Exhibit 1.2
UNITED TENNESSEE BANKSHARES, INC.
Up to 1,454,750 Shares
of Common Stock
(Par Value $0.01 Per Share)
$10.00 Per Share
SALES AGENCY AGREEMENT
________, 1997
Trident Securities, Inc.
0000 Xxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Dear Sirs:
United Tennessee Bankshares, Inc., a Tennessee corporation ("Company"), and
Newport Federal Savings & Loan Association, a federally chartered and insured
mutual savings and loan association ("Association"), hereby confirm as of the
date above their respective agreements with Trident Securities, Inc.
("Trident"), a broker-dealer registered with the Securities and Exchange
Commission ("Commission") and a member of the National Association of Securities
Dealers, Inc. ("NASD"), as follows:
1. Introduction. The Association intends to convert from a federally
chartered mutual savings and loan association to a federally chartered stock
savings and loan association as a wholly-owned subsidiary of the Company
(together with the Offerings, as defined below, the issuance of shares of
common stock of the Association to the Company, and the incorporation of the
Company, collectively the "Conversion") pursuant to a plan of conversion
adopted on May 20, 1997 ("Plan") by the Association's Board of Directors. In
accordance with the Plan, the Company is offering shares of its common stock,
par value $.01 per share ("Shares" or the "Common Stock"), pursuant to
nontransferable subscription rights in a subscription offering ("Subscription
Offering"), in order of priority, to (i) the Association's Eligible Account
Holders (as defined in the Plan), (ii) the Association's Employee Stock
Ownership Plan ("ESOP"), (iii) the Association's Supplemental Eligible
Account Holders (as defined in the Plan), and (iv) the Association's Other
Members (as defined in the Plan). Any shares of the Common Stock not sold in
the Subscription Offering are being offered to the general public in a
community offering, with preference being given to natural persons and trusts
of natural persons who are permanent residents of Xxxxx County, Tennessee
("Association's Local Community") ("Community Offering"), and, if necessary,
through a syndicate of NASD-registered broker-dealers managed by Trident in a
syndicated community offering ("Syndicated Community Offering"). The
Community Offering and the Syndicated Community Offering may commence
currently with or at any time during the Subscription Offering or after the
expiration
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of the Subscription Offering. The Subscription Offering, the Community
Offering and the Syndicated Community Offering are collectively referred to
as the "Offerings." Purchases of Shares in the Offerings are subject to
certain limitations and restrictions as described in the Plan.
The Company and the Association have been advised by Trident that it
intends to utilize its best efforts to assist the Company and the Association
with the sale of the Shares in the Subscription Offering and, if applicable,
in the Community Offering and the Syndicated Community Offering.
2. Representations and Warranties.
(a) The Company and the Association jointly and severally represent and
warrant to Trident that:
(i) The Company has filed with the Commission a registration
statement, including exhibits and an amendment or amendments thereto, on
Form SB-2 (No. 333-_____), including a Prospectus relating to the
Offerings, for the registration of the Shares under the Securities Act of
1933, as amended ("Securities Act"); and such registration statement has
been declared effective under the Securities Act and no stop order has been
issued with respect thereto and no proceedings therefor have been initiated
or, to the Company's best knowledge, threatened by the Commission. Except
as the context may otherwise require, such registration statement, as
amended or supplemented, on file with the Commission at the time the
registration statement became effective, including the Prospectus,
financial statements, schedules, exhibits and all other documents filed as
part thereof, as amended and supplemented, is herein called the
"Registration Statement," and the prospectus, as amended or supplemented,
on file with the Commission at the time the Registration Statement became
effective is herein called the "Prospectus," except that if any prospectus
filed by the Company with the Commission pursuant to Rule 424(b) of the
general rules and regulations of the Commission under the Securities Act
(together with the published policies and actions of the Commission
thereunder, the "Securities Act Regulations") differs from the form of
prospectus on file at the time the Registration Statement became effective,
the term "Prospectus" shall refer to the Rule 424(b) prospectus from and
after the time it is filed with the Commission and shall include any
amendments or supplements thereto from and after their dates of
effectiveness or use, respectively.
(ii) The Association has filed an Application for Approval of
Conversion on Form AC, including exhibits (as amended or supplemented, the
"Form AC" or the "Conversion Application") with the Office of Thrift
Supervision ("OTS") under the Home Owners' Loan Act, as amended ("HOLA"),
and the rules and regulations, including published policies and actions of
the OTS thereunder (collectively, the "OTS Regulations"), which has been
approved by the OTS; and the Prospectus and the proxy
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statement for the solicitation of proxies from the members of the
Association for the special meeting of members to approve the Plan ("Proxy
Statement") included as part of the Form AC have been approved for use by
the OTS. No order has been issued by the OTS preventing or suspending the
use of the Prospectus or the Proxy Statement and no action by or before the
OTS revoking such approvals is pending or, to the Association's best
knowledge, threatened. The Company has filed with the OTS an application
on Form H-e(1)-S (as amended or supplemented, the "Holding Company
Application") promulgated under the savings and loan holding company
provisions of the HOLA and the regulations promulgated thereunder and has
received approval of its acquisition of the Association from the OTS.
(iii) As of the date hereof (i) the Registration Statement and the
Prospectus complied with the Securities Act and the Securities Act
Regulations, (ii) the Registration Statement does 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 (iii) the
Prospectus does not contain 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. Representations or warranties in this
subsection shall not apply to statements or omissions made in reliance upon
and in conformity with written information furnished to the Company or the
Association by or on behalf of Trident relating to Trident expressly for
use in the Registration Statement or Prospectus.
(iv) The Company has been duly incorporated as a Tennessee corporation
and the Association has been duly organized as a mutual savings and loan
association under the laws of the United States, and each of them is
validly existing and in good standing under the laws of their jurisdiction
of organization with full power and authority to own its property and
conduct its business as described in the Registration Statement and
Prospectus; the Association is a member of the Federal Home Loan Bank of
Cincinnati; and the deposit accounts of the Association are insured by the
Savings Association Insurance Fund ("SAIF") administered by the Federal
Deposit Insurance Corporation ("FDIC") up to the applicable legal limits.
Each of the Company and the Association is not required to be qualified to
do business as a foreign corporation in any jurisdiction where
non-qualification would have a material adverse effect on the financial
condition, operations, business, properties or assets of the Company and
the Association.
(v) The Association has good, marketable and insurable title to its
assets described in the Prospectus as owned by it, free and clear of all
liens, charges, encumbrances or restrictions, except for liens for taxes
not yet due, except as described in the Prospectus and except as do not in
the aggregate have a material adverse effect upon the financial condition,
operations, business, properties or assets of the Association;
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and all of the leases and subleases material to the financial condition,
operations, business, assets or properties of the Association, under which
it holds properties, including those described in the Prospectus, are in
full force and effect as described therein.
(vi) NFS Service Corporation ("Subsidiary"), the Association's sole
subsidiary corporation, is duly organized and in good standing under the
laws of the State of Tennessee, with full power and authority to own its
property and conduct its business and is not required to be qualified to do
business as a foreign corporation in any jurisdiction where the failure to
be so qualified would have a material adverse effect on the business,
financial condition, operations, properties or assets of the Subsidiary.
The Subsidiary holds all licenses, certificates and permits from
governmental authorities necessary for the conduct of its business, except
where failure to obtain such licenses, permits or authorizations would not
have a material adverse effect on the financial condition, operations,
property, assets or business of the Subsidiary. All of the outstanding
stock of the Subsidiary has been duly authorized and is fully paid and
nonassessable, and such stock is owned directly by the Association, free
and clear of any liens or encumbrances. The activities of the Subsidiary
are permitted to subsidiaries of a federally-chartered savings and loan
association by the OTS Regulations.
(vii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary actions on the part of each of the
Company and the Association, and this Agreement is a valid and binding
obligation of each of the Company and the Association, enforceable in
accordance with its terms (except as the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, reorganization,
conservatorship, receivership or similar laws relating to or affecting the
enforcement of creditors' rights generally or the rights of creditors of
insured financial institutions and their holding companies, the accounts of
whose subsidiaries are insured by the FDIC, by general equity principles,
regardless of whether such enforceability is considered in a proceeding in
equity or at law, or laws relating to the safety and soundness of insured
depository institutions and their affiliates, and except to the extent that
the provisions of Sections 8 and 9 hereof may be unenforceable as against
public policy or by applicable law, including without limitation,
Section 23A of the Federal Reserve Act, 12 U.S.C. Section 371c (("Section
23A")).
