EXHIBIT 1.2
Form of Proposed Agency Agreement Among
Home Federal Bancorp, Inc.,
Home Federal Savings and Loan Association of Nampa and
Xxxxx, Xxxxxxxx & Xxxxx, Inc.
HOME FEDERAL BANCORP
(a federal corporation)
Up to 4,600,000 Shares
(Subject to Increase Up to 5,290,000 Shares)
COMMON STOCK ($0.01 Par Value)
Subscription Price $10.00 Per Share
AGENCY AGREEMENT
July __, 2004
Xxxxx, Xxxxxxxx & Xxxxx, Inc.
000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000-0000
Ladies and Gentlemen:
Home Federal Bancorp, a newly formed federally chartered stock
corporation (the "Holding Company"), Home Federal MHC, a federally chartered
mutual holding company ("MHC") and Home Federal Savings and Loan Association of
Nampa, a federally chartered mutual savings and loan association (the "Bank")
(collectively, the "Home Federal Parties") hereby confirm, jointly and
severally, their agreement with Xxxxx, Xxxxxxxx & Xxxxx, Inc. ("KBW" or the
"Agent"), as follows:
Section 1. The Offering. The Bank, in accordance with the Plan
of Reorganization and Stock Issuance adopted May 18, 2004 (the "Plan"), intends
to convert from mutual to stock form and to reorganize into a federal mutual
holding company structure as a wholly owned subsidiary of the Holding Company
which in turn will be a majority-owned subsidiary of the MHC (the
"Reorganization"). The Reorganization is being conducted 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 regulations are referred to herein as
the "MHC Regulations"). In connection with the Reorganization, the Holding
Company will offer stock on a priority basis to (i) Eligible Account Holders;
(ii) Tax Qualified Employee Stock Benefit Plan of the Bank ("Employee Plan") of
the Holding Company; (iii) Supplemental Eligible Account Holders; and (iv) Other
Members (all capitalized terms used in this Agreement and not defined in this
Agreement shall have the meanings set forth in the Plan). Pursuant to the Plan,
the Holding Company is offering a minimum of 3,400,000 and a maximum of
4,600,000 shares (subject to an increase up to 5,290,000 shares) of common
stock, $0.01 par value per share (the "Common Stock"), in the Subscription
Offering, and, if necessary, (i) the Direct Community Offering and/or (ii) a
Syndicated Community Offering.
Pursuant to the Plan, the Holding Company will offer and sell shares of
its Common Stock (the "Shares") in the Subscription Offering, Direct Community
Offering, and/or Syndicated Community Offering (the "Offering"). The Holding
Company may offer Shares, if any, remaining after the Subscription Offering, in
the Direct Community Offering with a preference to natural persons residing in
Ada, Canyon, Xxxxxx and Gem Counties, Idaho, and
then to the general public. In the event a Direct Community Offering is held, it
may be held at any time during or immediately after the Subscription Offering.
Depending on market conditions, Shares available for sale but not subscribed for
in the Subscription Offering or purchased in the Direct Community Offering may
be offered in the Syndicated Community Offering to the general public on a best
efforts basis, as described in subsection 4(c) below. Upon completion of the
Offering, pursuant to the Plan, 40% of the outstanding Common Stock of the
Holding Company will be publicly held and 100% of the outstanding common stock
of the Bank will be held by the Holding Company. The Holding Company will sell
the Shares in the Offering at $10.00 per share (the "Purchase Price"). If the
number of Shares is increased or decreased in accordance with the Plan, the term
"Shares" shall mean such greater or lesser number, where applicable.
In connection with the Reorganization and pursuant to the terms of the
Plan as described in the Prospectus (as hereinafter defined), immediately
following the consummation of the Reorganization, subject to the approval of the
Bank's depositors and compliance with certain conditions as may be imposed by
regulatory authorities, the Company will contribute 2.4% of the aggregate number
of Shares sold in the Offering to the Foundation (the "Foundation") such shares
hereinafter being referred to as the ("Foundation Shares"). In addition, the
Company will make a cash contribution to the Foundation in an amount equivalent
to the value of 0.6% of the aggregate number of Shares sold in the Offering.
The Holding Company has filed with the U.S. Securities and Exchange
Commission (the "Commission" or the "SEC") Registration Statement on Form S-1
(File No. 333-11371) in order to register the Shares and the Foundation Shares
under the Securities Act of 1933, as amended (the "1933 Act"), and has filed
such amendments thereto as have been required to the date hereof (the
"Registration Statement"). The prospectus, as amended, included in the
Registration Statement at the time it initially became effective is hereinafter
called the "Prospectus," except that if any prospectus is filed by the Holding
Company pursuant to Rule 424(b) or (c) of the rules and regulations of the
Commission under the 1933 Act (the "1933 Act Regulations") differing from the
prospectus included in the Registration Statement at the time it initially
becomes effective, the term "Prospectus" shall refer to the prospectus filed
pursuant to Rule 424(b) or (c) from and after the time said prospectus is filed
with the Commission and shall include any supplements and amendments thereto
from and after their dates of effectiveness or use, respectively.
In connection with the Reorganization, the Bank filed with the OTS a
Notice of Mutual Holding Company Reorganization and Application for Approval of
an Issuance by a Subsidiary of a Mutual Holding Company, including exhibits and
the Prospectus (the "MHC Notice"). The Holding Company has filed with the OTS
its application on Form H-(e)1-S (the "Holding Company Application") to become a
savings and loan holding company under the Home Owners' Loan Act, as amended
(the "HOLA"), and the regulations promulgated thereunder. Collectively, the MHC
Notice and the Holding Company Application may also be termed the
"Applications."
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Section 2. Retention of Agent. Subject to the terms and
conditions herein set forth, the Home Federal Parties hereby appoint the Agent
as their financial advisor and marketing agent to utilize its best efforts to
solicit subscriptions for Shares and to advise and assist the Home Federal
Parties with respect to the Holding Company's sale of the Shares in the
Offering.
On the basis of the representations, warranties, and agreements herein
contained, but subject to the terms and conditions herein set forth, the Agent
accepts such appointment and agrees to consult with and advise the Home Federal
Parties as to the matters set forth in the letter agreement, dated October 31,
2003, between the Bank and KBW (the "Letter Agreement"). It is acknowledged by
the Home Federal Parties that the Agent shall not be required to purchase any
Shares or be obligated to take any action that is inconsistent with all
applicable laws, regulations, decisions or orders.
Except as described in Section 13(b) of this Agreement, the obligations
of the Agent pursuant to this Agreement shall terminate upon the completion or
termination or abandonment of the Plan by the Holding Company or upon
termination of the Offering, but in no event later than 90 days after the
completion of the Subscription Offering (the "End Date"). All fees or expenses
due to the Agent but unpaid will be payable to the Agent in next day funds at
the earlier of the Closing Date (as hereinafter defined) or the End Date. In the
event the Offering is extended beyond the End Date, the Home Federal Parties and
the Agent may agree to renew this Agreement under mutually acceptable terms and
subject to the approval of any governmental agency or regulatory authority
having jurisdiction over such matters.
In the event the Holding Company is unable to sell a minimum of
3,400,000 Shares by the End Date, this Agreement shall terminate and the Holding
Company shall refund to any persons who have subscribed for any of the Shares
the full amount that it may have received from them plus accrued interest, as
set forth in the Prospectus, and none of the parties to this Agreement shall
have any obligation to the other parties hereunder, except as set forth in this
Section 2 and in Sections 9, 11 and 12 hereof.
In the event the Offering is terminated for any reason not attributable
to the action or inaction of the Agent, the Agent shall be paid the fees due to
the date of such termination pursuant to Section 4, subparagraph (a) below, and
to the reimbursement of expenses pursuant to Section 9 below.
Section 3. Sale and Delivery of Shares. If all conditions
precedent to the consummation of the Reorganization, including, without
limitation, the sale of all Shares required by the Plan to be sold, are
satisfied, the Holding Company agrees to issue, or have issued, the Shares sold
in the Offering and to release for delivery certificates for such Shares on the
Closing Date (as hereinafter defined) against payment to the Holding Company by
any means authorized by the Plan; provided, however, that no funds shall be
released to the Holding Company until the conditions specified in Section 10
hereof shall have been complied with to the reasonable satisfaction of the Agent
and its counsel. The release of Shares against payment therefor shall be made on
a date and at a place acceptable to the Home Federal Parties and the Agent.
Certificates for Shares
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shall be delivered directly to the purchasers in accordance with their
directions. The date upon which the Holding Company shall release or deliver the
Shares sold in the Offering, in accordance with the terms herein, is called the
"Closing Date."
Section 4. Compensation. The Agent shall receive the following
compensation for its services hereunder:
(a) A management fee of $50,000, all of which has been paid. Such
fees shall be deemed to have been earned when due. Should the Reorganization be
terminated for any reason not attributable to the action or inaction of the
Agent, the Agent shall have earned and be entitled to be paid fees accruing
through the stage at which the termination occurred.
(b) A Success Fee equal to 1.35% of the aggregate purchase price
of the common stock sold in the Subscription Offering and Direct Community
Offering (excluding shares purchased by the Bank's officers, directors or
employees (or their immediate family) plus any employee stock ownership plan,
charitable foundations, tax-qualified or stock-based compensation plans (except
individual retirement accounts) or similar plans created by the Bank or the
Holding Company for some or all of their directors or employees shall be charged
upon consummation of the Reorganization. The management fee described in
subparagraph 4(a) shall be applied against the Success Fee described in this
subparagraph 4(b).
(c) If any of the Shares remain available after the Subscription
Offering and the Direct Community Offering, at the request of the Bank, KBW will
seek to form a syndicate of registered broker-dealers ("Selected Dealers") to
assist in the sale of such Shares on a best efforts basis, subject to the terms
and conditions set forth in the selected dealers agreement. KBW will endeavor to
distribute the Shares among the Selected Dealers in a fashion which best meets
the distribution objectives of the Bank and the Plan. KBW will be paid a fee not
to exceed 5.5% of the aggregate purchase price of the shares sold by the
Selected Dealers. From this fee, KBW will pass on to the Selected Dealers who
assist in such offering an amount competitive with gross underwriting discounts
charged at such time for comparable amounts of stock sold at a comparable price
per share in a similar market environment. Fees with respect to purchases
effected with the assistance of Selected Dealers other than KBW shall be
transmitted by KBW to such Selected Dealers. The decision to utilize Selected
Dealers will be made by the Bank upon consultation with KBW. In the event, with
respect to any stock purchases, fees are paid pursuant to this subparagraph
4(c), such fees shall be in lieu of and not in addition to payment pursuant to
subparagraph 4(b).
Full payment of KBW's fees, as described above, shall be made in next
day funds on the earlier of the Closing Date or a determination by the Bank to
terminate or abandon the Plan.
Section 5. Closing. The closing for the sale of the Shares shall
take place on the Closing Date at such location as mutually agreed upon by the
Agent and the Home Federal Parties. At the closing, the Home Federal Parties
shall deliver to the Agent in next day funds the commissions, fees and expenses
due and owing to the Agent as set forth in Sections 4 and 9 hereof and the
opinions and certificates required hereby and other documents
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deemed reasonably necessary by the Agent shall be executed and delivered to
effect the sale of the Shares as contemplated hereby and pursuant to the terms
of the Prospectus.
