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EXHIBIT 1.3
NEW HARRIS FINANCIAL, INC.
14,550,000 to 30,417,500 Shares
of Common Stock
(par value $.01 per share)
AGENCY AGREEMENT
August __, 2000
Ryan, Beck & Co., Inc.
220 South Orange Avenue
Livingston, New Jersey 07039-5817
Ladies and Gentlemen:
New Harris Financial, Inc., a Pennsylvania corporation (the "Company"),
Harris Savings Bank, a Pennsylvania-chartered stock savings bank that is in the
process of converting to a federal savings bank (the "Bank"), Harris Financial,
Inc. ("Harris Financial"), the current mid-tier holding company of the Bank, and
Harris Financial, M.H.C. (the "MHC"), a mutual holding company and the current
majority owner of Harris Financial, hereby confirm their agreement with Ryan,
Beck & Co., Inc. ("Ryan, Beck") (the "Selling Agent") to serve as agent of the
Company to assist the Company in the sale of between 14,550,000 and 30,417,500
shares of Common Stock (as defined below) of the Company (the "Shares" or
"Conversion Stock") in the Subscription and Community Offerings, as defined
below, as follows:
Introductory. The Company was recently incorporated under the laws of the
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Commonwealth of Pennsylvania for the purpose of being the successor of Harris
Financial. The Company is authorized to issue 110,000,000 shares of capital
stock, of which 100,000,000 shares are common stock having a par value of $.01
per share (the "Common Stock"), and 10,000,000 shares are preferred stock having
a par value of $.01 per share. The Offering, as defined below, is being
conducted in connection with the mutual-to-stock conversion (the "Conversion")
of the MHC.
Prior to the closing of the Conversion and the Offering, the Bank will
convert its charter to a federal savings bank charter, and the MHC and Harris
Financial will each convert their charters to federal holding company charters
(each, a "Charter Conversion" and collectively, the "Charter Conversions"), in
each case in accordance with the laws of the United States and the applicable
regulations of the Office of Thrift Supervision (the "OTS"; such laws and the
applicable regulations of the OTS are referred to herein as the "Charter
Conversion Regulations"). As a result, the Conversion is being conducted in
accordance with the laws of the United States and the applicable regulations of
the OTS (such laws and the regulations of the OTS are referred to herein as the
"Conversion Regulations").
The Company, Harris Financial, the MHC and the Bank (both before and after
the Charter Conversions) are sometimes referred to herein as the "Harris
Parties."
The Conversion is to be conducted in accordance with a Plan of Conversion
(the "Plan") adopted by the Board of Trustees of the MHC on March 27, 2000 and
amended on June 22, 2000. The Plan provides that the Conversion will be effected
as follows: The Company will charter an interim savings bank as a wholly-owned
subsidiary ("Interim Bank"). Harris Financial will convert to an interim federal
stock savings bank and will thereafter merge with and into the Bank. The MHC
will also convert to an
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interim federal stock savings bank and merge with and into the Bank. The Interim
Bank will then merge with and into the Bank with the Bank as the surviving
entity. In connection with the foregoing transactions, each stockholder of
Harris Financial, Inc. immediately prior to the Conversion, other than the MHC
("Public Stockholders"), will receive shares of the Company's common stock
pursuant to an exchange ratio described in the Plan. Pursuant to the Plan and in
connection with the Conversion, the Company will offer the Conversion Stock for
sale in the Offering, as defined below.
Simultaneous with or immediately after the consummation of the Conversion
and the Offering, the Company will acquire York Financial, Inc. ("York
Financial"), in a stock-for-stock exchange (the "Merger") pursuant to an
Agreement and Plan of Reorganization (the "Merger Agreement") dated as of March
27, 2000 (the "Merger Agreement"). York Financial, Inc. is the holding company
of York Federal Savings and Loan Association ("York Federal"). The Merger will
be accomplished in accordance with the laws of the Commonwealth of Pennsylvania
and the United States and applicable regulations of Pennsylvania and the OTS
(such laws and the regulations collectively, the "Merger Regulations", and
together with the Conversion Regulations and the Charter Conversion Regulations,
the "Reorganization Regulations"). Ryan, Beck is serving as financial advisor to
Harris Financial and the Bank in connection with the Merger. Pursuant to the
terms of the Merger Agreement, upon consummation of the Merger each outstanding
share of common stock, par value $1.00 per share, of York Financial ("York
Financial Common Stock") and each outstanding option to purchase York Financial
Common Stock will automatically convert into and become exchangeable for a
number of shares of the Company's Common Stock determined according to an
exchange ratio calculated in the manner set forth in the Merger Agreement. The
Merger is expected to close simultaneously with or immediately after
consummation of the Conversion. The Conversion and the Merger are separate,
distinct transactions, but one will not occur without the other. The Charter
Conversions, the Conversion and the Merger are sometimes collectively referred
to herein as the "Reorganization." The Company, Harris Financial, Inc., the MHC,
the Bank, York Financial and York Federal are sometimes hereinafter collectively
referred to as the "Constituent Institutions."
The Company, in accordance with the Plan, is offering, in a subscription
offering by way of nontransferable subscription rights, the Shares for a
purchase price of $10.00 per share (the "Purchase Price") in a Subscription
Offering, Community Offering and, if necessary, an Underwritten Public Offering
(in each case, as defined below and all of which, collectively, are referred to
herein as the "Offering"). The aggregate number of Shares to be issued in the
Offering will be between 14,550,000 and 30,417,500 and will be based upon an
independent appraisal of the estimated pro forma market value of the Common
Stock of the Company.
The Shares will be offered in descending order of priority to (i) the
Bank's Eligible Account Holders (defined as holders of deposit accounts totaling
$50 or more as of December 31, 1998); (ii) the Bank's Employee Stock Ownership
Plan (the "ESOP") (for a total of up to 8% of the Shares issued in the
Offering); (iii) the Bank's Supplemental Eligible Account Holders (defined as
holders of deposit accounts totaling $50 or more as of June 30, 2000); and (iv)
depositors with accounts at the Bank on August ___, 2000 (the "Subscription
Offering"). Shares of common stock not purchased in the Subscription Offering
may be offered to the general public in a community offering that is expected to
be conducted during the Subscription Offering (the "Community Offering"). In the
Community Offering, preference will be given to persons who reside in the Bank's
local community, and then to current stockholders of Harris Financial and York
Financial. It is acknowledged that the Company reserves the right, in its
absolute discretion, to accept or reject, in whole or in part, any or all orders
in the Community Offering. If the Company does not receive orders for at least
19,550,000 shares in the Subscription and Community Offerings, then, in the
Company's discretion in order to issue the minimum number of shares necessary to
complete the Offering, up to 5,000,000 of the unsubscribed Shares may be applied
to the acquisition by merger of York
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Financial, and any such Shares ("York Shares") so applied will be deemed issued
in the Community Offering.
Shares of common stock not purchased in the Subscription Offering or in the
Community Offering or applied as York Shares may be sold to Selling Agent for
resale to the general public in a standby firm commitment underwritten public
offering (the "Underwritten Public Offering"). If an Underwritten Public
Offering is conducted, it would be subject to a separate underwriting agreement
expected to be entered into between the Company and Ryan, Beck and Legg Mason
Wood Walker, Inc. (the "Selling Agent"), as the co-managers of the Underwritten
Public Offering. In addition, for a period of 30 days following the Underwritten
Public Offering, the Company expects to grant the Selling Agent an option to
purchase additional shares, not to exceed 15% of the shares sold in the
Underwritten Public Offering, on the same terms as other shares purchased by the
Selling Agent, for the purpose of covering over-allotments, if any.
Except for the ESOP, generally no person may purchase in the Offering more
than $5,000,000 of Conversion Stock; the maximum amount that an individual
together with persons acting in concert may purchase in all categories of the
Offering combined is 5% of the shares issued in the Offering; provided that the
Company may, in its sole discretion and without further notice to or
solicitation of subscribers or other prospective purchasers, increase or
decrease such maximum purchase limitations.
The following applications have been filed in connection with the
Reorganization: (i) an Application for Conversion on Form AC (the "Conversion
Application") has been filed with the OTS; (ii) a Combined Application H-(e)1/H-
(e)3 Holding Company Application (the "Holding Company Application") has been
filed with the OTS; (iii) a Bank Merger Act Application (the "BMA Application")
has been filed with the OTS; (iv) an Application on Form 1582 for Conversion
from a State-Chartered Stock Association into a Federal Stock Savings Bank,
together with related applications for the conversion of the MHC and Harris
Financial from state-chartered to federally chartered holding companies
(collectively, the "Charter Conversion Applications"); and all amendments to the
foregoing applications required to the date hereof have also been filed. The
Charter Conversion Applications, the Conversion Application, the Holding Company
Application and the BMA Application are referred to herein collectively as the
"Reorganization Applications." The Conversion Application includes, among other
things, the Plan of Conversion.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (File No._________) (the "S-1
Registration Statement") containing a prospectus relating to the Subscription
and Community Offering for the registration of the Shares under the Securities
Act of 1933, as amended (the "1933 Act"), and has filed such amendments thereto
and such amended prospectuses as may have been required to the date hereof. The
prospectus, as amended, on file with the Commission at the time the S-1
Registration Statement becomes effective is hereinafter called the "S-1
Prospectus," except that if the Prospectus filed by the Company pursuant to Rule
424(b) of the rules and regulations of the Commission under the 1933 Act (the
"1933 Act Regulations") differs from the prospectus on file at the time the
Registration Statement becomes effective, the term "S-1 Prospectus" shall refer
to the prospectus filed pursuant to Rule 424(b) from and after the time such
prospectus is filed with or mailed to the Commission for filing. It is the
Company's intention to file a post-effective amendment to the Registration
Statement to add a second prospectus relating to the Underwritten Public
Offering.
The Company has also filed with the Commission a registration statement on
Form S-4 (File No._________) (the "S-4 Registration Statement") containing a
proxy statement to be used to solicit proxies of the Harris Financial
stockholders and the York Financial stockholders on various matters relating to
the Reorganization. Such proxy statement also constitutes a prospectus that
offers to the Harris
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Financial stockholders and the York Financial stockholders the opportunity to
participate in the Community Offering. The Company has filed such amendments to
the S-4 Registration Statement and such amended prospectuses as may have been
required to the date hereof. The proxy statement/prospectus, as amended, on
file with the Commission at the time the S-4 Registration Statement becomes
effective is hereinafter called the "S-4 Prospectus," except that if the S-4
Prospectus filed by the Company pursuant to Rule 424(b) of the rules and
regulations of the Commission under the 1933 Act Regulations differs from the
prospectus on file at the time the Registration Statement becomes effective, the
term "S-4 Prospectus" shall refer to the prospectus filed pursuant to Rule
424(b) from and after the time such prospectus is filed with or mailed to the
Commission for filing.
The S-1 Registration Statement and the S-4 Registration Statement are
collectively referred to herein as the "Registration Statement." The S-1
Prospectus and the S-4 Prospectus are collectively referred to herein as the
"Subscription Prospectus."
SECTION 1. Appointment of the Selling Agent; Compensation to the Selling
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Agent. Subject to the terms and conditions set forth below, the Company hereby
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appoints Ryan, Beck as its agent to consult with and advise the Harris Parties,
and to solicit subscriptions and purchase orders for Shares on behalf of the
Company, in connection with the Company's offering of Common Stock in the
Subscription and Community Offerings. On the basis of the representations,
warranties and agreements herein contained, and subject to the terms and
conditions herein set forth, Ryan, Beck accepts such appointment and agrees to
consult with and advise the Harris Parties as to the matters set forth in
Section 3 of the Engagement Letter between the Selling Agent, and Harris
Financial, Inc. dated April 7, 2000 included as Exhibit A attached hereto, and
to use their best efforts to solicit subscriptions and purchase orders for
Shares in accordance with this Agreement; provided, however, that the Selling
Agent shall not be responsible for obtaining subscriptions or purchase orders
for any specific number of Shares, shall not be required to purchase any Shares
and shall not be obligated to take any action which is inconsistent with any
applicable law, regulation, decision or order.
