PSB BANCORP, INC.
(a Pennsylvania Corporation)
3,099,728 Shares
(Subject to Increase Up to 3,564,698 Shares)
COMMON STOCK (No Par Value)
Subscription Price $10.00 Per Share
AGENCY AGREEMENT
May __, 1998
▇▇▇▇▇▇▇ ▇▇▇▇ & Company
A Division of ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
PSB Bancorp, Inc. (the "Holding Company"), PSB Mutual Holding Company
(the "MHC") and Pennsylvania Savings Bank (the "Bank") (collectively, the
"Primary Parties") hereby confirm, jointly and severally, their agreement with
▇▇▇▇▇▇▇ ▇▇▇▇ & Company ("▇▇▇▇" or the "Agent"), a Division of ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇, Inc. ("KBW"), as follows:
Section 1. The Offering. The Holding Company is offering up to
3,099,728 shares of common stock, no par value per share (the "Common Stock")
(subject to an increase up to 3,564,698 shares), in (i) an exchange offering
(the "Exchange Offering"), (ii) a subscription offering (the "Subscription
Offering"), (iii) a direct community offering (the "Direct Community Offering")
and, if necessary, (iv) a syndicated community offering (the "Syndicated
Community Offering"), in connection with the reorganization of the Bank from a
subsidiary of the MHC to a wholly-owned subsidiary of the Holding Company (the
"Reorganization"), all pursuant to the Plan of Conversion from Mutual Holding
Company to Stock Holding Company and Agreement and Plan of Reorganization (the
"Plan"). Pursuant to the Plan, the Reorganization will be effected as follows:
(i) the MHC will convert to an interim stock savings bank and merge
simultaneously with and into the Bank, with the Bank as the surviving entity and
(ii) a newly-formed interim stock savings bank ("Interim"), wholly owned by the
Holding Company, will merge with and into the Bank, resulting in the Bank
becoming a wholly owned subsidiary of the Holding Company.
In the Exchange Offering, each share of the common stock, par value
$1.00 per share, of the Bank (the "Bank Common Stock") held by the MHC will be
cancelled and each share of Bank Common Stock held by the Bank's other
stockholders (the "Public Stockholders") will be exchanged
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for shares of Common Stock ("Exchange Shares") pursuant to an exchange ratio
(the "Exchange Ratio") that will result in the Public Stockholders owning in the
aggregate approximately the same percentage of the outstanding shares of Common
Stock, upon consummation of the Reorganization, as the percentage of outstanding
Bank Common Stock they owned immediately prior to the Reorganization, excluding
fractional shares for which cash will be received and shares purchased by the
Public Stockholders in the Conversion Offerings (defined below), all as
described in the Plan.
In the Subscription Offering, non-transferable rights to subscribe for
up to 1,610,000 shares (subject to an increase up to 1,851,500 shares) of the
Common Stock ("Subscription Rights") will be granted, in the following priority:
(1) the Bank's depositors with account balances of $50.00 or more as of June 30,
1996 ("Eligible Account Holders"); (2) the Bank's tax-qualified Employee Stock
Ownership Plan ("ESOP"); and (3) the Bank's depositors with account balances of
$50.00 or more as of December 31, 1997 ("Supplemental Eligible Account
Holders"), subject to the priorities and purchase limitations set forth in the
Plan. Concurrently with the Subscription Offering, the Holding Company will
offer all shares of Common Stock offered but not subscribed for in the
Subscription Offering, if any, in the Direct Community Offering to members of
the general public, with first preference given to Public Stockholders (who are
not Eligible Account Holders or Supplemental Eligible Account Holders) and then
to natural persons and trusts of natural persons who are permanent residents of
Philadelphia and ▇▇▇▇▇▇▇▇▇▇ Counties of Pennsylvania. Depending on market
conditions, shares not subscribed for in the Subscription Offering or purchased
in the Direct Community Offering may be offered in the Syndicated Community
Offering to eligible members of the general public on a best efforts basis by
approved broker-dealer firms ("Assisting Brokers") which are members of the
National Association of Securities Dealers, Inc. ("NASD").
The Holding Company will issue shares of its Common Stock (the
"Conversion Shares") in the Subscription Offering, Direct Community Offering,
and Syndicated Community Offering (collectively, the "Conversion Offerings") at
a purchase price of $10.00 per share (the "Purchase Price"). If the number of
Conversion Shares and Exchange Shares (collectively, the "Shares") is increased
or decreased in accordance with the Plan, the term "Shares" shall mean such
greater or lesser number, where applicable.
The Holding Company has filed with the U.S. Securities and Exchange
Commission (the "Commission") a Registration Statement on Form S-1 (File No.
333-37511) containing a prospectus relating to the Exchange Offering and the
Conversion Offerings (collectively, the "Offerings") for the registration of the
Shares under the Securities Act of 1933, as amended (the "1933 Act"), and has
filed such amendments thereto as have been required to the date hereof (the
"Registration Statement"). The prospectus, as amended, included in the
Registration Statement at the time it initially became effective is hereinafter
called the "Prospectus," except that if any prospectus is filed by the Holding
Company pursuant to Rule 424(b) or (c) of the regulations of the Commission
under the 1933 Act differing from the prospectus included in the Registration
Statement at the time it initially becomes effective, the term "Prospectus"
shall refer to the prospectus filed pursuant to Rule 424(b) or (c) from and
after the time said prospectus is filed with the Commission and shall
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include any supplements and amendments thereto from and after their dates of
effectiveness or use, respectively.
In connection with the Reorganization, pursuant to Pennsylvania law and
the rules, regulations and policies of the Pennsylvania Department of Banking
(the "PDOB") and the rules, regulations and policies of the Federal Deposit
Insurance Corporation (the "FDIC") (together, the "Conversion Regulations"), the
MHC and the Bank filed with the PDOB and the FDIC an Application for Approval of
Conversion, including exhibits and the Prospectus, and has filed amendments
thereto as required by the FDIC and PDOB (as so amended, the "Conversion
Application"). The Bank's applications with the FDIC and PDOB for approval of
(i) the merger of MHC (after its conversion to an interim stock savings bank)
with and into the Bank and (ii) the merger of Interim with and into the Bank
(collectively, the "Merger Applications") were filed as exhibits to the
Conversion Application. The Holding Company filed with the Board of Governors of
the Federal Reserve System ("FRB") its application on Form FRY-3 (the "Holding
Company Application") to acquire the Bank under the Bank Holding Company Act of
1956, as amended, and the regulations promulgated thereunder ("BHCA").
Section 2. Appointment of the Agent. Subject to the terms and
conditions of this Agreement, the Primary Parties hereby appoint ▇▇▇▇ as their
financial advisor and marketing agent to utilize its best efforts to solicit
subscriptions for the Conversion Shares and to advise and assist the Primary
Parties with respect to the sale of the Conversion Shares in the Conversion
Offerings.
On the basis of the representations and warranties of the Primary
Parties contained in, and subject to the terms and conditions of, this
Agreement, the Agent accepts such appointment and agrees to consult with and
advise the Holding Company and the Bank as to the matters set forth in the
letter agreement ("Letter Agreement"), dated July 28, 1997, between the Bank and
▇▇▇▇ (a copy of which is attached hereto as Exhibit A). It is acknowledged by
the Primary Parties that the Agent shall not be obligated to purchase any Shares
and shall not be obligated to take any action which is inconsistent with any
applicable law, regulation, decision or order. Subscriptions for Conversion
Shares will be offered by means of order forms as described in the Prospectus.
Except as provided in the paragraph below, the appointment of the Agent
hereunder shall terminate upon consummation of the Offerings.
▇▇▇▇ agrees to act as financial advisor to the Bank and the Holding
Company for a period of one year following the consummation of the
Reorganization for no additional fee to render general advice on financial
matters, including dividend policy, and share repurchase programs, assistance
with shareholder reporting and shareholder relations matters, general advice on
mergers and acquisitions (but not including advice with respect to a specific
acquisition transaction by, or sale of, the Bank or the Holding Company), and
other related financial matters which are brought to the attention of the Bank
or the Holding Company. However, nothing in this Agreement shall require the
Holding Company or the Bank to obtain such financial advisory services from
▇▇▇▇. After the completion of such one year period, if the parties wish to
continue the relationship, a fee will be
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negotiated and an agreement with respect to specific advisory services will be
entered into at that time.
If selected broker-dealers are used to assist in the sale of Conversion
Shares in the Syndicated Community Offering, the Primary Parties hereby appoint,
subject to the terms and conditions of this Agreement, ▇▇▇▇ to manage such
broker-dealers in the Syndicated Community Offering. On the basis of the
representations and warranties of the Primary Parties contained in, and subject
to the terms and conditions of, this Agreement, ▇▇▇▇ accepts such appointment
and agrees to manage the selling group of broker-dealers in the Syndicated
Community Offering.
Section 3. Refund of Purchase Price. In the event that the
Reorganization is not consummated for any reason, including but not limited to
the inability to sell the Conversion Shares during the Offerings (including any
permitted extension thereof), this Agreement shall terminate and any persons who
have subscribed for any of the Conversion Shares shall have refunded to them the
full amount which has been received from such person, together with interest at
the Bank's current passbook rate, from the date payment is received as provided
in the Prospectus. Upon termination of this Agreement, neither the Agent nor the
Primary Parties shall have any obligation to the other except that (i) the
Primary Parties shall remain liable for any amounts due pursuant to Sections
4(a), 8, 10 and 11 hereof, unless the transaction is not consummated due to the
breach by the Agent of a warranty, representation or covenant; and (ii) the
Agent shall remain liable for any amount due pursuant to Sections 10 and 11
hereof, unless the transaction is not consummated due to the breach by the
Primary Parties of a warranty, representation or covenant.
Section 4. Fees. In addition to the expenses specified in Section 8
hereof, as compensation for the Agent's services under this Agreement, the Agent
has received or will receive the following fees from the Primary Parties:
(a) A management fee in the amount of $25,000. Such fee has
been earned and paid in full.
(b) A fee of 1.5% of the aggregate Purchase Price of the
Conversion Shares sold in the Subscription Offering and the Direct Community
Offering, excluding those shares purchased by the Bank's officers, directors or
employees (or members of their immediate families), the ESOP, and any tax
qualified or stock based compensation plan (except Individual Retirement
Accounts) or similar plan created by the Bank for some or all of its directors
or employees. The fee to be paid pursuant to this subsection (b) shall not
exceed $100,000. In the event, with respect to any stock purchases, fees are
paid pursuant to this subsection (b), such fees shall be paid in lieu of, and
not in addition to, payments to the Agent pursuant to subsection (a).
(c) A fee not to exceed 5.5% of the aggregate Purchase Price
of the Conversion Shares sold by Assisting Brokers in any Syndicated Community
Offering. The Agent will pay the Assisting Brokers which assisted in the
purchase of Conversion Shares in the Syndicated Community Offering a fee
competitive with gross underwriting discounts charged at such time for
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comparable amounts of stock sold at a comparable price per share in a similar
market environment. The decision to utilize Assisting Brokers will be made
jointly by the Agent on the one hand, and the Primary Parties, on the other
hand.