Section 6. Representations and Warranties of the Home Federal
Parties. The Home Federal Parties jointly and severally represent and warrant to
the Agent that:
(a) Each of the Home Federal Parties has all such power,
authority, authorizations, approvals and orders as may be required to enter into
this Agreement, and, as of the Closing Date, each of the Home Federal Parties
will have all such power, authority, authorizations, approvals and orders as may
be required to carry out the provisions and conditions hereof and to issue and
sell the Shares to be sold by the Company and to issue and contribute the
Foundation Shares and related cash contributions, as provided herein and as
described in the Prospectus. The consummation of the Reorganization, the
execution, delivery and performance of this Agreement and the Letter Agreement
and the consummation of the transactions contemplated herein have been duly and
validly authorized by all necessary corporate action on the part of each of the
Home Federal Parties. This Agreement has been validly executed and delivered by
each of the Home Federal Parties, and is a valid, legal and binding obligation
of each of the Home Federal Parties, in each case enforceable in accordance with
its terms, except as the legality, validity, binding nature and enforceability
thereof may be limited by (i) bankruptcy, insolvency, moratorium,
reorganization, conservatorship, receivership or other similar laws relating to
or affecting the enforcement of creditors' rights generally, (ii) general equity
principles regardless of whether such enforceability is considered in a
proceeding in equity or at law, and (iii) the extent, if any, that the
provisions of Sections 11 or 12 hereof may be unenforceable as against public
policy.
(b) The Registration Statement was declared effective by the
Commission on [July __, 2004]. No stop order has been issued with respect to the
Prospectus. No proceedings related to the Prospectus have been initiated or, to
the knowledge of the Home Federal Parties, threatened by the Commission. At the
time the Registration Statement, including the Prospectus contained therein
(including any amendment or supplement thereto), became effective, the
Registration Statement complied as to form in all material respects with the
1933 Act and the 1933 Act Regulations. The Registration Statement and the
Prospectus 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. At the time any Rule 424(b) or (c) Prospectus was filed with the
Commission and at the Closing Date referred to in Section 5, the Registration
Statement, including the Prospectus (including any amendment or supplement
thereto) and, when taken together with the Prospectus, any Blue Sky Application
or Sales Information (as such terms are defined in Section 11 hereof) authorized
for use by any of the Home Federal Parties in connection with the Offering, will
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;
provided, however, that the representations and warranties in this Section 6(b)
shall not apply to statements or omissions made in reliance upon and in
conformity with written information furnished to the Home Federal
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Parties by the Agent expressly regarding the Agent for use under the caption
"Home Federal's Reorganization and Stock Offering - Marketing Arrangements."
(c) The MHC Notice, including the Prospectus and the proxy
statement for the solicitation of proxies from members of the Bank for the
special meeting to approve the Plan (the "Members' Proxy Statement"), was
prepared by the Company and the Bank and filed with the OTS. The MHC Notice was
approved by the OTS on [July __], 2004. The Prospectus and Members' Proxy
Statement have each been authorized for use by the OTS. As of [July __], 2004
and at all times subsequent thereto until the Closing Date, the MHC Notice,
including the Prospectus and the Members' Proxy Statement (including any
amendment or supplement thereto), will comply in all material respects with the
MHC Regulations, except to the extent waived in writing by the OTS and with all
applicable provisions of the Securities Exchange Act of 1934, as amended (the
"1934 Act") and the regulations of the SEC under the 1934 Act (the "1934 Act
Regulations"). The MHC Notice, including the Prospectus and the Members' Proxy
Statement (including any amendment or supplement thereto), does not include any
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; provided, however,
that the representations and warranties in this Section 6(c) shall not apply to
statements or omissions made in reliance upon and in conformity with written
information furnished to the Company or the Bank by the Agent or its counsel
expressly regarding the Agent for use in the Prospectus contained in the MHC
Notice under the caption "Home Federal's Reorganization and Stock Offering -
Marketing Arrangements.
(d) The Holding Company Application has been prepared by the
Company in material conformity with the requirements of the OTS and approved by
the OTS. A conformed copy of the Holding Company Application has been delivered
to the Agent and its counsel, receipt of which is hereby acknowledged by the
Agent.
(e) No order has been issued by the OTS, the SEC or any state
securities administrator preventing or suspending the use of the Prospectus or
any supplemental sales literature authorized by the Home Federal Parties for use
in connection with the Offering and no action by or before any such government
entity to revoke any approval, authorization or order of effectiveness related
to the Reorganization is pending or, to the best knowledge of the Home Federal
Parties, threatened.
(f) Pursuant to the MHC Regulations, the Plan has been approved by
the Board of Directors of the Bank and is subject to approval by the members of
the Bank; at the Closing Date, the offer and sale of the Shares and all actions
in connection with the contribution to the Foundation will have been conducted
in all material respects in accordance with the Plan, the MHC Regulations, and
all other applicable laws, regulations, decisions and orders, including all
terms, conditions, requirements and provisions precedent to the Reorganization
imposed upon the Bank by the OTS, the SEC or any other regulatory authority,
other than those which the regulatory authority permits to be completed after
the Reorganization and in the manner described in the Prospectus. To the best
knowledge of the Home Federal Parties, no person has
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sought to obtain review of the final action of the OTS in approving the Plan,
the MHC Notice or the Holding Company Application pursuant to applicable
statutes or regulations.
(g) RP Financial, LC, which prepared the appraisal of the
aggregate pro forma market value of the Common Stock on which the Offering was
based (the "Appraisal"), has advised the Home Federal Parties in writing that it
is independent with respect to each of the Home Federal Parties within the
meaning of the MHC Regulations and the Home Federal Parties believe RP
Financial, LC to be expert in preparing appraisals of savings institutions.
(h) Xxxx Xxxxx LLP, which certified the financial statements filed
as part of the Registration Statement and the MHC Notice, has advised the Home
Federal Parties that it is an independent certified public accountant within the
meaning of the Code of Ethics of the AICPA, and Xxxx Xxxxx LLP is, with respect
to the Home Federal Parties and each subsidiary thereof, an independent
certified public accountant as required by the 1933 Act and the 1933 Act
Regulations.
(i) The financial statements, schedules and notes related thereto
that are included in the Prospectus fairly present in all material respects the
financial condition, results of operations, equity and cash flows of the Bank at
the respective dates indicated and for the respective periods covered thereby
and comply as to form in all material respects with the applicable accounting
requirements of Title 12 of the Code of Federal Regulations, Regulation S-X of
the SEC and generally accepted accounting principles ("GAAP") (including those
requiring the recording of certain assets at their current market value). Such
financial statements, schedules and notes related thereto have been prepared in
accordance with generally accepted accounting principles consistently applied
through the periods involved (except as noted in the Notes to the financial
statements), present fairly in all material respects the information required to
be stated therein and are consistent with the most recent financial statements
and other reports filed by the Bank with the OTS, and any other applicable
regulatory authority, except that accounting principles employed in such
regulatory filings conform to the requirements of the OTS and the SEC and not
necessarily to GAAP. The other financial, statistical and pro forma information
and related notes included in the Prospectus present fairly the information
shown therein on a basis consistent with the audited and unaudited financial
statements of the Bank included in the Prospectus, and as to the pro forma
adjustments, the adjustments made therein have been consistently applied on the
basis described therein.
(j) Except for the changes, which for purposes of this Section
6(j) are not deemed to be material adverse changes, discussed in the letter from
Xxxx Xxxxx LLP provided to the Agent pursuant to Section 10(d) of this
Agreement, since the respective dates as of which information is given in the
Registration Statement including the Prospectus: (i) there has not been any
material adverse change in the financial condition, results of operations,
capital, assets, properties or business of the Home Federal Parties, 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 Bank or in the
principal amount of the Bank's assets that are classified by the Bank as
substandard, doubtful or loss or in loans past due 90 days or more or real
estate acquired by foreclosure, by deed-in-lieu of foreclosure or deemed
in-substance foreclosure or any material
7
decrease in equity capital or total assets of the Bank, nor have the Home
Federal Parties issued any securities or incurred any liability or obligation
for borrowing other than in the ordinary course of business; (iii) there have
not been any material transactions entered into by the Home Federal Parties that
have not been disclosed in the Prospectus; (iv) there has not been any material
adverse change in the aggregate dollar amount of the Bank's deposits or its
consolidated net worth; (v) there has been no material adverse change in the
Home Federal Parties' relationship with their insurance carriers, including,
without limitation, cancellation or other termination of the Home Federal
Parties fidelity bond or any other type of insurance coverage; (vi) except as
disclosed in the Prospectus, there has been no material change in executive
management of the Home Federal Parties, none of which has any material
undisclosed liability of any kind, contingent or otherwise; (vii) none of the
Home Federal Parties has sustained any material loss or interference with its
respective business or properties from fire, flood, windstorm, earthquake,
accident or other calamity, whether or not covered by insurance; (viii) none of
the Home Federal Parties is in default in the payment of principal or interest
on any outstanding debt obligations; (ix) the capitalization, liabilities,
assets, properties and business of the Home Federal Parties conform in all
material respects to the descriptions thereof contained in the Prospectus; and
(x) none of the Home Federal Parties has any material contingent liabilities,
except as set forth in the Prospectus.
(k) The Holding Company is a stock corporation duly organized and
validly existing under the laws of the United States, with corporate power and
authority to own its properties and to conduct its business, as described in the
Prospectus, and is qualified to transact business and will be in good standing
in Idaho and in each jurisdiction in which the conduct of business requires such
qualification, unless the failure to qualify in one or more of such
jurisdictions would not have a material adverse effect on the financial
condition, results of operation, capital, properties, business affairs or
prospects of the Home Federal Parties taken as a whole (a "Material Adverse
Effect"). As of the Closing Date, the Holding Company will have obtained all
licenses, permits and other governmental authorizations required for the conduct
of its business, except those that individually or in the aggregate would not
have a Material Adverse Effect; and as of the Closing Date, all such licenses,
permits and governmental authorizations will be in full force and effect, and
the Holding Company will be in compliance therewith in all material respects,
and the Holding Company will be in compliance in all material respects with all
laws, rules, regulations and orders applicable to the operation of its business.
(l) At the Closing Date, the MHC will be duly chartered and
validly existing as a mutual holding company in good standing under the laws of
the United States with corporate power and authority to own its property and
conduct its business as described in the Prospectus.
(m) As of the date of this Agreement, the Holding Company does not
own any equity securities or any equity interest in any business enterprise.
