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DELANCO BANCORP, INC.
(a Federal Corporation)
Up to 931,500 Shares
(Subject to Increase Up to 1,071,225 Shares)
COMMON STOCK ($0.01 Par Value)
Subscription Price $10.00 Per Share
AGENCY AGREEMENT
----------------
February 12, 2007
Ryan Beck & Co., Inc.
18 Columbia Turnpike
Florham Park, New Jersey 07932
Ladies and Gentlemen:
Delanco Bancorp, Inc., a federal corporation (the "Holding
Company"),
Delanco MHC, a federal mutual holding company (the "MHC") and
Delanco Federal
Savings Bank, a federally chartered stock savings bank (the
"Bank")
(collectively, the "Primary Parties") hereby confirm jointly and
severally,
their agreement with Ryan Beck & Co., Inc. ("Agent"), as
follows:
1. THE OFFERING.
On November 20, 2006, the Board of Directors of the
------------
Holding Company adopted a Plan of Stock Issuance (the "Plan"),
which provides
for the offering by the Holding Company of up to 49% of the Holding
Company's
common stock, par value $0.01 per share (the "Common Stock") in (i)
a
subscription offering (the "Subscription Offering"), and, if
necessary, (ii) a
direct community offering (the "Direct Community Offering") and, if
necessary
(iii) a syndicated community offering (the "Syndicated Community
Offering"). The
shares of Common Stock to be sold by the Holding Company in the
Offerings (as
defined below) are hereinafter called the "Shares" or "Conversion
Shares."
Upon the completion of the Subscription Offering, Community
Offering,
and Syndicated Community Offering (collectively, the "Offerings" or
"Offering"),
the purchasers of Shares in the Offerings will own 45% of the
outstanding Common
Stock and the MHC will own 55% of the outstanding Common Stock. The
Holding
Company will issue the Shares at a purchase price of $10.00 per
share (the
"Purchase Price"). If the number of Conversion Shares is increased
or decreased
in accordance with the Plan, the term "Shares" or "Conversion
Shares" shall mean
such greater or lesser number, where applicable.
In the Subscription Offering, non-transferable rights to subscribe
for
between 688,500 and 931,500 shares (subject to an increase up to
1,071,225
shares) of the Common Stock ("Subscription Rights") will be
granted, in the
following order of priority: (1) the Bank's depositors with account
balances of
at least $50.00 as of the close of business on October 31, 2005
("Eligible
Account Holders"); (2) the Bank's tax-qualified employee plans; (3)
the Bank's
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depositors with account balances of at least $50.00 as of the close
of business
on December 31, 2006 ("Supplemental Eligible Account Holders"); and
(4) the
Bank's depositors with account balances of at least $50.00 on
January 31, 2007
("Other Member Record Date") and borrowers of the Bank as of
November 14, 1994
whose borrowings remained outstanding as of Other Member Record
Date (other than
Eligible Account Holders and Supplemental Eligible Account Holders)
(the "Other
Members"), subject to the priorities and purchase limitations set
forth in the
Plan. The Holding Company may offer shares of Common Stock for
which
subscriptions have not been received in the Subscription Offering
in the
Community Offering to members of the general public, with
preference given to
natural persons residing in Burlington County, New Jersey. Shares
may also be
reserved in the Community Offering for institutional investors. In
the event a
Community Offering is held, it may be held at any time during or
immediately
after the Subscription Offering. Depending on market conditions,
shares not
subscribed for in the Subscription Offering or purchased in the
Community
Offering may be offered in the Syndicated Community Offering to
selected members
of the general public through a syndicate of registered
broker-dealers managed
by Agent ("Assisting Brokers") which are members of the National
Association of
Securities Dealers, Inc. ("NASD").
It is acknowledged that the number of Shares to be sold in the
Offering
may be increased or decreased as described in the Prospectus (as
hereinafter
defined); that the purchase of Shares in the Offering is subject to
maximum and
minimum purchase limitations as described in the Prospectus; and
that the
Holding Company may reject, in whole or in part, any subscription
received in
the Community Offering and Syndicated Community Offering.
The Holding Company has filed with the U.S. Securities and
Exchange
Commission (the "Commission") a Registration Statement on Form SB-2
(File No.
