Exhibit 10.1
400,000 SHARES OF COMMON STOCK
First Keystone Financial, Inc.
PLACEMENT AGENCY AGREEMENT
__________________________
December 4, ▇▇▇▇
▇▇▇▇▇▇▇ ▇'▇▇▇▇▇ & Partners, L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
First Keystone Financial, Inc., a Pennsylvania corporation
(the "Company"), and First Keystone Bank, a federally chartered
stock savings bank and wholly-owned subsidiary of the Company
(the "Bank Subsidiary"), confirm their agreement (the
"Agreement") with Sandler ▇'▇▇▇▇▇ & Partners, L.P. (the
"Placement Agent") with respect to the issue and sale by the
Company of 400,000 shares (the "Shares") of its common stock,
par value $0.01 per share (the "Common Stock"). The Shares are
to be offered and sold without being registered under the
Securities Act of 1933, as amended (the "1933 Act"), in reliance
upon exemptions therefrom (including any exemptions under the
rules and regulations of the Securities and Exchange Commission
(the "Commission") under the 1933 Act (the "1933 Act
Regulations")).
The Company and the Bank Subsidiary have prepared and
delivered to the Placement Agent copies of a preliminary
confidential private placement memorandum dated July 14, 2006
(the "Preliminary Offering Memorandum") and have prepared and
will deliver to the Placement Agent, as soon as practicable, but
not later than the date of distribution, copies of a final
confidential private placement memorandum (the "Final Offering
Memorandum"), each for use by the Placement Agent in connection
with its solicitation of purchasers of the Shares. "Offering
Documents" means, with respect to any date or time referred to
in this Agreement, the Preliminary Offering Memorandum or the
Final Offering Memorandum, or any amendment or supplement to
such document, including exhibits thereto and any documents
incorporated therein by reference, which has been prepared and
delivered by the Company to the Placement Agent in connection
with its solicitation of purchasers of the Shares.
SECTION 1. Representations and Warranties.
______________________________
(a) The Company and the Bank Subsidiary jointly and severally
represent and warrant to the Placement Agent as of the date
hereof and as of the Closing Time (as defined below), and agree
with the Placement Agent, as follows:
(1) Similar Offerings. Except as described in the Offering
Documents, the Company has not, directly or indirectly, solicited
any offer to buy or offered to
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sell, and will not, directly or indirectly, solicit any offer to buy or
offer to sell, in the United States or to any United States citizen or
resident, any security which is or would be integrated with the sale of the
Shares in a manner that would require the Shares to be registered
under the ▇▇▇▇ ▇▇▇.
(2) Offering Documents.
(a) As of 5:00 p.m. (Eastern Standard Time) on
December 4, 2006 (the "Applicable Time"), the Preliminary Offering
Memorandum, when considered together with the pricing terms applicable to
the Shares as specified in Schedule A hereto and any reports filed by
the Company with the Commission pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended
(the "1934 Act") since the date of the Preliminary Offering
Memorandum (the "Disclosure Package"), did not include any untrue
statement of 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.
(b) The Offering Documents do not, and at the Closing
Time will not, include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading.
(3) SEC Documents.
(a) Since September 30, 2003, the Company has filed
all documents required to be filed by it prior to the date hereof
with the Commission pursuant to the reporting requirements of the
1934 Act (the "SEC Documents").
(b) At the time of the filing thereof, the SEC
Documents complied in all material respects with the requirements of the
1933 Act, or the 1934 Act, as applicable, and the rules and
regulations of the Commission thereunder, and none of such
documents contained an untrue statement of a material fact or
omitted 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, and any further documents so
filed prior to the Closing Time, when such documents become
effective or are filed with the Commission, as the case may be,
will conform in all material respects to the requirements of the
1933 Act or the 1934 Act, as applicable, and the rules and
regulations of the Commission thereunder and will not contain an
untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(4) Books and Records; Internal Accounting Controls.
The books, records and accounts of the Company and the Bank Subsidiary
accurately and fairly reflect, in reasonable detail, the
transactions in, and dispositions of, the assets of, and the
results of operations of, the Company and the Bank Subsidiary.
The Company and the Bank Subsidiary maintain a system of internal
accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
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statements in accordance with generally accepted
accounting principles in the United States ("GAAP") and to
maintain asset accountability, (iii) access to assets is
permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.
(5) Financial Reporting; Internal Controls. The
chief executive officer and the chief financial officer of the Company
have made all certifications required by the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002
(the "▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act") and the related rules and regulations
promulgated by the Commission, and the statements contained in
any such certification are complete and correct; the Company
maintains a system of internal control over financial reporting
(as defined in Rule 13a-15(f) of the ▇▇▇▇ ▇▇▇) that complies with
the requirements of the 1934 Act and has been designed by the
Company's principal executive officer and principal financial
officer, or under their supervision, to provide reasonable
assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in
accordance with GAAP; the Company's internal control over
financial reporting is effective, and the Company is not aware of
any material weaknesses in its internal control over financial
reporting; the Company maintains disclosure controls and
procedures (as defined in Rule 13a-15(e) of the ▇▇▇▇ ▇▇▇) that
comply in all material respects with the requirements of the 1934
Act, such disclosure controls and procedures have been designed
to ensure that material information relating to the Company and
its subsidiaries is made known to the Company's principal
executive officer and principal financial officer by others
within those entities, and such disclosure controls and
procedures are effective; the Company is otherwise in compliance
in all material respects with all applicable provisions of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and the related rules and regulations
promulgated by the Commission.
(6) Independent Accountants. The accounting firm
which audited the consolidated financial statements included in the
Disclosure Package and the Offering Documents is the independent
registered public accounting firm of the Company and the Bank Subsidiary
within the meaning of the 1933 Act and the 1933 Act Regulations.
(7) Financial Statements. The consolidated historical
financial statements of the Company, together with the related schedules
and notes, included in the Disclosure Package and the Offering
Documents present fairly the respective consolidated statement of
financial condition of the Company and its consolidated
subsidiaries at the respective dates indicated, and the
consolidated statements of income and cash flows of the Company
and its consolidated subsidiaries for the respective periods
specified; the financial statements have been prepared in
conformity with GAAP applied on a consistent basis throughout the
periods involved, except as disclosed in the notes to such
financial statements. The supporting schedules, if any, included
in the Disclosure Package and the Offering Documents present
fairly, in all material respects, the information required to be
stated therein, and have been or will be properly prepared on the
basis described therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments used
therein are appropriate to give effect to the transactions and
circumstances referred to therein, and the summary financial data
included in the Disclosure Package and the Offering Documents
present fairly, in all material respects, the information shown
therein and have been prepared on a basis
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consistent with that of the audited financial statements included in
the Disclosure Package and the Offering Documents.