The Selling Agent also expects to act, together with Legg Mason, as a co-
managing underwriter in connection with the Underwritten Public Offering. The
terms of the Underwritten Public Offering will be set forth in an underwriting
agreement (the "Underwriting Agreement") expected to be entered into among the
Company, Ryan, Beck and Legg Mason immediately prior to the commencement of the
Underwritten Public Offering.
In addition to the reimbursement of the expenses specified in Sections 6
and 7 hereof, the Selling Agent shall receive and the Harris Parties shall pay
(i) an advisory and management fee of $150,000 (the "Management Fee"), of which
$50,000 has already been paid as of the date of this Agreement, and (ii) a fee
of one percent (1.2%) of the dollar amount of the Shares sold in the
Subscription Offering and Community Offering (the "Marketing Fee"), excluding
shares purchased by officers, directors, employees (and immediate family
thereof) and employee benefit plans of the Harris Parties, but including any
York Shares issued in the Community Offering. Shares sold in the Underwritten
Public Offering will be subject to an underwriting discount to be set forth in
the Underwriting Agreement. In addition, pursuant to the Engagement Letter
relating to the Underwritten Public Offering, if fewer than 7,500,000 shares are
available for issuance in the Underwritten Public Offering, Ryan, Beck and Legg
Mason will be entitled to receive a standby fee of 1.5% of the difference
between $75,000,000 and the gross proceeds of shares sold in the public
offering.
If (i) the Plan is abandoned or terminated by the Company; (ii) the
Offering is not consummated by March 31, 2001; (iii) the Selling Agent
terminates this Agreement because there has been a material adverse change in
the financial condition or operations of Harris Financial or the Bank since
December 31, 1999; or (iv) immediately prior to the commencement of the
Offering, the Selling Agent terminates
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this Agreement because, in its reasonable judgment, the Harris Parties have
failed to satisfactorily disclose all relevant information in the Registration
Statement, the Subscription Prospectus and the Reorganization Applications or
the Selling Agent determines that market conditions exist which might render the
sale of the Shares by the Company inadvisable, the Company will pay the
Management Fee to the Selling Agent (less the $50,000 received to date), such
fee to serve as compensation for its advisory and administrative services as set
forth in Exhibit A hereto, in addition to reimbursement of the Selling Agent's
reasonable out-of-pocket expenses as set forth in Section 6 hereof. If there is
a resolicitation of subscriptions for any reason, and the Selling Agent is
required to provide significant additional services or expend significant
additional time, the parties agree to negotiate in good faith an agreement to
cover the Selling Agent's additional fees and expenses in connection therewith,
including attorneys' fees and expenses.
The compensation specified above shall be payable (to the extent not
already paid) to the Selling Agent in next day clearinghouse funds on the
earlier of the Closing Date (as hereinafter defined), a determination by the
Company and the Bank to terminate or abandon the Plan, or the termination of
this Agreement by the Selling Agent or the Company and the Bank in accordance
with the preceding paragraph. The Bank and the Company agree to reimburse the
Selling Agent from time to time for the costs and expenses specified in Sections
6 and 7 hereof, to the extent such costs and expenses are reasonably incurred by
the Selling Agent, promptly upon receiving a reasonable accounting of such costs
and expenses.
SECTION 2. Closing Date; Release of Funds and Delivery of Certificates. If
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all conditions precedent to the consummation of the Conversion and the Offering
are satisfied, the Company agrees to issue or have issued the Shares sold in the
Subscription and Community Offerings and to release for delivery certificates
evidencing such Shares on the Closing Date against payment therefor by release
of funds from the special, interest-bearing account referred to in Section 5(p)
hereof and by the authorized withdrawal of funds from deposit accounts at the
Bank in accordance with the Plan; provided, however, that no such funds shall be
released to the Company or withdrawn until the conditions specified in Section 9
hereof shall have been complied with to the reasonable satisfaction of the
Selling Agent and its counsel. Such release, withdrawal and payment shall be
made on the Closing Date, on a business day and at a time and place selected by
the Selling Agent, which date and place shall be acceptable to the Bank and the
Company, on at least two business days prior notice to the Bank and the Company
(it being understood that such business day shall not be more than ten business
days after the termination of the Offering), or such other time or place as
shall be agreed upon by the Selling Agent, the Bank and the Company and the
Selling Agent under the Underwriting Agreement. Certificates evidencing the
Shares sold in the Subscription and Community Offerings shall be delivered
directly to the purchasers thereof or in accordance with their directions. The
hour and date upon which the Company shall release or deliver the Shares sold in
the Offering in accordance with the terms hereof are called the "Closing Date."
SECTION 3. Subscription Prospectus; Offering. The Shares are to be offered
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in the Offering at $10.00 per share, as set forth on the cover page of the
Subscription Prospectus. There will be a maximum and minimum, and an adjusted
maximum and adjusted minimum, number of Shares offered. The number of Shares
offered may be changed by the Company after consultation with the Selling Agent,
subject to the provisions of the Plan, depending on market and financial
conditions.
SECTION 4. Representations and Warranties; Certain Covenants.
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A. The Harris Parties jointly and severally represent and warrant to and
covenant with the Selling Agent as follows:
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a. The Registration Statement was declared effective by the
Commission on August __, 2000. At the time the Registration Statement,
including the Subscription Prospectus contained therein, became effective, the
Registration Statement complied in all material respects with the requirements
of the 1933 Act and the 1933 Act Regulations and the Registration Statement, any
preliminary or final Subscription Prospectus, any Blue Sky Application (as
defined in Section 7 hereof) or any Sales Information (as defined in Section 7
hereof) authorized by any Harris Party for use in connection with the Offering
did not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and at the time any Rule 424(b) Subscription Prospectus is filed
with or mailed to the Commission for filing and at the Closing Date referred to
in Section 2, the Registration Statement, any preliminary or final Subscription
Prospectus, any Blue Sky Application or any Sales Information authorized by any
Harris Party for use in connection with the Offering will not contain an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that the representations and
warranties in this Section 4(a) shall not apply to statements in or omissions
from the Registration Statement, any preliminary or final Subscription
Prospectus, any Blue Sky Application or any Sales Information made in reliance
upon and in conformity with information furnished in writing to the Harris
Parties by the Selling Agent expressly regarding the Selling Agent for use under
the captions "The Conversion and Stock Offering--Marketing Arrangements in the
Subscription and Community Offering" and "The Conversion and Stock Offering--
Public Offering" in the Subscription Prospectus.
b. The Company has filed with the OTS the Charter Conversion
Application, the Conversion Application, including the Plan, the Registration
Statement and the Subscription Prospectus, the Holding Company Application and
the BMA Application, each of which included exhibits and supplemental material,
and has filed an amendment or amendments thereto, as required, and has published
notice of such filings, as required, which Applications have been or prior to
the Closing Date will be approved by the OTS; and the Plan has been adopted by
the Board of Trustees of the MHC and the directors of Harris Financial, the
Company and the Bank, and has been or prior to the Closing Date will be
approved by the Members of the MHC and the stockholders of Harris Financial and
the Bank.
c. At the Closing Date, (i) the Charter Conversions will have been
effected in accordance with the Charter Conversion Regulations and all other
applicable material laws, regulations, decisions and orders, including in
compliance with all terms, conditions, requirements and provisions precedent to
the Charter Conversions imposed upon the Harris Parties by the the OTS, any
state regulatory authority or any other regulatory authority; (ii) the
Conversion and the Offering will have been effected in the manner described in
the Subscription Prospectus and in accordance with the Plan, the Conversion
Regulations and all other applicable material laws, regulations, decisions and
orders, including in compliance with all terms, conditions, requirements and
provisions precedent to the Conversion and the Offering imposed upon the Harris
Parties by the Commission, the OTS, any state regulatory or Blue Sky authority
or any other regulatory authority, and (iii) the Constituent Institutions will
have completed the conditions precedent to the Merger in accordance with the
Merger Agreement, and all applicable laws, regulations, decisions and orders,
including all material terms, conditions, requirements and provisions precedent
to the Merger imposed upon the Constituent Institutions by the OTS or any other
regulatory authority, other than those which the regulatory authority permits to
be completed after the effective time of the Merger ("Effective Time")
d. No order has been issued by the OTS or any state regulatory or
Blue Sky authority preventing or suspending the use of the Subscription
Prospectus, and no action by or before any such governmental entity to revoke
any approval, authorization or order of effectiveness related to the Conversion
or the Offering is pending or threatened.
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e. At the time of the approval of the Reorganization Applications by
the applicable regulatory authorities (including any amendment or supplement
thereto) and at all times subsequent thereto until the Closing Date, the
Reorganization Applications complied and will comply in all material respects
with the Reorganization Regulations. The Subscription Prospectus contained in
the Reorganization Applications (including any amendment or supplement thereto),
at the time of the approval of the Reorganization Applications by the OTS and at
all times subsequent thereto until the Closing Date and the Effective Time,
complied and will comply in all material respects with the Reorganization
Regulations.
f. RP Financial, LC. ("RP Financial"), which prepared the Independent
Valuation dated as of [________], 2000, described in the Subscription
Prospectus, is independent with respect to the Harris Parties within the meaning
of the Plan and the Conversion Regulations and is believed by the Harris Parties
to be experienced and expert in the valuation and the appraisal of business
entities, including savings institutions, and the Harris Parties believe that RP
Financial has prepared the pricing information set forth in the Subscription
Prospectus in accordance with the requirements of the Conversion Regulations.
g. Arthur Anderson LLP ("Arthur Anderson"), the firm which certified
the financial statements of Harris Financial, Inc. filed as part of the
Registration Statement, is, with respect to the Harris Parties, an independent
certified public accountant as required by the 1933 Act and the 1933 Act
Regulations. Ernst & Young ("E&Y"), the firm which certified the financial
statements of York Financial filed as part of the Registration Statement, is,
with respect to York Financial and York Federal, an independent certified public
accountant as required by the 1933 Act and the 1933 Act Regulations.
h. The consolidated financial statements, together with the related
schedules and notes thereto, included in the Registration Statement and which
are part of the Subscription Prospectus present fairly the financial condition,
results of operations, changes in retained earnings and cash flows of each of
(i) Harris Financial, Inc. and its consolidated subsidiaries and (ii) York
Financial and its consolidated subsidiaries, at and for the dates indicated and
the periods specified and comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act Regulations. Such financial
statements have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis during the periods involved, present
fairly in all material respects the information required to be stated therein
and are consistent with financial statements and other reports filed by Harris
Financial, Inc. and/or York Financial with their applicable bank regulatory
authorities except to the extent that accounting principles employed in such
filings conform to the requirements of such authorities and not necessarily to
generally accepted accounting principles. The other financial, statistical and
pro forma information and related notes thereto included in the Subscription
Prospectus present fairly the information shown therein on a basis consistent
with the audited financial statements of Harris Financial, Inc. and/or York
Financial included in the Registration Statement and which are part of the
Subscription Prospectus, and as to the pro forma adjustments, such adjustments
have been properly applied on the basis described therein.
i. Since the respective dates as of which information is given in the
Registration Statement and Subscription Prospectus, except as may otherwise be
stated therein: (i) there has not been any material adverse change in the
financial condition, net income, capital, properties, affairs or prospects of
the Harris Parties, York Financial, York Federal, or their respective
subsidiaries (the "combined institution"), taken as a whole, whether or not
arising in the ordinary course of business, (ii) there has not been any material
increase in the long-term debt of the combined institution, taken as a whole,
nor have the Harris Parties, York Financial, York Federal or their respective
subsidiaries issued any securities or incurred any liability or obligations for
borrowing other than in the ordinary course of business, (iii) there have not
been any material transactions entered into by the Harris Parties, York
Financial, York Federal
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or their respective subsidiaries, except those transactions entered into in the
ordinary course of business and those specifically described in or contemplated
by the Subscription Prospectus, including the execution of loan documents
pertaining to the ESOP, and (iv) the capitalization, liabilities, assets,
properties and business of the Harris Parties, York Financial, York Federal and
their respective subsidiaries conform in all material respects to the
descriptions thereof contained in the Subscription Prospectus. The Harris
Parties, York Financial, York Federal and their subsidiaries have no material
liability of any kind, contingent or otherwise, except as reflected in the
financial statements filed as part of the Registration Statement or otherwise
set forth in the Subscription Prospectus.