333-139339) in order to register 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 include any supplements and amendments thereto
from and
after their dates of effectiveness or use, respectively.
In connection with the Offering, the Holding Company filed with
the
Office of Thrift Supervision (the "OTS"), pursuant to Title 12,
Parts 575 and
563b of the Code of Federal Regulations (the "Conversion
Regulations"), an
Application for Approval of a Minority Stock Issuance by a Savings
Association
Subsidiary of a Mutual Holding Company on Form MHC-2, including
exhibits and the
Prospectus, and has filed amendments thereto as required by the OTS
(as so
amended, the "MHC-2").
Concurrently with the execution of this Agreement, the Holding
Company
is delivering to Agent copies of the Prospectus dated February 9,
2007 of the
Holding Company to be used in the Subscription Offering and
Community Offering
(if any), and, if necessary, will deliver copies of the Prospectus
and any
prospectus supplement for use in a Syndicated Community Offering
and/or Public
Offering, as defined in the Prospectus (as hereinafter
defined).
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2. APPOINTMENT
OF AGENT. Subject to the terms and conditions of this
--------------------
Agreement, the Primary Parties hereby appoint Agent as their
financial advisor
and marketing agent to utilize its best efforts to solicit
subscriptions for the
Shares and to advise and assist the Primary Parties with respect to
the sale of
the Shares in the 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, Agent accepts such appointment and agrees to consult
with and advise
the MHC, the Holding Company and the Bank as to the matters set
forth in the
letter agreement ("Letter Agreement"), dated July 11, 2006, between
the Holding
Company and Agent (a copy of which is attached hereto as EXHIBIT
A). It is
acknowledged by the Primary Parties that 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. Except as
provided in the last paragraph of this Section 2, the appointment
of Agent
hereunder shall terminate upon consummation of the Offering.
If selected broker-dealers are used to assist in the sale of Shares
in
the Syndicated Community Offering, the Primary Parties hereby,
subject to the
terms and conditions of this Agreement, appoint Agent 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, Agent accepts such
appointment
and agrees to manage the selling group of broker-dealers in the
Syndicated
Community Offering.
Agent agrees to make available to the Holding Company for a period
of
three (3) years following the consummation of the Offering its
Strategic
Advisory Services ("STARS") program. If the Bank elects to
participate in the
STARS program, Agent will meet with the Bank at its request and
will render
general advice on the financial matters listed in Section 9 of the
Letter
Agreement (but not including (i) any in-depth merger and
acquisition analyses or
studies which are available under Agent's normal fee schedule, or
(ii) advice
with respect to a specific acquisition transaction by, or sale of,
the Bank or
the Holding Company). If the Holding Company elects to participate
in the STARS
program, Agent will waive the regular retainer fee and hourly
charges for the
first three-year period. The Holding Company would be required,
however, to
reimburse Agent for its reasonable out-of-pocket expenses incurred
in
conjunction with the performance of these services. Such
out-of-pocket expenses
include travel, legal and other miscellaneous expenses. Agent would
not be
permitted to incur any single expense in excess of $1,000 pursuant
to this
paragraph without the prior approval of the Holding Company. If
negotiations for
a transaction conducted during the three-year period result in the
execution of
a definitive agreement and/or consummation of a transaction for
which Agent
customarily would be entitled to a fee for its advisory or other
investment
banking services, Agent shall receive a contingent advisory fee in
accordance
with the terms of a separate engagement letter to be entered into
with respect
to such transaction. Nothing in this Agreement shall require the
Holding Company
to obtain such financial advisory services from Agent. After the
completion of
such three-year period, if the parties wish to continue the
relationship, a fee
will be negotiated and an agreement with respect to specific
advisory services
will be entered into at that time.
3. REFUND OF
PURCHASE PRICE. In the event that the Offering is not
------------------------
consummated for any reason, including but not limited to the
inability to sell
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the Shares during the Offering (including any permitted extension
thereof), this
Agreement shall terminate and any persons who have subscribed for
any of the
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
savings rate,
from the date payment is received to the date said refund is made
as provided in
the Prospectus. Upon termination of this Agreement, neither 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,
8, 10 and 11 hereof, unless the transaction is not consummated due
to the breach
by Agent of a warranty, representation or covenant; and (ii) 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.