Section 5. Closing. If the minimum number of Conversion Shares
permitted to be sold in the Reorganization on the basis of the most recently
updated Reorganization appraisal are subscribed for at or before the termination
of the Offerings, and the other conditions to the completion of the
Reorganization are satisfied, the Holding Company agrees to issue the Shares on
the Closing Date (as hereinafter defined) against payment therefor by the means
authorized by the Plan and to deliver certificates evidencing ownership of the
Conversion Shares in such authorized denominations and registered in such names
as may be indicated on the subscription order forms directly to the purchasers
thereof as promptly as practicable after the Closing Date. The Closing shall be
held at the offices of special counsel to the Primary Parties, or at such other
place as shall be agreed upon among the Primary Parties and the Agent, at 10:00
a.m. on a business day selected by the Holding Company which business day shall
be no less than two business days following the giving of prior notice by the
Holding Company to the Agent or at such other time as shall be agreed upon by
the Primary Parties and the Agent. At the Closing, the Primary Parties shall
deliver to the Agent in same-day funds the commissions, fees and expenses owing
to the Agent as set forth in Sections 4 and 8 hereof and the opinions required
hereby and other documents deemed reasonably necessary by the Agent shall be
executed and delivered to effect the sale of the Shares as contemplated hereby
and pursuant to the terms of the Prospectus. The Holding Company shall notify
the Agent when funds shall have been received for the minimum number of shares
of the Common Stock. The date upon which the Holding Company shall release the
Conversion Shares for delivery in accordance with the terms hereof is referred
to herein as the "Closing Date."
As soon as practicable after the Closing Date, the Holding Company and
the Bank shall cause a letter of transmittal to be mailed to each Public
Stockholder advising such Public Stockholder of the terms of the Exchange
offering and the procedure for surrendering to an agent, duly appointed by the
Holding Company (the "Exchange Agent"), the certificates evidencing shares of
Bank Common Stock issued and outstanding as of the Closing Date. Upon surrender
of each such certificate to the Exchange Agent, the Holding Company agrees to
issue to the holder thereof or his or her designee a certificate or certificates
representing the number of full Exchange Shares based on the Exchange Ratio.
Section 6.A. Representations and Warranties of the Primary Parties. The
Primary Parties jointly and severally represent and warrant to the Agent that:
(a) The Primary Parties 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 Shares as provided herein and as described in the Prospectus. The
consummation of the Reorganization, 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 Primary Parties and this
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Agreement has been validly executed and delivered by the Primary Parties and,
assuming valid execution and delivery by the Agent, is the valid, legal and
binding agreement of the Primary Parties enforceable in accordance with its
terms, except to the extent, if any, that the provisions of Sections 10 and 11
hereof may be unenforceable as against public policy, and except to the extent
that such enforceability may be limited by bankruptcy laws, insolvency laws, or
other laws affecting the enforcement of creditors' rights generally, or the
rights of creditors of savings institutions insured by the FDIC (including the
laws relating to the rights of the contracting parties to equitable remedies).
(b) The Registration Statement was declared effective by the
Commission on May __, 1998; and no stop order has been issued with respect
thereto and no proceedings therefor have been initiated or, to the best
knowledge of the Primary Parties, threatened by the Commission. At the time the
Registration Statement, including the Prospectus contained therein (including
any amendment or supplement thereto), became effective, the Registration
Statement complied as to form in all material respects with the requirements of
the 1933 Act and the regulations promulgated thereunder and the Registration
Statement, including the Prospectus contained therein (including any amendment
or supplement thereto), any Blue Sky Application or any Sales Information (as
such terms are defined in Section 10 hereof) authorized by the Primary Parties
for use in connection with the Offerings 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)
Prospectus was filed with the Commission and at the Closing Date referred to in
Section 5, the Registration Statement, including the Prospectus contained
therein (including any amendment or supplement thereto), and any Blue Sky
Application or any Sales Information authorized by the Primary Parties for use
in connection with the Offerings will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that the representations and warranties in
this Section 6A(c) shall not apply to statements or omissions made in reliance
upon and in conformity with written information furnished to the Primary Parties
by the Agent expressly regarding the Agent or KBW for use under the captions
"Market for Common Stock," "The Conversion and Reorganization -- Plan of
Distribution for the Subscription, Direct Community and Syndicated Community
Offerings" and "--Description of Sales Activities" or written statements or
omissions from any sales information or information filed pursuant to state
securities or blue sky laws or regulations regarding the Agent or KBW.
(c) The Conversion Application, including the Plan, the
Prospectus, the Proxy Statement of the MHC relating to the special meeting of
the members of the MHC at which the Plan shall be considered for approval by the
MHC's eligible voting members, and the Proxy Statement of the Bank relating to
the special meeting of stockholders at which the Plan shall be considered for
approval by the Bank's eligible voting stockholders (collectively, the "Proxy
Statements"), was approved by the FDIC on _______, 1998 and by the PDOB on
________, 1998. At the time of the approval of the Conversion Application,
including the Prospectus, by the FDIC and the PDOB (including any amendment or
supplement thereto) and at all times subsequent thereto until the
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Closing Date, the Conversion Application, including the Prospectus, did and will
comply as to form in all material respects with the Conversion Regulations and
any other applicable rules and regulations of the FDIC or the PDOB (except as
modified or waived in writing by the FDIC or the PDOB). At the time of the
approval of the Conversion Application, and as of the date of this Agreement,
the Conversion Application, including the Prospectus (including any amendment or
supplement thereto), did not and 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 subsection (d) shall not apply to statements or omissions
made in reliance upon and in conformity with written information furnished to
the Primary Parties by the Agent expressly regarding the Agent or KBW, for use
in the Prospectus contained in the Conversion Application under the captions
"Market for Common Stock," "The Conversion and Reorganization -- Plan of
Distribution for the Subscription, Direct Community and Syndicated Community
Offerings" and "--Description of Sales Activities" or written statements or
omissions from any sales information or information filed pursuant to state
securities or blue sky laws or regulations regarding the Agent.
(d) No order has been issued by the FDIC, the PDOB, the
Commission, or any state regulatory authority, preventing or suspending the use
of the Prospectus and no action by or before any such government entity to
revoke any approval, authorization or order of effectiveness related to the
Reorganization is pending or, to the best knowledge of the Primary Parties,
threatened.
(e) The Plan has been adopted by the Board of Directors of the
Holding Company, the MHC and the Bank. To the best knowledge of the Primary
Parties, no person has, or at the Closing Date will have, sought to obtain
review of the final action of the FDIC or the PDOB in approving the Plan, the
Reorganization, the Conversion Application or the Merger Application, pursuant
to the Conversion Regulations or any other statute or regulation.
(f) The Holding Company Application was approved by the FRB on
_______________, 1998. At the time of the approval of the Holding Company
Application and at all times subsequent thereto until the Closing Date, the
Holding Company Application did and will comply as to form in all material
respects with the BHCA. To the best knowledge of the Primary Parties, no person
has, or at the Closing Date will have, sought to obtain review of the final
action of the FRB in approving the Holding Company Application pursuant to the
BHCA or any other statute or regulation.
(g) The Merger Application was approved by the FDIC on
_______________, 1998 and by the PDOB on _____________, 1998. At the time of the
approval of the Merger Application and at all times subsequent thereto until the
Closing Date, the Merger Application did and will comply as to form in all
material respects with the applicable provisions of the Federal Deposit
Insurance Act and the regulations promulgated thereunder and with the applicable
provisions of Pennsylvania law and the regulations promulgated thereunder. To
the best knowledge of the Primary Parties, no person has, or at the Closing Date
will have, sought to obtain review of the final action of the FDIC or the PDOB
in approving the Merger Application.
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(h) R.P. Financial, LC., which prepared the appraisal of the
pro forma market value of the Bank and the MHC on which the Offerings were based
(the "Appraisal"), has advised the Primary Parties in writing that it is
independent with respect to each of the Primary Parties within the meaning of
the Conversion Regulations.
(i) Stockton ▇▇▇▇▇ & Co., P.C., which certified the financial
statements filed as part of the Registration Statement and the Conversion
Application, has advised the Primary Parties in writing that they are, with
respect to each of the Primary Parties, independent certified public accountants
under the 1933 Act and the regulations promulgated thereunder.
(j) The financial statements and the notes thereto which are
included in the Registration Statement and which are a part of the Prospectus
present fairly the financial condition and shareholders' equity of the Bank as
of the dates indicated and the results of operations and cash flows for the
periods specified. The financial statements comply in all material respects with
the applicable accounting requirements of Regulation S-X of the Commission and
generally accepted accounting principles ("GAAP") applied on a consistent basis
during the periods presented except as otherwise noted therein, 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 Bank with the PDOB and the FDIC except that accounting principles employed
in such filings conform to requirements of such authorities and not necessarily
to GAAP. The other financial, statistical and pro forma information and related
notes included in the Prospectus present fairly the information shown therein on
a basis consistent with the audited and unaudited financial statements included
in the Prospectus, and as to the pro forma adjustments, the adjustments made
therein have been properly applied on the basis described therein.
(k) Since the respective dates as of which information is
given in the Registration Statement, including the Prospectus: (i) there has not
been any material adverse change in the financial condition or in the earnings,
capital, properties or business affairs of any of the Primary Parties or of the
Primary Parties considered as one enterprise, whether or not arising in the
ordinary course of business; (ii) there has not been any material increase in
the aggregate amount of loans past due ninety (90) days or more, any real estate
acquired by foreclosure or loans characterized as "in substance foreclosure" or
any change in total assets of the Bank in an amount greater than $3.0 million;
nor has the Bank issued any securities or incurred any liability or obligation
for borrowings other than in the ordinary course of business; (iii) there have
not been any material transactions entered into by any of the Primary Parties,
other than those in the ordinary course of business; and (iv) the
capitalization, liabilities, assets, properties and business of the Primary
Parties conform in all material respects to the descriptions thereof contained
in the Prospectus and, none of the Primary Parties has any material liabilities
of any kind, contingent or otherwise, except as disclosed in the Registration
Statement or the Prospectus.
(l) The Holding Company is a corporation organized and in good
standing under the laws of the Commonwealth of Pennsylvania, with corporate
power and authority to own its properties and to conduct its business as
described in the Prospectus, and is duly qualified to transact
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business and is in good standing in each jurisdiction in which the conduct of
its business requires such qualification unless the failure to qualify in one or
more of such jurisdictions would not have a material adverse effect on the
financial condition, earnings, capital, properties or business affairs of the
Primary Parties. The Holding Company has obtained all licenses, permits and
other governmental authorizations currently required for the conduct of its
business, except those that individually or in the aggregate would not
materially adversely affect the financial condition, earnings, capital, assets
or properties of the Primary Parties taken as a whole; and all such licenses,
permits and governmental authorizations are in full force and effect, and the
Holding Company is complying in all material respects therewith.