(8) No Material Adverse Change. Since the respective
dates as of which information is given in the Disclosure Package and the
Offering Documents, except as described therein, there has not
been (A) any transaction entered into by the Company or any of
the Company's subsidiaries, other than in the ordinary course of
business, that is material to the Company and its subsidiaries
considered as one enterprise, (B) any dividend or distribution of
any kind declared, paid or made by the Company on any class of
its capital stock, or (C) any change or development that
individually or in the aggregate could reasonably be expected to
have a Material Adverse Effect. As used herein, "Material
Adverse Effect" means any material adverse change or any
development (including any change in statutes or regulations
affecting the Company, the Bank Subsidiary or any of their
respective subsidiaries) which could reasonably be expected to
have a material adverse change in the financial condition or in
the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business.
(9) Regulatory Enforcement Matters. Except in each
case as described in the Disclosure Package and the Offering Documents,
neither the Company nor any of its subsidiaries is subject or is
party to, or has received any notice or advice that any of them
may become subject or party to, any investigation with respect to
any cease-and-desist order, agreement, consent agreement,
memorandum of understanding or other regulatory enforcement
action, proceeding or order with or by, or is a party to any
commitment letter or similar undertaking to, or is subject to any
directive by, or has been a recipient of any supervisory letter
from, or has adopted any board resolutions at the request of, any
Regulatory Agency (as defined below) that currently restricts in
any material respect the conduct of their business or that in any
material manner relates to their capital adequacy, their credit
policies, their management or their business (each, a "Regulatory
Agreement"), nor has the Company or any of its subsidiaries been
advised by any Regulatory Agency that it is considering issuing
or requesting any such Regulatory Agreement, and there is no
unresolved violation, criticism or exception by any Regulatory
Agency with respect to any report or statement relating to any
examinations of the Company or any of its subsidiaries which, in
the reasonable judgment of the Company, is expected to result in
a Material Adverse Effect. As used herein, the term "Regulatory
Agency" means any federal or state agency charged with the
supervision or regulation of depositary institutions, or holding
companies of depositary institutions, or engaged in the insurance
of depository institution deposits, or any court, administrative
agency or commission or other governmental agency, authority or
instrumentality having supervisory or regulatory authority with
respect to the Company or any of its subsidiaries.
(10) Good Standing of the Company. The Company has
been duly organized and is validly existing as a corporation in good
standing under the laws of the Commonwealth of Pennsylvania and
has full power and authority under such laws to own, lease and
operate its properties and to conduct its business as now being
conducted as described in the Disclosure Package and the Offering
Documents and to enter into and perform its obligations under
this Agreement; and the Company is duly registered as a savings
and loan holding company under the Home Owners' Loan Act, as
amended ("HOLA").
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(11) Good Standing of the Bank Subsidiary. The Bank
Subsidiary has been duly organized and is validly existing under the
laws of the United States of America and has full power and authority
under such laws to own, lease and operate its properties and to
conduct its business as now being conducted as described in the
Disclosure Package and the Offering Documents; and the Bank
Subsidiary's deposit accounts are insured up to the applicable
limit by the Deposit Insurance Fund of the Federal Deposit
Insurance Corporation ("FDIC") to the fullest extent permitted by
law and the rules and regulations of the FDIC; and no proceeding
for the revocation or termination of such insurance is pending
or, to the knowledge of the Company and the Bank Subsidiary,
threatened.
(12) Other Subsidiaries. There are no subsidiaries of
the Company other than the Bank Subsidiary, First Keystone Capital
Trust I, a Delaware statutory trust and First Keystone Capital
Trust II, a Delaware statutory trust, and there are no
subsidiaries of the Bank Subsidiary other than FKF Management
Corp., a Delaware corporation, First ▇▇▇▇▇▇▇ Services, Inc., a
Delaware corporation, First Pointe, Inc., a Pennsylvania
corporation, and State Street Service Corp., a Pennsylvania
corporation, and there are no subsidiaries of State Street
Service Corp. other than First Keystone Insurance Services, LLC,
a Pennsylvania limited liability company (together, with all
subsidiaries other than the Banking Subsidiaries, the "Other
Subsidiaries"). The Other Subsidiaries have been duly organized
and are validly existing as corporations or other business
entities in good standing under the laws of their jurisdiction of
organization and have corporate or other entity power and
authority to own, lease and operate their properties and to
conduct their business as described in the Disclosure Package and
the Offering Documents.
(13) Foreign Qualifications. The Company and its
subsidiaries are each duly qualified as a foreign corporation or other
entity to transact business and are each in good standing in each
jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify or be in good
standing would not individually or in the aggregate result in a
Material Adverse Effect.
(14) Capital Stock Duly Authorized and Validly Issued.
All of the issued and outstanding capital stock of the Company has been
duly authorized and validly issued and is fully paid and
nonassessable; except as described in the Disclosure Package and
the Offering Documents, all of the issued and outstanding capital
stock of the Bank Subsidiary and each of the Other Subsidiaries
has been duly authorized and validly issued, is fully paid and
nonassessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equitable right; and none of
the issued and outstanding capital stock of the Company or its
subsidiaries was issued in violation of any preemptive or similar
rights arising by operation of law, under the articles of
incorporation, charter or bylaws of the Company or any such
subsidiary or under any agreement to which the Company or any
such subsidiary is a party.
(15) Capitalization. The authorized, issued and
outstanding capital stock of the Company as of March 31, 2006 is as
set forth in the Disclosure Package and the Offering Documents under
the caption of "Capitalization"; there have not been any subsequent
issuances of capital stock of the Company except pursuant to the
exercise of options to purchase
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the Common Stock of the Company outstanding as of March 31, 2006;
and, except as described in the Disclosure Package and the Offering
Documents, there has not been any additional long term (maturity greater
than one year) borrowings incurred by the Company or any of its
subsidiaries subsequent to March 31, 2006.
(16) Authorization of the Shares. At the Closing Time,
the Shares will have been duly authorized for issuance by the Company
and, when duly issued and executed and delivered by the Company
to the Purchasers (as defined in Section 2(a)) against payment
therefor in accordance with the subscription agreement therefor,
will be validly issued and fully paid and nonassessable shares of
Common Stock; the issuance of the Shares is not subject to
preemptive or other similar rights; and the Shares will conform
in all material respects to the description thereof in the
Disclosure Package and the Offering Documents.
(17) Authorization of Agreement. This Agreement has
been duly authorized, executed and delivered by each of the Company and
the Bank Subsidiary.
