ALAMOGORDO FINANCIAL CORPORATION
1,101,643 Shares
COMMON STOCK
(Par Value $.0l Per Share)
Subscription Price $10.00 Per Share
AGENCY AGREEMENT
___________ __, 2000
Xxxxxxx Xxxx & Company,
a Division of Xxxxx, Xxxxxxxx & Xxxxx, Inc.
000 Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxx 00000
Ladies and Gentlemen:
Alamogordo Financial Corporation, a federal corporation (the
"Company"), AF Mutual Holding Company (the "MHC") and Alamogordo Federal Savings
and Loan Association, a federally chartered stock savings and loan association
(the "Bank") 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 Xxxxxxx Xxxx & Company, a Division of Xxxxx, Xxxxxxxx & Xxxxx, Inc. (the
"Agent"), as follows:
Section 1. The Offering. In accordance with the Stock Issuance Plan
adopted by its Board of Directors (the "Plan"), the Company will offer and sell
up to 1,101,643 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 September 30, 1998 ("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 December 31, 1999 ("Supplemental Eligible
Account Holders"), and (4) employees, officers and directors of the Bank. To the
extent Shares remain unsold in the Subscription Offering, the Company is
offering for sale in a 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 New Mexico counties of Xxxxx and Lincoln
("Other Subscribers"), (all such offerees being referred to in the aggregate as
"Eligible Offerees"). It is anticipated that shares not subscribed for in the
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 "Syndicated Community Offering") (the Subscription Offering, Community
Offering and Syndicated Community 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 Syndicated Community 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 S-1 (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.
In accordance with Title 12, Parts 575 and 563b of the Code of Federal
Regulations (the "MHC Regulations"), the Company has filed with the Office of
Thrift Supervision (the "OTS") an Application on Form MHC-2 with respect to the
stock issuance (the "MHC Application"), including the Prospectus and the
Valuation Appraisal Report prepared by RP Financial, LC (the "Appraisal") and
has filed such amendments thereto as may have been required by the OTS. The MHC
Application has been approved by the OTS and the related Prospectus has been
authorized for use by the OTS.
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, the MHC
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.
2
On the basis of the representations, warranties, and agreements herein
contained, but subject to the terms and conditions herein set forth, the Agent
accepts such appointment and agrees to consult with and advise the Company, the
MHC and the Bank as to the matters set forth in the letter agreement ("Letter
Agreement"), dated November 29, 1999 between the Company and the Agent (a copy
of which is attached hereto as Exhibit A). It is acknowledged by the Company,
the MHC 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.
The obligations of the Agent pursuant to this Agreement (other than
those set forth in Sections 2(d), 8 and 9 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 MHC, 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 708,050 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 6, 8 and 9 hereof.
In the event the Offering is terminated, the Agent shall be reimbursed
for its actual accountable out-of-pocket expenses.
If all conditions precedent to the consummation of the Offering,
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 7 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 MHC, the Bank and the Agent.
Certificates for shares shall be delivered directly to the purchasers in
accordance with their directions. The date 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:
3
(a) A management fee of $25,000, payable in four installments of
$6,250 on November 29 and December 29, 1999 and January 29 and
February 29, 2000. 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 $75,000.
(c) If any of the shares remain available after the Subscription and
Community Offerings, at the request of the Bank, 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 Bank 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 syndicated community, an amount competitive
with gross underwriting discounts changed 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 Bank 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 be in lieu of, and not in
addition to, payment pursuant to subparagraph 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; the fees set forth in Section 2; 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
(including counsel's out-of-pocket expenses) not to exceed
$35,000. The selection of such counsel will be done by the Agent,
after consultation with the Bank.
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.
4
Section 4. Representations and Warranties of the Company, the MHC and
the Bank. The Company, the MHC 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, the
MHC and the Bank and filed with the Commission was declared
effective by the Commission on __________ __, 2000. 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 MHC or the Bank contained in Sales Information (as such term
is defined in Section 8 hereof) authorized by the Company, the
MHC 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, the MHC or the Bank contained in Sales
Information (as such term is defined in Section 8 hereof)
authorized by the Company, the MHC 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, the MHC 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 MHC Application which was prepared by the Company, the MHC
and the Bank and filed with the OTS was approved by the OTS on
___________ ___, 2000, and the related Prospectus has been
authorized for use by the OTS. At the time of the approval of the
MHC Application, including the
5
Prospectus (including any amendment or supplement thereto), by
the OTS and at all times subsequent thereto until the Closing
Date, the MHC Application, including the Prospectus (including
any amendment or supplement thereto), will comply in all material
respects with the MHC Regulations, except to the extent waived in
writing by the OTS. The MHC 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, the
MHC or the Bank by the Agent or its counsel expressly regarding
the Agent for use in the Prospectus contained in the MHC
Application or statements in or omissions from any sales
information.