(m) The MHC is organized and is validly existing as a mutual
holding company under the laws of the Commonwealth of Pennsylvania, and is duly
authorized to conduct its business and own its property as described in the
Registration Statement and the Prospectus; the MHC has obtained all licenses,
permits and other governmental authorizations required for the conduct of its
business except those that individually or in the aggregate would not materially
adversely affect the financial condition, earnings, capital, assets or
properties of the Primary Parties taken as a whole; all such licenses, permits
and governmental authorizations are in full force and effect and the MHC is
complying therewith in all material respects; the MHC is duly qualified as a
foreign corporation to transact business in each jurisdiction in which the
failure to be so qualified in one or more of such jurisdictions would have a
material adverse effect on the financial condition, earnings, capital, assets
properties or business of the Primary Parties.
(n) The MHC does not own any equity securities or any equity
interest in any business enterprise except as described in the Prospectus.
(o) The Bank is organized and validly existing as a
Pennsylvania-chartered savings bank in stock form, and is duly authorized to own
its properties and conduct its business as described in the Prospectus; the
activities of the Bank are permitted by the rules, regulations and practices of
the FDIC and PDOB; the Bank has obtained all licenses, permits and other
governmental authorizations currently required for the conduct of its business
except those that individually or in the aggregate would not materially
adversely affect the financial condition of the Primary Parties taken as a
whole; all such licenses, permits and other governmental authorizations are in
full force and effect and the Bank is duly qualified as a foreign corporation to
transact business in each jurisdiction in which failure to so qualify would have
a material adverse effect upon the financial condition, earnings, capital,
properties or business affairs of the Bank; all of the issued and outstanding
capital stock of the Bank after the Reorganization will be duly and validly
issued and fully paid and nonassessable; and the Holding Company will directly
own all of such capital stock free and clear of any mortgage, pledge, lien,
encumbrance, claim or restriction. The Bank does not own equity securities or
any equity interest in any other business enterprise except for Transnational
Mortgage Corporation, PSA Service Corp., PSA Financial Corp. and PSA Consumer
Discount Company (the "Subsidiaries") and as otherwise described in the
Prospectus.
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(p) The Bank is a member of the Federal Home Loan Bank of
Pittsburgh ("FHLB of Pittsburgh"); the deposit accounts of the Bank are insured
by the FDIC up to applicable limits.
(q) The Bank's authorized capital stock consists solely of
10,000,000 shares of the Bank Common Stock, of which 1,194,640 shares are issued
and outstanding as of the date hereof (615,250 issued and outstanding to the
MHC); and the MHC is not authorized to issue any shares of capital stock.
(r) The Subsidiaries are organized, validly existing and in
good standing under the laws of the Commonwealth of Pennsylvania, with full
power and authority to own their property and conduct their business; each of
the Subsidiaries is duly qualified as a foreign corporation to transact business
in each jurisdiction in which failure to so qualify would have a material
adverse effect on the financial condition, earnings, capital, assets or
properties of the Primary Parties and their subsidiaries, taken as a whole; the
Subsidiaries hold all licenses, certificates and permits from governmental
authorities necessary for the conduct of their business, except where failure to
hold such licenses, permits or authorizations would not have a material adverse
effect on the financial condition, earnings, capital, assets or properties of
the Primary Parties, taken as a whole; all of the outstanding capital stock of
the Subsidiaries has been duly authorized and is fully paid and non-assessable,
and is owned directly or indirectly by the Bank, free and clear of any liens or
encumbrances; the activities of the Subsidiaries are permitted to be conducted
by subsidiaries of a Pennsylvania-chartered savings bank pursuant to
Pennsylvania law, the Federal Deposit Insurance Act and the regulations
promulgated thereunder and the BHCA and the regulations promulgated thereunder.
(s) Upon consummation of the Reorganization, the authorized,
issued and outstanding equity capital of the Holding Company will be within the
range set forth in the Prospectus under the caption "Capitalization," and,
except for the shares of Common Stock held by the Bank, which will be cancelled
as of the Closing Date, no shares of Common Stock have been or will be issued
and outstanding prior to the Closing Date; the shares of Common Stock to be
issued in the Exchange Offering and subscribed for in the Conversion Offering
have been duly and validly authorized for issuance, and when issued and
delivered by the Holding Company pursuant to the Plan against payment of the
consideration calculated as set forth in the Plan and the Prospectus, will be
duly and validly issued and fully paid and nonassessable; the issuance of the
shares of Common Stock is not subject to preemptive rights, except for the
Subscription Rights granted pursuant to the Plan; and the terms and provisions
of the shares of Common Stock will conform in all material respects to the
description thereof contained in the Prospectus. Upon issuance of the Shares,
good title to the Shares will be transferred from the Holding Company to the
Public Stockholders in the Exchange Offering and to the purchasers of Shares
against payment therefor in the Conversion Offering as set forth in the Plan and
the Prospectus, subject to such claims as may be asserted against the purchasers
thereof by third party claimants.
(t) None of the Primary Parties are in violation of their
respective articles of incorporation or their respective bylaws, or are in
material default in the performance or observance
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of any obligation, agreement, covenant, or condition contained in any contract,
lease, loan agreement, indenture or other instrument to which they are a party
or by which they, or any of their respective property, may be bound which would
result in a material adverse change in the financial condition, earnings,
capital, properties or business affairs of the Primary Parties considered as one
enterprise 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 articles of incorporation or
bylaws of the Holding Company, the MHC or the Bank, or materially conflict with
or constitute a material breach of, or default under, any material contract,
lease or other instrument to which any of the Primary Parties has a beneficial
interest, or any applicable law, rule, regulation or order that is material to
the financial condition of the Primary Parties on a consolidated basis; (ii)
violate any authorization, approval, judgment, decree, order, statute, rule or
regulation applicable to the Primary Parties except for such violations which
would not have a material adverse effect on the financial condition and results
of operations of the Primary Parties on a consolidated basis; or (iii) with the
exception of the liquidation account established in the Reorganization, result
in the creation of any material lien, charge or encumbrance upon any property of
the Primary Parties.
(u) No material default exists, and no event has occurred
which with notice or lapse of time, or both, would constitute a material default
on the part of any of the Primary Parties, in the due performance and observance
of any term, covenant or condition of any indenture, mortgage, deed of trust,
note, bank loan or credit agreement or any other material instrument or
agreement to which any of the Primary Parties is a party or by which any of them
or any of their property is bound or affected in any respect which, in any such
case, is material to the Primary Parties considered as one enterprise, and 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 Primary Parties,
threatened any action or proceeding wherein any of the Primary Parties is
alleged to be in default thereunder under circumstances where such action or
proceeding, if determined adversely to any of the Primary Parties, would have a
material adverse effect upon the Primary Parties considered as one enterprise.
(v) The Primary Parties have good and marketable title to all
assets which are material to the businesses of the Primary Parties and to those
assets described in the Prospectus as owned by them free and clear of all
material liens, charges, encumbrances, restrictions or other claims, except such
as are described in the Prospectus or which do not have a material adverse
effect on the businesses of the Primary Parties taken as a whole; and all of the
leases and subleases which are material to the businesses of the Primary
Parties, as described in the Registration Statement or Prospectus, are in full
force and effect.
(w) Except as may be described in the Prospectus, the Primary
Parties are not in material violation of any directive from the PDOB, the FDIC,
the Commission or any other agency to make any material change in the method of
conducting their respective businesses; the Primary Parties have conducted and
are conducting their respective businesses so as to comply in all respects with
all applicable statutes and regulations (including, without limitation,
regulations, decisions, directives and orders of the PDOB, the Commission and
the FDIC), except where the failure to so
11
comply would not reasonably be expected to result in any material adverse change
in the financial condition, results of operations, capital, properties or
business affairs of the Primary Parties considered as one enterprise and, except
as set forth in the Prospectus, there is no charge, investigation, action, suit
or proceeding before or by any court, regulatory authority or governmental
agency or body pending or, to the best knowledge any of the Primary Parties,
threatened, which would reasonably be expected to materially and adversely
affect the Reorganization, the performance of this Agreement, or the
consummation of the transactions contemplated in the Plan as described in the
Registration Statement, or which would reasonably be expected to result in any
material adverse change in the financial condition, results of operations,
capital, properties or business affairs of the Primary Parties considered as one
enterprise.
(x) The Primary Parties have received an opinion of its
special counsel, ▇▇▇▇▇▇▇ & ▇▇▇, with respect to the federal and Pennsylvania
income tax consequences of the Reorganization, as described in the Registration
Statement and the Prospectus; and the facts and representations upon which such
opinions are based are truthful, accurate and complete, and none of the Primary
Parties will take any action inconsistent therewith.
(y) The Holding Company, the Bank and the MHC have timely
filed all required federal and state tax returns, have paid all taxes that have
become due and payable in respect of such returns, except where permitted to be
extended, have made adequate reserves for similar future tax liabilities, and,
except as disclosed in the Prospectus, no deficiency has been asserted with
respect thereto by any taxing authority.
(z) No further approval, authorization, consent or other order
of any regulatory or supervisory or other public authority is required for the
execution and delivery by the Primary Parties of this Agreement, or the issuance
of the Shares, except for ______________ and any necessary qualification,
notification, or registration or exemption under the securities or blue sky laws
of the various states in which the Shares are to be offered and except as may be
required under the rules and regulations of the NASD and/or Nasdaq.
(aa) None of the Primary Parties has: (i) issued any
securities within the last 18 months (except for (a) notes to evidence bank
loans or other liabilities in the ordinary course of business or as described in
the Prospectus and (b) shares of Common Stock issued to the Bank with respect to
the initial capitalization of the Holding Company); (ii) had any dealings with
respect to sales of securities within the 12 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 Offerings and
purchases and sales of U.S. government and agency and other securities in the
ordinary course of business; (iii) entered into a financial or management
consulting agreement except for the Letter Agreement and as contemplated
hereunder; or (iv) engaged any intermediary between the Agent and the Primary
Parties in connection with the offering of Shares, and no person is being
compensated in any manner for such service.
12
(ab) Neither the Primary Parties nor, to the best knowledge of
the Primary Parties, any employees of the Primary Parties have made any payment
of funds of the Primary Parties as a loan to any person for the purchase of
Conversion Shares, except for the Holding Company's loan to the ESOP the
proceeds of which will be used to refinance certain indebtedness of the ESOP and
to purchase Conversion Shares, or has made any other payment of funds prohibited
by law, and no funds have been set aside to be used for any payment prohibited
by law.
(ac) The Bank complies in all material respects with the
applicable financial recordkeeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1970, as amended, and the regulations
and rules thereunder.
(ad) The Primary Parties have not relied upon ▇▇▇▇ or its
counsel for any legal, tax or accounting advice in connection with the
Reorganization.
(ae) The records of Eligible Account Holders and Supplemental
Eligible Account Holders (as those terms are defined in the Plan) delivered to
the Agent by the Primary Parties or its agent for use during the Conversion have
been reviewed by the Primary Parties and are believed to be accurate, reliable
and complete and the Agent shall have no liability to any person relating to the
reliability, accuracy or completeness of such records or for any denial or
allocation of a subscription to purchase shares to any person based upon such
records.