(18) Not an Investment Company. The Company is not, and
immediately following consummation of the transactions contemplated
hereby and the application of the net proceeds as described in the
Disclosure Package and the Offering Documents, the Company will not be,
an "investment company" required to be registered under the Investment
Company Act of 1940, as amended (the "1940 Act").
(19) Absence of Defaults and Conflicts. Neither the
Company nor any of its subsidiaries is in violation of its respective
articles of incorporation, charter or bylaws or similar governing
documents, except to the extent such violation, conflict, breach
or default would not adversely affect the transactions
contemplated hereby or have a Material Adverse Effect. The
Company and each of its subsidiaries have conducted and are
conducting their business so as to comply in all material
respects with all applicable statutes, regulations and
administrative and court decrees. None of the Company or any
subsidiary of the Company is in default in the performance or
observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or other agreement or
instrument to which it is a party or by which it or any of them
may be bound or to which any of its properties or assets is
subject (collectively, "Agreements and Instruments"), except for
such defaults under Agreements and Instruments that would not
individually or in the aggregate result in a Material Adverse
Effect. The execution, delivery and performance of this
Agreement by the Company, the issuance, sale and delivery of the
Shares, the consummation of the transactions contemplated by this
Agreement, and compliance by the Company and the Bank Subsidiary
with the terms of this Agreement have been duly authorized by all
necessary corporate action on the part of the Company and the
Bank Subsidiary and do not and will not, whether with or without
the giving of notice or passage of time or both, violate,
conflict with or constitute a breach of, or default or Repayment
Event (as defined below) under, or result in the creation or
imposition of any, security interest, mortgage, pledge, lien,
charge, encumbrance, claim or equitable right upon any properties
or assets of the Company or any of its subsidiaries pursuant to,
any of the Agreements and Instruments, except to the extent such
violation, conflict, breach or default would not individually or
in the aggregate adversely affect the transactions contemplated
hereby or have a Material Adverse Effect, nor will such action
result in any violation of the provisions of the articles of
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incorporation, charter, bylaws or similar governing documents of
the Company or any of its subsidiaries or any violation by the
Company or any of its subsidiaries of any applicable law,
statute, rule, regulation, judgment, order, writ or decree of any
government, government authority, agency or instrumentality or
court, domestic or foreign, including, without limitation, the
Office of Thrift Supervision (the "OTS") and the FDIC, having
jurisdiction over the Company or any of its subsidiaries or their
respective properties or assets (collectively, "Governmental
Entities"), except to the extent such violation, conflict, breach
or default would not individually or in the aggregate adversely
affect the transactions contemplated hereby or have a Material
Adverse Effect. As used herein, a "Repayment Event" means any
event or condition which gives the holder of any note, debenture
or other evidence of indebtedness (or any person acting on such
holder's behalf) the right to require the repurchase, redemption
or repayment of all or a portion of such indebtedness by the
Company or any of its subsidiaries prior to its scheduled
maturity.
(20) Absence of Labor Dispute. No labor dispute with
the employees of the Company or any of its subsidiaries exists or, to
the knowledge of the executive officers of the Company or the
Bank Subsidiary, is imminent, which, in the reasonable judgment
of the Company or the Bank Subsidiary, is expected to result in a
Material Adverse Effect.
(21) Absence of Proceedings. Except as disclosed in the
Disclosure Package and the Offering Documents, there is no action,
suit, proceeding, inquiry or investigation before or brought by any
Governmental Entity, now pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its subsidiaries
which would individually or in the aggregate result in a Material
Adverse Effect, or which could individually or in the aggregate materially
and adversely affect the consummation of the transactions contemplated
by this Agreement or the performance by the Company or the Bank
Subsidiary of their respective obligations hereunder.
(22) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any Governmental Entity, other than
those that have been made or obtained, is necessary or required
for the performance by the Company of its obligations hereunder,
or the consummation by the Company of the transactions
contemplated hereby, except as may be required under federal or
state securities laws.
(23) Possession of Licenses and Permits. Each of the
Company and the subsidiaries of the Company possesses such permits,
licenses, approvals, consents and other authorizations (collectively,
"Governmental Licenses") issued by the appropriate Governmental
Entities necessary to conduct the business now operated by them,
and the Company and each of the subsidiaries of the Company is in
compliance with the terms and conditions of all such Governmental
Licenses, except where the failure to so possess or to so comply
would not individually or in the aggregate have a Material
Adverse Effect; all of the Governmental Licenses are valid and in
full force and effect, except where the invalidity of such
Governmental Licenses or the failure of such Governmental
Licenses to be in full force and effect would not individually or
in the aggregate have a Material Adverse Effect; and none of the
Company or any subsidiaries of the Company has received any
notice of proceedings relating to the
7
revocation or modification of any such Governmental Licenses which
would individually or in the aggregate result in a Material Adverse Effect.
(24) Title to Property. Each of the Company and the
subsidiaries of the Company has good and marketable title to all of their
respective real and personal properties the descriptions of which
are contained in the Disclosure Package and the Offering
Documents, in each case free and clear of all liens, encumbrances
and defects, except as stated in the Disclosure Package and the
Offering Documents, or such as would not individually or in the
aggregate result in a Material Adverse Effect; and all of the
leases and subleases under which the Company or any subsidiary
holds properties are in full force and effect, except where the
failure of such leases and subleases to be in full force and
effect would not individually or in the aggregate have a Material
Adverse Effect, and none of the Company or any subsidiaries of
the Company has any notice of any claim of any sort that has been
asserted by anyone adverse to the rights of the Company or any
subsidiaries of the Company under any of the leases or subleases
mentioned above, or affecting or questioning the rights of such
entity to the continued possession of the leased or subleased
premises under any such lease or sublease, except for any such
claim which would not individually or in the aggregate result in
a Material Adverse Effect.
(25) Intellectual Property. Each of the Company and
the subsidiaries of the Company owns or possesses adequate patents,
patent rights, licenses, inventions, copyrights, know how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual
property (collectively, "Intellectual Property") presently
employed by them in connection with the business now operated by
them or reasonably necessary in order to conduct such business,
except to the extent the failure to so own, possess or be able to
obtain such Intellectual Property would not individually or in
the aggregate have a Material Adverse Effect; and neither the
Company nor any of the Company's subsidiaries has received any
notice of any infringement of or conflict with asserted rights of
others with respect to any Intellectual Property or of any facts
or circumstances which would render any Intellectual Property
invalid or inadequate to protect the interest of the Company or
any of its subsidiaries therein, which infringement or conflict
(if the subject of any unfavorable decision, ruling or finding)
or invalidity or inadequacy would individually or in the
aggregate result in a Material Adverse Effect.
