369,750 - 500,250 Shares
(subject to increase up to 575,288 shares
in the event of an oversubscription)
STEELTON BANCORP, INC.
(a Pennsylvania corporation)
COMMON STOCK
($0.10 Par Value Per Share)
Subscription Price: $10.00 Per Share
AGENCY AGREEMENT
_______________ , 1999
Capital Resources, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
Suite 200
Washington, D.C. 20036
Ladies and Gentlemen:
Steelton Bancorp, Inc. (the "Company") and Mechanics Savings and Loan,
FSA, a federally chartered mutual savings and loan association (the
"Association"), with its deposit accounts insured by the Savings Association
Insurance Fund ("SAIF") administered by the Federal Deposit Insurance
Corporation ("FDIC"), hereby confirm their agreement with Capital Resources,
Inc. ("Capital Resources") as follows:
SECTION 1. The Offering. The Association, in accordance with and
pursuant to its plan of conversion adopted by the Board of Directors of the
Association (the "Plan"), intends to be converted from a federally chartered
mutual savings and loan association to a federally chartered stock savings and
loan association and will sell all of its issued and outstanding stock to the
Company. The Company will offer and sell its common stock (the "Common Stock")
in a subscription offering ("Subscription Offering") to (1) depositors of the
Association as of December 31, 1997 ("Eligible Account Holders"), (2) tax
qualified employee benefit plans of the Association, (3) depositors of the
Association as of March 31, 1999 ("Supplemental Eligible Account Holders"), and
(4) certain other members of the Association ("Other Members") pursuant to
rights to subscribe for shares of Common Stock (the "Shares"). Subject to the
prior subscription rights of the above-listed parties, and, depending on market
conditions, the Company may also offer the Common Stock for sale to persons
residing in communities near the Association's Offices in a community offering
and syndicated community offering (the "Community Offering") conducted after the
Subscription Offering and the Company may offer its Common Stock for sale in a
public offering to selected persons (the "Public Offering,") conducted after the
Community Offering. The Public Offering, the Community Offering and Subscription
Offering are refereed to collectively as the "Offering," and all such Offerees
being referred to in the aggregate as "Eligible Offerees." Shares may also be
sold in the Public Offering by a selling group of broker-dealers organized and
managed by Capital Resources. It is acknowledged that the purchase of Shares in
the Offering is subject to maximum and minimum purchase limitations as described
in the Plan and that the Company may reject in whole or in part any
subscriptions received from subscribers in the Public Offering or Direct
Community Offering.
The Company and the Association desire to retain Capital Resources to
assist the Company with its sale of the Shares in the Offering. By and through
this Agreement, the Company and the Association confirm the retention of Capital
Resources to assist the Company and the Association during the Offering.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form SB-2 (File No.___________)
containing an offering prospectus relating to the Offering for the registration
of the Shares under the Securities Act of 1933, as amended (the "1933 Act"), and
has filed such amendments thereto, if any, and such amended prospectuses as may
have been required to the date hereof (the "Registration Statement"). The
prospectus, as amended, included in the Registration Statement at the time it
initially becomes effective, is hereinafter called the "Offering Prospectus",
except that if any prospectus is filed by the Company pursuant to Rule 424(b) or
(c) of the rules and regulations of the Commission under the 1933 Act (the "1933
Act Regulations") differing from the offering prospectus included in the
Registration Statement at the time it initially becomes effective, the term
"Offering Prospectus" shall refer to the offering prospectus filed pursuant to
Rule 424(b) or (c) from and after the time said offering prospectus is filed
with or mailed to the Commission for filing.
In accordance with Title 12, Part 563b of the Code of Federal
Regulations (the "Conversion Regulations"), the Association has filed with the
Office of Thrift Supervision (the "OTS") an Application for Approval of
Conversion on Form AC (the "Conversion Application") including the Offering
Prospectus and has filed such amendments thereto, if any, as may have been
required by the OTS. The Conversion Application has been approved by the OTS.
The Company has filed with the OTS its application on Form H-(e)1-S (the
"Holding Company Application") to acquire the Association under the Home Owners'
Loan Act, as amended (12 U.S.C. '1467a) ("HOLA").
SECTION 2. Retention of Capital Resources; Compensation; Sale and Delivery
of the Shares. Subject to the terms and conditions herein set forth, the Company
and the Association hereby appoint Capital Resources as their agent to advise
and assist the Company and the Association with the Company's sale of the Shares
in the Offering.
On the basis of the representations, warranties, and agreements herein
contained, but subject to the terms and conditions herein set forth, Capital
Resources accepts such appointment and agrees to consult with and advise the
Company and the Association as to matters relating to the Conversion and the
Offering. It is acknowledged by the Company and the Association that Capital
Resources shall not be required to purchase any Shares and shall not be
obligated to take any action which is inconsistent with any applicable laws,
regulations, decisions or orders. If requested by the Company or the
Association, Capital Resources also may assemble and manage a selling group of
broker dealers which are members of the National Association of Securities
Dealers, Inc. (the "NASD") to participate in the solicitation of purchase orders
for Shares under a selected dealers' agreement ("Selected Dealers' Agreement").
A form of Selected Dealers' Agreement is annexed as Exhibit B. The obligations
of Capital Resources pursuant to this Agreement shall terminate upon the
completion or termination or abandonment of the Plan by the Company or the
Association, or if the terms of the Conversion are substantially amended so as
to materially and adversely change the role of Capital Resources, but in no
event later than 45 days after the completion of the Offering (the "End Date").
All fees due to Capital Resources but unpaid will be payable to Capital
Resources in next day funds at the earlier of the Closing Date (as hereinafter
defined) or the End Date. In the event the Offering is extended beyond the End
Date, the Company, the Association and Capital Resources may agree to renew this
Agreement under mutually acceptable terms.
In the event the Company is unable to sell a minimum of $3,697,500 of
Common Stock within the period herein provided, this Agreement shall terminate,
and the Company shall refund to any persons who have subscribed for any of the
Shares, the full amount which it may have received from them plus accrued
interest as
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set forth in the Offering Prospectus; and none of the parties to this Agreement
shall have any obligation to the other parties hereunder, except as set forth in
this Section 2 and in Sections 7, 9 and 10 hereof.
In the event the closing does not occur, the Conversion is terminated
or otherwise abandoned, or the terms of the Conversion are substantially amended
so as to materially and adversely change the role of Capital Resources, Capital
Resources shall be entitled to retain any compensation already received for
consulting services prior to the closing, and shall be reimbursed for all
reasonable legal fees and actual, accountable out-of-pocket expenses subject to
the limits set forth in paragraph (b) below for rendering financial advice to
the Association concerning the structure of the Conversion, preparing a market
and financial analysis, performing due diligence and assisting in the
preparation of the Application for Conversion and the Registration Statement,
which shall be paid upon such termination, abandonment or amendment or within
five days of such event.
If all conditions precedent to the consummation of the Conversion,
including, without limitation, the sale of all Shares required by the Plan to be
sold, are satisfied, the Company agrees to issue or have issued the Shares sold
in the Offering and to release for delivery certificates for such Shares on the
Closing Date (as hereinafter defined) against payment to the Company by any
means authorized by the Plan, provided, however, that no certificates shall be
released for such shares until the conditions specified in Section 7 hereof
shall have been complied with to the reasonable satisfaction of Capital
Resources and its counsel. The release of Shares against payment therefor shall
be made on a date and at a time and place acceptable to the Company, the
Association and Capital Resources. The date upon which the Company shall release
or deliver the Shares sold in the Offering, in accordance with the terms hereof,
is herein called the "Closing Date."
Capital Resources shall receive the following compensation for its
services hereunder:
(a) a marketing fee in the amount of $75,000 (of which $15,000 was paid on
execution of the engagement letter dated January 25, 1999 and $15,000 was paid
on regulatory approval of the Conversion Application for consulting work
performed prior to the Offering, and the balance will be paid upon closing of
the Conversion).
(b) Capital Resources shall be reimbursed for all reasonable
out-of-pocket expenses, including, but not limited to, legal fees, travel,
communications and postage, incurred by it whether or not the Conversion is
successfully completed as set forth in Section 7 hereof. Reimbursement for
Capital Resources' legal and other expenses shall not exceed $25,000, unless
otherwise approved by the Association. Capital Resources shall be reimbursed
promptly for all out-of-pocket expenses upon receipt by the Company or the
Association of a monthly itemized bill summarizing such expenses since the date
of the last bill, if any, to the date of the current bill.
(c) In the event other broker-dealers are assembled and managed by Capital
Resources to participate in the sale of the shares pursuant to a Selected
Dealers' Agreement or other arrangement, the Company and the Association will
enter into a separate agreement for the payment of selected dealers'
commissions.
All subscription funds received by Capital Resources (and if by check
shall be made payable to the Company) or by other NASD registered broker-dealers
soliciting subscriptions (if any) shall be transmitted (either by U.S. Mail or
similar type of transmittal) to the Company by noon of the following business
day.
SECTION 3. Offering Prospectus; the Offering. The Shares are to be offered
in the Offering at the Purchase Price as set forth on the cover page of the
Offering Prospectus.
SECTION 4. Representations and Warranties. The Company and the Association
jointly and severally represent and warrant to Capital Resources as follows:
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(a) The Registration Statement was declared effective by the Commission on
__________, 1999. At the time the Registration Statement, including the Offering
Prospectus contained therein (including any amendment or supplement thereto),
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, including the Offering Prospectus contained therein
(including any amendment or supplement thereto), any Blue Sky Application or any
Sales Information (as such terms are defined previously herein or in Section 8
hereof) authorized by the Company or the Association for use in connection with
the Offering 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) or (c) Offering Prospectus was
filed with the Commission for filing and at the Closing Date referred to in
Section 2, the Registration Statement including the Offering Prospectus
contained therein (including any amendment or supplement thereto), any Blue Sky
Application or any Sales Information (as such terms are defined previously
herein or in Section 8 hereof) authorized by the Company or the Association for
use in connection with the 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 the 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 or Offering Prospectus made in reliance upon and in
conformity with written information furnished to the Company or the Association
by Capital Resources expressly regarding Capital Resources for use under the
caption "The Offering-Plan of Distribution/Marketing Arrangements."