(viii) There is no litigation or governmental proceeding pending
or, to the best knowledge of the Company or the Association, threatened
against or involving the Company, the Association or the Subsidiary, or any
of their respective assets which individually or in the aggregate would
reasonably be expected to have a material adverse effect on the financial
condition, results of operations, business, assets or properties of the
Company, the Association or the Subsidiary, taken as a whole. Any
litigation
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or governmental proceeding is not considered "threatened" unless the
potential litigation or governmental authority had manifested to the
management of the Company, the Association or the Subsidiary a present
intention to initiate such litigation or proceeding.
(ix) The Company and the Association have received the opinions of
Housley Kantarian & Xxxxxxxxx, P.C. with respect to the federal income tax
consequences of the Conversion, and of Xxxx & Company, P.C., Knoxville,
Tennessee, with respect to Tennessee income tax consequences of the
Conversion, to the effect that the Conversion will constitute a tax-free
reorganization under the Internal Revenue Code of 1986, as amended, and
will not be a taxable transaction for the Association or the Company under
the laws of Tennessee; and the facts and representations made by the
Company and the Association and relied upon in rendering such opinions are
accurate and complete, and neither the Company nor the Association have
taken any action inconsistent therewith.
(x) Neither the Company nor the Association nor the Subsidiary is in
violation of any rule or regulation of the OTS or the FDIC that could
reasonably be expected to result in any enforcement action against the
Company, the Association or the Subsidiary, or their officers or directors,
that might have a material adverse effect on the financial condition,
operations, businesses, assets or properties of the Company, the
Association, and the Subsidiary, taken as a whole.
(xi) RP Financial, LC. ("RP Financial"), the firm that prepared the
independent appraisal dated as of _______, 1997, is independent with
respect to the Company and the Association within the meaning of the OTS
Regulations. The Company and the Association believe RP Financial to be
experienced and expert in rendering appraisals of thrift institutions, and
nothing has come to the attention of the Company and the Association which
has caused them to believe that the appraisal by RP Financial was not
prepared in accordance with the requirements of the OTS Regulations.
(xii) Xxxx & Company, P.C., the firm that certified the consolidated
financial statements of the Association at December 31, 1996 and 1995 and
for each of years in the two year period ended December 31, 1996 filed as
part of the Registration Statement and the Conversion Application, is
independent with respect to the Company and the Association as required by
the Securities Act, the Securities Act Regulations, the Code of Professional
Ethics of the American Institute of Certified Public Accountants, and
Title 12 of the Code of Federal Regulations Parts 563c and 571, and nothing
has come to the attention of the Company and the Association which has
caused them to believe that such firm is not independent within the meaning
of such provisions.
(xiii) The consolidated financial statements and related notes which
are included in the Registration Statement and the Prospectus fairly present
the consolidated financial condition, earnings, equity and cash flows of the
Association at the respective dates
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thereof and for the respective periods covered thereby and comply as to
form with the applicable accounting requirements of the Securities Act
Regulations and the OTS Regulations. Such financial statements have been
prepared in accordance with generally accepted accounting principles
("GAAP") consistently applied throughout the periods involved, except as
set forth therein, and such financial statements are consistent with
financial statements and other reports filed by the Association with the
OTS, except as GAAP may otherwise require. The financial tables in the
Prospectus accurately present the information purported to be shown thereby
at the respective dates thereof and for the respective periods covered
thereby.
(xiv) There has been no material change in the financial condition,
operations, business, assets or properties of the Company, the Association
and the Subsidiary, taken as a whole, since the latest date set forth in the
Prospectus, except as set forth therein; and the capitalization, assets,
properties and business of each of the Company and the Association conform
in all material aspects to the descriptions thereof contained in the
Prospectus. Neither the Company nor the Association nor the Subsidiary has
any material liabilities of any kind, contingent or otherwise, except as set
forth in the Prospectus.
(xv) There has been no breach or default (or the occurrence of any
event which, with notice or lapse of time or both, would constitute a
default) under, or creation or imposition of any lien, charge or other
encumbrance upon any of the properties or assets of the Company, the
Association or the Subsidiary pursuant to any of the terms, provisions or
conditions of, any agreement, contract, indenture, bond, debenture, note,
instrument or obligation to which the Company, the Association or the
Subsidiary is a party or by which any of them or any of their respective
assets or properties may be bound or is subject, or violation of any
governmental license or permit or any enforceable published law,
administrative regulation or order or court order, writ, injunction or
decree, which breach, default, encumbrance or violation would have a
material adverse effect on the financial condition, operations, business,
assets or properties of the Company, the Association and the Subsidiary,
taken as a whole; all agreements which are material to the financial
condition, results of operations or business of the Company, the
Association and the Subsidiary, taken as a whole, are in full force and
effect, and no party to any such agreement has instituted or, to the best
knowledge of the Company, the Association and the Subsidiary, threatened
any action or proceeding wherein the Company, the Association or the
Subsidiary would be alleged to be in default thereunder.
(xvi) Neither the Company nor the Association nor the Subsidiary is in
violation of its respective charter or bylaws. The execution and delivery
of this Agreement and the consummation of the transactions contemplated
hereby by the Company and the Association do not conflict with or result in
a breach of the charter or bylaws of the
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Company or the Association (in either mutual or stock form) or constitute
a material breach of or default (or an event which, with notice or lapse of
time or both, would constitute a default) under, give rise to any right of
termination, cancellation or acceleration contained in, or result in the
creation or imposition of any lien, charge or other encumbrance upon any of
the properties or assets of the Company or the Association pursuant to any
of the terms, provisions or conditions of, any material agreement, contract,
indenture, bond, debenture, note, instrument or obligation to which the
Company or the Association is a party (other than the establishment of a
liquidation account pursuant to the Plan) or violate any governmental
license or permit or any law, administrative regulation or order or court
order, writ, injunction or decree (subject to the satisfaction of certain
conditions imposed by the OTS in connection with its approval of the
Conversion Application), which breach, default, encumbrance or violation
would have a material adverse effect on the financial condition, operations
or business of the Company and the Association, taken as a whole.
(xvii) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, except as otherwise may
be indicated or contemplated therein, none of the Company or the Association
has issued any securities which will remain issued at the Closing Date or
incurred any liability or obligation, direct or contingent, or borrowed
money, except borrowings or liabilities in the ordinary course of business,
or entered into any other transaction not in the ordinary course of business
and not consistent with prior practices, which is material in light of the
business of the Company and the Association, taken as a whole.
(xviii) The issuance and the sale of the Shares have been duly
authorized by all necessary action of the Company and approved by the OTS
and, when issued in accordance with the terms of the Plan for the
consideration described therein, shall be validly issued, fully paid and
nonassessable and shall conform to the description thereof contained in the
Prospectus; the issuance of the Shares is not subject to preemptive rights,
except as set forth in the Prospectus; and good title to the Shares will be
transferred by the Company upon issuance thereof against payment therefor,
free and clear of all claims, encumbrances, security interests and liens
against the Company whatsoever. The issuance and sale of the capital stock
of the Association to the Company has been duly authorized by all necessary
action of the Association and the Company and all appropriate regulatory
authorities (subject to the satisfaction of various conditions imposed by
the OTS in connection with its approvals of the Conversion Application and
the Holding Company Application), and such capital stock, when issued in
accordance with the terms of the Plan, will be fully paid and nonassessable
and will conform in all material respects to the description thereof
contained in the Prospectus.
(xix) No approval of any regulatory, supervisory or other public
authority is required in connection with the execution and delivery of this
Agreement or the issuance
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of the Shares, except such approvals as have been obtained and except for
the declaration of effectiveness of any required post-effective amendment
by the Commission and approval thereof by the OTS, the issuance of the
Association's Federal Stock Charter by the OTS and as may be required under
the "blue sky" or securities laws of various jurisdictions.
(xx) All contracts and other documents required to be filed as
exhibits to the Registration Statement, the Conversion Application or the
Holding Company Application have been filed with the Commission or the OTS
or both, as the case may be.