(26) Payment of Taxes. The Company has filed all
foreign, federal, state and local tax returns that are required to be
filed or has requested extensions thereof (except in any case in
which the failure so to file would not have a Material Adverse
Effect) and has paid all taxes required to be paid by it and any
other assessment, fine or penalty levied against it, to the
extent that any of the foregoing is due and payable, except for
any such assessment, fine or penalty that is currently being
contested in good faith or would not individually or in the
aggregate result in a Material Adverse Effect.
(27) Insurance. The Company and each of its subsidiaries
are insured for commercially reasonable amounts by insurance
companies with an A.M. Best rating of A- or better against such
losses and risks and in such amounts as are prudent and customary
in the businesses in which they are engaged; all policies of
insurance and fidelity or surety bonds insuring the Company or
any of its subsidiaries or their respective businesses, assets,
8
employees, officers and directors are in full force and effect in
all material respects; the Company and its subsidiaries are in
compliance with the terms of such policies and instruments in all
material respects; there are no claims by the Company or any of
its subsidiaries under any such policy or instrument as to which
any insurance company is denying liability or defending under a
reservation of rights clause; neither the Company nor any of its
subsidiaries has been refused any insurance coverage sought or
applied for within the past three years; and neither the Company
nor any of its subsidiaries has any reason to believe that it
will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at
a cost that would not result in a Material Adverse Effect.
(28) Payment of Dividends. No subsidiary of the
Company is currently prohibited, directly or indirectly, from paying
any dividends to the Company, from making any other distribution on
such subsidiary's capital stock, from repaying to the Company any
loans or advances to such subsidiary from the Company or from
transferring any of such subsidiary's property or assets to the
Company or any other subsidiary of the Company, except as
described in the Disclosure Package and the Offering Documents
and as such subsidiaries may be limited by regulations issued by
Regulatory Agencies of general applicability.
(29) Environmental. The Company and each of its
subsidiaries (A) are in compliance with any and all applicable foreign,
federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (B) have received and are in
compliance with all permits, licenses or other approvals required
of them under applicable Environmental Laws to conduct their
respective businesses and (C) have not received notice of any
actual or potential liability for the investigation or
remediation of any disposal or release of hazardous or toxic
substances or wastes, pollutants or contaminants, except where
such non-compliance with Environmental Laws, failure to receive
required permits, licenses or other approvals, or liability would
not individually or in the aggregate result in a Material Adverse
Effect. Neither the Company nor any of the subsidiaries has been
named as a "potentially responsible party" under the
Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended.
(30) ERISA. Each of the Company and its subsidiaries
has fulfilled, in all material respects, its obligations, if any,
under the minimum funding standards of ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the regulations promulgated thereunder
with respect to each "plan" (as defined in Section 3(3) of ERISA
and the regulations thereunder), which is maintained by the
Company and its subsidiaries for their employees, and each such
plan is in compliance in all material respects with the presently
applicable provisions of ERISA and the regulations thereunder.
The Company and its subsidiaries have not incurred any unpaid
liability under Title IV of ERISA to the Pension Benefit Guaranty
Corporation (other than for the payment of premiums in the
ordinary course) or to any such plan.
(31) Foreign Corrupt Practices Act. The operations of
the Company and the Bank Subsidiary are and have been conducted at
all times in compliance in all material respects with applicable
financial recordkeeping and reporting requirements of the
Currency and
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Foreign Transactions Reporting Act of 1970, as amended, also known
as the Bank Secrecy Act, the money laundering statues of all applicable
jurisdictions, the rules and regulations thereunder and any related
or similar rules, regulations or guidelines, issued, administered or
enforced by any Governmental Entity having jurisdiction over the Company
or the Bank Subsidiary (collectively, the "Money Laundering Laws")
and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator
involving the Company or the Bank Subsidiary with respect to the
Money Laundering Laws is pending or, to the knowledge of the
Company, threatened. Neither the Company, the Bank Subsidiary,
nor, to the knowledge of the Company, any director, officer,
agent, employee or other person associated with or acting on
behalf of the Company or the Bank Subsidiary has (A) used any
corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political
activity; (B) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee; (C) violated
or is in violation of any provision of the Foreign Corrupt
Practices Act of 1977; (D) made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment; or (E)
made any payment of funds to the Company or the Bank Subsidiary
or received or retained funds in violation of any law, rule or
regulation.
(32) NASDAQ Compliance; Listing.
(a) The Company is in compliance with the
requirements of the NASDAQ for continued quotation of the Common
Stock thereon and has not received any notification that, and has no
knowledge that, the NASDAQ is contemplating terminating such quotation
nor, to the Company's knowledge, is there any basis therefor. The
transactions contemplated by this Agreement will not contravene
the rules and regulations of the NASDAQ.
(b) The Shares have been or will be prior to Closing
Time duly authorized for quotation on the NASDAQ.
(33) NASD Affiliations. To the knowledge of the Company,
there are no affiliations or associations (as such terms are defined by
the National Association of Securities Dealers, Inc. ("NASD"))
between any member of the NASD and any of the Company's officers
or directors.
(34) Stabilization. The Company has not taken and will
not take, directly or indirectly, any action designed to, or that
might be reasonably expected to, cause or result in stabilization
or manipulation of the price of the Shares.
(35) Brokers or Finders. No broker, investment banker,
financial advisor or other individual, corporation, general or limited
partnership, limited liability company, firm, joint venture,
association, enterprise, joint securities company, trust,
unincorporated organization or other entity, other than the
Placement Agent, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with
the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company.
(36) Solicitation; Other Issuances of Securities.
Neither the Company nor any of its Affiliates (as defined in Rule 501(b)
under the ▇▇▇▇ ▇▇▇) or any person acting on
10
its or any of their behalf, (A) has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D
under the 1933 Act Regulations) in connection with the offer or sale of
the Shares, (B) has, directly or indirectly, made any offers or sales
of any security or solicited any offers to buy any security,
under any circumstances that would require registration of the
Shares under the 1933 Act or (C) has issued any shares of Common
Stock or shares of any series of preferred stock or other
securities or instruments convertible into, exchangeable for or
otherwise entitling the holder thereof to acquire shares of
Common Stock which would be integrated with the sale of the
Shares for purposes of the 1933 Act or of any applicable
stockholder approval provisions, including, without limitation,
under the rules and regulations of any exchange or automated
quotation system on which any of the securities of the Company
are listed or designated, and the Company and its subsidiaries
will take reasonable precautions designed to ensure that any
action or steps taken by the Company or its subsidiaries would
not require registration of any of the Shares under the 1933 Act
or cause the offering of the Shares to be integrated with other
offerings.