j. The Company and Harris Financial are both Pennsylvania
corporations, duly organized and validly existing and in good standing under the
laws of the Commonwealth of Pennsylvania with the corporate power and authority
to conduct the business and own the property of Harris Financial as described in
the Registration Statement and Public Offering Prospectus under Pennsylvania
law. The Company is duly registered with the OTS as a savings and loan holding
company under the HOLA. Prior to the Charter Conversions, Harris Financial was
duly registered with the Board of Governors of the Federal Reserve System as a
bank holding company. Upon completion of the Charter Conversions, Harris
Financial will be duly organized and registered with the OTS as a federally
chartered savings and loan holding company, with the corporate power and
authority to conduct its business and own its property as described in the
Registration Statement and Public Offering Prospectus.
k. The Bank is a Pennsylvania-chartered savings bank, duly organized
and validly existing and in good standing under the laws of the Commonwealth of
Pennsylvania with the corporate power and authority to conduct its business and
own its property as described in the Registration Statement and Subscription
Prospectus under Pennsylvania law. Upon completion of the Charter Conversions,
the Bank will be a duly organized and validly existing federally chartered
savings bank and after the Conversion will continue as such, and will have the
corporate power and authority to conduct its business and own its property as
described in the Registration Statement and Subscription Prospectus under the
Home Owners' Loan Act ("HOLA") and the regulations thereunder.
l. The MHC is a Pennsylvania-chartered mutual holding company, duly
organized and validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania with the corporate power and authority to conduct
its business and own its property as described in the Registration Statement and
Subscription Prospectus. Prior to the Charter Conversions, the MHC was duly
registered with the Board of Governors of the Federal Reserve System as a bank
holding company. Upon completion of the Charter Conversions, the MHC will be
duly organized and registered with the OTS as a federally chartered savings and
loan holding company, with the corporate power and authority to conduct its
business and own its property as described in the Registration Statement and
Public Offering Prospectus.
m. York Financial is a Pennsylvania corporation, duly organized and
validly existing and in good standing under the laws of the Commonwealth of
Pennsylvania with the corporate power and authority to conduct its business and
own its property as described in the Registration Statement and Subscription
Prospectus. York Financial is duly registered with the OTS as a savings and loan
holding company under the HOLA. York Federal is a federally chartered savings
and loan association, duly organized and validly existing under the laws of the
United States with the corporate power and authority to conduct its business and
own its property as described in the Registration Statement and Subscription
Prospectus.
n. The Harris Parties, York Financial, York Federal and their
subsidiaries have obtained all material licenses, permits and other governmental
authorizations currently required for the conduct of their respective businesses
(including, in the case of the Company, for the conduct of the business of
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Harris Financial following the Conversion); all such licenses, permits and
governmental authorizations are in full force and effect; the Harris Parties,
York Financial, York Federal and their subsidiaries are in all material respects
complying with all laws, rules, regulations and orders applicable to the
operation of their respective businesses; and none of the Harris Parties, York
Financial, York Federal or their subsidiaries has received notice of any
proceeding or action relating to the revocation or modification of any such
license, permit or governmental authorization which, singly or in the aggregate,
if subject to an unfavorable decision, ruling or finding, might materially and
adversely affect the conduct of the business, the financial condition or the net
income, affairs or prospects of the combined institution taken as a whole.
o. The articles of incorporation, charter or similar instruments of
the Harris Parties, York Financial, York Federal are in full force and effect;
no conservator or receiver has been appointed for any of the Harris Parties,
York Financial, or York Federal; and the Bank and York Federal are each
operating as an insured depository institution. Each of the Harris Parties,
York Financial, and York Federal is duly qualified to transact business and is
in good standing in each jurisdiction in which its ownership or leasing of
property or the conduct of its business (currently and as contemplated following
the Reorganization) requires such qualification unless the failure to be so
qualified in one or more of such jurisdictions would not have a material adverse
effect on the financial condition or the business, operations, net income or
prospects of the combined institution, taken as a whole.
p. Upon consummation of the Reorganization, all of the outstanding
capital stock of the Bank will be duly authorized and validly issued and fully
paid and nonassessable; and all such stock will be owned directly by the
Company, free and clear of all liens, encumbrances, claims or other
restrictions. Each of the Harris Parties, York Financial, and York Federal does
not own equity securities or any equity interest in any other business
enterprise except as described in the Subscription Prospectus; each of the
subsidiaries has been duly organized and is validly existing and in good
standing under the laws of its jurisdiction of organization with the authority
to conduct its business and own its property as described in the Registration
Statement and the Subscription Prospectus; all of the outstanding stock of each
subsidiary has been duly authorized and validly issued and is fully paid and
nonassessable; all such stock is owned directly by Harris Financial, Inc., the
Bank, York Financial or York Federal, as the case may be, free and clear of all
liens, encumbrances, claims or other restrictions; and each of the subsidiaries
is duly qualified to transact business and is in good standing in each
jurisdiction in which its ownership or leasing of property or the conduct of its
business requires such qualification, unless the failure to be so qualified
would not have a material adverse effect on the operations of the combined
institution, taken as a whole. The activities of the Harris subsidiaries are
permitted to subsidiaries of Pennsylvania-chartered and federally chartered
savings banks, and the activities of the York subsidiaries are permitted to
subsidiaries of federally chartered savings banks, in each case by the rules,
regulations, policies and practices of the Pennsylvania Department of Banking
(in the case of the Harris subsidiaries), the OTS (in the case of both the
Harris and the York subsidiaries), and any other state or federal authority
having jurisdiction over such matters.
q. The deposit accounts of the Bank and York Federal are, and
following the Closing Date of the Reorganization the deposit accounts of the
Bank will be, insured by the Savings Association Insurance Fund (the "SAIF"), as
administered by the FDIC, up to the maximum amounts allowed by law. Upon
consummation of the Conversion, the liquidation account for the benefit of
Eligible Account Holders and Supplemental Eligible Account Holders ("Liquidation
Account") will be duly established in accordance with the requirements of the
Conversion Regulations.
r. Upon consummation of the Reorganization, the authorized equity
capital of the Company will consist of 100,000,000 shares of common stock and
10,000,000 shares of preferred stock, and the issued and outstanding equity
capital of the Company will be consistent with that set forth in the
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Subscription Prospectus under the caption "Historical and Pro Forma
Capitalization"; no shares of Common Stock, or securities exercisable into or
exchangeable for Common Stock, will have been issued prior to the Closing Date
(other than ____ shares held by the Bank, which shares will be cancelled upon
consummation of the Conversion); the Shares will have been duly and validly
authorized for issuance and, when issued and delivered by the Company pursuant
to the Plan, will be duly and validly issued and fully paid and nonassessable,
the issuance of the Shares is not subject to any preemptive rights; and the
terms and provisions of the Common Stock will conform in all material respects
to the description thereof contained in the Subscription Prospectus. Upon the
issuance of the Shares, good title to the Shares will be transferred from the
Company to the purchasers thereof against payment therefor, subject to such
claims as may be asserted against the purchasers thereof by third-party
claimants.
s. As of the date hereof and as of the Closing Date, none of the
Harris Parties, York Financial, York Federal, or any subsidiary is or will be in
violation of its charter or By-Laws or in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any material contract, lease, loan agreement, indenture or other
instrument to which it is a party or by which it or any of its property may be
bound; the consummation of the Reorganization, the execution, delivery and
performance of this Agreement and the consummation of the transactions herein
contemplated have been duly and validly authorized by all necessary corporate
action on the part of the Harris Parties, and this Agreement has been validly
executed and delivered by the Harris Parties and is the valid, legal and binding
obligation of the Harris Parties, enforceable in accordance with its terms,
except to the extent that rights to indemnity hereunder may be limited under
applicable law and subject to bankruptcy, insolvency, reorganization or other
laws related to or affecting the enforcement of creditors' rights generally and
equitable principles limiting the right to obtain specific enforcement or
similar equitable relief. The execution and delivery of this Agreement, the
fulfillment of the terms herein set forth and the consummation of the
transactions herein contemplated will not (i) conflict with or constitute a
breach of, or default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, the charter or By-Laws of the Harris Parties,
York Financial, York Federal, or any subsidiary, or any material contract, lease
or other instrument to which the Harris Parties, York Financial, York Federal,
or any subsidiary is a party or in which the Harris Parties, York Financial,
York Federal, or any subsidiary has a beneficial interest, or any applicable
law, rule, regulation or order; (ii) violate any authorization, approval,
judgment, decree, order, statute, rule or regulation applicable to the Harris
Parties, York Financial, York Federal, or any subsidiary; or (iii) result in the
creation of any lien, charge or encumbrance upon any property of the Harris
Parties, York Financial, York Federal, or any subsidiary.
t. The Harris Parties have all such power, authority, authorizations,
approvals and orders as may be required to enter into this Agreement and to
carry out the provisions and conditions hereof, and the Company has all such
power, authority, authorizations and orders as may be required to issue and sell
the Shares as provided in the Plan and described in the Subscription Prospectus,
subject to the approval of the applicable regulatory authorities and the
satisfaction of any conditions of such approval.
u. The Harris Parties, York Financial, York Federal, and their
respective subsidiaries have good and marketable title to all properties and
assets which are material to the business of the combined institution taken as a
whole, including those properties and assets described in the Subscription
Prospectus as owned by them, free and clear of all liens, except such liens as
are described in the Subscription Prospectus or are not materially significant
or important in relation to the business of the combined institution and its
subsidiaries on a consolidated basis; and all leases and subleases which are
material to the business of the combined institution taken as a whole under
which the Harris Parties, York Financial, York Federal, or any subsidiary holds
properties, including those leases and subleases described in the Subscription
Prospectus, are in full force and effect.
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v. As of the date hereof and as of the Closing Date and the Effective
Date, the Harris Parties, York Financial, and York Federal, are not and will not
be in violation of any directive from the Commission, the OTS, the FDIC, the
Board of Governors of the Federal Reserve System ("FRB"), the Pennsylvania
Department of Banking or any other agency to make any material change in the
method of conducting their respective businesses so as to comply in all material
respects with all applicable statutes and regulations (including, without
limitation, regulations, decisions, directives and orders of such governmental
agencies), and no suit or proceeding, charge, investigation or action before or
by any court, regulatory authority or governmental agency or body is or will be
pending or, to the knowledge of the Harris Parties, threatened, which might
materially and adversely affect the Conversion or the Merger, the performance of
this Agreement or the consummation of the transactions contemplated in the Plan
and as described in the Subscription Prospectus, or which might result in any
material adverse change in the financial condition, net income, capital,
properties, affairs or prospects of the combined institution taken as a whole,
or which would materially affect its respective properties and assets.
w. The Harris Parties have received an opinion of their counsel, Luse
Lehman Gorman Pomerenk & Schick, Washington, D.C., with respect to the federal
income tax consequences of the Reorganization, and an opinion of Luse Lehman
Gorman Pomerenk & Schick, Washington, D.C., with respect to the Pennsylvania
state income tax consequences of the Reorganization; the federal tax opinion of
Luse Lehman Gorman Pomerenk & Schick, Washington, D.C., is accurately summarized
in the Conversion Application and the Subscription Prospectus. The facts and
representations upon which such opinions are based are truthful, accurate and
complete, and no Harris Party will take any action inconsistent therewith.