4. FEES. In
addition to the expenses specified in Section 8 hereof,
----
as compensation for Agent's services under this Agreement, Agent
has received or
will receive the following fees from the Primary Parties:
a. A total inclusive
success fee for advisory and marketing
services of $150,000
b. A fee equal to
1.00% of the aggregate Purchase Price of the
Shares sold by Agent in any Syndicated Community Offering
which fee along with the fee payable directly by the Holding
Company to assisting brokers other than Agent will not exceed
6.00% in the aggregate. Assisting Brokers will not be utilized
without the prior approval of the Primary Parties, and it is
agreed that Agent will manage the Assisting Brokers in the
Syndicated Offering.
In the event that the Holding Company is required to resolicit
subscribers for Shares in the Subscription and Direct Community
Offering and
Agent is required to provide significant additional services in
connection with
such a resolicitation, the Primary Parties and Agent shall mutually
agree to the
dollar amount of additional fees due to Agent, if any. Until any
agreement
called for by this paragraph is reached, Agent shall not accrue
expenses
relating to any resolicitation in an amount that would cause the
total expenses
incurred by Agent to be greater than as set forth in Section 8
hereof without
the prior written consent of the Holding Company or the Bank, which
consent
shall not be unreasonably withheld.
If this Agreement is terminated in accordance with the provisions
of
Sections 3, 9, or 13, Agent shall not be entitled to receive the
fee set forth
in Sections 4(a)-(b), but Agent will be entitled to payment of
$25,000 for its
advisory and administration services and the Primary Parties will
reimburse
Agent for its reasonable expenses pursuant to Section 8 and
paragraph 4 of the
Letter Agreement.
5. CLOSING. If
the minimum number of Shares required to be sold in
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the Offering on the basis of the most recently updated Appraisal
(as defined in
Section 6(j)) are subscribed for at or before the termination of
the Offering,
and the other conditions to the completion of the Offering are
satisfied, the
Holding Company agrees to issue the Shares on the Closing Date (as
hereinafter
defined) against payment therefore by the means authorized by the
Plan and to
deliver certificates evidencing ownership of the 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
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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 Agent, at 10:00 a.m.,
Eastern Standard
Time, on the 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 Agent or at such other time as shall be
agreed upon by
the Primary Parties and Agent. At the Closing, the Primary Parties
shall deliver
to Agent by wire transfer in same-day funds the commissions, fees
and expenses
owing as set forth in Sections 4 and 8 hereof and the opinions
required hereby
and other documents deemed reasonably necessary by 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
Agent when
funds shall have been received for the minimum number of shares of
the Common
Stock. The hour and date upon which the Holding Company shall
release the Shares
for delivery in accordance with the terms hereof is referred to
herein as the
"Closing Date."
6.
REPRESENTATIONS AND WARRANTIES OF THE PRIMARY PARTIES. The
Primary
-----------------------------------------------------
Parties jointly and severally represent and warrant to Agent that,
except as
disclosed in the Prospectus:
(a) The Bank, the MHC
and the Holding Company 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, subject to the various limitations and required
approvals described
therein. Subject to the receipt of regulatory approval, the
consummation of the
Offering, 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
Bank, the MHC
and the Holding Company as of the Closing Date. This Agreement has
been validly
executed and delivered by the Holding Company, the MHC and the
Bank, and is a
valid, legal and binding obligation of the Holding Company, the MHC
and the Bank
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 Plan has been
approved by the OTS.
(c) The Registration
Statement was declared effective by the
Commission on February 9, 2007; and no stop order has been issued
with respect
thereto and no proceedings therefore 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
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 Offering did not contain an untrue statement of a material fact
or omit to
state a material fact required to be stated therein or necessary to
make the
statements therein, in light of the circumstances under which they
were made,
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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
6(c) shall not
apply to statements or omissions made in reliance upon and in
conformity with
written information furnished to the Primary Parties by Agent
expressly
regarding Agent for use under the captions "Market for the Common
Stock" and
"The Stock Offering--Marketing Arrangements" or written statements
or omissions
from any sales information or information filed pursuant to state
securities or
blue sky laws or regulations regarding Agent.