(b) The Conversion Application, including the Offering Prospectus, was
approved by the OTS on _____________, 1999. At the time of the approval of the
Conversion Application, including the Offering Prospectus, by the OTS (including
any amendment or supplement thereto) and at all times subsequent thereto until
the Closing Date, the Conversion Application, including the Offering Prospectus,
will comply in all material respects with the Conversion Regulations and any
other rules and regulations of the OTS. The Conversion Application, including
the Offering Prospectus (including any amendment or supplement thereto), does
not include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that representations or warranties in this
Section 4(b) shall not apply to statements or omissions made in reliance upon
and in conformity with written information furnished to the Association by
Capital Resources expressly regarding Capital Resources for use in the Offering
Prospectus contained in the Conversion Application under the caption "The
Offering-Plan of Distribution/Marketing Arrangements."
(c) The Company has filed with the OTS the Holding Company Application and
will have received from the OTS, as of the Closing Date, approval of its
acquisition of the Association.
(d) No order has been issued by the OTS, the Commission, the FDIC (and
hereinafter reference to the FDIC shall include the BIF), or to the best
knowledge of the Company or the Association any State regulatory or Blue Sky
authority, preventing or suspending the use of the Offering 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 Association or the Company, pending or threatened.
(e) At the Closing Date referred to in Section 2, the Plan will have been
adopted by the Board of Directors of both the Company and the Association, the
Company and the Association will have completed in all material respects the
conditions precedent to the Conversion and the offer and sale of the Shares will
have been conducted in all material respects in accordance with the Plan, the
Conversion Regulations and all other applicable laws, regulations, decisions and
orders, including all terms, conditions, requirements and provisions
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precedent to the Conversion imposed upon the Company or the Association by the
OTS, the Commission or any other regulatory authority and in all materials
respects in the manner described in the Offering Prospectus. At the Closing
Date, no person will have sought to obtain review of the final action of the
OTS, to the knowledge of the Company or the Association, in approving the Plan
or in approving the Conversion or the Company's application to acquire all of
the capital stock and control of the Association pursuant to the HOLA or any
other statute or regulation.
(f) The Association is now a duly organized and validly existing
federally chartered savings and loan association in mutual form of organization
and upon the Conversion will become a duly organized and validly existing
federally chartered savings and loan association 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 and the Offering
Prospectus; the Company and the Association have obtained all material licenses,
permits and other governmental authorizations currently required for the conduct
of their respective businesses; all such licenses, permits and governmental
authorizations are in full force and effect, and the Company and the Association
are in all material respects complying with all laws, rules, regulations and
orders applicable to the operation of their businesses; and the Association is
in good standing under the laws of the United States and is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which its ownership of property or leasing of properties or the
conduct of its business requires such qualification, unless the failure to be so
qualified in one or more of such jurisdictions would not have a material adverse
effect on the condition, financial or otherwise, or the business, operations or
income of the Association. The Association does not own equity securities or any
equity interest in any other business enterprise except as described in the
Offering Prospectus. Upon the completion of the Conversion of the Association to
a federally chartered stock savings bank pursuant to the Plan, (i) all of the
authorized and outstanding capital stock of the Association will be owned by the
Company, and (ii) the Company will have no direct subsidiaries other than the
Association. 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 in compliance with the 1933 Act Regulations or the OTS's
resolutions or letters of approval. All terms, conditions, requirements and
provisions with respect to the Conversion imposed by the Commission, the OTS and
the FDIC, if any, will have been complied with by the Company and the
Association 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.
(g) 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
Offering Prospectus, and the Company is qualified to do business as a foreign
corporation in any jurisdiction in which the conduct of its business requires
such qualification, except where the failure to so qualify would not have a
material adverse effect on the business of the Company.
(h) The Association is a member of the Federal Home Loan Bank of Pittsburgh
("FHLBPB"); and the deposit accounts of the Association are insured by the FDIC
up to the applicable limits. Upon consummation of the Conversion, the
liquidation account for the benefit of Eligible Account Holders and Supplemental
Eligible Account Holders will be duly established in accordance with the
requirements of the Conversion Regulations.
(i) The Company and the Association have good and marketable title to all
assets owned by them which are material to the business of the Company and the
Association and to those assets described in the Registration Statement and
Offering Prospectus as owned by them, free and clear of all liens, charges,
encumbrances or restrictions, except such as are described in the Registration
Statement and Offering Prospectus or are not materially significant or important
in relation to the business of the Company and the Association; and
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all of the leases and subleases material to the business of the Company and the
Association under which the Company or the Association holds properties,
including those described in the Registration Statement and Offering Prospectus,
are in full force and effect.
(j) The Association has received an opinion of its counsel, ▇▇▇▇▇▇▇,
Spidi, Sloane & ▇▇▇▇▇, P.C., with respect to the federal income tax consequences
of the Conversion of the Association from mutual to stock form, the acquisition
of the capital stock of the Association by the Company, the sale of the Shares,
and the reorganization of the Association as described in the Registration
Statement and the Offering Prospectus and an opinion from ▇▇▇▇▇▇▇, Spidi, ▇▇▇▇▇▇
& ▇▇▇▇▇, P.C. with respect to the Commonwealth of Pennsylvania income tax
consequences of the proposed transaction; all material aspects of the opinions
of ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇, P.C. are accurately summarized in the
Offering Prospectus; and the facts and representations upon which such opinions
are based are truthful, accurate and complete, and neither the Association nor
the Company will take any action inconsistent therewith.
(k) The Company and the Association 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 Association to the Company and Shares to be sold
by the Company as provided herein and as described in the Offering Prospectus.
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 Association and this Agreement has been validly executed
and delivered by the Company and the Association and is the valid, legal and
binding agreement of the Company and the Association enforceable in accordance
with its terms (except as the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium, reorganization or similar laws relating to
or affecting the enforcement of creditors' rights generally or the rights of
creditors of savings and loan holding companies, the accounts of whose
subsidiaries are insured by the FDIC or by general equity principles regardless
of whether such enforceability is considered in a proceeding in equity or at
law, and except to the extent, if any, that the provisions of Sections 9 and 10
hereof may be unenforceable as against public policy or pursuant to Section 23A
of the Federal Reserve Act).
(l) The Company and the Association have conducted their businesses in
compliance in all material respects with all applicable federal and state laws,
rules, and regulations of the OTS, the FDIC, and the Commission. The Company and
the Association are not in violation of any directive which has been delivered
to the Company or the Association, or of which management of the Company or the
Association has actual knowledge from the OTS, the Commission, 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 OTS, the Commission and the FDIC) and except as set
forth in the Registration Statement and the Offering Prospectus, there is no
suit or proceeding or, to the knowledge of the Company or the Association,
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
Association, 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 Registration
Statement or which might result in any material adverse change in the condition
(financial or otherwise), earnings, capital, properties, business affairs or
business prospects of the Company or the Association, considered as one
enterprise, or which would materially affect their properties and assets.
(m) The financial statements which are included in the Registration
Statement and which are part of the Offering Prospectus fairly present the
financial condition, results of operations, retained earnings and cash flows of
the Association at the respective dates thereof and for the respective periods
covered thereby, and comply as to form in all material respects with the
applicable accounting requirements of Title 12 of the Code of Federal
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Regulations and generally accepted accounting principles ("GAAP") (including
those requiring the recording of certain assets at their current market value).
Such financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied through the periods
involved, present fairly in all material respects the information required to be
stated therein and are consistent with the most recent financial statements and
other reports filed by the Association with the OTS and the FDIC, except that
accounting principles employed in such filings 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 Offering Prospectus present fairly the information shown therein
on a basis consistent with the audited and unaudited financial statements, if
any, of the Association included in the Offering Prospectus, and as to the pro
forma adjustments, the adjustments made therein have been properly applied on
the basis described therein.
(n) Since the respective dates as of which information is given in the
Registration Statement and the Offering Prospectus, except as may otherwise be
stated therein: (i) there has not been any material adverse change in the
financial condition of the Company or the Association, or of the Company and the
Association considered as one enterprise, or in the earnings, capital,
properties, business affairs or business prospects of the Company or the
Association, whether or not arising in the ordinary course of business, (ii)
there has not been (A) an increase of greater than $_________ in the long term
debt of the Association or (B) an increase of $_________, in non performing
assets (consisting of accruing loans past due 90 days or more, non-accruing
loans and foreclosed assets) or (C) a decrease of $__________ or more in the
allowance for loan losses or (D) any decrease in total equity or (E) a decrease
in net income from December 31, 1998 to date when compared to the like period in
1998 or (F) any change in total assets of the Association in an amount greater
than $____________ (excluding the proceeds of stock subscriptions) or (H) any
other material change which would require an amendment to the Offering
Prospectus; (iii) the Association has not issued any securities or incurred any
liability or obligation for borrowing other than in the ordinary course of
business; (iv) there have not been any material transactions entered into by the
Company or the Association, except with respect to those transactions entered
into in the ordinary course of business; and (v) the capitalization,
liabilities, assets, properties and business of the Company and the Association
conform in all material respects to the descriptions thereof contained in the
Offering Prospectus, and neither the Company nor the Association have any
material liabilities of any kind, contingent or otherwise, except as set forth
in the Offering Prospectus.
(o) As of the date hereof and as of the Closing Date, neither the
Company nor the Association is in violation of its certificate of incorporation
or charter, respectively, or its bylaws (and the Association will not be in
violation of its charter or bylaws in capital stock form as of the Closing Date)
or in default in the performance or observance of any material obligation,
agreement, covenant, or condition contained in any contract, lease, loan
agreement, indenture or other instrument to which it is a party or by which it,
or any of its property may be bound which would result in a material adverse
change in the condition (financial or otherwise), earnings, capital, properties,
business affairs or business prospects of the Company or Association or which
would materially affect their properties or assets. The consummation of the
transactions herein contemplated will not (i) conflict with or constitute a
breach of, or default under, the certificate of incorporation and bylaws of the
Company, the charter and bylaws of the Association (in either mutual or capital
stock form), or any material contract, lease or other instrument to which the
Company or the Association has a beneficial interest, or any applicable law,
rule, regulation or order; (ii) violate any authorization, approval, judgment,
decree, order, statute, rule or regulation applicable to the Company or the
Association; or (iii) with the exception of the Liquidation Account established
in the Conversion, result in the creation of any material lien, charge or
encumbrance upon any property of the Company or the Association.