(37) No Registration. It is not necessary in connection
with the offer, sale and delivery of the Shares by the Company in the
manner contemplated by this Agreement to register the Shares
under the 1933 Act.
(38) Conduct of Business. Except as disclosed in the
Disclosure Package and the Offering Documents, the Company and the
subsidiaries are conducting their respective businesses in
compliance in all material respects with all laws, rules,
regulations, decisions, directives and orders (including, without
limitation, all regulations and orders of, or agreement with, the
OTS and the FDIC) applicable to it.
(b) Any certificate signed by any duly authorized officer of
the Company or any of its subsidiaries and delivered to the Placement
Agent or to counsel for the Placement Agent shall be deemed a
representation and warranty by the Company or its subsidiaries to
the Placement Agent as to the matters covered thereby.
SECTION 2. Sale and Delivery of the Shares; Closing.
(a) On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell an aggregate of 400,000 Shares
to the persons who have duly filled out the Subscription
Agreement included in the Offering Documents which has been
accepted by the Company (collectively, the "Purchasers"), at a
price per Share which shall be set forth in the Disclosure
Package and in the Final Offering Memorandum. The Company has
the absolute and sole discretion to accept any of such
subscriptions in whole or in part. Each Purchaser shall be an
"accredited" investor as that term is defined in Regulation D
under the 1933 Act Regulations.
(b) Deliveries of certificates for the Shares shall be made
at the offices of Barack ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
or such other place as may be agreed to by the Placement Agent
and the Company, on such date and at such time as shall be agreed
upon by the Placement Agent and the Company (such time and date
of delivery being herein called the "Closing Time"). Each
Purchaser shall pay the purchase price for the Shares subscribed
for by wire transfer of
11
immediately available funds to an escrow account maintained by an
escrow agent to be designated by the Company (and reasonably acceptable
to the Placement Agent) and identified in the applicable Subscription
Agreement at least two (2) business days preceding the Closing Time.
(c) The Placement Agent, relying on the representations
and warranties given by each of the Company and the Bank Subsidiary
herein, hereby undertakes, subject to and in accordance with the
provisions of this Agreement, to act as agent for the Company in
connection with procuring qualified subscribers to subscribe for
or purchase an aggregate of 400,000 Shares. The Company
expressly acknowledges and agrees that the offering contemplated
hereby is on a "best efforts" basis only and that the execution
of this Agreement by the Placement Agent does not constitute a
commitment by the Placement Agent to purchase any Shares and does
not ensure the successful placement of the Shares or any portion
thereof or the success of the Placement Agent with respect to
securing any other financing on behalf of the Company. As
compensation to the Placement Agent for its commitments
hereunder, the Company hereby agrees to pay at the Closing Time
to the Placement Agent in immediately available funds a
commission equal to the greater of (i) the aggregate of seven
percent (7.00%) of the gross proceeds from the sale of Shares to
Purchasers whom the Placement Agent identified or referred to the
Company and one percent (1.00%) of the gross proceeds from the
sale of Shares to Purchasers whom the Company identified or (ii)
$250,000.
(d) In performing its duties under this Agreement, the
Placement Agent shall be entitled to rely upon any notice, signature
or writing which the Placement Agent shall in good faith believe to
be genuine and to be signed or presented by a proper party or
parties. The Placement Agent may rely upon any opinions or
certificates or other documents delivered to it by the Company,
the Bank Subsidiary or its counsel or designees.
SECTION 3. Covenants of the Company and the Bank
Subsidiary. The Company and the Bank Subsidiary covenant with the
Placement Agent as follows:
(a) Offering Documents. The Company and the Bank Subsidiary,
as promptly as possible, will furnish to the Placement Agent,
without charge, such number of copies of the Preliminary Offering
Memorandum, the Final Offering Memorandum and any amendments and
supplements thereto as the Placement Agent may reasonably
request.
(b) Notice and Effect of Material Events. Prior to the
Closing Time, the Company and the Bank Subsidiary will immediately
notify the Placement Agent, and confirm such notice in writing, of (x)
any filing made by the Company and the Bank Subsidiary of
information relating to the offering of the Shares with any
regulatory body in the United States, and (y) any Material
Adverse Effect, which (i) makes any statement in the Disclosure
Package and the Offering Documents false or misleading or (ii) is
not disclosed in the Disclosure Package or the Offering
Documents. In such event or if during such time any event shall
occur as a result of which it is necessary, in the reasonable
opinion of the Company, its counsel or the Placement Agent or
counsel to such Placement Agent, to amend or supplement the
Disclosure Package or the Final Offering Memorandum in order that
the Disclosure Package or the Final Offering Memorandum not
include any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein
not misleading in the light of the circumstances
12
then existing, the Company will forthwith amend or supplement the
Disclosure Package or the Final Offering Memorandum by preparing
and furnishing to the Placement Agent an amendment or amendments of,
or a supplement or supplements to, the Disclosure Package or the
Final Offering Memorandum (in form and substance satisfactory in
the reasonable opinion of counsel for the Placement Agent) so
that, as so amended or supplemented, the Disclosure Package or
the Final Offering Memorandum will not include an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading,
in the light of the circumstances then existing.
(c) Amendment to Offering Documents. The Company and the
Bank Subsidiary will advise the Placement Agent promptly of any
proposal to amend or supplement the Disclosure Package or the
Offering Documents and will not effect such amendment or
supplement without the prior written consent of the Placement
Agent, which consent will not be unreasonably withheld. Neither
the consent of the Placement Agent nor such Placement Agent's
delivery of any such amendment or supplement shall constitute a
waiver of any of the conditions set forth in Section 5 hereof.
(d) Use of Proceeds. The Company and the Bank Subsidiary
will use the proceeds received by it from the sale of the Shares as
described in the Final Offering Memorandum.
(e) Lock-Up. During the 180-day period after the Closing
Time, the Company will not, and will use its best efforts to cause
its directors or executive officers not to, without the prior written
consent of the Placement Agent, directly or indirectly, issue,
sell, offer or agree to sell, grant any option for the sale of,
or otherwise dispose of, Common Stock, any security convertible
into, exchangeable or exercisable for Common Stock or any equity
security substantially similar to the Common Stock. The
foregoing sentence shall not apply to (i) the issuance by the
Company of (x) the Shares to be sold hereunder, (y) any shares of
Common Stock issued upon the exercise of an option disclosed in
the Disclosure Package and the Offering Documents or (z) any
options to purchase Common Stock granted pursuant to existing
employee benefit plans of the Company referred to in the
Disclosure Package and the Offering Documents, or (ii) the sale
or transfer of any shares of Common Stock permitted under the
individual lock-up agreements executed by certain directors and
officers of the Company.