(d) At the time of
filing the Registration Statement relating to
the Offering and at the date hereof, the Holding Company was not,
and is not, an
ineligible issuer, as defined in Rule 405. At the time of the
filing of the
Registration Statement and at the time of the use of any issuer
free writing
prospectus, as defined in Rule 433(h), the Holding Company met the
conditions
required by Rules 164 and 433 for the use of a free writing
prospectus. If
required to be filed, the Holding Company has filed any issuer free
writing
prospectus related to the offered Shares at the time it is required
to be filed
under Rule 433 and, if not required to be filed, will retain such
free writing
prospectus in the Holding Company's records pursuant to Rule 433(g)
and if any
issuer free writing prospectus is used after the date hereof in
connection with
the offering of the Shares the Holding Company will file or retain
such free
writing prospectus as required by Rule 433.
(e) As of the
Applicable Time, neither (i) the Issuer-Represented
General Free Writing Prospectus(es) issued at or prior to the
Applicable Time
and the Statutory Prospectus, all considered together
(collectively, the
"General Disclosure Package"), nor (ii) any individual
Issuer-Represented
Limited-Use Free Writing Prospectus, when considered together with
the General
Disclosure Package, included any untrue statement of a material
fact or omitted
to state any material fact necessary in order to make the
statements therein, in
the light of the circumstances under which they were made, not
misleading. The
preceding sentence does not apply to statements in or omissions
from any
Prospectus included in the Registration Statement relating to the
offered Shares
or any Issuer-Represented Free Writing Prospectus based upon and in
conformity
with written information furnished to the Holding Company by Agent
specifically
for use therein. As used in this paragraph and elsewhere in this
Agreement:
i. "Applicable
Time" means each and every date when a potential
purchaser submitted a subscription or otherwise committed to
purchase Shares.
ii. "Statutory
Prospectus", as of any time, means the Prospectus
relating to the offered Shares that is included in the
Registration Statement relating to the offered Shares
immediately
prior to that time, including any document incorporated by
reference therein.
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iii. "Issuer-Represented Free Writing Prospectus" means any
"issuer
free writing prospectus," as defined in Rule 433(h), relating
to
the offered Shares that is required to be filed with the SEC by
the Holding Company or required to be filed with the SEC. The
term
does not include any writing exempted from the definition of
prospectus pursuant to clause (a) of Section 2(a)(10) of the
1933
Act, without regard to Rule 172 or Rule 173.
iv.
"Issuer-Represented General Free Writing Prospectus" means any
Issuer-Represented Free Writing Prospectus that is intended for
general distribution to prospective investors.
v.
"Issuer-Represented Limited-Use Free Writing Prospectus" means
any
Issuer-Represented Free Writing Prospectus that is not an
Issuer-Represented General Free Writing Prospectus. The term
Issuer-Represented Limited-Use Free Writing Prospectus also
includes any "BONA FIDE electronic road show," as defined in
Rule
433, that is made available without restriction pursuant to
Rule
433(d)(8)(ii) or otherwise, even though not required to be
filed
with the Conversion.
(f) Each
Issuer-Represented Free Writing Prospectus, as of its
date of first use and at all subsequent times through the
completion of the
Offering and sale of the offered Shares or until any earlier date
that the
Holding Company notified or notifies Agent (as described in the
next sentence),
did not, does not and will not include any information that
conflicted,
conflicts or will conflict with the information contained in the
Registration
Statement relating to the offered Shares, including any document
incorporated by
reference therein that has not been superseded or modified. If at
any time
following the date of first use of an Issuer-Represented Free
Writing Prospectus
there occurred or occurs an event or development as a result of
which such
Issuer-Represented Free Writing Prospectus conflicted or would
conflict with the
information contained in the Registration Statement relating to the
offered
Shares or included or would include an untrue statement of a
material fact or
omitted or would omit to state a material fact necessary in order
to make the
statements therein, in the light of the circumstances prevailing at
that
subsequent time, not misleading, the Holding Company has notified
or will notify
promptly Agent so that any use of such Issuer-Represented
Free-Writing
Prospectus may cease until it is amended or supplemented and the
Holding Company
has promptly amended or will promptly amend or supplement such
Issuer-Represented Free Writing Prospectus to eliminate or correct
such
conflict, untrue statement or omission. The foregoing two sentences
do not apply
to statements in or omissions from any Issuer-Represented Free
Writing
Prospectus based upon and in conformity with written information
furnished to
the Primary Parties by Agent specifically for use therein.