(xxi) The Company, the Association and the Subsidiary have timely
filed all required federal, state and local franchise tax returns, and no
deficiency has been asserted with respect to such returns by any taxing
authorities, and the Company, the Association and the Subsidiary have paid
all taxes that have become due and, to the best of their knowledge, have
made adequate reserves for accrued tax liabilities, except where any
failure to make such filings, payments and reserves, or the assertion of
such a deficiency, would not have a material adverse effect on the
financial condition or results of operations of the Company, the
Association and the Subsidiary, taken as a whole.
(xxii) All of the loans represented as assets of the Association
and the Subsidiary as of the most recent date for which financial condition
data is included in the Prospectus meet or are exempt from all requirements
of federal, state or local law pertaining to lending, including without
limitation truth in lending (including the requirements of Regulation Z and
12 C.F.R. Part 226 and Section 563.99), 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 have a material adverse effect on the Company, the Association
and the Subsidiary, taken as a whole.
(xxiii) The records of Eligible Account Holders, Supplemental
Eligible Account Holders and Other Members (as those terms are defined in
the Plan) delivered to Trident by the Association or its agent for use
during the Conversion have been reviewed by the Association and, to its
best knowledge, are accurate, reliable and complete; and Trident shall have
no liability to any person relating to the reliability, accuracy or
completeness of such records or for any denial or allocation of a
subscription to purchase shares to any person based upon such records.
(xxiv) Neither the Company nor the Association nor the Subsidiary
or, to the best knowledge of the Company, the Association and the
Subsidiary, the employees of the Company, the Association or the
Subsidiary, has made any payment of funds of the Company, the Association
or the Subsidiary prohibited by law, and no funds of the
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Company, the Association or the Subsidiary have been set aside to be used
for any payment prohibited by law.
(xxv) To the best knowledge of the Company, the Association and the
Subsidiary, the Company, the Association and the Subsidiary comply with
all laws, rules and regulations relating to environmental protection and
neither the Company, the Association nor the Subsidiary is subject to
liability under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, or any similar law, except for
violations which, if asserted, would not have a material adverse effect on
the Company, the Association and the Subsidiary, taken as a whole. There
are no actions, suits, regulatory investigations or other proceedings
pending or, to the best knowledge of the Company, the Association or the
Subsidiary, threatened against the Company, the Association or the
Subsidiary relating to environmental protection. To the best knowledge of
the Company, the Association and the Subsidiary, 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 been caused by the Company, the
Association or the Subsidiary or, to the best knowledge of the Company, the
Association and the Subsidiary, and except as already disclosed in the
Prospectus, has occurred on, in or at any of the facilities or properties
owned or leased by the Company, the Association or the Subsidiary or in
which the Association or the Subsidiary has a security interest, except
such disposal, release or discharge which would not have a material adverse
effect on the financial condition, operations, business, assets or
properties of the Company, the Association or the subsidiary, taken as a
whole.
(xxvi) All documents prepared and delivered by the Association or
the Company or their representatives in connection with the Conversion
were, on the dates on which they were delivered, true, complete and
correct.
(xxvii) The allowance for loan losses contained in the Association's
consolidated financial statements contained in the Prospectus were
established according with the past practices and experiences of the
Association and with generally accepted accounting principles, and the
allowance for loan losses at September 30, 1997 disclosed in the Prospectus
is adequate in all material respects under generally accepted accounting
principles to provide for possible losses on loans (including, without
limitation, accrued interest receivable) and credit commitments outstanding
as of such date.
(b) Trident represents and warrants to the Company and the Association
that:
(i) Trident is registered as a broker-dealer and is in good standing
with the Commission and the NASD.
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(ii) Trident is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation, with full corporate
power and authority to provide the services to be furnished to the Company
and the Association hereunder.
(iii) 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 Trident, and this
Agreement is a legal, valid and binding obligation of Trident, enforceable
in accordance with its terms (except as the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, reorganization or similar
laws relating to or affecting the enforcement of creditors' rights
generally or the rights of creditors of registered broker-dealers accounts
of whose may be protected by the Securities Investor Protection Corporation
or by general equity principles, regardless of whether such enforceability
is considered in a proceeding in equity or at law, and except to the extent
that the provisions of Sections 8 and 9 hereof may be unenforceable as
against public policy).
(iv) Trident and, to Trident's best knowledge, its employees, agents
and representatives who shall perform any of the services required
hereunder to be performed by Trident, shall be duly authorized and shall
have all licenses, approvals and permits necessary to perform such
services, and Trident is a registered selling agent in the jurisdictions in
which the Company is relying on such registration for the sale of the
Shares, and will remain so registered until the Conversion is consummated
or terminated.
(v) The execution and delivery of this Agreement by Trident, the
fulfillment of the terms set forth herein and the consummation of the
transactions contemplated hereby shall not violate or conflict with the
charter or bylaws of Trident or violate, conflict with or constitute a
breach of, or default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, any material agreement, indenture
or other instrument by which Trident is bound or under any governmental
license or permit or any law, administrative regulation, authorization,
approval or order or court decree, injunction or order.
(vi) All funds received by Trident to purchase Common Stock will be
handled in accordance with Rule 15c2-4 under the Securities Exchange Act of
1934, as amended ("Exchange Act").
(vii) No action or proceeding against Trident before the
Commission, the NASD, any state securities commission, or any state or
federal court is pending or, to Trident's best knowledge, threatened
concerning Trident's activities as a broker-dealer.
3. Employment of Trident; Sale and Delivery of the Shares. On the basis
of the representations and warranties herein contained, but subject to the terms
and conditions herein
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set forth, the Company and the Association hereby employ Trident as their agent
to utilize its best efforts to assist the Company with the Company's sale of the
Shares in the Offerings, and Trident hereby accepts such employment. The
employment of Trident hereunder shall terminate (a) forty-five (45) days after
the Subscription and Community Offering closes, unless the Company and the
Association, with the approval of the OTS, are permitted to extend such period
of time, or (b) upon consummation of the Conversion, whichever date shall first
occur.
In the event the Company is unable to sell a minimum of 935,000 Shares (or
such lesser amount as the OTS may permit) within the period herein provided,
this Agreement shall terminate, and the Company and the Association shall refund
promptly to any persons who have subscribed for any of the Shares, the full
amount which it may have received from them, together with interest as provided
in the Prospectus, and no party to this Agreement shall have any obligation to
the other party hereunder, except as set forth in Sections 6, 8, 9 and 10
hereof. Appropriate arrangements for placing the funds received from
subscriptions for Shares in special interest-bearing accounts with the
Association until all Shares are sold and paid for will be made prior to the
commencement of the Subscription and Community Offering, with provision for
prompt refund to the purchasers as set forth above, or for delivery to the
Company if all Shares are sold.
If all conditions precedent to the consummation of the Conversion are
satisfied, including the sale of all Shares required by the Plan to be sold, the
Company agrees to issue or have issued such Shares and to release for delivery
certificates to subscribers thereof for such Shares on or as soon as possible
following the Closing Date against payment to the Company by any means
authorized pursuant to the Prospectus, at the principal office of the Company,
000 Xxxx Xxxxxxxx, Xxxxxxx, Xxxxxxxxx, or at such other place as shall be agreed
upon between the parties hereto. The date upon which the Company shall release
or deliver the Shares sold in the Offerings, in accordance with the terms
hereof, is herein called the "Closing Date."
Trident agrees either (a) upon receipt of an executed order form of a
subscriber to forward the offering price of the Common Stock ordered on or
before twelve noon on the next business day following receipt or execution of an
order form by Trident to the Association for deposit in a segregated account or
(b) to solicit indications of interest in which event (i) Trident will
subsequently contact any potential subscriber indicating interest to confirm the
interest and give instructions to execute and return an order form or to receive
authorization to execute the order form on the subscriber's behalf, (ii) Trident
will mail acknowledgements of receipt of orders to each subscriber confirming
interest on the business day following such confirmation, (iii) Trident will
debit accounts of such subscribers on the third business day ("debit date")
following receipt of the confirmation referred to in (i), and (iv) Trident will
forward completed order forms together with such funds to the Association on or
before twelve noon on the next business day following the debit date for deposit
in a segregated account. Trident acknowledges that if the procedure in (b) is
adopted, subscribers' funds are not required to be in their accounts until the
debit date.
