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