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EXHIBIT 1.2
HERITAGE BANCSHARES, INC.
Up to 502,550 Shares
COMMON STOCK
(Par Value $.01 Per Share)
Subscription Price $10.00 Per Share
AGENCY AGREEMENT
_________, 2001
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Heritage Bancshares, Inc., a Delaware corporation (the "Company") and
Heritage Savings Bank, ssb, a Texas chartered mutual savings bank (the "Bank")
(references to the "Bank" include the Bank in mutual or stock form, as
indicated by the context), with its' deposit accounts insured by the Savings
Association Insurance Fund ( "SAIF") administered by the Federal Deposit
Insurance Corporation ("FDIC"), hereby confirm, jointly and severally, their
agreement with ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. (the "Agent"), as follows:
SECTION 1. THE OFFERING. In accordance with the plan of conversion
adopted by its Board of Directors (the "Plan"), the Company will offer and
sell up to 502,550 shares of its common stock, par value, $.01 per share (the
"Shares" or "Common Stock"), in a subscription offering (the "Subscription
Offering") to (1) depositors of the Bank with account balances of $50.00 or
more as of June 30, 2000 ("Eligible Account Holders"), (2) the Employee Stock
Ownership Plan of the Bank (the "ESOP"), (3) depositors of the Bank with
account balances of $50.00 or more as of September 30, 2001 ("Supplemental
Eligible Account Holders"), (4) depositors of the Bank as of the close of
business on ___________, who continue as depositors as of the Special Meeting
who are not Eligible Account Holders or Supplemental Eligible Account Holders
("Other Members"), and (5) employees, officers and directors of the Bank to
the extent they are not Eligible Account Holders, Supplemental Eligible
Account Holders, or Other Members. To the extent Shares remain unsold in the
Subscription Offering, the Company is offering for sale in a direct community
offering (the "Community Offering" and when referred to together with the
Subscription Offering, the "Subscription and Community Offering") the Shares
not so subscribed for or ordered in the Subscription Offering to members of
the general public, with preference given to natural persons residing in the
Texas county of ▇▇▇▇▇▇▇ ("Other Subscribers"), (all such offerees being
referred to in the aggregate as "Eligible Offerees"). It is anticipated that
shares not subscribed for in the
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Subscription and Community Offering will be offered to certain members of the
general public on a best efforts basis through a selected dealers arrangement
(the "Public Offering") (the Subscription Offering, Community Offering and
Public Offering are collectively referred to as the "Offering"). It is
acknowledged that the purchase of Shares in the Offering is subject to the
maximum and minimum purchase limitations as described in the Plan and that the
Company and the Bank may reject, in whole or in part, any orders received in
the Community Offering or Public Offering. The Company will issue the Shares
at a purchase price of $10.00 per share (the "Purchase Price").
The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form SB-2 (File No.
333-_______) (the "Registration Statement") containing a prospectus relating
to the Offering for the registration of the Shares under the Securities Act of
1933 (the "1933 Act"), and has filed such amendments thereof and such amended
prospectuses as may have been required to the date hereof. The term
"Registration Statement" shall include all exhibits thereto, as amended,
including post-effective amendments. The prospectus, as amended, on file with
the Commission at the time the Registration Statement initially became
effective is hereinafter called the "Prospectus," except that if any
Prospectus is filed by the Company pursuant to Rule 424(b) or (c) of the rules
and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations") differing from the prospectus on file at the time the
Registration Statement 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.
The Bank and the Company have filed with the Texas Savings and Loan
Department ("TSLD") and the Federal Deposit Insurance Corporation (the "FDIC")
an Application for Conversion of the Bank with respect to the stock issuance
(the "Conversion Application"), including the Prospectus and the Valuation
Appraisal Report prepared by ▇▇▇▇▇▇▇▇ & Company, Inc. (the "Appraisal") and
has filed such amendments thereto as may have been required by the TSLD and
the FDIC. The Company has filed an Application to become a savings and loan
holding company (the "Holding Company Application") pursuant to the Home
Owners Loan Act, as amended (the "HOLA") with the Office of Thrift Supervision
("OTS"). The Conversion Application and Holding Company Application have each
been approved by their respective agencies and the related Prospectus has been
authorized for use. The TSLD, FDIC and OTS are sometimes referred to herein as
the "Agencies."
SECTION 2. RETENTION OF AGENT; COMPENSATION; SALE AND DELIVERY OF THE
SHARES. Subject to the terms and conditions herein set forth, the Company and
the Bank have retained the Agent to consult with and to advise the Bank and
the Company, and to assist the Company, on a best efforts basis, in the
distribution of the shares of Common Stock in the Offering. The services that
the Agent will provide include, but are not limited to (i) training the
employees of the Bank who will perform certain ministerial functions in the
Subscription and Community Offering regarding the mechanics and regulatory
requirements of the stock offering process, (ii) managing the Stock
Information Center by assisting interested stock subscribers and by keeping
records of all stock orders and (iii) preparing marketing materials.
On the basis of the representations, warranties, and agreements
herein contained, but subject to the terms and conditions herein set forth,
the Agent accepts such appointment and agrees to
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consult with and advise the Company and the Bank as to the matters set forth
in the letter agreement ("Letter Agreement"), dated May 10, 2001 between the
Bank and the Agent (a copy of which is attached hereto as Exhibit A). It is
acknowledged by the Company and the Bank that the Agent shall not be required
to take or purchase any Shares or be obligated to take any action which is
inconsistent with all applicable laws, regulations, decisions or orders. In
the event of a Public Offering, the Agents will assemble and manage a selling
group of broker-dealers which are members of the National Association of
Securities Dealers, Inc. (the "NASD") to participate in the solicitation of
purchase orders for shares under a selected dealers' agreement ("Selected
Dealers' Agreement"), the form of which is set forth as a Exhibit B to this
Agreement.
Agent also agrees to provide financial advisory assistance to the
Bank and the Company at no charge for a period of one year following the
completion of the Offering including general advice on the market for bank
stocks and the stock of the Company, shareholder enhancement methods and other
related matters. Thereafter, if the parties wish to continue the relationship,
a fee will be negotiated and an agreement with respect to specific advisory
services will be entered into at that time.
The obligations of the Agent pursuant to this Agreement (other than
those set forth in Sections 9 and 10 hereof) shall terminate upon the
completion or termination or abandonment of the Plan by the Company or upon
termination of the Offering, but in no event later than the date (the "End
Date") which is 45 days after the Closing Date (as hereinafter defined). All
fees or expenses due to the Agent but unpaid will be payable to the Agent in
next day funds at the earlier of the Closing Date (as hereinafter defined) or
the End Date. In the event the Offering is extended beyond the End Date, the
Company, the Bank and the Agent may agree to renew this Agreement under
mutually acceptable terms.
In the event the Company is unable to sell a minimum of 323,000
Shares within the period herein provided, this Agreement shall terminate and
the Company shall refund to any persons who have subscribed for any of the
Shares, the full amount which it may have received from them plus accrued
interest as set forth in the Prospectus; and none of the parties to this
Agreement shall have any obligation to the other parties hereunder, except as
set forth in this Section 2 and in Sections 7, 9 and 10 hereof.
In the event the Offering is terminated, the Agent shall be paid the
fees due to the date of such termination pursuant to subparagraphs (a) and (d)
below.
If all conditions precedent to the consummation of the Conversion,
including, without limitation, the sale of all Shares required by the Plan to
be sold, are satisfied, the Company agrees to issue, or have issued, the
Shares sold in the Offering and to release for delivery certificates for such
Shares on the Closing Date (as hereinafter defined) against payment to the
Company by any means authorized by the Plan; provided, however, that no funds
shall be released to the Company until the conditions specified in Section 8
hereof shall have been complied with to the reasonable satisfaction of the
Agent and their counsel. The release of Shares against payment therefor shall
be made on a date and at a place acceptable to the Company, the Bank and the
Agent. Certificates for shares shall be delivered directly to the purchasers
in accordance with their directions. The date
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upon which the Company shall release or deliver the Shares sold in the
Offering, in accordance with the terms herein, is called the "Closing Date."
The Agent shall receive the following compensation for its services
hereunder:
(a) A management fee of $25,000, payable in four consecutive
monthly installments of $6,250 commencing with the adoption
of the Plan. All installments have been paid as of the date
hereof. Should the Offering be terminated for any reason not
attributable to the action or inaction of the Agent, the
Agent shall have earned and be entitled to be paid fees
accruing through the stage at which the termination
occurred.
(b) A Success Fee of $50,000.
(c) If any of the shares remain available after the Subscription
and Community Offerings, at the request of the Company, the
Agent will seek to form a syndicate of registered
broker-dealers to assist in the sale of such Common Stock on
a best efforts basis, subject to the terms and conditions
set forth in the selected dealers agreement. the Agent will
endeavor to distribute the Common Stock among dealers in a
fashion which best meets the distribution objectives of the
Company and the Plan. The Agent will be paid a fee not to
exceed 5.5% of the aggregate Purchase Price of the Shares
sold by them. The Agent will pass onto selected
broker-dealers, who assist in the Public Offering, an amount
competitive with gross underwriting discounts charged at
such time for comparable amounts of stock sold at a
comparable price per share in a similar market environment.
Fees with respect to purchases affected with the assistance
of a broker/dealer other than the Agent shall be transmitted
by the Agent to such broker/dealer. The decision to utilize
selected broker-dealers will be made by the Company upon
consultation with the Agent. In the event, with respect to
any purchases of Shares, fees are paid pursuant to this
subparagraph 2(c), such fees shall credited be against the
payments made pursuant to subparagraphs 2(a) and 2(b).
(d) The Company will bear those expenses of the proposed
offering customarily borne by issuers, including, without
limitation, regulatory filing fees, "Blue Sky," and NASD
filing and registration fees; the fees of the Company's
accountants, attorneys, appraiser, transfer agent and
registrar, printing, mailing and marketing and syndicate
expenses associated with the Offering; and fees for "Blue
Sky" legal work. If the Agent incurs expenses on behalf of
the Company, the Company will reimburse the Agent for such
expenses. The Agent shall be reimbursed for reasonable
out-of-pocket expenses, including costs of travel, meals and
lodging, photocopying, telephone, facsimile and couriers.