(n) The Bank has been duly organized and is a validly existing
federally chartered savings and loan association in the mutual form of
organization and upon the Reorganization will become a wholly owned subsidiary
of the Holding Company, in both instances duly authorized
8
to conduct its business and own its property as described in the Registration
Statement and the Prospectus; the Bank has obtained all licenses, permits and
other governmental authorizations currently required for the conduct of its
business, except those that individually or in the aggregate would not have a
Material Adverse Effect; all such licenses, permits and governmental
authorizations are in full force and effect, and the Bank is in compliance with
all laws, rules, regulations and orders applicable to the operation of its
business; except where failure to be in compliance would not, individually or in
the aggregate, have a Material Adverse Effect. The Bank does not own equity
securities or any equity interest in any other active business enterprise except
Federal Home Loan Bank of Seattle stock or as described in the Prospectus or as
would not be material to the operations of the Bank. Upon completion of the
Reorganization, (i) all of the authorized and outstanding capital stock of the
Bank will be owned by the Holding Company free and clear of any mortgage,
pledge, lien, encumbrance, claim or restriction of any kind and (ii) the Holding
Company will have no direct subsidiaries other than the Bank. At the Closing
Date, the Reorganization will have been effected in all material respects in
accordance with all applicable statutes, regulations, decisions and orders; and,
except with respect to the filing of certain post-sale, post-Reorganization
reports, and documents in compliance with the 1933 Act Regulations, all terms,
conditions, requirements and provisions with respect to the Reorganization
imposed by the OTS or any other governmental agency, if any, will have been
complied with by the Home Federal Parties in all material respects or
appropriate waivers will have been obtained and all material notice and waiting
periods will have been satisfied, waived or elapsed.
(o) The authorized capital stock of the Bank consists of 1,000
shares of common stock, of $1.00 par value per share (the "Bank Common Stock")
and 9,000 shares of preferred stock, no par value (the "Bank Preferred Stock"),
of which no shares of Bank Common Stock and no shares of Bank Preferred Stock
are issued and outstanding as of the date hereof; no additional shares of Bank
Common Stock and no shares of Bank Preferred Stock will be issued.
(p) The only subsidiary of the Bank is Idaho Home Service
Corporation which has been inactive since 2001.
(q) The Bank is a member of the Federal Home Loan Bank of Seattle
("FHLB-Seattle"). The deposit accounts of the Bank are insured by the Federal
Deposit Insurance Corporation ("FDIC") up to the maximum limits, and no
proceedings for the termination or revocation of such insurance are pending or,
to the best knowledge of the Home Federal Parties,
9
threatened.
(r) Upon consummation of the Reorganization, the authorized,
issued and outstanding capital stock of the Holding Company will be within the
range set forth in the Prospectus under the caption "Capitalization" and no
shares of Common Stock have been or will be issued and outstanding prior to the
Closing Date (except for the shares issued upon incorporation of the Holding
Company); the Shares and the Foundation Shares have been duly and validly
authorized for issuance and, when issued and delivered by the Holding Company
pursuant to the Plan against payment of the consideration calculated as set
forth in the Plan and the Prospectus, will be duly and validly issued and fully
paid and nonassessable; the issuance of the Shares and Foundation Shares is not
subject to preemptive rights, except for the subscription rights granted
pursuant to the Plan; and the terms and provisions of the Shares and Foundation
Shares will conform in all material respects to the description thereof
contained in the Prospectus. Upon issuance of the Shares and the Foundation
Shares sold, good title to the Shares and the Foundation Shares will be
transferred from the Holding Company to the purchasers of Shares (or the
Foundation Shares, as appropriate) against payment therefor as set forth in the
Plan and the Prospectus.
(s) None of the Home Federal Parties is (i) in violation of their
respective charters or bylaws, as applicable or (ii) in default in the
performance or observance of any obligation, agreement, covenant, or condition
contained in any contract, lease, loan agreement, indenture or other instrument
to which it is a party or by which it or any of its property may be bound which
would result in a Material Adverse Effect. The execution and delivery of this
Agreement and the consummation of the transactions herein contemplated will not:
(i) violate or conflict with the charter or bylaws of any of the Home Federal
Parties; (ii) conflict with, or constitute a breach of or default under, any
material contract, lease or other instrument to which any of the Home Federal
Parties is a party or by which any of the properties of the Home Federal Parties
may be bound, or any applicable law, rule, regulation or order, except for such
conflicts, breaches or defaults that would not individually or in the aggregate
result in a Material Adverse Effect; (iii) violate any authorization, approval,
judgment, decree, order, statute, rule or regulation applicable to the Home
Federal Parties, except for such violations which would not have a Material
Adverse Effect; or (iv) result in the creation of any material lien, charge or
encumbrance upon any property of the Home Federal Parties, except for such
liens, charges or encumbrances that would not individually or in the aggregate
have a Material Adverse Effect.
(t) All documents made available to or delivered or to be made
available to or delivered by the Home Federal Parties or their representatives
in connection with the issuance and sale of the Shares, including records of
account holders, and depositors of the Bank, or in connection with the Agent's
exercise of due diligence, except for those documents which were prepared by
parties other than the Home Federal Parties or their representatives, to the
best knowledge of the Home Federal Parties, were on the dates on which they were
delivered, or will
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be on the dates on which they are to be delivered, true, complete and correct in
all material respects.
(u) 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 of the
Home Federal Parties, in the due performance and observance of any term,
covenant or condition of any indenture, mortgage, deed of trust, note, bank loan
or credit agreement or any other instrument or agreement to which any of the
Home Federal Parties is a party or by which any of their property is bound or
affected in any respect which, in any such case, would have a Material Adverse
Effect on the Home Federal Parties taken as a whole, and such agreements are in
full force and effect; and no other party to any such agreements has instituted
or, to the knowledge of any of the Home Federal Parties, threatened any action
or proceeding wherein any of the Home Federal Parties is alleged to be in
default thereunder under circumstances where such action or proceeding, if
determined adversely to any of the Home Federal Parties, would have a Material
Adverse Effect.
(v) The Home Federal Parties have good and marketable title to all
assets which are material to the businesses of the Home Federal Parties, free
and clear of all liens, charges, encumbrances, restrictions or other claims,
except such as are described in the Prospectus or where the absence of good and
marketable title would not have a Material Adverse Effect; and all of the leases
and subleases which are material to the businesses of the Home Federal Parties,
including those described in the Registration Statement or Prospectus, are in
force and effect.
(w) The Home Federal Parties are not in violation of any directive
from the OTS, or any other agency to make any material change in the method of
conducting their respective businesses; the Home Federal Parties have conducted
and are conducting their respective businesses so as to comply in all respects
with all applicable statutes and regulations (including, without limitation,
regulations, decisions, directives and orders of the Commission and the OTS),
except where the failure to so comply would not have a Material Adverse Effect,
and there is no charge, investigation, action, suit or proceeding before or by
any court, regulatory authority or governmental agency or body pending or, to
the knowledge of any of the Home Federal Parties, threatened, which might
materially and adversely affect the Reorganization, the performance of this
Agreement, or the consummation of the transactions contemplated in the Plan as
described in the Registration Statement, or which might result in a Material
Adverse Effect.
(x) Prior to the Closing Date, the Home Federal Parties will have
received an opinion of their special counsel, Breyer & Associates PC with
respect to the federal income tax consequences of the Reorganization, as
described in the Registration Statement and the Prospectus, an opinion of
Xxxxxxx Xxxxxxx Xxxxxxx, Chartered with respect to the state tax consequences of
the Reorganization, and an opinion of Silver Xxxxxxxx & Xxxx, L.L.P. with
respect to the federal income tax consequences of the proposed establishment of,
and contribution to, the Foundation as described in the Registration Statement
and the Prospectus, and the facts and representations upon which such opinions
will be based, will be truthful, accurate and complete, and none of the Home
Federal Parties will take any action inconsistent therewith.
11
(y) The Bank has filed all required federal and state tax returns,
paid all taxes that have become due and payable, except where permitted to be
extended or where the failure to pay such taxes would not have a Material
Adverse Effect, have made adequate reserves for similar future tax liabilities
to the extent required by GAAP and no deficiency has been asserted with respect
thereto by any taxing authority.
(z) No approval, authorization, consent or other order of any
regulatory or supervisory or other public authority is required for the
execution and delivery by the Home Federal Parties of this Agreement, or the
issuance of the Shares, except for the approval of the OTS, the Commission and
the Nasdaq Stock Market, Inc., and any necessary qualification, notification, or
registration or exemption under the securities or blue sky laws of the various
states in which the Shares are to be offered.
(aa) None of the Home Federal Parties has: (i) issued any
securities within the last 18 months except for (a) notes to evidence bank loans
or other liabilities in the ordinary course of business or as described in the
Prospectus, and (b) shares of Common Stock issued with respect to the initial
capitalization of the Holding Company; (ii) had any dealings with respect to
sales of securities within the 12 months prior to the date hereof with any
member of the NASD, or any person related to or associated with such member,
other than discussions and meetings relating to the Offering and purchases and
sales of U.S. government and agency and other securities in the ordinary course
of business; or (iii) engaged any intermediary between the Agent and the Home
Federal Parties in connection with the Offering or the offering of shares of the
Common Stock of the Holding Company, and no person is being compensated in any
manner for such services. Appropriate arrangements have been made for placing
the funds received from subscriptions for Shares in a special interest-bearing
account with the Bank until all Shares are sold and paid for, with provision for
refund to the purchasers in the event that the Reorganization is not completed
for whatever reason or for delivery to the Holding Company if all Shares are
sold.
(bb) To the best knowledge of the Home Federal Parties, the Home
Federal Parties have not made any payment of funds of the Home Federal Parties
as a loan to any person for the purchase of Shares, except for the Holding
Company's loan to the employee stock ownership plan, the proceeds of which may
be used to purchase Shares, or has made any other payment or loan of funds
prohibited by law, and no funds have been set aside to be used for any payment
prohibited by law.
(cc) The Bank complies in all material respects with the applicable
financial record keeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, and the regulations and rules
thereunder.
(dd) The Home Federal Parties have not relied upon Agent or its
counsel for any legal, tax or accounting advice in connection with the
Reorganization.
(ee) The records used by the Home Federal Parties to determine the
identity of Eligible Account Holders and Supplemental Eligible Account Holders
and Other Members are accurate and complete in all material respects.
12
(ff) None of the Home Federal Parties is required to be registered
as an investment company under the Investment Company Act of 1940.
(gg) The Foundation has been duly organized and is validly existing
as a private charitable foundation in good standing under the laws of the State
of Idaho with corporate power and authority to conduct its business as described
in the Prospectus; to the knowledge of the Home Federal Parties, all approvals
required to establish the Foundation and to contribute the Foundation Shares
thereto and cash in an amount equivalent to the value of 0.6% of the aggregate
number of shares sold in the Offering have been obtained as described in the
Prospectus; except as specifically disclosed in the Prospectus and the Members'
Proxy Statement, there are no agreements and/or understandings, written or oral
or otherwise, between any of the Home Federal Parties and the Foundation with
respect to the control, directly or indirectly, over the voting and the
acquisition or disposition of the shares of Common Stock to be contributed by
the Holding Company to the Foundation; the Foundation Shares to be issued to the
Foundation in accordance with the Plan and as described in the Prospectus will
have been duly authorized for issuance and, when issued and contributed by the
Holding Company pursuant to the Plan, will be duly and validly issued and fully
paid and non-assessable.
(hh) The Home Federal Parties have taken all actions necessary to
obtain at Closing a Blue Sky Memorandum from Breyer & Associates PC.
(ii) Any certificates signed by an officer of any of the Home
Federal Parties and delivered to the Agent or its counsel that refer to this
Agreement shall be deemed to be a representation and warranty by the Home
Federal Parties to the Agent as to the matters covered thereby with the same
effect as if such representation and warranty were set forth herein.
Section 7. Representations and Warranties of the Agent. Agent
represents and warrants to the Home Federal Parties that:
(a) Agent is a duly organized New York corporation and is validly
existing and in good standing under the laws of the State of New York and is
licensed to conduct business in the State of Idaho with full power and authority
to provide the services to be furnished to the Home Federal Parties hereunder.