(p) 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 or the
Association, in the due performance and observance of any
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term, covenant or condition of any indenture, mortgage, deed of trust, note,
Association loan or credit agreement or any other instrument or agreement to
which the Company or the Association 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 cases,
is material to the Company or the Association; such agreements are in full force
and effect; and no other party to any such agreements has instituted or, to the
best knowledge of the Company or the Association, threatened any action or
proceeding wherein the Company or the Association would or might be alleged to
be in default thereunder.
(q) Upon consummation of the Conversion, the authorized, issued and
outstanding equity capital of the Company will be within the range 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; the Shares 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 Offering Prospectus, will be duly and validly issued and fully
paid and non-assessable; the issuance of the Shares will not violate any
preemptive rights; the Shares will be issued in conformity with the provisions
of the Plan, the Offering Prospectus, and the Conversion Regulations; and the
terms and provisions of the Shares will conform in all material respects to the
description thereof contained in the Registration Statement and the Offering
Prospectus. Upon the issuance of the Shares, good title to the Shares 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.
(r) No approval of any regulatory or supervisory or other public authority
is required in connection with the execution and delivery of this Agreement or
the issuance of the Shares, except for the approval of the OTS, the Commission
and any necessary qualification or registration under the securities or blue sky
laws of the various states in which the Shares are to be offered and as may be
required under the regulations-of the National Association of Securities
Dealers, Inc. ("NASD").
(s) ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, which has certified the financial statements of
the Association included in the Registration Statement, are with respect to the
Company and the Association independent public accountants within the meaning of
the Code of Professional Ethics of the American Institute of Certified Public
Accountants and Title 12 of the Code of Federal Regulations, Section 571.2(c)(3)
and the 1933 Act and the 1933 Act Regulations.
(t) The Company and the Association have (subject to all properly obtained
extensions) timely filed all required federal and state tax returns, have paid
all taxes that have become due and payable in respect of such returns, have made
adequate reserves for similar future tax liabilities and no deficiency has been
asserted with respect thereto by any taxing authority.
(u) Appropriate arrangements have been made for placing the funds received
from subscriptions for Shares in a special interest-bearing account with the
Association until all Shares are sold and paid for, with provision for refund to
the purchasers in the event that the Conversion is not completed for whatever
reason or for delivery to the Company if all Shares are sold.
(v) To the knowledge of the Company and the Association, none of the
Company, the Association nor employees of the Company or the Association have
made any payment of funds of the Company or the Association as a loan to any
person for the purchase of the Shares other than the Employee Stock Ownership
Plan Trust.
(w) Prior to the Conversion, the Association was not authorized to issue
shares of capital stock and neither the Company nor the Association has: (i)
issued any securities within the last 18 months (except for notes
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to evidence other Association loans and reverse repurchase agreements or other
liabilities); (ii) had any material dealings within the twelve months prior to
the date hereof with any member of the NASD, or any person related to or
associated with such member, other than discussions and meetings relating to the
proposed the Offering and routine purchases and sales of U.S. government and
agency securities and other investment securities; (iii) entered into a
financial or management consulting agreement except as contemplated hereunder;
and (iv) engaged any intermediary between Capital Resources and the Company and
the Association in connection with the offering of Common Stock, and no person
is being compensated in any manner for such service.
(x) All pending legal proceedings to which the Company or the Bank is a
party or of which any of their property is the subject which are not described
in the Registration Statement and the Offering Prospectus, including ordinary
routine litigation incidental to the business are, considered in the aggregate,
not material.
(y) To the knowledge of the Company and the Association, the Company and
the Association comply in all material respects with all laws, rules and
regulations relating to environmental protection, and neither the Company nor
the Association has been notified or is otherwise aware that any of them is
potentially liable, or is considered potentially liable in any material respect,
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended, or any similar state or local laws. There are no actions,
suits, regulatory investigations or other proceedings pending or, to the
knowledge of the Company or the Association, threatened against the Company or
the Association relating to environmental protection, nor does the Company or
the Association have any reason to believe any such proceedings may be brought
against any of them.
(z) The Association has one subsidiary, ▇▇▇▇▇▇▇ Service Corporation.
Any certificates signed by an officer of the Company or the Association and
delivered to Capital Resources or its counsel that refer to this Agreement shall
be deemed to be a representation and warranty by the Company or the Association
to Capital Resources as to the matters covered thereby with the same effect as
if such representation and warranty were set forth herein.
SECTION 5. Capital Resources represents and warrants to the Company and the
Association that:
(a) Capital Resources is a corporation and is validly existing in good
standing under the laws of the District of Columbia with full power and
authority to provide the services to be furnished to the Company and the
Association hereunder.
(b) The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
all necessary action on the part of Capital Resources, and this Agreement has
been duly and validly executed and delivered by Capital Resources and is the
legal, valid and binding agreement of Capital Resources, enforceable in
accordance with its terms.
(c) Each of Capital Resources and its employees, agents and representatives
who shall perform any of the services hereunder shall be duly authorized and
empowered, and shall have all licenses, approvals and permits necessary, to
perform such services and Capital Resources is a registered selling agent in the
jurisdictions listed in Exhibit A hereto and will remain registered in such
jurisdictions in which the Company is relying on such registration for the sale
of the Shares, until the Conversion is consummated or terminated.
(d) The execution and delivery of this Agreement by Capital Resources, the
consummation of the transactions contemplated hereby and compliance with the
terms and provisions hereof will not conflict
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with, or result in a breach of, any of the terms, provisions or conditions of,
or constitute a default (or event which with notice or lapse of time or both
would constitute a default) under, the certificate of incorporation of Capital
Resources or any agreement, indenture or other instrument to which Capital
Resources is a party or by which its property is bound, or law or regulation by
which Capital Resources is bound.
(e) Funds received by Capital Resources to purchase Common Stock will be
handled in accordance with Rule 15c2-4 under the Securities Exchange Act of
1934, as amended.
SECTION 6. Covenants of the Company and Association. The Company and the
Association hereby jointly and severally covenant with Capital Resources as
follows:
(a) The Company will not, at any time after the date the Registration
Statement is declared effective, file any amendment or supplement to the
Registration Statement without providing Capital Resources and its counsel
reasonable time to review such amendment or file any amendment or supplement to
which amendment Capital Resources or its counsel shall reasonably object.
(b) The Association has filed the Conversion Application with the OTS. The
Association will not, at any time after the date the Conversion Application is
approved, file any amendment or supplement to the Conversion Application without
providing Capital Resources and its counsel an opportunity to review such
amendment or supplement or file any amendment or supplement to which amendment
or supplement Capital Resources or its counsel shall reasonably object.
(c) The Company and the Association will use their best efforts to cause
any post-effective amendment to the Registration Statement to be declared
effective by the Commission and any post-effective amendment to the Conversion
Application to be approved by the OTS and will immediately upon receipt of any
information concerning the events listed below notify Capital Resources and
promptly confirm the notice in writing: (i) when the Registration Statement, as
amended, has become effective; (ii) when the Conversion Application, as amended,
has been approved by the OTS; (iii) of the receipt of any comments from the
Commission, the OTS or the FDIC or any other governmental entity with respect to
the Conversion or the transactions contemplated by this Agreement; (iv) of the
request by the Commission, the OTS or the FDIC or any other governmental entity
for any amendment or supplement to the Registration Statement or for additional
information; (v) of the issuance by the Commission, the OTS, the FDIC or any
other governmental entity of any order or other action suspending the Offering
or the use of the Registration Statement or the Offering Prospectus or any other
filing of the Company and the Association under the Conversion Regulations or
other applicable law, or the threat of any such action; (vi) the issuance by the
Commission, the OTS or the FDIC, or any state authority, of any stop order
suspending the effectiveness of the Registration Statement or of the initiation
or threat of initiation or threat of any proceedings for that purpose; or (vii)
of the occurrence of any event mentioned in paragraph (h) below. The Company and
the Association will make every reasonable effort to prevent the issuance by the
Commission, the OTS or the FDIC, or any 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.
(d) The Company and the Association will deliver to Capital Resources and
to its 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. Further,
the Company and the Association will deliver such additional copies of the
foregoing documents to counsel for Capital Resources as may be required for any
NASD and blue sky filings. In addition, the Company and the Association will
also deliver to Capital Resources such number of copies of the Offering
Prospectus, as amended or supplemented,
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as Capital Resources may reasonably request.
(e) The Company will furnish to Capital Resources, from time to time during
the period when the Offering Prospectus (or any later prospectus related to this
Offering) is required to be delivered under the 1933 Act or the Securities
Exchange Act of 1934 (the "1934 Act"), such number of copies of such Offering
Prospectus (as amended or supplemented) as Capital Resources may reasonably
request for the purposes contemplated by the 1933 Act or the 1934 Act or the
respective applicable rules and regulations of the Commission thereunder. The
Company authorizes Capital Resources to use the Offering Prospectus (as amended
or supplemented, if amended or supplemented) for any lawful manner in connection
with the sale of the Shares by Capital Resources.
(f) The Company and the Association will comply in all material respects
with any and all terms, conditions, requirements and provisions with respect to
the Conversion and the transactions contemplated thereby imposed by the
Commission, by applicable state law and regulations, and by the 1933 Act, the
1934 Act and the rules and regulations of the Commission promulgated under such
statutes, to be complied with prior to or subsequent to the Closing Date and
when the Offering Prospectus is required to be delivered, the Company and the
Association will comply in all material respects, at their own expense, with all
requirements imposed upon them by the OTS, the Conversion Regulations, the FDIC,
the Commission, by applicable state law and regulations and by the 1933 Act, 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, so far as necessary to permit the
continuance of sales or dealing in shares of Common Stock during such period in
accordance with the provisions hereof and the Offering Prospectus.