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Trident shall receive the following compensation and expense reimbursement
for its services hereunder:
(a) (i) a management fee of $20,000, (ii) a commission equal to 2.0%
of the aggregate dollar amount of Common Stock sold in the Subscription
Offering and the Community Offering, excluding Shares sold to the
Association's directors, executive directors, their "associates" as defined
in the Plan, and the Association's ESOP, and (iii) if applicable, a
commission to be agreed upon by Trident and the Company for Shares sold by
other member firms of the NASD through a selected dealers arrangement in
the Syndicated Community Offering, which aggregate commission shall be
determined at the discretion of the Company and the Association with the
advice of Trident. All such fees shall be paid to Trident in next-day
funds on the Closing Date.
(b) Reimbursement for reasonable out-of-pocket allocable expenses,
including but not limited to travel, food, lodging and legal fees, incurred
by it whether or not the Offerings are successfully completed; provided,
however, that reimbursable legal fees will not exceed $30,000 and that
other reimbursable expenses will not exceed $10,000, and, provided further,
that neither the Company nor the Association shall reimburse Trident for
any of the foregoing expenses accrued after Trident shall have notified the
Company or the Association of its election to terminate this Agreement
pursuant to Section 11 hereof or after such time as the Company or the
Association shall have given notice in accordance with Section 12 hereof
that Trident is in breach of this Agreement. Full reimbursement of Trident
shall be made in next-day funds on the Closing Date or, if the Conversion
is not completed and is terminated for any reason, within ten (10) business
days of receipt by the Company of a written request detailing allocable
expenses from Trident for reimbursement of such expenses. Trident
acknowledges receipt of a $10,000 advance payment from the Association,
which shall be credited against the total reimbursement due Trident
hereunder. In the event this Agreement is terminated pursuant to Section
11 hereof, Trident shall be reimbursed only for its actual allocable
expenses.
(c) Reimbursement for any expenses of the Company and the Association
set forth in Section 6 hereof to the extent paid by Trident on behalf of
the Company and the Association. Full reimbursement shall be made in
next-day funds on the Closing Date or, if the Conversion is not completed
and is terminated for any reason, within ten (10) business days of receipt
by the Company and the Association of a written request for such
reimbursement detailing such reimbursements.
Notwithstanding the limitations on reimbursement of Trident for its
allocable expenses provided in subsection (b) above and notwithstanding any
reimbursement of Trident pursuant to subsection (c) above, in the event that a
resolicitation or other event causes the Offerings to be extended beyond their
original expiration date, Trident shall be reimbursed for its reasonable
Trident Securities, Inc.
Page 13
allocable expenses incurred during such extended period, provided that the
allowance for allocable expenses provided for in subsection (b) above has been
exhausted and subject to the following: such reimbursement shall be in an
amount equal to the product obtained by dividing $40,000 (the reimbursable
expenses and legal fees limitation set forth in Section (b) above by the total
number of days of the unextended Subscription Offering (calculated from the date
of the Prospectus to the intended close of the Subscription Offering as stated
in the Prospectus) and multiplying such product by the number of days of the
extension (that number of days from the date of the supplemental prospectus used
in the extended Subscription Offering to the closing of the extension of the
Subscription Offering described in such supplemental prospectus).
4. Offering. Subject to the provisions of Section 7 hereof, Trident is
assisting the Company on a best efforts basis in offering a minimum of 935,000
and a maximum of 1,265,000 Shares, subject to adjustment up to 1,454,750 Shares
(except as the OTS may permit to be decreased or increased) in the Offerings.
The Shares are to be offered to the public at the price set forth on the cover
page of the Prospectus and the first page of this Agreement.
5. Further Agreements. The Company and the Association jointly and
severally covenant and agree that:
(a) Subsequent to the respective dates as of which information is given in
the Registration Statement and Prospectus and through and including the Closing
Date, except as otherwise may be indicated or contemplated therein, neither the
Company nor the Association will issue any securities which will remain issued
at the Closing Date or incur any liability or obligation, direct or contingent,
or borrow money, except borrowings or liabilities in the ordinary course of
business, or enter into any other transaction not in the ordinary course of
business and consistent with prior practices, which is material in light of the
financial condition, operations, business, properties or assets of the Company
and the Association, taken as a whole.
(b) If any Shares remain unsubscribed following completion of the
Subscription Offering and the Community Offering, the Company (i) will, if
deemed necessary, promptly file with the Commission a post-effective amendment
to such Registration Statement relating to the results of the Subscription and
the Community Offerings, any additional information with respect to the proposed
plan of distribution and any revised pricing information or (ii) if no such
post-effective amendment is required, will file with, or mail for filing to, the
Commission a prospectus or prospectus supplement containing information relating
to the results of the Subscription and Community Offerings and pricing
information pursuant to Rule 424(c) of the Securities Act Regulations, in either
case in a form reasonably acceptable to the Company and Trident.
(c) Upon consummation of the Conversion, the authorized, issued and
outstanding equity capital of the Company shall be within the range as set forth
in the Prospectus under the caption "Capitalization," and no Common Stock shall
be outstanding immediately prior to the
Trident Securities, Inc.
Page 14
Closing Date (other than any shares of Common Stock issued in connection with
the initial capitalization of the Company, which shares will be canceled upon
consummation of the Conversion); and the certificates representing the Shares
will conform in all material respects with the requirements of Tennessee law and
OTS Regulations.
(d) At all times subsequent to the date of the Prospectus through and
including the Closing Date (i) the Registration Statement and the Prospectus
will comply with the Securities Act and the Securities Act Regulations, (ii) the
Registration Statement will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and (iii) the Prospectus will not contain 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. Agreements in this
subsection shall not apply to statements or omissions made in reliance upon and
in conformity with written information furnished to the Company or the
Association relating to Trident by or on behalf of Trident expressly for use in
the Registration Statement or Prospectus.
(e) Upon amendment of the Association's charter and bylaws as provided in
the OTS Regulations and completion of the sale by the Company of the Shares as
contemplated by the Prospectus, (i) the Association will be converted pursuant
to the Plan to a federally chartered capital stock savings and loan association
with full power and authority to own its property and conduct its business as
described in the Prospectus, (ii) all of the authorized and outstanding capital
stock of the Association will be owned of record and beneficially by the
Company, and (iii) the Company will have no direct subsidiaries other than the
Association.
(f) The Company shall deliver to Trident, from time to time, such number
of copies of the Prospectus as Trident reasonably may request. The Company
authorizes Trident to use the Prospectus in any lawful manner in connection with
the offer and sale of the Shares.
(g) The Company will notify Trident immediately, and confirm the notice in
writing, (i) when any post-effective amendment to the Registration Statement
becomes effective or any supplement to the Prospectus has been filed, (ii) of
the issuance by the Commission of any stop order relating to the Registration
Statement or of the initiation or the threat of any proceedings for that
purpose, (iii) of the receipt of any notice with respect to the suspension of
the qualification of the Shares for offering or sale in any jurisdiction, and
(iv) of the receipt of any comments from the staff of the Commission relating to
the Registration Statement. If the Commission enters a stop order relating to
the Registration Statement at any time, the Company will make every reasonable
effort to obtain the lifting of such order at the earliest possible moment.
Trident Securities, Inc.
Page 15
(h) During the time when a prospectus is required to be delivered under
the Securities Act, the Company will comply with all requirements imposed upon
it by the Securities Act and by the Securities Act Regulations to permit the
continuance of offers and sales of or dealings in the Shares in accordance with
the provisions hereof and the Prospectus. If during the period when the
Prospectus is required to be delivered in connection with the offer and sale of
the Shares any event relating to or affecting the Company and the Association,
taken as a whole, shall occur as a result of which it is necessary, in the
reasonable opinion of counsel for Trident, to amend or supplement the Prospectus
in order to make the Prospectus not false or misleading in light of the
circumstances existing at the time it is delivered to a purchaser of the Shares,
the Company forthwith shall prepare and furnish to Trident a reasonable number
of copies of an amendment or amendments or of a supplement or supplements to the
Prospectus (in form and substance reasonably satisfactory to counsel for
Trident) which shall amend or supplement the Prospectus so that, as amended or
supplemented, the Prospectus shall not contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances existing at the time the Prospectus is
delivered to a purchaser of the Shares, not misleading. The Company will not
file or use any amendment or supplement to the Registration Statement or the
Prospectus unless Trident has been first furnished a copy or if Trident shall
reasonably object after having been furnished such copy. For the purposes of
this subsection the Company and the Association shall furnish such information
with respect to themselves as Trident from time to time may reasonably request.