x. No default exists, and no event has occurred which, with notice or
lapse of time or both, would constitute a default, on the part of any Harris
Party or any subsidiary in the due performance and observance of any term,
covenant or condition of any indenture, mortgage, deed of trust, note, bank loan
or credit agreement or any other instrument or agreement to which any Harris
Party or subsidiary thereof is a party or by which any of them or any of their
respective property is bound or affected which, in any such case, is material to
the Harris Parties and their subsidiaries taken as a whole; such agreements are
in full force and effect and no other party to any such agreement has instituted
or, to the knowledge of the Harris Parties, threatened any action or proceeding
wherein the Harris Parties or any subsidiary would or might be alleged to be in
default thereunder. No default exists, and no event has occurred which with
notice or lapse of time, or both, would constitute a default, on the part of
York Financial, York Federal or any subsidiary in the due performance and
observance of any term, covenant or condition of any indenture, mortgage, deed
of trust, note, bank loan or credit agreement or any other instrument or
agreement to which York Financial, York Federal or any subsidiary is a party or
by which any of them or any of their respective property is bound or affected
which, in any such case, is material to York Financial, York Federal and its
subsidiaries, taken as a whole; such agreements are in full force and effect and
no other party to any such agreement has instituted or, to the knowledge of York
Financial or York Federal, threatened any action or proceeding wherein York
Financial, York Federal or any subsidiary would or might be alleged to be in
default thereunder.
y. Subsequent to the date the Registration Statement is declared
effective by the Commission and prior to the Closing Date, except as otherwise
may be indicated or contemplated therein, none of the Harris Parties or any
subsidiary has or will have: (i) issued any securities or incurred any
liability or obligation, direct or contingent, for borrowed money, except
borrowings from the same or similar sources indicated in the Subscription
Prospectus in the ordinary course of its business, or (ii) entered into any
transaction which is material in light of the business and properties of the
Harris Parties taken as a whole. Subsequent to the date the Registration
Statement is declared effective by the Commission and prior to the Closing Date,
except as otherwise may be indicated or contemplated therein, none of York
Financial, York Federal or any subsidiary has or will have: (i) issued any
securities or
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incurred any liability or obligation, direct or contingent, for borrowed money,
except borrowings from the same or similar sources indicated in the Subscription
Prospectus in the ordinary course of its business, or (ii) entered into any
transaction which is material in light of the business and properties of York
Financial and York Federal taken as a whole. For purposes of this Section
4(A)(z), obligations for borrowed money do not include deposits.
z. The Harris Parties, York Financial, York Federal and their
subsidiaries have filed all federal, state and local tax returns required to be
filed and have made timely payment of all taxes due and payable in respect of
such returns and no deficiency has been asserted with respect thereto by any
taxing authority.
aa. Except as disclosed in the Subscription Prospectus with respect to
the ESOP, none of the Harris Parties, York Financial, York Federal or any
subsidiary has made any payment of funds of the Harris Parties, York Financial,
York Federal or any subsidiary as a loan for the purchase of the Shares or made
any other payment of funds prohibited by law, and no funds have been set aside
to be used for any payment prohibited by law.
bb. Prior to the Conversion, (x) the Bank had authorized capital
stock consisting of ________ shares of common stock, ________ of which were
outstanding, and _________ shares of preferred stock, none of which were
outstanding, (y) Harris Financial, Inc. had authorized capital stock consisting
of 100,000,000 shares of common stock, ________ of which were publicly held and
______ of which were held by the MHC, and 10,000,000 shares of preferred stock,
none of which were outstanding and (a) the MHC was not authorized to issue
capital stock. None of the Harris Parties has: (i) other than as described in
the Subscription Prospectus issued any securities within the last 18 months
(except for notes to evidence other bank loans and reverse repurchase
agreements); (ii) had any material dealings within the 12 months prior to 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 the Merger and routine purchases and sales of securities for or from its
portfolio; (iii) entered into a financial or management consulting agreement
relating to the sale of stock, except as contemplated hereunder and in
connection with the Merger; or (iv) engaged any intermediary between the Selling
Agent and any Harris Party in connection with any offering of shares of its
capital stock, and no person is being compensated in any manner for such
service.
cc. Neither the Harris Parties, York Financial, or York Federal is
required to be registered under the Investment Company Act of 1940, as amended.
dd. To the knowledge of the Harris Parties, the Company has taken all
necessary action to make such filings and/or to qualify or register the Shares
for offer and sale in the Conversion and the Merger under the securities or Blue
Sky laws of all jurisdictions wherein such Shares will be offered which require
such filings and/or qualification or registration.
ee. All Sales Information used by the Company in connection with the
Offering that is required by the Conversion Regulations to be filed has been
filed with and approved by the applicable regulatory authority.
ff. Except for information provided in writing to the Harris Parties
by the Selling Agent for use in the Subscription Prospectus, the Company and the
Bank have not relied upon the Selling Agent or its legal or other advisors for
any legal, tax or accounting advice in connection with the Conversion.
gg. To the knowledge of the Harris Parties on the one hand and to the
knowledge of York Financial and York Federal on the other hand, each of the
Harris Parties, York Financial, York Federal
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and their respective subsidiaries is in compliance with all laws, rules and
regulations relating to environmental protection, except where such failure
would not have a material adverse effect on the financial condition of the
combined institution taken as a whole, and none of the Harris Parties, York
Financial, York Federal or any subsidiary 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 similar state law. No actions, suits,
regulatory investigations or other proceedings are pending, or, to the knowledge
of the Harris Parties, threatened against any Harris Party, York Financial, York
Federal or any subsidiary relating to environmental protection, nor does any
Harris Party have any reason to believe any such proceedings may be brought
against any of such entities. To the knowledge of the Harris Parties on the one
hand and to the knowledge of York Financial and York Federal, on the other hand,
no disposal, release or discharge of hazardous or toxic substances, pollutants
or contaminants, including petroleum and gas products, as any of such terms may
be defined under federal, state or local law, has occurred on, in, at or about
any of the facilities or properties owned, operated or leased by, or pledged to,
any Harris Party, York Financial, York Federal or any subsidiary, except such
disposal, release or discharge which would not have a material adverse effect on
the combined institution taken as a whole.
hh. No labor dispute with the employees of any Harris Party, York
Financial, York Federal or any subsidiary exists or, to the knowledge of the
Harris Parties, is imminent.
ii. All of the loans represented as assets on the most recent
financial statements or selected financial information of Harris Financial, Inc.
and York Financial included in the Subscription 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
Regulation 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 combined institution taken as a whole.
jj. Any certificate signed by an officer of any Harris Party and
delivered to the Selling Agent or their counsel that refers to this Agreement
shall be deemed to be a representation and warranty by such Harris Party to the
Selling Agent as to the matters covered thereby with the same effect as if such
representation and warranty were set forth herein.
B. Representations and Warranties of the Selling Agent. The Selling Agent
---------------------------------------------------
represents and warrants to the Harris Parties as follows:
a. The Selling Agent is registered as a broker-dealer with the
Commission and is a member of the NASD.
b. The Selling Agent is validly existing and in good standing as a
corporation under the laws of the State of New Jersey with the corporate power
and authority to provide the services to be furnished to the Company and the
Bank hereunder.
c. The execution and delivery 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 Selling Agent, and this
Agreement is a legal, valid and binding obligation of the Selling Agent,
enforceable in accordance with its terms, except to the extent that rights to
indemnity hereunder may be limited under applicable law and subject to
bankruptcy, insolvency, reorganization or other laws related to or affecting the
enforcement of creditors' rights generally and equitable principles limiting the
right to obtain specific enforcement or similar equitable relief.
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d. The Selling Agent and, to the Selling Agent's knowledge, its
employees, agents and representatives who shall perform any of the services
required hereunder to be performed by the Selling Agent shall be duly authorized
and shall have all licenses, approvals and permits necessary to perform such
services, and Ryan, Beck is a registered selling agent in the jurisdictions
listed in Exhibit B hereto and will remain registered in such jurisdictions in
which the Company is relying on such registration for the sale of the Shares,
until the Conversion is consummated or terminated.
e. The execution and delivery of this Agreement by the Selling
Agent, the fulfillment of the terms set forth herein and the consummation of the
transactions herein contemplated shall not violate or conflict with the
corporate charter or By-Laws of the Selling Agent or violate, conflict with or
constitute a breach of, or default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, any material agreement,
indenture or other instrument by which the Selling Agent is bound or under any
governmental license or permit or any law, administrative regulation,
authorization, approval or order or court decree, injunction or order applicable
to it.
f. Any funds received by the Selling Agent to purchase Shares will
be handled in accordance with Rule 15c2-4 under the Securities Exchange Act of
1934 (the "1934 Act"), if applicable.
g. There is not now pending or, to the Selling Agent's knowledge,
threatened against the Selling Agent any material action or proceeding before
the Commission, the NASD, any state securities commission or any state or
federal court concerning the Selling Agent's activities as a broker-dealer.
SECTION 5. Additional Covenants of the Harris Parties. The Harris Parties
------------------------------------------
hereby jointly and severally covenant with the Selling Agent as follows:
a. The Harris Parties will not file any amendment or supplement to
the Registration Statement or any Reorganization Application without notifying
the Selling Agent of its intention to do so and providing the Selling Agent and
its counsel an opportunity to review such amendment or supplement, nor will any
Harris Party file any such amendment or supplement to which the Selling Agent or
its counsel shall reasonably object.
b. The Harris Parties will use their best efforts to cause each
Reorganization Application not heretofore approved to be approved by the
applicable regulatory authority and will promptly upon receipt of any
information concerning the events listed below notify the Selling Agent: (i) of
the approval of any Reorganization Application not heretofore approved; (ii) of
the receipt of any comments from the OTS or any other governmental entity with
respect to the Charter Conversion, the Conversion, the Merger or the
transactions contemplated by this Agreement; (iii) of the request by the OTS or
any other governmental entity for any amendment or supplement to the
Registration Statement, the Subscription Prospectus or any Reorganization
Application or for additional information; (iv) of the issuance by the
Commission, the OTS or any other governmental entity of any order or other
action suspending the Charter Conversion, the Conversion or the Merger or the
use of the Registration Statement or the Subscription Prospectus or any other
filing of the Company and the Bank under the Reorganization Regulations, the
1933 Act, 1933 Act Regulations or other applicable law, or the threat of any
such action; (v) of the issuance by the Commission, the OTS or any other state
governmental authority of any stop order suspending the effectiveness of the
Registration Statement or any Reorganization Application or of the initiation or
threat of any proceedings for such purpose; or (vi) of the occurrence of any
event mentioned in paragraph (f) below. The Harris Parties will make every
reasonable effort to prevent the issuance by the Commission, the OTS or any
other governmental authority of any such order and, if any such order shall at
any time be issued, to obtain the lifting thereof at the earliest possible time.
The Harris Parties will provide copies of the foregoing comments, requests and
orders to the Selling Agent upon receipt of such items.