(g) If, at any time during the period when the Offering Prospectus relating
to the Shares is required to be delivered, any event relating to or affecting
the Company or the Association shall occur, as a result of which it is necessary
or appropriate, in the reasonable opinion of counsel for the Company and the
Association or in the reasonable opinion of Capital Resources' counsel, to amend
or supplement the Registration Statement or Offering Prospectus in order to make
the Registration Statement or Offering Prospectus not misleading in light of the
circumstances existing at the time it is delivered to a purchaser, the Company
and the Association will, at their expense, forthwith prepare, file with the
Commission and the OTS and furnish to Capital Resources a reasonable number of
copies of any amendment or amendments of, or a supplement or supplements to, the
Registration Statement or Offering Prospectus (in form and substance reasonably
satisfactory to Capital Resources and its counsel after a reasonable time for
review) which will amend or supplement the Registration Statement or Offering
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 Offering Prospectus reasonably is delivered to a purchaser, not
misleading. For the purpose of this Agreement, the Company and the Association
each will timely furnish to Capital Resources such information with respect to
itself as Capital Resources may from time to time request.
(h) The Company and the Association will take all necessary actions, in
cooperation with Capital Resources, and furnish to the appropriate agency,
entity, or person, such information as may be required to qualify or register
the Shares for offering and sale by the Company under the applicable securities
or blue sky laws of such jurisdictions in which the shares are required under
the Conversion Regulations to be sold or as Capital Resources and the
Association may jointly agree; 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 Shares shall have been qualified or registered as
above provided, the Company will make and file such statements and reports in
each fiscal period as are or may be required by the laws of such jurisdiction.
-11-
(i) The liquidation account for the benefit of account holders with account
balances of $50 or more as of the applicable record dates will be duly
established and maintained in accordance with the requirements of the OTS.
(j) The Company and the Association will not sell or issue, contract to
sell or otherwise dispose of, for a period of 180 days after the date hereof,
without Capital Resources' prior written consent, any shares of Common Stock
other than in connection with any plan or arrangement described in the Offering
Prospectus.
(k) The Company shall register its Common Stock under Section 12(g) of the
1934 Act concurrent with the stock offering pursuant to the Plan and shall
request that such registration be effective upon completion of the Conversion.
The Company shall maintain the effectiveness of such registration for not less
than three years or such shorter period as permitted by the OTS.
(l) During the period during which the Company's common stock is registered
under the 1934 Act or for three years from the date hereof, whichever period is
greater, the Company will furnish to its stockholders as soon as practicable
after the end of each fiscal year an annual report (including a balance sheet
and statements of income, stockholders' equity and changes in financial position
or cash flow statement of the Company as at the end of and for such year,
certified by independent public accountants and prepared in accordance with
Regulation S-X under the 1934 Act).
(m) During the period of three years from the date hereof, the Company will
furnish to Capital Resources: (i) a copy of each public report of the Company
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 Form 10-K, 10-Q, and
8-K and all proxy statements and annual reports to stockholders), a copy of each
public report of the Company mailed to its stockholders or filed with the
Commission or the OTS or any other supervisory or regulatory authority 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
additional public documents and information with respect to the Company or the
Association as Capital Resources may reasonably request, and (ii) from time to
time, such other publicly available information concerning the Company and the
Association as Capital Resources may reasonably request.
(n) The Company and the Association will use the net proceeds from the sale
of the Shares in the manner set forth in the Offering Prospectus under the
caption "Use of Proceeds."
(o) 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 are
qualified for sale, neither the Company nor the Association will distribute any
prospectus, offering circular or other offering material in connection with the
offer and sale of the Shares.
(p) The Company will make generally available to its security holders as
soon as practicable, but not later than 90 days after the close of the period an
earnings statement (in form complying with the provisions of Rule 158 under the
1933 Act) 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.
(q) The Company will maintain quotation of the shares in the
over-the-counter market effective on the Closing Date.
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(r) The Association will maintain appropriate arrangements for depositing
all funds received from persons mailing subscriptions for or orders to purchase
Shares in the Offering on an interest-bearing basis at the rate described in the
Offering Prospectus until the Closing Date and satisfaction of all conditions
precedent to the release of the Association's obligation to refund payments
received from persons subscribing for or ordering Shares in the Offering in
accordance with the Plan as described in the Offering Prospectus or until
refunds of such funds have been made to the persons entitled thereto or
withdrawal authorizations canceled in accordance with the Plan and as described
in the Offering Prospectus. The Association will maintain such records of all
funds received to permit the funds of each subscriber to be separately insured
by the FDIC (to the maximum extent allowable) and to enable the Association to
make the 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 Offering
Prospectus.
(s) The Company will register as a savings and loan holding company under
the HOLA within the period required by applicable law.
(t) The Company and the Association will take such actions and furnish such
information as are reasonably requested by Capital Resources in order for
Capital Resources to ensure compliance with the "Interpretation of the Board of
Governors of the NASD on Free Riding and Withholding."
(u) The Association will not amend the Plan of Conversion without Capital
Resources' prior written consent in any manner that, in the reasonable opinion
of Capital Resources, would materially and adversely affect the sale of the
Shares or the terms of this Agreement except as to comply with any regulatory
requirement.
(v) The Company shall advise Capital Resources, if necessary, as to the
allocation of the Shares in the event of an oversubscription and shall provide
Capital Resources with any information necessary to assist Capital Resources in
allocating the Shares in such event and such information shall be accurate and
reliable.
(w) The Company and the Association shall promptly advise Capital Resources
in writing of all relationships or facts which would render persons subscribing
or purchasing Shares in the Conversion Associates or Acting in Concert within
the meaning of the Conversion Regulations, and shall further advise Capital
Resources of all appropriate limitations on the purchase of shares by such
persons imposed by the Conversion Regulations and such information furnished
shall be accurate and reliable in all material respects.
SECTION 7. Payment of Expenses. Whether or not this Agreement becomes
effective, the Conversion is completed or the sale of the Shares by the Company
is consummated, the Company and Association jointly and severally agree to pay
directly for or to reimburse Capital Resources for (to the extent that such
expenses have been reasonably incurred by Capital Resources) (a) all filing fees
and expenses incurred in connection with the qualification or registration of
the Shares for offer and sale by the Company under the securities or blue sky
laws of any jurisdictions Capital Resources and the Company may agree upon
pursuant to subsection (i) of Section 6 above, including counsel fees paid or
incurred by the Company, the Association or Capital Resources in connection with
such qualification or registration or exemption from qualification or
registration; (b) all filing fees in connection with all filings with the NASD;
(c) any stock issue or transfer taxes which may be payable with respect to the
sale of the Shares to purchasers in the Conversion; (d) reasonable and necessary
expenses of the Conversion, including but not limited to, attorneys' fees,
transfer agent, registrar and other agent charges, fees relating to auditing and
accounting or other advisors and costs of printing all documents necessary in
connection with the Conversion; and (e) out-of-pocket expenses incurred by
Capital Resources in connection with the Conversion or any of the transactions
contemplated hereby, including, without limitation, the
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fees of its attorneys, and reasonable communication and travel expenses, as
limited by Section 2 hereof.
SECTION 8. Conditions to Capital Resources' Obligations. Capital Resources'
obligations hereunder, as to the Shares to be delivered at the Closing Date, are
subject to the condition that all representations and warranties and other
statements of the Company and the Association herein are, at and as of the
commencement of the Offering and at and as of the Closing Date, true and correct
in all material respects, the condition that the Company and the Association
shall have performed in all material respects all of their obligations hereunder
to be performed on or before such dates, and to the following further
conditions:
(a) At the Closing Date, the Company and the Association will have
completed the conditions precedent to, and shall have conducted the Conversion
in all material respects in accordance with, the Plan, the Conversion
Regulations and all other applicable laws, regulations, decisions and orders,
including all terms, conditions, requirements and provisions precedent to the
Conversion imposed upon them by the OTS.
(b) The Registration Statement shall have been declared effective by the
Commission and the Conversion Application approved by the OTS not later than
5:30 p.m. (eastern time) on the date of this Agreement, or with Capital
Resources' consent at a later time and date; and at the Closing Date no stop
order suspending the effectiveness of the Registration Statement shall have been
issued under the 1933 Act or proceedings therefore initiated or threatened by
the Commission or any state authority, and no order or other action suspending
the authorization of the Offering Prospectus or the consummation of the
Conversion shall have been issued or proceedings therefore initiated or, to the
Company's or Association's knowledge, threatened by the Commission, the OTS, the
FDIC or any state authority.
(c) At the Closing Date, Capital Resources shall have received:
(1) The favorable opinion, dated as of the Closing Date addressed to
Capital Resources and for its benefit, of ▇▇▇▇▇▇▇, Spidi, Sloane & ▇▇▇▇▇, P.C.,
counsel for the Company and the Association dated the Closing Date, addressed to
Capital Resources and 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.
(ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and the Offering Prospectus; and the Company is qualified
to do business in Pennsylvania, to such counsel's knowledge based on the
conferences and document review specified in item (xii) below, the only state in
which it is doing business.
(iii) The Association was duly organized and is a validly existing
federally chartered savings association in mutual form of organization and upon
the consummation of the Conversion will become a duly organized and validly
existing federally chartered savings association 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; and the Association is
validly existing under the laws of the United States and is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which its ownership of property or leasing of properties or the
conduct of its business requires such qualification 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, operations or
income or business prospects of the Association. The activities of the
Association as described in the Offering Prospectus, insofar as they are
material to the operations and financial condition of the Association, are
permitted by the rules, regulations and resolutions and practices of the OTS or
the FDIC and any other federal or state authorities.
-14-
(iv) The Association is a member of the FHLBPB, and the deposit accounts of
the Association are insured by the FDIC up to the maximum amount allowed under
law and to the best of such counsel's knowledge no proceedings for the
termination or revocation of such insurance are pending or threatened; and the
description of the liquidation account as set forth in the Registration
Statement and the Offering Prospectus under the caption "The Conversion -
Effects of the Conversion Liquidation Account" has been reviewed by such counsel
and is accurate in all material respects.