(af) To the best knowledge of the Primary Parties, the Primary
Parties comply with all laws, rules and regulations relating to environmental
protection, and none of them has been notified or is otherwise aware that any of
them is potentially liable, or is considered potentially liable, under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, or any other federal, state or local environmental laws and
regulations; no action, suit, regulatory investigation or other proceeding is
pending, threatened against the Primary Parties relating to environmental
protection, nor do the Primary parties have any reason to believe any such
proceedings may be brought against any of them; and to the best knowledge of the
Primary Parties, no disposal, release or discharge of hazardous or toxic
substances, pollutants or contaminants, including petroleum and gas products, as
any of such terms may be defined under federal, state or local law, has occurred
on, in, at or about any facilities or properties owned or leased by any of the
Primary Parties or, to the best knowledge of the Bank, in which the Bank has a
security interest.
Any certificates signed by an officer of any of the Primary Parties and
delivered to the Agent or its counsel that refer to this Agreement shall be
deemed to be a representation and warranty by the Primary Parties to the Agent
as to the matters covered thereby with the same effect as if such representation
and warranty were set forth herein.
Section 6.B. Representations and Warranties of the Agent. Agent
represents and warrants to the Primary Parties that:
13
(a) KBW is a corporation and is validly existing in good
standing under the laws of the State of New York with full power and authority
to provide the services to be furnished to the Primary Parties 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 KBW, and this Agreement has
been duly and validly executed and delivered by KBW, and is the legal, valid and
binding agreement of Agent, enforceable in accordance with its terms except as
the enforceability thereof may be limited by (i) bankruptcy, insolvency,
moratorium, reorganization, conservatorship, receivership or other similar laws
relating to or affecting the enforcement of creditors' rights generally, (ii)
general equity principles regardless of whether such enforceability is
considered in a proceeding in equity or at law, and (iii) the extent, if any,
that the provisions of Sections 10 or 11 hereof may be unenforceable as against
public policy.
(c) Each of Agent 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.
(d) The execution and delivery of this Agreement by Agent, the
consummation of the transactions contemplated hereby and compliance with the
terms and provisions hereof will not conflict 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 articles of incorporation of KBW or any agreement, indenture or other
instrument to which KBW is a party or by which it or its property is bound.
(e) No action, suit, charge or proceeding is pending, or to
the knowledge of Agent threatened, against Agent which, if determined adversely
to Agent, would have a material adverse effect upon the ability of Agent to
perform obligations under this Agreement.
(f) No approval, authorization, consent or other order of any
regulatory or supervisory or other public authority is required for the
execution and delivery by Agent of this Agreement, except as may have been
received.
Section 7.A. Covenants of the Primary Parties. The Primary Parties
hereby jointly and severally covenant with the Agent as follows:
(a) The Holding 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 the Agent and its
counsel an opportunity to review such amendment or file any amendment or
supplement to which amendment the Agent or its counsel shall reasonably object.
(b) The Primary Parties will not, at any time after the date
any Application is approved, file any amendment or supplement to such
Application without providing the Agent and
14
its counsel an opportunity to review such amendment or supplement or file any
amendment or supplement to which amendment or supplement the Agent or its
counsel shall reasonably object.
(c) The Primary Parties [will use their best efforts to cause
the FRB to approve the Holding Company's acquisition of the Bank, and] 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 FDIC and the PDOB,
and will immediately upon receipt of any information concerning the events
listed below notify the Agent (i) when the Registration Statement, as amended,
has become effective; (ii) when the Conversion Application, as amended, has been
approved by the FDIC and the PDOB; (iii) when the Holding Company Application,
as amended, has been approved by the FRB; (iv) when the Merger Application, as
amended, has been approved by the FDIC and the PDOB; (v) of the receipt of any
comments from the Commission, the FDIC, the PDOB, or any other governmental
entity with respect to the Reorganization or the transactions contemplated by
this Agreement; (vi) of any request by the Commission, the FDIC, the PDOB, the
FRB or any other governmental entity for any amendment or supplement to the
Registration Statement, the Conversion Application, the Merger Application or
the Holding Company Application or for additional information; (vii) of the
issuance by the Commission, the FDIC, the PDOB, or any other governmental agency
of any order or other action suspending the Offerings or the use of the
Registration Statement or the Prospectus or any other filing of the Primary
Parties under the Conversion Regulations or other applicable law, or the threat
of any such action; (viii) of the issuance by the Commission, the PDOB, 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 (ix) of the occurrence of any event
mentioned in paragraph (f) below. The Primary Parties will make every reasonable
effort to prevent the issuance by the Commission, the PDOB, the FDIC or any
state authority of any order referred to in (vii) and (viii) above and, if any
such order shall at any time be issued, to obtain the lifting thereof at the
earliest possible time.
(d) The Primary Parties will deliver to the Agent and its
counsel conformed copies of each of the following documents, with all exhibits:
each of the Applications as originally filed and of each amendment or supplement
thereto, and the Registration Statement, as originally filed and each amendment
thereto. Further, the Primary Parties will deliver such additional copies of the
foregoing documents to counsel to the Agent as may be required for any NASD
filings. In addition, the Primary Parties will also deliver to the Agent such
number of copies of the Prospectus, as amended or supplemented, as the Agent may
reasonably request.
(e) The Primary Parties will comply in all material respects
with any and all terms, conditions, requirements and provisions with respect to
the Reorganization and the transactions contemplated thereby imposed by the
Commission, by applicable state law and regulations, and by the 1933 Act, the
Securities Exchange Act of 1934 (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 Prospectus is required to be
delivered, the Primary Parties will comply in all material respects, at their
own expense, with all material requirements
15
imposed upon them by the FDIC and the PDOB, the Conversion Regulations (except
as modified or waived in writing by the FDIC and the PDOB), 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, 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 Prospectus.
(f) The Primary Parties will inform the Agent of any event or
circumstances of which it is aware as a result of which the Registration
Statement and/or Prospectus, as then supplemented or amended, would include an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading. If it is necessary, in
the reasonable opinion of counsel for the Primary Parties, to amend or
supplement the Registration Statement or the Prospectus in order to correct such
untrue statement of a material fact or to make the statements therein not
misleading in light of the circumstances existing at the time of their use, the
Primary Parties will, at their expense, forthwith prepare, file with the
Commission, the FDIC and the PDOB, and furnish to the Agent, a reasonable number
of copies of an amendment or amendments of, or a supplement or supplements to,
the Registration Statement and the Prospectus (in form and substance reasonably
satisfactory to counsel for the Agent after a reasonable time for review) which
will amend or supplement the Registration Statement and/or the 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, not
misleading. For the purpose of this subsection, each of the Primary Parties will
furnish such information with respect to itself as the Agent may from time to
time reasonably request.
(g) Pursuant to the terms of the Plan, the Holding Company
will endeavor in good faith, in cooperation with the Agent, to register or to
qualify the Shares for offering and sale or to exempt such Shares from
registration and to exempt the Holding Company and its officers, directors and
employees from registration as broker-dealers, under the applicable securities
laws of the jurisdictions in which the Offerings will be conducted; provided,
however, that the Holding 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 registered or qualified as above provided, the Holding Company
will make and file such statements and reports in each year as are or may be
required by the laws of such jurisdictions.
(h) The liquidation account for the benefit of Eligible
Account Holders and Supplemental Eligible Account Holders will be duly
established and maintained in accordance with the requirements of the FDIC and
the PDOB, and such Eligible Account Holders and Supplemental Eligible Account
Holders who continue to maintain their savings accounts in the Bank will have an
inchoate interest in their pro rata portion of the liquidation account which
shall have a priority superior to that of the holders of shares of Common Stock
in the event of a complete liquidation of the Bank.
16
(i) The Holding Company will not sell or issue, contract to
sell or otherwise dispose of, for a period of 90 days after the date hereof,
without the Agent's prior written consent, which consent shall not be
unreasonably withheld, any shares of Common Stock other than in connection with
any plan or arrangement described in the Prospectus.
(j) For the period of three years from the date of this
Agreement, the Holding Company will furnish to the Agent (i) a copy of each
report of the Holding 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 Holding Company is listed or quoted, (ii) a copy of each
report of the Holding Company mailed to holders of Common Stock or
non-confidential report filed with the Commission or any supervisory or
regulatory authority or any national securities exchange or system on which any
class of the securities of the Holding Company is listed or quoted, and (iii)
from time to time, such other publicly available information concerning the
Holding Company and the Bank as the Agent may reasonably request.
(k) The Holding Company and the Bank will use the net proceeds
from the sale of the Common Stock in the manner set forth in the Prospectus
under the caption "Use of Proceeds."
(l) The Holding Company and the Bank will distribute the
Prospectus or other offering materials in connection with the offering and sale
of the Common Stock only in accordance with the Conversion Regulations, the 1933
Act and the 1934 Act and the rules and regulations promulgated under such
statutes, and the laws of any state in which the shares are qualified for sale.
(m) The Holding Company shall register its Common Stock under
Section 12(g) of the 1934 Act, concurrent with the effective date of the
Registration Statement. The Holding Company shall maintain the effectiveness of
such registration for not less than three years or such shorter period as
permitted by the FDIC and the PDOB.
(n) For so long as the Common Stock is registered under the
1934 Act, the Holding Company will furnish to its stockholders as soon as
practicable after the end of each fiscal year such reports and other information
as are required to be furnished to its stockholders under the 1934 Act
(including consolidated financial statements of the Holding Company and its
subsidiaries, certified by independent public accountants).
(o) The Holding Company will comply with the provisions of
Rule 158 of the 1933 Act.
(p) The Holding Company will report the use of proceeds of the
conversion offerings as required pursuant to Rule 463 under the 1933 Act.
(q) The Holding Company will use its best efforts to obtain
approval for the listing of, and maintain the quotation of, the Common Stock on
the Nasdaq National Market, effective on or prior to the Closing Date.
17
(r) The Primary Parties will maintain appropriate arrangements
for depositing all funds received from persons mailing subscriptions for or
orders to purchase Conversion Shares on an interest bearing basis at the rate
described in the Prospectus until the Closing Date and satisfaction of all
conditions precedent to the release of the Holding Company's obligation to
refund payments received from persons subscribing for or ordering Conversion
Shares in the Conversion Offering, in accordance with the Plan as described in
the Prospectus, or until refunds of such funds have been made to the persons
entitled thereto or withdrawal authorizations canceled in accordance with the
Plan and as described in the Prospectus. The Primary Parties 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 Primary Parties 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 Prospectus.
(s) The Holding Company and the Bank will take such actions
and furnish such information as are reasonably requested by the Agent in order
for the Agent to ensure compliance with the "Interpretation of the Board of
Governors of the NASD on Free Riding and Withholding."
(t) The Primary Parties will conduct their businesses in
compliance in all material respects with all applicable federal and state laws,
rules, regulations, decisions, directives and orders including, all decisions,
directives and orders of the Commission, the PDOB and the FDIC.
(u) The Primary Parties will not amend the Plan of Conversion
without notifying the Agent prior thereto.
(v) The Holding Company shall provide the Agent with any
information necessary to carry out the allocation of the Conversion Shares in
the event of an oversubscription and such information shall be accurate and
reliable in all material respects. The Agent shall be entitled to rely on the
allocation instructions and shall have no liability in respect of its reliance
thereon, including without limitation, no liability for or related to any denial
or grant of a subscription in whole or in part.