(b) The execution, delivery and performance of this Agreement and
the Letter Agreement and the consummation of the transactions contemplated
herein and therein have been duly and validly authorized by all necessary
corporate action on the part of Agent, and each of this Agreement and the Letter
Agreement is the legal, valid and binding agreement of Agent, enforceable in
accordance with its terms, except as the legality, validity, binding nature and
enforceability thereof may be limited by (i) bankruptcy, insolvency, moratorium,
reorganization, conservatorship, receivership or other similar laws relating to
or affecting the enforcement of creditors' rights generally, and (ii) general
equity principles regardless of whether such enforceability is considered in a
proceeding in equity or at law.
13
(c) Each of Agent and its employees, agents and representatives
who shall perform any of the services hereunder shall have, and until the
Offering is consummated or terminated shall maintain, all licenses, approvals
and permits necessary to perform such services and shall comply in all material
respects with all applicable laws and regulations in connection with the
performance of such services.
(d) The execution and delivery of this Agreement by the Agent, the
consummation of the transactions contemplated hereby and compliance with the
terms and provisions hereof will not conflict with, or result in a breach of,
any of the terms, provisions or conditions of, or constitute a default (or an
event which with notice or lapse of time or both would constitute a default)
under the Articles of Incorporation or Bylaws of the Agent or any material
agreement, indenture or other instrument to which the Agent is a party or by
which its property is bound.
(e) No action, suit, charge or proceeding before the Commission,
the NASD, any state securities commission or any court is pending, or to the
knowledge of Agent threatened, against Agent which, if determined adversely to
Agent, would have a material adverse effect upon the ability of Agent to perform
its obligations under this Agreement.
(f) Agent is registered as a broker/dealer pursuant to Section
15(b) of the 1934 Act and is a member in good standing of the NASD.
(g) Any funds received in the Offering by the Agent will be
handled by the Agent in accordance with Rule 15c2-4 under the 1934 Act to the
extent applicable.
Section 8. Covenants of the Home Federal Parties. The Home
Federal Parties hereby jointly and severally covenant with the Agent as follows:
(a) The Holding Company will not, at any time after the date the
Registration Statement is initially filed, file any amendment or supplement to
the Registration Statement without providing the Agent and its counsel a
reasonable opportunity to review and comment on such amendment or supplement.
The Holding Company will furnish promptly to the Agent and its counsel copies of
all correspondence from the Commission with respect to the Registration
Statement and the Holding Company's responses thereto.
(b) The Home Federal Parties will not, at any time after the date
any Application is approved, file any amendment or supplement to such
Application without providing the Agent and its counsel a reasonable opportunity
to review and comment on such amendment or supplement. The Home Federal Parties
will furnish promptly to the Agent and its counsel copies of all correspondence
from the OTS with respect to the Applications and the Home Federal Parties'
responses thereto.
(c) The Home Federal Parties will use their best efforts to cause
the OTS to approve the Holding Company's acquisition of the Bank, and will use
their best efforts to cause any post-effective amendment to the Registration
Statement to be declared effective by the Commission and any post-effective
amendment to the MHC Notice to be approved by the OTS, as applicable, and will
promptly upon receipt of any information concerning the events listed
14
below notify the Agent (i) when the Registration Statement, as amended, has
become effective; (ii) when the MHC Notice as amended, has received the approval
of the OTS; (iii) when the Holding Company Application, as amended, has been
approved by the OTS; (iv) of the receipt of any comments from the OTS or any
other governmental entity with respect to the Reorganization or the transactions
contemplated by this Agreement; (v) of any request by the Commission, the OTS,
or any other governmental entity for any amendment or supplement to the
Registration Statement or the Applications or for additional information; (vi)
of the issuance by the Commission or the OTS, or any other governmental agency
of any order or other action suspending the Offering or the use of the
Registration Statement or the Prospectus or any other filing of the Home Federal
Parties under the MHC Regulations or other applicable law, or the threat of any
such action; (vii) of the issuance by the Commission or the OTS, or any other
state authority of any stop order suspending the effectiveness of the
Registration Statement or of the initiation or threat of initiation or threat of
any proceedings for that purpose; or (viii) of the occurrence of any event
mentioned in subsection (f) below. The Home Federal Parties will make every
reasonable effort to prevent the issuance by the Commission, the OTS, or any
other state authority of any order referred to in (vi) and (vii) above and, if
any such order shall at any time be issued, to obtain the lifting thereof at the
earliest possible time.
(d) The Home Federal Parties will deliver to the Agent and to its
counsel two conformed copies of each of the following documents, with all
exhibits: the Applications as originally filed and of each amendment or
supplement thereto, and the Registration Statement, as originally filed and each
amendment thereto. Further, the Home Federal Parties will deliver such
additional copies of the foregoing documents to counsel to the Agent as may be
required for any NASD filings. In addition, the Home Federal Parties will also
deliver to the Agent such number of copies of the Prospectus, as amended or
supplemented, as determined and agreed to by the Home Federal Parties.
(e) The Home Federal Parties will furnish to the Agent, from time
to time during the period when the Prospectus (or any later prospectus related
to this offering) is required to be delivered under the 1933 Act or the 1934
Act, such number of copies of such Prospectus (as amended or supplemented) as
the Agent may reasonably request for the purposes contemplated by the 1933 Act,
the 1933 Act Regulations, 1934 Act or the 1934 Act Regulations. The Holding
Company authorizes the Agent to use the Prospectus (as amended or supplemented,
if amended or supplemented) in any lawful manner contemplated by the Plan in
connection with the sale of the Shares by the Agent.
(f) The Home Federal Parties will comply in all material respects
with any and all terms, conditions, requirements and provisions with respect to
the Reorganization and the transactions contemplated thereby, imposed by the
Commission, by applicable state law and regulations, and by the 1933 Act, the
1934 Act, the 1933 Act Regulations and the 1934 Act Regulations, to be complied
with prior to the Closing Date; and when the Prospectus is required to be
delivered, the Home Federal Parties will comply in all material respects, at
their own expense, with all requirements imposed upon them by the OTS, the MHC
Regulations (except as modified or waived in writing by the OTS), the
Commission, by applicable state law and regulations and by the 1933 Act, the
1934 Act, the 1933 Act Regulations and the 1934 Act
15
Regulations, in each case as from time to time in force, so far as is necessary
to permit the continuance of sales or dealing in shares of Common Stock during
such period in accordance with the provisions hereof and the Prospectus.
(g) During any period when the Prospectus is required to be
delivered, each of the Home Federal Parties will inform the Agent of any event
or circumstance of which it is or becomes aware as a result of which the
Registration Statement and/or Prospectus, as then supplemented or amended, would
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading. If it is
necessary, in the reasonable opinion of counsel for the Home Federal Parties, to
amend or supplement the Registration Statement or the Prospectus in order to
correct such untrue statement of a material fact or to make the statements
therein not misleading in light of the circumstances existing at the time of
their use, the Home Federal Parties will, at their expense, prepare, file with
the Commission and the OTS, and furnish to the Agent, a reasonable number of
copies of an amendment or amendments of, or a supplement or supplements to, the
Registration Statement and the Prospectus (after a reasonable time for review by
counsel for the Agent) which will amend or supplement the Registration Statement
and/or the Prospectus so that as amended or supplemented it will not contain an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances existing
at the time, not misleading. For the purpose of this subsection, each of the
Home Federal Parties will furnish such information with respect to itself as the
Agent may from time to time reasonably request.
(h) Pursuant to the terms of the Plan, the Holding Company will
endeavor in good faith, in cooperation with the Agent, to register or to qualify
the Shares for offering and sale or to exempt such Shares from registration and
to exempt the Holding Company and its officers, directors and employees from
registration as broker-dealers, under the applicable securities laws of the
jurisdictions in which the Offering will be conducted; provided, however, that
the Holding Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation to do business in any
jurisdiction in which it is not so qualified. In each jurisdiction where any of
the Shares shall have been registered or qualified as above provided, the
Holding Company will make and file such statements and reports as are required
by the applicable regulatory authority in connection with such registration or
qualification for a period of not less than one year from the effective date of
the Registration Statement.
(i) The Holding Company and the Bank will not sell or issue,
contract to sell or otherwise dispose of, for a period of 90 days after the date
hereof, any shares of their capital
16
stock or securities convertible into or exercisable for shares of their capital
stock, without the Agent's prior written consent other than in connection with
any plan or arrangement described in the Prospectus, including existing stock
benefit plans.
(j) The Home Federal Parties will use the net proceeds from the
sale of the Common Stock in the manner set forth in the Prospectus under the
caption "How We Intend to Use the Proceeds from this Offering."
(k) The Home Federal Parties will distribute the Prospectus or
other offering materials in connection with the offering and sale of the Common
Stock only in accordance with the MHC Regulations, the 1933 Act, the 1934 Act,
the 1933 Act Regulations and the 1934 Act Regulations, and the laws of any state
in which the shares are qualified for sale.
(l) Prior to the Closing Date, the Holding Company shall register
its Common Stock under Section 12(b) or 12(g) of the 1934 Act, and will request
that such registration statement shall be effective no later than the completion
of the Reorganization. The Holding Company shall maintain the effectiveness of
such registration for not less than three years or such shorter period as may be
required by applicable law.
(m) For so long as the Shares are registered under the 1934 Act,
the Holding Company will furnish to its stockholders as soon as practicable
after the end of each fiscal year such reports and other information as are
required to be furnished to its stockholders under the 1934 Act.
(n) The Home Federal Parties will maintain appropriate
arrangements for depositing all funds received from persons mailing
subscriptions for or orders to purchase Shares on an interest bearing basis as
described in the Prospectus until the Closing Date and satisfaction of all
conditions precedent to the release of the Holding Company's obligation to
refund payments received from persons subscribing for or ordering Shares in the
Offering, in accordance with the Plan as described in the Prospectus, or until
refunds of such funds have been made to the persons entitled thereto or
withdrawal authorizations canceled in accordance with the Plan and as described
in the Prospectus. The Home Federal Parties will maintain such records of all
funds received to permit the funds of each subscriber to be separately insured
by the FDIC (to the maximum extent allowable) and to enable the Home Federal
Parties to make the appropriate refunds of such funds in the event that such
refunds are required to be made in accordance with the Plan and as described in
the Prospectus.
(o) Each of the MHC and the Holding Company will register as a
savings and loan holding company under the HOLA.
(p) The Home Federal Parties will take such actions and furnish
such information as are reasonably requested by the Agent in order for the Agent
to ensure compliance with the "Interpretation of the Board of Governors of the
NASD on Free Riding and Withholding."
(q) Until the Closing Date, the Home Federal Parties will conduct
their businesses in compliance in all material respects with all applicable
federal and state laws, rules, regulations,
17
decisions, directives and orders, including all decisions, directives and orders
of the Commission and the OTS.
(r) The Home Federal Parties shall comply with any and all terms,
conditions, requirements and provisions with respect to the Reorganization and
the transactions contemplated thereby imposed by the OTS, the MHC Regulations,
the Commission, the 1933 Act and the 1933 Act Regulations, the 1934 Act and the
1934 Act Regulations to be complied with subsequent to the Closing Date. The
Holding Company will comply with all provisions of all undertakings contained in
the Registration Statement.