(v) Upon consummation of the Conversion, the authorized, issued and
outstanding capital stock of the Company will be as set forth in the
Registration Statement and the Offering Prospectus under the caption
"Capitalization, " and no shares of Common Stock have been issued prior to the
Closing Date; at the time of the Conversion, the Shares subscribed for pursuant
to the Offerings 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, will be duly and validly
issued and fully paid and non-assessable; and the issuance of the Shares is not
subject to preemptive rights.
(vi) The issuance and sale of the common stock of the Association to the
Company have been duly and validly authorized by all necessary corporate action
on the part of the Company and the Association and, upon payment therefor in
accordance with the terms of the Plan, will be duly and validly issued, fully
paid and non-assessable and will be owned of record by the Company, free and
clear of any mortgage, pledge, lien, encumbrance or claim (legal or equitable).
(vii) The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
all necessary action on the part of the Company and the Association; and this
Agreement is a valid and binding obligation of the Company and the Association,
enforceable in accordance with its terms (except as the enforceability thereof
may be limited by Association bankruptcy, insolvency, moratorium, reorganization
or similar laws relating to or affecting the enforcement of creditors' rights
generally or the rights of creditors of savings associations or savings and loan
holding companies, the accounts of whose subsidiaries are insured by the FDIC or
by general equity principles, regardless of whether such enforceability is
considered in a proceeding in equity or at law, and except to the extent, if
any, that the provisions of Sections 9 and 10 hereof may be unenforceable as
against public policy).
(viii) The Plan has been duly adopted by the required vote of the Directors
of the Company and the Association and members of the Association.
(ix) Subject to the satisfaction of the conditions to the OTS's approval of
the Conversion and the Company's application to acquire the Association, no
further approval, registration, authorization, consent or other order of any
regulatory agency, public board or body is required in connection with the
execution and delivery of this Agreement, the issuance of the Shares and the
consummation of the Conversion, except as may be required under the regulations
of the NASD. The Conversion has been consummated in all material respects in
accordance with all applicable provisions of the HOLA, the Conversion
Regulations, Federal and State law and all applicable rules and regulations
promulgated thereunder.
(x) The Conversion Application has been approved by the OTS. The OTS has
issued its order of approval under the savings and loan holding company
provisions of the HOLA, and the purchase by the Company of all of the issued and
outstanding capital stock of the Association has been authorized by the OTS and
no action has been taken, or to counsel's knowledge is pending or threatened, to
revoke any such authorization or approval, by way of judicial review of the
final action of the OTS approving the Conversion Application or in approving the
Holding Company Application or otherwise.
-15-
(xi) The Registration Statement is effective under the 1933 Act and, to
counsel's knowledge, no stop order suspending the effectiveness has been issued
under the 1933 Act or proceedings therefor initiated or, threatened by the
Commission.
(xii) At the time the Conversion Application, including the Offering
Prospectus contained therein, was approved, the Conversion Application including
the Offering Prospectus contained therein (as amended or supplemented, if so
amended or supplemented) complied as to form in all material respects with the
requirements of all applicable federal laws and the rules, regulations,
decisions and orders of the OTS (except as to the financial statements, other
financial data and stock valuation information included therein as to which such
counsel need express no opinion); to the best of such counsel's knowledge, based
on conferences with management of and the independent accountants for the
Company and the Association, and on such investigation of the corporate records
of the Company and the Association as such counsel conducted in connection with
the preparation of the Registration Statement and the Conversion Application,
all material documents and exhibits required to be filed with the Conversion
Application (as amended or supplemented, if so amended or supplemented) have
been so filed. The description in the Conversion Application and the Offering
Prospectus contained therein of such documents and exhibits is accurate in all
material respects and fairly presents the information required to be shown.
(xiii) At the time that the Registration Statement became effective, (i)
the Registration Statement (as amended or supplemented if so amended or
supplemented) (other than the financial statements and other financial and
statistical data and stock valuation information included therein, as to which
no opinion need be rendered), complied as to form in all material respects with
the requirements of the 1933 Act and the 1933 Act Regulations and (ii) the
Offering Prospectus (other than the financial statements and other financial and
statistical data and the stock valuation and pro forma information 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, the 1933 Act
Regulations, and Federal and State law (other than state blue sky law as to
which we express no opinion). To the best of such counsel's knowledge based on
the conferences and document review specified in item (xii) above, all material
documents and exhibits required to be filed with the Registration Statement (as
amended or supplemented, if so amended or supplemented) have been so filed. The
description in the Registration Statement and the Offering Prospectus of such
documents and exhibits is accurate in all material respects and fairly presents
the information required to be shown.
(xiv) During the course of such counsel's representation of the Company and
the Association, nothing has come to such counsel's attention that caused it to
believe that (i) the Company and the Association have not conducted the
Conversion, in all material respects, in accordance with all applicable
requirements of the Plan and applicable law, and (ii) the Plan, the Conversion
Application, the Registration Statement and the Offering Prospectus (other than
the financial statements and other financial and statistical data and the stock
valuation information included therein as to which no opinion need be rendered)
do not comply in all material respects with all applicable laws, rules,
regulations, decisions and orders including, but not limited to, the Conversion
Regulations, the HOLA, the 1933 Act and 1933 Act Regulations and all other
applicable laws, regulations, decisions and orders, including all applicable
terms, conditions, requirements and provisions precedent to the Conversion
imposed upon it by the OTS, the Commission and the FDIC, if any.
(xv) The terms and provisions of the Common Stock of the Company conform to
the description thereof contained in the Registration Statement and the Offering
Prospectus, and the form of certificates used to evidence the Shares complies
with all applicable requirements of Pennsylvania law.
(xvi) To such counsel's knowledge, there are no legal or governmental
proceedings pending or threatened which are required to be disclosed in the
Registration Statement and the Offering Prospectus, other
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than those disclosed therein, and all pending legal and governmental proceedings
to which the Company or the Association is a party or of which any of their
property is the subject which are not described in the Registration Statement
and the Offering Prospectus, including ordinary routine litigation incidental to
the business, are, considered in the aggregate, not material; provided that for
this purpose, any litigation or governmental proceeding is not considered to be
"threatened" unless the potential litigant or governmental authority has
manifested to the management of the Company or the Association, or to such
counsel, a present intention to initiate such litigation or proceeding.
(xvii) To such counsel's knowledge, the Company and the Association 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 and the Company and the
Association have conducted and are conducting their business so as to comply in
all material respects with all applicable statutes and regulations (including,
without limitation, regulations, decisions, directives and orders of the OTS and
the FDIC).
(xviii) The information in the Registration Statement and Offering
Prospectus under the captions "Regulation," "Restrictions on Acquisition of
Steelton Bancorp, Inc.," "The Conversion," AThe Offering," "Description of
Capital Stock" and the information in response to Items 7(d)(l), 7(f), 7(g) and
7(i) of the Form PS of the Conversion Regulations, 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 (except as to the financial statements and
other financial data included therein as to which such counsel need express no
opinion).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the United
States, to the extent such counsel deems proper and specified in such opinion
satisfactory to Capital Resources, upon the opinion of other counsel of good
standing (providing that such counsel states that Capital Resources is 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 Association and public officials (but not on
conclusions of law which may be set forth in said certificates); provided copies
of any such opinion(s) or certificates are delivered pursuant hereto to Capital
Resources together with the opinion to be rendered hereunder by special counsel
to the Company and the Association. Such counsel may assume that any agreement
is the valid and binding obligation of any parties to such agreement other than
the Company or the Association.
(2) The favorable opinion, dated as of the Closing Date addressed to
Capital Resources and for its benefit, of ______________________, Pennsylvania
counsel for the Company and the Association dated the Closing Date, addressed to
Capital Resources and in form and substance to the effect that:
(i) To such counsel's knowledge, the Company and the Association have
obtained all licenses, permits and other governmental authorizations required
for the conduct of their respective businesses, except where the failure to have
such licenses, permits or authorizations would not have a material adverse
effect on the business, financial condition operations or income or business
prospects of the Company and the Association, and all such licenses, permits and
other governmental authorizations are in full force and effect, and the Company
and the Association are in all material respects complying therewith.
(ii) To such counsel's knowledge, neither the Company nor the Association
is in contravention of its certificate of incorporation or its charter,
respectively, or its bylaws (and the Association will not be in contravention of
its charter or bylaws in stock form upon consummation of the Conversion) or, to
such counsel's knowledge, in default or violation of any obligation, agreement,
covenant or condition contained in any
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material contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which it is a party or by which it or its property may be bound
which default or violation would be material to the business of the Company and
the Association considered as one enterprise; to such counsel's knowledge, any
such default or violation will not constitute a material 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 or the Association which
are material to their business considered as one enterprise, pursuant to any
contract, indenture, mortgage, loan agreement, note, lease or other instrument
to which the Company or the Association is a party or by which any of them may
be bound, or to which any of the property or assets of the Company or the
Association is subject. In addition, such action will not result in any default
or violation of the provisions of the certificate of incorporation or bylaws of
the Company or the Association or to such counsel's knowledge, any applicable
law, act, regulation or order or court order, writ, injunction or decree. The
charter of the Association in stock form has been approved by the OTS.
(iii) To such counsel's knowledge, the Company and the Association have
good and marketable title to all 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 or are not material in relation to the business of the Company and the
Association considered as one enterprise; and to the best of such counsel's
knowledge, all of the leases and subleases material to the business of the
Company and the Association under which the Company and the Association hold
properties, as described in the Registration Statement, are in full force and
effect.
(3) The letter of ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇, P.C., counsel for the
Company and the Association addressed to Capital Resources, dated the Closing
Date, in form and substance to the effect that:
During the preparation of the Conversion Application, the Registration
Statement and the Offering Prospectus, such counsel participated in conferences
with management of, and the independent public accountants for the Company and
the Association. Based upon such conferences and a review of corporate records
of the Company and the Association as such counsel conducted in connection with
the preparation of the Registration Statement and Conversion Application,
nothing has come to their attention that would lead them to believe that the
Conversion Application, the Registration Statement, the Offering Prospectus, or
any amendment or supplement thereto (other than the financial statements 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 ▇▇▇▇▇▇, ▇▇▇▇▇▇,
& ▇▇▇▇▇▇▇▇, P.C., counsel to Capital Resources, with respect to such matters as
Capital Resources may reasonably require. Such opinion may rely upon the
opinions of counsel to the Company and the Association, and as to matters of
fact, upon certificates of officers and directors of the Company and the
Association delivered pursuant hereto or as such counsel shall reasonably
request.