(w) The Holding Company will not deliver the Shares until the
Primary Parties have satisfied or caused to be satisfied each condition set
forth in Section 9A hereof, unless such condition is waived in writing by the
Agent.
(x) Upon completion of the sale by the Holding Company of the
Shares contemplated by the Plan and the Prospectus, (i) the MHC shall have been
converted pursuant to the Plan to an interim stock savings bank and merged with
and into the Bank, (ii) all of the issued and outstanding capital stock of the
Bank shall be owned by the Holding Company, (iii) the Company shall have no
direct subsidiaries other than the Bank, and (iv) the Reorganization shall have
been effected in accordance with all applicable statutes, regulations, decisions
and orders; and all terms, conditions, requirements and provisions with respect
to the Reorganization (except those that are conditions subsequent) imposed by
the Commission, the FDIC, the PDOB or any other
18
governmental agency, if any, shall have been complied with by the Primary
Parties in all material respects or appropriate waivers shall have been obtained
and all notice and waiting periods shall have been satisfied, waived or elapsed.
(y) Prior to the Closing Date, the Plan shall have been
approved by the eligible voting members of the MHC and the eligible voting
stockholders of the Bank in accordance with the Conversion Regulations and the
provisions of MHC's and the Bank's respective charter and bylaws.
(z) As of the Closing Date, the Primary Parties shall have
completed all conditions precedent to the Reorganization in accordance with the
Plan and shall have complied in all material respects with applicable laws,
regulations (except as modified or waived in writing by the PDOB or the FDIC),
decisions and orders, including all terms, conditions, requirements and
provisions precedent to the Reorganization imposed upon it by the FDIC or the
PDOB as set forth in correspondence received from the FDIC and the PDOB.
(aa) On or before the Closing Date, the MHC and the Bank will
have completed all conditions precedent to the Reorganization specified in the
Plan and the offer and sale of the Shares will have been conducted in all
material respects in accordance with the Plan, the Conversion Regulations
(except as modified or waived in writing by the FDIC or the PDOB) and with all
other applicable laws, regulations, decisions and orders, including all terms,
conditions, requirements and provisions precedent to the Reorganization imposed
upon any of the Primary Parties by the FDIC, the PDOB, the Commission or any
other regulatory authority and in the manner described in the Prospectus.
Section 7.B. Covenants of Agent. Agent hereby covenants with the
Primary Parties as follows:
(a) During the period when the Prospectus is used, Agent will
comply, in all material respects and at its own expense, with all requirements
imposed upon it by the PDOB, the FDIC and, to the extent applicable, by the 1933
Act, the 1934 Act and the rules and regulations promulgated under the 1933 Act
and the ▇▇▇▇ ▇▇▇.
(b) Agent will distribute any Prospectus or offering materials
in connection with the offering and sale of the Common Stock only in accordance
with the Conversion Regulations and the requirements of the 1933 Act and 1934
Act and the rules and regulations promulgated thereunder.
(c) KBW undertakes to use its reasonable best efforts to make
a market in the Common Stock after the completion of the Offerings.
Section 8. Payment of Expenses. Whether or not the Reorganization is
completed or the sale and exchange of the Shares by the Holding Company is
consummated, the Primary Parties will
19
pay for all expenses incident to the performance of this Agreement, including
without limitation: (a) the preparation and filing of the all regulatory
applications; (b) the preparation, printing, filing, delivery and shipment of
the Registration Statement, including the Prospectus, and all amendments and
supplements thereto; (c) all filing fees and expenses in connection with the
qualification or registration of the Shares for offer and sale by the Holding
Company or the Bank under the securities or "blue sky" laws, including without
limitation filing fees, reasonable legal fees and disbursements of counsel in
connection therewith, and in connection with the preparation of a blue sky law
survey; (d) the filing fees of the NASD; and (e) the reasonable expenses of the
Agent, including without limitation, accounting, communications, legal and
travel expenses. Any such expense incurred by the Agent shall be reimbursed by
the Primary Parties. If this Agreement is terminated in accordance with the
provisions of Sections 3, 9, or 13, the Primary Parties shall pay the Agent the
fees earned pursuant to Section 4 and will reimburse the Agent for the
reasonable expenses of the Agent, including without limitation accounting,
communication, legal and travel expenses. The Agent's non-legal expenses shall
not exceed $7,500. The Agent's legal fees shall not exceed $30,000.
Section 9.A. Conditions to the Agent's Obligations. The obligations of
the Agent hereunder and the occurrence of the Closing and the Reorganization are
subject to the condition that all representations and warranties and other
statements of the Primary Parties herein contained are, at and as of the
commencement of the Offerings and at and as of the Closing Date, true and
correct, the condition that the Primary Parties shall have performed all of
their obligations hereunder to be performed on or before such dates and to the
following further conditions:
(a) The Registration Statement shall have been declared
effective by the Commission and the Conversion Application approved by the FDIC
and the PDOB not later than 5:30 p.m. on the date of this Agreement, the Holding
Company Application shall have been approved, and no stop order or other action
suspending the effectiveness of the Registration Statement shall have been
issued under the 1933 Act or proceedings therefor initiated or, to any of the
Primary Parties' best knowledge, threatened by the Commission or any state
authority and no order or other action suspending the authorization for use of
the Prospectus or the consummation of the Reorganization shall have been issued
or proceedings therefor initiated or, to any of the Primary Parties' best
knowledge, threatened by the FDIC, the PDOB, the Commission, or any other
governmental body.
(b) At the Closing Date, the Agent shall have each received:
(1) The favorable opinion, dated as of the Closing
Date, of ▇▇▇▇▇▇▇ & ▇▇▇, special counsel for the Primary Parties, in form and
substance satisfactory to counsel for the Agent to the effect that:
(i) The Holding Company is a corporation
duly organized and validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania, with corporate power and authority to own its
properties and to conduct its business as described in the Registration
Statement and Prospectus and to enter into this Agreement and perform its
obligations hereunder,
20
and is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business requires such qualification
and in which the failure to qualify would have a material adverse effect on the
financial condition, earnings, capital, properties or business affairs of the
Primary Parties.
(ii) The Bank is a capital stock savings
bank duly organized and validly existing and in good standing under the laws of
the Commonwealth of Pennsylvania, with corporate power and authority to own its
properties and to conduct its business as described in the Registration
Statement and Prospectus and to enter into this Agreement and perform its
obligations hereunder, and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business requires such
qualification and in which the failure to qualify would have a material adverse
effect on the financial condition, earnings, capital, properties or business
affairs of the Primary Parties.
(iii) The Bank is a member of the FHLB of
Pittsburgh and the Bank is an insured depository institution under the
provisions of the Federal Deposit Insurance Act, as amended, and to such
counsel's knowledge no proceedings for the termination or revocation of such
insurance are pending or threatened; the activities of the Bank as described in
the Prospectus are permitted by the rules, regulations and practices of the FDIC
and the PDOB; and the description of the liquidation account as set forth in the
Prospectus under the caption "The Conversion and Reorganization -- Effects of
Conversion and Reorganization on Depositors and Borrowers of the Savings Bank --
Liquidation Account" has been reviewed by such counsel and, to the extent that
such information constitutes matters of law or legal conclusions, is accurate in
all material respects.
(iv) The MHC has been duly organized and is
validly existing as a Pennsylvania chartered mutual holding company, duly
authorized to conduct its business and own its properties as described in the
Registration Statement and Prospectus and to enter into this Agreement and
perform its obligations hereunder.
(v) The Subsidiaries have been duly
incorporated and are validly existing as corporations in good standing under the
laws of the Commonwealth of Pennsylvania, and are duly qualified to transact
business and are in good standing in each jurisdiction in which the conduct of
their business requires such qualification and in which the failure to qualify
would have a material adverse effect on the financial condition, earnings,
capital, properties or business affairs of the Primary Parties and the
Subsidiaries, taken as a whole; to such counsel's knowledge, the Subsidiaries
hold all licenses, certificates and permits from governmental authorities
necessary for the conduct of their business, except where the failure to hold
such licenses, certificates or permits would not have a material adverse effect
on the financial condition, earnings, capital, assets or properties of the
Primary Parties and the Subsidiaries, taken as a whole; the Subsidiaries are not
in violation of their articles of incorporation or bylaws; all of the
outstanding capital stock of the Subsidiaries has been duly authorized and is
validly issued, fully paid and nonassessable, and owned directly or indirectly
by the Bank, free and clear of any liens, charges, encumbrances or restrictions
except such as would not result in a material adverse effect on the financial
condition, earnings,
21
capital, assets or properties of the Primary Parties and the Subsidiaries, taken
as a whole; all of the leases and subleases material to the business of the
Subsidiaries under which the Subsidiaries hold properties are in full force and
effect; and the activities of the Subsidiaries are permitted to subsidiaries of
a Pennsylvania chartered savings bank by the regulations and the policies and
practices of the FDIC and the PDOB and to non-banking subsidiaries of a bank
holding company under the BHCA and the regulations of the FRB.
(vi) Upon consummation of the
Reorganization, the authorized, issued and outstanding capital stock of the
Holding Company will be within the range set forth in the Prospectus under the
caption "Capitalization," and no shares of Common Stock have been or will be
issued and outstanding prior to the Closing Date (except for the shares issued
to the Bank upon incorporation of the Holding Company, which have been
cancelled); the Exchange Shares and the Conversion Shares have been duly and
validly authorized for issuance, and when issued and delivered by the Holding
Company pursuant to the Plan against payment of the consideration calculated as
set forth in the Plan and stated on the cover page of the Prospectus, will be
fully paid and nonassessable; and the issuance of the Exchange Shares and the
Conversion Shares is not subject to preemptive rights under the articles of
incorporation or bylaws of any of the Primary Parties, or arising or outstanding
by operation of law, except for the subscription rights under the Plan.
(vii) The authorized, issued and outstanding
capital stock of the Bank is as set forth in the Prospectus under the caption
"Capitalization," and all of the outstanding shares of such capital stock have
been duly authorized and validly issued and are fully paid and nonassessable.
Upon consummation of the Reorganization, all of the issued and outstanding
capital stock of the Bank will be duly authorized and validly issued and fully
paid and nonassessable,and all such capital stock will be owned of record and
beneficially by the Holding Company free and clear of any security interest,
mortgage, pledge, lien, encumbrance or claim.
(viii) The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of the Primary
Parties; and this Agreement constitutes a valid, legal and binding obligation of
each of the Primary Parties, enforceable in accordance with its terms, except to
the extent that the provisions of Sections 10 and 11 hereof may be unenforceable
as against public policy, and except to the extent that such enforceability may
be limited by bankruptcy laws, insolvency laws, or other laws affecting the
enforcement of creditors' rights generally, or the rights of creditors of
savings institutions insured by the FDIC (including the laws relating to the
rights of the contracting parties to equitable remedies).