(c) The Company and the MHC have registered with the OTS as savings
and loan holding companies under the Home Owners' Loan Act, as
amended ("HOLA").
(d) No order has been issued by the OTS or the FDIC (hereinafter any
reference to 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, the MHC or the Bank, pending or
threatened.
(e) The MHC is and, as of the Closing Date, will continue to be duly
organized and validly existing as a federally chartered mutual
holding company under the laws of the United States, duly
authorized to conduct its business and own its property as
described in the Registration Statement and the Prospectus; as of
the Closing Date, the MHC will have obtained all licenses,
permits and other governmental authorizations required for the
conduct of its business except those that individually or in the
aggregate would not materially adversely affect the financial
condition, earnings, capital, assets or properties of the
Company, MHC and Bank taken as a whole; as of the Closing Date,
all such licenses, permits and governmental authorizations will
be in full force and effect and the MHC will be in compliance
therewith in all material respects; as of the Closing Date, the
MHC will be duly qualified as a foreign corporation to transact
business in each jurisdiction in which the failure to be so
qualified in one or more of such jurisdictions would have a
material adverse effect on the financial condition, earnings,
capital, assets, properties or business of the Company, MHC and
Bank considered as one enterprise.
6
(f) The MHC does not own any equity securities or any equity interest
in any business enterprise except as described in the Prospectus.
(g) The MHC is not authorized to issue any shares of capital stock.
(h) At the Closing Date, the Plan will have been adopted by the
Boards of Directors of the Company, the MHC and the Bank and
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 MHC 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, the MHC or the Bank by the
OTS, the Commission, or any other regulatory authority and in the
manner described in the Prospectus. No person has sought to
obtain review of the final action of the OTS in approving the
Plan or in approving the MHC Application, or any other statute or
regulation.
(i) The Bank has been organized and is a validly existing federally
chartered savings and loan association in capital stock form of
organization, 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 United
States 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
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
completion of the 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, (ii) the Company
will have no direct subsidiaries other than the Bank, and (iii)
the Company will be a majority-owned subsidiary of the MHC. The
Offering 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-Offering reports, and documents in compliance
with the 1933 Act Regulations, the OTS' resolutions or letters of
7
approval, all terms, conditions, requirements and provisions with
respect to the Offering imposed by the Commission, the OTS, and
the FDIC, if any, will have been complied with by the Company,
the MHC 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.
(j) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the United
States 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 each jurisdiction in which the conduct of
its business requires such qualification, except where the
failure to so qualify would not 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.
(k) 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.
(l) The Company, the MHC 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, the MHC 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,
the MHC and the Bank, taken as a whole; and all of the leases and
subleases material to the business of the Company, the MHC and
the Bank, taken as a whole, under which the Company, the MHC or
the Bank hold properties, including those described in the
Registration Statement and Prospectus, are in full force and
effect.
(m) The Company and the Bank have received an opinion of their
special counsel, Xxxx Xxxxxx Xxxxxx Xxxxxxxx & Xxxxxx with
respect to the federal income tax consequences of the Offering
and the opinions of
8
____________________ with respect to New Mexico income tax
consequences of the Offering; all material aspects of the
opinions of Xxxx Xxxxxx Xxxxxx Xxxxxxxx & Xxxxxx and
_____________________ are accurately summarized in the
Registration Statement and will be accurately summarized in the
Prospectus; and further represent and warrant that the facts upon
which such opinions are based are truthful, accurate and
complete.
(n) The Company, the MHC 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 OTS 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, the MHC and the Bank and this Agreement has been
validly executed and delivered by the Company, the MHC and the
Bank and is the valid, legal and binding agreement of the
Company, the MHC 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 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 8 and 9 hereof may be unenforceable as against public
policy).
(o) The Company, the MHC and the Bank are not in violation of any
directive received from the OTS, the FDIC, or any other agency to
make any material change in the method of conducting their
businesses so as to comply in all material respects with all
applicable statutes and regulations (including, without
limitation, regulations, decisions, directives and orders of the
OTS, and the FDIC) 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, the MHC 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
9
Company, the MHC and the Bank, or which would materially affect
their properties and assets.