(s) The Home Federal Parties will not amend the Plan without
notifying the Agent prior thereto.
(t) The Holding Company shall provide the Agent with any
information necessary to allow the Agent to manage the allocation process in
order to permit the Holding Company to carry out the allocation of the Shares in
the event of an oversubscription, and such information shall be accurate and
reliable in all material respects.
(u) Prior to the Closing Date, the Home Federal Parties will
inform the Agent of any event or circumstances of which it is aware as a result
of which the Registration Statement and/or Prospectus, as then amended or
supplemented, would contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein not
misleading.
(v) The Holding Company will not deliver the Shares until the Home
Federal Parties have satisfied or caused to be satisfied each condition set
forth in Section 10 hereof, unless such condition is waived in writing by the
Agent.
(w) Prior to the Closing Date, the Plan shall have been approved
by the members of the Bank in accordance with the Plan and the MHC Regulations
and the applicable provisions, if any, of the Bank's charter and bylaws.
(x) On or before the Closing Date, the Home Federal Parties will
have used their best efforts to obtain approval for quotation of shares of the
Common Stock on the Nasdaq National Market System by the Closing Date and will
use their best efforts to maintain such quotation and will have completed all
conditions precedent to the Reorganization specified in the Plan and the offer
and sale of the Shares will have been conducted in all material respects in
accordance with the Plan, the MHC Regulations (except as modified or waived in
writing by the OTS) and with all other applicable laws, regulations, decisions
and orders, including all terms, conditions, requirements and provisions
precedent to the Reorganization imposed upon any of the Home Federal Parties by
the OTS, the Commission or any other regulatory authority and in the manner
described in the Prospectus.
(y) The Home Federal Parties shall use their best efforts to
ensure that the Foundation submits within the time frames required by applicable
law a request to the Internal Revenue Service to be recognized as a tax-exempt
organization under Section 501(c)(3) of the Internal
18
Revenue Code of 1986, as amended (the "Code"); the Home Federal Parties will
take no action which will result in the possible loss of the Foundation's
tax-exempt status.
Section 9. Payment of Expenses. Whether or not the
Reorganization is completed or the sale and issuance of the Shares by the
Holding Company is consummated, the Home Federal Parties will pay for all their
expenses incident to the performance of this Agreement customarily borne by
issuers, including without limitation: (a) the preparation and filing of the MHC
Notice; (b) the preparation, printing, filing, delivery and mailing of the
Registration Statement, including the Prospectus, and all documents related to
the Offering and proxy solicitation; (c) all filing fees and expenses in
connection with the qualification or registration of the Shares for offer and
sale by the Holding Company under the securities or "Blue Sky" laws, including
without limitation filing fees, reasonable legal fees and disbursements of
counsel in connection therewith, and in connection with the preparation of a
blue sky law survey; (d) the filing fees of the NASD related to the Agent's
fairness filing under NASD Rule 2710; (e) fees and expenses related to the
preparation of the independent appraisal; (f) fees and expenses related to
auditing and accounting services; (g) expenses relating to advertising,
temporary personnel, investor meetings and stock information center; (h)
transfer agent fees and costs of preparation and distribution of stock
certificates; and (i) Nasdaq application and listing fees. The Home Federal
Parties also agree to reimburse Agent for reasonable out-of-pocket expenses
accompanied by appropriate documentation, including costs of travel, meals and
lodging, photocopying, telephone, facsimile and couriers, as well as legal fees
and expenses, incurred by Agent in connection with the services hereunder. Agent
will not incur legal fees in excess of $35,000 without the approval of the Bank.
In the event that the Agent incurs any expenses on behalf of the Home Federal
Parties, the Home Federal Parties will pay or reimburse the Agent for such
expenses regardless of whether the Reorganization is successfully completed, and
such reimbursements will not be included in the expense limitations set forth
above. The Home Federal Parties acknowledge, however, that such limitations may
be increased by the mutual consent of the Bank and Agent in the event of delay
in the Offering requiring the Agent to utilize a Syndicated Community Offering,
a delay as a result of circumstances requiring material additional work by Agent
or its counsel or an update of the financial information in tabular form
contained in the Prospectus for a period later than [March 31, 2004]. Not later
than two days prior to the Closing Date, the Agent will provide the Bank with a
detailed accounting of all reimbursable expenses to be paid at the Closing in
next day funds. In the event the Bank determines to abandon or terminate the
Plan prior to Closing, payment of such expenses shall be made in next day funds
on the date such determination is made.
Section 10. Conditions to the Agent's Obligations. The
obligations of the Agent hereunder and the occurrence of the Closing and the
Reorganization are subject to the condition that all representations and
warranties of the Home Federal Parties herein contained are, at and as of the
commencement of the Offering and (except to the extent such representations and
warranties speak as of an earlier date) at and as of the Closing Date, true and
correct, the condition that the Home Federal Parties shall have performed, in
all material respects, all of their obligations hereunder to be performed on or
before such dates and to the following further conditions:
19
(a) At the Closing Date, the Home Federal Parties shall have
conducted the Reorganization in all material respects in accordance with the
Plan, the MHC Regulations and all other applicable laws, regulations, decisions
and orders, including all terms, conditions, requirements and provisions
precedent to the Reorganization imposed upon them by the OTS and the SEC or any
other authority government.
(b) The Registration Statement shall have been declared effective
by the SEC, the MHC Notice and Holding Company Application shall have been
approved by the OTS and no stop order or other action suspending the
effectiveness of the Registration Statement shall have been issued under the
1933 Act or proceedings therefor initiated or, to the knowledge of the Home
Federal Parties, threatened by the Commission or any state authority and no
order or other action suspending the authorization for use of the Prospectus or
the consummation of the Reorganization shall have been issued, or proceedings
therefor initiated or, to the knowledge of the Home Federal Parties, threatened
by the OTS, the Commission, or any other governmental body.
(c) At the Closing Date, the Agent shall have received:
(1) The opinion, dated as of the Closing Date, of Breyer
& Associates PC and/or local counsel acceptable to the Agent, in form
and substance satisfactory to the Agent and counsel for the Agent to
the effect that:
(i) The Holding Company is a corporation duly
organized and validly existing under the laws of the United
States, with corporate power and authority to own its
properties and to conduct its business as described in the
Prospectus.
(ii) The Bank is a validly existing federally
chartered mutual savings and loan association, and upon
consummation of the Reorganization, the Bank will become a
validly existing federally chartered stock savings bank, with
full power and authority to own its properties and to conduct
its business as described in the Prospectus and to enter into
this Agreement and perform its obligations hereunder; the
activities of the Bank as described in the Prospectus are
permitted by federal law and the rules and regulations of the
OTS (or valid waivers granted it by the OTS from such rules
and regulations); all of the capital stock of the Bank to be
outstanding upon completion of the Reorganization will be
validly issued, fully paid and nonassessable and will be owned
of record and beneficially by the Holding Company, free and
clear, to such counsel's Actual Knowledge, of any mortgage,
pledge, lien, encumbrance, claim or restriction.
(iii) The Bank is a member in good standing of the
Federal Home Loan Bank of Seattle. The Bank is an insured
depository institution under the provisions of the Federal
Deposit Insurance Act, as amended, and to such counsel's
Actual Knowledge, no proceedings for the termination or
revocation of the federal deposit insurance of the Bank are
pending or threatened.
20
(iv) The MHC has been duly organized and is
validly existing as a federally chartered mutual holding
company, duly authorized to conduct its business and own its
properties as described in the Registration Statement and
Prospectus.
(v) Upon consummation of the Reorganization and
the issuance of Foundation Shares to the Foundation
immediately upon completion of the Reorganization, subject to
compliance with all conditions imposed upon the Foundation and
the contribution of the Foundation Shares to the Foundation by
the OTS under the terms of the approval order of the OTS, in
an amount as described in the Prospectus, (a) the authorized,
issued and outstanding capital stock of the Holding Company
will be within the range set forth in the Prospectus under the
caption "Capitalization," and no shares of Common Stock have
been or will be issued and outstanding prior to the Closing
Date (except for the shares issued upon incorporation of the
Holding Company); (b) the Shares to be subscribed for in the
Offering and the Foundation Shares will have been duly and
validly authorized for issuance, and, when issued and
delivered by the Holding Company pursuant to the Plan against
payment of the consideration calculated as set forth in the
Plan, will be duly and validly issued and fully paid and
nonassessable; and (c) the issuance of the Shares and the
Foundation Shares is not subject to preemptive rights under
the charter or bylaws of the Holding Company, or arising or
outstanding by operation of law or under any contract,
indenture, agreement, instrument or other document known to
such counsel, except for the subscription rights under the
Plan. To such counsel's Actual Knowledge, upon issuance of the
Shares and Foundation Shares, good title to the Shares and
Foundation Shares will be transferred from the Holding Company
to the purchasers thereof against payment therefor, subject to
such claims as may be asserted against the purchasers thereof
by third-party claimants.
(vi) The Home Federal Parties have full corporate
power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby and by the
Plan, including the establishment of the Foundation and the
contribution thereto of the Foundation Shares. The execution
and delivery of this Agreement and the consummation of the
transactions contemplated hereby, including the establishment
of the Foundation and the contribution thereto of the
Foundation Shares, have been duly authorized by all necessary
corporate action on the part of the Home Federal Parties; and
this Agreement constitutes a valid, legal and binding
obligation of each of the Home Federal Parties, enforceable in
accordance with its terms, except as rights to indemnity and
contribution thereunder may be limited under applicable law,
and subject to the qualification that (i) enforcement thereof
may be limited by bankruptcy, insolvency, moratorium,
reorganization or other laws (including the laws of fraudulent
conveyance) or judicial decisions affecting the enforceability
of creditors' rights generally, the rights of creditors of
savings associations or financial institutions, the accounts
of which are insured by the FDIC, and (ii) enforcement thereof
is
21
subject to general equity principles (regardless of whether
such enforceability is considered in a proceeding in equity or
at law) and to the effect of certain laws and judicial
decisions upon the availability of injunctive relief and
enforceability of equitable remedies, including the remedies
of specific performance and self-help.
(vii) Pursuant to the MHC Regulations, the Plan
has been duly approved by the required vote of the Bank's
members, based upon the certificate of the inspector of
election, and duly adopted by the required vote of the
directors of the Holding Company and the Bank.
(viii) The Plan complies in all material respects
with the MHC Regulations; the MHC Notice and the Holding
Company Application, including the establishment of the
Foundation and the contribution thereto of the Foundation
Shares, have been approved by the OTS, and, to such counsel's
Actual Knowledge, no action has been taken and, to such
counsel's Actual Knowledge, none is pending or threatened by
the OTS, Commission or any other governmental authority to
revoke such approval or to suspend the Offering or the use of
the Prospectus, and subject to the satisfaction of any
conditions set forth in such approvals, no further approval,
registration, authorization, consent or other order of any
federal or state regulatory agency, public board or body is
required in connection with the execution and delivery of this
Agreement, the offer, sale and 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 as to which no opinion need be rendered. To such
counsel's Actual Knowledge, no person has sought to obtain
regulatory or judicial review of the final action of the OTS
approving the Plan, the MHC Notice, the Prospectus or the
Holding Company Application.