(f) Blue Sky Qualifications. The Company will use its
best efforts to qualify the Shares for offering and sale under the
applicable securities laws of such states and other domestic
jurisdictions as the Placement Agent may reasonably designate and
to maintain such qualifications in effect for a period of not
less than one year from the later of the date of the Final
Offering Memorandum or any amendment or supplement thereto. In
each jurisdiction in which the Shares have been so qualified, the
Company will file such statements and reports as may be required
by the laws of such jurisdiction to continue such qualification
in effect for a period of not less than one year from the later
of the date of the Final Offering Memorandum or any amendment or
supplement thereto.
(g) Registration Rights Agreement. The Company will use
its best efforts to comply with its obligations under the
Registration Rights Agreement to be entered into at the Closing
Time by the Company with respect to the Shares.
13
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident
to the performance of its obligations under this Agreement, including,
without limitation, (i) the cost of obtaining all securities and
bank regulatory approvals; (ii) the cost of preparation, printing
and delivery to the Placement Agent of this Agreement and such
other documents as may be required in connection with the
offering, purchase, sale and delivery of the Shares; (iii) the
cost of preparing, including printing and distributing, the
Offering Documents; (iv) the costs of blue sky qualification of
the Shares in the various states; and (v) all fees and
disbursements of the Company's counsel, accountants, agents and
other advisors. In the event the Placement Agent incurs any such
fees and expenses on behalf of the Company, the Company will
reimburse the Placement Agent for such fees and expenses whether
or not the transactions contemplated hereby are consummated.
(b) In addition to the expenses to be borne by the Company
under paragraph (a) above, the Company shall reimburse the Placement
Agent upon request made from time to time for its reasonable
documented out-of-pocket expenses, not to exceed $50,000,
incurred in connection with its engagement hereunder regardless
of whether the offering contemplated hereby is consummated,
including, without limitation, legal fees and expenses and
promotional and travel expenses.
SECTION 5. Conditions of Placement Agent's Obligations
and Additional Delivery Obligations of the Company. The obligations
of the Placement Agent hereunder are subject to the accuracy of
the representations and warranties of the Company and the Bank
Subsidiary contained in Section 1 hereof or in certificates of
any officer of the Company or any of its subsidiaries delivered
pursuant to the provisions hereof and to the performance by the
Company and the Bank Subsidiary of their obligations hereunder.
In addition, the Company and the Bank Subsidiary agree with the
Placement Agent as follows, and agree not to consummate the sale
of any Shares until and unless the following deliveries are made:
(a) Opinion of Counsel for Company and the Bank Subsidiary.
At the Closing Time, the Company and the Bank Subsidiary shall cause
to be delivered to the Placement Agent the favorable opinion,
dated as of the Closing Time, of Elias, Matz, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
L.L.P., counsel for the Company and the Bank Subsidiary, in form
and substance reasonably satisfactory to counsel for the
Placement Agent, and in substantially the form annexed hereto as
Exhibit A. Such counsel may state that, insofar as such opinion
involves factual matters, they have relied, to the extent they
deem proper, upon certificates of officers of the Company or any
of its subsidiaries and certificates of public officials. Such
opinion shall be governed by the Legal Opinion Accord of the ABA
Section of Business Law (1991).
(b) Certificates. At the Closing Time, the Company and
the Bank Subsidiary shall cause to be delivered to the Placement Agent
a certificate of the President and Chief Executive Officer of the
Company and of the Chief Financial Officer of the Company, dated
as of the Closing Time, to the effect that (i) since the date
hereof, or since the respective dates as of which the information
is given in the Disclosure Package or the Offering Documents,
there shall not have been any change or development that would
individually or in the aggregate have a
14
Material Adverse Effect, (ii) the representations and warranties in
Section 1 hereof were true and correct when made and are true and
correct with the same force and effect as though expressly made at
and as of the Closing Time, and (iii) the Company and the Bank
Subsidiary have complied with all agreements and satisfied all
conditions on their part to be performed or satisfied hereunder or
in the Subscription Agreements at or prior to the Closing Time.
(c) Officers' Certificate. At the Closing Time, the Company
and the Bank Subsidiary shall cause to be delivered to the Placement
Agent a certificate of the President and Chief Executive Officer
of the Company and of the Bank Subsidiary and the Chief Financial
Officer of the Company and of the Bank Subsidiary, dated as of
Closing Time, to the effect that (i) they have reviewed the
contents of the Disclosure Package and the Offering Documents;
(ii) based on each of their knowledge, as of the date of such
materials and as of the Closing Time, the Disclosure Package and
the Offering Documents do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order
to make the statements made therein, in light of the
circumstances under which such statements were made, not
misleading; and (iii) based on each of their knowledge, the
financial statements and other financial information included in
the Disclosure Package and the Offering Documents fairly present
in all material respects the financial condition and results of
operations of the Company and its subsidiaries as of and for the
dates and periods presented in the Disclosure Package and the
Offering Documents.
(d) Independent Auditors' Comfort Letter. At the time of
the execution of this Agreement, the Company and the Bank Subsidiary
shall cause to be delivered to the Placement Agent a letter from
Deloitte & Touche LLP (the "Company Independent Accountant"),
dated such date, in form and substance reasonably satisfactory to
the Placement Agent, containing statements and information of the
type ordinarily included in accountants' "comfort letters" to
placement agents in private placements with respect to the
financial statements and certain financial information included
in the Offering Documents.
(e) Bring-down Comfort Letter. At the Closing Time, the
Company and the Bank Subsidiary shall cause to be delivered to the
Placement Agent from the Company Independent Accountant a letter,
dated as of the Closing Time, to the effect that they reaffirm
the statements made in the letter furnished pursuant to
subsection (c) of this Section, except that the specified date
referred to shall be a date not more than three business days
prior to the Closing Time.
(f) Lock-up Agreements. At the date of this Agreement,
the Company and the Bank Subsidiary shall cause to be delivered to
the Placement Agent an agreement substantially in the form of
Exhibit B hereto signed by the persons listed on Schedule B
hereto.
(g) Additional Documents. At the Closing Time, the Company
and the Bank Subsidiary shall cause to be delivered to the counsel
for the Placement Agent such documents and opinions as they may
reasonably require for the purpose of enabling them to pass upon
the issuance and sale of the Shares as herein contemplated, or in
order to evidence the accuracy of any of the representations or
warranties of the Company and the Bank Subsidiary contained
herein or in any certificate delivered pursuant hereto.
