EAGLE BANCORP
(a Federal Corporation - in Formation)
878,313 Shares
(Subject to Increase Up to 1,010,059 Shares)
COMMON STOCK ($0.01 Par Value)
Subscription Price $8.00 Per Share
AGENCY AGREEMENT
February __, 2000
Xxxx, Xxxx & Co., Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
Ladies and Gentlemen:
Eagle Bancorp, a federal corporation in formation (the "Holding
Company"), Eagle Financial, MHC, a federal mutual holding company in formation
(the "MHC") and American Federal Savings Bank (the "Bank") (collectively, the
"Primary Parties") hereby confirm, jointly and severally their agreement with
Xxxx, Xxxx & Co., Inc. (the "Agent"), as follows:
SECTION 1. THE OFFERING. On September 16, 1999, the Board of Directors
of the Bank adopted a Plan of Reorganization (the "Plan") which provides for the
reorganization of the Bank into a two-tier mutual holding company structure, the
issuance of all of the Bank's outstanding Common Stock to the Holding Company
(the "Reorganization"), and the issuance of a majority of the outstanding common
stock to the MHC. Upon completion of the Reorganization, the Bank will be a
wholly owned subsidiary of the Holding Company and the Holding Company will be a
majority owned subsidiary of the MHC. The Holding Company is offering up to
878,313 shares of common stock, par value $0.01 per share (the "Common Stock")
(subject to an increase up to 1,010,059 shares), in (i) a subscription offering
(the "Subscription Offering"), and, if necessary, (ii) a direct community
offering (the "Direct Community Offering") and (iii) a syndicated community
offering (the "Syndicated Community Offering"), in connection with the
conversion and reorganization of the Bank from a mutual savings bank to a stock
savings bank and wholly-owned subsidiary of the Holding Company (the
"Reorganization"), all pursuant to the Plan of Reorganization from a Mutual
Savings Association to Mutual Holding Company and Stock Issuance Plan (the
"Plan"). References to the Bank herein shall include the Bank in its current
mutual form or post-Reorganization stock form as a wholly-owned subsidiary of
the Holding Company.
Pursuant to the Plan, the Holding Company will offer and sell shares of
its Common Stock (the "Conversion Shares" or "Shares") in the Subscription
Offering, Community Offering, and Syndicated Community Offering (collectively,
the "Conversion Offerings" or "Offering") so that, upon completion of the
Conversion Offerings, the purchasers of Conversion Shares in the Conversion
Offerings will own 47% of the outstanding Common Stock and the MHC will own 53%
of the outstanding Common Stock. The Holding Company will issue the Shares at a
purchase price of $8.00 per share (the "Purchase Price"). If the number of
Conversion Shares is increased or
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decreased in accordance with the Plan, the term "Shares" shall mean such greater
or lesser number, where applicable.
In the Subscription Offering, non-transferable rights to subscribe for
between 649,188 and 878,313 shares (subject to an increase up to 1,010,059
shares) of the Common Stock ("Subscription Rights") will be granted, in the
following priority: (1) the Bank's depositors with account balances of $50.00 or
more as of June 30, 1998 ("Eligible Account Holders"); (2) the Bank's
tax-qualified Employee Stock Ownership Plan ("ESOP"); (3) the Bank's depositors
with account balances of $50.00 or more as of December 31, 1999 ("Supplemental
Eligible Account Holders"); and (4) depositors (other than Eligible Account
Holders and Supplemental Eligible Account Holders) as of the date for
determining if members entitled to vote on the approval of the Plan (the "Voting
Record Date") and borrowers of the Bank as of April 18, 1991 whose borrowings
remain outstanding as of December 31, 1999 (collectively, "Other Members"),
subject to the priorities and purchase limitations set forth in the Plan. The
Holding Company may offer shares of Common Stock offered but not subscribed for
in the Subscription Offering to members of the general public, with first
preference given to borrowers of the Bank as of December 31, 1999, second
preference given to residents of the Bank's local communities of Xxxxx and
Clark, Gallatin, Jefferson, Silverbow and Xxxxxxxxxx counties in Montana and
third, to natural persons residing in the State of Montana. In the event a
Community Offering is held, it may be held at any time during or immediately
after the Subscription Offering. Depending on market conditions, shares not
subscribed for in the Subscription Offering or purchased in the Community
Offering may be offered in the Syndicated Community Offering to eligible members
of the general public on a best efforts basis by approved broker-dealer firms
which may include the Agent ("Assisting Brokers") which are members of the
National Association of Securities Dealers, Inc. ("NASD").
It is acknowledged that the number of Shares to be sold in the Offering
may be increased or decreased as described in the Prospectus (as hereinafter
defined); that the purchase of Shares in the Offering is subject to maximum and
minimum purchase limitations as described in the Prospectus; and that the
Company and Holding Company may reject, in whole or in part, any subscription
received in the Community Offering. 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.
The Holding Company has filed with the U.S. Securities and Exchange
Commission (the "Commission") a Registration Statement on Form SB-2 (File No.
333-93077) in order to register the Shares under the Securities Act of 1933, as
amended (the "1933 Act"), and has filed such amendments thereto as have been
required to the date hereof (the "Registration Statement"). The prospectus, as
amended, included in the Registration Statement at the time it initially became
effective is hereinafter called the "Prospectus", except that if any prospectus
is filed by the Holding Company pursuant to Rule 424(b) or (c) of the
regulations of the Commission under the 1933 Act differing from the prospectus
included in the Registration Statement at the time it initially becomes
effective, the term "Prospectus" shall refer to the prospectus filed pursuant to
Rule 424(b) or (c) from and after the time said prospectus is filed with the
Commission and shall include any supplements and amendments thereto from and
after their dates of effectiveness or use, respectively.
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In connection with the Reorganization, the Bank filed with the Office
of Thrift Supervision (the "OTS"), pursuant to Title 12, Parts 575 and 563b of
the Code of Federal Regulations (the "Conversion Regulations"), 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, and has filed amendments thereto as required by the OTS (as so
amended, the "MHC Notice and Application"). The Holding Company filed with the
OTS its application on Form H-(e)1-S (the "Holding Company Application") to
acquire the Bank under the Home Owners Loan Act and the regulations promulgated
thereunder ("HOLA"). The Bank's application with the OTS for approval of the
formation of an interim stock savings bank and the merger of the interim stock
savings bank with and into the Bank (the "Merger Application") was filed as an
exhibit to the Holding Company Application. The MHC Notice and Application and
the Holding Company Application (including the Merger Application) shall
collectively be hereinafter referred to as the "OTS Applications."
Concurrently with the execution of this Agreement, the Company is
delivering to the Agent copies of the Prospectus dated February __, 2000 of the
Holding Company to be used in the Subscription Offering and Community Offering
(if any), and, if necessary, will deliver copies of the Prospectus or prospectus
supplement for use in a Syndicated Community Offering and/or Public Offering, as
defined in the Prospectus (as hereinafter defined).
SECTION 2. APPOINTMENT OF AGENT. Subject to the terms and conditions of
this Agreement, the Primary Parties hereby appoint Agent as their financial
advisor and marketing agent to utilize its best efforts to solicit subscriptions
for the Conversion Shares and to advise and assist the Primary Parties with
respect to the sale of the Conversion Shares in the Conversion Offerings.
On the basis of the representations and warranties of the Primary
Parties contained in, and subject to the terms and conditions of, this Agreement
the Agent accepts such appointment and agrees to consult with and advise the
MHC, the Holding Company and the Bank as to the matters set forth in the letter
agreement ("Letter Agreement"), dated August 20, 1999, between the Bank and
Agent (a copy of which is attached hereto as Exhibit A). It is acknowledged by
the Primary Parties that the Agent shall not be obligated to purchase any Shares
and shall not be obligated to take any action which is inconsistent with any
applicable law, regulation, decision or order. Subscriptions for Conversion
Shares will be offered by means of order forms as described in the Prospectus.
Except as provided in the last paragraph of this Section 2, the appointment of
the Agent hereunder shall terminate upon consummation of the Offerings.
If selected broker-dealers are used to assist in the sale of Conversion
Shares in the Syndicated Community Offering, the Primary Parties hereby, subject
to the terms and conditions of this Agreement, appoint the Agent to manage such
broker-dealers in this Syndicated Community Offering. On the basis of the
representations and warranties of the Primary Parties contained in, and subject
to the terms and conditions of, this Agreement, the Agent accepts such
appointment and agrees to manage the selling group of broker-dealers in the
Syndicated Community Offering.
The Agent agrees to make available to the Bank, the MHC and the Holding
Company for a period of 12 months following the consummation of the
Reorganization its Strategic Advisory Services ("STARS") program. If the Bank
elects to participate in the STARS program, the Agent
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will meet with the Bank at its request and will render general advice on the
financial matters listed in Section 9 of the Letter Agreement (but not including
(i) any in-depth merger and acquisition analyses or studies which are available
under the Agent's normal fee schedule, or (ii) advice with respect to a specific
acquisition transaction by, or sale of, the Bank or the Holding Company). If the
Bank elects to participate in the STARS program, the Agent will waive the
regular retainer fee and hourly charges for the first 12 months of such
participation. The Bank would be required, however, to reimburse the Agent for
its reasonable out-of-pocket expenses incurred in conjunction with the
performance of these services. Such out-of-pocket expenses include travel, legal
and other miscellaneous expenses. The Agent would not be permitted to incur any
single expense in excess of $1,000 pursuant to this paragraph without the prior
approval of the Bank. If negotiations for a transaction conducted during the
12-month participation period result in the execution of a definitive agreement
and/or consummation of a transaction for which the Agent customarily would be
entitled to a fee for its advisory or other investment banking services, the
Agent shall receive a contingent advisory fee in accordance with the terms of a
separate engagement letter to be entered into with respect to such transaction.
Nothing in this Agreement shall require the Holding Company or the Bank to
obtain such financial advisory services from the Agent. After the completion of
such 12-month participation period, if the parties wish to continue the
relationship, a fee will be negotiated and an agreement with respect to specific
advisory services will be entered into at this time.
SECTION 3. REFUND OF PURCHASE PRICE. In the event that the
Reorganization is not consummated for any reason, including but not limited to
the inability to sell the Conversion Shares during the Offerings (including any
permitted extension thereof), this Agreement shall terminate and any persons who
have subscribed for any of the Conversion Shares shall have refunded to them the
full amount which has been received from such person, together with interest at
the Bank's current annual passbook rate, from the date payment is received to
the date said refund is made as provided in the Prospectus. Upon termination of
this Agreement, neither the Agent nor the Primary Parties shall have any
obligation to the other except that (i) the Primary Parties shall remain liable
for any amounts due pursuant to Sections 4(a), 8, 10 and 11 hereof, unless the
transaction is not consummated due to the breach by the Agent of a warranty,
representation or covenant; and (ii) the Agent shall remain liable for any
amount due pursuant to Sections 10 and 11 hereof, unless the transaction is not
consummated due to the breach by the Primary Parties of a warranty,
representation or covenant.
