Exhibit 1.1
SHS BANCORP, INC.
(a Pennsylvania corporation)
713,000 Shares (Anticipated Maximum)
Common Stock
(Par Value $0.01 Per Share)
AGENCY AGREEMENT
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July ___, 1997
▇▇▇▇, ▇▇▇▇ & Co., Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
SHS Bancorp, Inc., a Pennsylvania corporation (the "Company") and Spring
Hill Savings Bank, F.S.B., a federally chartered mutual savings bank (the
"Bank"), hereby confirm their agreement with ▇▇▇▇, ▇▇▇▇ & Co., Inc. ("▇▇▇▇,
▇▇▇▇" or the "Agent" or "you"), as follows:
Introductory. The Bank is in the process of converting from a federally
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chartered savings bank in the mutual form to a federally chartered savings bank
in stock form in accordance with the provisions of the Home Owners' Loan Act, as
amended (the "HOLA"), and the rules and regulations of the Office of Thrift
Supervision ("OTS") which have been or which may be promulgated thereunder by
the OTS, such statute, rules and regulations being collectively referred to as
the "Conversion Regulations." An Application for Approval of Conversion has
been filed with the OTS (the "Conversion Application") and all amendments
required to the date hereof have also been filed. The Conversion Application
includes, among other things, the Bank's plan of conversion (the "Plan") and the
Bank's proxy statement for the Special Meeting of Members, to be held on
September __, 1997 ("Proxy Statement"). Prior to the date hereof, the Plan has
been approved by the Board of Directors (hereinafter referred to as "Directors")
of the Bank and by the OTS. Pursuant to the Plan, the Bank will convert from a
federally chartered mutual savings bank to a federally chartered stock savings
bank; the Company has filed an application (the "Holding Company Application")
with the OTS to become a registered savings and loan holding company under HOLA;
all the issued and outstanding stock of the Bank will be sold to the Company;
and the Company will issue and sell its Common Stock (as defined below) in a
Subscription and Community Offering and, if necessary, in a Syndicated Community
Offering (the "Syndicated Community Offering"), all of which are described below
and in the Plan. Collectively, these transactions are referred to herein as the
"Conversion."
Upon consummation of the Conversion, the Company will have authorized
capital of 15,000,000 shares of capital stock, of which 10,000,000 shares shall
be common stock, $0.01 par value per share (the "Common Stock") and 5,000,000
shares shall be preferred stock of $0.01 par value. The Company, in accordance
with the Plan, is offering, in a subscription offering by way of nontransferable
subscription rights, shares of Common Stock, in order of priority, to depositors
of the Bank with account balances of $50.00 or more as of December 31, 1995
("Eligible Account Holders"), the Bank's Employee Stock Ownership Plan, a tax-
qualified employee benefit plan (the "ESOP"), depositors of the Bank with
account balances of $50.00 or more as of June 30, 1997 ("Supplemental Eligible
Account Holders"), and depositors other than Eligible Account Holders and
Supplemental Eligible Account Holders as of the Voting Record Date and borrowers
of the Bank with mortgage loans outstanding as of the Voting Record Date ("Other
Members"). Concurrently, and subject to the prior rights of holders of
subscription rights, the Company is offering the Common Stock for sale in a
community offering to the general public, with preference given to natural
persons who reside in the Pennsylvania Counties of Allegheny, Beaver, Butler,
Washington, ▇▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ ("Other Subscribers"). With the exception
of the ESOP, which intends to purchase up to 8% of the total number of shares of
Common Stock issued in the Conversion, no person may purchase more than $50,000
of the Common Stock offered in the Conversion; and no person, together with
associates of and persons acting in concert with such person, may purchase more
than $85,000 of the Common Stock offered in the Conversion; provided, however
that the maximum overall purchase limitation may be increased or decreased and
the amount permitted to be subscribed for may be increased or decreased in the
sole discretion of the Company. Common Stock not so subscribed for in the
Subscription and Community Offering, if any, will be offered by the Company to
certain members of the general public in the Syndicated Community Offering. It
is acknowledged that the Company in its sole discretion may accept or reject, in
whole or in part, any orders to purchase shares of the Common Stock received in
the Community Offering or in the Syndicated Community Offering.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form SB-2 (File No. 333-30231) (the
"Registration Statement") containing a Prospectus relating to the Subscription
and Community Offering for the registration of the Common Stock under the
Securities Act of 1933, as amended (the "1933 Act"), and has filed such
amendments thereto and such amended prospectuses as may have been required to
the date hereof. The Prospectus, as amended, on file with the Commission at the
time the Registration Statement becomes effective is hereinafter called the
"Prospectus", except that if the Prospectus filed by the Company pursuant to
Rule 424 (b) of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") differs from the prospectus on file at the time the
Registration Statement becomes effective, the term "Prospectus" shall refer to
the prospectus filed pursuant to Rule 424(b) from and after the time said
prospectus is filed with the Commission.
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SECTION 1. Appointment of Agent; Compensation to the Agent. Subject to the
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terms and conditions herein set forth, the Bank and the Company hereby appoint
the Agent as its agent to consult with and advise the Bank and the Company, and
to solicit subscriptions and purchase orders for Common Stock on behalf of the
Bank and the Company, in connection with the Company's offering of Common Stock
in the Subscription and Community Offering. On the basis of the
representations, warranties and agreements herein contained, and subject to the
terms and conditions herein set forth, ▇▇▇▇, ▇▇▇▇ accepts such appointment and
agrees to consult with and advise the Bank and the Company as to the matters set
forth in Section 3 of the Engagement Letter between the Agent and the Bank dated
February 20, 1997, included as Exhibit A attached hereto, and to use its best
efforts to solicit subscriptions and purchase orders for Common Stock in
accordance with this Agreement; provided, however, that the Agent shall not be
responsible for obtaining subscriptions or purchase orders for any specific
number of shares of Common Stock, shall not be required to purchase any shares
and shall not be obligated to take any action which is inconsistent with all
applicable laws, regulations, decisions or orders.
The appointment of the Agent hereunder shall terminate upon termination of
the Subscription and Community Offering or any Syndicated Community Offering and
satisfaction of the obligations of the Bank and the Company pursuant to this
Agreement.
Subject to the prior approval of the Company and the Bank, ▇▇▇▇, ▇▇▇▇ may
also assemble and manage a selling group of broker dealers ("Selling Group")
which are members of the National Association of Securities Dealers, Inc.
("NASD") to participate in the solicitation of purchase orders for shares of
Common Stock in the Syndicated Community Offering under a selected dealers'
agreement (the "Selected Dealers' Agreement"), the form of which is set forth as
Exhibit B to this Agreement.
In addition to the reimbursement of the expenses specified in Sections 6, 7
and 8 hereof, the Agent will receive an advisory and management fee of $25,000
("Management Fee") and a marketing fee of one and one-half percent (1.50%) of
the dollar amount of the Common Stock sold in the Subscription and Community
Offerings ("Marketing Fee"). Should a selling group of NASD member firms (which
may include ▇▇▇▇, ▇▇▇▇ & Co.) under a Selected Dealers' Agreement (the "Selling
Group") be implemented, the Bank shall pay a fee to selected dealers ("Selected
Dealers' Fee") of five and one-half percent (5.5%) in the aggregate. The
Marketing Fee and the Selected Dealers' Fee are hereinafter collectively
referred to as the "Sales Compensation." No Sales Compensation shall be payable
pursuant to this section in connection with the sale of Common Stock to
officers, directors, employees (and members of the immediate family thereof),
and employee benefit plans of the Company and the Bank. It is acknowledged that
the Bank paid the Agent $12,500 of the Management Fee upon execution of the
Engagement Letter. The minimum fee (consisting of the aggregate of the
Management Fee, Marketing Fee and Selected Dealers' Fee) shall be $100,000 and
the maximum Marketing Fee payable for shares sold in the Subscription and Direct
Community Offering is 1.5% of the aggregate Purchase Price at the midpoint of
the Estimated Valuation Range. ▇▇▇▇, ▇▇▇▇ will not commence sales
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of shares of Common Stock through members of the Selling Group without prior
approval of the Bank.
If the Conversion is not consummated by March 31, 1998, due to conditions
beyond the control of the Agent, or if the Agent terminates this Agreement in
accordance with Section 10 hereof, the Agent shall receive, in addition to the
Agent's reasonable out of pocket expenses as defined in Section 6 hereof, the
Management Fee of $25,000 in consideration of its advisory and administrative
services in lieu of the Sales Compensation. If there is necessitated a
resolicitation of subscriptions and purchase orders, the Company, the Bank and
the Agent agree to negotiate in good faith an agreement to cover the Agent's
further fees and expenses in connection therewith.
The compensation specified above shall be payable (to the extent not already
paid) to the Agent on the earlier of the Closing Date (as hereinafter defined),
or a determination by the Company and the Bank to terminate or abandon the Plan.
The Bank and the Company agree to reimburse the Agent for the costs and expenses
specified in Sections 6, 7 and 8 hereof, to the extent such costs and expenses
are reasonably incurred by the Agent, promptly upon receiving a reasonable
accounting of such costs and expenses.