(ix) The Plan has been duly adopted by the
board of directors of both the MHC and the Bank and approved by the members of
the MHC and the eligible voting stockholders of the Bank, as required by the
Conversion Regulations and the MHC's and the Bank's respective charter and
bylaws.
22
(x) The FRB has approved the Holding Company
Application and, to the best of such counsel's knowledge, no action is pending
or threatened respecting the Holding Company Application or the acquisition by
the Holding Company of all of the Bank's issued and outstanding capital stock;
the Holding Company Application complies as to form in all material respects
with the BHCA and all other requirements of the FRB, includes all documents
required to be filed as exhibits thereto, and is complete in all material
respects; the Holding Company is authorized to become a bank holding company and
is authorized to own all of the issued and outstanding capital stock of the Bank
pursuant to the Plan.
(xi) The PDOB has approved the Conversion
Application and, to the best of such counsel's knowledge, no action is pending
or threatened respecting the PDOB's approval of the Conversion Application; at
the time the Conversion Application was approved, the Conversion Application
complies in all material respects with Pennsylvania law and all applicable
rules, regulations, decisions and orders of the PDOB, includes all documents
required to be filed as exhibits thereto, and is complete in all material
respects (other than the financial statements, notes to financial statements,
financial tables and other financial and statistical data included therein and
the appraisal valuation as to which counsel need express no opinion).
(xii) The FDIC has raised no objection to
the Reorganization, and, to the best of such counsel's knowledge, no action is
pending or threatened respecting the FDIC's non-objection to the Reorganization;
at the time the FDIC issued its non-objection to the Reorganization, the
Conversion Application complies in all material respects with the rules and
regulations of the FDIC and all other requirements of the FDIC, includes all
documents required to be filed as exhibits thereto, and is complete in all
material respects (other than the financial statements, notes to financial
statements, financial tables and other financial and statistical data included
therein and the appraisal valuation as to which counsel need express no
opinion).
(xiii) The FDIC has approved the Merger
Application, and, to the best of such counsel's knowledge, no action is pending
or threatened respecting the FDIC's approval of the Merger Application; the
Merger Application complies in all material respects with the Federal Deposit
Insurance Act, the rules and regulations of the FDIC and all other requirements
of the FDIC, includes all documents required to be filed as exhibits thereto,
and is complete in all material respects; the FDIC has approved the merger of
the MHC with and into the Bank and the merger of Interim with and into the Bank.
(xiv) The PDOB has approved the Merger
Application, and, to the best of such counsel's knowledge, no action is pending
or threatened respecting the PDOB's approval of the Merger Application; the
Merger Application complies in all material respects with Pennsylvania law and
all other requirements of the PDOB, includes all documents required to be filed
as exhibits thereto, and is complete in all material respects; the PDOB has
approved the merger of the MHC with and into the Bank and the merger of Interim
with and into the Bank.
23
(xv) The Registration Statement has become
effective under the 1933 Act, no stop order suspending the effectiveness of the
Registration Statement has been issued, and, to the best of such counsel's
knowledge, no proceedings for that purpose have been instituted or threatened.
(xvi) No further approval, registration,
authorization, consent or other order of any regulatory agency, public board or
body is required in connection with the execution
(xvii) The material tax consequences of the
Reorganization are set forth in the Prospectus under the caption "The Conversion
and Reorganization -- Effects of Conversion and Reorganization on Depositors and
Borrowers of the Savings Bank -- Tax Effects." The information in the Prospectus
under the caption "The Conversion and Reorganization -- Effects of Conversion
and Reorganization on Depositors and Borrowers of the Savings Bank -- Tax
Effects" has been reviewed by such counsel and fairly describes such opinions
rendered by ▇▇▇▇▇▇▇ & ▇▇▇ to the Primary Parties with respect to such matters.
(xviii) The terms and provisions of the
shares of Common Stock conform to the description thereof contained in the
Registration Statement and the Prospectus and such description describes in all
material respects the rights of the holders thereof; the information in the
Prospectus under the captions "Comparison of Stockholders' Rights,"
"Restrictions on Acquisition of the Holding Company" and "Description of Capital
Stock of the Holding Company," to the extent that they constitute matters of law
or legal conclusions, has been prepared by such counsel and is accurate in all
material respects; and the forms of certificates proposed to be used to evidence
the shares of Common Stock are in due and proper form.
(xix) At the time that the Registration
Statement became effective the Registration Statement, including the Prospectus
contained therein (as amended or supplemented) (other than the financial
statements, notes to financial statements, financial tables or other financial
and statistical data included therein and the appraisal valuation as to which
counsel need express no opinion), complied as to form in all material respects
with the requirements of the 1933 Act and the rules and regulations promulgated
thereunder.
(xx) To the best of such counsel's
knowledge, there are no legal or governmental proceedings pending, or threatened
(i) asserting the invalidity of this Agreement or (ii) seeking to prevent the
Reorganization or the offer, sale or issuance of the Shares.
(xxi) The information in the Prospectus
under the captions "Regulation," and "The Conversion and Reorganization," to the
extent that it constitutes matters of law, summaries of legal matters, documents
or proceedings, or legal conclusions, has been prepared by such counsel and is
accurate 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).
24
(xxii) To the best of such counsel's
knowledge, none of the Primary Parties is in violation of its articles of
incorporation or its charter, as the case may be, or any material obligation,
agreement, covenant or condition contained in any material contract, indenture,
mortgage, loan agreement, note, lease or other instrument filed as an exhibit
to, or incorporated by reference in, the Registration Statement, which violation
would have a material adverse effect on the financial condition of the Primary
Parties considered as one enterprise, or on the earnings, capital, properties or
business affairs of the Primary Parties considered as one enterprise; the
execution and delivery of this Agreement by the Primary Parties, the incurrence
of the obligations herein set forth and the consummation of the transactions
contemplated herein, will not materially conflict with, 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 any of the
Primary Parties 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 any of the Primary Parties is a party or by
which any of them may be bound, or to which any of the property or assets of the
Primary Parties are subject. In addition, the execution and delivery of this
Agreement by the Primary Parties, the incurrence of the obligations set forth
herein and the consummation of the transactions contemplated herein will not
result in any material violation of the provisions of the articles of
incorporation or charter, as the case may be, of any of the Primary Parties or
any material violation of any applicable federal or Pennsylvania law, act,
regulation, or to such counsel's knowledge, order or court order, writ,
injunction or decree.
(xxiii) The stockholders of the Bank do not
have dissenters' rights or any other rights to dissent from the Reorganization
and receive the fair value of their shares of Bank Common Stock under
Pennsylvania or federal law.
The opinion may be limited to matters governed by the laws of the
United States or the Commonwealth of Pennsylvania. 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, upon the opinion of other counsel of good
standing, as long as such other opinion indicates that the Agent may rely on the
opinion, and (B) as to matters of fact, to the extent such counsel deems proper,
on certificates of responsible officers of the Primary Parties and public
officials; provided copies of any such opinion(s) or certificates of public
officials are delivered to Agent together with the opinion to be rendered
hereunder by special counsel to the Primary Parties. The opinion of such counsel
for the Primary Parties shall state that it has no reason to believe that the
Agent are not justified in relying thereon.
(2) The letter of ▇▇▇▇▇▇▇ & ▇▇▇, special counsel for
the Primary Parties, in form and substance to the effect that during the
preparation of the Registration Statement and the Prospectus, ▇▇▇▇▇▇▇ & ▇▇▇
participated in conferences with certain officers of and other representatives
of the Primary Parties, counsel to the Agent, representatives of the independent
public accountants for the Primary Parties and representatives of the Agent at
which the contents of the Registration Statement and the Prospectus and related
matters were discussed and, although ▇▇▇▇▇▇▇ & ▇▇▇ is not passing upon and does
not assume the accuracy of the statements contained in
25
the Registration Statement and Prospectus, on the basis of the foregoing without
independent verification (relying as to materiality as to factual matters on
certificates of officers and other factual representations by the Primary
Parties), nothing has come to the attention of ▇▇▇▇▇▇▇ & ▇▇▇ that caused ▇▇▇▇▇▇▇
& ▇▇▇ to believe that the Registration Statement at the time it was declared
effective by the SEC or the Prospectus as of its date, contained or contains any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading (it being
understood that counsel need express no comment or opinion with respect to the
financial statements, schedules and other financial and statistical data
included, or statistical or appraisal methodology employed, in the Registration
Statement or Prospectus).
(3) The favorable opinion, dated as of the Closing
Date, of Breyer & Aguggia, counsel for the Agent, with respect to such matters
as the Agent may reasonably require; such opinion may rely, as to matters of
fact, upon certificates of officers and directors of the Primary Parties
delivered pursuant hereto or as such counsel may reasonably request.
(c) Concurrently with the execution of this Agreement, the
Agent shall each receive a letter from Stockton ▇▇▇▇▇ & Co., P.C., dated the
date hereof and addressed to the Agent, (i) such letter confirming that Stockton
▇▇▇▇▇ & Co., P.C. 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 regulations promulgated thereunder and 12
C.F.R. Section 571.2(c)(3), and no information concerning its relationship with
or interests in the Primary Parties is required by the Conversion Application or
Item 10 of the Registration Statement, and stating in effect that in its opinion
the financial statements of the Bank included in the 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 consistently applied; (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 Bank
prepared by the Bank, a reading of the minutes of the meetings of the Board of
Directors of each of the Primary Parties, the members of the MHC and the
stockholders of each of the Holding Company and the Bank, a review of interim
financial information in accordance with Statement on Auditing Standards No. 71,
and consultations with officers of the Bank responsible for financial and
accounting matters, nothing came to their attention which caused them to believe
that: (A) such unaudited financial statements, including Recent Developments, if
any, are not in conformity with generally accepted accounting principles applied
on a basis substantially consistent with that of the audited financial
statements included in the Prospectus; or (B) during the period from the date of
the latest unaudited consolidated financial statements included in the
Prospectus to a specified date not more than three business days prior to the
date hereof, there was any increase in borrowings (defined as advances from the
FHLB of Pittsburgh, securities sold under agreements to repurchase and any other
form of debt other than deposits) of any of the Primary Parties or in
nonperforming loans of the Bank; or (C) there was any decrease in stockholders'
equity of the Bank at the date of such letter as compared with amounts
26
shown in the latest unaudited statement of condition included in the Prospectus
or there was any decrease in net income or net interest income of the Bank for
the number of full months commencing immediately after the period covered by the
latest unaudited income statement included in the Prospectus and ended on the
latest month end prior to the date of the Prospectus or in such letter as
compared to the corresponding period in the preceding year; and (iii) stating
that, in addition to the audit examination referred to in its opinion included
in the Prospectus and the performance of the procedures referred to in clause
(ii) of this subsection (c), they have compared with the general accounting
records of the Primary Parties, which are subject to the internal controls of
the accounting system of the Primary Parties and other data prepared by the
Primary Parties directly from such accounting records, to the extent specified
in such letter, such amounts and/or percentages set forth in the Prospectus as
the Agent may reasonably request, and they have found such amounts and
percentages to be in agreement therewith (subject to rounding).
(d) At the Closing Date, the Agent shall each receive letters
from Stockton ▇▇▇▇▇ & Co., P.C. dated the Closing Date, addressed to the Agent,
confirming the statements made by its letter delivered by it pursuant to
subsection (c) of this Section 9A, 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.
(e) At the Closing Date, counsel to the Agent shall have been
furnished with such documents and opinions as counsel for the Agent may require
for the purpose of enabling them to advise the Agent with respect to the
issuance and sale of the Common Stock as herein contemplated and related
proceedings, or in order to evidence the accuracy of any of the representations
and warranties, or the fulfillment of any of the conditions herein contained.
(f) At the Closing Date, the Agent shall each receive a
certificate of the Chief Executive Officer and Chief Financial Officer of each
of the Primary Parties, dated the Closing Date, to the effect that (i) they have
carefully examined the Prospectus and at the time the Prospectus became
authorized for final use, the 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 the light of the circumstances under which they were
made, not misleading; (ii) there has not been, since the respective dates as of
which information is given in the Prospectus, any material adverse change in the
financial condition or in the earnings, capital, properties, business prospects
or business affairs of the Primary Parties, considered as one enterprise,
whether or not arising in the ordinary course of business; (iii) the
representations and warranties contained in Section 6A of this Agreement are
true and correct with the same force and effect as though made at and as of the
Closing Date; (iv) the Primary Parties have complied in all material respects
with all material agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the Closing Date including the conditions
contained in this Section 9A; (v) no stop order has been issued or, to the best
of their knowledge, is threatened, by the Commission or any other governmental
body; (vi) no order suspending the Offerings, the Reorganization, the
acquisition of all of the shares of the Bank by the Holding Company or the
effectiveness of the Prospectus has been issued and to the best of their
knowledge, no proceedings for any such purpose have been initiated or threatened
by the PDOB, the
27
Commission, the FDIC, or any other federal or state authority; (vii) to the best
of their knowledge, no person has sought to obtain regulatory or judicial review
of the action of the PDOB or the FDIC in approving the Plan or to enjoin the
Reorganization.
(g) At the Closing Date, the Agent shall each receive a letter
from R.P. Financial, LC., dated as of the Closing Date, (i) confirming that said
firm is independent of the Primary Parties and is experienced and expert in the
area of corporate appraisals within the meaning of the Conversion Regulations,
(ii) stating in effect that the Appraisal complies in all material respects with
the applicable requirements of the Conversion Regulations, and (iii) further
stating that its opinion of the aggregate pro forma market value of the Primary
Parties, as converted, expressed in the Appraisal as most recently updated,
remains in effect.
(h) None of the Primary Parties shall have sustained, since
the date of the latest audited financial statements included in the Registration
Statement and Prospectus, any material 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 in the Registration Statement and the
Prospectus, and since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there shall not have been any
material change, or any development involving a prospective material change in,
or affecting the general affairs of, management, financial position,
stockholders' equity or results of operations of any of the Primary Parties,
otherwise than as set forth or contemplated in the Registration Statement and
the Prospectus, the effect of which, in any such case described above, is in the
Agent's reasonable judgment sufficiently material and adverse as to make it
impracticable or inadvisable to proceed with the Offerings or the delivery of
the Shares on the terms and in the manner contemplated in the Prospectus.
(i) Prior to and at the Closing Date: (i) in the reasonable
opinion of the Agent, there shall have been no material adverse change in the
financial condition or in the earnings, capital, properties or business affairs
of any of the Primary Parties independently, or of the Primary Parties,
considered as one enterprise, from that as of the latest dates as of which such
condition is set forth in the Prospectus, except as referred to therein; (ii)
there shall have been no material transaction entered into by the Primary
Parties, considered as one enterprise, from the latest date as of which the
financial condition of the Primary Parties is set forth in the Prospectus, other
than transactions referred to or contemplated therein; (iii) none of the Primary
Parties shall have received from the PDOB 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 in all material respects (which direction, if
any, shall have been disclosed to the Agent) and which would reasonably be
expected to have a material and adverse effect on the condition (financial or
otherwise) or on the earnings, capital, properties or business affairs of the
Primary Parties considered as one enterprise; (iv) none of the Primary Parties
shall have been in default (nor shall an event have occurred which, with notice
or lapse of time or both, would constitute a default) under any provision of any
agreement or instrument relating to any material outstanding indebtedness; (v)
no action, suit or proceeding, at law or in equity or before or by any federal
or state commission, board or other administrative agency, shall
28
be pending or, to the knowledge of the Primary Parties, threatened against any
of the Primary Parties 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 financial condition or on the earnings,
capital, properties or business affairs of the Primary Parties, considered as
one enterprise; and (vi) the Shares have been qualified or registered for
offering and sale under the securities or blue sky laws of the jurisdictions as
to which the Primary Parties and the Agent shall have agreed.
(j) At or prior to the Closing Date, the Agent shall each
receive (i) a copy of the letter from the PDOB approving the Conversion
Application, (ii) a copy of the letter of the FDIC stating its non-objection to
the Reorganization, (iii) a copy of the order from the Commission declaring the
Registration Statement effective, (iv) a copy of certificate of existence for
the Bank from the PDOB, (v) a certificate of good standing from the Commonwealth
of Pennsylvania evidencing the good standing of the Holding Company, (vi) a copy
of the letter from the FRB approving the Holding Company Application, (vii) a
certificate from the FDIC evidencing the Bank's insurance of accounts, (viii) a
certificate of the FHLB of Pittsburgh evidencing the Bank's membership therein,
(ix) a certificate from the PDOB evidencing the existence of the MHC, (x) a copy
of the letters from the FDIC and the PDOB approving the Merger Applications and
(xi) any other documents that Agent shall reasonably request.
(k) Subsequent to the date hereof, there shall not have
occurred any of the following: (i) a suspension or limitation in trading in
securities generally on the New York Stock Exchange or American Stock Exchange
or in the over-the-counter market, or quotations halted generally on the Nasdaq
Stock Market, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices for securities have been required 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
other federally-insured financial institutions or general moratorium on the
withdrawal of deposits from commercial banks or other federally-insured
financial institutions 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 the effect
of any of (i) through (iv) herein, in the Agent's reasonable judgment, makes it
impracticable or inadvisable to proceed with the Offerings or the delivery of
the Shares on the terms and in the manner contemplated in the Registration
Statement and the Prospectus.
Section 9.B. Conditions to the Primary Parties' Obligations. The
obligations of the Primary Parties hereunder are subject to the representations
and warranties of the Agent being true and correct at and as of the commencement
of the Offerings and at and as of the Closing Date, to the performance by the
Agent of its obligations hereunder and to the satisfaction of the conditions
contained in Paragraph (a) of Section 9A hereunder.
29
Section 10. Indemnification.
(a) The Primary Parties jointly and severally agree to
indemnify and hold harmless the Agent, its officers, directors, agents, servants
and employees and each person, if any, who controls the Agent 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, that the Agent or any of such
officers, directors, agents, servants, employees and controlling Persons
(collectively, the "Related Persons") may suffer or to which the Agent or the
Related Persons may become subject under all applicable federal and state laws
or otherwise, and to promptly reimburse the Agent and any Related Persons upon
written demand for any reasonable expenses (including fees and disbursements of
counsel) incurred by the Agent or any Related Persons 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), preliminary or final
Prospectus (or any amendment or supplement thereto), the Applications, or any
blue sky application or other instrument or document of the Primary Parties or
based upon written information supplied by any of the Primary Parties filed in
any state or jurisdiction to register or qualify any or all of the Shares under
the securities laws thereof (collectively, the "Blue Sky Applications"), or any
application or other document, advertisement, or communication ("Sales
Information") prepared, made or executed by or on behalf of any of the Primary
Parties with its consent or based upon written information furnished by or on
behalf of any of the Primary Parties, 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 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; (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), preliminary or
final Prospectus (or any amendment or supplement thereto), the Applications, any
Blue Sky Applications or Sales Information or other documentation distributed in
connection with the Reorganization; or (iv) result from any claims made with
respect to the accuracy, reliability and completeness of the records of Eligible
Account Holders and Supplemental Eligible Account Holders or for any denial or
reduction of a subscription or order to purchase Common Stock, whether as a
result of a properly calculated allocation pursuant to the Plan or otherwise,
based upon such records; 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) or the preliminary or final Prospectus (or any amendment or supplement
thereto), the Applications, the Blue Sky Applications or Sales Information or
other documentation distributed in connection with the Reorganization made in
reliance upon and in conformity with written information furnished to the
Primary Parties by the Agent with respect to the Agent expressly for use in the
Registration Statement (or any amendment or supplement thereto) or Prospectus
(or any amendment or
30
supplement thereto) under the captions "Market for Common Stock," "The
Conversion and Reorganization -- Plan of Distribution for the Subscription,
Direct Community and Syndicated Community Offerings" and "--Description of Sales
Activities" or statistical information regarding the Holding Company prepared by
the Agent for use in the Sales Information, except for information derived from
the Prospectus. Provided further, that the Primary Parties will not be
responsible for any loss, liability, claim, damage or expense to the extent they
result primarily from actions taken or omitted to be taken by the Agent in bad
faith or from the Agent's gross negligence or willful misconduct, and the Agent
each agree to repay to the Primary Parties any amounts advanced to it by the
Primary Parties in connection with matters as to which it is found not to be
entitled to indemnification hereunder. Notwithstanding the foregoing, the
indemnification provided for in this paragraph (a) shall not apply to the Bank
to the extent that such indemnification by the Bank would constitute a covered
transaction under Section 23A of the Federal Reserve Act.
(b) The Agent agrees to indemnify and hold harmless the
Primary Parties, their directors and officers, agents, servants and employees
and each person, if any, who controls any of the Primary Parties 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
Primary Parties and any such persons upon written demand for any reasonable
expenses (including fees and disbursements of counsel) incurred by 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 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), the
Applications or any Blue Sky Applications 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 the Agent's obligations under this Section
10(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) or the Prospectus (or any amendment or supplement thereto)
in reliance upon and in conformity with written information furnished to the
Primary Parties by the Agent expressly for use under the captions "Market for
Common Stock," "The Conversion and Reorganization -- Plan of Distribution for
the Subscription, Direct Community and Syndicated Community Offerings" and
"--Description of Sales Activities" or statistical information regarding the
Holding Company prepared by the Agent for use in the Sales information.
(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 10 or
otherwise. An indemnifying party may participate at its own expense in the
defense of such action.
31
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 10 and in Section
11 hereof and the representations and warranties of the Primary Parties set
forth in this Agreement shall remain operative and in full force and effect
regardless of (i) any investigation made by or on behalf of the Agent or its
officers, directors, controlling persons, agents or employees or by or on behalf
of any of the Primary Parties or any officers, directors, controlling persons,
agents or employees of any of the Primary Parties; (ii) delivery of and payment
hereunder for the Shares; or (iii) any termination of this Agreement.
Section 11. Contribution.