SECTION 4. FEES. In addition to the expenses specified in Section 8
hereof, as compensation for the Agent's services under this Agreement, the Agent
has received or will receive the following fees from the Primary Parties:
(a) An advisory and marketing fee in the amount of $165,000.
(b) A fee equal to 6% of the aggregate Purchase Price of the
Conversion Shares sold by Assisting Brokers in any Syndicated Community
Offering. From this amount, the Agent will pay the Assisting Brokers that
assist in the sale of Conversation Shares in the Syndicated Community
Offering a fee competitive with selected dealers' selling concessions
typical at such time for comparable amounts of stock sold at a comparable
price per share in a similar market environment. Assisting Brokers will not
be utilized without the prior approval of the Primary Parties, and it is
agreed that Agent will manage the Assisting Brokers in the Syndicated
Offering.
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In the event that the Company and/or the Bank are required to resolicit
subscribers for Shares in the Subscription and Community Offering and the Agent
is required to provide significant additional services in connection with such a
resolicitation, the Primary Parties and the Agent shall mutually agree to the
dollar amount of additional fees due to the Agent, if any. Until any agreement
called for by this paragraph is reached, the Agent shall not accrue expenses
relating to any resolicitation in an amount that would cause the total expenses
incurred by the Agent to be greater than as set forth in Section 8 hereof
without the prior written consent of the Company or the Bank, which consent
shall not be unreasonably withheld.
SECTION 5. CLOSING. If the minimum number of Conversion Shares required
to be sold in the Offering on the basis of the most recently updated Appraisal
(as defined in Section 6(h)) are subscribed for at or before the termination of
the Offerings, and the other conditions to the completion of the Reorganization
are satisfied, the Holding Company agrees to issue the Shares on the Closing
Date (as hereinafter defined) against payment therefor by the means authorized
by the Plan and to deliver certificates evidencing ownership of the Conversion
Shares in such authorized denominations and registered in such names as may be
indicated on the subscription order forms directly to the purchasers thereof as
promptly as practicable after the Closing Date. The Closing shall be held at the
offices of special counsel to the Primary Parties, or at such other place as
shall be agreed upon among the Primary Parties and the Agent, at 10:00 a.m.,
Eastern Standard Time, on the business day selected by the Holding Company which
business day shall be no less than two business days following the giving of
prior notice by the Holding Company to the Agent or at such other time as shall
be agreed upon by the Primary Parties and the Agent. At the Closing, the Primary
Parties shall deliver to the Agent by wire transfer in same-day funds the
commissions, fees and expenses owing to the Agent as set forth in Sections 4 and
8 hereof and the opinions required hereby and other documents deemed reasonably
necessary by the Agent shall be executed and delivered to effect the sale of the
Shares as contemplated hereby and pursuant to the terms of the Prospectus. The
Holding Company shall notify the Agent when funds shall have been received for
the minimum number of shares of the Common Stock. The hour and date upon which
the Holding Company shall release the Conversion Shares for delivery in
accordance with the terms hereof is referred to herein as the "Closing Date."
The Holding Company and the Bank (or their respective agents) shall
advise the Agent as to the allocation of shares should the final allocation not
strictly correspond to the subscriptions received. The Agent shall have no
liability to any party for the records or other information provided by the
Holding Company and the Bank (or their respective agents) to the Agent for use
in allocating the Shares. The Holding Company and the Bank shall indemnify and
hold harmless the Agent for any liability arising out of the allocation of the
Shares in accordance with the Plan generally and the records or other
information provided to the Agent by the Holding Company and the Bank (or their
respective agents).
SECTION 6.A. REPRESENTATIONS AND WARRANTIES OF THE PRIMARY PARTIES. The
Primary Parties jointly and severally represent and warrant to the Agent that:
(a) The Bank has, and as of the Closing Date, the MHC and the Holding
Company will have, all such power, authority, authorizations, approvals and
orders as may be
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required to enter into this Agreement, to carry out the provisions and
conditions hereof and to issue and sell the Shares as provided herein and
as described in the Prospectus. The consummation of the Reorganization, the
execution, delivery and performance of this Agreement and the consummation
of the transactions herein contemplated have been duly and validly
authorized by all necessary corporate action on the part of the Bank and,
as of the Closing Date, will have been duly and validly authorized by all
necessary corporate action on the part of the MHC and the Holding Company.
This Agreement had been validly executed and delivered by the Holding
Company, the MHC and the Bank, and is a valid, legal and binding obligation
of the Bank, the Holding Company and the MHC, in each case enforceable in
accordance with its terms, except to the extent, if any, that the
provisions of Sections 10 and 11 hereof may be unenforceable as against
public policy, and except to the extent that such enforceability may be
limited by bankruptcy laws, insolvency laws, or other laws affecting the
enforcement of creditors' rights generally, or the rights of creditors of
savings institutions insured by the FDIC (including the laws relating to
the rights of the contracting parties to equitable remedies).
(b) The Plan has been approved by the OTS.
(c) The Registration Statement was declared effective by the
Commission on February __, 2000; and no stop order has been issued with
respect thereto and no proceedings therefor have been initiated or to the
best knowledge of the Primary Parties threatened by the Commission. At the
time the Registration Statement, including the Prospectus contained therein
(including any amendment or supplement thereto), became effective, the
Registration Statement complied as to form in all material respects with
the 1933 Act and the regulations promulgated thereunder and the
Registration Statement, including the Prospectus contained therein
(including any amendment or supplement thereto), any Blue Sky Application
or any Sales Information (as such terms are defined in Section 10 hereof)
authorized by the Primary Parties for use in connection with the Offerings
did not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading, and at the time any Rule 424(b) or (c) Prospectus was
filed with the Commission and at the Closing Date referred to in Section 5,
the Registration Statement, including the Prospectus contained therein
(including any amendment or supplement thereto), and any Blue Sky
Application or any Sales Information authorized by the Primary Parties for
use in connection with the Offerings will not contain an untrue statement
of a material fact or omit to state a material fact necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that the representations and
warranties in this Section 6(c) shall not apply to statements or omissions
made in reliance upon and in conformity with written information furnished
to the Primary Parties by the Agent expressly regarding the Agent for use
under the captions "Market for the Common Stock" and "The Offering -- Plan
of Distribution and Marketing Arrangements" or written statements or
omissions from any sales information or information filed pursuant to state
securities or blue sky laws or regulations regarding the Agent.
(d) The MHC Notice and Application, including the Prospectus, was
approved by the OTS on _________, 2000; the Proxy Statement of the Bank
relating to the special meeting of the members of the Bank at which the
Plan shall be considered for approval by the Bank's eligible voting members
(the "Proxy Statement") and the Prospectus (including any amendment or
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supplement thereto) was authorized for use by the OTS, and at all times
subsequent thereto until the Closing Date, the MHC Notice and Application,
including the Prospectus, did and will comply as to form in all material
respects with the Conversion Regulations and any other applicable rules and
regulations of the OTS (except as modified or waived in writing by the
OTS). At the time of the approval and at all times subsequent thereto until
the Closing Date, the MHC Notice and Application, including the Prospectus
(including any amendment or supplement thereto), did not and does not
include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that representations or warranties
in this subsection (d) shall not apply to statements or omissions made in
reliance upon and in conformity with written information furnished to the
Primary Parties by the Agent expressly regarding the Agent for use in
Prospectus contained in the MHC Notice and Application under the captions
"Market for the Common Stock" and "The Offering -- Plan of Distribution and
Marketing Arrangements" or written statements or omissions from any sales
information or information filed pursuant to state securities or blue sky
laws or regulations regarding the Agent.
(e) No order has been issued by the OTS, the Commission, or any state
regulatory authority, preventing or suspending the use of the Prospectus
and no action by or before any such government entity to revoke any
approval, authorization or order of effectiveness related to the
Reorganization is pending or, to the best knowledge of the Primary Parties,
threatened.
(f) The Plan has been duly adopted by the Board of Directors of the
Bank. To the best knowledge of the Primary Parties, no person has, or at
the Closing Date will have, sought to obtain review of the final action of
the OTS in approving the Plan, the Reorganization, or the OTS Applications,
pursuant to the HOLA or any other statute or regulation.
(g) The Holding Company has filed with the OTS the Holding Company
Application (including the Merger Application) and as of the Closing Date
the OTS will have approved of the Holding Company's acquisition of the
Bank.
(h) Xxxxxxx Financial Advisors, which prepared the appraisal of the
aggregate pro forma market value of the Holding Company and the Bank on
which the Offerings were based (the "Appraisal"), has advised the Primary
Parties in writing that it is independent with respect to each of the
Primary Parties within the meaning of the Conversion Regulations.
(i) Xxxx Xxxxx LLP, and Xxxxxxxx XxxXxxxxxx & Co., which certified the
financial statements filed as part of the Registration Statement and the
MHC Notice and Application, have each advised the Primary Parties that each
is, with respect to each of the Primary Parties, an independent certified
public accountant within the meaning of 12 C.F.R. Sections 563c.3 and
571.2(c)(3) and under the 1933 Act and the Regulations promulgated
thereunder.
(j) The financial statements and the notes thereto which are included
in theRegistration Statement and which are a part of the Prospectus present
fairly the financial condition and retained earnings of the Bank as of the
dates indicated and the results of operations and cash flows for the
periods specified. The financial statements comply in all material respects
with the applicable accounting requirements of Title 12 of the Code of
Federal Regulations, Regulation S-X
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of the Commission and generally accepted accounting principles ("GAAP")
applied on a consistent basis during the periods presented except as
otherwise noted therein, and present fairly in all material respects the
information required to be stated therein. The other financial, statistical
and pro forma information and related notes included in the Prospectus
present fairly the information shown therein on a basis consistent with the
audited and unaudited financial statements included in the Prospectus, and
as to the pro forma adjustments, the adjustments made therein have been
properly applied on the basis described therein.
(k) Since the respective dates as of which information is given in the
Registration Statement, including the Prospectus; (i) there has not been
any material adverse change in the financial condition or in the earnings,
capital, properties or business affairs of any of the Primary Parties or of
the Primary Parties considered as one enterprise, whether or not arising in
the ordinary course of business; (ii) there has not been any change in
total assets of the Bank in an amount greater than $30.0 million, any
material increase in the aggregate amount of loans past due ninety (90)
days or more, or any real estate acquired by foreclosure or loans
characterized as "in substance foreclosure"; nor has the Bank issued any
securities or incurred any liability or obligation for borrowings other
than in the ordinary course of business; (iii) there have not been any
material transactions entered into by any of the Primary Parties, other
than those in the ordinary course of business; and (iv) the capitalization,
liabilities, assets, properties and business of the Primary Parties conform
in all material respects to the descriptions thereof contained in the
Prospectus and none of the Primary Parties has any material liabilities of
any kind, contingent or otherwise, except as disclosed in Registration
Statement or the Prospectus.