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c. The Harris Parties will deliver to the Selling Agent and to its
counsel two conformed copies of each of the following documents, with all
exhibits: each Reorganization Application as originally filed and each
amendment or supplement thereto and the Registration Statement as originally
filed and each amendment thereto. In addition, the Harris Parties will also
deliver to the Selling Agent such number of copies of the closing documents with
respect to the Conversion and the Offering as the Selling Agent may reasonably
request.
d. The Harris Parties will furnish to the Selling Agent, from time
to time during the period when the Subscription Prospectus is required to be
delivered under federal or state securities laws or regulations or the
applicable rules and regulations of any other governmental entity, such number
of copies of the Subscription Prospectus (as amended or supplemented) as the
Selling Agent may reasonably request for the purposes contemplated by such
federal or state securities laws or regulations or the applicable rules and
regulations of any other governmental entity. The Company authorizes the
Selling Agent to use the Subscription Prospectus (as amended or supplemented)
for any lawful manner in connection with the sale of the Shares.
e. The Harris Parties will comply with any and all terms,
conditions, requirements and provisions with respect to the Reorganization and
the transactions contemplated thereby imposed by the Commission, the OTS, any
state regulatory or Blue Sky authority or any other governmental entity,
including the terms, conditions, requirements and provisions contained in the
Reorganization Regulations, the 1933 Act, the 1933 Act Regulations, the 1934 Act
and the rules and regulations of the Commission promulgated under the 1934 Act
(the "1934 Act Regulations").
f. If, at any time during the period when the Subscription
Prospectus is required to be delivered, any event relating to or affecting any
Harris Party shall occur, as a result of which it is necessary or appropriate,
in the opinion of counsel for the Harris Parties, to amend or supplement the
Registration Statement or the Subscription Prospectus in order to make the
Registration Statement or Subscription Prospectus not misleading in light of the
circumstances existing at the time it is delivered to a purchaser, the Harris
Parties will, at their expense, forthwith prepare, file with the Commission and
furnish to the Selling Agent a reasonable number of copies of an amendment or
amendments of, or a supplement or supplements to, the Registration Statement or
Subscription Prospectus (in form and substance reasonably satisfactory to the
Selling Agent and its counsel after a reasonable time for review) which will
amend or supplement the Registration Statement or Subscription Prospectus so
that as amended or supplemented it will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances existing at the time the
Subscription Prospectus is delivered to a purchaser, not misleading.
g. The Harris Parties will take all necessary actions, in
cooperation with the Selling Agent, and furnish to whomever the Selling Agent
may direct such information as may be required to qualify or register the Shares
for the Offering and sale by the Company under the applicable securities or Blue
Sky laws of such jurisdictions as the Selling Agent may reasonably designate;
provided, however, that the Company shall not be obligated to file any general
consent to service of process or to qualify to do business in any jurisdiction
in which it is not otherwise required to be so qualified. In each jurisdiction
where any of the Shares shall have been so qualified or registered, the Company
will make and file such statements and reports as are or may be required by the
laws of such jurisdiction.
h. The Company will not sell or issue, contract to sell or otherwise
dispose of, for a period of 180 days after the Closing Date, without the prior
written consent of the Selling Agent, any shares of, or any securities
convertible into or exercisable for shares of, Common Stock other than in
connection with the Merger or any other plan or arrangement described in the
Subscription Prospectus.
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i. During the period in which the Company's Common Stock is
registered under the 1934 Act, the Company will furnish to its stockholders as
soon as practicable after the end of each fiscal year an annual report
(including a consolidated balance sheet and consolidated statements of income,
stockholders' equity and cash flows of the Company and the Bank as at the end of
and for such year, certified by independent public accountants in accordance
with Regulation S-X under the 1934 Act) and make available as soon as
practicable after the end of each of the first three quarters of each fiscal
year (beginning with the first fiscal quarter ending after the Closing Date)
financial information of the Company and the Bank for such quarter in reasonable
detail.
j. During the period of three years from the date hereof, the
Company will furnish to the Selling Agent: (i) promptly after it becomes
available, a copy of each report of the Company furnished generally to
stockholders of the Company or furnished to or filed with the Commission under
the 1934 Act or any national securities exchange or system on which any class of
securities of the Company is listed or quoted (including, but not limited to,
reports of Forms 10-K, 10-Q and 8-K and all proxy statements and annual reports
to stockholders), a copy of each other report of the Company mailed to its
stockholders or filed with the Commission or any other supervisory or regulatory
authority or any national securities exchange or system on which any class of
securities of the Company is listed or quoted and each press release and
material news item and article released by the Company or the Bank, and (ii)
from time to time, such other public information concerning the Company and the
Bank as the Selling Agent may reasonably request.
k. The Company and the Bank will use the net proceeds from the sale
of the Shares substantially in the manner set forth in the Subscription
Prospectus under the caption "Use of Proceeds."
l. Other than as permitted by the Reorganization Regulations, the
HOLA, the 1933 Act, the 1933 Act Regulations and the laws of any jurisdiction in
which the Shares are qualified for sale, neither the Company nor the Bank will
distribute any Subscription Prospectus or other Sales Information in connection
with the offer and sale of the Shares.
m. The Company will make generally available to its security holders
as soon as practicable, but not later than 60 days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 of the 1933 Act Regulations) covering a twelve-month period beginning
not later than the first day of the Company's fiscal quarter next following the
effective date (as defined in such Rule 158) of the Registration Statement.
n. The Company will register the Common Stock under Section 12(g)
of the 1934 Act effective on or prior to the Closing Date.
o. The Company will use its best efforts to obtain approval for,
effective on or prior to the Closing Date, and maintain quotation of the Common
Stock on the Nasdaq National Market System.
p. The Harris Parties will maintain appropriate arrangements for
depositing all funds received from persons delivering orders to purchase Shares
in the Subscription and Community Offerings on an interest-bearing basis at the
rate described in the Subscription Prospectus until the Closing Date or until
the Offering is terminated in accordance with the Plan and as described in the
Subscription Prospectus. The Harris Parties will maintain such records of all
funds received to permit the funds of each subscriber to be separately insured
by the SAIF and to enable the Company to make appropriate refunds of such funds
in the event that such refunds are required to be made in accordance with the
Plan and as described in the Subscription Prospectus.
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q. The Harris Parties will take such actions and furnish such
information as are reasonably requested by the Selling Agent in order for the
Selling Agent to ensure compliance with Article III, Section 1, of the NASD's
Rules of Fair Practice and the NASD's "Interpretation to Free Riding and
Withholding."
r. The Harris Parties will conduct their respective businesses in
compliance in all material respects with all applicable federal and state laws,
rules, regulations, decisions, directives and orders including, all decisions,
directives and orders of the OTS.
s. The Harris Parties will not amend the Plan without the Selling
Agent's prior written consent in any manner that, in the opinion of the Selling
Agent, would affect the sale of the Shares or the terms of this Agreement, which
approval shall not be unreasonably withheld.
t. The Harris Parties will use all reasonable efforts to comply
with, or cause to be complied with, the conditions precedent to the several
obligations of the Selling Agent specified in Section 9 hereof.
u. Prior to the Closing Date, the Harris Parties shall have received
approval of each Reorganization Application required to consummate the Merger,
and all applicable waiting periods shall have expired.
SECTION 6. Payment of Expenses. Whether or not the Conversion is completed
-------------------
or the sale of the Shares by the Company is consummated, the Harris Parties
jointly and severally agree to pay all expenses incident to the performance of
the obligations of any Harris Party under this Agreement, including the
following: (i) the preparation, printing, issuance and delivery of the
certificates evidencing the Shares sold to the purchasers in the Offering and
the printing and delivery of all other documents applicable to the Conversion
and the Merger; (ii) the fees and disbursements of the Harris Parties' counsel,
accountants and other advisors; (iii) the qualification of the Shares under all
applicable securities or Blue Sky laws, including filing fees and the reasonable
fees and disbursements of counsel in connection therewith and in connection with
the preparation of a Blue Sky Survey concerning such jurisdictions as the
Selling Agent may reasonably designate; (iv) the printing and delivery to the
Selling Agent in such quantities as the Selling Agent shall reasonably request
of copies of the Registration Statement, the Subscription Prospectus and the
Reorganization Applications as originally filed and as amended or supplemented
and all other documents in connection with the Conversion and this Agreement;
(v) the filing fees incurred in connection with the review of the Registration
Statement, the Reorganization Applications and any other application, form or
filing by the Commission and the OTS; (vi) the filing fees and the fees and
disbursements of counsel incurred in connection with the review of the Offering
by the NASD; (vii) the fees for listing the Shares on the Nasdaq National Market
System; (viii) the fees and expenses relating to the Independent Valuation; (ix)
the fees and expenses relating to advertising expenses, temporary personnel
expenses, expenses related to the Stock Information Center to be established,
investor meeting expenses and other miscellaneous expenses relating to the
marketing by the Selling Agent of the Shares; and (x) the fees and charges of
any transfer agent, registrar or other agent. In the event that the Selling
Agent incurs any such expenses on behalf of the Harris Parties, the Harris
Parties will pay or reimburse the Selling Agent for such expenses regardless of
whether the Conversion is successfully completed, and such reimbursements will
not be included in the expense limitations set forth in the following paragraph.
The Selling Agent will not incur any single expense of more than $2,000 pursuant
to this paragraph without the prior approval of the Company or the Bank.
In addition, the Harris Parties will reimburse the Selling Agent for all
reasonable out-of- pocket expenses, including legal fees and expenses, incurred
by the Selling Agent in connection with the services provided by the Selling
Agent to the Harris Parties pursuant to this Agreement. Such legal fees shall
not
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exceed $75,000 and such other out-of-pocket expenses incurred by Ryan Beck shall
not exceed $50,000. The Selling Agent will provide a detailed accounting of the
out-of-pocket expenses referred to in this paragraph, which will be paid by the
Company and/or the Bank on the Closing Date. The parties hereto acknowledge that
the expense limitations set forth in this paragraph may be exceeded in the event
of a material delay in the Offering that requires an update of financial
information contained in the Registration Statement.
SECTION 7. Indemnification and Contribution.
--------------------------------
a. The Harris Parties agree to indemnify and hold harmless the Selling
Agent, its officers, directors, employees, agents, and counsel, and each person,
if any, who controls the Selling Agent within the meaning of Section 15 of the
1933 Act or Section 20(a) of the 1934 Act, against any loss, liability, claim,
damage, and expense whatsoever (which shall include, but not be limited to
amounts incurred in investigating, preparing, or defending against any
litigation, commenced or threatened, or any claim or investigation whatsoever
and any and all amounts paid in settlement of any claim or litigation), as and
when incurred, arising out of, based upon, or in connection with (i) any untrue
statement or alleged untrue statement of a material fact or any omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, contained in (A) any
preliminary prospectus, the Registration Statement, or the Prospectus (as from
time to time amended and supplemented), or any amendment or supplement thereto
or in any document incorporated by reference therein or required to be delivered
with any preliminary prospectus or the Prospectus or (B) in any application or
other document or communication (collectively called a "Blue Sky Application")
executed by or on behalf of the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify the securities being sold under the "blue sky" or securities laws
thereof or filed with the Commission or any securities exchange or (C) in any
application or other document, advertisement or communication prepared, made or
executed by or on behalf of any Harris Party or based upon written information
or statements furnished or made by any Harris Party or its representatives
(including counsel) whether or not filed in any jurisdiction in order to
register or qualify any or all of the Shares under the securities law thereof
(the "Sales Information"); unless such statement or omission was made in
reliance upon and in conformity with written information concerning the Selling
Agent or the compensation of the Selling Agent furnished to the Company by or on
behalf of the Selling Agent expressly for inclusion in any preliminary
prospectus, the Registration Statement, or the Prospectus, or any amendment or
supplement thereto, or in any Blue Sky Application or Sales Information, as the
case may be, or (ii) any breach of any representation, warranty, covenant, or
agreement of the Harris Parties contained in this Agreement. For purposes of
this section, the term "expense" shall include, but not be limited to, counsel
fees and costs, court costs, out-of-pocket costs and compensation for the time
spent by the Selling Agent's directors, officers, employees and counsel
according to his or her normal hourly billing rates. The indemnification
provisions shall also extend to all affiliates of the Selling Agent, their
respective directors, officers, employees, legal counsel, agents and controlling
persons within the meaning of the federal securities laws. The foregoing
agreement to indemnify shall be in addition to any liability the Harris Parties
may otherwise have to the Selling Agent or the persons entitled to the benefit
of these indemnification provisions.
b. The Selling Agent agrees to indemnify and hold harmless the
Company, its directors, officers who signed the registration statement, and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act or Section 20(a) of the 1934 Act, against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
above, as incurred, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in the registration statement (or
any amendment thereto) or any preliminary prospectus or the prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information about the Selling Agent, or the compensation of the Selling Agent,
furnished to the
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Company by the Selling Agent expressly for use in the Registration Statement (or
any amendment thereto) or such preliminary prospectus or the prospectus (or any
amendment or supplement thereto).
c. An indemnified party shall give prompt notice to the indemnifying
party if any action, suit, proceeding or investigation is commenced in respect
of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve the indemnifying party from its obligations
to indemnify hereunder. If it so elects within a reasonable time after receipt
of such notice, an indemnifying party may assume the defense of such action,
including the employment of counsel satisfactory to the indemnified parties) and
payment of all expenses of the indemnified party in connection with such action.
