stock, and Warrants which comprise the
Initial Units and Option Units, as the case may be, to the Underwriter.
(c) Certificates for the Common Stock, and Warrants which comprise the
Initial Units and Option Units, as the case may be, shall be registered in such
name or names and in such denominations as the Underwriter may request in
writing at least two business days prior to the Closing Time or the Option
Closing Time, as the case may be. The Company will make such certificates
available for examination by the Underwriter and counsel to the Underwriter not
later than 10:00 a.m. Eastern time on the business day prior to the Closing Time
or the Option Closing Time, as the case may be.
Section 3. Certain Covenants of the Company. The Company covenants with the
Underwriter as follows:
(a) The Company will use its best efforts to cause the Registration
Statement to become effective and will notify the Underwriter immediately, and
confirm the notice in writing, (i) when the Registration Statement, or any
post-effective amendment to the Registration Statement, shall have become
effective, or any supplement to the Prospectus or any amended Prospectus shall
have been filed, (ii) of the receipt of any comments from the Commission, (iii)
of any request of the Commission to amend the Registration Statement or amend or
supplement the Prospectus or for additional information and (iv) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus, or of the suspension of the qualification of the Units
for offering or sale in any jurisdiction, or of the institution or threatening
of any proceedings for any of such purposes. The Company will use every
reasonable effort to prevent
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the issuance of any such stop order or of any order preventing or suspending
such use and, if any such order is issued, to obtain the lifting thereof at the
earliest possible moment.
(b) The Company will not at any time file or make any amendment to the
Registration Statement or, if the Company has elected to rely upon Rule 430A of
the 1933 Act Regulations ("Rule 430A"), any amendment or supplement to the
Prospectus (including documents incorporated by reference into the Registration
Statement or the Prospectus) of which the Underwriter shall not previously have
been advised and furnished a copy, or to which the Underwriter or counsel for
the Underwriter shall reasonably object.
(c) The Company has furnished or will furnish to the Underwriter as many
signed and conformed copies of the Registration Statement as originally filed
and of each amendment thereto, whether filed before or after the Registration
Statement becomes effective, copies of all exhibits and documents filed
therewith and signed copies of all consents and certificates of experts as the
Underwriter may reasonably request.
(d) The Company will deliver or cause to be delivered to the Underwriter,
without charge, from time to time until the effective date of the Registration
Statement, as many copies of each preliminary prospectus as the Underwriter may
reasonably request, and the Company hereby consents to the use of such copies
for purposes permitted by the 1933 Act. The Company will deliver or cause to be
delivered to the Underwriter, without charge, as soon as the Registration
Statement shall have become effective (or, if the Company has elected to rely
upon Rule 430A, as soon as practicable after the Price Agreement has been
executed and delivered) and thereafter from time to time as requested by the
Underwriter during the period when the Prospectus is required to be delivered
under the 1933 Act, such number of copies of the Prospectus (as supplemented or
amended) as the Underwriter may reasonably request.
(e) The Company will comply to the best of its ability with the 1933 Act
and the 1933 Act Regulations, and the 1934 Act and the 1934 Act Regulations, so
as to permit the completion of the distribution of the Units as contemplated in
this Agreement and in the Prospectus. If, at any time when a prospectus is
required by the 1933 Act to be delivered in connection with sales of the Units,
any event shall occur or condition exist as a result of which it is necessary,
in the reasonable opinion of counsel for the Underwriter or counsel for the
Company, to amend the Registration Statement or amend or supplement the
Prospectus in order that 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 not misleading, in light of the circumstances existing at the
time it is delivered to a purchaser, or if it shall be necessary, in the
reasonable opinion of either such counsel, at any such time to amend the
Registration Statement or amend or supplement the Prospectus in order to comply
with the requirements of the 1933 Act or the 1933 Act Regulations, the Company
will promptly prepare and file with the Commission, subject to Section 3(b)
hereof, such amendment or supplement as may be necessary to correct such untrue
statement or omission or to make the Registration Statement or the Prospectus
comply with such requirements.
(f) The Company will use its best efforts, in cooperation with the
Underwriter, to qualify the Units (and the Common Stock and Warrants which
comprise the Units) for offering and sale under the applicable securities laws
of such states and other
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jurisdictions as the Underwriter may designate and to maintain such
qualifications in effect for a period of not less than one year from the
effective date of the Registration Statement; 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 or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not otherwise so
subject. The Company will file such statements and reports as may be required by
the laws of each jurisdiction in which the Units (and the Common Stock and
Warrants which comprise the Units) have been qualified as above provided.
(g) The Company will make generally available, within the meaning of Rule
158 of the 1933 Act Regulations ("Rule 158"), to the holders of the Units and
the Underwriter as soon as practicable, but not later than 90 days after the
close of the period covered thereby, an earnings statement of the Company and
its subsidiaries (in form complying with the provisions of Rule 158) covering a
period of at least 12 months beginning after the effective date of the
Registration Statement but not later than the first day of the Company's fiscal
quarter next following such effective date.
(h) The Company and the Bank will use the net proceeds received by them
from the sale of the Units in the manner specified in the Prospectus under the
caption "Use of Proceeds."
(i) The Company, during the period when a prospectus is required by the
1933 Act to be delivered in connection with the conversion of the Warrants into
Common Stock, will use its best efforts to cause a registration statement for
the Common Stock to be effective and will file promptly all documents required
to be filed with the Commission pursuant to Section 13 or 14 of the 1934 Act
subsequent to the time the Registration Statement becomes effective.
(j) For a period of five years after the Closing Time, the Company will
furnish to the Underwriter copies of all annual reports, quarterly reports and
current reports filed by the Company with the Commission, such other documents,
reports, proxy statements and information as shall be furnished by the Company
to its stockholders generally, and such other public information concerning the
Bank or the Company as the Underwriter may reasonably request.
(k) The Company will provide to the holders of the Common Stock annual
reports containing financial statements audited by the Company's independent
auditors and, upon written request, the Company's annual reports on Form 10-K.
(l) The Company will file with the NASD all documents and notices required
by the NASD of companies that have issued securities that are traded in the
Nasdaq SmallCap market.