(g) The MHC-2,
including the Prospectus, was approved by the OTS
on February 12, 2007, and at all times subsequent thereto until the
Closing
Date, the MHC-2, 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 OTS (except as modified or waived by the
OTS). At the
time of the approval and at all times subsequent thereto until the
Closing Date,
the MHC-2, 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
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made, not misleading; provided, however, that representations or
warranties in
this subsection (g) shall not apply to statements or omissions made
in reliance
upon and in conformity with written information furnished to the
Primary Parties
by Agent expressly regarding Agent for use in Prospectus contained
in the MHC-2
under the captions "Market for the Common Stock" and "The Stock
Offering
--Marketing Arrangements" or written statements or omissions from
any sales
information or information filed pursuant to state securities or
blue sky laws
or regulations regarding Agent.
(h) No order has been
issued by the OTS, 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 Offering is
pending or,
to the best knowledge of the Primary Parties, threatened.
(i) The Plan has been
duly adopted by the Board of Directors of
the Holding Company. 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 OTS in approving the Plan, the Offering, or the
MHC-2, pursuant to
the HOLA or any other statute or regulation.
(j) Keller &
Company, Inc. (the "Appraiser"), which prepared the
appraisal of the aggregate pro forma market value of the Holding
Company and the
Bank 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.
(k) Connolly, Grady
& Cha, P.C., which certified the financial
statements filed as part of the Registration Statement and the
MHC-2, has
advised the Primary Parties that it is an independent public
accounting firm
within the meaning of the Code of Ethics of the American Institute
of Certified
Public Accountants (the "AICPA"), that it is registered with the
Public Company
Accounting Oversight Board ("PCAOB") and that it is, with respect
to each of the
Primary Parties, an independent certified public accountant within
the meaning
of 12 C.F.R. Section 563c.3 and under the 1933 Act and the
Regulations
promulgated thereunder.
(l) The consolidated
financial statements and the notes thereto
which are included in the Registration Statement and which are a
part of the
Prospectus present fairly the consolidated financial condition and
retained
earnings of the Holding Company 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
Title 12 of the Code of Federal Regulations, Regulation S-X of the
Commission
and accounting principles generally accepted in the United States
of America
("GAAP") applied on a consistent basis during the periods presented
except as
otherwise noted therein, and present fairly in all material
respects the
information required to be stated therein. 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.
(m) Since the
respective dates as of which information is given
in the Registration Statement, including the Prospectus, other than
as disclosed
therein: (i) there has not been any material adverse change in the
financial
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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 change in total assets of the Holding Company,
any material
increase in the aggregate amount of loans past due ninety (90) days
or more, or
any real estate acquired by foreclosure or loans characterized as
"in substance
foreclosure"; nor has the Holding Company issued any securities or
incurred any
liability or obligation for borrowings other than in the ordinary
course of
business; and (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. 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
Registration Statement or the Prospectus.
(n) The Holding
Company is a corporation duly organized and in
good standing under the federal laws of the United States, with
corporate
authority to own its properties and to conduct its business as
described in the
Prospectus, and is qualified to transact business and in good
standing in each
jurisdiction in which the conduct of 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 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, properties or business 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 in compliance
therewith in
all material respects.
(o) The MHC is duly
organized and is validly existing as a
federally chartered mutual holding company under the laws of the
United States,
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 in
compliance therewith in all material respects.
(p) The MHC does not
own any equity securities or any equity
interest in any business enterprise except as described in the
Prospectus.
(q)
The MHC is not
authorized to issue any shares of capital
stock.
(r) The Bank is a duly
organized and validly existing federally
chartered savings bank in stock form, duly authorized to conduct
its business as
described in the Prospectus; the activities of the Bank are
permitted by the
rules, regulations and practices of the OTS; the Bank has obtained
all licenses,
permits and other governmental authorizations currently required
for the conduct
9
<PAGE>
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 in good standing under the
laws of the
United States; all of the issued and outstanding capital stock of
the Bank is
duly and validly issued and fully paid and nonassessable; and the
Holding
Company directly owns 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 as
otherwise described in the Prospectus.