Such indemnified party or parties shall have the right to employ its or their
own counsel in any such case, but the fees and expenses of such counsel shall be
at the expense of such indemnified party or parties unless the employment of
such counsel shall have been authorized in writing by the indemnifying party in
connection with the defense of such action or the indemnifying party shall not
have promptly employed counsel satisfactory to such indemnified party or parties
or such indemnified party or parties shall have reasonably concluded that there
may be one or more legal defenses available to it or them or to other
indemnified parties which are different from or additional to those available to
one or more of the indemnifying parties, in any of which events such fees and
expenses shall be borne by the indemnifying party and the indemnifying party
shall not have the right to direct the defense of such action on behalf of the
indemnified party or parties. The Harris Parties shall be liable for any
settlement of any claim against the Selling Agent (or its directors, officers,
employees, affiliates or controlling persons), made with the Harris Parties'
written consent, which consent shall not be unreasonably withheld. The Harris
Parties shall not, without the written consent of the Selling Agent, settle or
compromise any claim against it based upon circumstances giving rise to an
indemnification claim against the Harris Parties hereunder unless such
settlement or compromise provides that the Selling Agent and the other
indemnified parties shall be unconditionally and irrevocably released from all
liability in respect of such claim.
d. In order to provide for just and equitable contribution, if a
claim for indemnification pursuant to these indemnification provisions is made
but it is found in a final judgment by a court that such indemnification may not
be enforced in such case, even though the express provisions hereof provide for
indemnification in such case, then the Harris Parties, on the one hand, and the
Selling Agent, on the other hand, shall contribute to the amount paid or payable
by such indemnified persons as a result of such loss, liability, claim, damage
and expense in such proportion as is appropriate to reflect the relative
benefits received by the Harris Parties, on the one hand, and the Selling Agent,
on the other hand, from the Offering, and also the relative fault of the Harris
Parties, on the one hand, and the Selling Agent, on the other hand, in
connection with the statements, acts or omissions which resulted in such loss,
liability claim, damage and expense, and any other relevant equitable
considerations shall also be considered. No person found liable for a
fraudulent misrepresentation or omission shall be entitled to contribution from
any person who is not also found liable for such fraudulent misrepresentation or
omission. Notwithstanding the foregoing, the Selling Agent shall not be
obligated to contribute any amount hereunder that exceeds the total amount of
the fees paid or to be paid to the Selling Agent hereunder.
e. The indemnity and contribution agreements contained herein are in
addition to any liability which the Harris Parties may otherwise have to the
Selling Agent.
f. Neither termination nor completion of the engagement of the
Selling Agent nor any investigation made by or on behalf of the Selling Agent
shall affect the indemnification, obligations of the Harris Parties or the
Selling Agent hereunder, which shall remain and continue to be operative and in
full force and effect.
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SECTION 8. Conditions of the Selling Agent's Obligations. The obligations
---------------------------------------------
of the Selling Agent hereunder as to the Shares to be delivered at the Closing
Date are subject, in the discretion of the Selling Agent, to the condition that
all representations and warranties and other statements of the Harris Parties
herein are, at and as of the commencement of the Offering and at and as of the
Closing Date, true and correct in all material respects, the condition that the
Harris Parties shall have performed in all material respects all of their
respective obligations hereunder to be performed on or before such dates and to
the following conditions:
a. The Registration Statement shall have been declared effective by
the Commission and the OTS not later than 5:30 p.m. on the date of this
Agreement, or with the consent of the Selling Agent at a later time and date;
and at the Closing Date no stop order suspending the effectiveness of the
Registration Statement or the consummation of the Conversion shall have been
issued under the 1933 Act or proceedings therefor initiated or threatened by the
Commission or any state securities or Blue Sky authority, and no order or other
action suspending the effectiveness of the Subscription Prospectus or the
consummation of the Conversion shall have been issued or proceedings therefore
initiated or threatened by the OTS.
b. At the Closing Date, the Selling Agent shall have received:
(i) The favorable opinion, dated as of the Closing Date
addressed to the Selling Agent and for their and their counsel's benefit,
of Luse Lehman Gorman Pomerenk & Schick, Washington, D.C., ("Luse Lehman"),
as to issues of federal and Pennsylvania law set forth below. The opinion
of Luse Lehman shall be in form and substance to the effect that:
(1) Prior to the Charter Conversions, Harris Financial
was duly incorporated and validly existing as a corporation under the
laws of Pennsylvania, the Bank was duly organized and validly existing
under the laws of Pennsylvania as a savings bank in the capital stock
form of organization, and the MHC was duly organized and validly
existing under the laws of Pennsylvania as a mutual holding company;
and each had the corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and Subscription Prospectus.
(2) Following the Charter Conversions and prior to the
consummation of the Reorganization, Harris Financial was duly
incorporated and validly existing as federally chartered holding
company in stock form, and the MHC was duly incorporated and validly
existing as a federally chartered mutual holding company, and each had
the corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the
Registration Statement and Subscription Prospectus.
(3) Following the Charter Conversions, the Bank was duly
organized and validly existing as a federal savings bank in the
capital stock form of organization and upon the Reorganization will
continue as such, with the corporate power and authority to own, lease
and operate its properties and to conduct its business as described in
the Registration Statement and Subscription Prospectus.
(4) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
Pennsylvania, and has the corporate power and authority to own, lease
and operate the properties and to conduct the business of Harris
Financial as described in the Registration Statement and Subscription
Prospectus. Each of the Harris subsidiaries has been duly organized
and is validly existing and in good standing under the laws of its
jurisdiction of organization, and each
20
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has the corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the
Registration Statement and Subscription Prospectus.
(5) Each of the Harris Parties and their subsidiaries is
duly qualified as a foreign corporation to transact business and is in
good standing in each jurisdiction in which such qualification is and,
following consummation of the Reorganization, will be required, unless
the failure to be so qualified in one or more of such jurisdictions
would not have a material adverse effect on the financial condition or
the business, operations, net income or prospects of the Harris
Parties taken as a whole.
(6) All of the outstanding capital stock of the Bank is duly
authorized and validly issued, fully paid and non-assessable and,
upon consummation of the Reorganization, will be owned by the Company,
free and clear of any liens, encumbrances, claims or other
restrictions.
(7) The activities of each subsidiary of Harris Financial,
the MHC and the Bank as described in the Registration Statement and
Subscription Prospectus are permitted (i) to subsidiaries of a
Pennsylvania chartered savings bank and a bank holding company by the
rules, regulations, policies and practices of the Pennsylvania
Department of Banking, the FDIC, the Fed and any other federal or
state authority having jurisdiction over such matters, and (ii) to
subsidiaries of a federally-chartered savings bank and savings and
loan holding company by the rules, regulations, policies and practices
of the OTS and any other federal or state authority having
jurisdiction over such matters. All of the outstanding stock of each
subsidiary of Harris Financial, the MHC and the Bank has been duly
authorized and validly issued and is fully paid and nonassessable; and
upon consummation of the Reorganization all such stock will be owned
of record and beneficially by the Bank, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity.
(8) Upon consummation of the Reorganization, the authorized
equity capital of the Company will consist of 100,000,000 shares of
common stock and 10,000,000 shares of preferred stock, and the issued
and outstanding equity capital of the Company will be consistent with
that set forth in the Registration Statement and the Subscription
Prospectus under the caption "Historical and Pro Forma
Capitalization"; no shares of the Company's common stock, or
securities exercisable into or exchangeable for common stock, will
have been issued prior to the Closing Date (other than ____ shares
held by the Bank, which shares will be cancelled upon consummation of
the Conversion); at the time of the Conversion the Shares will have
been duly and validly authorized for issuance, and when issued and
delivered by the Company pursuant to the Plan, will be duly authorized
and validly issued and fully paid and nonassessable; the issuance of
the Shares is not subject to any preemptive rights. Upon the issuance
of the Shares, against payment therefor in accordance with the
Subscription Prospectus, the purchasers will have full legal title to
the shares, subject to such claims as may be asserted against the
purchasers thereof by third-party claimants.
(9) Each Reorganization Application has been approved by the
applicable regulatory authority pursuant to the Reorganization
Regulations and the Subscription Prospectus has been authorized for
use by the OTS, and, to such counsel's knowledge, no action has been
taken or is pending or threatened to revoke any such authorization or
approval.
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(10) Each Reorganization Application, as amended or
supplemented, if amended or supplemented, as filed with the applicable
regulatory authority complied as to form in all material respects with
the requirements of the Reorganization Regulations.
(11) The OTS's approval of the Plan remains in full force
and effect; the Harris Parties have conducted the Reorganization in
all material respects in accordance with the requirements of the
Reorganization Regulations, federal law, all other applicable
regulations, decisions and orders and the Plan, including all material
applicable terms, conditions, requirements and conditions precedent to
the Reorganization imposed by the OTS; no order has been issued by the
OTS to suspend the Charter Conversion, the Conversion or the Merger
and no action for such purpose has been instituted or, to such
counsel's knowledge, threatened by the OTS; and, to such counsel's
knowledge, no person has sought to obtain review of the final action
of the OTS in approving any Reorganization Application or the Plan.
(12) This Agreement has been duly authorized, executed and
delivered by the MHC, Harris Financial, the Company and the Bank and
is the legal, valid and binding agreement of the MHC, Harris
Financial, the Company and the Bank, subject, as to enforceability, to
bankruptcy, insolvency, reorganization, moratorium, conservatorship,
receivership and other laws of general applicability relating to or
affecting creditors' rights or the rights of creditors of depository
institutions the deposits of which are insured by the BIF, to general
principles of equity (whether considered in an action at law or in
equity) and to the extent that rights to indemnity and contribution
thereunder may be limited under applicable laws or under
considerations of public policy.
(13) The Registration Statement is effective under the 1933
Act and no stop order suspending effectiveness has been issued under
the 1933 Act and, to such counsel's knowledge, no proceedings therefor
have been initiated or threatened by the Commission or any state
securities or Blue Sky authority.
(14) All conditions imposed by the OTS in connection with
its approvals of the Reorganization Applications have been satisfied,
and no further approval, authorization, consent or other order of any
federal or state board or body is required in connection with the
execution and delivery of this Agreement, the issuance of the Shares
and the consummation of the Reorganization, except as may be required
under the securities or Blue Sky laws of various jurisdictions.
(15) At the time the Registration Statement became
effective, (i) the Registration Statement (as amended or supplemented,
if so amended or supplemented) (other than the financial statements,
stock valuation information and other financial and statistical data
included therein, as to which no opinion need be rendered), complied
as to form in all material respects with the requirements of the 1933
Act and the 1933 Act Regulations and (ii) the Subscription Prospectus
(other than the financial statements, stock valuation information and
other financial and statistical data included therein, as to which no
opinion need be rendered) complied as to form in all material respects
with the requirements of the Conversion Regulations.
(16) The information in the Registration Statement and
Subscription Prospectus under the captions "Regulation," "Restrictions
on Acquisition of New Harris Financial" and "Description of Capital
Stock of New Harris Financial," to the extent that it constitutes
matters of law, summaries of legal matters, documents or proceedings
or
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legal conclusions, has been reviewed by such counsel and is correct in
all material respects.
(17) The terms and provisions of the Common Stock conform in
all material respects to the description thereof contained in the
Subscription Prospectus, and the form of certificate used to evidence
the Shares is in due and proper form.
(18) To such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened against any Harris
Party or any subsidiary which are required to be disclosed in the
Registration Statement and Subscription Prospectus other than those
disclosed therein, and all pending legal and governmental proceedings
to which any Harris Party or any subsidiary is the subject which are
not disclosed in the Registration Statement, including ordinary
routine litigation, are, considered in the aggregate, not material.
(19) To such counsel's knowledge, there are no material
contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments required to be described or referred to in the
Registration Statement and Subscription Prospectus or to be filed as
exhibits thereto other than those described or referred to therein or
filed as exhibits thereto, and the description thereof or references
thereto are correct in all material respects.