(i) The Company and the Association will take all reasonably necessary
action as may be required to qualify or register the Shares for offer and sale
by the Company under the securities or blue sky laws of such jurisdictions as
Trident and the Company or its counsel may agree upon; provided, however, that
the Company shall not be obligated to qualify as a foreign corporation to do
business under the laws of any such jurisdiction. In each jurisdiction where
such qualification or registration shall be effected, the Company, unless
Trident agrees that such action is not necessary or advisable in connection with
the distribution of the Shares, shall file and make such statements or reports
as are, or reasonably may be, required by the laws of such jurisdiction.
(j) Appropriate entries will be made in the financial records of the
Association to establish a liquidation account for the benefit of Eligible
Account Holders and Supplemental Eligible Account Holders (as those terms are
defined in the Plan) in accordance with the OTS Regulations.
(k) The Company will file a registration statement for the Common Stock
under Section 12(g) of the Exchange Act prior to completion of the Offerings
pursuant to the Plan and shall request that such registration statement be
effective upon completion of the Conversion. The Company shall maintain the
effectiveness of such registration for a minimum period of three years or for
such shorter period as may be required by applicable law.
Trident Securities, Inc.
Page 16
(l) The Company will make generally available to its security holders as
soon as practicable, but not later than 90 days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 of the Securities Act Regulations) covering a twelve-month period
beginning not later than the first day of the Company's fiscal quarter next
following the effective date (as defined in said Rule 158) of the Registration
Statement.
(m) For a period of three (3) years from the date of this Agreement, the
Company will furnish to Trident, as soon as publicly available after the end of
each fiscal year, a copy of its annual report to shareholders for such year; and
the Company will furnish to Trident (i) as soon as publicly available, a copy of
each report or definitive proxy statement of the Company filed with the
Commission under the Exchange Act or mailed to shareholders, and (ii) from time
to time, such other public information concerning the Company as Trident may
reasonably request.
(n) The Company shall use the net proceeds from the sale of the Shares in
the manner set forth in the Prospectus.
(o) The Company shall not deliver the Shares until each and every
condition set forth in Section 7 hereof has been satisfied, unless such
condition is waived in writing by Trident.
(p) The Company shall advise Trident, if necessary, as to the allocation
of deposits, in the case of Eligible Account Holders and Supplemental Eligible
Account Holders, and votes, in the case of Other Members, and of the Shares in
the event of an oversubscription, and shall provide Trident final instructions
as to the allocation of the Shares ("Allocation Instructions") in such event and
the Allocation Instructions shall be accurate, reliable and complete. Trident
shall be entitled to rely on the Allocation Instructions and shall have no
liability in respect of its reliance thereon, including without limitation, any
liability for or related to any denial or grant of a subscription in whole or in
part.
(q) The Company and the Association will take such actions and furnish
such information as are reasonably requested by Trident in order for Trident to
comply with the NASD's "Interpretation Relating to Free-Riding and Withholding."
(r) At the Closing Date, the Company and the Association will have
completed the conditions precedent to, and shall have conducted the Conversion
in all material respects in accordance with, the Plan, OTS Regulations and all
other applicable laws, regulations, published decisions and orders, including
all terms, conditions, requirements and provisions precedent to the Conversion
imposed by the OTS.
(s) The Company will use its best efforts to obtain approval for and
maintain quotation of its shares of common stock on the Nasdaq stock market
effective on or prior to the Closing Date.
Trident Securities, Inc.
Page 17
6. Payment of Expenses. Subject to Section 3(c) hereof, whether or not
the Conversion is consummated, the Company and the Association shall pay the
following expenses: (a) all regulatory filing fees, including but not limited to
those payable to the Commission, OTS, "blue sky" authorities and the NASD
(including fees payable to the NASD for Trident's filing pursuant to the NASD
Corporate Finance Rule), (b) all stock issue and transfer taxes which may be
payable with respect to the sale of the Shares, (c) attorneys' fees of the
Company and the Association, (d) attorneys' fees relating to any required "blue
sky" laws research and filings, (e) telephone charges, (f) air freight, (g)
rental equipment, (h) supplies, (i) transfer agent and registrar fees and
expenses, (j) auditing and accounting fees and expenses, (k) costs of printing
and mailing all documents necessary in connection with the Conversion, and (l)
slide production expenses in connection with any community investor meetings to
be held by Trident.
7. Conditions of Trident's Obligations. Except as may be waived in
writing by Trident, the obligations of Trident as provided herein shall be
subject to the accuracy of the representations and warranties contained in
Section 2 hereof as of the date hereof and as of the Closing Date, to the
performance by the Company and the Association of their obligations hereunder,
and to the following conditions:
(a) At the Closing Date, Trident shall receive the favorable opinions
of Housley Kantarian & Xxxxxxxxx, P.C., special counsel for the Company and
the Association, and _______________, local counsel for the Company and the
Association, each dated the Closing Date, addressed to Trident, in form and
substance reasonably satisfactory to counsel for Trident and stating that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Tennessee, and the Association is validly existing as a mutual
savings and loan association under the laws of the United States, each
with full power and authority to own its properties and conduct its
business as described in the Prospectus;
(ii) the Association is a member of the Federal Home Loan Bank of
Cincinnati, and the deposit accounts of the Association are insured by
the SAIF up to the applicable legal limits; and no action or
proceeding to suspend or revoke such membership or insurance coverage
is pending or, to such counsel's Actual Knowledge, threatened;
(iii) the activities of the Association and the Subsidiary as
described in the Prospectus are permitted under the HOLA and OTS
Regulations;
(iv) the Subsidiary is validly existing as a corporation in good
standing under the laws of the State of Tennessee with full power and
authority to own its properties and conduct its business as described
in the Prospectus; to such
Trident Securities, Inc.
Page 18
counsel's Actual Knowledge, the Subsidiary has obtained all licenses,
permits and other governmental authorizations required for the conduct
of its business as described in the Prospectus, except where the
failure to obtain such licenses, permits or governmental authorization
would not have a material adverse effect on the financial condition,
operations, business, properties or assets of the Subsidiary; to such
counsel's Actual Knowledge, all of the leases and subleases material
to the business of the Subsidiary under which the Subsidiary holds
properties are in full force and effect; the Subsidiary is not in
violation of its articles of incorporation or, to such counsel's
Actual Knowledge, bylaws; all of the outstanding stock of the
Subsidiary has been duly authorized and is validly issued, fully paid
and nonassessable, and such stock is owned directly by the
Association, free and clear of all material liens, encumbrances or
other claims or restrictions;
(v) the Company, the Association and the Subsidiary are each
duly qualified to do business and are in good standing as a foreign
corporation in each jurisdiction where the ownership or leasing of its
properties or the conduct of its business requires such qualification,
unless the failure to be so qualified would not have a material
adverse effect on the Company, the Association and the Subsidiary,
taken as a whole.
(vi) to such counsel's Actual Knowledge, the Association has
obtained all licenses, permits and other governmental authorizations
required for the conduct of its business as described in the
Prospectus, except where the failure to obtain such licenses, permits
or governmental authorizations would not have a material adverse
effect on the financial condition, operations, business, properties or
assets of the Company and the Association, taken as a whole; to such
counsel's Actual Knowledge, all of the leases and subleases material
to the business of the Association under which the Association holds
properties are in full force and effect; the Association is not in
violation of its charter or, to such counsel's Actual Knowledge,
bylaws;
(vii) the Plan has been duly adopted and approved by the Boards of
Directors of the Association and the Company and the members of the
Association; the Plan complies with, and to such counsel's Actual
Knowledge, the Conversion has been effected in all material respects in
accordance with, the HOLA and the OTS Regulations; to such counsel's
Actual Knowledge, all of the terms, conditions, requirements and
provisions with respect to the Plan and the Conversion imposed by
the OTS, except with respect to the Conversion Application (which is
covered by opinion (xix) below) and the filing or submission of
certain required post-Conversion reports or other materials by the
Company or the Association, have been complied with by the Company and
the
Trident Securities, Inc.