(ix) The Registration Statement has become
effective under the 1933 Act, and to such counsel's Actual
Knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued, or proceedings for
that purpose have been instituted by the Commission and to
such counsel's Actual Knowledge, no such proceedings have been
threatened by the Commission.
(x) The terms and provisions of the Shares and
the Foundation Shares conform in all material respects to the
description thereof contained in the Registration Statement
and the Prospectus, and the forms of certificates proposed to
be used to evidence the Shares are in due and proper form in
compliance with applicable laws.
(xi) At the time the MHC Notice, including the
Prospectus and Members' Proxy Statement contained therein, was
approved by the OTS, the MHC Notice, including the Prospectus
and Members' Proxy Statement contained therein, as amended or
supplemented, complied as to
22
form in all material respects with the requirements of the MHC
Regulations, the 1933 Act Regulations, and the 1934 Act
Regulations (other than the financial statements, notes to
financial statements, financial tables or other financial and
statistical data included therein and the appraisal valuation
and the business plan as to which counsel need express no
opinion).
(xii) At the time that the Registration Statement
became effective and as of the Closing Date, the Registration
Statement, including the Prospectus (as amended or
supplemented) (other than the financial statements, notes to
financial statements, financial tables or other financial and
statistical data included therein and the appraisal valuation
and the business plan as to which counsel need express no
opinion), complied as to form in all material respects with
the requirements of the 1933 Act and the rules and regulations
promulgated thereunder.
(xiii) To such counsel's Actual Knowledge, there
are no legal or governmental proceedings pending, or
threatened (i) asserting the invalidity of this Agreement,
(ii) seeking to prevent the Reorganization or the offer, sale
or issuance of the Shares, or (iii) which are required to be
disclosed in the Registration Statement and Prospectus, other
than those disclosed therein.
(xiv) The information in the Prospectus under the
captions "Summary -- The Reorganization and Stock Offering,"
"Risk Factors," "How We Intend to Use the Proceeds from this
Offering," "Our Policy Regarding Dividends," "Management,"
"How We Are Regulated," "Taxation," "Restrictions on
Acquisition of Home Federal Bancorp and Home Federal,"
"Description of Capital Stock of Home Federal Bancorp," and
"Home Federal's Reorganization and Stock Offering," to the
extent that such information constitutes matters of law,
summaries of legal matters, documents or proceedings, or legal
conclusions, has been reviewed by such counsel and is accurate
in all material respects. The descriptions in the Prospectus
of statutes or regulations are accurate summaries and fairly
present the information required to be shown.
(xv) None of the Home Federal Parties is required
to be registered as an investment company under the Investment
Company Act of 1940.
(xvi) To such counsel's Actual Knowledge, none of
the Home Federal Parties is in violation of its Charter and
Bylaws or in default or violation of any obligation,
agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other
instrument to which it is a party or by which it or its
property may be bound, except for such defaults or violations
which would not have a Material Adverse Effect; the execution
and delivery of this Agreement, the incurrence of the
obligations herein set forth and the consummation of the
transactions contemplated herein do not (a), to such counsel's
Actual Knowledge, conflict
23
with or constitute a breach of, or default under, or result in
the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Home Federal Parties
pursuant to any material contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which any of the
Home Federal Parties is a party or by which any of them may be
bound, or to which any of the property or assets of the Home
Federal Parties are subject, (b) result in any violation of
the provisions of the Charter or Bylaws of the Home Federal
Parties or, (c) result in any violation of any applicable
federal or state law, act, regulation (except that no opinion
with respect to the securities and blue sky laws of various
jurisdictions or the rules or regulations of the NASD and/or
The Nasdaq Stock Market need be rendered) or, to such
counsel's Actual Knowledge, order or court order, writ,
injunction or decree.
(xvii) The Charter and Bylaws of each of the MHC,
the Holding Company and the Bank comply in all material
respects with the laws of the United States.
(xviii) To such counsel's Actual Knowledge, none of
the Home Federal Parties is in violation of any directive from
the OTS to make any material change in the method of
conducting its respective business.
(xix) To such counsel's Actual Knowledge, there
are no material contracts, indentures, mortgages, loan
agreements, notes, leases or other instruments required to be
described or referred to in the MHC Notice, the Registration
Statement or the Prospectus or required to be filed as
exhibits thereto other than those described or referred to
therein or filed as exhibits thereto in the MHC Notice, the
Registration Statement or the Prospectus. The description in
the MHC Notice, the Registration Statement and the Prospectus
of such documents and exhibits is accurate in all material
respects and fairly presents the information required to be
shown.
24
(xx) The Foundation has been duly incorporated
and is validly existing as a non-stock corporation in good
standing under the laws of the State of Idaho with corporate
power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectus; no
approvals are required to establish the Foundation and to
contribute the Foundation Shares and cash amounts thereto as
described in the Prospectus other than those set forth in the
approval order of the OTS; the Foundation Shares to be issued
to the Foundation in accordance with the Plan and as described
in the Prospectus will have been duly authorized for issuance
and, when issued and contributed by the Company pursuant to
the Plan, will be duly and validly issued and fully paid and
non-assessable.
The opinion may be limited to matters governed by the laws of
the United States and the State of Idaho. In rendering such opinion,
such counsel may rely (A) as to matters involving (i) the application
of any laws other than the United States, and (ii) the Foundation
required pursuant to paragraphs (c)(1)(iv), (v) and (xx) above, to the
extent such counsel deems proper and specified in such opinion, upon
the opinion of counsel reasonably acceptable to the Agent, as long as
such other opinion indicates that the Agent may rely on the opinion,
and (B) as to matters of fact, to the extent such counsel deems proper,
on certificates of responsible officers of the Home Federal Parties and
public officials; provided copies of any such opinion(s) or
certificates of public officials are delivered to Agent together with
the opinion to be rendered hereunder by special counsel to the Home
Federal Parties. The term "Actual Knowledge" as used herein shall mean
the conscious awareness of facts or other information of the attorneys
in such counsel's firm who have rendered legal services in connection
with the representation of the Home Federal Parties in the Offering or
the preparation of such counsel's opinion letter. Such opinion may be
limited to present statutes, regulations and judicial interpretations
and to facts as they presently exist; in rendering such opinion, such
counsel need assume no obligation to revise or supplement it should the
present laws be changed by legislative or regulatory action, judicial
decision or otherwise; and such counsel need express no view, opinion
or belief with respect to whether any proposed or pending legislation,
if enacted, or any proposed or pending regulations or policy statements
issued by any regulatory agency, whether or not promulgated pursuant to
any such legislation, would affect the validity of the Reorganization
or any aspect thereof. In the context of such counsel's opinion
described in paragraph (ix) above regarding the absence of any stop
order suspending the effectiveness of the Registration Statement or the
institution of proceedings for that purpose by the Commission, such
counsel's opinion letter shall state that such counsel has confirmed
the same with the staff of the Commission by telephone on the date of
such counsel's opinion. Such counsel may assume that any agreement is
the valid and binding obligation of any parties to such agreement other
than each of the Holding Company or the Bank. The Agent's counsel may
rely for purposes of its own opinion on the opinion of Breyer &
Associates PC
25
whose opinion shall expressly authorize such reliance. The opinion of
such counsel for the Home Federal Parties shall state that it has no
reason to believe that the Agent is not reasonably justified in relying
thereon.
(2) A letter of Breyer & Associates PC which shall state
that during the preparation of the Registration Statement and the
Prospectus, Breyer & Associates PC participated in conferences with
certain officers of and other representatives of the Home Federal
Parties, counsel to the Agent, representatives of the independent
public accountants for the Home Federal Parties and representatives of
the Agent at which the contents of the Registration Statement and the
Prospectus and related matters were discussed and has considered the
matters required to be stated therein and the statements contained
therein and, although (without limiting the opinions provided pursuant
to Section 10(c)(1)), Breyer & Associates PC has not independently
verified the accuracy, completeness or fairness of the statements
contained in the Registration Statement and Prospectus, on the basis of
the foregoing, nothing has come to the attention of Breyer & Associates
PC that caused Breyer & Associates PC to believe that the Registration
Statement at the time it was declared effective by the Commission and
as of the date of such letter, contained or contains any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements
therein in light of the circumstances under which they were made not
misleading (it being understood that counsel need express no comment or
opinion with respect to statements, notes to financial statements,
schedules and other financial and statistical data included, or
statistical or appraisal methodology employed, in the Registration
Statement or Prospectus, the appraisal valuation or the business plan).
(3) A Blue Sky Memorandum from Breyer & Associates PC
relating to the offering, including Agent's participation therein, and
should be furnished to Agent with a copy thereof addressed to Agent or
upon which Breyer & Associates PC shall state Agent may rely. The Blue
Sky Memorandum will relate to the necessity of obtaining or confirming
exemptions, qualifications or the registration of the common stock
under applicable state securities law.
(d) Concurrently with the execution of this Agreement, the Agent
shall receive a letter from Xxxx Xxxxx LLP dated the date hereof and addressed
to the Agent, such letter (i) confirming that Xxxx Xxxxx LLP is a firm of
independent public accountants within the meaning of the 1933 Act and the 1933
Act Regulations, and stating in effect that in the opinion of Xxxx Xxxxx LLP the
financial statements of the Bank included in the Prospectus comply as to form in
all material respects with the applicable accounting requirements of the 1933
Act and the 1934 Act and the related rules and regulations of the Commission
thereunder; (ii) stating in effect that, on the basis of certain agreed upon
procedures (but not an audit examination in accordance with generally accepted
auditing standards) consisting of a review (in accordance with Statement of
Auditing Standards No. 71) of the latest available unaudited consolidated
interim financial statements of the Bank prepared by the Home Federal Parties, a
reading of the minutes of the meetings of the Board of Directors of the Bank and
committees thereof and consultations with officers of the Bank responsible for
financial and accounting matters, nothing
26
came to their attention which caused them to believe that: (A) such unaudited
consolidated financial statements included in the Prospectus are not in
conformity with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements included
in the Prospectus; or (B) except as stated in such letter, during the period
from the date of the latest unaudited consolidated financial statements included
in the Prospectus to a specified date not more than five business days prior to
the date of the Prospectus, there was any material increase in borrowings
(defined as securities sold under agreements to repurchase and any other form of
debt other than deposits), or non-performing loans, special mention loans or
decrease in the deposits or loan loss allowance, total assets, stockholders'
equity or there was any change in common stock outstanding at the date of such
letter as compared with amounts shown in the latest unaudited statement of
condition or there was any decrease in net income, non-interest income,
provision for loan losses or net income after provision or increase in
non-interest expense of the Bank for the period commencing immediately after the
period covered by the latest unaudited income statement and ended not more than
five business days prior to the date of the Prospectus as compared to the
corresponding period in the preceding year; and (iii) stating that, in addition
to the audit examination referred to in its opinion included in the Prospectus
and the performance of the procedures referred to in clause (ii) of this
subsection (c), they have compared with the general accounting records of the
Bank, which are subject to the internal controls of the accounting system of the
Bank and other data prepared by the Home Federal Parties from accounting
records, to the extent specified in such letter, such amounts and/or percentages
set forth in the Prospectus as the Agent may reasonably request, and they have
found such amounts and percentages to be in agreement therewith (subject to
rounding).