15
(h) Termination of Agreement. If any condition or
obligation specified in this Section shall not have been fulfilled or
complied with when and as required to be fulfilled or complied
with, this Agreement may be terminated by the Placement Agent by
notice to the Company and the Bank Subsidiary at any time at or
prior to the Closing Time, and such termination shall be without
liability of any party to any other party except as provided in
Section 4 hereof and except that Section 6 and 7 hereof shall
survive any such termination and remain in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of Placement Agent. The Company and the
Bank Subsidiary agree to jointly and severally indemnify and hold
harmless: (x) the Placement Agent; (y) each person, if any, who
controls (within the meaning of Section 15 of the 1933 Act or
Section 20 of the ▇▇▇▇ ▇▇▇) the Placement Agent (each such
person, a "controlling person"); and (z) the respective partners,
directors, officers, employees and agents of the Placement Agent
or any such controlling person as follows:
(1) against any and all loss, liability, claim, damages
and expense whatsoever, as incurred, relating to or arising out of,
or based upon, in whole or in part, (A) any untrue statement or
alleged untrue statement of a material fact included in the
Preliminary Offering Memorandum, the Disclosure Package or the
Final Offering Memorandum, in each case, as amended or
supplemented, or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; (B) any untrue statement or alleged untrue statement
of material fact contained in any information or documents
executed in favor of or furnished or made available to the
Placement Agent by the Company and the Bank Subsidiary; (C) any
omission or alleged omission to state in any information or
documents executed in favor of or furnished or made available to
the Placement Agent by the Company and the Bank Subsidiary a
material fact necessary to make the statements therein not
misleading; or (D) the breach or alleged breach of any
representation, warranty and agreement of the Company and the
Bank Subsidiary contained herein;
(2) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission, or breach or alleged breach of any such representation,
warranty or agreement; provided that (subject to Section 6(d)
hereof) any such settlement is effected with the written consent
of the Company and the Bank Subsidiary; and
(3) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by the
Placement Agent to the extent permitted by Section 6(c) hereof),
reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, or
breach or alleged breach of any such
16
representation, warranty or agreement, to the extent that any such
expense is not paid under (1) or (2) above;
provided, however, that this indemnity agreement shall not apply
to any loss, liability, claim, damage or expense (A) to the
extent arising out of any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and
in conformity with written information furnished to the Company
by the Placement Agent or their counsel expressly for use in the
Disclosure Package and the Offering Documents (or any amendment
or supplement thereto) (the "Placement Agent's Information") or
(B) which is found by a final unappealable order of a court with
jurisdiction over the matter to have been directly caused by the
gross negligence of the Placement Agent.
Notwithstanding the foregoing, the indemnification
provided for in this paragraph (a) shall not apply to the Bank
Subsidiary to the extent that such indemnification by the Bank
Subsidiary is found in a final, non-appealable judgment by a
court of competent jurisdiction to constitute a violation of any
financial institution law or regulation applicable to the Bank
Subsidiary, including if such indemnification is so found to
constitute a covered transaction under 23A of the Federal
Reserve Act.
(b) Indemnification of Offerors, Directors, Officers and
Employees. The Placement Agent agrees to indemnify and hold
harmless the Company and the Bank Subsidiary, their directors,
officers and employees, and each person, if any, who controls the
Company or the Bank Subsidiary within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act against any and all
loss, liability, claim, damage and expense described in the
indemnity contained in Sections 6(a)(1)(A), 6(a)(2) and 6(a)(3)
above, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in
conformity with the Placement Agent's Information.
(c) Actions against Parties; Notification. Each indemnified
party shall give notice as promptly as reasonably practicable to
each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure
to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it
is not materially prejudiced as a result thereof, and in any
event shall not relieve it from any liability which it may have
otherwise than on account of this indemnity agreement. In case
any such action shall be brought against any indemnified party,
the indemnifying party shall be entitled to participate therein
and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified
party (who shall not, except with the consent of the indemnified
party which consent shall not be unreasonably withheld, be
counsel to the indemnifying party), and, after notice from the
indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party shall not
be liable to such indemnified party under such subsection for any
legal expenses of other counsel or any other expenses, in each
case subsequently incurred by such indemnified party, in
connection with the defense thereof other than reasonable costs
of investigation. In no event shall the indemnifying parties be
liable for fees and expenses of more than one counsel (in
addition to any local counsel) separate from their own counsel
for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction
arising out of the same general
17
allegations or circumstances. No indemnifying party shall, without
the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to
any litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under
this Section 6 or Section 7 hereof (whether or not the indemnified
parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional
release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii)
does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any
indemnified party.
(d) Settlement without Consent if Failure to Reimburse.
If at any time an indemnified party shall have validly requested an
indemnifying party to reimburse the indemnified party for fees
and expenses of counsel, such indemnifying party agrees that it
shall be liable for any settlement of the nature contemplated by
Section 6(a)(2) effected without its written consent if (i) such
settlement is entered into more than 45 days after receipt by
such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of
such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have
reimbursed such indemnified party in accordance with such request
prior to the date of such settlement.
SECTION 7. Contribution. In order to provide for
just and equitable contribution in circumstances under which the
indemnification provided for in Section 6 hereof is for any
reason held to be unenforceable by an indemnified party in
respect of any losses, liabilities, claims, damages or expenses
referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities,
claims, damages and expenses incurred by such indemnified party,
as incurred, (i) in such proportion as is appropriate to reflect
the relative benefits received by the Company and the Bank
Subsidiary, on the one hand, and the Placement Agent, on the
other hand, from the offering of the Shares pursuant to this
Agreement or (ii) if the allocation provided by clause (i) is not
permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company and the Bank
Subsidiary, on the one hand, and the Placement Agent, on the
other hand, in connection with the statements or omissions which
resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the
Bank Subsidiary, on the one hand, and the Placement Agent, on
the other hand, in connection with the offering of the Shares
pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the
offering of the Shares pursuant to this Agreement (before
deducting expenses) received by the Company and the Bank
Subsidiary and the total commission received by the Placement
Agent bear to the aggregate offering price of the Shares.
The relative fault of the Company and the Bank
Subsidiary, on the one hand, and the Placement Agent, on the
other hand, shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statements of
a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company and
the
18
Bank Subsidiary or by the Placement Agent and the parties'
relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the Bank Subsidiary and the Placement
Agent agree that it would not be just and equitable if
contribution pursuant to this Section 7 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 7. The aggregate amount of losses,
liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall
be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in investigating, preparing
or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue
or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, the
Placement Agent shall not be required to contribute any amount
in excess of the amount by which its commissions received
pursuant to Section 2(c) hereof exceeds the amount of any
damages which the Placement Agent has otherwise been required to
pay by reason of such untrue or alleged untrue statement or
omission or alleged omission.