Page 19
Association; and, to such counsel's Actual Knowledge, no person has
sought to obtain regulatory or judicial review of the final action of
the OTS in approving the Plan;
(viii) the Company has authorized Common Stock as set forth in
the Registration Statement and the Prospectus, and the description
thereof in the Registration Statement and the Prospectus is accurate
and complete in all material respects;
(ix) the issuance and sale of the Shares have been duly and
validly authorized by all necessary corporate action on the part of
the Company; the Shares, upon receipt of consideration and issuance in
accordance with the terms of the Plan and this Agreement, will be
validly issued, fully paid, nonassessable and, except as disclosed in
the Prospectus, free of preemptive rights (other than subscription
rights granted pursuant to the Plan), and good title thereto shall be
transferred by the Company free and clear of all claims, encumbrances,
security interests and liens created by the Company;
(x) the certificates for the Shares are in due and proper form
and comply in all material respects with applicable Tennessee law and
OTS Regulations;
(xi) the issuance and sale of the capital stock of the
Association to the Company have been duly authorized by all necessary
corporate action of the Association and the Company and have received
the approval of the OTS, and such capital stock, upon receipt of
payment and issuance in accordance with the terms of the Plan, will be
validly issued, fully paid and nonassessable;
(xii) subject to the satisfaction of the conditions to the OTS
approval of the Conversion Application and the Holding Company
Application, no further approval, authorization, consent or other
order of any regulatory agency is required in connection with the
execution and delivery of this Agreement, the issuance and sale of the
Shares and the consummation of the Conversion, except with respect to
the issuance to the Association's Federal Stock Charter by the OTS,
and except as may be required under the "blue sky" securities laws of
various jurisdictions and the regulations of the NASD (as to which no
opinion need be rendered);
(xiii) the execution and delivery of this Agreement and the
consummation of the Conversion have been duly and validly authorized
by all necessary corporate action on the part of each of the Company
and the Association; and this Agreement is a legal, valid and binding
obligation of each of the Company and
Trident Securities, Inc.
Page 20
the Association, enforceable in accordance with its terms (except as
the enforceability thereof may be limited by (i) bankruptcy,
insolvency, moratorium, reorganization, receivership, conservatorship
or other similar laws relating to or affecting the enforcement of
creditors' rights generally or the rights of creditors of depository
institutions whose accounts are insured by the FDIC or savings and
loan holding companies the accounts of whose subsidiaries are insured
by the FDIC; (ii) general equity principles, regardless of whether
such enforceability is considered in a proceeding in equity or at law,
or (iii) laws relating to the safety and soundness of insured
depository institutions and their affiliates, and except to the extent
that the provisions of Sections 8 and 9 hereof may be unenforceable as
against public policy or applicable law, including but not limited to,
Section 23A of the Federal Reserve Act, as amended);
(xiv) except as set forth in the Prospectus, there are no legal or
governmental proceedings pending or, to such counsel's Actual
Knowledge, threatened against or involving the assets of the Company,
the Association or the Subsidiary which would have a material adverse
effect on the Company, the Association and the Subsidiary, taken as a
whole;
(xv) the statements in the Prospectus under the captions
"Regulation," "Taxation," "Dividends," "Certain Restrictions on
Acquisition of the Company" "Regulation" and "Description of Capital
Stock," insofar as they are, or refer to, statements of law or legal
conclusions (excluding financial or statistical data or stock
valuation information included therein, as to which an opinion need
not be expressed), have been prepared or reviewed by such counsel and
are accurate and complete in all material respects;
(xvi) the Form AC has been approved by the OTS, and the
Prospectus and the Proxy Statement have been authorized for use by the
OTS; the Registration Statement has been declared effective by the
Commission; and no proceedings are pending by or before the Commission
or the OTS seeking to revoke or rescind the orders declaring the
Registration Statement effective or approving the Conversion
Application or, to such counsel's Actual Knowledge, are contemplated
or threatened;
(xvii) the execution and delivery of this Agreement and the
consummation of the Conversion by the Company and the Association do
not conflict with or result in a breach of the charter or bylaws of
the Company or the Association (in either mutual or stock form), or,
to such counsel's Actual Knowledge, constitute a breach of or default
(or an event which, with notice or lapse of time or both, would
constitute a default) under, give rise to any right of termination,
cancellation or acceleration contained in, or result in the creation
or imposition
Trident Securities, Inc.
Page 21
of any lien, charge or other encumbrance upon any of the properties
or assets of the Company or the Association pursuant to any of the
terms, provisions or conditions of, any material agreement, contract,
indenture, bond, debenture, note, instrument or obligation to which
the Company or the Association is a party (other than the
establishment of the liquidation account pursuant to the Plan) or
violate any governmental license or permit or any enforceable published
law, administrative regulation or order or court order, writ,
injunction or decree (subject to the satisfaction of certain conditions
imposed by the OTS in connection with its approval of the Conversion
Application and the Holding Company Application), which breach,
default, encumbrance or violation would have a material adverse effect
on the financial condition, operations, business, assets or properties
of the Company and the Association taken as a whole;
(xviii) to such counsel's Actual Knowledge, there has been no
breach of any provision of the Company's, the Association's or the
Subsidiary's charter or bylaws or breach or default (or the occurrence
of any event which, with notice or lapse of time or both, would
constitute a default) by the Company, the Association or the
Subsidiary under any agreement, contract, indenture, bond, debenture,
note, instrument or obligation to which the Company, the Association
or the Subsidiary is a party or by which any of them or any of their
respective assets or properties may be bound, which breach or default
would have a material adverse effect on the financial condition,
operations, business, assets or properties of the Company, the
Association and the Subsidiary taken as a whole;
(xix) at the time the Conversion Application was approved by
the OTS and the Registration Statement was declared effective by the
Commission, the Conversion Application and the Registration Statement
(including the Prospectus and the Proxy Statement contained therein),
complied as to form in all material respects with the requirements of
the Securities Act, the HOLA, the Securities Act Regulations and the
OTS Regulations, as the case may be (except as to information provided
in writing by Trident with respect to Trident included therein and
financial statements, notes to financial statements, financial tables
and other financial and statistical data and stock valuation
information included therein, as to which no opinion need be
rendered); to such counsel's Actual Knowledge, all documents and
exhibits required to be filed with the Conversion Application and the
Registration Statement have been so filed; and the descriptions in the
Conversion Application and the Registration Statement of such
documents and exhibits are accurate and complete in all material
respects; and
(xx) upon the effectiveness of the Association's stock charter
and bylaws in accordance with applicable regulations and completion of
the sale by the Company of the Shares as contemplated by the
Prospectus and the Plan, (i) the
Trident Securities, Inc.
Page 22
Association will be converted to a permanent capital stock savings
and loan association under the laws of the United States with full
power and authority to own its property and conduct its business as
described in the Prospectus, and (ii) all of the outstanding capital
stock of the Association will be owned of record and, to such
counsel's Actual Knowledge, beneficially by the Company, free and
clear of all liens, charges, encumbrances and restrictions.
In rendering such opinions, such counsels may rely as to certain
matters of fact on certificates of executive officers and directors of the
Company and the Association and certificates of public officials delivered
pursuant hereto. Such counsels may assume that any agreement is the valid
and binding obligation of any parties to such agreement other than the
Company, the Association and the Subsidiary. Such opinion may be governed
by, and interpreted in accordance with, the Legal Opinion Accord ("Accord")
of the ABA Section of Business Law (1991), and, as a consequence,
references in such opinions to such counsel's "Actual Knowledge" shall be
as such term is defined in the Accord (or knowledge based on certificates).
For purposes of such opinion, no proceeding shall be deemed to be pending,
no order or stop order shall be deemed to be issued, and no action shall be
deemed to be instituted unless, in each case, a director or executive
officer of the Company or the Association, or its counsel, shall have
received a copy of such proceeding, order, stop order or action. Such
opinion may be limited to statutes, regulations and judicial
interpretations and to facts as they exist as of the date of such opinions.
In rendering such opinions, such counsels need assume no obligation to
revise or supplement it should such statutes, regulations and judicial
interpretations be changed by legislative or regulatory action, judicial
decision or otherwise. Such counsels need express no view, opinion or
belief with respect to whether any proposed or pending legislation, if
enacted, or any proposed or pending regulations or policy statements issued
by any regulatory agency, whether or not promulgated pursuant to any such
legislation, would affect the validity of the execution and delivery by the
Company and the Association of this Agreement or the issuance of the
Shares.