(e) At the Closing Date, the Agent shall receive a letter from
Xxxx Xxxxx LLP dated the Closing Date, addressed to the Agent, confirming the
statements made by its letter delivered pursuant to subsection (d) of this
Section 10, the "specified date" referred to in clause (ii)(B) thereof to be a
date specified in such letter, which shall not be more than three business days
prior to the Closing Date.
(f) At the Closing Date, counsel to the Agent shall have been
furnished with such documents and opinions as counsel for the Agent may require
for the purpose of enabling them to advise the Agent with respect to the
issuance and sale of the Shares and the issuance of the Foundation Shares as
herein contemplated and related proceedings, or in order to evidence the
27
accuracy of any of the representations and warranties, or the fulfillment of any
of the conditions herein contained.
(g) At the Closing Date, the Agent shall receive a certificate of
the Chief Executive Officer and Chief Financial Officer of each of the Home
Federal Parties, dated the Closing Date, to the effect that: (i) they have
examined the Registration Statement and at the time the Registration Statement
became authorized for final use, the Prospectus did not contain an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein not misleading; (ii) there has not been, since
the respective dates as of which information is given in the Registration
Statement, any Material Adverse Effect otherwise than as set forth or
contemplated in the Registration Statement; (iii) the representations and
warranties contained in Section 6 of this Agreement are true and correct with
the same force and effect as though made at and as of the Closing Date; (iv) the
Home Federal Parties have complied in all material respects with all material
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to the Closing Date including the conditions contained in this
Section 10; (v) no stop order has been issued or, to their knowledge, is
threatened, by the Commission or any other governmental body; (vi) no order
suspending the Offering, the Reorganization, the acquisition of all of the
shares of the Bank by the Holding Company, the transactions required under the
Plan to consummate the Reorganization or the effectiveness of the Prospectus has
been issued and to their knowledge, no proceedings for any such purpose have
been initiated or threatened by the OTS, the Commission, or any other federal or
state authority; and (vii) to their knowledge, no person has sought to obtain
regulatory or judicial review of the action of the OTS in approving the Plan or
to enjoin the Reorganization.
(h) At the Closing Date, the Agent shall receive a letter from RP
Financial, LC, dated as of the Closing Date, (i) confirming that said firm is
independent of the Home Federal Parties and is experienced and expert in the
area of corporate appraisals, (ii) stating in effect that the Appraisal complies
in all material respects with the applicable requirements of the MHC
Regulations, and (iii) further stating that its opinion of the aggregate pro
forma market value of the Home Federal Parties, as converted, expressed in the
appraisal as most recently updated, remains in effect.
(i) None of the Home Federal Parties shall have sustained, since
the date of the latest financial statements included in the Registration
Statement and Prospectus, any material loss or interference with its business
from fire, explosion, flood, earthquake or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth in the Registration Statement and
the Prospectus, and since the respective dates as of which information is given
in the Registration Statement and the Prospectus, there shall not have been any
Material Adverse Effect that is in the Agent's reasonable judgment 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 Prospectus.
(j) Prior to and at the Closing Date, in the reasonable opinion of
the Agent there shall have been no material adverse change in the financial
condition or in the earnings, business
28
affairs or prospects of any of the Home Federal Parties independently, or the
Home Federal Parties taken as a whole, from and as of the latest dates as of
which such condition is set forth in the Prospectus, except as referred to
therein.
(k) At or prior to the Closing Date, the Agent shall receive (i) a
copy of the MHC Notice and a copy of the letters from the OTS approving the MHC
Notice, (ii) a copy of the order from the Commission declaring the Registration
Statement effective, (iii) an executed copy of the charter of the Holding
Company, (iv) an executed copy of the charter of the MHC; (v) a copy of the
letter from the OTS approving the Holding Company Application, (vi) a
certificate from the FDIC evidencing the Bank's insurance of accounts, and (vii)
any other documents that Agent shall reasonably request.
(l) Subsequent to the date hereof, there shall not have occurred
any of the following: (i) a suspension or limitation in trading in securities
generally on the New York Stock Exchange or American Stock Exchange or in the
over-the-counter market, or quotations halted generally on the Nasdaq Stock
Market, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices for securities have been required by either of such exchanges
or the NASD or by order of the Commission or any other governmental authority
other than temporary trading halts or limitation (A) imposed as a result of
intraday changes in the Dow Xxxxx Industrial Average, (B) lasting no longer than
until the regularly scheduled commencement of trading on the next succeeding
business-day and (C) which when combined with all other such halts occurring
during the previous five (5) business days, total less than two (2); (ii) a
general moratorium on the operations of federally insured financial institutions
or a general moratorium on the withdrawal of deposits from commercial banks or
other federally insured financial institutions declared by either federal or
state authorities; or (iii) there shall not have occurred any material adverse
change in the financial markets in the United States or elsewhere or any
outbreak of hostilities or escalation thereof or other calamity or crisis,
including, without limitation, terrorist activities after the date hereof, the
effect of which, in the judgment of the Agent, is so material and adverse as to
make it impracticable to market the Shares or to enforce contracts, including
subscriptions or purchase orders, for the sale of the Shares.
(m) All such opinions, certificates, letters and documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to the Agent and to counsel for the Agent.
Any certificate signed by an officer of the Holding Company or the Bank and
delivered to the Agent or to counsel for the Agent shall be deemed a
representation and warranty by the Holding Company or the Bank, as the case may
be, to the Agent as to the statements made therein.
Section 11. Indemnification.
(a) The Home Federal Parties jointly and severally agree to
indemnify and hold harmless the Agent, its officers, directors, agents,
attorneys, servants and employees and each person, if any, who controls the
Agent within the meaning of Section 15 of the 1933 Act or Section 20(a) of the
1934 Act, against any and all loss, liability, claim, damage or expense
whatsoever (including but not limited to settlement expenses, subject to the
limitation set forth in
29
the last sentence of subsection (c) below), joint or several, that the Agent or
any of such officers, directors, agents, attorneys, servants, employees and
controlling Persons (collectively, the "Related Persons") may suffer or to which
the Agent or the Related Persons may become subject under all applicable federal
and state laws or otherwise, and to promptly reimburse the Agent and any Related
Persons upon written demand for any reasonable expenses (including reasonable
fees and disbursements of counsel and Agent's time spent according to normal
hourly rates) incurred by the Agent or any Related Persons in connection with
investigating, preparing or defending any actions, proceedings or claims
(whether commenced or threatened) to the extent such losses, claims, damages,
liabilities or actions: (i) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment or supplement thereto), the Prospectus (or any
amendment or supplement thereto), the Applications, or other instrument or
document of the Home Federal Parties or based upon written information supplied
by any of the Home Federal Parties filed in any state or jurisdiction to
register or qualify any or all of the Shares under the securities laws thereof
(collectively, the "Blue Sky Applications"), or any application or other
document, advertisement, or communication ("Sales Information") prepared, made
or executed by or on behalf of any of the Home Federal Parties with its consent
or based upon information furnished by or on behalf of any of the Home Federal
Parties, in order to qualify or register the Shares under the securities laws
thereof, (ii) arise out of or are based upon the omission or alleged omission to
state in any of the foregoing documents or information, a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; (iii) arise from
any theory of liability whatsoever relating to or arising from or based upon the
Registration Statement (or any amendment or supplement thereto), the Prospectus
(or any amendment or supplement thereto), the Applications, any Blue Sky
Applications or Sales Information or other documentation distributed in
connection with the Offering; or (iv) result from any claims made with respect
to the accuracy, reliability and completeness of the records identifying the
Eligible Account Holders and Supplemental Eligible Account Holders or Other
Members or for any denial or reduction of a subscription or order to purchase
Common Stock, whether as a result of a properly calculated allocation pursuant
to the Plan or otherwise, based upon such records; provided, however, that no
indemnification is required under this subsection (a) to the extent such losses,
claims, damages, liabilities or actions arise out of or are based upon any
untrue material statements or alleged untrue material statements in, or material
omission or alleged material omission from, the Registration Statement (or any
amendment or supplement thereto) or the Prospectus (or any amendment or
supplement thereto), the Applications, the Blue Sky Applications or Sales
Information or other documentation distributed in connection with the
Reorganization made in reliance upon and in conformity with information
furnished to the Home Federal Parties by the Agent or its representatives
(including counsel) with respect to the Agent expressly for use in the
Registration Statement (or any amendment or supplement thereto) or Prospectus
(or any amendment or supplement thereto) under the caption "Home Federal's
Reorganization and Stock Offering - Marketing Arrangements" except for
information derived from the Prospectus. Provided further, that the Home Federal
Parties will not be responsible for any loss, liability, claim, damage or
expense to the extent a court of competent jurisdiction finds they result
primarily from material oral misstatements by the Agent to a purchaser or
prospective purchaser of Shares which are not based upon information in the
Registration Statement or Prospectus, or from actions taken or
30
omitted to be taken by the Agent in bad faith or from the Agent's gross
negligence or willful misconduct and the Agent agrees to repay to the Home
Federal Parties any amounts advanced to it by the Home Federal Parties in
connection with matters as to which it is found by a court of competent
jurisdiction not to be entitled to indemnification hereunder.
(b) The Agent agrees to indemnify and hold harmless the Home
Federal Parties, their directors and officers, agents, attorneys, servants and
employees and each person, if any, who controls any of the Home Federal Parties
within the meaning of Section 15 of the 1933 Act or Section 20(a) of the 1934
Act against any and all loss, liability, claim, damage or expense whatsoever
(including but not limited to settlement expenses, subject to the limitation set
forth in the last sentence of subsection (c) below), joint or several, which
they, or any of them, may suffer or to which they, or any of them, may become
subject under all applicable federal and state laws or otherwise, and to
promptly reimburse the Home Federal Parties and any such persons upon written
demand for any reasonable expenses (including out-of-pocket expenses, fees and
disbursements of counsel) incurred by them in connection with investigating,
preparing or defending any actions, proceedings or claims (whether commenced or
threatened) to the extent such losses, claims, damages, liabilities or actions
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement (or any amendment or
supplement thereto), the Applications or any Blue Sky Applications or Sales
Information or are based upon the omission or alleged omission to state in any
of the foregoing documents a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the Agent's
obligations under this Section 11(b) shall exist only if and only to the extent
that such untrue statement or alleged untrue statement was made in, or such
material fact or alleged material fact was omitted from, the Applications,
Registration Statement (or any amendment or supplement thereto) or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with information furnished to the Home Federal Parties by the Agent
or its representatives (including counsel) expressly for use under the caption
"Home Federal's Reorganization and Stock Offering - Marketing Arrangements."
(c) Each indemnified party shall give prompt written notice to
each indemnifying party of any action, proceeding, claim (whether commenced or
threatened), or suit instituted against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve it from any liability which it may have on account of this Section 11,
Section 12 or otherwise, unless the failure to give such notice promptly results
in material prejudice to the indemnifying party. An indemnifying party may
participate at its own expense in the defense of such action. In addition, if it
so elects within a reasonable time after receipt of such notice, an indemnifying
party, jointly with any other indemnifying parties receiving such notice, may
assume the defense of such action with counsel chosen by it reasonably
acceptable to the indemnified parties that are defendants in such action, unless
such indemnified parties reasonably object to such assumption on the ground that
there may be legal defenses available to them that are different from or in
addition to those available to such indemnifying party. If an indemnifying party
assumes the defense of such action, the indemnifying parties shall not be liable
for any fees and expenses of counsel for the indemnified parties incurred
thereafter in connection with such action, proceeding or claim, other than
31
reasonable costs of investigation. In no event shall the indemnifying parties be
liable for the fees and expenses of more than one separate firm of attorneys
(unless an indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from or in
addition to those of other indemnified parties) for all indemnified parties in
connection with any one action, proceeding or claim or separate but similar or
related actions, proceedings or claims in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall be
liable for any settlement of any action, proceeding or suit, which settlement is
effected without its prior written consent. Neither the Home Federal Parties nor
the Agent shall, without the written consent of the other, settle or compromise
any claim against them or it based upon circumstances giving rise to an
indemnification claim against the other party hereunder unless such settlement
or compromise provides that the indemnified party shall be unconditionally and
irrevocably released from all liability in respect to such claim.
(d) The agreements contained in this Section 11 and in Section 12
hereof and the representations and warranties of the Home Federal Parties set
forth in this Agreement shall remain operative and in full force and effect
regardless of (i) any investigation made by or on behalf of the Agent or its
officers, directors, controlling persons, agents, attorneys, servants or
employees or by or on behalf of any of the Home Federal Parties or any officers,
directors, controlling persons, agents, attorneys, servants or employees of any
of the Home Federal Parties; (ii) delivery of and payment hereunder for the
Shares; or (iii) any termination of this Agreement. Notwithstanding the prior
sentence, Sections 11 and 12 hereof are subject to and limited by Section 23A of
the Federal Reserve Act, as applicable.
Section 12. Contribution.
In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 11 is due in
accordance with its terms but is found in a final judgment by a court to be
unavailable from the Home Federal Parties or the Agent, the Home Federal Parties
and the Agent shall contribute to the aggregate losses, claims, damages and
liabilities of the nature contemplated by such indemnification (including any
investigation, legal and other expenses incurred in connection therewith and any
amount paid in settlement of any action, suit, or proceeding of any claims
asserted, but after deducting any contribution received by the Home Federal
Parties or the Agent from persons other than the other party thereto, who may
also be liable for contribution) in such proportion so that (i) the Agent is
responsible for that portion represented by the percentage that the fees paid to
the Agent pursuant to Section 4 of this Agreement (not including expenses)
("Agent's Fees), less any portion of Agent's Fees paid by Agent to Assisting
Brokers, bear to the total proceeds received by the Home Federal Parties from
the sale of the Shares in the Offering, net of all expenses of the Offering,
except Agent's fees and (ii) the Home Federal Parties shall be responsible for
the balance. If, however, the allocation provided above is not permitted by
applicable law or if the indemnified party failed to give the notice required
under Section 11 above, then each indemnifying party shall contribute to such
amount paid or payable to such indemnified party in such proportion as is
appropriate to reflect not only such relative fault of the Home Federal Parties
on the one hand and the Agent on the other in connection with the statements or
32
omissions which resulted in such losses, claims, damages or liabilities (or
actions, proceedings or claims in respect thereof), but also the relative
benefits received by the Home Federal Parties on the one hand and the Agent on
the other from the Offering, as well as any other relevant equitable
considerations. The relative benefits received by the Home Federal Parties on
the one hand and the Agent on the other hand shall be deemed to be in the same
proportion as the total proceeds from the Offering, except Agent's fees, net of
all expenses of the Offering, received by the Home Federal Parties bear, with
respect to the Agent, to the total fees (not including expenses) received by the
Agent less the portion of such fees paid by the Agent to Assisting Brokers. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Home Federal Parties on the one hand or the Agent on the other and the parties
relative intent, good faith, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Home Federal Parties and the
Agent agree that it would not be just and equitable if contribution pursuant to
this Section 12 were determined by pro-rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this Section 12. The amount paid or payable by an indemnified party
as a result of the losses, claims, damages or liabilities (or action,
proceedings or claims in respect thereof) referred to above in this Section 12
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action, proceeding or claim. It is expressly agreed that the Agent shall not be
liable for any loss, liability, claim, damage or expense or be required to
contribute any amount which in the aggregate exceeds the amount paid (excluding
reimbursable expenses) to the Agent under this Agreement less the portion of
such fees paid by the Agent to Assisting Brokers. It is understood and agreed
that the above-stated limitation on the Agent's liability is essential to the
Agent and that the Agent would not have entered into this Agreement if such
limitation had not been agreed to by the parties to this Agreement. No person
found guilty of any fraudulent misrepresentation (within the meaning of Section
11(f) of the 0000 Xxx) shall be entitled to contribution with respect to any
loss or liability arising from such misrepresentation from any person who was
not found guilty of such fraudulent misrepresentation. The duties, obligations
and liabilities of the Home Federal Parties and the Agent under this Section 12
and under Section 11 shall be in addition to any duties, obligations and
liabilities which the Home Federal Parties and the Agent may otherwise have. For
purposes of this Section 12, each of the Agent's and the Home Federal Parties'
officers, directors and, controlling persons within the meaning of the 1933 Act
and the 1934 Act shall have the same rights to contribution as the Home Federal
Parties and the Agent. Any party entitled to contribution, promptly after
receipt of notice of commencement of any action, suit, claim or proceeding
against such party in respect of which a claim for contribution may be made
against another party under this Section 12, will notify such party from whom
contribution may be sought, but the omission to so notify such party shall not
relieve the party from whom contribution may be sought from any other obligation
it may have hereunder or otherwise than under this Section 12.
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Section 13. Survival.
(a) All representations, warranties and indemnities and other
statements contained in this Agreement, or contained in certificates of officers
of the Home Federal Parties or the Agent submitted pursuant hereto, shall remain
operative and in full force and effect, regardless of any termination or
cancellation of this Agreement or any investigation made by or on behalf of the
Agent or its controlling persons, or by or on behalf of the Home Federal Parties
and shall survive the issuance of the Shares, and any legal representative,
successor or assign of the Agent, any of the Home Federal Parties, and any
indemnified person shall be entitled to the benefit of the respective
agreements, indemnities, warranties and representations.
(b) The provisions of Paragraph 8 of the Letter Agreement,
"Additional Services," shall survive the issuance of the Shares (but not any
termination or cancellation of this Agreement) for a period of one (1) year, and
any legal representative, successor or assign of the Agent, and any of the Home
Federal Parties shall be entitled during such period to the benefit of the
agreements contained therein.
Section 14. Termination. Agent may terminate this Agreement by
giving the notice indicated below in this Section at any time after this
Agreement becomes effective as follows:
(a) In the event (i) the Plan is abandoned or terminated by the
Holding Company; (ii) the Holding Company fails to consummate the sale of the
minimum number of Shares prior to December 31, 2004 in accordance with the
provisions of the Plan or as required by the MHC Regulations and applicable law;
or (iii) immediately prior to commencement of the Offering, the Agent terminates
this relationship because in its opinion, which shall have been formed in good
faith after reasonable determination and consideration of all relevant factors,
there has been a failure to satisfactorily disclose all relevant information in
the Prospectus or the existence of market conditions which might render the sale
of the Shares inadvisable, this Agreement shall terminate and the Home Federal
Parties shall refund 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 in accordance with Section 2 hereof and any such termination shall
be without liability of any party to any other party except as otherwise
provided in Sections 2, 4, 9, 11 and 12 hereof.
(b) If any of the conditions specified in Section 10 hereof shall
not have been fulfilled when and as required by this Agreement, or by the
Closing Date, or waived in writing by the Agent, this Agreement and all of the
Agent's obligations hereunder may be canceled by the Agent by notifying the Bank
of such cancellation in writing at any time at or prior to the Closing Date, and
any such cancellation shall be without liability of any party to any other party
except as otherwise provided in Sections 2, 4, 9, 11 and 12 hereof.
(c) If Agent elects to terminate this Agreement as provided in
this Section, the Bank shall be notified by the Agent as provided in Section 15
hereof.
(d) If this Agreement is terminated in accordance with the
provisions of this Agreement, the Agent shall retain the advisory and management
fee paid to it pursuant to Section
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4 and the Home Federal Parties shall reimburse the Agent for any of its other
actual, accountable, reasonable out-of-pocket expenses pursuant to Section 9,
including without limitation, communication, legal and travel expenses.
Section 15. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication. Notices to
Agent shall be directed to Xxxxx, Xxxxxxxx & Xxxxx, Inc., 000 Xxxxxxxxx Xxxxx,
Xxxxxx, Xxxx 00000, Attention: Xx. Xxxxxxxx XxXxxxx (with a copy to Elias, Matz,
Xxxxxxx & Xxxxxxx L.L.P., 000 00xx Xxxxxx, XX, 00xx Xxxxx, Xxxxxxxxxx, XX 00000,
Attention: Xxxx X. Xxxxxxxx); notices to the Home Federal Parties shall be
directed to Home Federal Bancorp, 000 00xx Xxxxxx Xxxxx, Xxxxx, Xxxxx 00000,
Attention: Xxxxxx X. Xxxxxxx, President and Chief Executive Officer (with a copy
to Breyer & Associates PC, 0000 Xxxxxxxxxx Xxxxx, Xxxxx 000, XxXxxx, XX 00000,
Attention: Xxxx X. Xxxxxx, Xx., Esq.).
Section 16. Parties. This Agreement shall inure to the benefit of
and be binding upon the Agent and the Home Federal Parties, and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
parties hereto and their respective successors and the controlling persons and
officers and directors referred to in Sections 11 and 12 and their heirs and
legal representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provisions herein contained. It is understood
and agreed that this Agreement is the exclusive agreement among the parties,
supersedes any prior Agreement among the parties and may not be varied except by
a writing signed by all parties, except for Paragraphs 4, 10 and 11 of the
Letter Agreement, which are not hereby superseded.
Section 17. Partial Invalidity. In the event that any term,
provision or covenant herein or the application thereof to any circumstances or
situation shall be invalid or unenforceable, in whole or in part, the remainder
hereof and the application of said term, provision or covenant to any other
circumstance or situation shall not be affected thereby, and each term,
provision or covenant herein shall be valid and enforceable to the full extent
permitted by law.
Section 18. Construction. This Agreement shall be construed in
accordance with the laws of the State of New York.
Section 19. Counterparts. This Agreement may be executed in
separate counterparts, each of which so executed and delivered shall be an
original, but all of which together shall constitute but one and the same
instrument.
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If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon this instrument
along with all counterparts will become a binding agreement between you and us
in accordance with its terms.
HOME FEDERAL MHC
By:
----------------------------------------
Xxxxxx X. Xxxxxxx
President and Chief Executive Officer
HOME FEDERAL BANCORP, INC.
By:
----------------------------------------
Xxxxxx X. Xxxxxxx
President and Chief Executive Officer
HOME FEDERAL SAVINGS AND LOAN ASSOCIATION OF
NAMPA
By:
----------------------------------------
Xxxxxx X. Xxxxxxx
President and Chief Executive Officer
The foregoing Agency Agreement is
hereby confirmed and accepted as
of the date first set forth above.
XXXXX, XXXXXXXX & XXXXX, INC.
By:
----------------------------
Xxxxxxxx XxXxxxx
Managing Director
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