(l) As of the Closing Date, the Holding Company will be a corporation
duly organized and in good standing under the federal laws of the United
States, with corporate power authority to own its properties and to conduct
its business as described in the Prospectus, and will be qualified to
transact business and in good standing in each jurisdiction in which the
conduct of business requires such qualification unless the failure to
qualify in one or more of such jurisdictions would not have a material
adverse effect on the financial condition, earnings, capital, properties or
business affairs of the Primary Parties. 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 materially
adversely affect the financial condition, earnings, capital, assets or
properties of the Primary Parties taken as a whole; 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.
(m) As of the Closing Date, the MHC will be duly organized and will be
validly existing as a federally chartered mutual holding company under the
laws of the United States, duly authorized to conduct its business and own
its property as described in the Registration Statement and the Prospectus;
as of the Closing Date, the MHC 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
materially adversely affect the financial condition, earnings, capital,
assets or properties of the Primary Parties taken as a whole; as of the
Closing Date, all such licenses, permits and governmental authorizations
will be in full force and effect and the MHC will be in compliance
therewith in all material respects; as of the Closing Date, the MHC will be
duly qualified as a foreign corporation to transact business in each
jurisdiction in which the failure
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to be so qualified in one or more of such jurisdictions would have a
material adverse effect on the financial condition, earnings, capital,
assets properties or business of the Primary Parties.
(n) The MHC does not, and as of the Closing Date, will not own any
equity securities or any equity interest in any business enterprise except
as described in the Prospectus.
(o) The MHC is not authorized to issue any shares of capital stock.
(p) The Bank is duly organized and validly existing federally
chartered savings association in mutual form, duly authorized to conduct
its business as described in the Prospectus; the activities of the Bank are
permitted by the rules, regulations and practices of the OTS; the Bank has
obtained all licenses, permits and other governmental authorizations
currently required for the conduct of its business except those that
individually or in the aggregate would not materially adversely affect the
financial condition of the Primary Parties taken as a whole; all such
licenses, permits and other governmental authorizations are in full force
and effect and the Bank is in good standing under the laws of the United
States and is duly qualified as a foreign corporation to transact business
in each jurisdiction in which failure to so qualify would have a material
adverse effect upon the financial condition, earnings, capital, properties
or business affairs of the Bank; all of the issued and outstanding capital
stock of the Bank after the Reorganization will be duly and validly issued
and fully paid and nonassessable; and the Holding Company will directly own
all of such capital stock free and clear of any mortgage, pledge, lien,
encumbrance, claim or restriction. The Bank does not own equity securities
or any equity interest in any other business enterprise except as otherwise
described in the Prospectus.
(q) The Bank is a member of the Federal Home Loan Bank of Seattle
("FHLB of Seattle"); the deposit accounts of the Bank are insured by the
FDIC up to applicable limits. Upon consummation of the Reorganization, the
rights of the members of the Bank in its mutual form shall be transferred
to MHC in accordance with the Plan and the requirements of the Conversion
Regulations.
(r) The Bank is not authorized to issue any shares of capital stock.
(s) Upon consummation of the Reorganization, the authorized, issued
and outstanding equity capital of the Holding Company will be within the
range set forth in the Prospectus under the caption "Capitalization" and,
except for the shares of Common Stock held by MHC, no shares of Common
Stock have been or will be issued and outstanding prior to the Closing
Date; and the shares of Common Stock to be subscribed for in the Offering
have been duly and validly authorized for issuance and, when issued and
delivered by the Holding Company pursuant to the Plan against payment of
the consideration calculated as set forth in the Plan and the Prospectus,
will be duly and validly issued and fully paid and nonassessable; the
issuance of the Shares is not subject to preemptive rights, except for the
Subscription Rights granted pursuant to the Plan; and the terms and
provisions of the shares of Common Stock will conform in all material
respects to the description thereof contained in the Prospectus. Upon
issuance of the Shares, good title to the Shares will be transferred from
the Holding Company to the purchasers of Shares against payment therefor in
the Offering as set forth in the Plan and the Prospectus.
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(t) The Bank is not, and as of the Closing Date neither the Holding
Company nor the MHC will be, in violation of their respective articles of
incorporation or charter or their respective bylaws, or in material default
in the performance or observance of any obligation, agreement, covenant, or
condition contained in any contract, lease, loan agreement, indenture or
other instrument to which they are a party or by which they, or any of
their respective property, may be bound which would result in a material
adverse change in the condition (financial or otherwise), earnings,
capital, properties or assets. The consummation of the transactions herein
contemplated will not (i) conflict with or constitute a breach of, or
default under, the articles of incorporation, charter or bylaws of the Bank
or, as of the Closing Date, the Holding Company or the MHC, or materially
conflict with or constitute a material breach of, or default under, any
material contract, lease or other instrument to which any of the Primary
Parties has a beneficial interest, or any applicable law, rule, regulation
or order that is material to the financial condition of the Bank; (ii)
violate any authorization, approval, judgment, decree, order, statute, rule
or regulation applicable to the Primary Parties except for such violations
which would not have a material adverse effect on the financial condition
and results of operations of the Bank; or (iii) result in the creation of
any material lien, charge or encumbrance upon any property of the Primary
Parties.
(u) No material default exists, and no event has occurred which with
notice or lapse of time, or both, would constitute a material default on
the part of any of the Primary Parties, in the due performance and
observance of any term, covenant or condition of any indenture, mortgage,
deed of trust, note, bank loan or credit agreement or any other material
instrument or agreement to which any of the Primary Parties is a party or
by which any of them or any of their property is bound or affected in any
respect which, in any such case, is material to the Primary Parties
individually or considered as one enterprise, and such agreements are in
full force and effect; and no other party to any such agreements has
instituted or, to the best knowledge of the Primary Parties, threatened any
action or proceeding wherein any of the Primary Parties is alleged to be in
default thereunder under circumstances where such action or proceeding, if
determined adversely to any of the Primary Parties, would have a material
adverse effect upon the Primary Parties individually or considered as one
enterprise.
(v) The Primary Parties have good and marketable title to all assets
which are material to the businesses of the Primary Parties and to those
assets described in the Prospectus as owned by them, free and clear of all
material liens, charges, encumbrances, restrictions or other claims, except
such as are described in the Prospectus or which do not have a material
adverse effect on the businesses of the Primary Parties taken as a whole;
and all of the leases and subleases which are material to the businesses of
the Primary Parties, as described in the Registration Statement or
Prospectus, are in full force and effect.
(w) The Primary Parties are not in material violation of any directive
from the OTS, the FDIC, the Commission or any other agency to make any
material change in the method of conducting their respective businesses;
the Primary Parties have conducted and are conducting their respective
businesses so as to comply in all respects with all applicable statutes and
regulations (including, without limitation, regulations, decisions,
directives and orders of the OTS, the Commission and the FDIC), except
where the failure to so comply would not reasonably be expected to result
in any material adverse change in the financial condition, results of
operations, capital, properties or business affairs of the Primary Parties
considered as one enterprise and there is no
10
charge, investigation, action, suit or proceeding before or by any court,
regulatory authority or governmental agency or body pending or, to the best
knowledge any of the Primary Parties, threatened, which would reasonably be
expected to materially and adversely affect the Reorganization, the
performance of this Agreement, or the consummation of the transactions
contemplated in the Plan as described in the Registration Statement, or
which would reasonably be expected to result in any material adverse change
in the financial condition results of operations, capital, properties or
business affairs of the Primary Parties considered as one enterprise.
(x) Prior to the Closing Date, the Primary Parties will have received
an opinion of their special counsel, Xxxxx Xxxxxxx LLP ("Xxxxx Xxxxxxx"),
with respect to the federal income tax consequences of the Reorganization,
as described in the Registration Statement and the Prospectus, and an
opinion from Xxxxxxxx XxxXxxxxxx & Co., P.C. with respect to the tax
consequences of the proposed transaction under the laws of the State of
Montana; and the facts and representations upon which such opinions are
based are truthful, accurate and complete, and none of the Primary Parties
will take any action inconsistent therewith.
(y) The Bank has timely filed all required federal and state tax
returns, has paid all taxes that have become due and payable in respect of
such returns, except where permitted to be extended, has made adequate
reserves for similar future tax liabilities, and no deficiency has been
asserted with respect thereto by any taxing authority.
(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 Primary Parties of this Agreement, or the
issuance of the Shares, except for the approval of the OTS and the
Commission (which have been received) and any necessary qualification,
notification, or registration or exemption under the securities or blue sky
laws of the various states in which the Shares are to be offered.
(aa) None of the Primary Parties has: (i) issued any securities within
the last 18 months (except for (a) notes to evidence bank loans or other
liabilities in the ordinary course of business or as described in the
Prospectus, and (b) shares of Common Stock issued 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; (iii) entered into a
financial or management consulting agreement except for the Letter
Agreement and as contemplated hereunder; or (iv) engaged any intermediary
between the Agent and the Primary Parties in connection with the Offering
or the offering of shares of the common stock of the Bank, and no person is
being compensated in any manner for such services.
(ab) Neither the Primary Parties nor, to the best knowledge of the
Primary Parties, any employee of the Primary Parties has made any payment
of funds of the Primary Parties as a loan to any person for the purchase of
Conversion Shares, except for the Holding Company's loan to the ESOP the
proceeds of which will be used to purchase Conversion Shares, or has made
any other payment of funds prohibited by law, and no funds have been set
aside to be used for any payment prohibited by law.
11
(ac) 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.
(ad) The Primary Parties have not relied upon Agent or its counsel for
any legal, tax or accounting advice in connection with the Reorganization.
(ae) The records of Eligible Account Holders, Supplemental Eligible
Account Holders and Other Members are accurate and complete in all material
respects.
(af) The Primary Parties comply with all laws, rules and regulations
relating to environmental protection, and none of them has been notified or
is otherwise aware that any of them is potentially liable, or is considered
potentially liable, under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, or any other Federal,
state or local environmental laws and regulations; no action, suit,
regulatory investigation or other proceeding is pending, threatened against
the Primary Parties relating to environmental protection, nor do the
Primary Parties have any reason to believe any such proceedings may be
brought against any of them; and no disposal, release or discharge of
hazardous or toxic substances, pollutants or contaminants, including
petroleum and gas products, as any of such terms may be defined under
federal, state or local law, has occurred on, in, at or about any
facilities or properties owned or leased by any of the Primary Parties or,
to the best knowledge of the Bank, in which the Bank has a security
interest.
(ag) All of the loans represented as assets on the most recent
financial statements or selected financial information of the Bank included
in the Prospectus meet or are exempt from all requirements of federal,
state and local law pertaining to lending, including, without limitation,
truth in lending (including the requirements of Regulations Z and 12 C.F.R.
Part 226), real estate settlement procedures, consumer credit protection,
equal credit opportunity and all disclosure laws applicable to such loans,
except for violations which, if asserted, would not result in a material
adverse effect on the financial condition, results of operations or
business of the Primary Parties taken as a whole.
(ah) None of the Primary Parties are required to be registered as an
investment company under the Investment Company Act of 1940.
(ai) As of the date hereof, the charters of the Holding Company and
the MHC have been filed with the OTS, but neither charter is effective or
otherwise in force.
Any certificates signed by an officer of any of the Primary Parties and
delivered to the Agent or its counsel that refer to this Agreement shall be
deemed to be a representation and warranty by the Primary Parties to the Agent
as to the matters covered thereby with the same effect as if such representation
and warranty were set forth herein.
Section 6.B. REPRESENTATIONS AND WARRANTIES OF THE AGENT. Agent
represents and warrants to the Primary Parties that:
12
(a) Agent is a corporation and is validly existing in good standing
under the laws of the State of New Jersey with full power and authority to
provide the services to be furnished to the Primary Parties hereunder.
(b) The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly
authorized by all necessary action on the part of Agent, and this Agreement
and 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, (ii) general equity principles regardless of whether such
enforceability is considered in a proceeding in equity or at law, and (iii)
the extent, if any, that the provisions of Sections 10 or 11 hereof may be
unenforceable as against public policy.
(c) Except for licenses, approvals and permits required by the State
of Arkansas or required by another jurisdiction solely because the Offering
is being made in such jurisdiction, each of Agent and its employees, agents
and representatives who shall perform any of the services hereunder shall
have, and until the Reorganization is completed or terminated shall
maintain all licenses, approvals and permits necessary to perform such
services.
(d) No action, suit, charge or proceeding before the Commission, the
NASD, any state securities commission or any court is pending, or to the
knowledge of Agent threatened, against Agent which, if determined adversely
to Agent, would have a material adverse effect upon the ability of Agent to
perform its obligations under this Agreement.
(e) Agent is registered as a broker/dealer pursuant to Section 15(b)
of the 1934 Act and is a member of the National Association of Securities
Dealers, Inc.
(f) Any funds received in the Offering by the Agent will be handled by
the Agent in accordance with Rule 15c2-4 under the Securities Exchange Act
of 1934, as amended (the "1934 Act") to the extent applicable.
SECTION 7. COVENANTS OF THE PRIMARY PARTIES. The Primary Parties hereby
jointly and severally covenant with the Agent as follows:
(a) The Holding Company will not, at any time after the date the
Registration Statement is declared effective, file any amendment or
supplement to the Registration Statement without providing the Agent and
its counsel an opportunity to review such amendment or file any amendment
or supplement to which amendment the Agent or its counsel shall reasonably
object.
(b) The Primary Parties will not, at any time after the date any OTS
Application is approved, file any amendment or supplement to such OTS
Application without providing the Agent and its counsel an opportunity to
review such amendment or supplement or file any amendment or supplement to
which amendment or supplement the Agent or its counsel shall reasonably
object.
13
(c) The Primary 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 OTS Applications to be approved by the OTS,
and will immediately upon receipt of any information concerning the events
listed below notify the Agent (i) when the Registration Statement, as
amended, has become effective; (ii) when the MHC Notice and Application, as
amended, has been approved by the OTS; (iii) when the Holding Company
Application, as amended, has been approved by the OTS; (iv) when the Merger
Application has been approved by the OTS; (v) of the receipt of any
comments from the Commission, the OTS, or any other governmental entity
with respect to the Reorganization or the transactions contemplated by this
Agreement; (vi) of any request by the Commission, the OTS, any other
governmental entity for any amendment or supplement to the Registration
Statement or the OTS Applications or for additional information; (vii) of
the issuance by the Commission, the OTS, or any other governmental agency
of any order or other action suspending the Offerings or the use of the
Registration Statement or the Prospectus or any other filing of the Primary
Parties under the Conversion Regulations or other applicable law, or the
threat of any such action; (viii) of the issuance by the Commission, the
OTS, the FDIC or any state authority of any stop order suspending the
effectiveness of the Registration Statement or of the initiation or threat
of initiation or threat of any proceedings for that purpose; or (ix) of the
occurrence of any event mentioned in paragraph (f) below. The Primary
Parties will make every reasonable effort to prevent the issuance by the
Commission, the OTS, the FDIC or any state authority of any order referred
to in (vii) and (viii) above and, if any such order shall at any time be
issued, to obtain the lifting thereof at the earliest possible time.
(d) The Primary Parties will deliver to the Agent and to its counsel
conformed copies of each of the following documents, with all exhibits:
each of the OTS Applications as originally filed and of each amendment or
supplement thereto, and the Registration Statement, as originally filed and
each amendment thereto. Further, the Primary Parties will deliver such
additional copies of the foregoing documents to counsel to the Agent as may
be required for any NASD filings. In addition, the Primary Parties will
also deliver to the Agent such number of copies of the Prospectus, as
amended or supplemented, as the Agent may reasonably request.
(e) The Primary Parties will comply in all material respects with any
and all terms, conditions, requirements and provisions with respect to the
Reorganization and the transactions contemplated thereby imposed by the
Commission, by applicable state law and regulations, and by the 1933 Act,
the 1934 Act, and the rules and regulations of the Commission promulgated
under such statutes, to be complied with prior to or subsequent to the
Closing Date; and when the Prospectus is required to be delivered, the
Primary Parties will comply in all material respects, at their own expense,
with all material requirements imposed upon them by the OTS, the Conversion
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 and the rules and regulations of the Commission promulgated
under such statutes, in each case as from time to time in force, so far as
necessary to permit the continuance of sales or dealing in shares of Common
Stock during such period in accordance with the provisions hereof and the
Prospectus.
(f) Each of the Primary Parties will inform the Agent of any event or
circumstances of which it is or becomes aware as a result of which the
Registration Statement and/or
14
Prospectus, as then supplemented or amended, would include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein not misleading. If it is necessary, in
the reasonable opinion of counsel for the Primary Parties, to amend or
supplement the Registration Statement or the Prospectus in order to correct
such untrue statement of a material fact or to make the statements therein
not misleading in light of the circumstances existing at the time of their
use, the Primary Parties will, at their expense, 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 (in form and substance
reasonably satisfactory to counsel for the Agent after a reasonable time
for review) which will amend or supplement the Registration Statement
and/or the Prospectus so that as amended or supplemented it will not
contain an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the
circumstances existing at the time, not misleading. For the purpose of this
subsection, each of the Primary Parties will furnish such information with
respect to itself as the Agent may from time to time reasonably request.
(g) Pursuant to the terms of the Plan, the Holding Company will
endeavor in good faith, in cooperation with the Agent, to register or to
qualify the Shares for offer 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 in each year as are or may be
required by the laws of such jurisdictions.
(h) The Holding Company will not sell or issue, contract to sell or
otherwise dispose of, for a period of 90 days after the date hereof,
without the Agent's prior written consent, which consent shall not be
unreasonably withheld, any shares of Common Stock other than in connection
with any plan or arrangement described in the Prospectus.
(i) For the period of three years from the date of this Agreement, the
Holding Company will furnish to the Agent upon request (i) a copy of each
report of the Holding Company furnished to or filed with the Commission
under the 1934 Act or any national securities exchange or system on which
any class of securities of the Holding Company is listed or quoted, (ii) a
copy of each report of the Holding Company mailed to holders of Common
Stock or non-confidential report filed with the Commission or the OTS or
any other supervisory or regulatory authority or any national securities
exchange or system on which any class of the securities of the Holding
Company is listed or quoted, (iii) each press release and material news
item and article released by the Holding Company and/or Bank, and (iv) from
time-to-time, such other publicly available information concerning the
Primary Parties as the Agent may reasonably request.
(j) The Primary Parties will use the net proceeds from the sale of the
Common Stock in the manner set forth in the Prospectus under the caption
"Use of Proceeds."
15
(k) The Holding Company and the Bank will distribute the Prospectus or
other offering materials in connection with the offering and sale of the
Common Stock only in accordance with the Conversion Regulations, the 1933
Act and the 1934 Act and the rules and regulations promulgated under such
statutes, and the laws of any state in which the shares are qualified for
sale.
(l) Prior to the Closing Date, the Holding Company shall register its
Common Stock under Section 12(g) of the 1934 Act, as amended, and will
request that such registration statement be effective upon 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
permitted by the OTS.
(m) For so long as the Common Stock is registered under the 1934 Act,
the Holding Company will furnish to its stockholders as soon as practicable
after the end of each fiscal year such reports and other information as are
required to be furnished to its stockholders under the 1934 Act (including
consolidated financial statements of the Holding Company and its
subsidiaries, certified by independent public accountants).
(n) The Holding Company will report the use of proceeds of the
Offering in accordance with Rule 463 under the 1933 Act, and apply the
proceeds from the sale of the shares in the manner set forth in the
Prospectus under the caption "How We Intend to Use the Proceeds of the
Offering."
(o) The Primary Parties will maintain appropriate arrangements for
depositing all funds received from persons mailing subscriptions for or
orders to purchase Conversion Shares on an interest bearing basis at the
rate described in the Prospectus until the Closing Date and satisfaction of
all conditions precedent to the release of the Holding Company's obligation
to refund payments received from persons subscribing for or ordering
Conversion Shares in the Conversion Offerings, in accordance with the Plan
as described in the Prospectus, or until refunds of such funds have been
made to the persons entitled thereto or withdrawal authorizations canceled
in accordance with the Plan and as described in the Prospectus. The Primary
Parties will maintain such records of all funds received to permit the
funds of each subscriber to be separately insured by the FDIC (to the
maximum extent allowable) and to enable the Primary Parties to make the
appropriate refunds of such funds in the event that such refunds are
required to be made in accordance with the Plan and as described in the
Prospectus.
(p) Within 90 days following the Closing Date, the MHC and the Holding
Company will each register as a savings and loan holding company under the
HOLA.
(q) The Primary 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."
(r) The Primary Parties will conduct their businesses in compliance in
all material respects with all applicable federal and state laws, rules,
regulations, decisions, directives and orders including, all decisions,
directives and orders of the Commission, the OTS and the FDIC.
16
(s) The Holding Company and the Bank 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 HOLA, the Commission, the 1933 Act, the Regulations, the Exchange
Act and the regulations promulgated by the Commission pursuant to the
Exchange Act to be complied with subsequent to the Closing Date. The
Company will comply with all provisions of all undertakings contained in
the Registration Statement.
(t) The Primary Parties will not amend the Plan without notifying the
Agent prior thereto.
(u) The Holding Company shall provide the Agent with any information
necessary to carry out the allocation of the Conversion Shares in the event
of an oversubscription, and such information shall be accurate and reliable
in all material respects.
(v) The Holding Company will not deliver the Shares until the Primary
Parties have satisfied or caused to be satisfied each condition set forth
in Section 9 hereof, unless such condition is waived in writing by the
Agent.
(w) Immediately upon completion of the sale by the Holding Company of
the Shares contemplated by the Plan and the Prospectus, (i) the MHC shall
have been formed pursuant to the Plan and shall own at all times more than
50% of the issued and outstanding shares of Common Stock, (ii) all of the
issued and outstanding shares of capital stock of the Bank shall be owned
by the Holding Company, (iii) the Holding Company shall have no direct
subsidiaries other than the Bank, and (iv) the Reorganization shall have
been effected in accordance with all applicable statutes, regulations,
decisions and orders; and all terms, conditions, requirements and
provisions with respect to the Reorganization (except those that are
conditions subsequent) imposed by the Commission, the OTS or any other
governmental agency, if any, shall have been complied with by the Primary
Parties in all material respects or appropriate waivers shall have been
obtained and all notice and waiting periods shall have been satisfied,
waived or elapsed.
(x) Prior to the Closing Date, the Plan shall have been approved by
the eligible voting members of the Bank in accordance with the Conversion
Regulations and the provisions of the Bank's charter and bylaws.
(y) As of the Closing Date, the Primary Parties shall have completed
all conditions precedent to the Reorganization in accordance with the Plan
and shall have complied in all material respects with applicable laws,
regulations (except as modified or waived in writing by the OTS), decisions
and orders, including all terms, conditions, requirements and provisions
precedent to the Reorganization imposed upon it by the OTS as set forth in
correspondence received from the OTS.
(z) On or before the Closing Date, the Primary Parties will have
completed all conditions precedent to the Reorganization specified in the
Plan and the offer and sale of the Shares will have been conducted in all
material respects in accordance with the Plan, the Conversion Regulations
(except as modified or waived in writing by the OTS) and with all other
applicable laws, regulations, decisions and orders, including all terms,
conditions, requirements and provisions
17
precedent to the Reorganization imposed upon any of the Primary Parties by
the OTS, the Commission or any other regulatory authority and in the manner
described in the Prospectus.
SECTION 8. PAYMENT OF EXPENSES. Whether or not the Reorganization is
completed or the sale and exchange of the Shares by the Holding Company is
consummated, the Primary Parties will pay for all expenses incident to the
performance of this Agreement, including without limitation: (a) the preparation
and filing of the OTS Applications; (b) the preparation, printing, filing,
delivery and shipment of the Registration Statement, including the Prospectus,
and all amendments and supplements thereto; (c) all filing fees and expenses in
connection with the qualification or registration of the Shares for offer and
sale by the Holding Company or the Bank under the securities or "blue sky" laws,
including without limitation filing fees, reasonable legal fees and
disbursements of counsel in connection therewith, and in connection with the
preparation of a blue sky law survey; (d) the filing fees of the NASD; (e) fees
and expenses related to the preparation of the independent appraisal; and (f)
the reasonable expenses of the Agent. Notwithstanding the foregoing, the Primary
Parties shall not be required to reimburse Agent for more than $25,000 in legal
fees (other than such fees as shall be related to "blue sky" matters) and
$25,000 in out-of-pocket expenses, except in the event of any material delay in
the Offering that would require an update of the financial information contained
in the Registration Statement, as amended or supplemented, to reflect a period
later than that set forth in the original Registration Statement. Not later than
three 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.
SECTION 9. CONDITIONS TO THE AGENT'S OBLIGATIONS. The obligations of
the Agent hereunder and the occurrence of the Closing and the Reorganization are
subject to the condition that all representations and warranties and other
statements of the Primary Parties herein contained are, at and as of the
commencement of the Offering and at and as of the Closing Date, true and
correct, the condition that the Primary Parties shall have performed all of
their obligations hereunder to be performed on or before such dates and to the
following further conditions:
(a) The Registration Statement shall have been declared effective by
the Commission and the prospectus and proxy statement contained in the MHC
Notice and Application shall have been approved by the OTS for mailing
prior to the commencement of the Offering, the Holding Company Application
shall have been approved, and no stop order or other action suspending the
effectiveness of the Registration Statement shall have been issued under
the 1933 Act or proceedings therefor initiated or, to any of the Primary
Parties' best knowledge, threatened by the Commission or any state
authority and no order or other action suspending the authorization for use
of the Prospectus or the consummation of the Reorganization shall have been
issued or proceedings therefor initiated or, to any of the Primary Parties'
best knowledge, threatened by the OTS, the Commission, or any other
governmental body.
(b) At the Closing Date, the Agent shall have received:
(1) The favorable opinion, dated as of the Closing Date, of Xxxxx
Xxxxxxx, and/or local counsel acceptable to the Agent in form and
substance satisfactory to counsel for the Agent to the effect that:
18
(i) The Holding Company is a corporation duly organized and
validly existing and in good standing under the federal laws of
the United States of America, with corporate power and authority
to own its properties and to conduct its business as described in
the Prospectus, and is duly qualified to transact business and is
in good standing in each jurisdiction in which the conduct of its
business requires such qualification and in which the failure to
qualify would have a material adverse effect on the financial
condition, earnings, capital, properties or business affairs of
the Primary Parties.
(ii) The Bank is a duly organized and validly existing
federally chartered mutual savings association 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 the rules,
regulations and practices of the OTS; the issuance and sale of
the capital stock of the Bank to the Holding Company in the
Reorganization has been duly and validly authorized by all
necessary corporate action on the part of the Holding Company and
the Bank and, upon payment therefor in accordance with the terms
of the Plan, will be validly issued, fully paid and
nonassessable, and will be owned of record and beneficially by
the Holding Company, free and clear of any mortgage, pledge,
lien, encumbrance, claim or restriction.
(iii) The activities of the Bank described in the Prospectus
are permitted under federal law to subsidiaries of a savings bank
holding company that is a federal corporation. To the best of
such counsel's knowledge, each of the Holding Company and the
Bank has obtained all licenses, permits, and other governmental
authorizations that are material for the conduct of its business,
and all such licenses, permits and other governmental
authorization are in full force and effect, and to the best of
such counsel's knowledge the Holding Company and the Bank are
complying therewith in all material respects.
(iv) The Bank is a member of the FHLB of Seattle and the
Bank is an insured depository institution under the provisions of
the Federal Deposit Insurance Act, as amended, and to such
counsel's knowledge no proceedings for the termination or
revocation of such insurance are pending or threatened.
(v) Upon consummation of the Reorganization, the MHC will
have been duly organized and will be 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.
(vi) Upon consummation of the Reorganization, (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 of Common Stock of the Holding
Company issued to the MHC will have been duly and validly
authorized for issuance and will be fully paid and nonassessable;
(c) the shares of Common Stock of the Holding Company to be
subscribed for in the Offering 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
19
forth in the Plan, will be fully paid and nonassessable; and (d)
the issuance of the shares of Common Stock is not subject to
preemptive rights under the charter, articles of incorporation or
bylaws of any of the Primary Parties, or arising or outstanding
by operation of law or, to the best knowledge of such counsel,
under any contract, indenture, agreement, instrument or other
document, except for the subscription rights under the Plan.
(vii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of
the Primary Parties; and this Agreement constitutes a valid,
legal and binding obligation of each of the Primary Parties,
enforceable in accordance with its terms, except to the extent
that the provisions of Sections 10 and 11 hereof may be
unenforceable as against public policy, and except to the extent
that such enforceability may be limited by bankruptcy laws,
insolvency laws, or other laws affecting the enforcement of
creditors' rights generally, or the rights of creditors of
savings institutions insured by the FDIC (including the laws
relating to the rights of the contracting parties to equitable
remedies).
(viii) The Plan has been duly adopted by the board of
directors of the Bank and by the members of the Bank, in the
manner required by the Conversion Regulations and the Bank's
charter and bylaws.
(ix) The OTS Applications have been approved by the OTS and
the Prospectus and the Proxy Statement have been authorized for
use by the OTS, and subject to the satisfaction of any conditions
set forth in such OTS 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.
(x) The purchase by the Holding Company of all of the issued
and outstanding capital stock of the Bank has been authorized by
the OTS and no action has been taken, or, to such counsel's
knowledge, is pending or threatened, to revoke any such
authorization or approval.
(xi) The Registration Statement has become effective under
the 1933 Act, no stop order suspending the effectiveness of the
Registration Statement has been issued, and, to the best of such
counsel's knowledge, no proceedings for that purpose have been
instituted or threatened.
(xii) The material tax consequences of the Reorganization
are set forth in the Prospectus under the caption "The
Reorganization -- Federal and State Tax Consequences of the
Reorganization." The information in the Prospectus under the
caption "The Reorganization -- Federal and State Tax Consequences
of the Reorganization" has been reviewed by such counsel and
fairly describes such opinions rendered by such counsel and
Xxxxxxxx XxxXxxxxxx & Co. to the Primary Parties with respect to
such matters.
(xiii) The terms and provisions of the shares of Common
Stock conform to the description thereof contained in the
Registration Statement and the Prospectus, and
20
the forms of certificates proposed to be used to evidence the
shares of Common Stock are in due and proper form.
(xiv) At the time the MHC Notice and Application was
approved, the MHC Notice and Application (as amended or
supplemented) including the Prospectus contained therein,
complied as to form in all material respects with the
requirements of the Conversion Regulations and all applicable
laws, rules and regulations and decisions and orders of the OTS,
except as modified or waived in writing by the OTS (other than
the financial statements, notes to financial statements,
financial tables and other financial and statistical data
included therein and the appraisal valuation as to which counsel
need express no opinion). To such counsel's knowledge, no person
has sought to obtain regulatory or judicial review of the final
action of the OTS approving the OTS Applications.
(xv) At the time that the Registration Statement became
effective the Registration Statement, including the Prospectus
contained therein (as amended or supplemented) (other than the
financial statements, notes to financial statements, financial
tables or other financial and statistical data included therein
and the appraisal valuation as to which counsel need express no
opinion), complied as to form in all material respects with the
requirements of the 1933 Act and the rules and regulations
promulgated thereunder.
(xvi) To the best of such counsel's knowledge, there are no
legal or governmental proceedings pending, or threatened (i)
asserting the invalidity of this Agreement or (ii) seeking to
prevent the Reorganization or the offer, sale or issuance of the
Shares.
(xvii) The information in the Prospectus under the captions
"Regulation," "Taxation," "Restrictions on Acquisition of Eagle",
"Eagle Bancorp's Charter and Bylaws," "Description of Capital
Stock," "The Reorganization," and "The Offering" to the extent
that it 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 (except
as to the financial statements and other financial data included
therein as to which such counsel need express no opinion).
(xviii) None of the Primary Parties are required to be
registered as an investment company under the Investment Company
Act of 1940.
(xix) The Bank has duly adopted a federal stock charter and
bylaws effective upon consummation of the Reorganization, and
none of the Primary Parties is in violation of its articles of
incorporation or its charter, as the case may be, or its bylaws
or, to the best of such counsel's knowledge, any material
obligation, agreement, covenant or condition contained in any
material contract, indenture, mortgage, loan agreement, note,
lease or other instrument filed as an exhibit to, or incorporated
by reference in, the Registration Statement, which violation
would have a material adverse effect on the financial condition
of the Primary Parties considered as one enterprise, or on the
earnings, capital, properties or business affairs of the Primary
Parties considered as one enterprise. In addition, the execution
and delivery of and performance under this Agreement by the
Primary Parties, the incurrence of the obligations set forth
herein and the consummation of the transactions contemplated
herein will not result in any material violation of the
provisions
21
of the articles of incorporation or charter, as the case may be,
or the bylaws of any of the Primary Parties or any material
violation of any applicable law, act, regulation, or to such
counsel's knowledge, order or court order, writ, injunction or
decree.
The opinion may be limited to matters governed by the laws of the
United States, and in the case of local counsel, the State of Montana. In
rendering such opinion, such counsel may rely (A) as to matters involving the
application of laws of any jurisdiction other than the United States, to the
extent such counsel deems proper and specified in such opinion, upon the opinion
of other counsel of good standing, as long as such other opinion indicates that
the Agent may rely on the opinion, and (B) as to matters of fact, to the extent
such counsel deems proper, on certificates of responsible officers of the
Primary Parties and public officials, provided copies of any such opinion(s) or
certificates of public officials are delivered to Agent together with the
opinion to be rendered hereunder by special counsel to the Primary Parties. The
opinion of such counsel for the Primary Parties shall state that it has no
reason to believe that the Agent is not justified in relying thereon.
(2) The letter of Xxxxx Xxxxxxx in form and substance to the
effect that during the preparation of the Registration Statement and
the Prospectus, Xxxxx Xxxxxxx participated in conferences with certain
officers of and other representatives of the Primary Parties, counsel
to the Agent, representatives of the independent public accountants
for the Primary Parties and representatives of the Agent at which the
contents of the Registration Statement and the Prospectus and related
matters were discussed and has considered the matters required to be
stated therein and the statements contained therein and, although
(without limiting the opinions provided pursuant to Section 9(b)(1))
Xxxxx Xxxxxxx 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 Xxxxx Xxxxxxx that caused Xxxxx
Peabody to believe that the Registration Statement at the time it was
declared effective by the SEC 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 the financial statements, schedules and other financial and
statistical data included, or statistical or appraisal methodology
employed, in the Registration Statement or Prospectus).
(3) The favorable opinion, dated as of the Closing Date, of Xxxx
Xxxxxx Xxxxxx Xxxxxxxx & Xxxxxx, counsel for the Agent, with respect
to such matters as the Agent may reasonably require; such opinion may
rely, as to matters of fact, upon certificates of officers and
directors of the Primary Parties delivered pursuant hereto or as such
counsel may reasonably request.
(c) Concurrently with the execution of this Agreement, the Agent shall
receive a letter from Xxxxxxxx XxxXxxxxxx & Co., dated the date hereof and
addressed to the Agent, such letter confirming that Xxxxxxxx XxxXxxxxxx &
Co. is a firm of independent public accountants within the meaning of the
Code of Professional Ethics of the American Institute of Certified Public
Accountants, the 1933 Act and the regulations promulgated thereunder and 12
C.F.R. Section 571.2(c)(3), and no information concerning its relationship
with or interests in the Primary Parties is required by the OTS
Applications or Item 13 of the Registration Statement, and stating in
effect that in Xxxxxxxx XxxXxxxxxx & Co.'s opinion the financial statements
of the Bank included in the
22
Prospectus comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act, the 1934 act and the related
published rules and regulations of the Commission thereunder and the
Conversion Regulations and generally accepted accounting principles
consistently applied; (ii) stating in effect that, on the basis of certain
agreed upon procedures (but not an audit examination in accordance with
generally accepted auditing standards) consisting of a reading of the
latest available unaudited interim financial statements of the Bank
prepared by the Bank, a reading of the minutes of the meetings of the Board
of Directors of the Bank and the members of the Bank, a review of interim
financial information in accordance with Statement on Auditing Standards
No. 71, and consultations with officers of the Bank responsible for
financial and accounting matters, nothing came to their attention which
caused them to believe that: (A) such unaudited financial statements,
including recent developments, if any, are not in conformity with generally
accepted accounting principles applied on a basis substantially consistent
with that of the audited financial statements included in the Prospectus;
or (B) during the period from the date of the latest unaudited consolidated
financial statements included in the Prospectus to a specified date not
more than three business days prior to the date hereof, there was any
increase in borrowings (defined as advances from the FHLB of Seattle,
securities sold under agreements to repurchase and any other form of debt
other than deposits) of the Bank or in nonperforming loans of the Bank; or
(C) there was any decrease in retained earnings of the Bank at the date of
such letter as compared with amounts shown in the latest unaudited
statement of condition included in the Prospectus or there was any decrease
in net income or net interest income of the Bank for the number of full
months commencing immediately after the period covered by the latest
unaudited income statement included in the Prospectus and ended on the
latest month end prior to the date of the Prospectus or in such letter as
compared to the corresponding period in the preceding year; and (iii)
stating that, in addition to the audit examination referred to in its
opinion included in the Prospectus and the performance of the procedures
referred to in clause (ii) of this subsection (c), they have compared with
the general accounting records of the Bank, which are subject to the
internal controls of the accounting system of the Bank and other data
prepared by the Primary Parties directly from such accounting records, to
the extent specified in such letter, such amounts and/or percentages set
forth in the Prospectus as the Agent may reasonably request, and they have
found such amounts and percentages to be in agreement therewith (subject to
rounding).
(d) At the Closing Date, the Agent shall receive a letter from
Xxxxxxxx XxxXxxxxxx & Co. dated the Closing Date, addressed to the Agent,
confirming the statements made by its letter delivered by it pursuant to
subsection (c) of this Section 9, the "specified date" referred to in
clause (ii)(B) thereof to be a date specified in such letter, which shall
not be more than three business days prior to the Closing Date.
(e) At the Closing Date, counsel to the Agent shall have been
furnished with such documents and opinions as counsel for the Agent may
require for the purpose of enabling them to advise the Agent with respect
to the issuance and sale of the Common Stock as herein contemplated and
related proceedings, or in order to evidence the accuracy of any of the
representations and warranties, or the fulfillment of any of the conditions
herein contained.
(f) At the Closing Date, the Agent shall receive a certificate of the
Chief Executive Officer and Chief Financial Officer of each of the Primary
Parties, dated the Closing Date, to the effect that: (i) they have examined
the Prospectus and at the time the Prospectus became
23
authorized for final use, the Prospectus did not contain an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; (ii) there has not been, since
the respective dates as of which information is given in the Prospectus,
any material adverse change in the financial condition or in the earnings,
capital, properties, business prospects or business affairs of the Primary
Parties, considered as one enterprise, whether or not arising in the
ordinary course of business; (iii) the representations and warranties
contained in Section 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) each of
the Primary Parties has 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 9; (v) no stop order has been issued or, to the
best of their knowledge, is threatened, by the Commission or any other
governmental body; (vi) no order suspending the Offering, the
Reorganization, the acquisition of all of the shares of the Bank by the
Holding Company, the acquisition by the MHC of shares of the Common Stock
or the effectiveness of the Registration Statement has been issued and to
the best of 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; (vii) to the best of 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.
(g) At the Closing Date, the Agent shall receive a letter from Xxxxxxx
Financial Advisors, dated as of the Closing Date, (i) confirming that said
firm is independent of the Primary Parties and is experienced and expert in
the area of corporate appraisals within the meaning of the Conversion
Regulations, (ii) stating in effect that the Appraisal complies in all
material respects with the applicable requirements of the Conversion
Regulations, and (iii) further stating that its opinion of the aggregate
pro forma market value of the Primary Parties, as converted, expressed in
the Appraisal as most recently updated, remains in effect.
(h) None of the Primary Parties shall have sustained, since the date
of the latest audited financial statements included in the Registration
Statement and Prospectus, any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth in the Registration
Statement and the Prospectus, and since the respective dates as of which
information is given in the Registration Statement and the Prospectus,
there shall not have been any material change, or any development involving
a prospective material change in, or affecting the general affairs of,
management, financial position, retained earnings, long-term debt,
stockholders' equity or results of operations of any of the Primary
Parties, otherwise than as set forth or contemplated in the Registration
Statement and the Prospectus, the effect of which, in any such case
described above, is in the Agent's reasonable judgment sufficiently
material and adverse as to make it impracticable or inadvisable to proceed
with the Offering or the delivery of the Shares on the terms and in the
manner contemplated in the Prospectus.
(i) Prior to and at the Closing Date: (i) in the reasonable opinion of
the Agent there shall have been no material adverse change in the financial
condition or in the earnings, capital, properties or business affairs of
any of the Primary parties independently, or the Primary Parties considered
as one enterprise, from and as of the latest dates as of which such
condition is set forth in the Prospectus, except as referred to therein;
(ii) there shall have been no material transaction
24
entered into by the Primary Parties, independently or considered as one
enterprise, from the latest date as of which the financial condition of the
Primary Parties is set forth in the Prospectus, other than transactions
referred to or contemplated therein; (iii) none of the Primary Parties
shall have received from the OTS or the FDIC any direction (oral or
written) to make any material change in the method of conducting their
business with which it has not complied in all material respects (which
direction, if any, shall have been disclosed to the Agent) and which would
reasonably be expected to have a material and adverse effect on the
condition (financial or otherwise) or on the earnings, capital, properties
or business affairs of the Primary Parties considered as one enterprise;
(iv) none of the Primary Parties shall have been in default (nor shall an
event have occurred which, with notice or lapse of time or both, would
constitute a default) under any provision of any agreement or instrument
relating to any material outstanding indebtedness; (v) no action, suit or
proceeding, at law or in equity or before or by any federal or state
commission, board or other administrative agency, shall be pending or, to
the knowledge of the Primary Parties, threatened against any of the Primary
Parties or affecting any of their properties wherein an unfavorable
decision, ruling or finding would reasonably be expected to have a material
and adverse effect on the financial condition or on the earnings, capital,
properties or business affairs of the Primary Parties, considered as one
enterprise; and (vi) the Shares shall have been qualified or registered for
offering and sale under the securities or "blue sky" laws of the
jurisdictions requested by the Agent.
(j) At or prior to the Closing Date, the Agent shall receive (i) a
copy of the letter from the OTS authorizing the use of the Prospectus and
approving the MHC Notice and Application, (ii) a copy of the order from the
Commission declaring the Registration Statement effective, (iii) a copy of
a certificate of existence for the Bank, (iv) a certificate or other
writing from the appropriate federal authority in form and substance
reasonably satisfactory to Agent evidencing the valid existence of the
Holding Company as of the Closing Date, (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, (vii) a certificate of
the FHLB of Seattle evidencing the Bank's membership therein, (viii) a
certificate or other writing from the OTS in form and substance reasonably
satisfactory to Agent evidencing the valid existence of the MHC as of the
Closing Date, (ix) a copy of the letters from the OTS approving the Merger
Application and (x) any other documents that Agent shall reasonably
request.
(k) Subsequent to the date hereof, there shall not have occurred any
of the following: (i) a suspension or limitation in trading in securities
generally on the New York Stock Exchange or American Stock Exchange or in
the over-the-counter market, or quotations halted generally on the Nasdaq
Stock Market, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices for securities have been required by either of
such exchanges or the NASD or by order of the Commission or any other
governmental authority other than temporary trading halts (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 business days, total less
than three; (ii) a general moratorium on the operations of commercial banks
or other federally-insured financial institutions or general moratorium on
the withdrawal of deposits from commercial banks or other federally-insured
financial institutions declared by either federal or state authorities;
(iii) the engagement by the United States in hostilities which have
resulted in the declaration, on or after the date hereof, of a national
emergency or war; or (iv) a
25
material decline in the price of equity or debt securities if the effect of
any of (i) through (iv) herein, in the Agent's reasonable judgment, makes
it impracticable or inadvisable to proceed with the offering or the
delivery of the Shares on the terms and in the manner contemplated in the
Registration Statement and the Prospectus.
(l) All such options, 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 of 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. If any
condition to the Agent's obligations hereunder to be fulfilled prior to or
at the Closing Date is not fulfilled, the Agent may terminate this
Agreement (provided that if this Agreement is so terminated but the sale of
Shares is nevertheless consummated, the Agent shall be entitled to the
compensation provided for in Section 4 hereof) or, if the Agent so elects,
may waive any such conditions which have not been fulfilled or may extend
the time of their fulfillment.
SECTION 10. INDEMNIFICATION.
(a) The Primary 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 the last sentence of paragraph (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) incurred by the Agent or any
Related Persons in connection with investigating, preparing or defending
any actions, proceedings or claims (whether commenced or threatened) to the
extent such losses, claims, damages, liabilities or actions: (i) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (or any amendment or
supplement thereto), preliminary or final Prospectus (or any amendment or
supplement thereto), the OTS Applications, or any blue sky application or
other instrument or document of the Primary Parties or based upon written
information supplied by any of the Primary Parties filed in any state or
jurisdiction to register or qualify any or all of the Shares under the
securities laws thereof (collectively, the "Blue Sky Applications"), or any
application or other document, advertisement, or communication ("Sales
Information") prepared, made or executed by or on behalf of any of the
Primary Parties with its consent or based upon written information
furnished by or on behalf of any of the Primary Parties, whether or not
filed in any Jurisdiction in order to qualify or register the Shares under
the securities laws thereof, (ii) arise out of or 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), preliminary or final
Prospectus (or any amendment or supplement thereto), the OTS Applications,
any Blue Sky Applications or Sales Information or other documentation
distributed in connection with the Reorganization; or (iv) result from any
claims made with respect to the accuracy, reliability and completeness of
the records of Eligible Account Holders, Supplemental Eligible Account
Holders and 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
paragraph (a) to the extent such losses, claims, damages, liabilities or
actions arise out of or are based upon any untrue material statements or
alleged untrue material statements in, or material omission or alleged
material omission from, the Registration Statement (or any amendment or
26
supplement thereto) or the preliminary or final Prospectus (or any
amendment or supplement thereto), the OTS Applications, the Blue Sky
Applications or Sales Information or other documentation distributed in
connection with the Reorganization made in reliance upon and in conformity
with written information furnished to the Primary Parties by the Agent 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
captions "Market for the Common Stock" and "The Offering - Plan of
Distribution and Marketing Arrangements" or statistical information
regarding the Holding Company prepared by the Agent for use in the Sales
Information, except for information derived from the Prospectus. Provided
further, that the Primary Parties will not be responsible for any loss,
liability, claim, damage or expense to the extent they result primarily
from material oral misstatements by the Agent to a purchaser of Shares
which are not based upon information in the Registration Statement or
Prospectus, or from actions taken or omitted to be taken by the Agent in
bad faith or from the Agent's gross negligence or willful misconduct, and
the Agent agrees to repay to the Primary Parties any amounts advanced to it
by the Primary Parties in connection with matters as to which it is found
not to be entitled to indemnification hereunder.
(b) The Agent agrees to indemnify and hold harmless the Primary
Parties, their directors and officers, agents, servants and employees and
each person, if any, who controls any of the Primary Parties within the
meaning of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act
against any and all loss, liability, claim, damage or expense whatsoever
(including but not limited to settlement expenses, subject to the
limitation set forth in the last sentence of paragraph (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 Primary Parties and any such
persons upon written demand for any reasonable expenses (including fees and
disbursements of counsel) incurred by them in connection with
investigating, preparing or defending any actions, proceedings or claims
(whether commenced or threatened) to the extent such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment of supplement thereto), the OTS
Applications or any Blue Sky Applications or Sales Information or are based
upon the omission or alleged omission to state in any of the foregoing
documents a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that the Agent's
obligations under this Section 10(b) shall exist only if and only to the
extent that such untrue statement or alleged untrue statement was made in,
or such material fact or alleged material fact was omitted from, the
Registration Statement (or any amendment or supplement thereto) or the
Prospectus (or any amendment or supplement thereto) in reliance upon
27
and in conformity with written information furnished to the Primary Parties
by the Agent or its representatives (including counsel) expressly for use
under the captions "Market for the Common Stock" and "The Offering -- Plan
of Distribution and Marketing Arrangements" or statistical information
regarding the Holding Company prepared by the Agent for use in the Sales
information (except for statistical information derived from the
Prospectus).
(c) Each indemnified party shall give prompt written notice to each
indemnifying party of any action, proceeding, claim (whether commenced or
threatened), or suit instituted against it in respect of which indemnity
may be sought hereunder, but failure to so notify an indemnifying party
shall not relieve it from any liability which it may have on account of
this Section 10, Section 11 or otherwise. 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 defense of such action with counsel chosen by it
and approved by the indemnified parties that are defendants in such action,
unless such indemnified parties reasonably object to such assumption on the
ground that there may be legal defenses available to them that are
different from or in addition to those available to such indemnifying
party. If an indemnifying party assumes the defense of such action, the
indemnifying parties shall not be liable for any fees and expenses of
counsel for the indemnified parties incurred thereafter in connection with
such action, proceeding or claim, other than reasonable costs of
investigation. In no event shall the indemnifying parties be liable for the
fees and expenses of more than one separate firm of attorneys (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.
(d) The agreements contained in this Section 10 and in Section 11
hereof and the representations and warranties of the Primary Parties set
forth in this Agreement shall remain operative and in full force and effect
regardless of (i) any investigation made by or on behalf of the Agent or
its officers, directors, controlling persons, agents or employees or by or
on behalf of any of the Primary Parties or any officers, directors,
controlling persons, agents or employees of any of the Primary Parties;
(ii) delivery of and payment hereunder for the Shares; or (iii) any
termination of this Agreement.
SECTION 11. CONTRIBUTION.
(a) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 10 is
due in accordance with its terms but is for any reason held by a court to
be unavailable from the Primary Parties or the Agent, the Primary Parties
and the Agent shall contribute to the aggregate losses, claims, damages and
liabilities of the nature contemplated by such indemnification 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 Primary Parties from the sale of the
Conversion Shares in the Conversion Offerings, net of all expenses of the
Offerings
28
except Agent's Fees, and (ii) the Primary Parties shall be responsible for
the balance. If, however, the allocation provided above is not permitted by
applicable law or if the indemnified party failed to give the notice
required under Section 10 above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative fault of the
Primary Parties on the one hand and the Agent on the other in connection
with the statements or omissions which resulted in such losses, claims,
damages or liabilities (or actions, proceedings or claims in respect
thereof), but also the relative benefits received by the Primary Parties on
the one hand and the Agent on the other from the Offering, as well as any
other relevant equitable considerations. The relative benefits received by
the Primary Parties on the one hand and the Agent on the other hand shall
be deemed to be in the same proportion as the total proceeds from the
Conversion Offerings, net of all expenses of the Conversion Offerings
except Agent's Fees, received by the Primary Parties bear, with respect to
the Agent, to the total fees (not including expenses) received by the Agent
less the portion of such fees paid by the Agent to Assisting Brokers. The
relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Primary Parties on the one hand or the Agent on
the other and the parties relative intent, good faith, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Primary Parties and the Agent agree that it would not be just
and equitable if contribution pursuant to this Section 11 were determined
by pro-rata allocation or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
Section 11. The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or action, proceedings or
claims in respect thereof) referred to above in this Section 11 shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such
action, proceeding or claim. It is expressly agreed that the Agent shall
not be liable for any loss, liability, claim, damage or expense or be
required to contribute any amount which in the aggregate exceeds the amount
paid (excluding reimbursable expenses) to the Agent under this Agreement
less the portion of such fees paid by the Agent to Assisting Brokers. It is
understood 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 1933 Act)
shall be entitled to contribution from any person who was not found guilty
of such fraudulent misrepresentation. The duties, obligations and
liabilities of the Primary Parties and the Agent under this Section 11 and
under Section 10 shall be in addition to any duties, obligations and
liabilities which the Primary Parties and the Agent may otherwise have. For
purposes of this Section 11, each of the Agent's and the Primary Parties'
officers and directors and each person, if any, who controls the Agent or
any of the Primary Parties within the meaning of the 1933 Act and the 1934
Act shall have the same rights to contribution as the Primary Parties and
the Agent. Any party entitled to contribution, promptly after receipt of
notice of commencement of any action, suit, claim or proceeding against
such party in respect of which a claim for contribution may be made against
another party under this Section 11, will notify such party from whom
contribution may be sought, but the omission to so notify such party shall
not relieve the party from whom contribution may be sought from any other
obligation it may have hereunder or otherwise than under this Section 11.
SECTION 12. REPRESENTATIONS, WARRANTIES AND INDEMNITIES TO SURVIVE
DELIVERY. All representations, warranties and indemnities and other statements
contained in this Agreement, or
29
contained in certificates of officers of the Primary 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 Primary Parties and shall survive the issuance of the
Shares, and any legal representative, successor or assign of the Agent, any of
the Primary Parties, and any indemnified person shall be entitled to the benefit
of the respective agreements, indemnities, warranties and representations.
SECTION 13. TERMINATION. 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 the Holding Company fails to sell the minimum number
of the Conversion Shares within the period specified in accordance with the
provisions of the Plan or as required by the Conversion Regulations and
applicable law, this Agreement shall terminate upon refund by the Primary
Parties to each person who has subscribed for or ordered any of the
Conversion Shares the full amount which it may have received from such
person, together with interest in accordance with Section 3, and no party
to this Agreement shall have any obligation to the other hereunder, except
as set forth in Sections 3, 4, 8, 10 and 11 hereof.
(b) If any of the conditions specified in Section 9 shall not have
been fulfilled when and as required by this Agreement, or by the Closing
Date, or waived in writing by the Agent, this Agreement and all of the
Agent's obligations hereunder may be canceled by the Agent by notifying the
Bank of such cancellation in writing at any time at or prior to the Closing
Date, and any such cancellation shall be without liability of any party to
any other party except as otherwise provided in Sections 3, 4, 8, 10 and 11
hereof.
(c) If Agent elects to terminate this Agreement as provided in this
Section, the Bank shall be notified by the Agent as provided in Section 14
hereof.
(d) If this Agreement is terminated in accordance with the provisions
of Sections 3, 9, or 13, the Primary Parties shall pay the Agent the fees
earned pursuant to Section 4 and will reimburse the Agent for its
reasonable expenses pursuant to Section 8, including without limitation
accounting, communication, legal and travel expenses.
SECTION 14. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to Agent shall be
directed to Xxxx, Xxxx & Co. Inc., 000 Xxxx Xxxxxx, Xxxxx 000, Xxxx Xxxxxx,
Xxxxxxxxxxxx 00000, Attention: Xxxxxxxx Xxxxx (with a copy to Xxxxxxx X. Xxxxxx,
Esq., Xxxx Xxxxxx Xxxxxx Xxxxxxxx & Xxxxxx, 0000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx
000, Xxxxxxxxxx, X.X. 20015); notices to the Primary Parties shall be directed
to American Federal Savings Bank, 0000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, President and Chief Executive Officer (with a copy
to Xxxxxxx X. Xxxxxxx, Esq., Xxxxx Xxxxxxx, LLP, 0000 00xx Xxxxxx, X.X., Xxxxx
000, Xxxxxxxxxx, X.X. 00000).
SECTION 15. PARTIES. This Agreement shall inure to the benefit of and
be binding upon the Agent and the Primary Parties, and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
parties hereto and their respective successors and the controlling persons and
30
officers and directors referred to in Sections 10 and 11 and their heirs and
legal representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provisions herein contained. It is understood
and agreed that this Agreement is the exclusive agreement among the parties,
supersedes any prior Agreement among the parties and may not be varied except by
a writing signed by all parties.
SECTION 16. PARTIAL INVALIDITY. In the event that any term, provision
or covenant herein or the application thereof to any circumstances or situation
shall be invalid or unenforceable, in whole or in part, the remainder hereof and
the application of said term, provision or covenant to any other circumstance or
situation shall not be affected thereby, and each term, provision or covenant
herein shall be valid and enforceable to the full extent permitted by law.
SECTION 17. CONSTRUCTION. This Agreement shall be construed in
accordance with the laws of the State of New Jersey.
31
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
you and us in accordance with its terms.
Very truly yours,
EAGLE BANCORP
(In Formation)
By:___________________________
Xxxxx X. Xxxxxx
President and Chief Executive Officer
EAGLE FINANCIAL, MHC
(In Formation)
By:___________________________
Xxxxx X. Xxxxxx
President and Chief Executive Officer
AMERICAN FEDERAL SAVINGS BANK
By:___________________________
Xxxxx X. Xxxxxx
President and Chief Executive Officer
The foregoing Agency Agreement is hereby confirmed and
accepted as of the date first set and above written.
By:___________________________
Xxx X. Xxxxxxx
President and Chief Executive Officer
32
EAGLE BANCORP
(A Federal Corporation)
Up to 1,010,059 Shares
(Par Value $0.01 Per Share)
March ___, 2000
Ladies and Gentlemen:
We have agreed to assist Eagle Bancorp (the "Holding Company"), a federal
corporation, and American Federal Savings Bank (the "Bank"), a federally
chartered mutual savings association, in connection with the offer and sale by
the Holding Company of up to 1,010,059 shares of the common stock, $0.01 par
value per share (the "Common Stock"). These shares are to be issued in
connection with the reorganization of the Bank from a mutual savings bank to a
stock savings bank and wholly-owned subsidiary of the Holding Company (the
"Reorganization"), in accordance with the Plan of Reorganization from a Mutual
Savings Association to Mutual Holding Company and Stock Issuance Plan (the
"Plan"). Under the Plan, the Holding Company will become, upon consummation of
the Reorganization, a majority-owned subsidiary of Eagle Financial, MHC, a
federally chartered mutual holding company. The offering price per share of the
Common Stock has been fixed at $8.00. The Common Stock and certain of the terms
on which it is being offered are more fully described in the enclosed prospectus
dated February __, 2000 (the "Prospectus"). Capitalized terms not otherwise
defined herein shall have the meaning ascribed to them in the Prospectus.
In connection with the Reorganization, the Holding Company is offering
the Common Stock in a Subscription Offering to the Eligible Account Holders, the
Employee Stock Ownership Plan, the Supplemental Eligible Account Holders and the
Other Members. The Holding Company is also offering all shares of Common Stock
offered but not subscribed for in the Subscription Offering in the Community
Offering to members of the general public, with preference given first to
borrowers of the Bank as of December 31, 1999; second to natural persons
residing in Xxxxx and Clark, Gallatin, Jefferson, Silverbow and Xxxxxxxxxx
counties in Montana, and third to natural persons residing in the State of
Montana. The Common Stock is also being offered in accordance with the Plan by a
selling group of broker-dealers in the Syndicated Community Offering.
We are offering the selected dealers (of which you are one) the
opportunity to participate in the solicitation of offers to buy the Common Stock
and we will pay you a fee in the amount of _______ percent (_______%) of the
dollar amount of the Common Stock sold on behalf of the Holding Company by you,
as evidenced by the authorized designation of your firm on the order form or
forms for such Common Stock accompanying the funds transmitted for payment
therefor to the special account established by the Bank for the purpose of
holding such funds. Any purchase of Common Stock made pursuant to this Agreement
is subject to the maximum purchase limitations provided for in the Plan and
described in the Prospectus. It is understood, of course, that payment of your
fee will be made to you directly by the Holding Company for the Common Stock
sold on behalf of the Holding Company by you, as evidenced in accordance with
the preceding sentence. As
A1
soon as practicable after the closing date of the Offering, the Holding Company
will remit to you the fees to which you are entitled hereunder.
Each order form for the purchase of Common Stock must set forth the
identity and address of each person to whom the certificates for such Common
Stock should be issued and delivered. Such order form should clearly identify
your firm. You shall instruct any subscriber who elects to send his order form
to you to make any accompanying check payable to the Bank.
This offer is made subject to the terms and conditions herein set forth
and contained in the Plan and is made only to selected dealers who are (i)
members in good standing of the National Association of Securities Dealers, Inc.
(the "NASD") who are to comply with all applicable rules of the NASD, including,
without limitation, the NASD's Interpretation With Respect to Free-Riding and
Withholding and Section 24 of Article III of the NASD's Rules of Fair Practice,
or (ii) foreign dealers not eligible for membership in the NASD who agree (A)
not to sell any Common Stock within the United States, its territories or
possessions or to persons who are citizens thereof or resident therein and (B)
in making other sales to comply with the above-mentioned NASD Interpretation,
Sections 8, 24 and 36 of the above-mentioned Article III as if they were NASD
members and Section 2S of such Article III as it applies to non-member brokers
or dealers in a foreign country.
Orders for Common Stock will be strictly subject to confirmation and we,
acting on behalf of the Holding Company, reserve the right in our unrestricted
discretion to reject any order in whole or in part, to accept or reject orders
in the order of their receipt or otherwise, and to allot. Neither you nor any
other person is authorized by the Holding Company or by us to give any
information or make any representations other than those contained in the
Prospectus in connection with the sale of any of the Common Stock. No selected
dealer is authorized to act as agent for us when soliciting offers to buy the
Common Stock from the public or otherwise. No selected dealer shall engage in
any stabilizing (as defined in Regulation M promulgated under the Securities
Exchange Act of 1934) with respect to the Common Stock during the offering.
We and each selected dealer assisting in selling Common Stock pursuant
hereto agree to comply with the applicable requirements of the Securities
Exchange Act of 1934 and applicable state rules and regulations. In addition, we
and each selected dealer confirm that the Securities and Exchange Commission
interprets Rule 15c2-8 promulgated under the Securities Exchange Act of 1934 as
requiring that a Prospectus be supplied to each person who is expected to
receive a confirmation of sale 48 hours prior to delivery of such person's order
form.
We and each selected dealer within the meaning of Rule 15c3-1(a)(1)
further agree to the extent that our customers desire to pay for shares with
funds held by or to be deposited with us, in accordance with the interpretation
of the Securities and Exchange Commission of Rule 15c2-4 promulgated under the
Securities Exchange Act of 1934, either (a) upon receipt of an executed order
form or direction to execute an order form on behalf of a customer to forward
the offering price for the Common Stock ordered on or before twelve noon of the
business day following receipt or execution of an order form by us to the
Holding Company for deposit in a segregated account or (b) to solicit
indications of interest in which event (i) we will subsequently contact any
customer indicating interest to confirm the interest and give instructions to
execute and return an order form
A2
or to receive authorization to execute the order form on the customer's behalf,
(ii) we will mail acknowledgments of receipt of orders to each customer
confirming interest on the business day following such confirmation, (iii) we
will debit accounts of such customers on the third business day (the "Debit
Date") following receipt of the confirmation referred to in (i), and (iv) we
will forward completed order forms together with such funds to the Holding
Company on or before twelve noon on the next business day following the Debit
Date for deposit in a segregated account. We and each selected dealer
acknowledge that if the procedure in (b) is adopted, our customers' funds are
not required to be in their accounts until the Debit Date.
Unless earlier terminated by us, this Agreement shall terminate upon the
closing date of the Offering. We may terminate this Agreement or any provisions
hereof at any time by written or telegraphic notice to you. Of course, our
obligations hereunder are subject to the successful completion of the Offering.
You agree that at any time or times prior to the termination of this
Agreement you will, upon our request, report to us the number of shares of
Common Stock sold on behalf of the Holding Company by you under this Agreement.
We shall have full authority to take such actions as we may deem
advisable in respect of all matters pertaining to the offering. We shall be
under no liability to you except for lack of good faith and for obligations
expressly assumed by us in this Agreement.
Upon application to us, we will inform you as to the states in which we
believe the Common Stock has been qualified for sale under, or are exempt from
the requirements of, the respective blue sky laws of such states, but we assume
no responsibility or obligation as to your rights to sell Common Stock in any
state.
Additional copies of the Prospectus and any supplements thereto will be
supplied in reasonable quantities upon request.
Any notice from us to you shall be deemed to have been duly given if
mailed, telephoned, or telegraphed to you at the address to which this Agreement
is mailed.
This Agreement shall be construed in accordance with the laws of the
State of New Jersey.
A3
Please confirm your agreement hereto by signing and returning the
confirmation accompanying this letter at once to us at Xxxx, Xxxx & Co., Inc.,
000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000. The enclosed duplicate
copy will evidence the agreement between us.
XXXX, XXXX & CO., INC.
By:_______________________________
Xxx X. Xxxxxxx
President and Chief Executive Officer
Agreed and accepted as of __________________, 2000
_______________________________
_______________________________
A4