(m) The Company shall cause to be prepared by its counsel one or more "blue
sky" surveys (each, a "Blue Sky Survey") for use in connection with the offering
of the Units (and the Common Stock and Warrants comprising the Units) as
contemplated by the Prospectus and a copy of each Blue Sky Survey or surveys
shall be delivered to each of the Company and the Underwriter.
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(n) If, at the time the Registration Statement becomes effective, any
information shall have been omitted therefrom in reliance upon Rule 430A, then
the Company will prepare, and file or transmit for filing with the Commission in
accordance with Rule 430A and Rule 424(b), copies of an amended Prospectus or,
if required by Rule 430A, a post-effective amendment to the Registration
Statement (including an amended Prospectus) containing all information so
omitted.
(o) The Company will, at its expense, subsequent to the issuance of the
Units, prepare and distribute to the Underwriter and counsel to the Underwriter
a bound volume containing copies of the documents used in connection with the
issuance of the Units.
(p) The Company will not, prior to the Option Closing Date or thirty (30)
days after the date of this Agreement, whichever occurs first, incur any
material liability or obligation, direct or contingent, or enter into any
material transaction, other than in the ordinary course of business, or any
transaction with a related party which is required to be disclosed in the
Prospectus pursuant to Item 404 of Regulation S-K of the Commission, except as
contemplated by the Prospectus.
(q) The Company will not sell or issue, contract to sell or issue, or
otherwise dispose of, for a period of 180 days after the Closing Time, without
the prior written consent of the Underwriter, any shares of, or any securities
convertible into or exercisable for shares of, Common Stock other than in
connection with any plan or arrangement described in the Prospectus.
Section 4. Payment of Expenses.
(a) Whether or not the sale of the Units by the Company is consummated, the
Company agrees to pay all expenses incident to the performance of the
obligations of the Company under this Agreement, including the following: (i)
the preparation, printing, issuance and delivery of the certificates evidencing
the Common Stock and Warrants; (ii) the fees and disbursements of the Company's
counsel, accountants and other advisors; (iii) the qualification or exemption
from qualification of the Units (and the Common Stock and Warrants comprising
the Units) under all applicable securities or Blue Sky laws, including filing
fees and the reasonable fees and disbursements of counsel in connection
therewith and in connection with the preparation of the Blue Sky Survey
concerning such jurisdictions as the Underwriter may reasonably designate; (iv)
the printing and delivery to the Underwriter in such quantities as the
Underwriter shall reasonably request copies of the Prospectus, and all other
documents in connection with this Agreement; (v) the filing fees and the fees
and disbursements of counsel incurred in connection with the review of the
Offering by the NASD; (vi) the fees for listing the Common Stock, Warrants and
Units on the Nasdaq SmallCap market; (vii) the fees and expenses relating to
advertising expenses, investor meeting expenses and other miscellaneous expenses
relating to the marketing by the Underwriter of the Units; (viii) the fees and
charges of any transfer agent, registrar or other agent; and (ix) the fees and
charges of the Warrant Agent. In the event that the Underwriter incurs any such
expenses on behalf of the Company, the Company will pay or reimburse the
Underwriter for such expenses regardless of whether the Offering is
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successfully completed, and such reimbursements will not be included in the
expense limitations set forth in the following paragraph.
(b) In addition, the Company will reimburse the Underwriter for all
reasonable out-of-pocket expenses, including legal fees and expenses of
Underwriter's counsel, incurred by the Underwriter in connection with the
services provided by the Underwriter to the Company pursuant to this Agreement.
Such legal fees shall not exceed (i) $55,000 with regard to the Offering
(excluding any Blue Sky fees and expenses), (ii) and $10,000 with regard to the
Underwriter's other out-of-pocket expenses without the approval of the Company.
The Underwriter will provide a detailed accounting of the out-of-pocket expenses
referred to in this paragraph, which will be paid by the Company on the Closing
Time. The parties hereto acknowledge that the expense limitations set forth in
this paragraph may be exceeded in the event of a material delay in the Offering
that requires an update of financial or other information contained in the
Prospectus.
(c) If (i) the Closing Time does not occur on or before [_______], 2002,
(ii) the Company abandons or terminates the Offering, or (iii) this Agreement is
terminated by the Underwriter in accordance with the provisions of Section 5 or
9(a), the Company shall reimburse the Underwriter for its reasonable
out-of-pocket expenses, as set forth in this Section 4, including the reasonable
fees and disbursements of counsel for the Underwriter.
Section 5. Conditions of Underwriter's Obligations. The obligations of the
Underwriter to purchase and pay for the Units that it has agreed to purchase
pursuant to this Agreement are subject, in the discretion of the Underwriter, to
the accuracy of the representations and warranties of the Company contained
herein or in certificates of the officers of the Company or any subsidiary
delivered pursuant to the provisions hereof, to the execution of the Price
Agreement no later than 5:30 p.m. on the first business day following the date
hereof, or at such later time as the Underwriter may agree in writing (in the
Underwriter's sole discretion), to the performance by the Company of its
obligations hereunder and to the following further conditions:
(a) The Registration Statement shall have become effective not later than
4:00 p.m. on the first business day following the date hereof, or at such later
time or on such later date as the Underwriter may agree to in writing; at the
Closing Time, no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act and no proceedings for that
purpose shall be pending or, to the Underwriter's knowledge or the knowledge of
the Company, shall be contemplated by the Commission, and any request on the
part of the Commission for additional information shall have been complied with
to the satisfaction of counsel for the Underwriter. If the Company has elected
to rely upon Rule 430A, a prospectus containing the information required by Rule
430A shall have been filed with the Commission in accordance with Rule 424(b)
(or a post-effective amendment providing such information shall have been filed
and declared effective in accordance with the requirements of Rule 430A).
(b) At the Closing Time, the Underwriter shall have received:
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(i) The favorable opinion, dated as of the Closing Time, of ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, LLP ("Windels"), counsel for the Company, in form
and substance reasonably satisfactory to counsel for the Underwriter,
substantially in the form set forth in EXHIBIT D.
(ii) The favorable opinion, dated as of the Closing Time, of ▇▇▇▇▇ &
Associates, P.A. ("▇▇▇▇▇") counsel for the Underwriter, in form and
substance satisfactory to the Underwriter.
In rendering their opinion, counsel may rely, to the extent such counsel
deems such reliance necessary or appropriate, upon certificates of governmental
officials, certificates or opinions of other counsel reasonably satisfactory to
the Underwriter and, as to matters of fact, officers' certificates. The opinion
of such counsel need refer only to matters of New Jersey and federal law and may
add other qualifications and explanations of the basis of their opinion as may
be reasonably acceptable to the Underwriter.
(c) At the Closing Time and again at the Option Closing Date, (i) the
Registration Statement and the Prospectus, as they may then be amended or
supplemented, shall contain all statements that are required to be stated
therein under the 1933 Act and the 1933 Act Regulations and shall conform in all
material respects to the requirements of the 1933 Act and the 1933 Act
Regulations, the Company shall have complied in all material respects with Rule
430A (if they shall have elected to rely thereon), and neither the Registration
Statement nor the Prospectus, as they may then be amended or supplemented, shall
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; (ii) there shall not have been, since the respective dates as of
which information is given in the Registration Statement, any material adverse
change in the condition (financial or otherwise), earnings, business affairs,
assets or business prospects of the Company and its subsidiaries, considered as
one enterprise, whether or not arising in the ordinary course of business; (iii)
no action, suit or proceeding at law or in equity shall be pending or, to the
knowledge of the Company, threatened against the Company or its subsidiaries
that would be required to be set forth in the Prospectus that is not set forth
therein, and no proceedings shall be pending or, to the knowledge of the
Company, threatened against either of the Company or any subsidiary of the
Company before or by any federal, state or other commission, board or
administrative agency wherein an unfavorable decision, ruling or finding would
materially adversely affect the condition (financial or otherwise), earnings,
business affairs, assets or business prospects of the Company and its
subsidiaries, considered as one enterprise, other than as set forth in the
Prospectus; (iv) the Company shall have complied, in all material respects, with
all agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the Closing Time or Option Closing Date, as applicable;
(v) the other representations and warranties of the Company set forth in Section
l(a) hereof shall be accurate in all material respects as though expressly made
at and as of the Closing Time or Option Closing Date, as applicable; and (vi) no
stop order suspending the effectiveness of the Registration Statement shall have
been issued and no proceeding for that purpose been initiated or, to the best
knowledge of the Company, threatened by the Commission. At the Closing Time, the
Underwriter shall have received a certificate of the President and the Chief
Financial Officer of the Company, dated as of the Closing Time, to such effect.
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(d) At the time that this Agreement is executed by the Company, the
Underwriter shall have received from KPMG a letter or letters, dated such date,
in form and substance satisfactory to the Underwriter, confirming that they are
independent certified public accountants with respect to the Company within the
meaning of the 1933 Act and the 1933 Act Regulations, and stating in effect
that, with respect to the Company:
(i) in their opinion, the consolidated financial statements as of
December 31, 2001 and 2000, and for each of the years in the three year
period ended December 31, 2001 and the related financial statement
schedules, if any, included or incorporated by reference in the
Registration Statement and the Prospectus and covered by their opinions
included therein comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the 1933 Act
Regulations;
(ii) on the basis of procedures (but not an audit in accordance with
generally accepted accounting standards) specified by the AICPA for a
review of interim financial information as described in SAS No. 71, Interim
Financial Information, including a reading of the latest available interim
consolidated financial statements of the Company, a reading of the minutes
of all meetings of the Board of Directors of the Company and the Bank and
of the Audit and Executive Committees of the Board of Directors of the Bank
since January 1, 2002, inquiries of certain officials of the Company and
its subsidiaries responsible for financial and accounting matters, and such
other inquiries and procedures as may be specified in such letter, nothing
came to their attention that caused them to believe that:
(A) the unaudited interim consolidated financial information
included or incorporated by reference in the Prospectus, if any, do
not comply as to form in all material respects with applicable
accounting requirements of the 1933 Act, or are not presented in
conformity with generally accepted accounting principles applied on a
basis consistent with that of the audited financial statements
included in the Prospectus;
(B) at a specified date not more than three days prior to the
date of this Agreement, there was any increase in total borrowings,
real estate owned or Federal Home Loan Bank advances of the Company
and its consolidated subsidiaries or any decrease in total assets,
total deposits or stockholders' equity of the Company and its
consolidated subsidiaries, any increase in the number of outstanding
shares of capital stock of the Company and its consolidated
subsidiaries or any increase or decrease in loan loss allowance of the
Company and its consolidated subsidiaries, in each case as compared
with amounts shown in the financial statements at December 31, 2001
included in the Registration Statement, except in all cases for
changes, increases or decreases that the Registration Statement
discloses have occurred or may occur; or
(C) for the period from December 31, 2001 to a specified date not
more than three days prior to the date of this Agreement, there was
any decrease in consolidated net interest income, non-interest income,
net income or net income per share or any increase in the consolidated
provision for loan losses, in each case as compared with a period of
comparable length in the preceding year,
-16-
except in all cases for changes, increases or decreases that the
Registration Statement discloses have occurred or may occur; and
(iii) in addition to the procedures referred to in clause (ii) above,
they have performed other specified procedures, not constituting an audit,
with respect to certain amounts, percentages, numerical data and financial
information appearing in the Registration Statement (including the Selected
Consolidated Financial Data) (having compared such items with, and have
found such items to be in agreement with, the financial statements of the
Company or general accounting records of the Company, as applicable, which
are subject to the Company's internal accounting controls or other data and
schedules prepared by the Company from such records); and
(iv) on the basis of a review of schedules provided to them by the
Company, nothing came to their attention that caused them to believe that
the pro forma information set forth in the Prospectus under the heading
"Capitalization" had not been correctly calculated on the basis described
therein.
(e) At the Closing Time, the Underwriter shall have received from KPMG a
letter, in form and substance satisfactory to the Underwriter and dated as of
the Closing Time, reaffirming the statements made in the letter(s) furnished
pursuant to Section 5(d) hereof, except that the inquiries specified in Section
5(d) hereof shall be made based upon the latest available unaudited interim
consolidated financial statements and the specified date referred to shall be a
date not more than five days prior to the Closing Time.
(f) At the Closing Time, counsel for the Underwriter shall have been
furnished with all such documents, certificates and opinions as they may
reasonably request for the purpose of enabling them to pass upon the issuance
and sale of the Units as contemplated in this Agreement and the matters referred
to in Section 5(c) hereof and in order to evidence the accuracy and completeness
of any of the representations, warranties or statements of the Company, the
performance of any of the covenants of the Company or the fulfillment of any of
the conditions herein contained; and all proceedings taken by the Company at or
prior to the Closing Time in connection with the authorization, issuance and
sale of the Units as contemplated in this Agreement shall be satisfactory in
form and substance to the Underwriter and to counsel for the Underwriter.
(g) The Company shall have paid, or made arrangements satisfactory to the
Underwriter for the payment of, all such expenses as may be required by Section
4 hereof.
(h) In the event the Underwriter exercises its option provided in Section 2
hereof to purchase all or any portion of the Option Units, the obligations of
the Underwriter to purchase the Option Units that it has agreed to purchase
shall be subject to the receipt by the Underwriter on the Option Closing Date
of:
(i) A certificate, dated the Option Closing Date, of the President and
the Chief Financial Officer of the Company confirming that the certificate
delivered at the Closing Time pursuant to Section 5(c) hereof remains true
as of the Option Closing Date;
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(ii) The favorable opinion of ▇▇▇▇▇▇▇, counsel for the Company,
addressed to the Underwriter and dated the Option Closing Date, in form
satisfactory to ▇▇▇▇▇, counsel to the Underwriter, relating to the Option
Units and otherwise to the same effect as the opinion required by Section
5(b)(i) hereof;
(iii) The favorable opinion of ▇▇▇▇▇, counsel to the Underwriter,
dated the Option Closing Date, relating to the Option Units and otherwise
to the same effect as the opinion required by Section 5(b)(ii) hereof; and
(iv) A letter from KPMG addressed to the Underwriter and dated the
Option Closing Date, in form and substance satisfactory to the Underwriter
and substantially the same in form and substance as the letter(s) furnished
to the Underwriter pursuant to Section 5(e) hereof.
(i) The Units (and the Common Stock and the Warrants comprising the Units)
shall have been qualified or registered for sale, or subject to an available
exemption from such qualification or registration, under the "blue sky" or
securities laws of such jurisdictions as shall have been reasonably specified by
the Underwriter, and the Offering contemplated by this Agreement shall have been
cleared by the NASD.
(j) The Company shall have executed and delivered the Warrant Agreement in
such form reasonably satisfactory to the Underwriter and its counsel.
(k) The Lock-Up Agreements shall have been delivered to the Underwriter.
If any of the conditions specified in this Section 5 shall not have been
fulfilled when and as required by this Agreement, this Agreement may
be terminated by the Underwriter on notice to the Company at any time at or
prior to the Closing Time, and such termination shall be without liability of
any party to any other party, except as provided in Section 4 of this Agreement.
Notwithstanding any such termination, the provisions of Sections 4, 6, 7, 10 and
12 of this Agreement shall remain in effect.
Section 6. Indemnification.
(a) The Company agrees to indemnify and hold harmless the Underwriter, each
officer, director, employee, agent and legal counsel of the Underwriter, and
each person, if any, who controls the Underwriter within the meaning of Section
15 of the 1933 Act or Section 20(a) of the 1934 Act, against any loss,
liability, claim, damage and expense whatsoever (which shall include, but not be
limited to, amounts incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim or investigation
whatsoever and any and all amounts paid in settlement of any claim or
litigation, provided such settlement is entered into with the consent of the
Company as provided herein), as and when incurred, arising out of, based upon or
in connection with (i) any untrue statement or alleged untrue statement of a
material fact or any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, contained in (A) any preliminary prospectus, the Registration
Statement or the Prospectus (as from time to time amended and supplemented), or
any amendment or supplement thereto or in any document incorporated by reference
therein or required to be delivered with any preliminary prospectus or the
Prospectus or (B) in any application or other document or communication
(collectively called
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an "application") executed by or on behalf of the Company or based upon written
information furnished by or on behalf of the Company filed in any jurisdiction
in order to qualify the Units under the "blue sky" or securities laws thereof or
filed with the Commission, the NASD or any securities exchange, unless such
statement or omission or alleged statement or omission was made in reliance upon
and in conformity with written information concerning the Underwriter, this
Agreement or the compensation of the Underwriter furnished to the Company by or
on behalf of the Underwriter expressly for inclusion in any preliminary
prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or in any application, as the case may be, or (ii) any
breach of any representation, warranty, covenant or agreement of the Company
contained in this Agreement. For purposes of this section, the term "expense"
shall include, but not be limited to, counsel fees and costs, court costs,
out-of-pocket costs and compensation for the time spent by any of the
Underwriter's directors, officers, employees and counsel according to his or her
normal hourly billing rates. The indemnification provisions shall also extend to
all directors, officers, employees, agents, legal counsel and controlling
persons of each affiliate of the Underwriter.
(b) The Underwriter agrees to indemnify and hold harmless the Company, its
directors, each officer 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(a) of the 1934 Act, against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
above, as incurred, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in any preliminary prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or any application in reliance upon and in conformity with written
information about the Underwriter, this Agreement or the compensation of the
Underwriter, furnished to the Company by the Underwriter expressly for inclusion
in such preliminary prospectus, the Registration Statement or the Prospectus, or
any amendment or supplement thereto, or in any application.
(c) An indemnified party shall give prompt notice to each indemnifying
party if any action, suit, proceeding or investigation is commenced in respect
of which indemnity may be sought hereunder, but failure to notify an
indemnifying party shall not relieve the indemnifying party from its obligations
to indemnify hereunder, except to the extent that the indemnifying party has
been prejudiced in any material respect by such failure. If it so elects within
a reasonable time after receipt of such notice, an indemnifying party may assume
the defense of such action, including the employment of counsel satisfactory to
the indemnified parties and the payment of all expenses of the indemnified party
in connection with such action. Such indemnified party or parties shall have the
right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless the employment of such counsel shall have been authorized in
writing by the indemnifying party in connection with the defense of such action
or the indemnifying party shall not have promptly employed counsel satisfactory
to such indemnified party or parties or such indemnified party or parties shall
have reasonably concluded that there may be one or more legal defenses available
to it or them or to other indemnified parties that are different from or
additional to those available to one or more of the indemnifying parties, in any
of which events such fees and expenses shall be borne by the indemnifying party
and the indemnifying party shall not have the right to direct the defense of
such action on behalf of the indemnified party or parties. The Company shall be
liable for any settlement of any claim against the Underwriter (or
-19-
any of its directors, officers, employees, agents, legal counsel or controlling
persons) made with the Company's written consent, which consent shall not be
unreasonably withheld. The Company shall not, without the written consent of the
Underwriter, settle or compromise any claim against the Underwriter (or any of
its directors, officers, employees, agents, legal counsel or controlling
persons) based upon circumstances giving rise to an indemnification claim
against the Company hereunder unless such settlement or compromise provides that
the Underwriter and the other indemnified parties shall be unconditionally and
irrevocably released from all liability in respect to such claim.
(d) In order to provide for just and equitable contribution, if a claim for
indemnification pursuant to these indemnification provisions is made but it is
found in a final judgment by a court that such indemnification may not be
enforced in such case, even though the express provisions hereof provide for
indemnification in such case, then the Company, on the one hand, and the
Underwriter, on the other hand, shall contribute to the amount paid or payable
by such indemnified persons as a result of such loss, liability, claim, damage
and expense (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the Underwriter, on the
other hand, from the underwriting, or (ii) if the allocation provided by clause
(i) is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company, on the one hand, and the Underwriter, on the
other hand, in connection with the statements, acts or omissions which resulted
in such loss, liability, claim, damage and expense, and any other relevant
equitable considerations. No person found liable for a fraudulent
misrepresentation or omission shall be entitled to contribution from any person
who is not also found liable for such fraudulent misrepresentation or omission.
Notwithstanding the foregoing, the Underwriter shall not be obligated to
contribute any amount hereunder that exceeds the amount of the underwriting
discount retained by them.
(e) The indemnity and contribution agreements contained herein are in
addition to any liability which the Company may otherwise have to the
Underwriter. (f) Neither termination nor completion of the engagement of the
Underwriter nor any investigation made by or on behalf of the Underwriter shall
affect the indemnification obligations of the Company or the Underwriter
hereunder, which shall remain and continue to be operative and in full force and
effect.
Section 7. Representations, Warranties and Agreements to Survive Delivery.
The representations, warranties, indemnities, agreements and other statements of
the Company or its officers set forth in or made pursuant to this Agreement will
remain operative and in full force and effect regardless of any investigation
made by or on behalf of the Underwriter or any controlling person of the
Underwriter and will survive termination of this Agreement and receipt or
delivery of and payment for the Units.
Section 8. Offering by the Underwriter. The Company is advised by the
Underwriter that the Underwriter proposes to make a public offering of the
Units, on the terms and conditions set forth in the Registration Statement from
time to time as and when the Underwriter deems advisable after the Registration
Statement becomes effective.
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Section 9. Termination of Agreement.
(a) The Underwriter may terminate this Agreement, by notice to the Company,
at any time at or prior to the Closing Time (i) if there has been, since the
time of execution of this Agreement or since the respective dates as of which
information is given in the Registration Statement, any material adverse change
in the condition (financial or otherwise), earnings, business affairs or
business prospects of the Company and its 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 of
the United States, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of the
Underwriter, impracticable or inadvisable to market the Units or enforce
contracts for the sale of the Units; or (iii) if trading in any securities of
the Company has been suspended or materially limited by the Commission or the
NASD, or if trading generally on The New York Stock Exchange, Nasdaq National
Market, Nasdaq SmallCap market or in the over-the-counter market has been
suspended or materially limited, or minimum or maximum prices for trading have
been fixed, or maximum ranges for prices for securities have been required, by
such exchange or system or by order of the Commission, the NASD or any other
governmental authority with appropriate jurisdiction over such matters, or a
material disruption has occurred in commercial banking or securities settlement
or clearance services in the United States; or (iv) if a banking moratorium has
been declared by any federal, New York or New Jersey authority; or (v) if there
shall have been such material and substantial change in the market for
securities in general or in political, financial or economic conditions as in
the Underwriter's judgment makes it inadvisable to proceed with the offering,
sale and delivery of the Units on the terms contemplated by the Prospectus; or
(vi) if the Underwriter reasonably determines (which determination shall be in
good faith) that there has not been satisfactory disclosure of all relevant
financial information relating to the Company in the Company's disclosure
documents and that the sale of the Units is inadvisable given such disclosures;
or (vii) if the Price Agreement has not been executed by all the parties hereto
prior to 5:30 p.m. on the first business day following the date of this
Agreement.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party, except
to the extent provided in Section 4 hereof. Notwithstanding any such
termination, the provisions of Sections 4, 6, 7, 10 and 12 hereof shall remain
in effect.
Section 10. Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered, mailed or transmitted by any standard form of telecommunication.
Notices shall be addressed as follows:
If to the Underwriter:
▇▇▇▇, ▇▇▇▇ & Co., LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Managing Director
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with a copy to:
▇▇▇▇▇ & Associates, P.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇., Esq.
If to the Company:
Somerset Hills Bancorp
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., President and
Chief Executive Officer
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Section 11. Parties. This Agreement is made solely for the benefit of the
Underwriter, and the officers, directors, employees, agents and legal counsel of
the Underwriter specified in Section 6 hereof, the Company and, to the extent
expressed, any person controlling the Company or the Underwriter, and the
directors of the Company, its officers who have signed the Registration
Statement, and their respective executors, administrators, successors and
assigns, and no other person shall acquire or have any right under or by virtue
of this Agreement. The term "successors and assigns" shall not include any
purchaser, as such purchaser, from the Underwriter of the Units.
Section 12. WAIVER OF TRIAL BY JURY. THE UNDERWRITER AND THE COMPANY HEREBY
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR
COUNTERCLAIM (WHETHER BASED IN CONTRACT, TORT OR OTHERWISE) RELATED TO OR
ARISING OUT OF THIS AGREEMENT.
Section 13. Governing Law and Time. This Agreement shall be governed by the
laws of the State of New Jersey. Specified times of the day refer to New York
City time.
Section 14. Counterparts. This Agreement may be executed in one or more
counterparts, and when a counterpart has been executed by each party, all such
counterparts taken together shall constitute one and the same agreement.
Section 14. Miscellaneous. This Agreement, including all Exhibits hereto,
constitutes the entire understanding of the parties and supercedes any and all
prior negotiations of the parties with respect to this subject matter. This
Agreement may be amended only in
-22-
writing signed by each of the parties. In the event that any term, provision or
covenant herein or the application thereof to any circumstances or situation
shall be invalid or unenforceable, in whole or in part, the remainder hereof and
the application of said term, provision or covenant to any other circumstance or
situation shall not be affected thereby, and each term, provision or covenant
herein shall be valid and enforceable to the full extent permitted by law. The
failure or delay by the Underwriter or the Company in exercising any right,
power or privilege hereunder shall not operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder. If the
Public Offering is consummated, the Underwriter may, at its option and expense,
place an announcement in such newspapers and periodicals as the Underwriter may
choose stating that the Underwriter has so acted, and the capacity in which it
has acted.
[The remainder of this page has been left blank intentionally.]
-23-
IN WITNESS WHEREOF, the parties hereto have signed this Agreement and have
declared it effective as of the date written above.
SOMERSET HILLS BANCORP
By:
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
President and Chief Executive Officer
▇▇▇▇, ▇▇▇▇ & CO., LLC
By:
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
Managing Director
-24-
EXHIBIT A
WARRANT AGREEMENT
-25-
EXHIBIT B
PRICE AGREEMENT
[_________], 2002
▇▇▇▇, ▇▇▇▇ & Co., LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated the date hereof (the
"Underwriting Agreement"), between the Company (as defined in the Underwriting
Agreement) and ▇▇▇▇, ▇▇▇▇ & Co., LLC (the "Underwriter"). The Underwriting
Agreement provides for the purchase by the Underwriter from the Company of a
number of Units (as such term is defined in the Underwriting Agreement) of the
Company to be determined in the manner set forth in the Underwriting Agreement
and to be set forth herein (the "Units").
This Agreement is the Price Agreement referred to in the Underwriting
Agreement.
Pursuant to Section 2 of the Underwriting Agreement, the Company agrees
with the Underwriter as follows:
1. The public offering price per Unit shall be $[___].
2. The purchase price for the Units to be paid by the Underwriter shall
be $[_____] per Unit.
3. The number of Initial Units to be purchased by the Underwriter is
[______].
4. The initial exercise price of the Warrants shall be $[_____].
The Company represents and warrants to the Underwriter that the
representations and warranties of the Company set forth in Section 1(a) of the
Underwriting Agreement are accurate as though expressly made at and as of the
date hereof.
This Agreement shall be governed by the laws of the State of New Jersey.
-26-
If the foregoing is in accordance with the understanding of the Underwriter
of the agreement between the Underwriter and the Company, please sign and return
to the Company a counterpart hereof, whereupon this instrument, along with all
counterparts and together with the Underwriting Agreement, shall be a binding
agreement between the Underwriter and the Company in accordance with its terms
and the terms of the Underwriting Agreement.
Very truly yours,
SOMERSET HILLS BANCORP
By:
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
President and Chief Executive Officer
Confirmed and accepted as of the date first above written:
▇▇▇▇, ▇▇▇▇ & CO., LLC
By:
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Managing Director
-27-
EXHIBIT C
LOCK-UP AGREEMENT
▇▇▇▇, ▇▇▇▇ & Co., LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
RE: Somerset Hills Bancorp
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of
Common Stock ("Common Stock") of the Somerset Hills Bancorp (the "Company") or
securities convertible into or exchangeable or exercisable for Common Stock (the
"Offering"). The Company proposes to carry out a public offering of Units of the
Company each consisting of one share of Common Stock and one Warrant to purchase
one share of Common Stock (the "Units") for which you will act as underwriter.
The undersigned recognizes that the Offering will be of benefit to the
undersigned and will benefit the Company by, among other things, raising
additional capital for its operations. The undersigned acknowledges that you are
relying on the representations and agreements of the undersigned contained in
this letter in carrying out the Offering and in entering into underwriting
agreements with the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that the
undersigned will not offer to sell, contract to sell, or otherwise sell, dispose
of, loan, pledge or grant any rights with respect to (collectively, a
"Disposition") any shares of Common Stock, any options or warrants to purchase
any shares of Common Stock or any securities convertible into or exchangeable
for shares of Common Stock (collectively, "Securities") now owned or hereafter
acquired directly by such person or with respect to which such person has or
hereafter acquires the power of disposition, otherwise than (i) as a bona fide
gift or gifts, provided the donee or donees thereof agree in writing to be bound
by this restriction, (ii) for grants of employee stock options pursuant to the
terms of a plan in effect on the date hereof, issuances of Common Stock pursuant
to the exercise of such options or the exercise of any other employee stock
options outstanding on the date hereof, or (iii) with the prior written consent
of the Underwriter, for a period commencing on the date hereof and continuing to
a date 180 days after the offering has been closed (the "Lock-up Period"). The
foregoing restriction has been expressly agreed to preclude the holder of the
Securities from engaging in any hedging or other transaction which is designed
to or reasonably expected to lead to or result in a Disposition of Securities
during the Lock-up Period, even if such Securities would be disposed of by
someone other than such holder. Such prohibited hedging or other transactions
would include, without limitation, any short sale (whether or not against the
box) or any purchase, sale or grant of any right (including, without limitation,
any put or call option) with respect to any Securities or with respect to any
security (other than a broad-based market basket or index) that included,
relates to or derives any significant part of its value from Securities. The
undersigned also agrees and consents to the entry of stop transfer instructions
with the Company's transfer agent and registrar against the
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transfer of shares of Common Stock or Securities held by the undersigned except
in compliance with the foregoing restrictions.
This agreement is irrevocable and will be binding on the undersigned and
the respective successors, heirs, personal representatives, and assigns of the
undersigned. This letter agreement shall terminate and be no further force and
effect upon a decision by the Underwriter or the Company not to proceed with the
Offering.
Dated:
---------------------
-----------------------------------
[Printed Name of Holder]
By:
-------------------------------
[Signature]
-----------------------------------
Printed Name of Person Signing
-29-
EXHIBIT D
COMPANY COUNSEL'S OPINION
-30-
EXHIBIT D
FORM OF LEGAL OPINION
[Closing Date]
▇▇▇▇, ▇▇▇▇ & Co., LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We have acted as counsel to Somerset Hills Bancorp, a New Jersey
corporation (the "Company") in connection with the offering of units (the
"Units") consisting of common stock (the "Common Stock") and warrants (the
"Warrants") of the Company in an underwritten Offering (the "Offering") by you.
The Offering was made pursuant to that certain Underwriting Agreement between
you and the Company dated _______________ (the "Underwriting Agreement"). This
opinion letter is furnished to you pursuant to Section 5(b)(i) of the
Underwriting Agreement. Terms not otherwise defined herein shall have the same
meaning as in the Underwriting Agreement.
As such counsel, we have examined originals or copies of (a) the Company's
Certificate of Incorporation and its by-laws, (b) certificates of officers or
representatives of the Company and of public officials, (c) the corporate
proceedings of the Company authorizing the execution and delivery of the
Underwriting Agreement; (d) the Underwriting Agreement; (e) the Warrant
Agreement between the Company and Registrar and Transfer Company, Cranford, New
Jersey, the company's transfer agent dated as of _________________ (the "Warrant
Agreement") governing the terms and conditions of the Warrants; (f) specimen
forms of certificates representing the Common Stock and the Warrants; (g) the
Preliminary Prospectus describing the Offering and the Final Prospectus dated
_______________ describing the Offering (collectively, the "Prospectus"), and
(h) and such other documents, and have made such other investigations as we have
deemed necessary or appropriate for the purpose of giving the opinions in this
letter. As such counsel, we participated in the preparation of the Underwriting
Agreement, and consulted with officers or representatives of the Company
concerning the terms and provisions thereof and the representations and
warranties made by the Company thereunder. As counsel to the Company, we
participated in the preparation of the Prospectus and the Warrant Agreement.
In giving certain of the opinions expressed in this letter and making our
investigations in connection with this letter, we have assumed (i) the due
authorization of the parties thereto (other than the Company) of the documents
we have examined; (ii) the due execution and delivery by the parties thereto
(other than the Company) of the documents we have examined; (iii) the
genuineness of all signatures by individuals; (iv) the personal legal capacity
of all individual signatories; (v) the authenticity of all documents presented
to us as originals; (vi) the conformity to the originals of all documents
presented to us as copies; and (vii) the integrity and
completeness of the minute books of the Company presented to us for our
examination. We have no reason to believe that the foregoing assumptions are
unwarranted.
As to various questions of fact material to such opinions, we have relied,
without investigation or analysis of any underlying data contained therein, upon
certificates of public officials and of officers of the Company, and on the
representations and warranties in accordance with Section 1 of the Underwriting
Agreement. Except as expressly stated herein, we have not independently verified
any factual matters in connection with the giving of the opinions set forth
below.
Whenever our opinion is qualified with "to the best of our knowledge," with
your consent, we have relied exclusively upon certificates of officers of the
Company and certificates of others as to the existence or non-existence of the
circumstances upon which this opinion is predicated and on various
representations and warranties contained in the Underwriting Agreement. We have
not conducted any independent investigation in this regard. The phrase "to the
best of our knowledge" means the conscious awareness of the lawyers in our Firm
who were actively involved in the Offering.
Based solely upon the foregoing and in reliance thereon, and subject to the
limitations, qualifications and exceptions set forth in this letter, we are of
the opinion that:
(1) The Company is validly existing as a New Jersey corporation with
the corporate power and authority to own, lease and operate the combined
properties as described in the Prospectus. Each of the Company's
subsidiaries is validly existing and in good standing under the laws of its
jurisdiction of organization, and each has the corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus.
(2) The Company is duly registered with the Board of Governors of the
Federal Reserve System as a bank holding company under the Bank Holding
Company Act of 1956, as amended. Somerset Hills Bank (the "Bank") is a New
Jersey-chartered commercial bank subsidiary of the Company and the deposit
accounts of the Bank are insured by the Bank Insurance Fund of the Federal
Deposit Insurance Corporation ("FDIC") up to the maximum allowable limits
thereof. The Company has all such power, authority, authorization,
approvals and orders as may be required to enter into the Underwriting
Agreement and the Warrant Agreement and to carry out the provisions and
conditions thereof.
(3) Each of the Company and its subsidiaries is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, unless the failure to
be so qualified in one or more of such jurisdictions would not have a
material adverse effect on the financial condition or the business,
operations, net income or prospects of the Company taken as a whole.
(4) The authorized equity capital of the Company consists of 5,000,000
shares of common stock _________________ shares of which are issued and
outstanding and 1,000,000 shares of preferred stock, no shares of which are
issued and outstanding. All of the outstanding shares of capital stock of
the Company and each of the Company's other subsidiaries have been duly
authorized and validly issued and are fully paid and non-assessable.
(5) The activities of each subsidiary of the Company as described in
the Prospectus are permitted to subsidiaries of a New Jersey corporation by
the rules, regulations, policies and practices of the New Jersey Department
of Banking and Insurance ("NJBI"), the FDIC, and/or the Federal Reserve
Board ("FRB"), as the case may be, and any other federal or state authority
having jurisdiction over such matters. All of the outstanding stock of each
subsidiary of the Company is owned of record and beneficially by the
Company, free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity.
(6) Except for the Bank and ▇▇▇▇▇▇▇▇ Financial Services, Inc., the
Company does not have any "significant subsidiaries" as defined in Rule
1-02 of Regulation S-X of the Commission.
(7) The information in the Prospectus under the captions "Supervision
and Regulation" and "Description of the Company's Securities" to the extent
that it constitutes matters of law, summaries of legal matters, documents
or proceedings or legal conclusions, is accurate in all material respects.
The capital stock of the Company and the Warrants conform in all material
respects to the description thereof contained or incorporated by reference
in the Prospectus and such description conforms to the rights set forth in
the instruments defining the same. The form of certificates used to
evidence the Common Stock and the Warrants is in due and proper form.
(8) The Underwriting Agreement and the Warrant Agreement each has been
duly authorized, executed and delivered by the Company and are the legal,
valid and binding agreements of the Company, subject, as to enforceability,
to bankruptcy, insolvency, reorganization, moratorium, conservatorship,
receivership and other laws of general applicability relating to or
affecting creditors' rights or the rights of creditors of depository
institutions the deposits of which are insured by the Bank Insurance Fund,
to general principles of equity (whether considered in an action at law or
in equity) and to the extent that rights to indemnity and contribution
thereunder may be limited under applicable laws or under considerations of
public policy.
(9) The Units (including the Common Stock and the Warrants
constituting the Units) have been duly and validly authorized for issuance,
and when issued and delivered by the Company against payment of
consideration therefore, will be duly authorized and validly issued, fully
paid and nonassessable. The issuance of the Units is not subject to any
preemptive rights. Upon the issuance of the Units, against payment therefor
in accordance with the Prospectus, the purchasers will have full legal
title to the Units, subject to such claims as may be asserted against the
purchasers thereof by third-party claimants. The Units conform in all
material respects to the description thereof in the Prospectus, and such
description conforms in all material respects to the rights set forth in
the instruments defining the same.
(10) The issuance and sale of the Units by the Company, the compliance
by the Company with all of the provisions of the Underwriting Agreement and
the Warrant Agreement, and the consummation of the transactions therein
contemplated will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, any statute or any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its properties; and no
consent, approval, authorization, order, license, certificate, permit,
registration or qualification of or with any such court or other
governmental agency or body is required to be obtained by the Company for
the issue and sale of the Units by the Company, or the consummation by the
Company of the transactions contemplated by the Underwriting Agreement and
the Warrant Agreement, except for such consents, approvals, authorizations,
licenses, certificates, permits, registrations or qualifications as have
already been obtained, or as may be required under the 1933 Act or the 1933
Act Regulations, the 1934 Act or the 1934 Act Regulations, or state
securities laws.
(11) The Company has not engaged in any activity that would result in
the Company being, and after giving effect to the offering and sale of the
Units, the Company will not be, an "investment company," or an entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended.
(12) Neither the Company, the Bank nor any other subsidiary is in
violation of any provision of its Certificate of Incorporation, charter or
bylaws or in 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 agreement or instrument to
which it is a party or by which it may be bound or to which any of its
respective properties may be subject, except for such defaults that,
individually or in the aggregate, would not have a material adverse effect
on the condition (financial or otherwise), earnings, business affairs,
assets or business prospects of the Company and its subsidiaries,
considered as one enterprise.
(13) Except as disclosed in the Prospectus, there is no action, suit
or proceeding before or by any government, governmental instrumentality or
court, domestic or foreign, now pending or, to the best of our knowledge,
threatened against the Company, the Bank or any other subsidiary that is
required to be disclosed in the Prospectus or that could reasonably be
expected to result in any material adverse change in the condition
(financial or otherwise), earnings, business affairs, assets or business
prospects of the Company and its subsidiaries, considered as one
enterprise, or that could reasonably be expected materially and adversely
to affect the properties or assets of the Company and its subsidiaries,
considered as one enterprise, or that could reasonably be expected
materially and adversely to affect the consummation of the transactions
contemplated in this Agreement. All pending legal or governmental
proceedings to which the Company, the Bank or any other subsidiary is a
party that are not described in the Prospectus, including ordinary routine
litigation incidental to its business, if decided in a manner adverse to
the Company, would not have a material adverse effect on the condition
(financial or otherwise), earnings, business affairs or business prospects
of the Company and its subsidiaries, considered as one enterprise.
(14) There are no material contracts or documents of a character
required to be described in the Registration Statement or the Prospectus or
to be filed as exhibits to the Registration Statement that are not
described and filed as required.
(15) To the best of our knowledge, each of the Company and its direct
and indirect subsidiaries, owns, possesses or has obtained all material
governmental licenses, permits, certificates, consents, orders, approvals
and other authorizations necessary to own or lease, as the case may be, and
to operate its properties and to carry on its business as presently
conducted, and neither the Company, the Bank nor any other subsidiary has
received any notice of any restriction upon, or any notice of proceedings
relating to revocation or modification of, any such licenses, permits,
certificates, consents, orders, approvals or authorizations.
(16) Except as disclosed in the Prospectus, there are no persons with
registration or other similar rights to have any securities of the Company
registered pursuant to the Registration Statement or otherwise registered
by the Company under the 1933 Act.
(17) All corporate acts and other proceedings required to be taken by
or on the part of the Company to adopt and approve the Prospectus have been
properly taken.
(18) The Company's and the Bank's Certificate of Incorporation and
by-laws comply in all material respects with the banking laws of the State
of New Jersey and the rules and regulations of the FRB.
(19) The Units and Warrants have been approved for inclusion in the
Nasdaq SmallCap market.
(20) The Company has filed with the NASD all documents and notices
required by the NASD of companies that have issued securities that are
traded in the over-the-counter market and quotations for which are reported
by the Nasdaq SmallCap market.
(21) Neither the Company, the Bank nor any other subsidiary of the
Company has taken or will 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, under the
Exchange Act or otherwise, of the price of the Units or the Common Stock.
(22) To the best of our knowledge, neither the Company nor the Bank is
in violation of any directive from the FRB, the FDIC or the NJBI to make
any material change in the method of conducting its business, and the
Company and any subsidiary thereof has conducted and is conducting its
businesses so as to comply in all material respects with all applicable
statutes and regulations (including, without limitation, regulations,
decisions, directives and orders of the FRB, the FDIC and the NJBI).
No facts have come to our attention during the course of our representation
that have caused us to believe that the Prospectus 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 statement therein, in the light of the
circumstances under which they were made, not misleading (it being understood
that we express no opinion with respect to the financial statements and the
notes thereto and other financial and statistical data included in the
Prospectus).
These opinions are given as of the date of this letter, and we undertake no
responsibility to advise you of any changes in applicable law or any other
matters that may come to our attention after the date of this letter that may
affect our opinions expressed herein.
Yours truly,