(d) At the Closing Date, counsel to Capital Resources shall have been
furnished with such documents and opinions as they may reasonably require for
the purpose of enabling them to render the opinion as herein contemplated, or in
order to evidence the occurrence or completeness of any of the representations
or warranties, or the fulfillment of any of the conditions, herein contained.
(e) At the Closing Date, Capital Resources 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 Association,
dated as of such Closing Date, to the effect that: (i) they have carefully
examined the
-1
Offering Prospectus and, in their opinion, at the time the Offering Prospectus
became authorized for final use, the Offering Prospectus did 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; (ii) since the date the Offering
Prospectus became authorized for final use, in their opinion no event has
occurred which should have been set forth in an amendment or supplement to the
Offering Prospectus which has not been so set forth, including specifically, but
without limitation, any material adverse change in the condition, financial or
otherwise, or in the earnings, capital, properties, business prospects or
business affairs of the Company or the Association, and the conditions set forth
in this Section 8 have been satisfied; (iii) since the respective dates as of
which information is given in the Registration Statement and the Offering
Prospectus, there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, capital, properties, business
affairs or business prospects of the Company or the Association, independently,
or of the Company and the Association considered as one enterprise, whether or
not arising in the ordinary course of business; (iv) to the best knowledge of
such officers the representations and warranties in Section 4 are true and
correct with the same force and effect as though expressly made at and as of the
Closing Date; (v) to the best knowledge of such officers, the Company and the
Association have complied with all material agreements and satisfied, in all
material respects at or prior to the Closing Date, all obligations required to
be met by such date and will in all material respects comply with all
obligations to be satisfied by them after Conversion; (vi) no stop order
suspending the effectiveness of the Registration Statement has been initiated
or, to the best knowledge of the Company or Association, threatened by the
Commission or any state authority; (vii) no order suspending the Offering, the
Conversion, the acquisition of all of the shares of the Association by the
Company or the effectiveness of the Offering Prospectus has been issued and to
the best knowledge of the Company or Association, no proceedings for that
purpose have been initiated or threatened by the OTS, the Commission, the FDIC,
or any state authority; and (viii) to the best of their knowledge, no person has
sought to obtain review of the final action of the OTS approving the Plan.
(f) Prior to and at the Closing Date: (i) in the reasonable opinion of
Capital Resources, there shall have been no material adverse change in the
condition, financial or otherwise, or in the earnings, or the business affairs
or business prospects of the Company or the Association independently, or of the
Company or the Association, considered as one enterprise, since the latest dates
as of which such condition is set forth in the Offering Prospectus, except as
referred to therein; (ii) there shall have been no material transaction entered
into by the Company or the Association from the latest date as of which the
financial condition of the Company or the Association is set forth in the
Offering Prospectus other than transactions referred to or contemplated therein;
(iii) the Company or the Association shall not have received from the OTS or the
FDIC 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 Capital Resources) and which would reasonably
be expected to have a material and adverse effect on the business, operations or
financial condition or income of the Company or the Association taken as a
whole; (iv) neither the Company nor the Association 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 and agreement or instrument
relating to any material 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 Association, threatened against the Company or
the Association or affecting any of their properties wherein an unfavorable
decision, ruling or finding would reasonably be expected to have a material and
adverse effect on the business, operations, financial condition or income of the
Company or the Association, taken as a whole; and (vi) the Shares have been
qualified or registered for offering and sale under the securities or blue sky
laws of the jurisdictions as Capital Resources shall have requested and as
agreed to by the Company.
(g) Concurrently with the execution of this Agreement, Capital Resources
shall receive a letter from ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, dated the date hereof and
addressed to Capital Resources: (i) confirming
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that ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP is a firm of independent public accountants within the
meaning of the Code of Professional Ethics of the American Institute of
Certified Public Accountants, the 1933 Act and the 1933 Act Regulations and 12
C.F.R. ' 571.2(c)(3) and no information concerning its relationship with or
interests in the Company and the Association is required to be disclosed in the
Offering Prospectus by the Conversion Regulations or Item 10 of the Registration
Statement, and stating in effect that in ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP's opinion the
financial statements of the Association as are included in the Offering
Prospectus 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 the Conversion
Regulations and generally accepted accounting principles; (ii) stating in effect
that, on the basis of certain agreed upon procedures (but not an audit
examination in accordance with generally accepted auditing standards) consisting
of a reading of the latest available unaudited interim financial statements of
the Association prepared by the Association, a reading of the minutes of the
meetings of the Board of Directors and members of the Association and
consultations with officers of the Association responsible for financial and
accounting matters, nothing came to their attention which caused them to believe
that: (A) during the period from the date of the latest unaudited summary
financial and other data as of and for the three month period ended March 31,
1999, as set forth under the heading "Recent Developments" in the Prospectus,
there has been (1) any increase in the long term debt of the Association or (2)
any increase in non-performing assets (consisting of accruing loans past due 90
days or more, non-accruing loans and foreclosed assets) or (3) any decrease in
the allowance for loan losses or (4) any decrease in total equity or (5) a
decrease in net income when compared to the like period in the preceding year or
(6) any change in total assets of the Association in an amount from March 31,
1999 to ____________, 1999 greater than $850,000.00 (excluding the proceeds of
stock subscriptions); and (iii) stating that, in addition to the audit
examination referred to in its opinion included in the Offering Prospectus and
the performance of the procedures referred to in clause (ii) of this subsection
(g), they have compared with the general accounting records of the Company
and/or the Association, as applicable, which are subject to the internal
controls of the Company and/or the Association, as applicable, accounting system
and other data prepared by the Company and/or the Association, as applicable,
directly from such accounting records, to the extent specified in such letter,
such amounts and/or percentages set forth in the Offering Prospectus as Capital
Resources may reasonably request; and they have found such amounts and
percentages to be in agreement therewith (subject to rounding).
(h) At the Closing Date, Capital Resources shall receive a letter from
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, dated the Closing Date, addressed to Capital Resources,
confirming the statements made by its letter delivered by it pursuant to
subsection (g) of this Section 8, except that the "specified date" referred to
in clause (ii)(B) thereof to be a date specified in such letter, which shall not
be more than three business days prior to the Closing Date.
(i) The Company and the Association shall not have sustained since the date
of the latest audited financial statements included in the Registration
Statement and Offering 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 and Offering Prospectus, and since the respective dates as of which
information is given in the Registration Statement and Offering Prospectus,
there shall not have been any material change in the long term debt of the
Company or the Association other than debt incurred in relation to the purchase
of Shares by the Company's Tax-Qualified Employee Plans, or any change, or any
development involving a prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of operations of
the Company or the Association, otherwise than as set forth or contemplated in
the Registration Statement and Offering Prospectus, the effect of which, in any
such case described above, is in Capital Resources' reasonable judgment
sufficiently material and adverse as to make it impracticable or inadvisable to
proceed with the Subscription or Public Offerings or the delivery of the Shares
on the terms and in the manner contemplated in the Offering Prospectus.
-20-
(j) At or prior to the Closing Date, Capital Resources shall receive (i) a
copy of the letter from the OTS authorizing the use of the Offering Prospectus,
(ii) a copy of the order from the Commission declaring the Registration
Statement effective, (iii) a copy of a certificate from the OTS evidencing the
valid existence of the Association, (iv) certificates of good standing from the
Commonwealth of Pennsylvania evidencing the good standing of the Company and
evidencing that the Company is duly qualified to do business in Pennsylvania and
(v) a copy of the letter from the OTS approving the Company's Holding Company
Application.
(k) As soon as available after the Closing Date, Capital Resources shall
receive a certified copy of the Association's stock charter.
(1) 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 National
Market, or minimum or maximum prices for trading being fixed, or maximum ranges
for prices for securities being required 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 operations of commercial banks or federal savings
banks or general moratorium on the withdrawal of deposits from commercial
associations or federal savings associations declared by either federal or state
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, as to clauses (iii) or (iv), the effect of such hostilities or
decline, in Capital Resources' reasonable judgment, makes it impracticable or
inadvisable to proceed with the Offering or the delivery of the Shares on the
terms and in the manner contemplated in the Registration Statement and the
Offering Prospectus.
All such opinions, certifications, letters and documents shall be in
compliance with the provisions hereof only if they are, in the reasonable
opinion of Capital Resources and its counsel, satisfactory to Capital Resources
and its counsel. Any certificates signed by an officer or director of the
Company or the Association and delivered to Capital Resources or its counsel
shall be deemed a representation and warranty by the Company or the Association
to Capital Resources as to the statements made therein.
If any of the conditions specified in this Section shall not have been
fulfilled when and as required by this Agreement, this Agreement and all of
Capital Resources' obligations hereunder may be canceled by Capital Resources by
notifying the Association 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 2, 7, 9 and 10 hereof. Notwithstanding the above, if this Agreement is
canceled pursuant to this paragraph, Capital Resources will be entitled to
retain any compensation already received for consulting services prior to the
closing (including reimbursed expenses as provided herein), and the Company and
the Association jointly and severally agree to reimburse Capital Resources for
all out-of-pocket expenses, (including without limitation the fees and expenses
of Capital Resources' counsel) reasonably incurred by Capital Resources and
Capital Resources' counsel at its normal rates, in connection with the
preparation of the Registration Statement and the Offering Prospectus, and in
contemplation of the proposed Subscription or Public Offerings to the extent
provided for, and subject to the limitations contained in Sections 2 and 7
hereof.
SECTION 9. Indemnification.