(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 Bank at the respective
dates indicated and for the respective periods covered thereby
and comply as to form in all material respects with the
applicable accounting requirements of Title 12 of the Code of
Federal Regulations 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 Bank with the OTS. The other financial,
statistical and pro forma information and related notes included
in the Prospectus present fairly the information shown therein on
a basis consistent with the audited and unaudited financial
statements of the Bank included in the Prospectus, and as to the
pro forma adjustments, the adjustments 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, the MHC or the Bank considered
as one enterprise, or in the earnings, capital or properties of
the Company, the MHC 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, the MHC 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, the MHC 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, the MHC's or the Bank's relationship
with its insurance carriers, including, without limitation,
cancellation or other termination of the Company's, the
10
MHC'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, the MHC or
the Bank, neither of which has any material undisclosed liability
of any kind, contingent or otherwise; (vii) the Company, the MHC
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, the MHC 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, the
MHC and the Bank conform in all material respects to the
descriptions thereof contained in the Prospectus; and (x) neither
the Company, the MHC 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, the MHC or the Company or their
representatives in connection with the issuance and sale of the
Shares, including records of account holders, depositors and
other members of the Bank, or in connection with the Agent's
exercise of due diligence, except for those documents which were
prepared by parties other than the Bank, the MHC, the Company or
their representatives, to the best knowledge of the Bank, the MHC
and the Company, 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, the MHC nor the Bank is (i) in violation of its articles
of incorporation or 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 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, the MHC and the Bank and this Agreement
has been validly executed and delivered by the Company, the MHC
and the Bank and is a valid, legal and binding Agreement of the
Company, the MHC and the Bank enforceable 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 federal
savings institutions, (ii) general equitable principles, (iii)
laws relating to the safety and soundness of insured depository
institutions, and (iv) applicable
11
law or public policy with respect to the indemnification and/or
contribution provisions contained herein, and except that no
representation or warranty need be made 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). 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 upon any of
the assets of the Company, the MHC or the Bank pursuant to the
articles of incorporation of the Company or the charter and
bylaws of the Bank and the MHC, or any material contract, lease
or other instrument to which the Company, the MHC 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, the MHC 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, the MHC and
the Bank on a consolidated basis; or (iii) result in the creation
of any material lien, charge or encumbrance upon any property of
the Company, the MHC 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, the MHC 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, the MHC
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, the MHC 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, the MHC and the Bank,
threatened any action or proceeding wherein the Company, the MHC
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 prior to the Closing Date (other than Shares held by
the MHC); 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
for shares purchased by the ESOP with funds
12
borrowed from the Company to the extent payment therefor in cash
has not been received by the Company; 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, the MHC 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 approval of any regulatory 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 OTS 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) The Accounting & Consulting Group L.L.P. which has certified the
consolidated audited financial statements and schedules of the
Bank included in the Prospectus, has advised the Company, the MHC
and the Bank in writing that they are, with respect to the
Company, the MHC and the Bank, independent public accountants
within the meaning of the Code of Professional Ethics of the
American Institute of Certified Public Accountants and Title 12
of the Code of Federal Regulations and Section 571.2(c)(3).
(w) RP Financial LC, which has prepared the Valuation Appraisal
Report as of December ___, 1999 (as amended or supplemented, if
so amended or supplemented) (the "Appraisal"), has advised the
Company in writing that it is independent of the Company, the MHC
and the Bank within the meaning of the MHC Regulations.
(x) The Company, the MHC and the Bank have timely filed all required
federal, state and local tax returns; the Company, the MHC 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 Bank is in compliance in all material respects with the
applicable financial record-keeping and reporting requirements of
the Currency and
13
Foreign Transactions Reporting Act of 1970, as amended, and the
regulations and rules thereunder.
(z) To the knowledge of the Company, the MHC and the Bank, neither
the Company, the MHC, the Bank nor employees of the Company, the
MHC or the Bank have made any payment of funds of the MHC, 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, the MHC 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, and except for any
shares issued in connection with the incorporation of 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, the
MHC 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, the MHC 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, the MHC 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, the MHC 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.
14
Section 5. Representations and Warranties of the Agent.
The Agent represents and warrants to the Company, the MHC and the Bank
that:
(i) it is a corporation and is validly existing in good standing
under the laws of the State of Ohio and licensed to conduct business
in the State of Ohio and it has the full power and authority to
provide the services to be furnished to the Bank, the MHC and the
Company hereunder.
(ii) 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.
(iii) 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.
(iv) 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 agreement, indenture or
other instrument to which the Agent is a party or by which it or its
property is bound.
(v) 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.
(vi) 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.