(a) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 10 is due in
accordance with its terms but is for any reason held by a court to be
unavailable from the Primary Parties or the Agent, as the case may be, the
Primary Parties or the Agent, as the case may be, shall contribute to the
aggregate losses, claims, damages and liabilities (including any investigation,
legal and other expenses incurred in connection therewith and any amount paid in
settlement of any action, suit or proceeding of any claims asserted, but after
deducting any contribution received by the Primary Parties or the Agent, as the
case may be, from persons other than the other party thereto, who may also be
liable for contribution) in such proportion so that (i) the Agent is responsible
for that portion represented by the percentage that the fees paid to the Agent
pursuant to Section 4 of this Agreement (not including expenses), less any
portion of such fees paid by Agent to Assisting Brokers, bear to the gross
proceeds received by the Primary Parties from the sale of the Conversion Shares
in the Conversion Offerings and (ii) the Primary Parties 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 10 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 Primary Parties on
the one hand and the Agent 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 Primary
32
Parties on the one hand and the Agent on the other from the offering, as well as
any other relevant equitable considerations. The relative benefits received by
the Primary Parties on the one hand and the Agent on the other shall be deemed
to be in the same proportion as the total gross proceeds from the Conversion
Offerings (before deducting expenses) received by the Primary Parties bear, with
respect to the Agent, to the total fees (not including expenses) received by the
Agent less the portion of such fees paid by the Agent to Assisting Brokers. 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
Primary Parties on the one hand or the Agent 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 Primary Parties and the Agent
agree that it would not be just and equitable if contribution pursuant to this
Section 11 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 11. 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 11
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 the Agent 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 the Agent under this Agreement less the portion of
such fees paid by the Agent to Assisting Brokers. It is understood that the
above-stated limitation on the Agent's liability is essential to the Agent and
that the Agent 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
▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person who was not found
guilty of such fraudulent misrepresentation. The duties, obligations and
liabilities of the Primary Parties, the Agent under this Section 11 and under
Section 10 shall be in addition to any duties, obligations and liabilities which
the Primary Parties, the Agent may otherwise have. For purposes of this Section
11, each of the Agent's and the Primary Parties' officers and directors and each
person, if any, who controls the Agent or any of the Primary Parties within the
meaning of the 1933 Act and the 1934 Act shall have the same rights to
contribution as the Primary Parties and the Agent. 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 11, will
notify such party from whom contribution may be sought, but the omission to so
notify such party shall not relive the party from whom contribution may be
sought from any other obligation it may have hereunder or otherwise than under
this Section 11.
Section 12. Representations, Warranties and Indemnities to Survive
Delivery. All representations, warranties and indemnities and other statements
contained in this Agreement, or contained in certificates of officers of the
Primary Parties, the Agent submitted pursuant hereto, shall remain operative and
in full force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of the Agent or its
controlling persons, or by or on behalf of the Primary Parties and shall survive
the issuance of the Shares, and any legal
33
representative, successor or assign of the Agent any of the Primary Parties, and
any indemnified person shall be entitled to the benefit of the respective
agreements, indemnities, warranties and representations.
Section 13. Termination. ▇▇▇▇ 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 Holding Company fails to sell the minimum
number of the Conversion Shares within the period specified 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 Primary
Parties to each person who has subscribed for or ordered any of the Conversion
Shares the full amount which it may have received from such person, together
with interest in accordance with Section 3, and no party to this Agreement shall
have any obligation to the other hereunder, except as set forth in Sections 3,
4, 8, 10 and 11 hereof.
(b) If any of the conditions specified in Section 9A shall not
have been fulfilled when and as required by this Agreement, or by the Closing
Date, or waived in writing by the Agent, this Agreement and all of the Agent's
obligations hereunder may be canceled by the Agent by notifying the Bank of such
cancellation in writing 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 3, 4, 8, 10 and 11 hereof.
(c) If ▇▇▇▇ elects to terminate this Agreement as provided in
this Section, the Primary Parties shall be notified by the Agent as provided in
Section 14 hereof.
Section 14. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to ▇▇▇▇ shall be
directed to ▇▇▇▇▇▇▇ ▇▇▇▇ & Company at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (with a copy to ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esquire,
Breyer & Aguggia, ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. 20005);
notices to the Primary Parties shall be directed to Pennsylvania Savings Bank,
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President, and Chief Executive Officer (with
a copy to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esquire, ▇▇▇▇▇▇▇ & ▇▇▇, One Glenhardie Corporate
Center, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇).
Section 15. Parties. This Agreement shall inure to the benefit of and
be binding upon the Agent and the Primary Parties, and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
parties hereto and their respective successors and the controlling persons and
officers and directors referred to in Sections 10 and 11 and their heirs and
legal representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provisions herein contained. It is understood
and agreed that this Agreement is the exclusive agreement among the
34
parties, supersedes any prior Agreement among the parties and may not be varied
except by a writing signed by all parties.
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 State of New York.
35
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
you and us in accordance with its terms.
Very truly yours,
PSB BANCORP, INC.
By:
---------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
President and Chief
Executive Officer
PSB MUTUAL HOLDING COMPANY
By:
---------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
President and Chief
Executive Officer
PENNSYLVANIA SAVINGS BANK
By:
---------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
President and Chief
Executive Officer
The foregoing Agency Agreement is hereby confirmed and accepted as of the date
first set and above written.
▇▇▇▇▇▇▇ ▇▇▇▇ & COMPANY, A DIVISION
OF ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC.
By:
---------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Executive Vice
President and Chief Operating Officer
36
PSB BANCORP, INC.
(A Pennsylvania Corporation)
Up to 3,099,728 Shares
(No Par Value)
SELECTED DEALERS' AGREEMENT
, 1998
------------------
Ladies and Gentlemen:
We have agreed to assist PSB Mutual Holding Company (the "MHC"), a
Pennsylvania chartered mutual holding company, and Pennsylvania Savings Bank
("Pennsylvania Savings" or the "Bank"), a Pennsylvania chartered stock savings
bank, in connection with the offer and sale of up to 3,099,728 shares of the
common stock, no par value (the "Common Stock"), of PSB Bancorp, Inc. (the
"Holding Company"). Theses shares are to be issued in connection with the
reorganization of the Bank from a subsidiary of the MHC to a wholly owned
subsidiary of the Holding Company (the "Reorganization") in accordance with the
Plan of Conversion from Mutual Holding Company to Stock Holding Company and
Agreement and Plan of Reorganization (the "Plan"). The offering price per share
of the Common Stock has been fixed at $10.00. The Common Stock and certain of
the terms on which it is being offered are more fully described in the enclosed
prospectus dated ______________, 1998 (the "Prospectus"). Capitalized terms not
otherwise defined herein shall have the meaning ascribed to them in the
Prospectus.
In connection with the Reorganization, the Holding Company is offering
the Common Stock in a Subscription Offering to the Eligible Account Holders, the
ESOP and the Supplemental Eligible Account Holders and concurrently therewith,
in a Direct Community Offering to members of the general public, with preference
given first to Public Stockholders (who are not Eligible Account Holders or
Supplemental Eligible Account Holders) and then to natural persons and trusts of
natural persons who are permanent residents of Philadelphia and ▇▇▇▇▇▇▇▇▇▇
Counties of Pennsylvania. The Common Stock is also being offered in accordance
with the Plan by a selling group of broker-dealers in the Syndicated Offering.
We are offering the selected dealers (of which you are one) the
opportunity to participate in the solicitation of offers to buy the Common Stock
and we will pay you a fee in the amount of _______ percent (______%) of the
dollar amount of the Common Stock sold on behalf of the Holding Company by you,
as evidenced by the authorized designation of your firm on the order form or
forms for such Common Stock accompanying the funds transmitted for payment
therefor to the
1
special account established by the Bank for the purpose of holding such funds.
Any purchase of Common Stock made pursuant to this Agreement is subject to the
maximum purchase limitations provided for in the Plan and described in the
Prospectus. It is understood, of course, that payment of your fee will be made
to you directly by the Holding Company for the Common Stock sold on behalf of
the Holding Company by you, as evidenced in accordance with the preceding
sentence. As soon as practicable after the closing date of the Conversion
Offerings, the Holding Company will remit to you the fees to which you are
entitled hereunder.
Each order form for the purchase of Common Stock must set forth the
identity and address of each person to whom the certificates for such Common
Stock 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 the Bank.
This offer is made subject to the terms and conditions herein set forth
and contained in the Plan and is made only to selected dealers who are (i)
members in good standing of the National Association of Securities Dealers, Inc.
(the "NASD") who are to comply with all applicable rules of the NASD, including,
without limitation, the NASD's Interpretation With Respect to Free-Riding and
Withholding and Section 24 of Article III of the NASD's Rules of Fair Practice,
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 resident therein and (B)
in making other sales to comply with the above-mentioned NASD Interpretation,
Sections 8, 24 and 36 of the above-mentioned Article III as if they were NASD
members and Section 25 of such Article III as it applies to non-member brokers
or dealers in a foreign country.
Orders for Common Stock will be strictly subject to confirmation and
we, acting on behalf of the Holding Company, 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 other person is authorized by the Holding Company or by us to give
any information or make any representations other than those contained in the
Prospectus in connection with the sale of any of the Common Stock. No selected
dealer is authorized to act as agent for us when soliciting offers to buy the
Common Stock 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) with respect to the Common Stock during the offering.
We and each selected dealer assisting in selling Common Stock pursuant
hereto agree to comply with the applicable requirements of the Securities
Exchange Act of 1934 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
requiring that a Prospectus be supplied to each person who is expected to
receive a confirmation of sale 48 hours prior to delivery of such person's order
form.
2
We and each selected dealer within the meaning of Rule 15c3-1(a)(1)
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 and Exchange Commission of Rule 15c2-4 promulgated under the
Securities Exchange Act of 1934, either (a) upon receipt of an executed order
form or direction to execute an order form on behalf of a customer to forward
the offering price for the Common Stock ordered on or before twelve noon of the
business day following receipt or execution of an order form by us to the
Holding 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 instructions to
execute and return an order form or to receive authorization to execute the
order form on the customer's behalf, (ii) we will mail acknowledgements 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 third business day (the "Debit Date") following receipt of the confirmation
referred to in (i), and (iv) we will forward completed order forms together with
such funds to the Holding 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.
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 of
Common Stock sold on behalf of the Holding 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 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 Common Stock has been qualified for sale under, or are exempt from
the requirements of, the respective blue sky laws of such states, but we assume
no responsibility or obligation as to your rights to sell Common Stock in any
state.
Additional copies of the Prospectus and any supplements thereto will be
supplied in reasonable quantities upon request.
Any notice from us to you shall be deemed to have been duly given if
mailed, telephoned, or telegraphed to you at the address to which this Agreement
is mailed.
3
This Agreement shall be construed in accordance with the laws of the
State of Ohio.
Please confirm your agreement hereto by signing and returning the
confirmation accompanying this letter at once to us at ▇▇▇▇▇▇▇ ▇▇▇▇ & Company,
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇. The enclosed duplicate copy will
evidence the agreement between us.
▇▇▇▇▇▇▇ ▇▇▇▇ & COMPANY, A DIVISION
OF ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC.
By:
--------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President
Agreed and accepted as of , 1998
----------------
-------------------------------------
By:
---------------------------------
4