The Agent shall also be reimbursed for its fees of
underwriter's counsel (such fees of counsel will not be
incurred without the prior approval of the Company) not to
exceed $25,000. The selection of such counsel will be done
by the Agent, after consultation with the Company.
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SECTION 3. PROSPECTUS; OFFERING. The Shares are to be initially
offered in the Offering at the Purchase Price as defined and set forth on the
cover page of the Prospectus. The Purchase Price may be changed by the Company
after consultation with the Agent, subject to such approval of the TSLD and
FDIC and declaration of effectiveness of an amendment to the Prospectus by the
Commission as may be required. The parties hereto hereby acknowledge that,
without the prior written consent of the TSLD and FDIC, the Conversion will
not be consummated until the Company has received subscriptions for at least
the minimum range of the pro forma market value of the Company.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
BANK. The Company and the Bank jointly and severally represent and warrant to
and agree with the Agent as follows:
(a) The Registration Statement which was prepared by the Company
and the Bank and filed with the Commission was declared
effective by the Commission on _______ __, 2001. At the
time the Registration Statement, including the Prospectus
contained therein (including any amendment or supplement),
became effective, the Registration Statement contained all
statements that were required to be stated therein in
accordance with the 1933 Act and the 1933 Act Regulations,
complied in all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations and the
Registration Statement, including the Prospectus contained
therein (including any amendment or supplement thereto), and
any information regarding the Company or the Bank contained
in Sales Information (as such term is defined in Section 9
hereof) authorized by the Company or the Bank for use in
connection with the Offering, did not contain an untrue
statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under
which they were made, not misleading, and at the time any
Rule 424(b) or (c) Prospectus was filed with the Commission
and at the Closing Date referred to in Section 2, the
Registration Statement, including the Prospectus contained
therein (including any amendment or supplement thereto), and
any information regarding the Company or the Bank contained
in Sales Information authorized by the Company or the Bank
for use in connection with the Offering will contain all
statements that are required to be stated therein in
accordance with the 1933 Act and the 1933 Act Regulations
and will not contain an untrue statement of a material fact
or omit to state a material fact necessary in order to make
the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however,
that the representations and warranties in this Section 4(a)
shall not apply to statements or omissions made in reliance
upon and in conformity with written information furnished to
the Company or the Bank by the Agent or its counsel
expressly regarding the Agent for use in the Prospectus or
statements in or omissions from any Sales Information or
information filed pursuant to state securities or blue sky
laws or regulations regarding the Agent.
(b) The Conversion Application which was prepared by the Company
and the Bank and filed with the TSLD and the FDIC was
approved by the TSLD on ______________,
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2001 and the FDIC on _________________, 2001, and the
related Prospectus has been authorized for use by the TSLD
and the FDIC. At the time of the approval of the Conversion
Application, including the Prospectus (including any
amendment or supplement thereto), by the TSLD and FDIC and
at all times subsequent thereto until the Closing Date, the
Conversion Application, including the Prospectus (including
any amendment or supplement thereto), will comply in all
material respects with the rules and regulations of the TSLD
and the FDIC ("Conversion Regulations"), except to the
extent waived in writing by the TSLD or FDIC, as
appropriate. The Conversion Application, including the
Prospectus (including any amendment or supplement thereto),
does not include any untrue statement of a material fact or
omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
provided, however, that the representations and warranties
in this Section 4(b) shall not apply to statements or
omissions made in reliance upon and in conformity with
written information furnished to the Company or the Bank by
the Agent or its counsel expressly regarding the Agent for
use in the Prospectus contained in the Conversion
Application or statements in or omissions from any Sales
Information.
(c) As of the Closing Date, the Bank and the Company will have
satisfied the conditions precedent to their consummation of
the Conversion in all material respects in accordance with
the Plan, and shall have complied in all material respects
with the HOLA and all other applicable laws, regulations,
decisions and orders, including all terms, conditions,
requirements, and provisions precedent to the Conversion
imposed upon each of them by the Agencies. The Plan has been
duly and validly adopted by the Board of Directors of each
of the Bank and the Company. The filing of the Holding
Company Application has been approved by the Board of
Directors of the Company. The Agencies have approved the
Plan and authorized the use of the Prospectus and such
approvals and authorization remain in full force and effect.
(d) The Company is a savings and loan holding company under
HOLA. The Holding Company Application which was prepared by
the Company and the Bank and filed with the OTS was approved
by the OTS on ______________, 2001. At the time of the
approval of the Holding Company Application, including the
Prospectus (including any amendment or supplement thereto),
by the OTS and at all times subsequent thereto until the
Closing Date, the Holding Company Application, including the
Prospectus (including any amendment or supplement thereto),
will comply in all material respects with the HOLA and
related regulations, except to the extent waived in writing
by the OTS. The Holding Company Application, including the
Prospectus (including any amendment or supplement thereto),
does not include any untrue statement of a material fact or
omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
provided, however, that the representations and warranties
in this Section 4(d) shall not apply to statements or
omissions made in reliance upon and in conformity with
written information
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furnished to the Company or the Bank by the Agent or its
counsel expressly regarding the Agent for use in the
Prospectus contained in the Holding Company Application or
statements in or omissions from any Sales Information.
(e) No order has been issued by the Agencies (hereinafter any
reference to the Agencies or the FDIC shall include the
SAIF) preventing or suspending the use of the Prospectus,
and no action by or before any such government entity to
revoke any approval, authorization or order of effectiveness
related to the Offering is, to the best knowledge of the
Company or the Bank, pending or threatened.
(f) The Company does not own any equity securities or any equity
interest in any business enterprise except as described in
the Prospectus.
(g) The Plan has been adopted by the Boards of Directors of the
Company and the Bank and at the Closing Date will have been
approved by the members of the Bank, and the offer and sale
of the Shares will have been conducted in all material
respects in accordance with the Plan, the Conversion
Regulations, and all other applicable laws, regulations,
decisions and orders, including all terms, conditions,
requirements and provisions precedent to the Offering
imposed upon the Company or the Bank by the Agencies, the
Commission, or any other regulatory authority and in the
manner described in the Prospectus. To the best knowledge
of the Company, no person has sought to obtain review of
the final action of the Agencies in approving the Plan, or
in approving the Conversion or the Conversion Application or
the Holding Company Application pursuant to any applicable
state or federal statute or regulation.
(h) The Bank has been organized and is a validly existing Texas
chartered savings bank in mutual form of organization, and
on the Closing Date will become a duly organized and validly
existing Texas chartered savings bank in capital stock form
of organization, in both instances, duly authorized to
conduct its business and own its property as described in
the Registration Statement and the Prospectus; the Bank has
obtained all material licenses, permits and other
governmental authorizations currently required for the
conduct of its business; all such licenses, permits and
governmental authorizations are in full force and effect,
and the Bank is in all material respects complying with all
laws, rules, regulations and orders applicable to the
operation of its business; the Bank is existing under the
laws of the State of Texas and is duly qualified as a
foreign corporation to transact business and is in good
standing in each jurisdiction in which its ownership of
property or leasing of property or the conduct of its
business requires such qualification, unless the failure to
be so qualified in one or more of such jurisdictions would
not individually or in the aggregate have a material adverse
effect on the condition, financial or otherwise, or the
business, operations or income of the Bank. The Bank does
not own equity securities or any equity interest in any
other business enterprise except as described in the
Prospectus or as would not be material to the operations of
the Bank. Upon sale by the Company of the Shares
contemplated by the Prospectus, (i) all of the issued and
outstanding capital stock of the Bank will be owned by the
Company and
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(ii) the Company will have no direct subsidiaries other than
the Bank. At the Closing Date, the Conversion will have
been effected in all material respects in accordance with
all applicable statutes, regulations, decisions and orders;
and, except with respect to the filing of certain post-sale,
post-Conversion reports, and documents in compliance with
the 1933 Act Regulations, the Agencies' resolutions or
letters of approval, all terms, conditions, requirements and
provisions with respect to the Conversion imposed by the
Commission and the Agencies, if any, will have been complied
with by the Company and the Bank in all material respects or
appropriate waivers will have been obtained and all material
notice and waiting periods will have been satisfied, waived
or elapsed.
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of
the State of Delaware with corporate power and authority to
own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the
Prospectus, and at the Closing Date the Company will be
qualified to do business as a foreign corporation in Texas
and in each jurisdiction in which the conduct of its
business requires such qualification, except where the
failure to so qualify would not individually or in the
aggregate have a material adverse effect on the condition,
financial or otherwise, or the business, operations or
income of the Company. The Company has obtained all
material licenses, permits and other governmental
authorizations currently required for the conduct of its
business; all such licenses, permits and governmental
authorizations are in full force and effect, and the Company
is in all material respects complying with all laws, rules,
regulations and orders applicable to the operation of its
business.
(j) The Bank is a member of the Federal Home Loan Bank of Dallas
("FHLB-Dallas"). The deposit accounts of the Bank are
insured by the FDIC up to the applicable limits; and no
proceedings for the termination or revocation of such
insurance are pending or, to the best knowledge of the
Company or the Bank, threatened.
(k) Upon consummation of the Conversion, the liquidation account
for the benefit of Eligible Account Holders and Supplemental
Eligible Account Holders will be duly established in
accordance with the requirements of the Conversion
Regulations and the Plan.
(l) The Company and the Bank have good and marketable title to
all real property and good title to all other assets
material to the business of the Company and the Bank, taken
as a whole, and to those properties and assets described in
the Registration Statement and Prospectus as owned by them,
free and clear of all liens, charges, encumbrances or
restrictions, except such as are described in the
Registration Statement and Prospectus, or are not material
to the business of the Company and the Bank, taken as a
whole; and all of the leases and subleases material to the
business of the Company and the Bank, taken as a whole,
under which the Company or the Bank hold properties,
including those described in the Registration Statement and
Prospectus, are in full force and effect.
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(m) The Company and the Bank have received an opinion of their
special counsel, Elias, Matz, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P.
("▇▇▇▇▇, ▇▇▇▇") with respect to the federal income tax
consequences of the Conversion, the acquisition of the
capital stock of the Bank by the Company and the sale of the
Shares as described in the Registration Statement and the
Prospectus, and an opinion from ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇
LLP ("▇▇▇▇▇ ▇▇▇▇▇▇▇") with respect to the Texas state income
tax consequences of the proposed Conversion, acquisition of
the capital stock of the Bank by the Company and the sale of
the Shares as described in the Registration Statement and
the Prospectus; all material aspects of the opinions of
▇▇▇▇▇, ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ are accurately summarized in
the Prospectus; and the facts and representations upon which
such opinions are based are truthful, accurate and complete.
(n) The Company and the Bank have all such power, authority,
authorizations, approvals and orders as may be required to
enter into this Agreement, to carry out the provisions and
conditions hereof and to issue and sell the Shares to be
sold by the Company, as provided herein and as described in
the Prospectus except approval or confirmation by the TSLD
and the FDIC of the final appraisal of the Company. The
consummation of the Offering, the execution, delivery and
performance of this Agreement and the consummation of the
transactions herein contemplated have been duly and validly
authorized by all necessary corporate action on the part of
the Company and the Bank and this Agreement has been validly
executed and delivered by the Company and the Bank and is
the valid, legal and binding agreement of the Company and
the Bank 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 Texas savings
banks and savings and loan holding companies, the accounts
of whose subsidiaries are insured by the FDIC 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 if any, that the provisions of Sections
9 and 10 hereof may be unenforceable as against public
policy).
(o) The Company and the Bank are not in violation of any
directive received from the Agencies, the State of Texas or
any other agency to make any material change in the method
of conducting their businesses so as to comply with all
applicable statutes and regulations (including, without
limitation, regulations, decisions, directives and orders of
the TSLD, FDIC and the OTS) and, except as may be set forth
in the Registration Statement and the Prospectus, there is
no suit or proceeding or charge or action before or by any
court, regulatory authority or governmental agency or body,
pending or, to the knowledge of the Company or the Bank,
threatened, which might materially and adversely affect the
Offering, the performance of this Agreement or the
consummation of the transactions contemplated in the Plan
and as described in the Registration Statement and the
Prospectus, or which might result in any material adverse
change in the condition (financial or otherwise), earnings,
capital or properties of the Company and the Bank, or which
would materially affect their properties and assets.
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(p) The financial statements, schedules and notes related
thereto which are included in the Prospectus fairly present
the consolidated balance sheet, income statement, statement
of changes in equity and cash flows of the Company at the
respective dates indicated and for the respective periods
covered thereby and comply as to form in all material
respects with the applicable accounting requirements of the
Agencies, regulation S-X of the Commission, and generally
accepted accounting principles (including those requiring
the recording of certain assets at their current market
value). Such financial statements, schedules and notes
related thereto have been prepared in accordance with
generally accepted accounting principles consistently
applied through the periods involved, present fairly in all
material respects the information required to be stated
therein and are consistent with the most recent financial
statements and other reports filed by the Company and the
Bank with the Agencies. The other financial, statistical
and pro forma information and related notes included in the
Prospectus present fairly the information shown therein on a
basis consistent with the audited and unaudited financial
statements of the Company included in the Prospectus, and as
to the pro forma adjustments, the adjustments described
therein have been properly applied on the basis described
therein.
(q) 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, financial or
otherwise, in the condition of the Company or the Bank
considered as one enterprise, or in the earnings, capital or
properties of the Company or the Bank, whether or not
arising in the ordinary course of business; (ii) there has
not been any material increase in the long-term debt of the
Bank or in the principal amount of the Bank's assets which
are classified by the Bank as substandard, doubtful or loss
or in loans past due 90 days or more or real estate acquired
by foreclosure, by deed-in-lieu of foreclosure or deemed
in-substance foreclosure or any material decrease in
retained earnings or total assets of the Bank nor has the
Company or the Bank issued any securities (other than in
connection with the incorporation of the Company) or
incurred any liability or obligation for borrowing other
than in the ordinary course of business; (iii) there have
not been any material transactions entered into by the
Company or the Bank; (iv) there has not been any material
adverse change in the aggregate dollar amount of the Bank's
deposits or its consolidated net worth; (v) there has been
no material adverse change in the Company's or the Bank's
relationship with its insurance carriers, including, without
limitation, cancellation or other termination of the
Company's or the Bank's fidelity bond or any other type of
insurance coverage; (vi) except as disclosed in the
Prospectus there has been no material change in management
of the Company or the Bank, neither of which has any
material undisclosed liability of any kind, contingent or
otherwise; (vii) the Company or the Bank has not sustained
any material loss or interference with its respective
business or properties from fire, flood, windstorm,
earthquake, accident or other calamity, whether or not
covered by insurance; (viii) the Company or the Bank is not
in default in the payment of principal or interest on any
outstanding debt obligations; (ix) the capitalization,
liabilities, assets, properties and business of the Company
and the Bank conform in all material respects to the
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descriptions thereof contained in the Prospectus; and (x)
neither the Company nor the Bank has any material contingent
liabilities, except as set forth in the Prospectus. All
documents made available to or delivered or to be made
available to or delivered by the Bank or the Company or
their representatives in connection with the issuance and
sale of the Shares, including records of account holders,
depositors, borrowers and other members of the Bank, or in
connection with the Agent's exercise of due diligence, were
on the dates on which they were delivered, or will be on the
dates on which they are to be delivered, true, complete and
correct in all material respects.
(r) As of the date hereof and as of the Closing Date, neither
the Company nor the Bank is (i) in violation of its charter
or bylaws, respectively, or (ii) in default in the
performance or observance of any material obligation,
agreement, covenant, or condition contained in any material
contract, lease, loan agreement, indenture or other
instrument to which it is a party or by which it or any of
its property may be bound. The consummation of the
transactions herein contemplated will not: (i) conflict
with or constitute a breach of, or default under, or result
in the creation of any material lien, charge or encumbrance
(with the exception of the liquidation account established
in the Conversion) upon any of the assets of the Company or
the Bank pursuant to the articles of incorporation, charter
and bylaws of the Company and the Bank, or any material
contract, lease or other instrument to which the Company or
the Bank has a beneficial interest, or any applicable law,
rule, regulation or order; (ii) violate any authorization,
approval, judgement, decree, order, statute, rule or
regulation applicable to the Company or the Bank, except for
such violations which would not have a material adverse
effect on the financial condition and results of operations
of the Company and the Bank on a consolidated basis; or
(iii) with the exception of the liquidation account
established in the Conversion, result in the creation of any
material lien, charge or encumbrance upon any property of
the Company or the Bank.
(s) No default exists, and no event has occurred which with
notice or lapse of time, or both, would constitute a
default, on the part of the Company or the Bank in the due
performance and observance of any term, covenant or
condition of any indenture, mortgage, deed of trust, note,
bank loan or credit agreement or any other instrument or
agreement to which the Company or the Bank is a party or by
which any of them or any of their property is bound or
affected, except such defaults which would not have a
material adverse affect on the financial condition or
results of operations of the Company and the Bank on a
consolidated basis; 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 Company and the
Bank, threatened any action or proceeding wherein the
Company or the Bank would or might be alleged to be in
default thereunder.
(t) Upon consummation of the Offering, the authorized, issued
and outstanding equity capital of the Company will be within
the range set forth in the Prospectus under the caption
"Capitalization," and no Shares have been or will be issued
and outstanding
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prior to the Closing Date (other than Shares issued to the
Company); the Shares will have been duly and validly
authorized for issuance and, when issued and delivered by
the Company pursuant to the Plan against payment of the
consideration calculated as set forth in the Plan and in the
Prospectus, will be duly and validly issued, fully paid and
non-assessable; except to the extent that subscription
rights and priorities pursuant thereto exist pursuant to the
Plan, no preemptive rights exist with respect to the Shares;
and the terms and provisions of the Shares will conform in
all material respects to the description thereof contained
in the Registration Statement and the Prospectus. To the
best knowledge of the Company and the Bank, upon the
issuance of the Shares, good title to the Shares will be
transferred from the Company to the purchasers thereof
against payment therefor, subject to such claims as may be
asserted against the purchasers thereof by third-party
claimants.
(u) No consent, approval, authorization or any other order of
any court, regulatory, administrative or supervisory or
other public authority is required in connection with the
execution and delivery of this Agreement or the issuance of
the Shares, except for the approval of the Commission, the
Agencies and any necessary qualification, notification,
registration or exemption under the securities or blue sky
laws of the various states in which the Shares are to be
offered, and except as may be required under the rules and
regulations of the NASD.
(v) ▇▇▇▇▇ ▇▇▇▇▇▇▇, which has certified the consolidated audited
financial statements and schedules of the Bank included in
the Prospectus, has advised the Company and the Bank in
writing that they are, with respect to the Company and the
Bank, independent public accountants within the meaning of
the Code of Professional Ethics of the American Institute of
Certified Public Accountants and the Conversion Regulations.
(w) ▇▇▇▇▇▇▇▇ & Company, Inc., which has prepared the Valuation
Appraisal Report as of _________, 2001 (as amended or
supplemented, if so amended or supplemented) (the
"Appraisal"), has advised the Company in writing that it is
independent of the Company and the Bank within the meaning
of the Conversion Regulations.
(x) The Company and the Bank have timely filed all required
federal, state and local tax returns; the Company and the
Bank have paid all taxes that have become due and payable in
respect of such returns, except where permitted to be
extended, have made adequate reserves for similar future tax
liabilities and no deficiency has been asserted with respect
thereto by any taxing authority.
(y) The Company and the Bank are in compliance 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.
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(z) To the knowledge of the Company and the Bank, neither the
Company, the Bank nor employees of the Company or the Bank
have made any payment of funds of the Company or the Bank as
a loan for the purchase of the Shares or made any other
payment of funds prohibited by law, and no funds have been
set aside to be used for any payment prohibited by law.
(aa) Prior to the Offering, neither the Company nor the Bank has:
(i) issued any securities within the last 18 months (except
for notes to evidence other bank loans and reverse
repurchase agreements or other liabilities in the ordinary
course of business or as described in the Prospectus, shares
of the Bank issued to the Company); (ii) had any material
dealings within the 12 months prior to the date hereof with
any member of the NASD, or any person related to or
associated with such member, other than discussions and
meetings relating to the proposed Offering and routine
purchases and sales of United States government and agency
securities; (iii) entered into a financial or management
consulting agreement except as contemplated hereunder; and
(iv) engaged any intermediary between the Agent and the
Company and the Bank in connection with the offering of the
Shares, and no person is being compensated in any manner for
such service. Appropriate arrangements have been made for
placing the funds received from subscriptions for Shares in
a special interest-bearing account with the Bank until all
Shares are sold and paid for, with provision for refund to
the purchasers in the event that the Offering is not
completed for whatever reason or for delivery to the Company
if all Shares are sold.
(bb) The Company and the Bank have not relied upon the Agent or
its legal counsel or other advisors for any legal, tax or
accounting advice in connection with the Offering.
(cc) The Company is not required to be registered under the
Investment Company Act of 1940, as amended.
(dd) Any certificates signed by an officer of the Company or the
Bank pursuant to the conditions of this Agreement and
delivered to the Agent or their counsel that refers to this
Agreement shall be deemed to be a representation and
warranty by the Company or the Bank to the Agent as to the
matters covered thereby with the same effect as if such
representation and warranty were set forth herein.
(ee) The Bank and the Company have complied or will comply in all
material respects with each and every undertaking or
commitment made by them under the blue sky laws, including,
without limitation, each and every undertaking or commitment
made in connection with the Subscription and Community
Offering.
(ff) Appropriate arrangements have been made for placing the
funds received from subscriptions for Shares in special
interest-bearing accounts with the Bank until all Shares are
sold and paid for, with provision for refund to the
purchasers in the event
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that the Conversion is not completed for whatever reason or
for delivery to the Company if all shares are sold.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE AGENT.
The Agent represents and warrants to the Company and the Bank that:
(a) it is a corporation and is validly existing in good standing
under the laws of the State of New York and licensed to
conduct business in the State of New York and it has the
full power and authority to provide the services to be
furnished to the Bank and the Company 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 the Agent, and this Agreement has been duly and
validly executed and delivered by the Agent and is a legal,
valid and binding agreement of the Agent, 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
by general equity principles regardless of whether such
enforceability is considered in a proceeding in equity or at
law, and except to the extent if any, that the provisions of
Sections 9 and 10 hereof may be unenforceable as against
public policy).
(c) Each of the Agent and its employees, agents and
representatives who shall perform any of the services
hereunder shall be duly authorized and empowered, and shall
have all licenses, approvals and permits necessary to
perform such services.
(d) The execution and delivery of this Agreement by the Agent,
the consummation of the transactions contemplated hereby and
compliance with the terms and provisions hereof will not
conflict with, or result in a breach of, any of the terms,
provisions or conditions of, or constitute a default (or an
event which with notice or lapse of time or both would
constitute a default) under, the articles of incorporation
of the Agent or any material agreement, indenture or other
instrument to which the Agent is a party or by which it or
its property is bound.
(e) No approval of any regulatory or supervisory or other public
authority is required in connection with the Agent's
execution and delivery of this Agreement, except as may have
been received.
(f) There is no suit or proceeding or charge or action before or
by any court, regulatory authority or government agency or
body or, to the knowledge of the Agent, pending or
threatened, which might materially adversely affect the
Agent's performance of this Agreement.
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SECTION 6. COVENANTS OF THE COMPANY AND THE BANK. The Company and the Bank
hereby jointly and severally covenant with the Agent as follows:
(a) The 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 supplement or file any amendment
or supplement to which amendment or supplement the Agent or
its counsel shall reasonably object.
(b) Neither the Bank nor the Company will, at any time after the
Conversion Application and Holding Company Application are
approved by the Agencies, file any amendment or supplement
to such Applications 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.
(c) The Company and the Bank 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-approval amendment to the Conversion Application and
Holding Company Application to be approved by the Agencies
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 Conversion Application and Holding
Company Application, as amended have been approved by the
Agencies; (iii) any comments from the Commission, the
Agencies or any other governmental entity with respect to
the Offering or the transactions contemplated by this
Agreement; (iv) of the request by the Commission, the
Agencies or any other governmental entity for any amendment
or supplement to the Registration Statement, the Conversion
Application and the Holding Company Application or for
additional information; (v) of the issuance by the
Commission, the Agencies or any other governmental entity of
any order or other action suspending the Offering or the use
of the Registration Statement or the Prospectus or any other
filing of the Company or the Bank under the Conversion
Regulations, HOLA or other applicable law, or the threat of
any such action; (vi) the issuance by the Commission, the
Agencies or any 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 (vii) of the occurrence of
any event mentioned in paragraph (g) below. The Company and
the Bank will make every reasonable effort (i) to prevent
the issuance by the Commission, the Agencies or any state
authority of any such order and, if any such order shall at
any time be issued and (ii) to obtain the lifting thereof at
the earliest possible time.
(d) The Company and the Bank will deliver to the Agent and to
its counsel two conformed copies of the Registration
Statement, the Conversion Application and the Holding
Company Application, as originally filed, and of each
amendment or supplement thereto, including all exhibits.
Further, the Company and the Bank will
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deliver such additional copies of the foregoing documents to
counsel to the Agent as may be required for any NASD and
"blue sky" filings.
(e) The Company and the Bank will furnish to the Agent, from
time to time during the period when the Prospectus (or any
later prospectus related to this offering) is required to be
delivered under the 1933 Act or the Securities Exchange Act
of 1934 (the "1934 Act"), such number of copies of such
Prospectus (as amended or supplemented) as the Agent may
reasonably request for the purposes contemplated by the 1933
Act, the 1933 Act Regulations, the 1934 Act or the rules and
regulations promulgated under the 1934 Act (the "1934 Act
Regulations"). The Company authorizes the Agent to use the
Prospectus (as amended or supplemented, if amended or
supplemented) in any lawful manner contemplated by the Plan
in connection with the sale of the Shares by the Agent.
(f) The Company and the Bank will comply with any and all
material terms, conditions, requirements and provisions with
respect to the Offering, and the transactions contemplated
thereby, imposed by the Commission, the Agencies or the
Conversion Regulations or the HOLA, and by the 1933 Act, the
1933 Act Regulations, the 1934 Act and the 1934 Act
Regulations to be complied with prior to or subsequent to
the Closing Date and when the Prospectus is required to be
delivered, and during such time period the Company and the
Bank will comply, at their own expense, with all material
requirements imposed upon them by the Commission, the
Agencies or the Conversion Regulations, the HOLA and by the
1933 Act, the 1933 Act Regulations, the 1934 Act and the
1934 Act Regulations, including, without limitation, Rule
10b-5 under the 1934 Act, in each case as from time to time
in force, so far as necessary to permit the continuance of
sales or dealing in the Common Stock during such period in
accordance with the provisions hereof and the Prospectus.
(g) If, at any time during the period when the Prospectus
relating to the Shares is required to be delivered, any
event relating to or affecting the Company or the Bank shall
occur, as a result of which it is necessary or appropriate,
in the opinion of counsel for the Company and the Bank or in
the reasonable opinion of the Agent's counsel, to amend or
supplement the Registration Statement or Prospectus in order
to make the Registration Statement or Prospectus not
misleading in light of the circumstances existing at the
time the Prospectus is delivered to a purchaser, the Company
and the Bank will immediately so inform the Agent and
prepare and file, at their own expense, with the Commission
and the Agencies 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 or
Prospectus (in form and substance reasonably satisfactory to
the Agent and its counsel after a reasonable time for
review) which will amend or supplement the Registration
Statement or Prospectus so that as amended or supplemented
it will not contain an untrue statement of a material fact
or omit to state a material fact necessary in order to make
the statements therein, in light of the circumstances
existing at the time the Prospectus is delivered to a
purchaser, not misleading. For the purpose of this
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Agreement, the Company and the Bank each will timely furnish
to the Agent such information with respect to itself as the
Agent may from time to time reasonably request.
(h) The Company and the Bank will take all necessary actions, in
cooperating with the Agent, and furnish to whomever the
Agent may direct, such information as may be required to
qualify or register the Shares for offering and sale by the
Company or to exempt such Shares from registration, or to
exempt the Company as a broker-dealer and its officers,
directors and employees as broker-dealers or agents under
the applicable securities or blue sky laws of such
jurisdictions in which the Shares are required under the
Conversion Regulations to be sold or as the Agent and the
Company and the Bank may reasonably agree upon; provided,
however, that the Company shall not be obligated to file any
general consent to service of process, to qualify to do
business in any jurisdiction in which it is not so
qualified, or to register its directors or officers as
brokers, dealers, salesmen or agents in any jurisdiction. In
each jurisdiction where any of the Shares shall have been
qualified or registered as above provided, the Company will
make and file such statements and reports in each fiscal
period as are or may be required by the laws of such
jurisdiction.
(i) The Bank shall duly establish and maintain the liquidation
account for the benefit of Eligible Account Holders and
Supplemental Eligible Account Holders in accordance with the
requirements of the Conversion Regulations, and such
Eligible Account Holders and Supplemental Eligible Account
Holders who continue to maintain their savings accounts in
the Bank will have an inchoate interest in their pro rata
portion of the liquidation account, which shall have a
priority superior to that of the holders of the Shares in
the event of a complete liquidation of the Bank.
(j) The Company and the Bank will not sell or issue, contract to
sell or otherwise dispose of, for a period of 180 days after
the Closing Date, without the Agent's prior written consent,
any Common Stock other than the Shares or other than in
connection with any plan or arrangement described in the
Prospectus, including existing stock benefit plans.
(k) The Company shall register its Common Stock under Section
12(g) of the 1934 Act on or prior to the Closing Date
pursuant to the Plan and shall request that such
registration be effective prior to or upon completion of the
Offering. The Company shall maintain the effectiveness of
such registration for not less than three years or such
shorter period as may be required by the Agencies.
(l) During the period during which the Company's Common Stock is
registered under the 1934 Act or for three years from the
date hereof, whichever period is greater, the Company will
furnish to its shareholders as soon as practicable after the
end of each fiscal year an annual report of the Company
(including a consolidated balance sheet and statements of
consolidated income, shareholders' equity and cash flows of
the Company and its subsidiaries as at the end of and for
such year, certified by
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independent public accountants in accordance with Regulation
S-X under the 1933 Act and the 1934 Act).
(m) During the period of three years from the date hereof, the
Company will furnish to the Agent: (i) as soon as
practicable after such information is publicly available, a
copy of each report of the 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 Company is listed or quoted (including,
but not limited to, reports on Forms 10-KSB, 10-QSB and 8-K
and all proxy statements and annual reports to
stockholders), (ii) a copy of each other non-confidential
report of the Company mailed to its stockholders or filed
with the Commission, the Agencies or any other supervisory
or regulatory authority or any national securities exchange
or system on which any class of securities of the Company is
listed or quoted, each press release and material news items
and additional documents and information with respect to the
Company or the Bank as the Agent may reasonably request; and
(iii) from time to time, such other nonconfidential
information concerning the Company or the Bank as the Agent
may reasonably request.
(n) The Company and the Bank will use the net 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."
(o) Other than as permitted by the Conversion Regulations, the
HOLA, the 1933 Act, the 1933 Act Regulations, and the laws
of any state in which the Shares are registered or qualified
for sale or exempt from registration, neither the Company
nor the Bank will distribute any prospectus, offering
circular or other offering material in connection with the
offer and sale of the Shares.
(p) The Company will use its best efforts to (i) encourage and
assist a market maker to establish and maintain a market for
the Shares and (ii) list and maintain quotation of the
Shares on the OTC Bulletin Board effective on or prior to
the Closing Date.
(q) The Bank will maintain appropriate arrangements for
depositing all funds received from persons mailing
subscriptions for or orders to purchase Shares in the
Offering 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 Bank's
obligation to refund payments received from persons
subscribing for or ordering Shares in the Offering in
accordance with the Plan and 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 Bank 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 Bank 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.
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(r) The Company and the Bank 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 NASD's
"Interpretation Relating to Free Riding and Withholding."
(s) Neither the Company nor the Bank will amend the Plan without
notifying the Agent prior thereto.
(t) The Company shall assist the Agent, if necessary, in
connection with the allocation of the Shares in the event of
an oversubscription and shall provide the Agent with any
information necessary to assist the Company in allocating
the Shares in such event and such information shall be
accurate and reliable in all material respects.
(u) Prior to the Closing Date, the Company and the Bank will
inform the Agent of any event or circumstances of which it
is aware as a result of which the Registration Statement
and/or Prospectus, as then amended or supplemented, would
contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the
statements therein not misleading.
(v) Subsequent to the date the Registration Statement is
declared effective by the Commission and prior to the
Closing Date, except as otherwise may be indicated or
contemplated therein or set forth in an amendment or
supplement thereto, neither the Company nor the Bank will
have: (i) issued any securities or incurred any liability or
obligation, direct or contingent, for borrowed money, except
borrowings from the same or similar sources indicated in the
Prospectus in the ordinary course of its business, or (ii)
entered into any transaction which is material in light of
the business and properties of the Company and the Bank,
taken as a whole.
(w) The Company will promptly take all necessary action to
register as a savings and loan holding company under the
HOLA.
(x) The facts and representations provided to ▇▇▇▇▇, ▇▇▇▇ by the
Bank and the Company and upon which ▇▇▇▇▇, ▇▇▇▇ will base
its opinion under Section 8(c)(1) are and will be truthful,
accurate and complete.
SECTION 7. PAYMENT OF EXPENSES. Whether or not the Offering is
completed or the sale of the Shares by the Company is consummated, the Company
and the Bank jointly and severally agree to pay or reimburse the Agent for the
Company and the Bank have agreed to reimburse the Agent for its out-of-pocket
expenses, and its legal fees (as specified in Section 2) and to indemnify the
Agent against certain claims or liabilities, including certain liabilities
under the Securities Act, and will contribute to payments the Agent may be
required to make in connection with any such claims or liabilities. In the
event the Company is unable to sell a minimum of 323,000 Shares, the Company
and the Bank shall promptly reimburse the Agent in accordance with Section 2
hereof.
SECTION 8. CONDITIONS TO THE AGENT'S OBLIGATIONS. The obligations of
the Agent hereunder, as to the Shares to be delivered at the Closing Date, are
subject, to the extent not waived in writing
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by the Agent, to the condition that all representations and warranties of the
Company and the Bank herein are, at and as of the commencement of the Offering
and at and as of the Closing Date, true and correct in all material respects,
the condition that the Company and the Bank shall have performed all of their
obligations hereunder to be performed on or before such dates, and to the
following further conditions:
(a) At the Closing Date, the Company and the Bank shall have
conducted the Conversion, including the Offering, in all
material respects in accordance with the Plan, the
Conversion Regulations, the HOLA and all other applicable
laws, regulations, decisions and orders, including all
terms, conditions, requirements and provisions precedent to
the Conversion and the Offering imposed upon them by the
Agencies.
(b) The Registration Statement shall have been declared
effective by the Commission and the Conversion Application
and the Holding Company Application shall be approved by the
Agencies not later than 5:30 p.m. on the date of this
Agreement, or with the Agent's consent at a later time and
date; and at the Closing Date, no stop order suspending the
effectiveness of the Registration Statement shall have been
issued under the 1933 Act or proceedings therefor initiated
or threatened by the Commission or any state authority, and
no order or other action suspending the authorization of the
Prospectus or the consummation of the Conversion shall have
been issued or proceedings therefor initiated or, to the
Company's or the Bank's knowledge, threatened by the
Commission, the Agencies or any state authority.
(c) At the Closing Date, the Agent shall have received:
(1) The favorable opinion, dated as of the Closing Date
and addressed to the Agent and for its benefit, of
Elias, Matz, special counsel for the Company and
the Bank, in form and substance to the effect that:
(i) The Company has been duly incorporated and
is validly existing in good standing as a
corporation under the laws of the State of
Delaware; the Company is qualified to do
business as a foreign corporation in Texas
and in each jurisdiction in which the
conduct of its business requires such
qualification.
(ii) The Company has corporate power and
authority to own, lease and operate its
properties and to conduct its business as
described in the Registration Statement
and the Prospectus.
(iii) The Bank has been organized and is a
validly existing Texas chartered savings
bank in capital stock form of
organization, authorized to conduct its
business and own its property as described
in the Registration Statement and the
Prospectus. All of the outstanding capital
stock has been duly authorized, and is
validly
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issued, fully paid and non-assessable and
is owned by the Company, free and clear of
any liens, encumbrances, claims or other
restrictions.
(iv) The Bank is a member of the FHLB-Dallas.
The deposit accounts of the Bank are
insured by the FDIC up to the maximum
amount allowed under law and no
proceedings for the termination or
revocation of such insurance are pending
or, to such counsel's Actual Knowledge,
threatened; the description of the
liquidation account as set forth in the
Prospectus under the caption "The
Conversion - Effects of Conversion -
Effect on Liquidation Rights," to the
extent that such information constitutes
matters of law and legal conclusions, has
been reviewed by such counsel and is
accurately described in all material
respects.
(v) Upon consummation of the Offering, the
authorized, issued and outstanding capital
stock of the Company will be within the
range set forth in the Prospectus under
the caption "Our Capitalization," no
shares of Common Stock have been issued
prior to the Closing Date; at the time of
the Offering, the Shares subscribed for
pursuant to the Offering will have been
duly and validly authorized for issuance,
and when issued and delivered by the
Company pursuant to the Plan against
payment of the consideration calculated as
set forth in the Plan and Prospectus, will
be duly and validly issued and fully paid
and non-assessable; the issuance of the
Shares is not subject to preemptive rights
and the terms and provisions of the Shares
conform in all material respects to the
description thereof contained in the
Prospectus. To such counsel's Actual
Knowledge, upon the issuance of the
Shares, good title to the Shares will be
transferred by the Company to the
purchasers thereof against payment
therefor, subject to such claims as may be
asserted against the purchasers thereof by
third-party claimants.
(vi) The Bank and the Company have full
corporate power and authority to enter
into this Agreement and to consummate the
transactions contemplated hereby and by
the Plan. 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 the
Company and the Bank; and this Agreement
is a valid and binding obligation of the
Company and the Bank, enforceable against
the Company and the Bank in accordance
with its terms, except as the
enforceability thereof may be limited by
(i) bankruptcy, insolvency,
reorganization, moratorium,
conservatorship, receivership or other
similar laws now or hereafter in effect
relating to or affecting the enforcement
of creditors' rights generally or the
rights of creditors of savings
institutions, the deposits
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of which are insured by the FDIC, and
savings and loan holding companies, (ii)
general equitable principles, (iii) laws
relating to the safety and soundness of
insured depository institutions and their
holding companies, and (iv) applicable law
or public policy with respect to the
indemnification and/or contribution
provisions contained herein, including
without limitation the provisions of
Sections 23A and 23B of the Federal
Reserve Act and except that no opinion
need be expressed as to the effect or
availability of equitable remedies or
injunctive relief (regardless of whether
such enforceability is considered in a
proceeding in equity or at law).
(vii) The Conversion Application has been
approved by the TSLD and the FDIC and the
Prospectus has been authorized for use by
the Agencies, and no action has been
taken, and to such counsel's Actual
Knowledge none is pending or threatened,
to revoke any such authorization or
approval. The Holding Company Application
has been approved by the OTS and no action
has been taken, and to such counsel's
Actual Knowledge none is pending or
threatened, to revoke any such
authorization or approval.
(viii) The Plan has been duly adopted by the
required vote of the directors of the
Company and the Bank.
(ix) Subject to the satisfaction of the
conditions to the Agencies' approval of
the Offering, no further approval,
registration, authorization, consent or
other order of any federal regulatory
agency is required in connection with the
execution and delivery of this Agreement,
the issuance of the Shares and the
consummation of the Offering, except as
may be required under the securities or
blue sky laws of various jurisdictions (as
to which no opinion need be rendered) and
except as may be required under the rules
and regulations of the NASD (as to which
no opinion need be rendered). To such
counsel's Actual Knowledge, the Offering
has been consummated in all material
respects in accordance with Conversion
Regulations and the HOLA, except that no
opinion is rendered with respect to (a)
the Conversion Application, the Holding
Company Application, the Registration
Statement or Prospectus, which are covered
by other clauses of this opinion, (b) the
satisfaction of the post-Offering
conditions in the Conversion Regulations
or in the Agency approvals of the
Conversion Application and the Holding
Company Application, (c) the securities or
"blue sky" laws of various jurisdictions
and (d) the rules and regulations of the
NASD.
(x) The Registration Statement is effective
under the 1933 Act, and no stop order
suspending the effectiveness has been
issued under the
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23
1933 Act or proceedings therefor initiated
or, to such counsel's Actual Knowledge,
threatened by the Commission.
(xi) At the time the Conversion Application,
including the Prospectus contained
therein, was approved by the TSLD and the
FDIC, the Conversion Application,
including the Prospectus contained
therein, complied as to form in all
material respects with the requirements of
the Conversion Regulations, Texas and
federal law and all applicable rules and
regulations promulgated thereunder (other
than the financial statements, the notes
thereto, and other tabular, financial,
statistical and appraisal data included
therein, as to which no opinion need be
rendered). At the time the Holding
Company Application, including the
Prospectus contained therein, was approved
by the OTS, the Holding Company
Application, including the Prospectus
contained therein, complied as to form in
all material respects with the
requirements of the Conversion
Regulations, Texas and federal law and all
applicable rules and regulations
promulgated thereunder (other than the
financial statements, the notes thereto,
and other tabular, financial, statistical
and appraisal data included therein, as to
which no opinion need be rendered).
(xii) At the time that the Registration
Statement became effective, (i) the
Registration Statement (as amended or
supplemented, if so amended or
supplemented) (other than the financial
statements, the notes thereto, and other
tabular, financial, statistical and
appraisal data included therein, as to
which no opinion need be rendered),
complied as to form in all material
respects with the requirements of the 1933
Act and the 1933 Act Regulations, and (ii)
the Prospectus (other than the financial
statements, the notes thereto, and other
tabular, financial, statistical and
appraisal data included therein, as to
which no opinion need be rendered)
complied as to form in all material
respects with the requirements of the 1933
Act, the 1933 Act Regulations, the
Conversion Regulations, the HOLA and
federal law.
(xiii) The terms and provisions of the Shares of
the Company conform, in all material
respects, to the description thereof
contained in the Registration Statement
and Prospectus, and the form of
certificate used to evidence the Shares is
in due and proper form.
(xiv) To such counsel's Actual Knowledge, there
are no legal or governmental proceedings
pending or threatened which are required
to be disclosed in the Registration
Statement and Prospectus, other than those
disclosed therein, and to such counsel's
Actual Knowledge, all pending legal and
governmental proceedings to which the
Company or the Bank is a party or of which
any of their property
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24
is the subject, which are not described in
the Registration Statement and the
Prospectus, including ordinary routine
litigation incidental to the Company's or
the Bank's business, are, considered in
the aggregate, not material.
(xv) To such counsel's Actual Knowledge, there
are no material contracts, indentures,
mortgages, loan agreements, notes, leases
or other instruments required to be
described or referred to in the Conversion
Application, the Holding Company
Application, the Registration Statement or
the Prospectus or required to be filed as
exhibits thereto other than those
described or referred to therein or filed
as exhibits thereto in the Conversion
Application, the Holding Company
Application, the Registration Statement or
the Prospectus. The description in the
Conversion Application, the Holding
Company Application, the Registration
Statement and the Prospectus of such
documents and exhibits is accurate in all
material respects and fairly presents the
information required to be shown.
(xvi) To such counsel's Actual Knowledge, the
Company and the Bank have conducted the
Offering, in all material respects, in
accordance with all applicable
requirements of the Plan and applicable
Texas and federal law. The Plan complies
in all material respects with all
applicable Texas and federal laws, rules,
regulations, decisions and orders
including, but not limited to, the
Conversion Regulations; no order has been
issued by the TSLD, the Commission, the
FDIC, or any state authority to suspend
the Offering or the use of the Prospectus,
and no action for such purposes has been
instituted or, to such counsel's Actual
Knowledge, threatened by the TSLD, the
Commission, the FDIC, or any state
authority and no person has sought to
obtain regulatory or judicial review of
the final action of the Agencies,
approving the Plan, the Conversion
Application or the Prospectus.
(xvii) To such counsel's Actual Knowledge, the
Company and the Bank have obtained all
material federal licenses, permits and
other federal governmental authorizations
currently required for the conduct of
their businesses and all such licenses,
permits and other governmental
authorizations are in full force and
effect, and the Company and the Bank are
in all material respects complying
therewith.
(xviii) To such counsel's Actual Knowledge,
neither the Company nor the Bank is in
violation of its articles of
incorporation, charter and bylaws, as
appropriate or, to such counsel's Actual
Knowledge, in default or violation of any
obligation, agreement, covenant or
condition contained in any contract,
indenture, mortgage, loan
24
25
agreement, note, lease or other instrument
to which it is a party or by which it or
its property may be bound, except for such
defaults or violations which would not
have a material adverse impact on the
financial condition or results of
operations of the Company and the Bank on
a consolidated basis; to such counsel's
Actual Knowledge, the execution and
delivery of this Agreement, the occurrence
of the obligations herein set forth and
the consummation of the transactions
contemplated herein will not conflict with
or constitute a breach of, or default
under, or result in the creation or
imposition of any lien, charge or
encumbrance upon any property or assets of
the Company or the Bank pursuant to any
material contract, indenture, mortgage,
loan agreement, note, lease or other
instrument to which the Company or the
Bank is a party or by which any of them
may be bound, or to which any of the
property or assets of the Company or the
Bank are subject (other than the
establishment of the liquidation account);
and, such action will not result in any
violation of the provisions of the charter
or bylaws of the Company or the Bank or,
result in any violation of any applicable
federal law, act, regulation (except that
no opinion with respect to the securities
and blue sky laws of various jurisdictions
or the rules or regulations of the NASD
need be rendered) or order or court order,
writ, injunction or decree.
(xix) The Company's articles of incorporation
and bylaws comply in all material respects
with the laws of the State of Delaware;
the Bank's charter and bylaws comply in
all material respects with the rules and
regulations of the Agencies.
(xx) To such counsel's Actual Knowledge,
neither the Company nor the Bank is in
violation of any directive from the
Agencies to make any material change in
the method of conducting its respective
business.
(xxi) The information in the Prospectus under
the captions "Summary," "Risk Factors"
(relating to takeover defensive
provisions), "Regulation," "The
Conversion," "Restrictions on Acquisition
of Heritage Bancshares, Inc. and Heritage
Savings Bank and Related Anti-Takeover
Provisions," "Description of Capital Stock
of Heritage Bancshares, Inc." and
Description of Capital Stock of Heritage
Bank" to the extent that such information
constitutes matters of law, summaries of
legal matters, documents or proceedings,
or legal conclusions, has been reviewed by
such counsel and is correct in all
material respects. The discussion of
statutes or regulations described or
referred to in the Prospectus are accurate
summaries and fairly present the
information required to be shown. The
information under the caption "The
Conversion - Effects of Conversion - Tax
Effects" has been reviewed by such counsel
and fairly describes the opinions
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26
rendered by them to the Company and the
Bank with respect to such matters.
(xxii) The Company is in good standing as a
savings and loan holding company under the
HOLA.
(xxiii) In addition, such counsel shall state that
during the preparation of the Conversion
Application, the Holding Company
Application, the Registration Statement
and the Prospectus, they participated in
conferences with certain officers of, the
independent public and internal
accountants for, and other representatives
of the Company and the Bank, at which
conferences the contents of the Conversion
Application, the Holding Company
Application, the Registration Statement
and the Prospectus and related matters
were discussed and, while such counsel
have not confirmed the accuracy or
completeness of or otherwise verified the
information contained in the Conversion
Application, the Holding Company
Application, the Registration Statement or
the Prospectus, and do not assume any
responsibility for such information, based
upon such conferences and a review of
documents deemed relevant for the purpose
of rendering their view (relying as to
materiality as to factual matters on
certificates of officers and other factual
representations by the Company and the
Bank), nothing has come to their attention
that would lead them to believe that the
Conversion Application, the Holding
Company Application, the Registration
Statement, the Prospectus, or any
amendment or supplement thereto (other
than the financial statements, the notes
thereto, and other tabular, financial,
statistical and appraisal data included
therein as to which no view need be
rendered) contained an untrue statement of
a material fact or omitted to state a
material fact required to be stated
therein or necessary to make the
statements therein, in light of the
circumstances under which they were made,
not misleading.
In giving such opinion, such counsel may rely as to
all matters of fact on certificates of officers or
directors of the Company and the Bank and
certificates of public officials. The opinion of
▇▇▇▇▇, ▇▇▇▇ shall be limited to matters governed by
federal banking and securities laws and by the laws
of the State of Delaware and the State of Texas,
and shall be governed by the Legal Opinion Accord
(the "Accord") of the American Bar Association
Section of Business Law (1991). The term "Actual
Knowledge" as used herein shall have the meaning
set forth in the Accord. For purposes of such
opinion, no proceedings 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 Bank shall
have received a copy of such proceedings, order,
stop order
26
27
or action. In addition, such opinion may be limited
to present statutes, regulations and judicial
interpretations and to facts as they presently
exist; in rendering such opinion, such counsel need
assume no obligation to revise or supplement it
should the present laws be changed by legislative
or regulatory action, judicial decision or
otherwise; and such counsel need express no view,
opinion or belief with respect to whether any
proposed or pending legislation, if enacted, or any
proposed or pending regulations or policy
statements issued by any regulatory agency, whether
or not promulgated pursuant to any such
legislation, would affect the validity of the
Offering or any aspect thereof. Such counsel may
assume that any agreement is the valid and binding
obligation of any parties to such agreement other
than the Company or the Bank.
(d) At the Closing Date, the Agent shall have received the
favorable opinion, dated as of the Closing Date, of Silver,
▇▇▇▇▇▇▇▇ & Taff, L.L.P., the Agent's counsel, with respect
to such matters as the Agent may reasonably require. Such
opinion may rely upon the opinions of counsel to the Company
and the Bank, and as to matters of fact, upon certificates
of officers and directors of the Company and the Bank
delivered pursuant hereto or as such counsel shall
reasonably request.
(e) At the Closing Date, the Agent shall receive a certificate
of the Chief Executive Officer and the Principal Financial
and/or Accounting Officer of the Company and the Bank in
form and substance reasonably satisfactory to the Agent's
Counsel, dated as of such Closing Date, to the effect that:
(i) they have carefully reviewed the Prospectus and, in
their opinion, at the time the Prospectus became authorized
for final use, the Prospectus did not contain any 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; (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 condition, financial or otherwise, or in the
earnings, capital, properties or business of the Company or
the Bank, and the conditions set forth in this Section 8
have been satisfied; (iii) since the respective dates as of
which information is given in the Registration Statement and
the Prospectus, there has been no material adverse change in
the condition, financial or otherwise, or in the earnings,
capital or properties of the Company or the Bank,
independently, or of the Company and the Bank, considered as
one enterprise, whether or not arising in the ordinary
course of business; (iv) the representations and warranties
in Section 4 are true and correct with the same force and
effect as though expressly made at and as of the Closing
Date; (v) the Company and the Bank have complied in all
material respects with all agreements and satisfied all
conditions on their part to be performed or satisfied at or
prior to the Closing Date and will comply in all material
respects with all obligations to be satisfied by them after
the Offering; (vi) no stop order suspending the
effectiveness of the Registration Statement has been
initiated or, to the best
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28
knowledge of the Company or the Bank, threatened by the
Commission or any state authority; (vii) no order suspending
the Offering, the Conversion, or the effectiveness of the
Prospectus has been issued and no proceedings for that
purpose are pending or, to the best knowledge of the Company
or the Bank, threatened by the TSLD, the Commission, the
FDIC, the OTS or other governmental entity or state
authority; and (viii) to the best knowledge of the Company
or the Bank, no person has sought to obtain review of the
final action of the Agencies approving the Plan.
(f) 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 condition, financial or otherwise, or
in the earnings or business of the Company or the Bank
independently, or of the Company and the Bank, considered as
one enterprise, from that as of the latest dates as of which
such condition is set forth in the Prospectus other than
transactions referred to or contemplated therein; (ii) the
Company or the Bank shall not have received from the
Agencies any direction (oral or written) to make any
material change in the method of conducting their business
with which it has not complied (which direction, if any,
shall have been disclosed to the Agent) or which materially
and adversely would affect the business, operations or
financial condition or income of the Company and the Bank
taken as a whole; (iii) the Company and the Bank shall not
have been in default (nor shall an event have occurred
which, with notice or lapse of time or both, would
constitute a default) under any provision of any agreement
or instrument relating to any outstanding indebtedness; (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, to the knowledge
of the Company or the Bank, threatened against the Company
or the Bank or affecting any of their properties wherein an
unfavorable decision, ruling or finding would materially and
adversely affect the business, operations, financial
condition or income of the Company and the Bank taken as a
whole; and (v) the Shares have been qualified or registered
for offering and sale or exempted therefrom under the
securities or blue sky laws of the jurisdictions as the
Agent shall have reasonably requested and as agreed to by
the Company and the Bank.
(g) Concurrently with the execution of this Agreement, the Agent
shall receive a letter from ▇▇▇▇▇ ▇▇▇▇▇▇▇ dated as of the
date of the Prospectus and addressed to the Agent: (i)
confirming that ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇, P.C. is a firm
of independent public accounts within the meaning of Rule
101 of the Code of Professional Ethics of the American
Institute of Certified Public Accountants and stating in
effect that in its opinion the consolidated financial
statements, schedules and related notes of the Company as of
June 30, 2001 and 2000, and as are included in the
Prospectus and covered by their opinion included therein,
comply as to form in all material respects with the
applicable accounting requirements and related published
rules and regulations of the TSLD, FDIC and the 1933 Act;
(ii) stating in effect that, on the basis of certain agreed
upon procedures (but not an audit in accordance with
generally accepted auditing standards) consisting of a
reading of the latest available unaudited interim
consolidated financial statements of the Company,
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29
a reading of the minutes of the meetings of the Board of
Directors and stockholders of the Company and consultations
with officers of the Company responsible for financial and
accounting matters, nothing came to their attention which
caused them to believe that: (a) the unaudited financial
statements included in the Prospectus are not in conformity
with the 1933 Act, applicable accounting requirements of the
TSLD, FDIC and 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 of the Prospectus, except as has been described
in the Prospectus, there was any increase in borrowings,
other than normal deposit fluctuations, by the Bank; or (c)
there was any decrease in the consolidated net assets of the
Company at the date of such letter as compared with amounts
shown in the latest unaudited consolidated statement of
condition included in the Prospectus; and (iii) stating
that, in addition to the audit referred to in their opinion
included in the Prospectus and the performance of the
procedures referred to in clause (ii) of this subsection
(f), they have compared with the general accounting records
of the Company, which are subject to the internal controls
of the Company, the accounting system and other data
prepared by the Company, 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 reported on
the results of such comparisons.
(h) At the Closing Date, the Agent shall receive a letter dated
the Closing Date, addressed to the Agent, confirming the
statements made by ▇▇▇▇▇ ▇▇▇▇▇▇▇ in the letter delivered by
it pursuant to subsection (g) of this Section 8, the
"specified date" referred to in clause (ii) of subsection
(g) thereof to be a date specified in such letter, which
shall not be more than three business days prior to the
Closing Date.
(i) At the Closing Date, the Agent shall receive a letter from
▇▇▇▇▇▇▇▇ & Company, dated the date thereof and addressed to
counsel for the Agent (i) confirming that said firm is
independent of the Company and the Bank and is experienced
and expert in the area of corporate appraisals, (ii) stating
in effect that the Appraisal prepared by such firm complies
in all material respects with the applicable requirements of
the Conversion Regulations, and (iii) further stating that
their opinion of the aggregate pro forma market value of the
Company and the Bank expressed in their Appraisal dated as
of __________ __, 2001, and most recently updated, remains
in effect.
(j) The Company and the Bank shall not have sustained since the
date of the latest financial statements included in the
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 or contemplated in the
Registration Statement and Prospectus and since the
respective dates as of which information is given in the
Registration Statement and Prospectus, there shall not have
been any change in the
29
30
long-term debt of the Company or the Bank, or any change, or
any development involving a prospective change, in or
affecting the general affairs, management, financial
position, stockholders' equity or results of operations of
the Company or the Bank, otherwise than as set forth or
contemplated in the Registration Statement and 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 Subscription Offering or the delivery of
the Shares on the terms and in the manner contemplated in
the Prospectus.
(k) At or prior to the Closing Date, the Agent shall receive:
(i) a copy of the letters from the TSLD and FDIC approving
the Conversion Application and authorizing the use of the
Prospectus; (ii) a copy of the order from the Commission
declaring the Registration Statement effective; (iii)
certificate of good standing from the State of Delaware
evidencing the good standing of the Company; (iv) a
certificate from the FDIC evidencing the Bank's insurance of
accounts; (v) a certificate of the FHLB-Dallas evidencing
the Bank's membership thereof; (vi) a certificate from the
OTS evidencing the Company's standing as a savings and loan
holding company; (vii) a copy of the Bank's Texas stock
charter; and (viii) a copy of the letters from the OTS
approving the Holding Company Application.
(l) Subsequent to the date hereof, there shall not have occurred
any of the following: (i) a suspension or limitation in
trading in securities generally on the New York Stock
Exchange or in the over-the-counter market, or quotations
halted generally on the Nasdaq, 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; (ii) a general moratorium on
the operations of commercial banks, federal savings
institutions or a general moratorium on the withdrawal of
deposits from commercial banks or federal savings
institutions declared by federal 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 material decline in
the price of equity or debt securities if the effect of such
a declaration or decline, 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.
(m) At or prior to the Closing Date, counsel to the Agent shall
have been furnished with such documents and opinions as they
may reasonably require for the purpose of enabling them to
pass upon the sale of the Shares as herein contemplated and
related proceedings or in order to evidence the occurrence
or completeness of any of the representations or warranties,
or the fulfillment of any of the conditions, herein
contained; and all proceedings taken by the Company or the
Bank in connection with the Offering and the sale of the
Shares as herein contemplated shall be satisfactory in form
and substance to the Agent and its counsel.
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31
SECTION 9. INDEMNIFICATION.
(a) The Company and the Bank jointly and severally agree to
indemnify and hold harmless the Agent, its respective
officers and directors, employees and agents, 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), joint or several, that the Agent or any of them
may suffer or to which the Agent and any such persons may
become subject under all applicable federal or state laws or
otherwise, and to promptly reimburse the Agent and any such
persons upon written demand for any expense (including
reasonable fees and disbursements of counsel) incurred by
the Agent or any of 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: (i) arise out of or
are related to the Conversion or any action taken by the
Agent where acting as agent of the Company and the Bank,
including without limitation, the denial or reduction of a
subscription or order to purchase Shares based upon the
deposit records of the Bank or otherwise; (ii) 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 Conversion Application and Holding
Company Application (or any amendment or supplement
thereto), or any instrument or document executed by the
Company or the Bank or based upon written information
supplied by the Company or the Bank filed in any state or
jurisdiction to register or qualify any or all of the Shares
or to claim an exemption therefrom, or provided to any state
or jurisdiction to exempt the Company as a broker-dealer or
its officers, directors and employees as broker-dealers or
agent, under the securities laws thereof (collectively, the
"Blue Sky Application"), or any document, advertisement,
oral statement or communication ("Sales Information")
prepared, made or executed by or on behalf of the Company or
the Bank with their consent or based upon written or oral
information furnished by or on behalf of the Company or the
Bank, whether or not filed in any jurisdiction, in order to
qualify or register the Shares or to claim an exemption
therefrom under the securities laws thereof; (iii) 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; or (iv) 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
Conversion Application and the Holding Company Application
(or any amendment or supplement thereto), any Blue Sky
Application or Sales Information or other documentation
distributed in connection with the Offering; 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 statement or alleged untrue material
statement in, or material omission or alleged material
omission from, the Registration Statement (or
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32
any amendment or supplement thereto), preliminary or final
Prospectus (or any amendment or supplement thereto), the
Conversion Application (or any amendment or supplement
thereto), any Blue Sky Application or Sales Information made
in reliance upon and in conformity with information
furnished in writing to the Company or the Bank by the Agent
or its counsel regarding the Agent provided, that it is
agreed and understood that the only information furnished in
writing to the Company or the Bank by the Agent regarding
the Agent is set forth in the Prospectus under the caption
"The Conversion - Marketing Arrangements;" and, provided
further, that such indemnification shall be to the extent
permitted by the Commissioner and the Agencies.
(b) The Agent agrees to indemnify and hold harmless the Company
and the Bank, their directors and officers and each person,
if any, who controls the Company or the Bank 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), 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 Company, the
Bank, and any such persons upon written demand for any
expenses (including reasonable fees and disbursements of
counsel) incurred by them, or any of them, in connection
with investigating, preparing to defend or defending any
actions, proceedings or claims (whether commenced or
threatened) to the extent such losses, claims, damages,
liabilities or actions: (i) arise out of or are based upon
any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (or
any amendment or supplement thereto), the Conversion
Application, the Holding Company Application (or any
amendment or supplement thereto), the preliminary or final
Prospectus (or any amendment or supplement thereto), any
Blue Sky Application or Sales Information, (ii) 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, or (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 Conversion Application, the
Holding Company Application (or any amendment or supplement
thereto), or any Blue Sky Application or Sales Information
or other documentation distributed in connection with the
Offering; provided, however, that the Agent's obligations
under this Section 9(b) shall exist only if and only to the
extent (i) 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), the preliminary or
final Prospectus (or any amendment or supplement thereto),
the Conversion Application, the Holding Company Application
(or any amendment or supplement thereto), or any Blue Sky
Application or Sales Information in reliance upon and in
conformity with information furnished in writing to the
Company or the Bank by the Agent or its counsel regarding
the Agent, provided, that it is agreed and understood that
the only
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information furnished in writing to the Company or the Bank
by the Agent regarding the Agent is set forth in the
Prospectus under the caption "The Conversion - Marketing
Arrangements."
(c) Each indemnified party shall give prompt written notice to
each indemnifying party of any action, proceeding, claim
(whether commenced or threatened), or suit instituted
against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party
shall not relieve it from any liability which it may have on
account of this Section 9 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
(and any special counsel that said firm may retain) for each
indemnified party 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.
(d) The agreements contained in this Section 9 and in Section 10
hereof and the representations and warranties of the Company
and the Bank 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 agent or their
officers, directors or controlling persons, agent or
employees or by or on behalf of the Company or the Bank or
any officers, directors or controlling persons, agent or
employees of the Company or the Bank; (ii) delivery of and
payment hereunder for the Shares; or (iii) any termination
of this Agreement.
SECTION 10. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 9 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Company, the Bank or the Agent, the Company,
the Bank and the Agent (provided, in the case of the Bank, that such
contribution is in compliance with the requirements of Section 23A of the
Federal Reserve Act and is consistent with any written interpretations
regarding Section 23A of the Federal Reserve Act issued by regulatory agencies
having jurisdiction with respect to such section generally or the Bank in
particular, including without limitation, any opinion issued by the OTS in
response to a request for interpretive advice submitted by counsel to the
Bank) shall contribute to the aggregate losses, claims, damages and
liabilities (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding of any claims
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asserted, but after deducting any contribution received by the Company, the
Bank or the Agent from persons other than the other party thereto, who may
also be liable for contribution) in such proportion so that the Agent is
responsible for that portion represented by the percentage that the fees paid
to the Agent pursuant to Section 2 of this Agreement (not including expenses)
bears to the gross proceeds received by the Company from the sale of the
Shares in the Offering, and the Company and the Bank 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 9 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 Company and the
Bank 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 thereto), but also
the relative benefits received by the Company and the Bank on the one hand and
the Agent on the other from the Offering (before deducting expenses). 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 Company and/or the Bank 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 Company, the Bank and the Agent agree that it would not be just and
equitable if contribution pursuant to this Section 10 were determined by
pro-rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to above in this Section
10. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions, proceedings or claims in
respect thereof) referred to above in this Section 10 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. It is understood
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 ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any
person who was not found guilty of such fraudulent misrepresentation. The
obligations of the Company and the Bank under this Section 10 and under
Section 9 shall be in addition to any liability which the Company and the Bank
may otherwise have. For purposes of this Section 10, each of the Agent's, the
Company's or the Bank's officers and directors and each person, if any, who
controls the Agent or the Company or the Bank within the meaning of the 1933
Act and the 1934 Act shall have the same rights to contribution as the Agent,
the Company or the Bank. 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 10, 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 10.
SECTION 11. SURVIVAL OF AGREEMENTS, REPRESENTATIONS AND INDEMNITIES.
The respective indemnities of the Company, the Bank and the Agent and the
representations and warranties and
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other statements of the Company, the Bank and the Agent 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 the Agent, the Company, the Bank or any controlling person
referred to in Section 9 hereof, and shall survive the issuance of the Shares,
and any successor or assign of the Agent, the Company, the Bank, and any such
controlling person shall be entitled to the benefit of the respective
agreements, indemnities, warranties and representations.
SECTION 12. TERMINATION. The Agent may terminate this Agreement by
giving the notice indicated below in this Section 12 at any time after this
Agreement becomes effective as follows:
(a) In the event the Company fails to sell the required minimum
number of the Shares 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 Company to each person who has subscribed for or
ordered any of the Shares the full amount which it may have
received from such person, together with interest as
provided in the Prospectus, and no party to this Agreement
shall have any obligation to the other hereunder, except for
payment by the Company and/or the Bank as set forth in
Sections 2(a), 7, 9 and 10 hereof.
(b) If any of the conditions specified in Section 8 shall not
have been fulfilled when and as required by this Agreement
unless waived in writing, or by the Closing Date, this
Agreement and all of the Agent's obligations hereunder may
be cancelled by the Agent by notifying the Company and the
Bank of such cancellation in writing or by telegram at any
time at or prior to the Closing Date, and any such
cancellation shall be without liability of any party to any
other party except as otherwise provided in Sections 2(a),
7, 9 and 10 hereof.
(c) If the Agent elects to terminate this Agreement as provided
in this Section, the Company and the Bank shall be notified
promptly by telephone or telegram, confirmed by letter.
The Company and the Bank may terminate this Agreement in the event
the Agent is in material breach of the representations and warranties or
covenants contained in Section 5 and such breach has not been cured within a
reasonable period of time after the Company and the Bank have provided the
Agent with notice of such breach.
This Agreement may also be terminated by mutual written consent of
the parties hereto.
SECTION 13. NOTICES. All communications hereunder, except as herein
otherwise specifically provided, shall be mailed in writing and if sent to the
Agent shall be mailed, delivered or telegraphed and confirmed to ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, Managing Director (with a copy to Silver, ▇▇▇▇▇▇▇▇ & ▇▇▇▇, L.L.P.,
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, P.C.) and, if sent to the Company and the
Bank, shall be mailed, delivered or telegraphed and confirmed to the Company
and the Bank at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇.
▇▇▇▇▇▇, President and Chief Executive Officer (with a copy to Elias,
Matz,▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P., Attention: ▇▇▇▇▇ ▇▇▇).
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SECTION 14. PARTIES. The Company and the Bank shall be entitled to
act and rely on any request, notice, consent, waiver or agreement purportedly
given on behalf of the Agent when the same shall have been given by the
undersigned. The Agent shall be entitled to act and rely on any request,
notice, consent, waiver or agreement purportedly given on behalf of the
Company or the Bank, when the same shall have been given by the undersigned or
any other officer of the Company or the Bank. This Agreement shall inure
solely to the benefit of, and shall be binding upon, the Agent, the Company,
the Bank, and their respective successors 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. It is understood and agreed that this Agreement is the
exclusive agreement among the parties hereto, and supersedes any prior
agreement among the parties and may not be varied except in writing signed by
all the parties.
SECTION 15. CLOSING. The closing for the sale of the Shares shall
take place on the Closing Date at such location as mutually agreed upon by the
Agent and the Company and the Bank. At the closing, the Company and the Bank
shall deliver to the Agent in next day funds the commissions, fees and
expenses due and owing to the Agent as set forth in Sections 2 and 7 hereof
and the opinions and certificates 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.
SECTION 16. PARTIAL INVALIDITY. In the event that any term, provision
or covenant herein or the application thereof to any circumstance 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
circumstances 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. COUNTERPARTS. This Agreement may be executed in
separate counterparts, each of which so executed and delivered shall be an
original, but all of which together shall constitute but one and the same
instrument.
If the foregoing correctly sets forth the arrangement among the
Company, the Bank and the Agent, please indicate acceptance thereof in the
space provided below for that purpose, whereupon this letter and the Agent's
acceptance shall constitute a binding agreement.
SECTION 18. ENTIRE AGREEMENT. This Agreement, including schedules and
exhibits hereto, which are integral parts hereof and incorporated as though
set forth in full, constitutes the entire agreement between the parties
pertaining to the subject matter hereof superseding any and all prior or
contemporaneous oral or prior written agreements, proposals, letters of intent
and understandings, and cannot be modified, changed, waived or terminated
except by a writing which expressly states that it is an amendment,
modification or waiver, refers to this Agreement and is signed by the party to
be charged. No course of conduct or dealing shall be construed to modify,
amend or otherwise affect any of the provisions hereof.
SECTION 19. HEADINGS. Headings on the Sections in this Agreement
are for reference purposes only and shall not be deemed to have any
substantive effect.
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SECTION 20. DELIVERY BY TELECOPIER. This Agreement shall become
effective upon execution and delivery hereof by all the parties hereto;
delivery of this Agreement may be made by telecopier to the parties with
original copies promptly to follow by overnight courier.
SECTION 21. CONSTRUCTION. This Agreement has been negotiated by the
parties and their respective counsel. This Agreement will be fairly
interpreted in accordance with its terms and without any strict construction
in favor of or against either party. This Agreement shall be construed in
accordance with the laws of the State of New York.
SECTION 22. EXHIBITS. Each and all of the Exhibits referred to
herein and attached hereto are hereby incorporated into this Agreement for all
purposes as fully as if set forth herein.
SECTION 23. ARBITRATION. Any disputes, controversies or claims
arising out of or relating to the negotiations, execution, delivery,
performance or breach of this Agreement shall be settled by arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association. The place of arbitration shall be New York City, New York.
Judgment upon the award rendered by the arbitrator(s) may be entered in any
court having jurisdiction thereof. If the amount claimed or disputed in such
arbitration is $100,000 or more, the arbitration shall be conducted before a
panel of three arbitrators. In any arbitration proceeding hereunder or any
action to enforce its rights hereunder, the prevailing party shall be awarded
the costs (including reasonable attorneys' fees) incurred by it related to
such proceeding or action. The arbitrator(s) shall have power to enter such
orders by way of interim awards, and they shall be enforceable in court.
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Very truly yours,
HERITAGE BANCSHARES, INC. HERITAGE SAVINGS BANK, SSB
By Its Authorized By Its Authorized
Representative: Representative:
------------------------------------- -------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief Executive Officer President and Chief Executive Officer
Accepted as of the date first above written
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC.
By Its Authorized
Representative:
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Managing Director
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