(s)
The Bank is a member
of the Federal Home Loan Bank of New
York ("FHLB of New York"); the deposit accounts of the Bank are
insured by the
FDIC up to applicable limits.
(t) Upon consummation
of the Offering, 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 MHC, no shares of Common Stock
have been or
will be issued and outstanding prior to the Closing Date; and the
shares of
Common Stock to be subscribed for in the 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 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 purchasers of Shares against payment therefor in the
Offering as
set forth in the Plan and the Prospectus.
(u) None of the Bank,
the Holding Company or the MHC are in
violation of their respective charters or their respective bylaws,
or in
material default in the performance or observance 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 properties, may be bound which would result in
a material
adverse change in the condition (financial or otherwise), earnings,
capital,
properties or assets. The consummation of the transactions herein
contemplated
will not (i) conflict with or constitute a breach of, or default
under, the
charter or bylaws of the Bank, the Holding Company or the MHC, 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 Holding Company; (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 Holding Company; or (iii) result in the creation
of any
material lien, charge or encumbrance upon any property of the
Primary Parties.
(v) 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 individually or considered as one
enterprise,
and such agreements are in full force and effect; and no other
party to any such
10
<PAGE>
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 individually or
considered as
one enterprise.
(w) 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.
(x) The Primary
Parties are not in material violation of any
directive from the OTS, 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 OTS, the Commission and the FDIC), except where the failure to
so 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
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 of any of the Primary Parties, threatened, which would
reasonably be
expected to materially and adversely affect the Offering, 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.
(y) The Primary
Parties have received an opinion of their special
counsel, Muldoon Murphy & Aguggia LLP, with respect to the
federal income tax
consequences of the Offering, as described in the Registration
Statement and the
Prospectus; and the facts and representations upon which such
opinion is based
are truthful, accurate and complete, and none of the Primary
Parties will take
any action inconsistent therewith.
(z) The Primary
Parties have timely filed or extended all
required federal and state tax returns, has paid all taxes that
have become due
and payable in respect of such returns, except where permitted to
be extended,
has made adequate reserves for similar future tax liabilities, and
no deficiency
has been asserted with respect thereto by any taxing authority.
(aa) No 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 the approval of the OTS and the
Commission (which have
been received) 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.
11
<PAGE>
(bb) 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) securities issued in connection with the
Bank's
reorganization into the mutual holding company structure); (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
Offering 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 and the engagement of FinPro, Inc.; or (iv) engaged any
intermediary
between Agent and the Primary Parties in connection with the
Offering, and no
person is being compensated in any manner for such services.
(cc) Neither the Primary Parties nor, to the best knowledge of
the
Primary Parties, any employee of the Primary Parties, has made any
payment of
funds of the Primary Parties as a loan to any person for the
purchase of Shares,
except for the Holding Company's loan to the ESOP the proceeds of
which will be
used to purchase 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.
(dd) The Bank complies in all material respects with the
applicable financial record keeping and reporting requirements of
the Currency
and Foreign Transactions Reporting Act of 1970, as amended, and the
regulations
and rules thereunder.
(ee) The Primary Parties have not relied upon Agent or its
counsel
for any legal, tax or accounting advice in connection with the
Offering.
(ff) The records of Eligible Account Holders, Supplemental
Eligible Account Holders and Other Members are accurate and
complete in all
material respects.
(gg) The Primary Parties comply in all material respects 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, or
to the
knowledge of the Primary Parties, 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 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 knowledge of the Primary Parties, in which the Primary Parties
have a
security interest.
(hh) All of the loans represented as assets on the most recent
financial statements or selected financial information of the
Holding Company
12
<PAGE>
included in the Prospectus meet or are exempt from all requirements
of federal,
state and local law pertaining to lending, including, without
limitation, truth
in lending (including the requirements of Regulations Z and 12
C.F.R. Part 226),
real estate settlement procedures, consumer credit protection,
equal credit
opportunity and all disclosure laws applicable to such loans,
except for
violations which, if asserted, would not result in a material
adverse effect on
the financial condition, results of operations or business of the
Primary
Parties taken as a whole.
(ii) None of the Primary Parties are required to be registered
as
an investment company under the Investment Company Act of 1940.