Section 5.l Covenants of the Company, the MHC and the Bank. The
Company, the MHC 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
15
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) The MHC and Bank will not, at any time after the MHC Application
is approved by the OTS, file any amendment or supplement to such
MHC Application without providing the Agent and its counsel an
opportunity to review such amendment or supplement or file any
amendment or supplement to which amendment or supplement the
Agent or its counsel shall reasonably object.
(c) The Company, the MHC 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-effective
amendment to the MHC Application to be approved by the OTS and
will immediately upon receipt of any information concerning the
events listed below notify the Agent: (i) when the Registration
Statement, as amended, has become effective; (ii) when the MHC
Application, as amended has been approved by the OTS; (iii) any
comments from the Commission, the OTS 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 OTS or any other governmental entity for any
amendment or supplement to the Registration Statement, the MHC
Application or for additional information; (v) of the issuance by
the Commission, the OTS 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, the MHC or the Bank under the MHC Regulations, or
other applicable law, or the threat of any such action; (vi) the
issuance by the Commission, the OTS 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, the MHC and
the Bank will make every reasonable effort (i) to prevent the
issuance by the Commission, the OTS or any state authority of any
such order and, if any such order shall at any time be issued,
(ii) to obtain the lifting thereof at the earliest possible time.
(d) The Company, the MHC and the Bank will deliver to the Agent and
to its counsel two conformed copies of the Registration Statement
and the MHC Application, as originally filed and of each
amendment or supplement thereto, including all exhibits. Further,
the Company, the MHC and the Bank will deliver such additional
copies of the foregoing documents to counsel to the Agent as may
be required for any NASD and "blue sky" filings.
16
(e) The Company, the MHC 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, the MHC 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 OTS or the MHC
Regulations, 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, the MHC and the Bank will comply, at their own expense,
with all material requirements imposed upon them by the
Commission, the OTS or the MHC Regulations, 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, the MHC or the Bank shall occur, as a
result of which it is necessary or appropriate, in the opinion of
counsel for the Company, the MHC 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, the MHC and the Bank will
immediately so inform the Agent and prepare and file, at their
own expense, with the Commission and the OTS and furnish to the
Agent a reasonable number of copies of an amendment or amendments
of, or a supplement or supplements to, the Registration Statement
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
17
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 Agreement, the Company,
the MHC 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, the MHC 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 MHC Regulations to be sold or as
the Agent and the Company, the MHC 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 Company, the MHC and the Bank will not sell or issue,
contract to sell or otherwise dispose of, for a period of 90 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.
(j) 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 OTS.
(k) During the period during which the Company's Common Stock is
registered under the 1934 Act or for three (3) 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
18
income, shareholders' equity and cash flows of the Company and
its subsidiaries as at the end of and for such year, certified by
independent public accountants in accordance with Regulation S-X
under the 1933 Act and the 1934 Act).
(l) 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-K,
10-Q 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 OTS 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, MHC or the Bank as
the Agent may reasonably request; and (iii) from time to time,
such other nonconfidential information concerning the Company,
the MHC or the Bank as the Agent may reasonably request.
(m) The Company, the MHC 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 "Use of Proceeds."
(n) Other than as permitted by the MHC 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, the MHC nor the Bank will
distribute any prospectus, offering circular or other offering
material in connection with the offer and sale of the Shares.
(o) 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 a national
or regional securities exchange or on the Nasdaq Stock Market
("Nasdaq") effective on or prior to the Closing Date.
(p) 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
19
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.
(q) The Company, the MHC 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."
(r) Neither the Company, the MHC nor the Bank will amend the Plan
without notifying the Agent prior thereto.
(s) 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.
(t) Prior to the Closing Date, the Company, the MHC 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.
(u) 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,
the MHC 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.
(v) The facts and representations provided to Xxxx Xxxxxx Xxxxxx
Xxxxxxxx & Xxxxxx by the Bank, the MHC and the Company and upon
which Xxxx
20
Xxxxxx Xxxxxx Xxxxxxxx & Xxxxxx will base its opinion under
Section 7(c)(1) are and will be truthful, accurate and complete.
Section 6. Payment of Expenses. Whether or not the Offering is
completed or the sale of the Shares by the Company is consummated, the Company,
the MHC and the Bank jointly and severally agree to pay or reimburse the Agent
for the Company, the MHC 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; and
the fees set forth under Section 2. In the event the Company is unable to sell a
minimum of 708,050 Shares, the Company, the MHC and the Bank shall promptly
reimburse the Agent in accordance with Section 2 hereof.