(20) To such counsel's knowledge, Harris Financial, the Bank
and the subsidiaries have obtained all material licenses, permits and
other governmental authorizations currently required for the conduct
of their respective businesses, taken as a whole, as described in the
Registration Statement and Subscription Prospectus; the Company has
obtained all material licenses, permits and other governmental
authorizations required for the conduct of the business of Harris
Financial, taken as a whole, as described in the Registration
Statement and Subscription Prospectus, following consummation of the
Reorganization; all such licenses, permits and other governmental
authorizations are in full force and effect; and Harris Financial, the
Company, the Bank and the subsidiaries are in all material respects
complying therewith.
(21) The Plan has been duly adopted by the required votes of
the Board of Trustees of the MHC, the Boards of Directors of Harris
Financial, the Bank and the Company, the stockholders of Harris
Financial, the stockholders of the Bank and the members of the MHC.
(22) The Company's articles of incorporation and bylaws
comply in all material respects with the [General Corporation Law
("GCL")] of the Commonwealth of Pennsylvania. The Company is not in
violation of its articles of incorporation or by-laws; the execution
and delivery of this Agreement, the incurrence of the obligations
herein set forth and the consummation of the transactions contemplated
herein will not result in any violation of the provisions of the
articles of incorporation or By-Laws of the Company.
(23) The Bank's, the MHC's and Harris Financial's charter
and by-laws comply in all material respects with the HOLA and the
rules and regulations of the OTS. Neither the Bank, the MHC or Harris
Financial is in violation of its charter or by-laws; the execution and
delivery of this Agreement, the incurrence of the obligations herein
set forth and the consummation of the transactions contemplated herein
will not result in any
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violation of the provisions of the charter or by-laws of the Bank, the
MHC or Harris Financial.
(24) To such counsel's knowledge, none of the Harris
subsidiaries is in violation of its charter or by-laws; to such
counsel's knowledge, the execution and delivery of this Agreement, the
incurrence of the obligations herein set forth and the consummation of
the transactions contemplated herein will not result in any violation
of the provisions of the charter or by-laws of such subsidiary.
(25) To such counsel's knowledge, none of the Harris Parties
is in violation of any directive from the OTS to make any material
change in the method of conducting its business, and the Harris
Parties have conducted and are conducting their respective businesses
so as to comply in all material respect with all applicable statutes
and regulations (including, without limitation, regulations,
decisions, directives and orders of the Pennsylvania Department of
Banking, the FDIC, the FRB and the OTS).
(26) Neither Harris Financial, the Company nor the Bank is
required to be registered as an investment company under the
Investment Company Act of 1940.
(27) The Harris Parties have the power and authority to
consummate the transactions contemplated by the Merger Agreement.
(28) The Merger Agreement has been duly authorized, executed
and delivered by each of the Harris Parties and constitutes the valid
and binding obligation of each of them, enforceable in accordance with
its terms subject to applicable bankruptcy, insolvency and similar
laws affecting creditors' rights and remedies generally and subject,
as to enforceability, to general principles of equity, whether
applied in a court of law or a court of equity.
(29) To such counsel's knowledge, all corporate acts and
other proceedings required to be taken by or on the part of the Harris
Parties to consummate the Merger have been properly taken and, as of
the closing of the merger of York Federal into the Bank (the "Bank
Merger"), all corporate acts and other proceedings required to be
taken by or on the part of the Harris Parties to consummate the Bank
Merger will have been properly taken; neither the execution and
delivery of the Merger Agreement, nor the consummation of the
transactions contemplated thereby, with and without the giving of
notice or the lapse of time, or both, will violate any provision of
the Articles, Charter or Bylaws of any Harris Party.
(30) Except as disclosed in such opinion, to such counsel's
knowledge, there are no actions, suits, proceedings or investigations
(public or private) of any nature pending or threatened that challenge
the validity or propriety of the transactions contemplated by the
Merger Agreement or which seek or threaten to restrain, enjoin or
prohibit or to obtain substantial damages in connection with the
consummation of such transactions.
(31) All regulatory and governmental approvals and consents
which are necessary to be obtained by the Harris Parties and their
subsidiaries to permit the execution, delivery and performance of the
Merger Agreement have been obtained.
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(32) All conditions precedent to consummation of the Merger
have been satisfied or waived, including but not limited to those
referenced in the Merger Agreement, and all statutory waiting periods
with respect to all regulatory and governmental approvals of the
Merger have expired.
(ii) The favorable opinion, dated as of the Closing Time, of
Breyer & Associates, P.C., counsel to York Financial and York Federal,
concerning the following matters:
(1) York Financial is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Pennsylvania, and York Federal is a federally chartered savings bank
duly organized in stock form, validly existing and in good standing
under the laws of the United States.
(2) York Financial and York Federal have the corporate
power and authority to carry on their respective businesses as such
businesses are described in the Subscription Prospectus and to
consummate the Merger and the Bank Merger, respectively.
(3) The Merger Agreement has been duly authorized and
approved by the Boards of Directors of York Financial and York
Federal, the Merger Agreement and the Merger have been approved by the
requisite vote of York Financial's shareholders, the Merger Agreement
has been duly executed and delivered by York Financial and York
Federal and the Merger Agreement constitutes the valid and binding
obligation of York Financial and York Federal, enforceable in
accordance with its terms subject to applicable bankruptcy, insolvency
and similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of equity,
whether applied in a court of law or a court of equity. To such
counsel's actual knowledge, no other corporate acts or proceedings are
required to be taken by York Financial or York Federal in order to
consummate the Merger.
(4) To such counsel's actual knowledge, all federal and
state banking agency approvals, consents, authorizations or
notifications required to be received or made by York Financial or
York Federal prior to consummation of the Merger or Bank Merger have
been properly obtained or made; neither the execution and delivery of
the Merger Agreement nor the consummation of the Merger or Bank
Merger, with or without the giving of notice or the lapse of time, or
both, will (i) violate any provision of the Articles of Incorporation,
Charter or Bylaws of York Financial or York Federal; or (ii) to the
actual knowledge of such counsel, violate any federal or state banking
statute, rule or regulation applicable to York Financial and York
Federal, which would have a material adverse effect on the financial
condition, assets, liabilities, or business of York Financial and York
Federal; to the actual knowledge of such counsel, no consent,
approval, authorization, order, registration or qualification of or
with any court, federal or state banking regulatory authority or other
federal or state banking governmental body other than as specifically
contemplated by the Merger Agreement is required for the consummation
by York Financial and York Federal of the Merger or the Bank Merger,
respectively.
(5) To such counsel's actual knowledge, there are no
actions, suits, proceedings, or investigations of any nature pending
or threatened that challenge the validity or legality of the Merger or
the Bank Merger or which seek or threaten to
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restrain, enjoin or prohibit (or obtain substantial damages in
connection with) the consummation of the Merger or the Bank Merger.
(6) To such counsel's actual knowledge, there is no
litigation, appraisal or other judicial or administrative proceeding
or governmental investigation pending or threatened against or
relating to the business or property of York Financial or York Federal
which would have a materially adverse effect on the consolidated
financial condition of York Financial, or any legal impediment to the
continued operation of the properties and business of York Financial
and York Federal in the ordinary course after the consummation of the
Merger or the Bank Merger.
Counsel may expressly exclude any opinions as to choice of law and anti-
trust matters and may add other qualifications and explanations of the basis of
its opinions as are consistent with the Legal Opinion Accord prepared by the
Section of Business Law of the American Bar Association.
(iii) The letter of Luse Lehman, addressed to the Selling
Agent, dated the Closing Date, in form and substance to the effect that:
(1) During the preparation of the Conversion Applications,
the Registration Statement and the Subscription Prospectus, such
counsel participated in conferences with management of and the
independent certified public accountants for the Harris Parties.
Based upon such conferences and such review of corporate records of
the Harris Parties as such counsel conducted in connection with the
preparation of the Registration Statement and Conversion Applications,
nothing has come to their attention that would lead them to believe
that any Conversion Application, the Registration Statement, the
Subscription Prospectus or any amendment or supplement thereto (other
than financial statements, stock valuation information and other
financial and statistical data included therein, as to which such
counsel need express no view), contained an untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
(iv) The favorable opinion, dated as of the Closing Date, of
Foley, Hoag & Eliot llp, counsel for the Selling Agent, with respect to
such matters as the Selling Agent may reasonably require. Such opinion may
rely upon certificates of officers and directors of the Harris Parties
delivered pursuant hereto or as such counsel shall reasonably request.
c. At the Closing Date, the Selling Agent shall receive a
certificate of the Chief Executive Officer and the Chief Financial Officer of
each of the Harris Parties, dated the Closing Date, to the effect that: (i)
since the respective dates as of which information is given in the Registration
Statement and the Subscription Prospectus, there has been no material adverse
change in the financial condition or in the net income, capital, properties,
affairs or prospects of the Harris Parties and York Financial and York Federal,
taken as a whole, whether or not arising in the ordinary course of business;
(ii) the representations and warranties in Section 4 of this Agreement are true
and correct with the same force and effect as though expressly made at and as of
the Closing Date; (iii) the Harris Parties have complied with all agreements and
satisfied all conditions on their part to be performed or satisfied at or prior
to the Closing Date and will comply with all obligations to be satisfied by them
after the Conversion; (iv) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been initiated or threatened by the Commission or any state securities or Blue
Sky authority; and (v) no order suspending the Offering, the Conversion or the
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effectiveness of the Subscription Prospectus has been issued and no proceedings
for that purpose have been issued and no proceedings for that purpose have been
initiated or threatened by the OTS.
d. Prior to and at the Closing Date: (i) there shall have been no
material adverse change in the financial condition or in the net income, affairs
or prospects of the Harris Parties, York Financial, York Federal or any
subsidiary thereof taken as a whole since the respective dates as of which
information is given in the Subscription Prospectus, except as referred to
therein; (ii) there shall have been no material transaction entered into by any
Harris Party, York Financial, York Federal or any subsidiary thereof since the
latest dates as of which the financial condition of the Company and the Bank is
set forth in the Subscription Prospectus, other than transactions referred to or
contemplated therein; (iii) no Harris Party shall have received from the OTS or
any other government agency any direction (oral or written) to make any material
change in the method of conducting its business with which it has not complied
(which direction, if any, shall have been disclosed to the Selling Agent) or
which would materially and adversely affect its business, operations, financial
condition or net income; (iv) no Harris Party, York Financial, York Federal or
any subsidiary thereof shall have been in default (nor shall an event have
occurred which, with notice or lapse of time or both, would constitute a
default) under any provision of any agreement or instrument relating to any
outstanding indebtedness; (v) no action, suit or proceeding, at law or in equity
or before or by any federal or state commission, board or other administrative
agency, shall be pending or, to the knowledge of any Harris Party, threatened
against any Harris Party, York Financial, York Federal or any subsidiary thereof
or affecting any of their respective properties wherein an unfavorable decision,
ruling or finding would materially and adversely affect the business,
operations, financial condition or net income of the Harris Parties, York
Financial and York Federal taken as a whole; and (vi) the Shares shall have been
qualified or registered for offering and sale under the securities or Blue Sky
laws of the jurisdictions set forth in the Blue Sky Survey prepared by Foley,
Hoag & Eliot llp.
e. (1) Concurrently with the execution of this Agreement, the
Selling Agent and the Harris Parties shall receive a letter from Arthur Anderson
dated the date hereof and addressed to the Selling Agent: (i) confirming that
Arthur Anderson is a firm of independent certified public accountants with
respect to Harris Financial, Inc. and the Bank within the meaning of the 1933
Act and the 1933 Act Regulations and the Code of Ethics of the American
Institute of Certified Public Accountants and no information concerning its
relationship with or interests in any Harris Party is required to be disclosed
in the Subscription Prospectus, and stating in effect that in its opinion the
consolidated financial statements of Harris Financial, Inc. included in the
Subscription Prospectus and covered by its opinion included therein comply as to
form in all material respects with the applicable accounting requirements of the
1933 Act, the 1934 Act, the 1933 Act Regulations, the 1934 Act Regulations and
generally accepted accounting principles; (ii) stating in effect that, on the
basis of certain agreed upon procedures (but not an examination in accordance
with generally accepted auditing standards) consisting of a review, in
accordance with Statement on Auditing Standards No. 71, of the latest available
unaudited interim consolidated financial statements of Harris Financial, Inc.