Any certificates signed by an officer of any of the Primary Parties
and
delivered to Agent or its counsel that refer to this Agreement
shall be deemed
to be a representation and warranty by the Primary Parties to 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 AGENT. Agent represents
---------------------------------------
and warrants to the Primary Parties that:
(a) Agent is a corporation and is validly existing in good
standing under the laws of the State of New Jersey 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 Agent, and this
Agreement the
Letter Agreement are the legal, valid and binding agreements of
Agent,
enforceable in accordance with its terms except as the legality,
validity,
binding nature and enforceability thereof may be limited by (i)
bankruptcy,
insolvency, moratorium, 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 have, and
until the
Offering is completed or terminated shall maintain all licenses,
approvals and
permits necessary to perform such services.
(d) No action, suit, charge or proceeding before the
Commission,
the NASD, any state securities commission or any court 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
its obligations under this Agreement.
(e) Agent is registered as a broker/dealer pursuant to Section
15(b) of the 1934 Act and is a member of the NASD.
(f)
Any funds received in the Offering by Agent will be handled
by Agent in accordance with Rule 15c2-4 under the Securities
Exchange Act of
1934, as amended (the "1934 Act") to the extent applicable.
13
<PAGE>
7. COVENANTS OF
THE PRIMARY PARTIES. The Primary Parties hereby
--------------------------------
jointly and severally covenant with 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 Agent and its
counsel an
opportunity to review such amendment or file any amendment or
supplement to
which amendment Agent or its counsel shall reasonably object.
(b) The Holding Company represents and agrees that, unless it
obtains the prior consent of Agent and Agent represents and agrees
that, unless
it obtains the prior consent of the Holding Company, it has not
made and will
not make any offer relating to the offered Shares that would
constitute an
"issuer free writing prospectus," as defined in Rule 433, or that
would
constitute a "free writing prospectus," as defined in Rule 405,
required to be
filed with the Commission. Any such free writing prospectus
consented to by the
Holding Company and Agent is hereinafter referred to as a
"Permitted Free
Writing Prospectus." The Holding Company represents that it has
complied and
will comply with the requirements of Rule 433 applicable to any
Permitted Free
Writing Prospectus, including timely Commission filing where
required, legending
and record keeping. The Holding Company need not treat any
communication as a
free writing prospectus if it is exempt from the definition of
prospectus
pursuant to Clause (a) of Section 2(a)(10) of the 1933 Act without
regard to
Rule 172 or 173.
(c) The Primary Parties will not, at any time after the date
the
MHC-2 is approved, file any amendment or supplement to such MHC-2
without
providing Agent and its counsel an opportunity to review such
amendment or
supplement or file any amendment or supplement to which amendment
or supplement
Agent or its counsel shall reasonably object.
(d) The Primary Parties 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 MHC-2 to
be approved
by the OTS, and will immediately upon receipt of any information
concerning the
events listed below notify Agent (i) when the Registration
Statement, as
amended, has become effective; (ii) when the MHC-2, as amended, has
been
approved by the OTS; (iii) of the receipt of any comments from the
Commission,
the OTS, or any other governmental entity with respect to the
Offering or the
transactions contemplated by this Agreement; (iv) of any request by
the
Commission, the OTS, any other governmental entity for any
amendment or
supplement to the Registration Statement or the MHC-2 or for
additional
information; (v) of the issuance by the Commission, the OTS, 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; or (vi) of the issuance by the
Commission, the OTS,
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. The Primary Parties
will make every
reasonable effort to prevent the issuance by the Commission, the
OTS, the FDIC
or any state authority of any order referred to in (v) and (vi)
above and, if
any such order shall at any time be issued, to obtain the lifting
thereof at the
earliest possible time.
14
<PAGE>
(e) The Primary Parties will deliver to Agent and to its
counsel
conformed copies of each of the following documents, with all
exhibits: the
MHC-2 as originally filed and 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 Agent as may be required for any NASD
filings. In
addition, the Primary Parties will also deliver to Agent such
number of copies
of the Prospectus, as amended or supplemented, as Agent may
reasonably request.
(f) The Primary Parties will comply in all material respects
with
any and all terms, conditions, requirements and provisions with
respect to the
Offering and the transactions contemplated thereby imposed by the
Commission, by
applicable state law and regulations, and by the 1933 Act, the 1934
Act, and the
rules and regulations of the Commission promulgated under such
statutes,