(b) At the Closing Date, Trident shall receive the letter of Housley
Kantarian & Xxxxxxxxx, P.C., special counsel for the Company and the
Association, dated the Closing Date, addressed to Trident, in form and
substance reasonably satisfactory to counsel for Trident and to the effect
that: (i) based on such counsel's participation in conferences with
representatives of the Company, the Association, its counsel, the
independent appraiser, the independent certified public accountants,
Trident and its counsel, review of documents and applicable law (including
the requirements of Form SB-2) and the experience such counsel has gained
in its practice under the Securities Act (relying as to factual matters on
certificates of officers and other written factual representations by the
Company and the Association), nothing has come to such counsel's attention
that would lead it to believe that the Registration Statement, as amended
or supplemented (except as to information in respect of Trident contained
Trident Securities, Inc.
Page 23
therein and except as to the financial statements, notes to financial
statements, financial tables and other financial and statistical data and
stock valuation information contained therein, as to which such counsel
need express no view), at the time it became effective contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements made therein, in
light of the circumstances under which they were made, not misleading, and
that the Prospectus, as amended or supplemented (except as to information
in respect of Trident contained therein and except as to financial
statements, notes to financial statements, financial tables and other
financial and statistical data and stock valuation information contained
therein as to which such counsel need express no view), as if its date and
at the Closing Date, contained any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading
(in issuing such letter, such counsel may indicate that it has not
confirmed the accuracy or completeness of or otherwise verified the factual
information contained in the Registration Statement or the Prospectus and
that it does not assume any responsibility for the accuracy or completeness
thereof.)
(c) Counsel for Trident shall have been furnished such documents as
they reasonably may require for the purpose of enabling them to review or
pass upon the sale of the Shares as herein contemplated and related
proceedings, and for the purpose of evidencing the accuracy, completeness
or satisfaction of any of the representations, warranties or conditions
herein contained, including but not limited to, resolutions of the Board of
Directors of the Company and the Association regarding the authorization of
this Agreement and the transactions contemplated hereby.
(d) Prior to and at the Closing Date, in the reasonable opinion of
Trident, (i) there shall have been no material adverse change in the
financial condition, business, operations, assets or properties of the
Company and the Association, taken as a whole, since the latest date as of
which such condition is set forth in the Prospectus, except as referred to
or contemplated therein; (ii) there shall have been no transaction entered
into by the Company or the Association after the latest date as of which
the financial condition of the Company or the Association is set forth in
the Prospectus other than transactions referred to or contemplated therein,
transactions in the ordinary course of business, and transactions which are
not material to the Company and the Association, taken as a whole; (iii)
none of the Company or the Association shall have received from the OTS or
Commission any directive (oral or written) to make any change in the method
of conducting their respective businesses which is material to the business
of the Company and the Association, taken as a whole, with which they have
not complied; (iv) 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 threatened against the Company or the
Association or affecting any of their respective assets, wherein an
unfavorable decision, ruling or finding would have a material adverse
effect on the
Trident Securities, Inc.
Page 24
business, operations, financial condition or income of the Company and the
Association, taken as a whole; and (v) the Shares shall have been qualified
or registered for offering and sale by the Company under the securities or
"blue sky" laws of such jurisdictions as Trident and the Company shall have
agreed upon.
(e) At the Closing Date, Trident shall receive a certificate of the
principal executive officer and the principal financial officer of each of
the Company and the Association, dated the Closing Date, to the effect
that: (i) they have examined the Prospectus and, at the time the Prospectus
became authorized for final use, the Prospectus did not contain an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading with respect to the Company or the
Association; (ii) since the date the Prospectus became authorized for final
use, no event has occurred which should have been set forth in an amendment
or supplement to the Prospectus which has not been so set forth, including
specifically, but without limitation, any material adverse change in the
business, financial condition, operations, assets or properties of the
Company or the Association and, the conditions set forth in clauses (ii)
through (iv) inclusive of subsection (d) of this Section 7 have been
satisfied; (iii) no order has been issued by the Commission or the OTS to
suspend the Offerings or the effectiveness of the Prospectus, and, to the
best knowledge of such officers, no action for such purposes has been
instituted or threatened by the Commission or the OTS; (iv) to the best
knowledge of such officers, no person has sought to obtain review of the
final actions of the OTS approving the Plan; and (v) all of the
representations and warranties contained in Section 2 of this Agreement are
true and correct, with the same force and effect as though expressly made
on the Closing Date.
(f) At the Closing Date, Trident shall receive, among other
documents, (i) copies of the letters from the OTS authorizing the use of
the Prospectus and the Proxy Statement, (ii) a copy of the order of the
Commission declaring the Registration Statement effective; (iii) copy of
the certificate from the OTS evidencing the corporate existence of the
Association; (iv) copy of the certificate from the FDIC evidencing the
insured status of the Association, (v) a copy of the letter from the
appropriate Delaware authority evidencing the incorporation (and, if
generally available from such authority, good standing) of the Company;
(vi) a copy of the Company's certificate of incorporation certified by the
appropriate Delaware governmental authority; and, (vii) if available, a
copy of the letter from the OTS approving the Association's Federal Stock
Charter.
(g) As soon as available after the Closing Date, Trident shall
receive a certified copy of the Association's Federal Stock Charter as
executed by the OTS.
(h) Concurrently with the execution of this Agreement, Trident
acknowledges receipt of a letter from Xxxx & Company, independent certified
public accountants,
Trident Securities, Inc.
Page 25
addressed to Trident and the Company, in substance and form reasonably
satisfactory to counsel for Trident, with respect to the consolidated
financial statements of the Association and certain financial information
contained in the Prospectus.
(i) At the Closing Date, Trident shall receive a letter in form and
substance reasonably satisfactory to counsel for Trident from Xxxx &
Company, independent certified public accountants, dated the Closing Date
and addressed to Trident and the Company, confirming the statements made by
them in the letter delivered by them pursuant to the preceding subsection
as of a specified date not more than five (5) days prior to the Closing
Date.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are, in the reasonable
opinion of Trident and its counsel, satisfactory to Trident and its counsel.
Any certificates signed by an officer or director of the Company or the
Association prepared for Trident's reliance and delivered to Trident or to
counsel for Trident shall be deemed a representation and warranty by the Company
and the Association to Trident as to the statements made therein. If any
condition to Trident's obligations hereunder to be fulfilled prior to or at the
Closing Date is not so fulfilled, Trident may terminate this Agreement or, if
Trident so elects, may waive in writing any such conditions which have not been
fulfilled, or may extend the time of their fulfillment.
8. Indemnification.
(a) The Company and the Association jointly and severally agree to
indemnify and hold harmless Trident, its officers, directors and employees and
each person, if any, who controls Trident within the meaning of Section 15 of
the Securities Act or Section 20(a) of the Exchange Act, against any and all
loss, liability, claim, damage and expense whatsoever and shall further promptly
reimburse such persons for any legal or other expenses reasonably incurred by
each or any of them in investigating, preparing to defend or defending against
any action, proceeding or claim (whether commenced or threatened) arising out of
or based upon (A) (i) any untrue or alleged untrue statement of a material fact
or the omission or alleged omission of a material fact required to be stated or
necessary to make the statements, in light of the circumstances under which they
were made, not misleading in (i) the Registration Statement or the Prospectus
(ii) any application (including the Form AC) or other document or communication
(in this Section 8 collectively called "Application") prepared or executed by or
on behalf of the Company, the Association or based upon written information
furnished by or on behalf of the Company or the Association, filed in any
jurisdiction to register or qualify the Shares under the securities laws thereof
or filed with the OTS or Commission with respect to the offering of the Shares,
unless such statement or omission was made in reliance upon and in conformity
with information furnished in writing to the Company or the Association with
respect to Trident by or on behalf of Trident expressly for use in the
Prospectus or any amendment or supplement thereof or in any Application, as the
case may be, or (B) the Conversion or the engagement of
Trident Securities, Inc.
Page 26
Trident hereunder, unless such action, proceeding or claim arises as a result of
Trident's gross negligence, bad faith or willful misconduct.
(b) The Company shall indemnify and hold Trident harmless for any
liability whatsoever arising out of (i) the Allocation Instructions or (ii) any
records of Eligible Account Holders, Supplemental Eligible Account Holders and
Other Members (as those terms are defined in the Plan) delivered to Trident by
the Association or its agents for use during the Conversion.