prepared by Harris Financial, Inc., a reading of the minutes of the meetings of
the Board of Directors and stockholders of Harris Financial, Inc. and Board of
Directors of the Bank and consultations with officers of Harris Financial, Inc.
and the Bank responsible for financial and accounting matters, nothing has come
to its attention which causes it to believe that: (A) the unaudited
consolidated financial statements of Harris Financial, Inc. included in the
Subscription Prospectus do not comply as to form in all material respects with
applicable accounting requirements; (B) such unaudited consolidated financial
statements are not in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the audited
consolidated financial statements included in the Subscription Prospectus; (C)
during the period from the date of the latest audited consolidated financial
statements included in the Subscription Prospectus to a specified date not more
than five business days prior to the date hereof, there was any material
increase in borrowings by Harris Financial, Inc. or the Bank; or (D) there was
any material decrease in retained
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earnings of Harris Financial, Inc. at the date of such letter as compared with
amounts shown in the latest audited consolidated balance sheet included in the
Subscription Prospectus or any material decrease in net income or net interest
income of Harris Financial, Inc. for the number of full months commencing
immediately after the period covered by the latest audited consolidated income
statement included in the Subscription Prospectus and ended on the latest month
end prior to the date of the Subscription Prospectus as compared to the
corresponding period in the preceding year; and (iii) stating that, in addition
to the examination referred to in its opinion included in the Subscription
Prospectus and the performance of the procedures referred to in clause (ii) of
this paragraph (e), it has compared with the general accounting records of
Harris Financial, Inc.'s and/or the Bank's, as applicable, accounting system and
other data prepared by Harris Financial, Inc. and/or the Bank, as applicable,
directly from such accounting records, to the extent specified in such letter,
such amounts and/or percentages set forth in the Subscription Prospectus as the
Selling Agent may reasonably request; and they have found such amounts and
percentages to be in agreement therewith (subject to rounding).
(2) Concurrently with the execution of this Agreement, the Selling Agent,
and the Harris Parties shall receive a letter from Ernst & Young dated the date
hereof and addressed to the Selling Agent: (i) confirming that Ernst & Young is
a firm of independent certified public accountants with respect to York
Financial and York Federal within the meaning of the 1933 Act and the 1933 Act
Regulations and the Code of Ethics of the American Institute of Certified Public
Accountants and no information concerning its relationship with or interests in
York Federal or York Financial is required to be disclosed in the Subscription
Prospectus, and stating in effect that in its opinion the consolidated financial
statements of York Financial included in the Subscription Prospectus and covered
by its opinion included therein comply as to form in all material respects with
the applicable accounting requirements of the 1933 Act, the 1934 Act, the 1933
Act Regulations, the 1934 Act Regulations and generally accepted accounting
principles; (ii) stating in effect that, on the basis of certain agreed upon
procedures (but not an examination in accordance with generally accepted
auditing standards) consisting of a review, in accordance with Statement on
Auditing Standards No. 71, of the latest available unaudited interim
consolidated financial statements of York Financial prepared by York Financial,
a reading of the minutes of the meetings of the Board of Directors and
stockholders of York Financial and consultations with officers of York Financial
responsible for financial and accounting matters, nothing has come to its
attention which causes it to believe that: (A) the unaudited consolidated
financial statements of York Financial included in the Subscription Prospectus
do not comply as to form in all material respects with applicable accounting
requirements; (B) such unaudited consolidated financial statements are not in
conformity with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited consolidated financial
statements included in the Subscription Prospectus; (C) during the period from
the date of the latest audited consolidated financial statements included in the
Subscription Prospectus to a specified date not more than five business days
prior to the date hereof, there was any material increase in borrowings by York
Financial or York Federal; or (D) there was any material decrease in retained
earnings of York Financial at the date of such letter as compared with amounts
shown in the latest audited consolidated balance sheet included in the
Subscription Prospectus or any material decrease in net income or net interest
income of York Financial for the number of full months commencing immediately
after the period covered by the latest audited consolidated income statement
included in the Subscription Prospectus and ended on the latest month end prior
to the date of the Subscription Prospectus as compared to the corresponding
period in the preceding year; and (iii) stating that, in addition to the
examination referred to in its opinion included in the Subscription Prospectus
and the performance of the procedures referred to in clause (ii) of this
paragraph (e), it has compared with the general accounting records of York
Financial and/or York Federal, as applicable, accounting system and other data
prepared by York Financial and/or York Federal, as applicable, directly from
such accounting records, to the extent specified in such letter, such amounts
and/or percentages set forth in the Subscription Prospectus as the Selling Agent
may reasonably request; and they have found such amounts and percentages to be
in agreement therewith (subject to rounding).
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f. At the Closing Date, the Selling Agent shall receive a letter from
Arthur Anderson and Ernst & Young, dated the Closing Date, addressed to the
Selling Agent, confirming the statements made by them in the letter delivered by
it pursuant to paragraph (e) of this Section 9, the "specified date" referred to
in clause (ii) (C) thereof to be a date specified in such letter, which shall
not be more than five business days prior to the Closing Date.
g. At the Closing Date, the Selling Agent shall have received a
letter from RP Financial, dated as of the Closing Date, confirming the
Independent Valuation.
h. At the Closing Date, counsel to the Selling Agent shall have been
furnished with such documents and opinions as they may reasonably require for
the purpose of enabling them to pass upon the sale of the Shares as herein
contemplated and related proceedings or in order to evidence the accuracy or
completeness of any of the representations and warranties, or the fulfillment of
any of the conditions, herein contained; and all proceedings taken by the Harris
Parties in connection with the Reorganization and the sale of the Shares as
herein contemplated shall be satisfactory in form and substance to the Selling
Agent and counsel to the Selling Agent.
i. The Harris Parties shall not have sustained since the date of the
latest audited consolidated financial statements included in the Registration
Statement and Subscription Prospectus any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, other than as set forth or contemplated in the Registration Statement,
which is in the judgment of the Selling Agent sufficiently material and adverse
as to make it impracticable or inadvisable to proceed with the Offering or the
delivery of the Shares on the terms and in the manner contemplated in the
Subscription Prospectus.
j. Subsequent to the date hereof, there shall not have occurred any
of the following: (i) a suspension or limitation in trading in securities
generally on the New York Stock Exchange or American Stock Exchange or in the
over-the-counter market, or quotations halted generally on the Nasdaq Stock
Market, or minimum or maximum prices for trading fixed, or maximum ranges for
prices for securities required by either of such exchanges or the NASD or by
order of the Commission or any other governmental authority; (ii) a general
moratorium on the operation of commercial banks, federal or state savings and
loan associations or savings banks in Pennsylvania or a general moratorium on
the withdrawal of deposits from commercial banks, federal or state savings and
loan associations or savings banks in Pennsylvania declared by either federal or
Pennsylvania authorities; (iii) the engagement by the United States in
hostilities which have resulted in the declaration, on or after the date hereof,
a national emergency or war; or (iv) a material decline in the price of equity
or debt securities, if the effect of such a decline, in the judgment or the
Selling Agent, makes it impracticable or inadvisable to proceed with the
Offering or the delivery of the Shares on the terms and in the manner
contemplated in the Subscription Prospectus.
k. If any of the conditions specified in this Section 9 shall not
have been fulfilled when and as required by this Agreement, or by March 31,
2001, this Agreement and all of the Selling Agent's obligations hereunder may be
canceled by the Selling Agent by notifying the Harris Parties of such
cancellation in writing or by fax at any time at or prior to the Closing Date,
and any such cancellation shall be without liability of any party to any other
party except as otherwise provided in Sections 1, 6 and 7 hereof.
Notwithstanding the above, if this Agreement is canceled pursuant to this
paragraph, the Harris Parties jointly and severally agree to reimburse the
Selling Agent for all of the Selling Agent's out-of-pocket expenses reasonably
incurred by the Selling Agent, including any legal fees (and out-of- pocket
expenses) to be paid to the Selling Agent's counsel, subject to the limits
expressed in Section 6 hereof, and an advisory and administrative services fee
of $150,000 in connection with the preparation of the Registration Statement and
the Subscription Prospectus and in contemplation of the proposed Offering.
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SECTION 9. Termination.
-----------
a. In the event the Company fails to sell the minimum number of Shares
in the Offering as set forth in the Subscription Prospectus and does not either
(i) modify the Offering within the period specified in, and in accordance with
the provisions of, the Plan or as required by the Conversion Regulations, or
(ii) enter into an Underwriting Agreement providing for the sale of sufficient
shares to reach the minimum number set forth in the Subscription Prospectus,
this Agreement shall terminate upon refund by the Company to each person who has
subscribed for or ordered any of the Shares the full amount which it may have
received from such person, together with interest, as provided in the
Subscription Prospectus, and no party to this Agreement shall have any
obligation to the other hereunder, except for payment by the Harris Parties as
set forth in Sections 1, 6 and 7 hereof.
b. This Agreement may be terminated by the Selling Agent, with respect
to the Selling Agent's obligations hereunder, by notifying the Company at any
time or prior to the Closing Date, if any of the conditions specified in Section
9 hereof shall not have been fulfilled when and as required by this Agreement or
if the Conversion has not been completed by March 31, 2001.
SECTION 10. Survival. The respective indemnities, agreements,
--------
representations, warranties and other statements of the Harris Parties and the
Selling Agent, as set forth in this Agreement, shall remain in full force and
effect, regardless of any investigation (or any statement as to the results
thereof) made by or on behalf of the Selling Agent or any of the Selling Agent's
officers or directors or any person controlling the Selling Agent, or the Harris
Parties, or any of their respective officers or directors or any person
controlling the Harris Parties, and shall survive termination of this Agreement
and receipt or delivery of any payment for the Shares.
SECTION 11. Waiver of Trial by Jury. Each of the Sales Agent and the
-----------------------
Company waives all right to trial by jury in any action, proceeding, claim or
counterclaim (whether based on contract, tort, or otherwise) related to or
arising out of this Agreement.
SECTION 12. Miscellaneous. Notices hereunder, except as otherwise provided
-------------
herein, shall be given in writing or by telegraph, addressed (a) to Ryan, Beck
at 220 South Orange Avenue, Livingston, New Jersey 07039-5817 (Attention:
Michelle Darcey, First Vice President), with a copy to Foley, Hoag and Eliot,
LLP, One Post Office Square, Boston, Massachusetts 02109 (Attention: Carol
Hempfling Pratt, Esq.) and (b) to the Harris Parties at the Bank's principal
office (Attention: Charles C. Pearson, Jr., President and Chief Executive
Officer), with a copy to Luse Lehman Gorman Pomerenk & Schick, P.C., 5335
Wisconsin Avenue, N.W., Suite 400, Washington, D.C. 20015, (Attention: Kenneth
Lehman, Esq.).
This Agreement is made solely for the benefit of and will be binding upon
the parties hereto and their respective successors and the directors, officers
and controlling persons referred to in Section 7 hereof, and no other person
will have any right or obligation hereunder. The term "successors" shall not
include any purchaser of any of the Shares.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New Jersey.
Time shall be of the essence of this Agreement.
This Agreement may be signed in various counterparts which together will
constitute one agreement.
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If the foregoing correctly sets forth the arrangement among the Company,
the Bank and the Selling Agent, please indicate acceptance thereof in the space
provided below for that purpose, whereupon this letter shall constitute a
binding agreement.
HARRIS FINANCIAL, INC. HARRIS SAVINGS BANK
By:____________________________________ By:___________________________________
Charles C. Pearson, Jr., President Charles C. Pearson, Jr., President
NEW HARRIS FINANCIAL, INC. HARRIS FINANCIAL M.H.C.
By:____________________________________ By:___________________________________
Charles C. Pearson, Jr., President Charles C. Pearson, Jr., President
RYAN, BECK & CO.
By:_____________________________________
Michelle Darcey, First Vice President
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EXHIBIT A
Engagement Letter
32
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EXHIBIT B
[Ryan, Beck is registered in all U.S. jurisdictions except Arkansas.]
33