SECTION 2. Closing Date; Release of Funds and Delivery of Certificates. If
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all conditions precedent to the consummation of the Conversion, including,
without limitation, the sale of all Common Stock required by the Plan to be
sold, are satisfied, the Company agrees to issue or have issued the Common Stock
sold in the Subscription and Community Offering and to release for delivery
certificates for Common Stock on the Closing Date (as hereinafter defined)
against payment therefor by release of funds from the special interest-bearing
account referred to in Section 5(r) hereof and by the authorized withdrawal of
funds from deposit accounts of Eligible Account Holders, Supplemental Eligible
Account Holders and Other Members in accordance with the Plan; provided,
however, that no such funds shall be released to the Company or withdrawn until
the conditions specified in Section 9 hereof shall have been complied with to
the reasonable satisfaction of the Agent and its counsel. Such release,
withdrawal and payment shall be made at the Closing Date of the Offering, on a
business day and at a place selected by the Agent, which date and place are
acceptable to the Bank and the Company, on at least two business days prior
notice to the Bank and Company (it being understood that such business day shall
not be more than ten business days after completion of the Subscription and
Community Offering or the solicitation of purchase orders for shares under the
Selected Dealers' Agreement unless an amendment to the Registration Statement is
required or the Conversion appraisal update has not been approved by the OTS),
or such other time or place as shall be agreed upon by the Agent, the Bank and
the Company. Certificates for Common Stock shall be delivered directly to the
purchasers thereof or in accordance with their directions. The hour and date
upon which the Company shall release or deliver the Common Stock sold in the
Subscription and Community Offering, in accordance with the terms hereof, are
herein called the "Closing Date."
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SECTION 3. Prospectus; Subscription and Community Offering. The Common
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Stock is to be offered in the Subscription and Community Offering at $10.00 per
share, as set forth on the cover page of the Prospectus. The number of shares
offered may be changed by the Company after consultation with the Agent.
SECTION 4. Representations and Warranties. The Company and the Bank
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jointly and severally represent and warrant to the Agent as follows:
(a) The Registration Statement was declared effective by the Commission
on August 12, 1997. At the time the Registration Statement, including the
Prospectus contained therein, became effective, the Registration Statement
complied in all material respects with the requirements of the 1933 Act and
the 1933 Act Regulations and the Registration Statement, any final
Prospectus, any Blue Sky Application or any Sales Document (as such terms
are defined previously herein or in Section 7 hereof) authorized by the
Company or the Bank for use in connection with the Subscription and
Community Offering (and only with respect to information provided by or
approved by the Company and the Bank) did not contain an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and at the time
any Rule 424(b) Prospectus was filed with the Commission and at the Closing
Date referred to in Section 2, the Registration Statement, any preliminary
or final Prospectus, any Blue Sky Application or any Sales Information (as
such terms are defined previously herein or in Section 7 hereof) authorized
by the Company or the Bank for use in connection with the Subscription and
Community Offering will not contain an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the representations and warranties in
this Section 4(a) shall not apply to statements in or omissions from such
Registration Statement, Prospectus or Sales Information made in reliance
upon and in conformity with information furnished in writing to the Company
or the Bank by the Agent expressly regarding the Agent for use under the
captions "Market for the Common Stock" and "The Conversion-Marketing and
Underwriting Arrangements."
(b) The Bank has filed with the OTS the Conversion Application,
including the Prospectus, exhibits, and an amendment or amendments thereto,
as required, which was approved by the OTS; the Proxy Statement of the Bank,
to be dated as of August 22, 1997, has been approved by the OTS; and the
Plan has been adopted by both the Board of Directors of the Company and the
Board of Directors of the Bank.
(c) The Company has filed with the OTS the Holding Company Application,
which was approved by the OTS and, to the best knowledge of the Company and
the Bank, no order has been received by or is pending before the OTS to
prevent, suspend or revoke any approval thereof.
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(d) At the Closing Date, the Company and the Bank will have completed
all conditions precedent to the Conversion and the offer and sale of the
Common Stock in accordance with the Plan, the Conversion Regulations and all
other applicable material laws, regulations, decisions and orders, including
all terms, conditions, requirements and provisions precedent to the
Conversion imposed upon the Company or the Bank by the Commission and the
OTS or any other regulatory authority.
(e) No order has been issued by the Commission, the OTS, the Federal
Deposit Insurance Corporation (the "FDIC"), or any State regulatory or Blue
Sky authority preventing or suspending the use of the Prospectus and no
action by or before any such government entity to revoke any approval,
authorization or order of effectiveness related to the Conversion is, to the
best knowledge of the Bank or the Company, pending or threatened.
(f) At the date hereof, to the best knowledge of the Company and the
Bank, no person has sought to obtain review of the final action of the OTS
in approving the Plan of Conversion or Holding Company Application.
(g) At the time of the approval of the Conversion Application by the OTS
(including any amendment or supplement thereto) and at all times subsequent
thereto until the Closing Date, the Conversion Application complied in all
material respects with the Conversion Regulations. The Prospectus contained
in the Conversion Application (including any amendments or supplements
thereto) complied in all material respects with the Conversion Regulations
at the time of the approval of the Conversion Application by the OTS and the
Prospectus contained in the Conversion Application will comply in all
material respects with such rules and regulations from such time until the
Closing Date.
(h) ▇▇▇▇▇▇▇ Financial Advisors, Inc. ("▇▇▇▇▇▇▇ Financial"), which
prepared the Conversion appraisal dated as of June 23, 1997, described in
the Prospectus, is independent with respect to the Company and the Bank
within the meaning of the Conversion Regulations, is believed by the Company
and the Bank to be experienced and expert in rendering corporate appraisals
of thrift institutions and the Bank believes that ▇▇▇▇▇▇▇ Financial has
prepared the pricing information set forth in the Prospectus in accordance
with the requirements of the Conversion Regulations.
(i) S.R. ▇▇▇▇▇▇▇▇▇, ▇.▇. ("▇▇▇▇▇▇▇▇▇"), the firm which certified the
financial statements filed as part of the Registration Statement is, with
respect to the Company and the Bank, an independent certified public
accountant as required by the 1933 Act and the 1933 Act Regulations.
(j) The financial statements included in the Registration Statement and
which are part of the Prospectus present fairly the financial condition,
results of operations, retained earnings and changes in financial position
and statement of cash flows of the
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Bank, at and for the dates indicated and the periods specified and comply as
to form in all material respects with the applicable accounting requirements
of the Conversion Regulations and generally accepted accounting principles.
Said financial statements are consistent with financial statements and other
reports filed by the Bank with the OTS and the FDIC except that accounting
principles employed in such filings (not including the Registration
Statement) conform to requirements of such authorities and not necessarily
to generally accepted accounting principles. The other financial,
statistical, and pro forma information and related notes included in the
Prospectus present fairly the information shown therein on a basis
consistent with the audited financial statements of the Bank included in the
Prospectus, and as to the pro-forma adjustments, the adjustments made
therein have been properly applied on the basis described therein.
(k) Since the respective dates as of which information is given in the
Registration Statement and Prospectus, except as may otherwise be stated
therein: (i) there has not been any material adverse change in the financial
condition of the Company, the Bank or Spring Hill Funding Corporation (the
"Subsidiary") or of the Company, the Bank and the Subsidiary considered as
one enterprise, or in the results of operations or business of the Company,
the Bank or the Subsidiary whether or not arising in the ordinary course of
business, (ii) there has not been any material increase in the long-term
debt of the Bank, nor has the Bank issued any securities or incurred any
liability or obligation for borrowing other than in the ordinary course of
business, (iii) there have not been any material transactions entered into
by the Company, the Bank or the Subsidiary, except those transactions
entered into in the ordinary course of business and those specifically
contemplated by the Prospectus, including the execution of loan documents
pertaining to the ESOP, and (iv) the capitalization, liabilities, assets,
properties and business of the Company, the Bank and the Subsidiary conform
in all material respects to the descriptions thereof contained in the
Prospectus. To the best knowledge of the Company, the Bank, and the
Subsidiary, neither the Company, the Bank nor the Subsidiary has any
material liability of any kind, contingent or otherwise, except as set forth
in the Prospectus.
(l) The Bank is now a federally chartered savings bank in mutual form of
organization and upon the Conversion will become a federally chartered
savings bank in capital stock form of organization, in both instances duly
authorized to conduct its business and own its property as described in the
Registration Statement; the Company, the Bank and the Subsidiary have
obtained all material licenses, permits and other governmental
authorizations currently required for the conduct of their respective
businesses; all such licenses, permits and the governmental authorizations
are in full force and effect; and the Company, the Bank and the Subsidiary
are in all material respects complying with all laws, rules, regulations and
orders applicable to the operation of their businesses. The Bank does not
own equity securities or any equity interest in any other business
enterprise except as described in the Prospectus. Upon completion of the
sale by the Company of the shares of Common Stock
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contemplated by the Prospectus, (i) the Bank will be converted pursuant to
the Plan to a federally chartered stock savings bank, (ii) all of the issued
and outstanding capital stock of the Bank will be owned by the Company, and
(iii) the Company will have no direct subsidiaries other than the Bank. The
Conversion will have been effected in all material respects in accordance
with all applicable statutes, regulations, decisions and orders; and, except
with respect to the filing of certain post-sale, post-conversion reports and
documents, all terms, conditions, requirements and provisions with respect
to the Conversion imposed by the Commission and the OTS, if any, will have
been complied with by the Company, the Bank and the Subsidiary in all
material respects or appropriate waivers will have been obtained and all
material notice and waiting periods will have been satisfied, waived or
elapsed.
(m) The deposit accounts of the Bank are insured by the Savings
Association Insurance Fund ("SAIF") as administered by the FDIC up to the
maximum amount allowed under law. Upon consummation of the Conversion, the
liquidation account for the benefit of Eligible Account Holders and
Supplemental Eligible Account Holders ("Liquidation Account") will be duly
established in accordance with the requirements of the Conversion
Regulations.
(n) Upon consummation of the Conversion, the authorized, issued and
outstanding equity capital of the Company will be as set forth in the
Registration Statement under the caption "Capitalization," and no shares of
Common Stock have been or will be issued and outstanding prior to the
Closing Date referred to in Section 2, except as to the issuance by the
Company of shares of Common Stock, if any, for the purpose of the Company's
initial capitalization and conducting organizational business, which shares
of Common Stock shall be cancelled on the Closing Date; the shares of Common
Stock issued in the Conversion will have been duly and validly authorized
for issuance and, when issued and delivered by the Company pursuant to the
Plan against payment of the consideration calculated as set forth in the
Plan and in the Prospectus, will be duly and validly issued and fully paid
and non-assessable; the issuance of the Common Stock will not violate any
preemptive rights; and the terms and provisions of the Common Stock will
conform in all material respects to the description thereof contained in the
Registration Statement and the Prospectus. To the best knowledge of the
Company and the Bank, upon the issuance of the Common Stock, good title to
the Common Stock will be transferred from the Company to the purchasers
thereof against payment therefor, subject to such claims as may be asserted
against the purchasers thereof by third-party claimants.
(o) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the Commonwealth of
Pennsylvania with corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Registration
Statement and the Prospectus, and the Company is not required to qualify as
a foreign corporation in any jurisdiction where it has not so qualified.
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(p) The Subsidiary has been duly organized and is in good standing under
the laws of the Commonwealth of Pennsylvania with full corporate power and
authority to own its properties and to conduct its business, as described in
the Registration Statement and the Prospectus and all of the outstanding
stock of the Subsidiary has been duly authorized and is fully paid and non-
assessable, and such stock is owned directly or indirectly by the Bank, free
and clear of any liens or encumbrances. The Subsidiary is duly qualified to
transact business and is in good standing in each jurisdiction in which it
conducts business, except where the failure to be qualified would not have a
material adverse effect on the operations of the Company, the Bank and the
Subsidiary taken as a whole.
(q) As of the date hereof and as of the Closing Date, neither the
Company, the Bank nor the Subsidiary is in violation of its articles of
incorporation, charter or bylaws (and the Bank will not be in violation of
its charter or bylaws in capital stock form upon consummation of the
Conversion); the consummation of the Conversion, the execution, delivery and
performance 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 Company and the Bank and this Agreement
has been validly executed and delivered by the Company and the Bank and is
the valid, legal and binding Agreement of the Company and the Bank
enforceable in accordance with its terms, except to the extent that rights
to indemnity hereunder may be limited under applicable law and subject to
bankruptcy, insolvency, reorganization or other laws relating to or
affecting the enforcement of creditors' rights generally and equitable
principles limiting the right to obtain specific enforcement or similar
equitable relief. The consummation of the transactions herein contemplated
will not (i) conflict with or constitute a breach of, or default under, the
articles of incorporation, charter or bylaws of the Company, the Bank (in
either mutual or capital stock form) or the Subsidiary, or any material
contract, lease or other instrument to which the Company, the Bank or the
Subsidiary is a party or in which the Company, the Bank or the Subsidiary
has a beneficial interest, or any applicable law, rule, regulation or order
to which the Company, the Bank or the Subsidiary is subject; (ii) violate
any authorization, approval, judgment, decree, order, statute, rule or
regulation applicable to the Company, the Bank or the Subsidiary; or (iii)
with the exception of the Liquidation Account established in the Conversion,
result in the creation of any lien, charge or encumbrance upon any property
of the Company, the Bank or the Subsidiary.
(r) The Company and the Bank have all such power, authority,
authorizations, approvals and orders as may be required to enter into this
Agreement, to carry out the provisions and conditions hereof and to issue
and sell the capital stock of the Bank and the Common Stock as provided in
the Plan and as described in the Prospectus, subject to the final approval
of the OTS and to the satisfaction of the conditions of the OTS approval of
the Conversion.
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(s) The Company, the Bank and the Subsidiary have good and marketable
title to all properties and assets which are material to the business of the
Company, the Bank and the Subsidiary on a consolidated basis and to those
properties and assets described in the Registration Statement and the
Prospectus as owned by them, free and clear of all liens, except such liens
as are described in the Prospectus or are not materially significant or
important in relation to the business of the Company, the Bank and the
Subsidiary on a consolidated basis; and all of the leases and subleases
material to the business of the Company, the Bank and the Subsidiary on a
consolidated basis under which the Company, the Bank or the Subsidiary hold
properties, including those described in the Prospectus, are in full force
and effect.
(t) The Company and the Bank are not in violation of any directive from
the Commission, the OTS, the FDIC, or any other agency to make any material
change in the method of conducting their 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
Commission, the FDIC and the OTS) and there is no suit or proceeding,
charge, investigation or action before or by any court, regulatory authority
or governmental agency or body, pending or, to the knowledge of the Company
or the Bank, threatened, which might materially and adversely affect the
Conversion, the performance of this Agreement or the consummation of the
transactions contemplated in the Plan and as described in the Prospectus or
which might result in any material adverse change in the financial
condition, results of operations or business of the Company and the Bank
taken as a whole or which would materially affect their properties and
assets.
(u) As of the Closing Date, the Bank and the Company shall have
conducted the Conversion in all material respects in accordance with the
Plan, and the Conversion Regulations and in the manner described in the
Prospectus.
(v) The Bank has received an opinion of its special counsel, Breyer &
Aguggia, with respect to the federal income tax consequences of the
Conversion and an opinion of ▇▇▇▇▇▇▇▇▇ with respect to the Pennsylvania
income tax consequences of the Conversion. The facts and representations
upon which such opinions are based are truthful, accurate and complete, and
neither the Bank nor the Company will take any action inconsistent
therewith.
(w) No default exists, and no event has occurred which with notice or
lapse of time, or both, would constitute a default on the part of the
Company, the Bank or the Subsidiary in the due performance and observance of
any term, covenant or condition of any indenture, mortgage, deed of trust,
note, bank loan or credit agreement or any other instrument or agreement to
which the Company, the Bank or the Subsidiary is a party or by which any of
them or any of their property is bound or affected in any respect which, in
any such case, is material to the Company, the Bank and the Subsidiary; such
agreements are in full force and effect, and no other party to any
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such agreements has instituted or, to the best knowledge of the Company, the
Bank, or the Subsidiary threatened any action or proceeding wherein the
Company, the Bank or the Subsidiary would or might be alleged to be in
default thereunder.
(x) Subsequent to the date the Registration Statement is declared
effective by the Commission and prior to the Closing Date, except as
otherwise may be indicated or contemplated therein, neither the Company, the
Bank nor the Subsidiary will have issued any securities or incurred any
liability or obligation, direct or contingent, for borrowed money, except
borrowings from the same or similar sources indicated in the Prospectus in
the ordinary course of its business. For purposes of this Section 4(x),
obligations for borrowed money do not include deposits.
(y) The Company, the Bank and the Subsidiary have filed all federal,
state and local tax returns required to be filed and have made timely
payments of all taxes due and payable in respect of such returns and no
deficiency has been asserted with respect thereto by any taxing authority.
(z) To the best knowledge of the Company and the Bank, none of the
Company, the Bank or employees of the Bank has made any payment of funds of
the Company or the Bank as a loan for the purchase of the Common Stock or
made any other payment of funds prohibited by law, and no funds have been
set aside to be used for any payment prohibited by law except as disclosed
in the Prospectus with respect to the ESOP.
(aa) Prior to the Conversion, the Bank was not authorized to issue
shares of capital stock; neither the Bank nor the Company has: (i) issued
any securities within the last 18 months (except for notes to evidence other
bank loans and reverse repurchase agreements); (ii) had any material
dealings within the 12 months prior to August 12, 1997 with any member of
the NASD, or any person related to or associated with such member, other
than discussions and meetings relating to the Conversion and routine
purchases and sales of U.S. government securities; (iii) entered into a
financial or management consulting agreement except as contemplated
hereunder; and (iv) engaged any intermediary between the Agent and the
Company or the Bank in connection with the offering of Common Stock, and no
person is being compensated in any manner for such service.
(bb) Neither the Company nor the Bank is required to be registered under
the Investment Company Act of 1940, as amended.
(cc) Except for information provided in writing to the Company or Bank
by the Agent for use in the Prospectus, the Company and the Bank have not
relied upon the Agent or its legal or other advisors for any legal, tax or
accounting advice in connection with the Conversion.
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(dd) To the best knowledge of the Company and the Bank, each of them is
in compliance in all material respects with all laws, rules and regulations
relating to environmental protection, except where such failure would not
have a material adverse effect on the financial condition of the Company and
the Bank taken as a whole, and neither the Company nor the Bank has been
notified or is otherwise aware that either of them is potentially liable, or
is considered potentially liable, under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, or any similar
state law. No action, suits, regulatory investigations or other proceedings
are pending, or, to the best knowledge of the Company and the Bank,
threatened against the Company or the Bank relating to environmental
protection, nor does the Company or the Bank have any reason to believe any
such proceedings may be brought against either of them. To the best
knowledge of the Company and the Bank, no disposal, release or discharge of
hazardous or toxic substances, pollutants or contaminants, including
petroleum and gas products, as any of such terms may be defined under
federal, state or local law, has occurred on, in, at or about any of the
facilities or properties of the Company or the Bank.
(ee) No labor dispute with the employees of the Company or the Bank
exists or, to the knowledge of the Company or the Bank, is imminent.
(ff) All of the loans represented as assets on the most recent financial
statements or selected financial information of the Bank included in the
Prospectus meet or are exempt from all requirements of federal, state and
local law pertaining to lending, including, without limitation, truth in
lending (including the requirements of Regulations Z and 12 C.F.R. Part
226), real estate settlement procedures, consumer credit protection, equal
credit opportunity and all disclosure laws applicable to such loans, except
for violations which, if asserted, would not result in a material adverse
effect on the financial condition, results of operations or business of the
Company and the Bank taken as a whole.
Any certificate signed by an officer of the Bank or of the Company and
delivered to the Agent or its counsel that refers to this Agreement shall be
deemed to be a representation and warranty by the Bank or the Company to the
Agent as to the matters covered thereby with the same effect as if such
representation and warranty were set forth herein.
SECTION 5. Covenants of the Company and Bank. The Company and the Bank
---------------------------------
hereby jointly and severally covenant with you as follows:
(a) The Company has filed the Registration Statement with the
Commission. The Company will not, at any time before the Registration
Statement is declared effective by the Commission, file any amendment to
such Registration Statement without providing you and your counsel an
opportunity to review such amendment and to reasonably object in writing.
The Company will not, at any time after the date the
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Registration Statement is declared effective, file any amendment or
supplement to the Registration Statement without providing you and your
counsel an opportunity to review such amendment or to which amendment you or
your counsel shall reasonably object.
(b) The Company and the Bank will use their best efforts to cause the
Registration Statement to be declared effective by the Commission and the
Conversion Application to be approved by the OTS and will immediately upon
receipt of any information concerning the events listed below notify you:
(i) when the Registration Statement has become effective; (ii) of the
receipt of any comments from the Commission, the OTS, or any other
governmental entity with respect to the Conversion or the transactions
contemplated by this Agreement; (iii) of the request by the Commission, the
OTS, or any other governmental entity for any amendment or supplement to the
Registration Statement or for additional information; (iv) of the issuance
by the Commission, the OTS, or any other governmental entity of any order or
other action suspending the effectiveness of the Registration Statement or
the approval of the Conversion Application or the use of the Registration
Statement or the Prospectus or any other filing of the Company and the Bank
under the Conversion Regulations, the 1933 Act, 1933 Act Regulations or
other applicable law, or the threat of any such action; (v) the issuance by
the Commission, the OTS, or any other state authority of any stop order
suspending the effectiveness of the Registration Statement or the Conversion
Application or of the initiation or threat of initiation or threat of any
proceedings for such purposes; or (vi) of the occurrence of any event
mentioned in paragraph (g) below. The Company and the Bank will make every
reasonable effort to prevent the issuance by the Commission, the OTS, or any
other state authority of any such order and, if any such order shall at any
time be issued, to obtain the lifting thereof at the earliest possible time.
(c) The Company will provide you with notice of its intention to file
and reasonable time to review prior to filing any amendment or supplement to
the Conversion Application, the Holding Company Application or to the
Registration Statement or the Prospectus (including a prospectus filed
pursuant to Rule 424 which differs from the prospectus on file at the time
the Registration Statement and any amendments thereto become effective) and
will not file any such amendment or supplement to which you shall reasonably
object or which shall be reasonably objected to by your counsel in writing.
(d) The Company and the Bank will deliver to you and to your counsel two
conformed copies of each of the following documents, with all exhibits: the
Conversion Application and the Holding Company Application, as originally
filed and of each amendment or supplement thereto, and the Registration
Statement, as originally filed and each amendment thereto.
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(e) The Company and the Bank will deliver to you such number of copies
of the Prospectus, as amended or supplemented, as you may reasonably
request. The Company authorizes the Agent to use the Prospectus (as amended
or supplemented, if amended or supplemented) for any lawful manner in
connection with the sale of the Common Stock by the Agent.
(f) During the periods prior to the Closing Date, when the Prospectus is
required to be delivered and subsequent to the Closing Date, the Company and
the Bank will comply, at their own expense, with any and all terms,
conditions requirements and provisions with respect to the Conversion and
the transactions contemplated thereby imposed upon them by the Commission
and the OTS, by applicable state law or the Conversion Regulations, and by
the 1933 Act, the 1933 Act Regulations, the 1934 Act and the rules and
regulations of the Commission promulgated under such statutes, including,
without limitation, Regulation M under the 1934 Act, in each case as from
time to time in force, in accordance with the provisions hereof and the
Prospectus.
(g) If, at any time during the period when the Prospectus relating to
the Shares is required to be delivered, any event relating to or affecting
the Company or the Bank shall occur, as a result of which it is necessary or
appropriate, in the opinion of counsel for the Company and the Bank to amend
or supplement the Registration Statement or Prospectus in order to make the
Registration Statement or Prospectus not misleading in light of the
circumstances existing at the time it is delivered to a purchaser, the
Company and the Bank will, at their expense, forthwith prepare, file with
the Commission and furnish to you a reasonable number of copies of an
amendment or amendments of, or a supplement or supplements to, the
Registration Statement or Prospectus (in form and substance satisfactory to
you and your counsel after a reasonable time for review) which will amend or
supplement the Registration Statement or Prospectus so that as amended or
supplemented it will not contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances existing at the time the Prospectus
is delivered to a purchaser, not misleading.
(h) The Company and the Bank will take all necessary actions, in
cooperation with you, and furnish to whomever the Agent may direct such
information as may be required to qualify or register the Common Stock and
sale by the Company under the applicable securities or Blue Sky laws of such
jurisdictions as you and the Company and the Bank and its counsel may agree
upon; provided, however, that the Company shall not be obligated to file any
general consent to service of process or to qualify to do business in any
jurisdiction in which it is not so qualified. In each jurisdiction where
any of the Common Stock shall have been qualified or registered as above
provided, the Company will make and file such statements and reports as are
or may be required by the laws of such jurisdiction.
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(i) The Company will not sell or issue, contract to sell or otherwise
dispose of, for a period of 90 days after the date hereof, without your
prior written consent, any shares of Common Stock other than the Common
Stock or other than in connection with any plan or arrangement described in
the Prospectus.
(j) During the period during which the Company's Common Stock is
registered under the 1934 Act, the Company will furnish to its stockholders
as soon as practicable after the end of each fiscal year an annual report
(including a consolidated balance sheet and statements of consolidated
income, stockholders' equity or cash flow statement of the Company and its
subsidiaries as at the end of and for such year, certified by independent
public accountants in accordance with Regulation S-X under the 1933 Act).
(k) During the period of three years from the date hereof, the Company
will furnish to you: (i) as soon as available, a copy of each report of the
Company furnished generally to stockholders of the Company or furnished to
or filed with the Commission under the 1934 Act or any national securities
exchange or system on which any class of securities of the Company is listed
or quoted, (including, but not limited to, reports on Forms 10-K, 10-Q and
8-K and all proxy statements and annual reports to stockholders), a copy of
each other report of the Company mailed to its stockholders or filed with
the Commission or any national securities exchange or system on which any
class of securities of the Company is listed or quoted, each press release
and material news items and articles released by the Company or the Bank and
(ii) from time to time, such other public information concerning the Company
and the Bank as you may reasonably request.
(l) The Company and the Bank will use the net proceeds from the sale of
the Common Stock substantially in the manner set forth in the Prospectus
under the caption "Use of Proceeds."
(m) Other than as permitted by the Conversion Regulations, the 1933 Act,
the 1933 Act Regulations and the laws of any state in which the shares of
Common Stock are qualified for sale, neither the Company nor the Bank will
distribute any prospectus, offering circular or other offering material in
connection with the offer and sale of the Common Stock.
(n) The Company will make generally available to its security holders as
soon as practicable, but not later than 60 days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 of the regulations promulgated under the ▇▇▇▇ ▇▇▇)
covering a twelve-month period beginning not later than the first day of the
Company's fiscal quarter next following the effective date (as defined in
said Rule 158) of the Registration Statement.
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(o) The Company will file with the Commission such reports on Form SR as
may be required pursuant to Rule 463 under the 1933 Act.
(p) The Company will promptly register the Common Stock under Section
12(g) of the 1934 Act.
(q) The Company will use its best efforts to obtain approval for and
maintain quotation of the Common Stock on the SmallCap Market of the Nasdaq
Stock Market effective on or prior to the Closing Date.
(r) The Bank will maintain appropriate arrangements for depositing all
funds received from persons mailing subscriptions for or orders to purchase
Common Stock in the Subscription and Community Offering on an interest
bearing basis at the rate described in the Prospectus until the Closing Date
and satisfaction of all conditions precedent to the release of the Bank's
obligation to refund payments received from persons subscribing for or
ordering Common Stock in the Subscription and Community Offering in
accordance with the Plan as described in the Prospectus or until refunds of
such funds have been made to the persons entitled thereto in accordance with
the Plan and as described in the Prospectus. The Bank will maintain such
records of all funds received to permit the funds of each subscriber to be
separately insured by the SAIF (to the maximum extent allowable) and to
enable the Bank to make appropriate refunds of such funds in the event that
such refunds are required to be made in accordance with the Plan and as
described in the Prospectus.
(s) The Company will take such actions and furnish such information as
are reasonably requested by the Agent in order for ▇▇▇▇, ▇▇▇▇ to ensure
compliance with the NASD's "Interpretation to Free Riding and Withholding."
(t) The Bank will not amend the Plan without the Agent's prior written
consent in any manner that, in the opinion of the Agent, would affect the
sale of the Shares or the terms of this Agreement, which approval shall not
be unreasonably withheld.
(u) The Company and the Bank will use all reasonable efforts to comply
with, or cause to be complied with, the conditions precedent to the several
obligations of the Agent specified in Section 9 hereof.
SECTION 6. Payment of Expenses. The Company and the Bank jointly and
-------------------
severally agree to pay all expenses incident to the performance of the
obligations of the Company and the Bank under this Agreement, including the
following: (i) the preparation, issuance and delivery of certificates for the
Common Stock to the subscribers in the Subscription and Community Offering; (ii)
the fees and disbursements of the Company's and the Bank's counsel, accountants
and other advisors; (iii) the qualification of the Common Stock under all
applicable securities or Blue Sky laws, including filing fees and the reasonable
fees and
-17-
disbursements of counsel in connection therewith and in connection with the
preparation of a Blue Sky Survey; (iv) the printing and delivery to you in such
quantities as you shall reasonably request of copies of the Registration
Statement, the Prospectus and the Conversion Application and Holding Company
Application as originally filed and as amended or supplemented and all other
documents in connection with the Conversion and this Agreement; (v) the filing
fees incurred in connection with the review of the Registration Statement, the
Conversion Application, or any other application, form, or filing by the
Commission, the OTS and the NASD; (vi) the fees for listing the shares on the
SmallCap Market of the Nasdaq Stock Market; (vii) the fees and expenses relating
to the appraisal; (viii) the fees and expenses relating to advertising expenses,
temporary personnel expenses, conversion center expenses, investor meeting
expenses, and other miscellaneous expenses relating to the marketing by the
Agent of the Common Stock; and (ix) the cost of printing all stock certificates
and all other documents applicable to the Conversion and the fees and charges of
any transfer agent, registrar and other agent. In the event that the Agent
incurs any of the above expenses on behalf of the Company or the Bank, the
Company or the Bank, as the case may be, shall pay or reimburse the Agent for
such reasonable fees and expenses regardless of whether the Conversion is
successfully completed. The Agent will not incur any single expense exceeding
$1,000 pursuant to this paragraph without the prior authorization of the Company
or the Bank.
The Company and the Bank also shall pay or reimburse the Agent for its
legal fees not to exceed $30,000 and other out-of-pocket expenses not to exceed
$7,500. The parties hereto acknowledge that such expense limitations may also be
exceeded in the event of a material delay in the offering that requires an
update of financial information contained in the Registration Statement
(excluding any financial information contained under the caption "Recent
Developments") for a period later than March 31, 1997.
SECTION 7. Indemnification.
---------------
(a) The Bank and the Company jointly and severally agree to indemnify and
hold harmless the Agent, its officers, directors, agents, servants and employees
and each person, if any, who controls you 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 or expense whatsoever (including but not limited to
settlement expenses, subject to the limitation in the last sentence of paragraph
(c) below), joint or several, that the Agent or any of them may suffer or to
which the Agent or any of them may become subject under all applicable federal
and state laws or otherwise, and to promptly reimburse the Agent and any such
persons upon written demand for any expenses (including reasonable fees and
disbursements of counsel) incurred by the Agent or any of them in connection
with investigating, preparing or defending any actions, proceedings or claims
(whether commenced or threatened) to the extent such losses, claims, damages,
liabilities or actions: (i) arise out of or are based upon any untrue
statement, or alleged untrue statements, of any material fact contained in the
Conversion Application, Holding Company Application or the Registration
Statement (the "Applications"), (or any amendment or supplement thereto), the
Prospectus (or any
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amendment or supplement thereto), or any Blue Sky application or other
instrument or document of the Bank or based upon written information supplied by
the Bank or their representatives (including counsel) in any state or
jurisdiction to register or qualify any or all of the shares of Common Stock
under the securities laws thereof (or any amendment or supplement thereto)
(collectively, the "Blue Sky Application"), or any application or other
document, advertisement, or communication prepared, made or executed by or on
behalf of the Bank with its consent after review ("Sales Information") or based
upon written information or statements furnished or made by or on behalf of the
Bank or the Company, whether or not filed in any jurisdiction in order to
qualify or register the shares of Common Stock under the securities law thereof;
(ii) arise out of or are based upon the omission or alleged omission to state in
any of the foregoing documents or information, a material fact required to be
stated therein or necessary to make the statements herein, in light of the
circumstances under which they were made, not misleading; or (iii) arise from
any theory of liability whatsoever relating to or arising from or based upon any
Application (or any amendment or supplement thereto), the Prospectus (or any
amendment or supplement thereto), Blue Sky Application or Sales Information or
other documentation prepared by the Bank or the Company and distributed in
connection with the Offering; except to the extent such losses, claims, damages,
liabilities or actions arise out of or are based upon any untrue material
statements or alleged untrue material statements in, or material omission or
alleged material omission from an Application (or any amendment or supplement
thereto), the Prospectus (or any amendment or supplement thereto), Blue Sky
Application, or Sales Information made in reliance upon and in conformity with
information furnished in writing to the Bank by the Agent regarding the Agent
expressly for use in the Prospectus, which the Bank and the Company acknowledge
includes only the information contained in the Prospectus under the captions
"Market for Common Stock" and "The Conversion --Marketing and Underwriting
Arrangements"; nor shall indemnification be required for material oral
misstatements to a purchaser of shares of Common Stock made by the Agent, which
are not based upon information provided by the Bank orally or in writing or
based upon information contained in the Application (or any amendment or
supplement thereto), the Prospectus (or any amendment or supplement thereto),
Blue Sky Application or any Sales Information distributed in connection with the
Conversion. In addition, neither the Company nor the Bank will be liable under
the foregoing indemnification provision to the extent that any loss, claim,
damage, liability or action is found in a final judgment by a court to have
resulted from the Agent's bad faith or negligence in performing the services to
be performed by the Agent under this Agreement. Notwithstanding the foregoing,
the indemnification provided for in this paragraph (a) shall not apply to the
Bank to the extent that such indemnification by the Bank would constitute a
covered transaction under Section 23A of the Federal Reserve Act. 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 the Agent's directors, officers, employees and counsel
according to his or her normal hourly billing rates. The foregoing agreement to
indemnify shall be in addition to any liability the Company may otherwise have
to the Agent or the persons entitled to the benefit of these indemnification
provisions.
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(b) The Agent jointly and severally agrees to indemnify and hold harmless
the Bank, the Company, the directors, officers, agents, servants and employees
of each of them, and each person, if any, who controls the Bank or 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 or expense whatsoever
(including but not limited to settlement expenses), joint or several, which
they, or any of them, may suffer or to which they, or any of them, may become
subject under all applicable federal and state laws or otherwise, and to
promptly reimburse the Bank or the Company, and any such persons upon written
demand for any expenses (including reasonable fees and disbursements of counsel)
incurred by them, or any of them, in connection with investigating, preparing or
defending any actions, proceedings or claims (whether commenced or threatened)
to the extent such losses, claims, damages, liabilities or actions: (i) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in any Application (or any amendment or supplement
thereto) or the Prospectus (or any amendment or supplement thereto), or the
Sales Information; or (ii) arise out of or which are based upon the omission or
alleged omission to state in any of the foregoing documents a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided,
however, that its obligations under this Section 7(b) shall exist only if, and
only to the extent, that such untrue statement or alleged untrue statement was
made in, or such material fact or alleged material fact was omitted from an
Application (or any amendment or supplement thereto), the Prospectus (or any
amendment or supplement thereto), or the Sales Information in reliance upon and
in conformity with information furnished in writing to the Bank by the Agent or
its representatives (including counsel) expressly for use in the Prospectus,
which the Bank and the Company acknowledge includes only the information
contained in the Prospectus under the captions "Market for the Common Stock" and
"The Conversion - Marketing and Underwriting Arrangements." In addition, the
Agent will not be liable under the foregoing indemnification provision to the
extent that any loss, claim, damage, liability or action is found in a final
judgment by a court to have resulted from the Bank's bad faith or negligence.
(c) Each indemnified party shall give prompt written notice to each
indemnifying party of any action, proceeding, claim (whether commenced or
threatened), or suit instituted against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve it from any liability which it may have on account of this Section 7 and
Section 8 herein. An indemnifying party may participate at its own expense in
the defense of such action. In addition, if it so elects within a reasonable
time after receipt of such notice, an indemnifying party, jointly with any other
indemnifying parties receiving such notice, may assume the defense of such
action with counsel chosen by it and reasonably acceptable to the indemnified
parties that are defendants in such action, unless such indemnified parties
reasonably object to such assumption on the ground that there may be legal
defenses available to them that are different from or in addition to those
available to such indemnifying party. If an indemnifying party assumes the
defense of such action, the indemnifying parties shall not be liable for any
fees and expenses of
-20-
counsel for the indemnified parties incurred thereafter in connection with such
action, proceeding or claim, other than reasonable costs of investigation. In
no event shall the indemnifying parties be liable for the fees and expenses of
more than one firm of attorneys for the indemnified parties (unless an
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
of the other indemnified parties) in connection with any one action, proceeding
or claim or separate but similar or related actions, proceedings or claims in
the same jurisdiction arising out of the same general allegations or
circumstances. The indemnifying party shall not be liable for any settlement of
such action, proceeding or suit effected without its prior written consent.
(d) The agreement contained in this Section 7 and in Section 8 hereof and
the representations and warranties of the Bank and the Company set forth in this
Agreement shall remain operative and in full force and effect regardless of:
(i) any investigation made by or on behalf of the Agent or its officers,
directors or controlling persons, agents or employees or by or on behalf of the
Bank, the Company or any officers, directors or controlling persons, agents or
employees of the Bank or the Company; (ii) delivery of and payment hereunder for
the shares of Common Stock; or (iii) any termination of this Agreement.
SECTION 8. Contribution. If the indemnification of an indemnified party
------------
provided for in Section 7 of this Agreement is for any reason held
unenforceable, the Bank or the Company and the Agent agree to contribute to the
losses, claims, damages and liabilities for which such indemnification is held
unenforceable: (i) in such proportion as is appropriate to reflect the relative
benefits to the Bank or the Company, on the one hand, and the Agent, on the
other hand, of the Conversion as contemplated (whether or not the Conversion is
consummated), or (ii) if the application provided for in clause (i) is for any
reason held unenforceable, 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 Bank or the Company, on the one hand, and the Agent, on the other
hand, as well as other equitable considerations. The Bank or the Company agrees
that for the purposes of this Section 8, the relative benefits of the Bank or
the Company and the Agent of the Conversion as contemplated shall be deemed to
be in the same proportion that the total net proceeds from the Conversion
received by the Bank or the Company in connection with the Conversion bear to
the total fees paid or to be paid to the Agent under this Agreement. No person
found guilty of any fraudulent misrepresentation (within the meaning of Section
11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person who was
not found guilty of such fraudulent misrepresentation. For purposes of this
Section 8, each of the Agent's officers and directors and each person, if any,
who controls the Agent within the meaning of the 1933 Act and the 1934 Act shall
have the same rights to contribution as the Agent, and each person, if any, who
controls the Bank or the Company within the meaning of the 1933 Act and the 1934
Act, and each officer, director and each person, if any, who controls the Bank
or the Company, shall have the same rights to contribution as the Bank and the
Company. Any party entitled to contribution shall promptly after receipt of
notice of commencement
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of any action, suit, claim or proceeding against such party in respect to which
a claim for contribution may be made against another party, notify such other
party, but the omission to so notify such party shall not relieve the party from
whom contribution may be sought from any other obligation it may have hereunder
or otherwise than under this Section 8. The Bank, the Company and the Agent
agree that it would not be just and equitable if contribution pursuant to this
Section 8 were determined by pro rata allocation or by other method of
--- ----
allocation that does not take into account the equitable considerations referred
to above in this Section 8. It is expressly agreed that the Agent shall not be
required to contribute to the Bank or the Company for any loss, liability,
claim, damage or expense any amount that in the aggregate exceeds the amount
paid to the Agent under this Agreement.
SECTION 9. Conditions of Your Obligations. Your obligations hereunder, as
------------------------------
to the Common Stock to be delivered at the Closing Date, are subject, in your
discretion, to the condition that all representations and warranties and other
statements of the Bank and the Company herein are, at and as of the commencement
of the Subscription and Community Offering and at and as of the Closing Date,
true and correct in all material respects, the condition that the Bank and the
Company shall have performed in all material respects all of its obligations
hereunder to be performed on or before such dates, and to the following further
conditions:
(a) The Registration Statement shall have been declared effective
by the Commission not later than 5:30 p.m. on the August 12, 1997, or with
your consent at a later time and date; and at the Closing Date no stop
order suspending the effectiveness of the Registration Statement or the
consummation of the Conversion shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission or any state
authority, and no order or other action suspending the effectiveness of the
Prospectus or the consummation of the Conversion shall have been issued or
proceedings therefor initiated or threatened by the Commission, any state
authority, the OTS or the FDIC.
(b) At the Closing Date you shall have received:
(1) The favorable opinion, dated as of the Closing Date
addressed to the Agent and for its and its counsel's benefit, of
Breyer & Aguggia, special counsel for the Company and the Bank in
form and substance to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the Commonwealth of Pennsylvania. The Bank validly
exists as a federally chartered savings bank under the laws of
the United States of America and upon the Conversion will
become a duly organized and validly existing federally
chartered savings bank in the capital stock form of
organization.
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(ii) The Company and the Bank each has the corporate
power and authority to own, lease and operate its properties
and to conduct its business as described in the Registration
Statement and Prospectus; and the Company is duly qualified as
a foreign corporation to transact business and is in good
standing in each jurisdiction where it owns or leases any
material properties or conducts any material business.
(iii) The deposit accounts of the Bank are insured by the
SAIF up to applicable limits in accordance with applicable
regulations; and, to the best of such counsel's knowledge, no
proceeding for the termination or revocation of such insurance
is pending or threatened. The Bank is a member of the Federal
Home Loan Bank of Pittsburgh.
(iv) Upon consummation of the Conversion, the
authorized, issued and outstanding capital stock of the Company
will be within the range set forth in the Registration
Statement and the Prospectus under the caption "Capitalization"
and no shares of Common Stock have been issued prior to the
Closing Date; the shares of Common Stock to be sold in the
Subscription Offering and Community Offering have been duly and
validly authorized for issuance and, when issued and delivered
by the Company against payment therefor as set forth in the
Plan and stated on the cover page of the Prospectus, will be
duly and validly issued and fully paid and nonassessable; and
the issuance of the shares of Common Stock is not subject to
statutory preemptive rights.
(v) Upon consummation of the Conversion, all of the
issued and outstanding capital stock of the Bank will be duly
authorized and validly issued and fully paid and nonassessable,
and all such capital stock will be owned of record and, to such
counsel's knowledge, beneficially, by the Company free and
clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity.
(vi) The Company's acquisition of the Bank has been
approved by the OTS and, to the best of such counsel's
knowledge, no action has been taken or is pending or threatened
to revoke such approval.
(vii) The Conversion Application, as amended or
supplemented, if amended or supplemented, as filed with the
OTS, complied as to form in all material respects with the
requirements of the HOLA and the Conversion Regulations. The
OTS has authorized the Conversion, subject to the satisfaction
of the conditions set forth in its
-23-
approval and, to the best of such counsel's knowledge, no
action has been taken or is pending or threatened to revoke
such authorization.
(viii) The OTS' approval of the Plan remains in full force
and effect; the Bank has duly adopted a federal stock charter
and by-laws effective upon consummation of the Conversion; to
the best of such counsel's knowledge, the Company and the Bank
have conducted the Conversion in all material respects in
accordance with applicable requirements of the Conversion
Regulations, federal law, all other applicable regulations,
decisions and orders thereunder and the Plan, including all
material applicable terms, conditions, requirements and
conditions precedent to the Conversion imposed upon the Company
and the Bank by the Commission and the OTS; no order has been
issued by the Commission or the OTS to suspend the Subscription
and Community Offering and no action for such purpose has been
instituted or, to the best of such counsel's knowledge,
threatened by the Commission or the OTS; and, to the best of
such counsel's knowledge, no person has sought to obtain review
of the final action of the OTS in approving the Conversion
Application or the Plan.
(ix) This Agreement has been duly authorized, executed
and delivered by the Company and the Bank.
(x) The Registration Statement is effective under the
1933 Act and no stop order suspending effectiveness has been
issued under the 1933 Act and, to the best of such counsel's
knowledge, no proceedings therefor have been initiated or
threatened by the Commission or any state authority.
(xi) Subject to satisfaction of conditions of the OTS in
connection with its approval of the Conversion Application and
Holding Company Application, no further approval,
authorization, consent or other order of any federal or state
board or body is required in connection with the execution and
delivery of this Agreement, the issuance of the shares of
Common Stock and the consummation of the Conversion, except as
may be required under the securities or Blue Sky laws of
various jurisdictions as to which counsel need render no
opinion.
(xii) At the time the Registration Statement became
effective, the Registration Statement (as amended or
supplemented, if so amended or supplemented) (other than the
financial statements, stock valuation information and other
financial and statistical data included therein, as to which no
opinion need be rendered), complied as to form in all material
respects with the requirements of the 1933 Act and the
-24-
1933 Act Regulations and (ii) the Prospectus (other than the
financial statements, stock valuation information and other
financial and statistical data included therein, as to which no
opinion need be rendered) complied as to form in all material
respects with the requirements of the Conversion Regulations
and federal law.
(xiii) The information in the Registration Statement and
Prospectus under the captions "Risk Factors - Anti-Takeover
Provisions," "Taxation," "Regulation," "Restrictions on
Acquisition of the Holding Company," "The Conversion" and
"Description of Capital Stock of the Holding Company" to the
extent that it constitutes matters of law, summaries of legal
matters, documents or proceedings, or legal conclusions, has
been reviewed by such counsel and is correct in all material
respects.
(xiv) The terms and provisions of the Common Stock of the
Company conform in all material respects to the description
thereof contained in the Prospectus, and the form of
certificate used to evidence the shares of Common Stock is in
due and proper form.
(xv) To the best of such counsel's knowledge, there are
no material contracts, indentures, mortgages, loan agreements,
notes, leases or other instruments required to be described or
referred to in the Registration Statement and Prospectus or to
be filed as exhibits thereto other than those described or
referred to therein or filed as exhibits thereto.
(xvi) To such counsel's Actual Knowledge, the Company,
the Bank and the Subsidiary have obtained all material federal
licenses, permits and other governmental authorizations
currently required under federal banking laws for the conduct
of their respective businesses as described in the Prospectus
or filed as an exhibit to the Registration Statement, and all
such licenses, permits and other governmental authorizations
are in full force and effect, and the Company, the Bank and the
Subsidiary are in all material respects complying
therewith.
(xvii) The Plan has been duly authorized by the Board of
Directors of the Company and the Board of Directors of the Bank
and, effective upon consummation of the Conversion, the Bank
will be authorized to issue capital stock.
(xviii) To such counsel's Actual Knowledge the Company is
not in violation of its articles of incorporation or bylaws or
in default in the performance or observance of any obligation,
agreement, covenant or
-25-
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument described in the
Prospectus or filed as an Exhibit to the Registration Statement
except for such defaults or violations which would not have a
material adverse impact on the financial condition or results
of operations of the Company, the Bank and the Subsidiary taken
as a whole; the execution and delivery of this Agreement, the
incurrence of the obligations herein set forth and the
consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate action on the part
of the Company and will not conflict with or constitute a
breach of, or default under, or result in the creation or
imposition of any material lien, charge or encumbrance upon any
property or assets of the Company pursuant to any material
contract, indenture, mortgage, loan agreement, note, lease or
other instrument described in the Prospectus or filed as an
exhibit to the Registration Statement, nor will such action
result in any violation of the provisions of the articles of
incorporation or bylaws of the Company.
(xix) The Bank is not in violation of its federal mutual
charter or bylaws (and the Bank will not be in violation of its
charter in stock form upon consummation of the Conversion) or
in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any material
contract, indenture, mortgage, loan agreement, note, lease or
other instrument described in the Prospectus or filed as an
exhibit to the Registration Statement; the execution and
delivery of this Agreement, the incurrence of the obligations
herein set forth and the consummation of the transaction
contemplated herein, will not conflict with or constitute a
breach of, or default under, or result in the creation or
imposition of any material lien, charge or encumbrance upon any
property or assets of the Bank pursuant to any material
contract indenture, mortgage, loan agreement, note, lease or
other instrument, described in the Prospectus or filed as an
exhibit to the Registration Statement, nor will such action
result in any violation of the provisions of the charter or
bylaws of the Bank.
(xx) To the best of such counsels knowledge, the Company
and the Bank are not in violation of any directive from the OTS
or the FDIC to make any material change in the method of
conducting their business.
(xxi) Neither the Company nor the Bank is required to be
registered as an investment company under the Investment
Company Act of 1940.
(xxii) Based on the certificate of the inspector of
election, the Plan has been duly adopted by the required vote
of the members of the Bank.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction or the United States, to
the extent such counsel
-26-
deems proper and specified in such opinion, upon the opinion of other counsel of
good standing (providing that such counsel states that the Agent and its counsel
are justified in relying upon such specified opinion or opinions), and (B) as to
matters of fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company and the Bank and public officials.
(2) The favorable opinion, dated as of the Closing Date and
addressed to ▇▇▇▇ ▇▇▇▇ and for its benefit of __________, the Bank's
local counsel, in form and substance to the effect that
(i) The Bank has the corporate power and authority to
own, operate and lease its properties and to conduct its
business as described in the Registration Statement and
Prospectus; and the Bank is duly qualified as a foreign
corporation to transact business and is in good standing in
each jurisdiction where it owns or leases any material
properties or conducts any material business.
(ii) The Subsidiary is incorporated and validly existing
Pennsylvania corporation in good standing with full corporate
authority to own, lease and operate its properties and conduct
its business as described in the Registration Statement and
Prospectus and the activities of the Subsidiary are permitted
by the rules, regulations, resolutions and practices of the
OTS, the FDIC and any other federal or state authorities having
jurisdiction over such matters;; the Subsidiary 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 such jurisdictions would not have a
material adverse effect on the condition, financial or
otherwise, or the business of the Company, the Bank and the
Subsidiary considered as one enterprise; and all of the
outstanding stock of the Subsidiary has been duly authorized
and validly issued, fully paid and nonassessable, and such
stock is owned directly by the Bank and is free and clear of
any liens, encumbrances, claims or other restrictions.
(iii) There are no legal or governmental proceedings
pending or, to the best of such counsel's knowledge, threatened
against the Company, the Bank or the Subsidiary which are
required to be disclosed in the Registration Statement and
Prospectus, other than those disclosed therein, and all pending
legal and governmental proceedings to which the Company, the
Bank or the Subsidiary is the subject which are not disclosed
in the Registration Statement, including ordinary routine
litigation incidental to the business, are, considered in the
aggregate, not material.
-27-
(iv) The Company, the Bank and the Subsidiary have
obtained all material state and local licenses, permits and
other governmental authorizations currently required for the
conduct of their respective businesses as described in the
Registration Statement and Prospectus, and all such licenses,
permits and other governmental authorizations are in full force
and effect, and the Company, the Bank and the Subsidiary are in
all material respects complying therewith.
(v) The Subsidiary is not in violation of its articles
of incorporation or bylaws or in default in the performance or
observance of any obligation, agreement, covenant or condition
contained in any material contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the
Subsidiary is a party as a borrower, a lessee or a guarantor,
or by which the Subsidiary or any of its property may be bound
as a borrower, a lessee or a guarantor; the execution and
delivery of this Agreement, the incurrence of the obligations
herein and therein set forth and the consummation of the
transactions contemplated herein and therein have been duly
authorized by all necessary corporate action and will not
conflict with or constitute a breach of, or default under, or
result in the creation or imposition of any material lien,
charge or encumbrance upon any property or assets of the
Subsidiary pursuant to any material contract, indenture,
mortgage, loan agreement, note, lease or other instrument to
which the Subsidiary is a party as a borrower, a lessee or a
guarantor, or by which it may be bound as a borrower, a lessee
or a guarantor, or to which any of the property or assets of
the Subsidiary is subject, nor will such action result in any
violation of the provisions of the articles of incorporation or
bylaws of the Subsidiary.
(vi) To the best of such counsel's knowledge, the
Company, the Bank and the Subsidiary have good and marketable
title to all properties and assets which are material to the
business of the Company, the Bank and the Subsidiary,
respectively, and to those properties and assets described in
the Registration Statement as owned by them, free and clear of
all liens, charges, encumbrances or restrictions, except such
as are described in the Registration Statement (including the
Liquidation Account) or are not material in relation to the
business of the Company, the Bank and the Subsidiary considered
as one enterprise.
(3) the letter of special counsel for the Company and the
Bank addressed to the Agent, dated the Closing Date, in form and
substance to the effect that:
During the preparation of the Conversion Application, the
Registration Statement and the Prospectus, such counsel participated
in conferences with management of and the independent public
accountants for the Company and
-28-
the Bank. Based upon such conferences and a review of corporate
records of the Company and the Bank as such counsel conducted in
connection with the preparation of the Registration Statement,
nothing has come to their attention that would lead them to believe
that, the Registration Statement, the Prospectus, or any amendment or
supplement thereto (other than the financial statements, notes to
financial statements, financial tables and other financial and
statistical data and stock valuation information included therein, as
to which such counsel need express no view), contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading.
(4) The favorable opinion, dated as of the Closing Date, of Elias,
Matz, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., your counsel, with respect to such
matters as you may reasonably require. Such opinion may rely upon the
opinions of counsel to the Bank and the Company, and as to matters of
fact, upon certificates of officers and directors of the Company and
the Bank delivered pursuant hereto or as such counsel shall
reasonably request.
(c) At the Closing Date, you shall receive a certificate of the Chief
Executive Officer and the Chief Financial Officer of the Company and of the
Chief Executive Officer and Chief Financial Officer of the Bank, dated as of
such Closing Date, to the effect that: (i) since the respective dates as of
which information is given in the Registration Statement and the Prospectus,
there has been no material adverse change in the financial condition, results of
operations or business of the Company and the Bank considered as one enterprise,
whether or not arising in the ordinary course of business; (ii) the
representations and warranties in Section 4 of this Agreement are true and
correct with the same force and effect as though expressly made at and as of the
Closing Date; (iii) the Company and the Bank have complied with all agreements
and satisfied all conditions on their part to be performed or satisfied at or
prior to the Closing Date and will comply with all obligations to be satisfied
by them after the Conversion; (iv) no stop order suspending the effectiveness of
the Registration Statement has been initiated or threatened by the Commission or
any state authority; and (v) no order suspending the Subscription and Community
Offering, the Conversion, the acquisition of all of the shares of the Bank by
the Company or the effectiveness of the Prospectus has been issued and no
proceedings for that purpose have been initiated or threatened by the
Commission, any state authority, the FDIC or the OTS.
(d) Prior to and at the Closing Date: (i) there shall have been no
material adverse change in the financial condition, results of operations or
business of the Company or the Bank independently, or of the Company or the
Bank, considered as one enterprise, from that as of the latest dates as of which
such condition is set forth in the Prospectus, except as referred to therein;
(ii) there shall have been no material transaction entered into by the Company
and the Bank, considered as one enterprise, from the latest date as of which the
financial condition of the Company or the Bank is set forth in the Prospectus
other than
-29-
transactions referred to or contemplated therein; (iii) the Company or the Bank
shall not have received from the FDIC or the OTS any direction (oral or written)
to make any material change in the method of conducting their business with
which it has not complied (which direction, if any, shall have been disclosed to
the Agent) or which materially and adversely would affect the financial
condition, results of operations or business of the Company or the Bank; (iv)
neither the Company nor the Bank shall have been in default (nor shall an event
have occurred which, with notice or lapse of time or both, would constitute a
default) under any provision of any agreement or instrument relating to any
outstanding indebtedness; (v) no action, suit or proceedings, at law or in
equity or before or by any federal or state commission, board or other
administrative agency, shall be pending or, to the knowledge of the Company or
the Bank, threatened against the Company or the Bank or affecting any of their
properties wherein an unfavorable decision, ruling or finding would materially
and adversely affect the financial condition, results of operations or business
of the Company or the Bank, taken as a whole; and (vi) the shares of Common
Stock shall have been qualified or registered for offering and sale under the
securities or blue sky laws of the jurisdictions as set forth in the Preliminary
Blue Sky Survey of the law firm of Elias, Matz, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
(e) Concurrently with the execution of this Agreement, the Agent, the
Company and the Bank shall receive a letter from S.R. ▇▇▇▇▇▇▇▇▇, ▇.▇. dated the
date hereof and addressed to the Agent: (i) confirming that S.R. ▇▇▇▇▇▇▇▇▇, ▇.▇.
is a firm of independent public accountants with respect to the Company and the
Bank within the meaning of the 1933 Act and the 1933 Act Regulations and stating
in effect that in its opinion the financial statements of the Bank for the years
ended December 31, 1996 and 1995, as are included in the Prospectus and, with
respect to such audited financial statements covered by its opinion included
therein, comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act, the 1934 Act and the related published
rules and regulations of the Commission thereunder and generally accepted
accounting principles; (ii) stating in effect that, on the basis of certain
agreed upon procedures (but not an examination in accordance with generally
accepted auditing standards) consisting of a reading of the latest available
unaudited interim financial statements of the Bank prepared by the Bank, a
reading of the minutes of the meetings of the Board of Directors and members of
the Bank and consultations with officers of the Bank responsible for financial
and accounting matters, nothing came to its attention which caused it to believe
that: during the period from that date of the latest audited financial
statements included in the Prospectus to a specified date not more than five
business days prior to the date hereof, there was any material increase in
borrowings by the Company or the Bank (increases in borrowings (which shall not
include deposits) will not be deemed material if such increase in total
borrowings outstanding does not exceed $1.0 million); or there was any material
decrease in surplus and reserves of the Bank at the date of such letter as
compared with amounts shown in the latest audited statement of condition
included in the Prospectus or there was any material decrease in net income or
net interest income of the Bank for the number of full months commencing
immediately after the period covered by the latest audited income statement
included in the Prospectus and ended on the latest month end
-30-
prior to the date of the Prospectus or in such letter as compared to the
corresponding period in the preceding year; and (iii) stating that, in addition
to the examination referred to in its opinion included in the Prospectus and the
performance of the procedures referred to in clause (ii) of this subsection (e),
it has compared with the general accounting records of the Company and/or the
Bank, as applicable, which are subject to the internal controls of the Company's
and/or the Bank's, as applicable, accounting system and other data prepared by
the Company and/or the Bank, as applicable, directly from such accounting
records, to the extent specified in such letter, such amounts and/or percentages
set forth in the Prospectus as you may reasonably request; and they have found
such amounts and percentages to be in agreement therewith (subject to rounding).
(f) At the Closing Date, you shall receive a letter from S.R. ▇▇▇▇▇▇▇▇▇,
▇.▇., dated the Closing Date, addressed to the Agent, confirming the statements
made by it in the letter delivered by it pursuant to subsection (e) of this
Section 9, the "specified date" referred to in clause (ii) (C) thereof to be a
date specified in such letter, which shall not be more than five business days
prior to the Closing Date.
(g) At the Closing Date, you shall have received a letter from ▇▇▇▇▇▇▇
Financial, dated as of the Closing Date, confirming its appraisal.
(h) At the Closing Date, your counsel shall have been furnished with such
documents and opinions as they may reasonably require for the purpose of
enabling them to pass upon the sale of the shares as herein contemplated and
related proceedings or in order to evidence the accuracy or completeness of any
of the representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company or the
Bank in connection with the Conversion and the sale of the shares of Common
Stock as herein contemplated shall be satisfactory in form and substance to you
and your counsel.
(i) The Company and the Bank shall not have sustained since the date of
the latest audited financial statements included in the Registration Statement
and Prospectus any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Registration Statement or otherwise provided to the
Agent in writing and in any such case described above, is in your judgment
sufficiently material and adverse as to make it impracticable or inadvisable to
proceed with the Subscription and Community Offering or the delivery of the
Common Stock on the terms and in the manner contemplated in the Prospectus.
(j) Subsequent to the date hereof, there shall not have occurred any of
the following: (i) a suspension or limitation in trading in securities generally
on the New York Stock Exchange or American Stock Exchange or in the over-the-
counter market, or quotations halted generally on the Nasdaq Stock Market, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices for securities have been required
-31-
by either of such exchanges or the NASD or by order of the commission or any
other governmental authority; (ii) a general moratorium on the operation of
commercial banks, federal savings and loan associations or savings and loan
associations in Pennsylvania or a general moratorium on the withdrawal of
deposits from commercial banks, federal savings and loan associations or savings
and loan associations in Pennsylvania declared by either federal or Pennsylvania
authorities; (iii) the engagement by the United States in hostilities which have
resulted in the declaration, on or after the date hereof, of a national
emergency or war; or (iv) a material decline in the price of equity or debt
securities if the effect of such a decline, in your judgment, makes it
impracticable or inadvisable to proceed with the Subscription and Community
Offering or the delivery of the shares of Common Stock on the terms and in the
manner contemplated in the Prospectus.
If any of the conditions specified in this Section 9 shall not have been
fulfilled when and as required by this Agreement, or by March 31, 1998, this
Agreement and all of your obligations hereunder may be canceled by you by
notifying the Bank of such cancellation in writing or by telegram at any time at
or prior to the Closing Date, and any such cancellation shall be without
liability of any party to any other party except as otherwise provided in
Sections 1, 6, 7 and 8 hereof. Notwithstanding the above, if this Agreement is
canceled pursuant to this paragraph, the Bank and the Company jointly and
severally agree to reimburse you for all of your out-of-pocket expenses
reasonably incurred by you, including any legal fees to be paid to the Agent's
counsel which shall not exceed $30,000, and an advisory and administrative
services fee of $25,000 in connection with the preparation of the Registration
Statement and the Prospectus, and in contemplation of the proposed Subscription
and Community Offering.
SECTION 10. Termination.
-----------
(a) In the event the Company fails to sell all of the Common Stock within
the period specified, and in accordance with the provisions of the Plan or as
required by the Conversion Regulations, this Agreement shall terminate upon
refund by the Bank to each person who has subscribed for or ordered any of the
Common Stock the full amount which it may have received from such person,
together with interest as provided in the Prospectus, and no party to this
Agreement shall have any obligation to the other hereunder, except for payment
by the Bank and/or the Company as set forth in Sections 1, 6, 7 and 8 hereof.
(b) This Agreement may be terminated by the Agent, with respect to the
Agent's obligations hereunder, by notifying the Company at any time at or prior
to the Closing Date, if any of the conditions specified in Section 9 hereof
shall not have been fulfilled when and as required by this Agreement or if the
Conversion has not been completed by March 31, 1998.
SECTION 11. Survival. The respective indemnities, agreements,
--------
representations, warranties and other statements of the Bank, the Company and
you, as set forth in this Agreement, shall remain in full force and effect,
regardless of any investigation (or any
-32-
statement as to the results thereof) made by or on behalf of you or any of your
officers or directors of any person controlling you, or the Bank or the Company,
or any officer, director or person controlling the Bank or the Company, and
shall survive termination of this Agreement and the receipt or delivery of any
payment for the shares of Common Stock.
SECTION 12. Miscellaneous. Notices hereunder, except as otherwise
-------------
provided herein, shall be given in writing or by telegraph, addressed (a) to the
Agent at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (Attention: ▇▇▇ ▇.
▇▇▇▇▇▇▇), with copies to Elias, Matz, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ L.L.P., ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇ (Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.) and (b)
to the Bank and the Company at the Bank's principal office (Attention: ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇), President and Chief Executive Officer), with a copy to Breyer &
Aguggia, ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇,
(Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.).
This Agreement is made solely for the benefit of and will be binding upon
the parties hereto and their respective successors and the controlling persons,
directors and officers referred to in Section 7 hereof, and no other person will
have any right or obligation hereunder. The term "successors" shall not include
any purchaser of any of the shares of Common Stock.
This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Pennsylvania.
Time shall be of the essence of this Agreement.
This Agreement may be signed in various counterparts which together will
constitute one agreement.
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If the foregoing correctly sets forth the arrangement among the Company,
the Bank and the Agent, please indicate acceptance thereof in the space provided
below for that purpose, whereupon this letter and your acceptance shall
constitute a binding agreement.
SHS BANCORP, INC. SPRING HILL SAVINGS BANK, F.S.B.
By:
---------------------------------
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------ President and Chief Executive
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Officer
President and Chief Executive
Officer
Accepted as of the date first above
written.
▇▇▇▇, ▇▇▇▇ & CO., INC.
By:
------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Executive Officer
-34-