Section 7. 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 by the Agent, to the condition that
all representations and warranties of the Company, the MHC 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,
the MHC 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, the MHC and the Bank shall have
conducted the Offering in all material respects in accordance
with the Plan, the MHC Regulations, and all other applicable
laws, regulations, decisions and orders, including all terms,
conditions, requirements and provisions precedent to the Offering
imposed upon them by the OTS.
(b) The Registration Statement shall have been declared effective by
the Commission and the MHC Application and MHC Notice shall be
approved by the OTS 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 therefore 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 therefore initiated or, to the Company's, the MHC's
or the Bank's knowledge, threatened by the Commission, the OTS,
the FDIC, or any state authority.
(c) At the Closing Date, the Agent shall have received:
21
(1) The favorable opinion, dated as of the Closing Date and
addressed to the Agent and for its benefit, of Xxxx Xxxxxx Xxxxxx
Xxxxxxxx & Xxxxxx, special counsel for the Company, the MHC and
the Bank, in form and substance to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation under the laws of the United States.
(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
federally chartered savings and loan association 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 of the Bank upon
completion of the Offering will be duly authorized and, upon
payment therefor, will be validly issued, fully paid and
non-assessable and will be 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; 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) The MHC has been duly organized and is validly existing
as a federally chartered mutual holding company, duly authorized
to conduct its business and own its properties as described in
the Registration Statement and Prospectus.
(vi) Upon consummation of the Offering, immediately upon
completion thereof subject to compliance with all conditions
imposed by the OTS under the terms of the OTS' approval order, in
an amount as described in the Prospectus, the authorized, issued
and outstanding capital stock of the Company will be within the
range set forth in the Prospectus under the caption
"Capitalization," and 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
22
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.
(vii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, have been
duly and validly authorized by all necessary action on the part
of the Company, the MHC and the Bank; and this Agreement is a
valid and binding obligation of the Company, the MHC and the
Bank, enforceable 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 of which are insured by the FDIC and their 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).
(viii) The MHC Application has been approved by the OTS and
the Prospectus has been authorized for use 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.
(ix) The Plan has been duly adopted by the required vote of
the directors of the Company, the MHC and the Bank, and based
upon the certificate of the inspector of election, by the members
of the Bank.
(x) Subject to the satisfaction of the conditions to the
OTS' 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
23
rendered) and except as may be required under the rules and
regulations of the NASD and/or the NYSE (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 MHC Regulations, except that no opinion is
rendered with respect to (a) the Registration Statement or
Prospectus, which are covered by other clauses of this opinion,
(b) the satisfaction of the post-Offering conditions in the OTS
Regulations or in the OTS approvals of the MHC Application, (c)
the securities or "blue sky" laws of various jurisdictions, and
(d) the rules and regulations of the NASD.
(xi) The Registration Statement is effective under the 1933
Act, and no stop order suspending the effectiveness has been
issued under the 1933 Act or proceedings therefor initiated or,
to such counsel's Actual Knowledge, threatened by the Commission.
(xii) At the time the MHC Application, including the
Prospectus contained therein, was approved by the OTS, the MHC
Application, including the Prospectus contained therein, complied
as to form in all material respects with the requirements of the
MHC Regulations, 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).
(xiii) 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 MHC Regulations and federal law.
(xiv) 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.
(xv) 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
24
Actual Knowledge, all pending legal and governmental proceedings
to which the Company, the MHC or the Bank is a party or of which
any of their property is the subject, which are not described in
the Registration Statement and the Prospectus, including ordinary
routine litigation incidental to the Company's, the MHC's or the
Bank's business, are, considered in the aggregate, not material.
(xvi) To such counsel's Actual Knowledge, there are no
material contracts, indentures, mortgages, loan agreements,
notes, leases or other instruments required to be described or
referred to in the MHC 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 MHC Application, the Registration Statement or the
Prospectus. The description in the MHC 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.
(xvii) To such counsel's Actual Knowledge, the Company, the
MHC and the Bank have conducted the Offering, in all material
respects, in accordance with all applicable requirements of the
Plan and applicable federal law, except that no opinion is
rendered with respect to (a) the MHC 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 OTS Regulations or in the OTS
approval of the MHC Application, (c) the securities or "blue sky"
laws of various jurisdictions, and (d) the rules and regulations
of the NASD. The Plan complies in all material respects with all
applicable federal laws, rules, regulations, decisions and orders
including, but not limited to, the MHC Regulations; no order has
been issued by the OTS, 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 OTS, 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 OTS, approving the Plan, the MHC Application or the
Prospectus.
(xviii) To such counsel's Actual Knowledge, the Company, the
MHC and the Bank have obtained all material licenses, permits and
other 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, the MHC and the Bank are in all material
respects complying therewith, except where the failure to have
such licenses, permits and other governmental authorizations or
the failure to be in compliance therewith would not have a
material adverse effect on the
25
business or operations of the Bank, the MHC and the Company,
taken as a whole.
(xix) To such counsel's Actual Knowledge, neither the
Company, the MHC nor the Bank is in violation of its articles of
incorporation and bylaws or its 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 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,
the MHC 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, the MHC
or the Bank pursuant to any material contract, indenture,
mortgage, loan agreement, note, lease or other instrument to
which the Company, the MHC 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, the MHC or the Bank are subject; and, such action
will not result in any violation of the provisions of the
certificate of incorporation or bylaws of the Company or the
Charter or bylaws of the MHC or the Bank or, to such counsel's
Actual Knowledge, 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.
(xx) The Company's articles of incorporation and bylaws
comply in all material respects with the regulations of the OTS.
The Bank's and MHC's charter and bylaws comply in all material
respects with the rules and regulations of the OTS.
(xxi) To such counsel's Actual Knowledge, neither the
Company, the MHC nor the Bank is in violation of any directive
from the OTS or the FDIC to make any material change in the
method of conducting its respective business.
(xxii) The information in the Prospectus under the captions
"Regulation," "The Stock Offering," "Restrictions on Acquisition
of the Alamogordo Financial and Alamogordo Federal" and
"Description of Capital Stock of the Alamogordo Financial," to
the extent that such information constitutes
26
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 in the
Prospectus relating to the tax consequences of the stock offering
has been reviewed by such counsel and fairly describes the
opinions rendered by Xxxx Xxxxxx Xxxxxx Xxxxxxxx & Xxxxxx and
_____________________ to the Company, the MHC and the Bank with
respect to such matters.
(xxiii) The Company and the MHC have been duly registered
and are in good standing as savings and loan holding companies
under the HOLA.
(xxiv) In addition, such counsel shall state that during the
preparation of the MHC 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, the MHC and the Bank,
at which conferences the contents of the MHC 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 MHC 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, the
MHC and the Bank), nothing has come to their attention that would
lead them to believe that the MHC 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, the MHC and the Bank
and certificates of public officials. The opinion of Xxxx Xxxxxx Xxxxxx Xxxxxxxx
& Xxxxxx shall be governed by the Legal Opinion Accord ("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,
the MHC or the Bank shall have received a copy of such
27
proceedings, order, stop order 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, the MHC or the Bank.
The favorable opinion, dated as of the Closing Date and addressed to
the Agent and for their benefit, of the Bank's local counsel, in form and
substance to the effect that, to the best of such counsel's knowledge, (i) the
Company, the MHC and the Bank have good and marketable title to all properties
and assets which are material to the business of the Company, the MHC and the
Bank 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 in relation to the business of the
Company, the MHC and the Bank considered as one enterprise; (ii) all of the
leases and subleases material to the business of the Company, the MHC and the
Bank under which the Company, the MHC and the Bank hold properties, as described
in the Registration Statement and Prospectus, are in full force and effect; and
(iii) the Bank 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 have a material adverse effect on the condition,
financial or otherwise, or the business, operations or income of the Bank.
(d) At the Closing Date, the Agent shall have received the favorable
opinion, dated as of the Closing Date, of Xxxxxx, Xxxxxxxx &
Xxxx, 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, the MHC and the Bank, and
as to matters of fact, upon certificates of officers and
directors of the Company, the MHC 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, the MHC 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
28
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, the
MHC or the Bank, and the conditions set forth in this Section 7
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, the MHC or the Bank, independently, or
of the Company, the MHC 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,
MHC 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 knowledge of the Company, the MHC
or the Bank, threatened by the Commission or any state authority;
(vii) no order suspending the Offering 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, the
MHC or the Bank, threatened by the OTS, the Commission, the FDIC,
or any state authority; and (viii) to the best knowledge of the
Company, the MHC or the Bank, no person has sought to obtain
review of the final action of the OTS 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, the MHC or the Bank independently, or of
the Company, the MHC 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, the MHC or the Bank
shall not have received from the OTS or the FDIC any direction
(oral or written) to make any material change in the method of
conducting their business with which it has not complied (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, the
MHC and the Bank taken as a whole; (iii) the Company, the MHC 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
29
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, the MHC or the Bank, threatened against
the Company, the MHC 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, the MHC 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,
the MHC and the Bank.
(g) Concurrently with the execution of this Agreement, the Agent
shall receive a letter from The Accounting & Consulting Group
L.L.P. dated as of the date of the Prospectus and addressed to
the Agent: (i) confirming that The Accounting & Consulting Group
L.L.P. 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 applicable
regulations of the OTS and stating in effect that in its opinion
the consolidated financial statements, schedules and related
notes of the Bank as of September 30, 1999 and 1998 and for each
of the three years in the period ended September 30, 1998, 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 OTS 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 Bank
prepared by the Bank, a reading of the minutes of the meetings of
the Board of Directors and members of the Bank and consultations
with officers of the Bank responsible for financial and
accounting matters, nothing came to their attention which caused
them to believe that: (A) the unaudited financial statements
included in the Prospectus are not in conformity with the 1933
Act, applicable accounting requirements of the OTS 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 Bank at the date of such letter as compared with amounts
30
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 Bank, which are subject to the
internal controls of the Bank, the accounting system and other
data prepared by the Bank, 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 The Accounting & Consulting Group L.L.P. in the letter
delivered by it pursuant to subsection (f) of this Section 7, the
"specified date" referred to in clause (ii) of subsection (f)
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 RP
Financial LC, dated the date thereof and addressed to counsel for
the Agent (i) confirming that said firm is independent of the
Company, the MHC and the Bank and is experienced and expert in
the area of corporate appraisals within the meaning of Title 12
of the Code of Federal Regulations, Section 563b.7(f)(1)(i), (ii)
stating in effect that the Appraisal prepared by such firm
complies in all material respects with the applicable
requirements of Title 12 of the Code of Federal Regulations, and
(iii) further stating that their opinion of the aggregate pro
forma market value of the Company, the MHC and the Bank expressed
in their Appraisal dated as of December __, 1999, and most
recently updated, remains in effect.
(j) The Company, the MHC 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 long- term debt of the Company, the MHC or
the Bank other than debt incurred in relation to the purchase of
Shares by the Bank's Eligible Plans, 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
31
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 OTS approving the MHC 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 OTS
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
and the MHC's standing as registered savings and loan holding
companies; (vii) a copy of the Bank's federal stock charter; and
(viii) a copy of the Company's federal charter; and (viii) a copy
of the MHC's federal charter.
(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 judgement, 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, the MHC or the Bank in
connection with the Offering and the sale
32
of the Shares as herein contemplated shall be satisfactory in
form and substance to the Agent and its counsel.
Section 8. Indemnification.
(a) The Company, the MHC 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 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 MHC Application (or
any amendment or supplement thereto), or any instrument or
document executed by the Company, the MHC or the Bank or based
upon written information supplied by the Company, the MHC 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, the MHC or the Bank with their consent or based upon
written or oral information furnished by or on behalf of the
Company, the MHC 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;
(ii) arise out of or are based upon the omission or alleged
omission to state in any of the foregoing documents or
information, a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; 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 MHC Application
33
(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
any amendment or supplement thereto), preliminary or final
Prospectus (or any amendment or supplement thereto), the MHC
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,
the MHC 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, the MHC or the
Bank by the Agent regarding the Agent is set forth in the
Prospectus; and, provided further, that such indemnification
shall be to the extent permitted by the Commissioner, the OTS,
the FDIC and the Board of Governors of the Federal Reserve. The
indemnification provided for in this paragraph (a) shall not be
applicable with respect to any loss, liability, claim, damage, or
expense whatsoever if it is determined by final judgment of a
court having jurisdiction over the matter that such loss,
liability, claim, damage or expense was primarily a result of the
Agent's willful misconduct or gross negligence.
(b) The Agent agrees to indemnify and hold harmless the Company, the
MHC and the Bank, their directors and officers and each person,
if any, who controls the Company, the MHC 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 MHC, 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 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 MHC 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
34
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 MHC 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 8(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 MHC
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,
the MHC 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, the MHC or the
Bank by the Agent regarding the Agent is set forth in the
Prospectus. The indemnification provided for in this Section 8
(b) shall not be applicable with respect to any loss, liability,
claim, damage, or expense whatsoever if it is determined by final
judgment of a court having jurisdiction over the matter that such
loss, liability, claim, damage or expense was primarily a result
of the Company's, the MHC's or the Bank's willful misconduct or
gross negligence.
(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 8 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
35
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 8 and in Section 9
hereof and the representations and warranties of the Company, the
MHC 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, the MHC or the Bank or any officers,
directors or controlling persons, agent or employees of the
Company, the MHC or the Bank; (ii) delivery of and payment
hereunder for the Shares; or (iii) any termination of this
Agreement.
Section 9. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 8 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Company, the MHC, the Bank or the Agent, the
Company, the MHC, the Bank and the Agent 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 asserted, but after deducting
any contribution received by the Company, the MHC, 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, the MHC 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 8 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, the MHC 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, the MHC 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, the MHC 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 MHC, the Bank and the Agent
agree that it would not be just and equitable if contribution pursuant to this
Section 9 were determined by pro-rata allocation or by any other
36
method of allocation which does not take into account the equitable
considerations referred to above in this Section 9. 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 9 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 1933 Act) shall be entitled to contribution
from any person who was not found guilty of such fraudulent misrepresentation.
The obligations of the Company, the MHC and the Bank under this Section 9 and
under Section 8 shall be in addition to any liability which the Company and the
Bank may otherwise have. For purposes of this Section 9, each of the Agent's,
the Company's, the MHC or the Bank's officers and directors and each person, if
any, who controls the Agent or the Company or the MHC 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, the MHC 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 9, 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
9.
Section 10. Survival of Agreements, Representations and Indemnities.
The respective indemnities of the Company, the MHC, the Bank and the Agent and
the representations and warranties and other statements of the Company, the MHC,
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 MHC, the Bank or any controlling person referred to in Section 8
hereof, and shall survive the issuance of the Shares, and any successor or
assign of the Agent, the Company, the MHC, the Bank, and any such controlling
person shall be entitled to the benefit of the respective agreements,
indemnities, warranties and representations.
Section 11. Termination. The Agent may terminate this Agreement by
giving the notice indicated below in this Section 11 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 by _________, 2000, and in accordance with
the provisions of the Plan or as required by the MHC 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
37
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, the MHC and/or the Bank as set forth in Sections
2(a), 6, 8 and 9 hereof.
(b) If any of the conditions specified in Section 7 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, the MHC 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), 6, 8 and 9 hereof.
(c) If the Agent elects to terminate this Agreement as provided in
this Section, the Company, the MHC and the Bank shall be notified
promptly by telephone or telegram, confirmed by letter.
The Company, the MHC 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 after the
Company, the MHC 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 12. 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 Xxxxxxx Xxxx &
Company, a Division of Xxxxx, Xxxxxxxx & Xxxxx, Inc., 000 Xxxxxxxxx, Xxxxxx,
Xxxx 00000-0000, Attention: Xxxxxxxx X. XxXxxxx, Executive Vice President (with
a copy to Silver, Xxxxxxxx & Xxxx, L.L.P., Attention: Xxxxxx X. Xxxxxxxxx, P.C.)
and, if sent to the Company, the MHC and the Bank, shall be mailed, delivered or
telegraphed and confirmed to the Company, the MHC and the Bank at 000 00xx
Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000-0000, Attention: Xxxxx Xxxxxxxxx, President
(with a copy to Xxxx Xxxxxx Xxxxxx Xxxxxxxx & Xxxxxx, Attention: Xxxx Xxxx).
Section 13. Parties. The Company, the MHC 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,
the MHC or the Bank, when the same shall have been given by the undersigned or
any other officer of the Company, the MHC or the Bank. This Agreement shall
inure solely to the benefit of, and shall be binding upon, the Agent, the
Company, the MHC, 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
38
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 14. 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, the MHC and the Bank. At the closing, the Company, the MHC 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 6 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 15. 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 16. Construction. This Agreement shall be construed in
accordance with the laws of the State of Kansas.
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 MHC, 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
39
to be charged. No course of conduct or dealing shall be construed to modify,
amend or otherwise affect any of the provisions hereof.
Very truly yours,
ALAMOGORDO FINANCIAL ALAMOGORDO FEDERAL SAVINGS AND
CORPORATION LOAN ASSOCIATION
By Its Authorized By Its Authorized
Representative: Representative:
---------------------------- ---------------------------------
Xxxxx Xxxxxxxxxx Xxxxx Xxxxxxxxxx
Chairman Chairman
AF MUTUAL HOLDING
COMPANY
By Its Authorized
Representative:
----------------------------
Xxxxx Xxxxxxxxxx
Chairman
Accepted as of the date first above written
Xxxxxxx Xxxx & Company, a Division
Xxxxx, Xxxxxxxx & Xxxxx, Inc.
By Its Authorized
Representative:
-----------------------------
Xxxxxxxx X. XxXxxxx
Executive Vice President
40