(a) The Company and the Association jointly and severally agree to
indemnify and hold harmless Capital Resources, its officers, directors, agents
and employees and each person, if any, who controls or is under common control
with Capital Resources within the meaning of Section 15 of the 1933 Act or
Section
-21-
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, that Capital Resources or any of them may suffer or to which Capital
Resources and any such persons upon written demand for any expenses (including
fees and disbursements of counsel) incurred by Capital Resources 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 the Registration Statement (or any amendment or supplement
thereto), Offering Prospectus (or any amendment or supplement thereto), the
Conversion Application (including any document required to be furnished
therewith), or any Blue Sky application or other instrument or document of the
Company or the Association or based upon written information supplied by the
Company or the Association filed in any state or jurisdiction to register or
qualify any or all of the Shares or the subscription rights applicable thereto
under the securities laws thereof (collectively, the "Blue Sky Application"), or
any application or other document, advertisement, oral statement, or
communication ("Sales Information") prepared, made or executed by or on behalf
of the Company with its consent or based upon written or oral information
furnished by or on behalf of the Company or the Association, whether or not
filed in any jurisdiction in order to qualify or register the Shares under the
securities laws 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
therein, 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 the Registration Statement (or any amendment or
supplement thereto), Offering Prospectus (or any amendment or supplement
thereto), the Conversion Application (including any document required to be
furnished therewith), any Blue Sky Application or Sales Information or other
documentation distributed in connection with the Conversion; provided, however,
that no indemnification is required under this paragraph (a) 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, the Registration Statement
(or any amendment or supplement thereto), the Conversion Application (including
any document required to be furnished therewith) , any Blue Sky Application, the
Offering Prospectus (or any amendment or supplement thereto), or Sales
Information made in reliance upon and in conformity with written information
furnished to the Company or the Association by Capital Resources regarding
Capital Resources expressly for use under the captions AThe Offering Plan of
Distribution/Marketing Arrangements" or "Community Offering" or ASyndicated
Community Offering" in the Offering Prospectus nor is indemnification required
for material oral misstatements made by Capital Resources, which are not based
upon information provided by the Association or the Company orally or in writing
or based on information contained in the Registration Statement (or any
amendment or supplement thereto), Offering Prospectus (or any amendment or
supplement thereto), the Conversion Application (including any document required
to be furnished therewith), any Blue Sky Application or Sales Information
distributed in connection with the Conversion. In addition, the Association and
the Company will not be liable under the foregoing provisions to the extent that
the loss, claim, damage, liability or actions is expressly found in a final
judgment by a court of competent jurisdiction to have resulted from Capital
Resources' bad faith or gross negligence.
(b) Capital Resources agrees to indemnify and hold harmless the Company and
the Association, their directors and officers, agents, servants and employees
and each person, if any, who controls the Company or the Association 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
Company, the Association and any such persons upon written demand for any
expenses (including 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
-22-
or actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or any
amendment of supplement thereto), or the Offering Prospectus (or any amendment
or supplement thereto), or the Conversion Application or any Blue Sky
Application or Sales Information or 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 the light of
the circumstances under which they were made, not misleading; provided, however,
that Capital Resources obligations under this Section 9(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,
the Registration Statement (or any amendment or supplement thereto), the
Offering Prospectus (or any amendment or supplement thereto), or the Conversion
Application, any Blue Sky Application or Sales Information in reliance upon and
in conformity with written information furnished to the Company or the
Association by Capital Resources regarding Capital Resources expressly for use
under the caption AThe Offering - Plan of Distribution/Marketing Arrangements"
or "Community Offering" or "Syndicated Community Offering" in the Offering
Prospectus or in the event of oral misstatements made by Capital Resources,
which are not based upon information provided by the Association or the Company
orally or in writing or based on information contained in the Registration
Statement (or any amendment or supplement thereto), Offering Prospectus (or any
amendment or supplement thereto), the Conversion Application, any Blue Sky
Application or Sales Information distributed in connection with the Conversion.
In addition, Capital Resources will not be liable under the foregoing provisions
to the extent that the loss, claim, damage, liability or actions is expressly
found in a final judgment by a court of competent jurisdiction to have resulted
from the Association's or the Company's bad faith or gross 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 9 or
otherwise. 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 defense of such action
with counsel chosen by it and approved by 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 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 separate firm of attorneys (and any special counsel that said firm may
retain) for all 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.
(d) The agreements contained in this Section 9 and in Section 10 hereof and
the representations and warranties of the Company and the Association 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 Capital Resources or its
officers, directors or controlling persons, agents or employees or by or on
behalf of the Company or the Association or any officers, directors or
controlling persons, agents or employees of the Company or the Association or
any controlling person, director or officer of the Company or the Association;
(ii) delivery of and payment hereunder for the Shares; or (iii) any termination
of this Agreement.
(e) No indemnification by the Association under Section 9(a) hereof nor
contribution under Section 10 hereof shall be effective if the same shall be
deemed to be in violation of any law, rule or regulation applicable to the
Association including, without limitation, Section 23A of the Federal Reserve
Act. If the
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indemnification or contribution by the Association is not effective pursuant to
the preceding sentence, then the indemnification by Capital Resources pursuant
to Section 9(b) shall be given only to the Company, its directors and officers,
agents, servants and employees and not to the Association, its directors and
officers, agents, servants and employees and the Association shall not be
entitled to any contribution from Capital Resources pursuant to Section 10.
SECTION 10. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 9 is due in accordance with its terms but is for any reason unavailable
as a result of Section 9(e) or held by a court to be unavailable from the
Company, the Association or Capital Resources, the Company, the Association and
Capital Resources shall contribute to the aggregate losses, claims, damages and
liabilities (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of any action, suit or
proceeding of any claims asserted, but after deducting any contribution received
by the Company or the Association or Capital Resources from persons other than
the other party thereto, who may also be liable for contribution) in such
proportion so that Capital Resources is responsible for that portion represented
by the fees paid to Capital Resources pursuant to Section 2 of this Agreement
(not including expenses) bears to the gross proceeds received by the Company
from the sale of the Shares in the Offering and the Company and the Association
shall be responsible for the balance. If, however, the allocation provided above
is not permitted by applicable law or if the indemnified party failed to give
the notice required under Section 9 above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative fault of the
Company and the Association on the one hand and Capital Resources on the other
in connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions, proceedings or claims in respect
thereof), but also the relative benefits received by the Company and Association
on the one hand and Capital Resources on the other from the offering as well as
any other relevant equitable considerations. The relative benefits received by
the Company and the Association on the one hand and Capital Resources on the
other shall be deemed to be in the same proportion as the total gross proceeds
from the Offering (before deducting expenses) received by the Company bear to
the total fees (not including expenses) received by Capital Resources. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company and/or the Association on the one hand or Capital Resources on the other
and the parties' relative intent, good faith, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company,
the Association and Capital Resources agree that it would not be just and
equitable if contribution pursuant to this Section 10 were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 10. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or action, proceedings or claims in respect thereof)
referred to above in this Section 10 shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action, proceeding or claim. It is expressly
agreed that Capital Resources shall not be liable for any loss, liability,
claim, damage or expense or be required to contribute any amount which in the
aggregate exceeds the amount paid (excluding reimbursable expenses) to Capital
Resources under this Agreement. It is understood that the above-stated
limitation on Capital Resources' liability is essential to Capital Resources and
that Capital Resources relied upon such limitation and would not have entered
into this Agreement if such limitation had not been agreed to by the parties to
this Agreement. No person found guilty of any fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not found guilty of such fraudulent
misrepresentation. The obligations of the Company and the Association under this
Section 10 and under Section 9 shall be in addition to any liability which the
Company and the Association may otherwise have. For purposes of this Section 10,
each of Capital Resources', the Company's or the Association's officers and
directors and each person, if any, who controls Capital Resources or the Company
or the Association within the meaning of the 1933 Act and the 1934 Act shall
have the same
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rights to contribution as the Company and the Association. Any party entitled to
contribution, promptly after receipt of notice of commencement of any action,
suit, claim or proceeding against such party in respect of which a claim for
contribution may be made against another party under this Section 10, will
notify such party from whom contribution may be sought, 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 10. This Section 10 is subject to and limited by the provisions of
Section 23A of the Federal Reserve Act, as applicable.
SECTION 11. Survival of Agreements, Representations and Indemnities. The
respective indemnities of the Company, the Association and Capital Resources and
the representations and warranties and other statements of the Company and the
Association set forth in or made pursuant to this Agreement shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of Capital Resources, the
Company, the Association or any indemnified person referred to in Section 9
hereof, and shall survive the issuance of the Shares, and any legal
representative, successor or assign of Capital Resources, the Association, and
any such indemnified person shall be entitled to the benefit of the respective
agreements, indemnities, warranties and representations.
SECTION 12. Termination. Capital Resources may terminate this Agreement by
giving the notice indicated below in this Section at any time after this
Agreement becomes effective as follows:
(a) In the event the Company fails to sell all of the Shares within the
period specified, and in accordance with the provisions of the Plan or as
required by the Conversion Regulations and applicable law, this Agreement shall
terminate upon refund by the Association to each person who has subscribed for
or ordered any of the Shares the full amount which it may have received from
such person, together with interest as provided in the Offering Prospectus, and
no party to this Agreement shall have any obligation to the other hereunder,
except for payment by the Association and/or the Company as set forth in
Sections 2, 7, 9 and 10 hereof.
(b) If any of the conditions specified in Section 8 shall not have been
fulfilled when and as required by this Agreement, or by the Closing Date, or
waived in writing by Capital Resources, this Agreement and all of Capital
Resources obligations hereunder may be canceled by Capital Resources by
notifying the Association 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 2, 7, 9 and 10 hereof.
(c) If Capital Resources elects to terminate this Agreement as provided in
this section, the Company and the Association shall be notified as provided in
Section 13 hereof, promptly by Capital Resources by telephone or telegram,
confirmed by letter.
SECTION 13. Notices. All communications hereunder, except as herein
otherwise specifically provided, shall be mailed in writing and if sent to
Capital Resources shall be mailed, delivered or telegraphed and confirmed to
Capital Resources, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇.▇. ▇▇▇▇▇ Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (with a copy to ▇▇▇▇▇▇ ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, P.C., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇,
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.) and, if sent to the Company and the
Association, shall be mailed, delivered or telegraphed and confirmed to the
Company and the Association at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (with a copy to ▇▇▇▇▇▇▇, Spidi, Sloane
& ▇▇▇▇▇, P.C., ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.)
SECTION 14. Parties. The Company and the Association shall be entitled to
act and rely on
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any request, notice, consent, waiver or agreement purportedly given on behalf of
Capital Resources when the same shall have been given by the undersigned.
Capital Resources shall be entitled to act and rely on any request, notice,
consent, waiver or agreement purportedly given on behalf or the Company or the
Association, when the same shall have been given by the undersigned or any other
officer of the Company or the Association. This Agreement shall inure solely to
the benefit of, and shall be binding upon, Capital Resources and the Company,
the Association and the controlling persons referred to in Section 9 hereof, and
their respective successors, legal representatives and assigns, and no other
person shall have or be construed to have any legal or equitable right, remedy
or claim under or in respect of or by virtue of this Agreement or any provision
herein contained.
SECTION 15. Closing. The closing for the sale of the Shares shall take
place on the Closing Date at the offices of ▇▇▇▇▇▇▇, Spidi, Sloane & ▇▇▇▇▇,
P.C., ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, or such other
location as mutually agreed upon by Capital Resources, the Company and the
Association. At the closing, the Association shall deliver to Capital Resources
in next day funds the commissions, fees and expenses due and owing to Capital
Resources as set forth in Sections 2 and 7 hereof and the opinions and
certificates required hereby and other documents deemed reasonably necessary by
Capital Resources shall be executed and delivered to effect the sale of the
Shares as contemplated hereby and pursuant to the terms of the Offering
Prospectus.
SECTION 16. Partial Invalidity. In the event that any term, provision or
covenant herein or the application thereof to any circumstances or situation
shall be invalid or unenforceable, in whole or in part, the remainder hereof and
the application of said term, provision or covenant to any other circumstance or
situation shall not be affected thereby, and each term, provision or covenant
herein shall be valid and enforceable to the full extent permitted by law.
SECTION 17. Construction. This Agreement shall be construed in accordance
with the laws of the District of Columbia.
SECTION 18. Counterparts. This Agreement may be executed in separate
counterparts, each of which so executed and delivered shall be an original, but
all of which together shall constitute but one and the same instrument.
Time shall be of the essence of this Agreement.
If the foregoing correctly sets forth the arrangement among the Company,
the Association and Capital Resources, please indicate acceptance thereof in the
space provided below for that purpose, whereupon this letter and Capital
Resources' acceptance shall constitute a binding agreement.
Very truly yours,
Steelton Bancorp, Inc..
By:
------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President and
Chief Executive Officer
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Mechanics Savings and Loan, FSA
By:
------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Executive Vice- President and
Chief Executive Officer
Accepted as of the date first above written.
CAPITAL RESOURCES, INC.
By: _____________________________________
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President
-27-
EXHIBIT A
Capital Resources
Broker/Dealer Jurisdictions
California New Jersey
Colorado New Mexico
Connecticut New York
District of Columbia Nevada
Florida North Carolina
Georgia Ohio
Iowa Oregon
Idaho Pennsylvania
Illinois South Carolina
Indiana Tennessee
Kansas Texas
Kentucky Virginia
Louisiana West
Maryland Virginia
Massachusetts Wisconsin
Michigan
Minnesota
Missouri
-28-
EXHIBIT B
(Form of Selected Dealers' Agreement)
369,750 - 500,250 Shares
(subject to increase up to 575,288 shares
in the event of an oversubscription)
STEELTON BANCORP, INC.
(a Pennsylvania corporation)
COMMON STOCK
($0.10 Par Value Per Share)
, 1999
[ ]
[ ]
[ ][ ]. [ ]
Gentlemen:
We have agreed to assist Steelton Bancorp, Inc. (the "Company") and
Mechanics Savings and Loan, FSA, a federally chartered mutual savings and loan
association (the "Bank"), in connection with the offer and sale of up to 575,288
shares of the Company's common stock, $0.10 par value (the "Shares"), to be
issued in connection with the conversion of the Bank to a federally chartered
stock savings association (the "Conversion"). The total number of Shares may be
decreased to a minimum of 369,750 Shares. The Shares, the number of shares to be
issued, and certain of the terms on which they are being offered, are more fully
described in the enclosed Prospectus dated _________________ , 1999 (the
"Prospectus").
In connection with its Conversion, the Company has offered the Shares in a
Subscription Offering to certain account holders and other members of the Bank
as well as in a Community Offering and Syndicated Community Offering. The Shares
are also being offered in accordance with the Plan of Conversion by a selling
group of broker-dealers.
We are offering the selected dealers (of which you are one) the opportunity
to participate in the solicitation of offers to buy the Shares and we will pay
you a fee in the amount of _______ percent (___ %) of the dollar amount of the
Shares sold on behalf of the Company by you, as evidenced by the authorized
designation of your firm on the order form or forms of such Shares accompanying
the funds transmitted for payment therefor to the special account established by
the Company for the purpose of holding such funds. It is understood, of course,
that payment of your fee will be made only out of compensation received by us
for the Shares sold on behalf of the Company by you, as evidenced in according
with the preceding sentence. As soon as practicable after the closing date of
the offering, we will remit to you, out of our compensation as provided above,
the fees to which you are entitled hereunder.
Each order form for the purchase of the Shares must set forth the identity
and address of each person to whom the certificates for such Shares should be
issued and delivered. Such order form should clearly identify your firm. You
shall instruct any subscriber who elects to send his order form to you to make
any accompanying check payable to "Steelton Bancorp, Inc."
This offer is made subject to the terms and conditions herein set forth and
is made only to selected
dealers who are (i) members in good standing of the National Association of
Securities Dealers, Inc. ("NASD") who are to comply with all applicable rules of
the NASD, including without limitation, the "Free-Riding and Withholding"
interpretation (IM-2110-1) of the Board of Governors of the NASD and Conduct
Rule 2740 of the NASD's Conduct Rules, or (ii) foreign dealers not eligible for
membership in the NASD who agree (A) not to sell any Common Stock within the
United States, its territories or possessions or to persons who are citizens
thereof or residents therein and (B) in making other sales to comply with the
above-mentioned NASD Interpretation and Conduct Rules 2878, 2740, and 2750 as if
they were NASD members, and Conduct Rule 2420 as it applies to non-member
brokers or dealers in a foreign country.
Orders for Shares will be strictly subject to confirmation and we, acting
on behalf of the Company and the Bank, reserve the right in our uncontrolled
discretion to reject any order in whole or in part, to accept or reject orders
in the order of their receipt or otherwise, and to allot. Neither you nor any
person is authorized by the Company, the Bank or by us to give any information
or make any representations other than those contained in the Prospectus in
connection with the sale of the Shares. No selected dealer is authorized to act
as agent for us when soliciting offers to buy the Shares from the public or
otherwise. No selected dealer shall engage in any stabilizing (as defined in
Regulation M promulgated under the Securities Exchange Act of 1934, as amended)
with respect to the Shares during the offering.
We and each selected dealer assisting in selling Shares pursuant hereto
agree to comply with the applicable requirements of the Securities Exchange Act
of 1934, as amended and applicable state rules and regulations. In addition, we
and each selected dealer confirm that the Securities and Exchange Commission
interprets Rule 15c2-8 promulgated under the Securities Exchange Act of 1934, as
amended, as requiring that a Prospectus be supplied to each person who is
expected to receive a confirmation of sale 48 hours prior to delivery of such
person's order form.
We and each selected dealer further agree to the extent that our customers
desire to pay for shares with funds held by or to be deposited with us, in
accordance with the interpretation of the Securities Exchange Commission of Rule
15c2-4 promulgated under the Securities Exchange Act of 1934, as amended, either
(a) upon receipt of an executed order form or direction to execute an order on
behalf of a customer, to forward the offering price for the Shares ordered on or
before twelve noon of the business day following receipt or execution of an
order form by us to the Company for deposit in a segregated account or (b) to
solicit indications of interest in which event (i) we will subsequently contact
any customer indicating interest to confirm the interest and give an order form
or to receive authorization to execute the order form on the customer's behalf,
(ii) we will mail acknowledgments of receipt of orders to each customer
confirming interest on the business day following such confirmation, (iii) we
will debit accounts of such customers on the fifth business day (the "debit
date") following receipt of the confirmation referred to in (i) and (ii) we will
forward completed order forms together with such funds to the Company on or
before twelve noon on the next business day following the debit date for deposit
in a segregated account. We and each selected dealer acknowledge that if the
procedure in (b) is adopted, our customers' funds are not required to be in
their accounts until the debit date. We and each selected dealer agree that no
method of payment, other than as set forth in this paragraph, will be employed
for shares of Shares sold pursuant to this Agreement.
Unless earlier terminated by us, this Agreement shall terminate upon the
closing date of this offering. We may terminate this Agreement or any provisions
hereof at any time by written or telegraphic notice to you. Of course, our
obligations hereunder are subject to the successful completion of the offering.
You agree that at any time or times prior to the termination of this
Agreement you will, upon our request, report to us the number of Shares sold on
behalf of the Company by you under this Agreement.
We shall have full authority to take such actions as we may deem advisable
in respect of all matters pertaining to the offering. We shall be under no
liability to you except for the lack of good faith and for obligations expressly
assumed by us in this Agreement.
Upon application to us, we will inform you as to the states in which we
believe the Shares have been qualified for sale under, or are exempt from the
requirements of, the respective blue sky law of such states, but we assume no
responsibility or obligation as to your rights to sell Shares in any state.
Additional copies of the Prospectus and any supplements thereto will be
supplied in reasonable quantities upon request.
Any notice from us to you shall be deemed to have been duly given if
mailed, telephoned, or telegraphed to you at the address to which this Agreement
is mailed.
This Agreement shall be construed in accordance with the laws of the
District of Columbia
Please confirm your agreement hereto by signing and returning the
confirmation accompanying this letter at once to us at Capital Resources, Inc.,
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇. The enclosed
duplicate copy will evidence the agreement between us.
Sincerely,
CAPITAL RESOURCES, INC.
By:
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