No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be
entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any,
who controls the Placement Agent within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act and the
respective partners, directors, officers, employees and agents
of such Placement Agent or any such controlling person shall
have the same rights to contribution as the Placement Agent,
while each officer and director of the Company and the Bank
Subsidiary, and each person, if any, who controls the Company
and the Bank Subsidiary within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act shall have the same
rights to contribution as the Company and the Bank Subsidiary.
SECTION 8. Representations, Warranties and Agreements
to Survive Delivery. All representations, warranties and agreements
contained in this Agreement or in certificates of officers of the
Company or the Bank Subsidiary submitted pursuant hereto shall
remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Placement Agent or
controlling person, or by or on behalf of the Company or the Bank
Subsidiary, and shall survive delivery of the Shares to the
purchasers thereof.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Placement Agent may terminate
this Agreement, by notice to the Company and the Bank Subsidiary,
at any time at or prior to the Closing Time if, since the time of
execution of this Agreement or since the respective dates as of
which information is given in the Disclosure Package or the
Offering Documents, (i) there shall have been any change or
development that would individually or in the aggregate have a
19
Material Adverse Effect, or (ii) any condition or obligation
specified in Section 5 hereof shall not have been fulfilled or
complied with when and as required to be fulfilled or complied
with), or (iii) there has occurred any material adverse change in
the financial markets in the United States, any outbreak of
hostilities or escalation thereof or any other calamity or
crisis, or any change or development involving a prospective
change in political, financial or economic conditions, in each
case the effect of which is such as to make it, in the judgment
of the Placement Agent, impracticable to market the Shares or to
enforce contracts for the sale of the Shares, or (iv) trading
generally on the American Stock Exchange, the New York Stock
Exchange or NASDAQ has been suspended or limited, or minimum or
maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such
system or by order of the Commission, the NASD or any other
governmental authority, or (v) a banking moratorium has been
declared by the United States or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant
to this Section, such termination shall be without liability of any
party to any other party except as provided in Section 4 hereof,
and provided further that Sections 1, 6 and 7 hereof shall
survive such termination and remain in full force and effect.
SECTION 10. Absence of Fiduciary Relationship. The
Company acknowledges and agrees that:
(a) in connection with the sale of the Shares, the
Placement Agent has been retained solely to act as a placement
agent, and no fiduciary or advisory relationship between the
Company and the Placement Agent has been created in respect of
any of the transactions contemplated by this Agreement;
(b) the price of the Shares set forth in the
Disclosure Package or the Final Offering Memorandum was
established following discussions and arms-length negotiations
between the Company and the Placement Agent, and the Company is
capable of evaluating and understanding and understands and
accepts the terms, risks and conditions of the transactions
contemplated by this Agreement;
(c) it has been advised that the Placement Agent and
its affiliates are engaged in a broad range of transactions which
may involve interests that differ from those of the Company and
that the Placement Agent has no obligation to disclose such
interests and transactions to the Company by virtue of any
fiduciary or advisory relationship; and
(d) it waives, to the fullest extent permitted by law,
any claims it may have against the Placement Agent for breach of
fiduciary duty or alleged breach of fiduciary duty and agrees
that the Placement Agent shall have no liability (whether direct
or indirect) to the Company in respect of such a fiduciary duty
claim or to any person asserting a fiduciary duty claim on behalf
of or in right of the Company, including stockholders, employees
or creditors of the Company.
SECTION 11. Notices. All notices and other
communications hereunder shall be in writing and shall be deemed to
have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Placement Agent shall be directed to
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Sandler ▇'▇▇▇▇▇ & Partners, L.P., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel, with a copy
to Barack ▇▇▇▇▇▇▇▇▇▇ et al., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇; and notices to
the Company and the Bank Subsidiary shall be directed to ▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
with a copy to Elias, Matz, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., 12th Floor,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇.
SECTION 12. Parties. This Agreement shall inure
to the benefit of and be binding upon the Placement Agent and the
Company and the Bank Subsidiary 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 Placement Agent and the Company and the Bank Subsidiary,
and their respective successors and the controlling persons and
other persons referred to in Sections 1, 6 and 7 hereof and their
heirs and legal representatives, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions
and provisions hereof are intended to be for the sole and
exclusive benefit of the Placement Agent and the Company and the
Bank Subsidiary and their respective successors, and said
controlling persons and other persons and their heirs and legal
representatives, and for the benefit of no other person, firm or
corporation. No purchaser of Shares shall be deemed to be a
successor by reason merely of such purchase.
SECTION 13. Counterparts; Facsimile. This Agreement
may be executed in any number of counterparts and by the parties hereto
in separate counterparts, and signature pages may be delivered by
facsimile, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one
and the same agreement.
SECTION 14. GOVERNING LAW; JURISDICTION. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW
PRINCIPLES OF SAID STATE OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW.
EACH OF THE COMPANY AND THE BANK SUBSIDIARY, ON BEHALF OF ITSELF
AND ITS SUBSIDIARIES, HEREBY IRREVOCABLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF THE FEDERAL AND NEW YORK STATE COURTS
LOCATED IN THE CITY OF NEW YORK IN CONNECTION WITH ANY SUIT,
ACTION OR PROCEEDING RELATED TO THIS AGREEMENT OR ANY OF THE
MATTERS CONTEMPLATED HEREBY, IRREVOCABLY WAIVES ANY DEFENSE OF
LACK OF PERSONAL JURISDICTION AND IRREVOCABLY AGREES THAT ALL
CLAIMS IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING MAY BE HEARD
AND DETERMINED IN ANY SUCH COURT. EACH OF THE COMPANY AND THE
BANK SUBSIDIARY, ON BEHALF OF ITSELF AND ITS SUBSIDIARIES
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO
SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY
SUCH SUIT, ACTION
21
OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
SECTION 15. Effect of Headings. The Article and Section
headings herein are for convenience only and shall not affect the
construction hereof.
SECTION 16. Entire Agreement. This Agreement represents
the entire understanding of the parties hereto with reference to the
transactions contemplated hereby and supersedes any and all other
oral or written agreements heretofore made.
22
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart
hereof, whereupon this instrument, along with all counterparts,
will become a binding agreement among the Placement Agent and
the Company and the Bank Subsidiary in accordance with its
terms.
Very truly yours,
FIRST KEYSTONE FINANCIAL, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_______________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
FIRST KEYSTONE BANK
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_______________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
CONFIRMED AND ACCEPTED,
as of the date first above written:
SANDLER ▇'▇▇▇▇▇ & PARTNERS, L.P.
By: Sandler ▇'▇▇▇▇▇ & Partners Corp.,
the sole general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
_____________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: An officer of the Corporation
23