(c) Trident agrees to indemnify and hold harmless the Company and the
Association, their officers, directors and employees and each person, if any,
who controls the Company and the Association within the meaning of Section 15 of
the Securities Act or Section 20(a) of the Exchange Act, to the same extent as
the foregoing indemnity from the Company and the Association to Trident, but
only with respect to statements or omissions, if any, made in the Prospectus or
any amendment or supplement thereof, in any Application or to a purchaser of the
Shares in reliance upon, and in conformity with, information furnished in
writing to the Company or the Association with respect to Trident by or on
behalf of Trident expressly for use in the Prospectus or any amendment or
supplement thereof or in any Application.
(d) Promptly after receipt by an indemnified party under this Section 8 of
notice of any action, proceeding or claim (whether commenced or threatened) such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party of such
action, proceeding or claim; but the omission so to notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party otherwise than under this Section 8. In case any such action
is brought against any indemnified party, and it notifies the indemnifying party
of the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with the other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section 8 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than the
reasonable cost of investigation except as otherwise provided herein. In the
event the indemnifying party elects to assume the defense of any such action and
retain counsel acceptable to the indemnified party, the indemnified party may
retain additional counsel, but shall bear the fees and expenses of such counsel
unless (i) the indemnifying party shall have specifically authorized the
indemnified party to retain such counsel or (ii) the parties to such suit
include such indemnifying party and the indemnified party, and such indemnified
party shall have been advised by counsel that one or more material legal
defenses may be available to the indemnified party which may not be available to
the indemnifying party, in which case the indemnifying party shall not be
entitled to assume the defense of such suit notwithstanding the indemnifying
party's obligation to bear the fees and expenses of such counsel. In no event
shall the indemnifying parties be liable for the fees and expenses of more than
one separate firm of
Trident Securities, Inc.
Page 27
attorneys (and any special counsel that said firm may retain) for all
indemnified parties in connection with any one action, proceeding, claim or suit
or separate but similar or related actions, proceedings or claims in the same
jurisdiction arising out of the same general allegations or circumstances. An
indemnifying party against whom indemnity may be sought shall not be liable to
indemnify an indemnified party under this Section 8 if any settlement of any
such action is effected without such indemnifying party's consent. To the
extent applicable, this Section 8 is subject to and limited by public policy and
the provisions of applicable law, including but not limited to, Section 23A.
9. Contribution. In order to provide for just and equitable contribution
in circumstances in which the indemnity agreement provided for in Section 8
above is for any reason held to be unavailable to Trident, the Company and/or
the Association other than in accordance with its terms, the Company and the
Association or Trident shall contribute to the aggregate losses, liabilities,
claims, damages, and expenses of the nature contemplated by said indemnity
agreement incurred by the Company and the Association or Trident (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Association on the one hand and Trident on the other from the
offering of the Shares or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above, but also the
relative fault of the Company or the Association on the one hand and Trident on
the other hand in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or judgments, as well as any other
relevant equitable considerations. The relative benefits received by the
Company and the Association on the one hand and Trident on the other shall be
deemed to be in the same proportion as the total net proceeds from the
Conversion received by the Company and the Association bear to the total fees
received by Trident under this Agreement. The relative fault of the Company or
the Association on the one hand and Trident on the other 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 Company or the Association or by Trident
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the Association and Trident agree that it would not be just
and equitable if contribution pursuant to this Section 9 were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities or judgments referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
the indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 9, Trident
shall not be required to contribute any amount in excess of the amount by which
fees owed Trident pursuant to this Agreement exceeds the amount of any
Trident Securities, Inc.
Page 28
damages which Trident has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation. To the extent applicable, this
Section 9 is subject to and limited by public policy and the provisions of
applicable law, including but not limited to, Section 23A.
10. Survival of Agreements, Representations and Indemnities. The
respective indemnities of the Company and the Association and Trident and the
representation and warranties of the Company and the Association and of Trident
set forth in or made pursuant to this Agreement shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of Trident or the Company or the Association
or any controlling person or indemnified party referred to in Section 8 hereof,
and shall survive any termination or consummation of this Agreement and/or the
issuance of the Shares, and any legal representative of Trident, the Company,
the Association and any such controlling persons shall be entitled to the
benefit of the respective agreements, indemnities, warranties and
representations.
11. Termination. Trident may terminate this Agreement by giving the
notice indicated below in this Section at any time after this Agreement becomes
effective as follows:
(a) If any domestic or international event or act or occurrence has
materially disrupted the United States securities markets such as to make it, in
Trident's reasonable opinion, impracticable to proceed with the offering of the
Shares; or if trading on the New York Stock Exchange shall have suspended; or if
the United States shall have become involved in a war or major hostilities; or
if a general banking moratorium has been declared by a state or federal
authority which has material effect on the Association or the Conversion; or if
a moratorium in foreign exchange trading by major international banks or persons
has been declared; or if there shall have been a material change in the
capitalization, condition or business of the Company, or if the Association
shall have sustained a material or substantial loss by fire, flood, accident,
hurricane, earthquake, theft, sabotage or other calamity or malicious act,
whether or not said loss shall have been insured; or if there shall have been a
material change in the condition or prospects of the Company or the Association.
(b) Any party hereto may terminate this Agreement by giving notice
pursuant to Section 12 hereof of a material breach of this Agreement by the
other party at any time after this Agreement becomes effective.
(c) If this Agreement is terminated as provided in this Section 11, the
party terminating this Agreement shall notify the non-terminating party promptly
by telephone or telegram, confirmed by letter.
Trident Securities, Inc.
Page 29
(d) If this Agreement is terminated by Trident for any of the reasons
set forth in subsection (a) above, and to fulfill its obligations, if any,
pursuant to Sections 3, 6, 8(a) and 9 of this Agreement and upon demand, the
Company and the Association shall pay Trident the full amount so owing
thereunder.
(e) The Association may terminate the Conversion in accordance with the
terms of the Plan. Such termination shall be without liability to any party,
except that the Company and the Association shall be required to fulfill
their obligations pursuant to Sections 3(b), 3(c), 6, 8(a), 9 and 10 of this
Agreement.
12. Notices. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and if sent to Trident shall be
mailed, delivered or telegraphed and confirmed to Trident Securities, Inc.,
0000 Xxx Xxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxx Xxxxxxxx 00000, Attention: Mr.
R. Xxx Xxxxxxx, Xx. (with a copy to Breyer & Aguggia, 0000 X Xxxxxx, X.X.,
Xxxxx 000 Xxxx, Xxxxxxxxxx, X.X. 00000, Attention: Xxxx X. Xxxxxxx, Esquire)
and if sent to the Company or the Association, shall be mailed, delivered or
telegraphed and confirmed to United Tennessee Bankshares, Inc. or Newport
Federal Savings & Loan Association, 000 Xxxx Xxxxxxxx, Xxxxxxx, Xxxxxxxxx
00000, Attention: Xxxxxxx X. Xxxxxxx, President (with a copy to Housley
Kantarian & Xxxxxxxxx, P.C. 0000 00xx Xxxxxx, X.X., Xxxxx 000, Xxxxxxxxxx, XX
00000, Attention: K. Xxxxx Xxxx, Esquire).
13. Parties. This Agreement shall inure solely to the benefit of, and
shall be binding upon, Trident, the Company, the Association and the
controlling and other persons referred to in Section 8 hereof, and their
respective successors, legal representatives and assigns, and no other person
shall have or be construed to have any legal or equitable right, remedy or
claim under or in respect of or by virtue of this Agreement or any provision
herein contained.
14. Construction. Unless preempted by federal law, this Agreement shall
be governed by and construed in accordance with the substantive laws of North
Carolina.
15. Counterparts. This Agreement may be executed in separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which together shall constitute but one and the same
instrument.
* * *
Trident Securities, Inc.
Page 30
Please acknowledge your agreement to the foregoing by signing below and
returning to the Company one copy of this letter.
UNITED TENNESSEE BANKSHARES, INC.
By:
-------------------------------------
Xxxxxxx X. Xxxxxxx
President and Chief Executive Officer
NEWPORT FEDERAL SAVINGS & LOAN ASSOCIATION
By:
-------------------------------------
Xxxxxxx X. Xxxxxxx
President and Chief Executive Officer
Agreed to and accepted as of
the date first written above:
TRIDENT SECURITIES, INC.
By:
-----------------------------------
Name:
Title:
