EXHIBIT 1.1
HERITAGE FINANCIAL CORPORATION
HERITAGE SAVINGS BANK
COMMON STOCK
(NO PAR VALUE)
AGENCY AGREEMENT
_______________, 1997
Xxxx, Xxxx & Co., Inc.
000 X. Xxxxxx Xxx.
Xxxxxxxxxx, XX 00000
Gentlemen:
Heritage Savings Bank (the "Savings Bank") and its proposed stock holding
company, Heritage Financial Corporation (the "Company") hereby confirm their
agreement with Xxxx, Xxxx & Co., Inc. ("Agent" or "you") as follows:
INTRODUCTION
Heritage Financial Corporation, MHC (the "Mutual Holding Company"), the
majority shareholder of the Savings Bank, the Savings Bank and the Company have
adopted a Plan of Conversion and Reorganization (the "Plan") whereby the Mutual
Holding Company will merge with and into the Savings Bank and the Savings Bank
will become a subsidiary of the Company, a Washington chartered stock
corporation. The reorganization and the share exchange and stock offering
described below are referred to herein collectively as the "Conversion."
The Company will offer shares (the "Shares") of its common stock, no par
value (the "Common Stock"), in an initial public offering as follows: (a) to the
holders of the outstanding common stock of the Savings Bank, other than the
Savings Bank's current majority shareholder, the Mutual Holding Company, (the
"Minority Stockholders") in mandatory exchange (the "Exchange") for their shares
of the Savings Bank (the "Minority Shares"); (b) in a Subscription Offering to
certain eligible account holders, the Savings Bank's tax-qualified employee
stock benefit plans, certain other depositors and borrowers; (c) to the extent
shares are available, to the Minority Shareholders in a Minority Stockholders'
Offering; and (d) to the extent shares are available, in a Community Offering to
members of the general public with preference given to natural persons residing
in the counties that the Savings Bank considers its local community. The
Subscription Offering, Minority Stockholders' Offering and the Community
Offering (but not the Shares
applicable to the Exchange) are referred to herein as the "Offering".
The Company will conduct these offerings in compliance with Washington law,
the Washington Department of Financial Institutions, Division of Banks (the
"Division") and the Federal Deposit Insurance Corporation (the "FDIC") rules
(together, the "Banking Regulations"), the Securities Act of 1933 (the "1933
Act") and the rules and regulations issued thereunder (the "1933 Act
Regulations") by the Securities and Exchange Commission (the "SEC"). The Company
has filed a bank holding company application with the Board of Governors of the
Federal Reserve System (the "FRB"). Each term not defined herein shall have the
meaning given it in the Prospectus contained in the Company's registration
statement on Form S-1 (File No. 333-__________) (the "Registration Statement")
filed with the SEC and in its Application for Conversion (the "Application")
filed with the Division and the FDIC.
SECTION 1. APPOINTMENT OF AGENT; COMPENSATION TO THE AGENT
Subject to the terms and conditions set forth below, the Company hereby
appoints Xxxx Xxxx as its agent to consult with, advise and assist it, and to
solicit purchase orders for Shares on its behalf, in connection with the
Offering. On the basis of the representations, warranties and agreements herein
contained, and subject to the terms and conditions herein set forth, Xxxx Xxxx
accepts such appointment and agrees to consult with and advise the Company as to
the matters set forth in Section 3 of the engagement letter between the Agent
and the Bank dated June 26, 1997, included as Exhibit A attached hereto, and to
use its best efforts to solicit purchase orders for Shares according to this
Agreement; provided, however, that the Agent shall not be responsible for
obtaining purchase orders for any specific number of Shares, shall not be
required to purchase any Shares and shall not be obligated to take any action
which is inconsistent with all applicable laws, regulations, decisions or
orders. If requested by the Company, Xxxx Xxxx may also assemble and manage a
selling group of broker-dealers which are members of the National Association of
Securities Dealers, Inc. ("NASD") to participate in the solicitation of purchase
orders for the Shares under a selected dealers' agreement ("Selected Dealers'
Agreement"), the form of which is set forth as Exhibit B to this Agreement.
The Company acknowledges that, having appointed the Agent hereunder, only
personnel employed by the Agent, and such other personnel as are assigned to
specific purposes or services contemplated by this Agreement to be performed by
the Agent, will be involved in providing the services described herein. In
forming a selling group in connection with the Offering, the Agent may include
the brokerage offices of the Agent located in Livingston, New Jersey. In such
event, you would be required to execute and abide by the terms of a Selected
Dealers' Agreement, and would be entitled to the same compensation as any other
member of the selling group as set forth therein.
In addition to the reimbursement of the expenses specified in Section 6, 7
and 8 hereof, the Agent will receive the following compensation in connection
with the Conversion:
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(1) an advisory and management fee of $50,000;
(2) a fee equal to 1.5% of the aggregate dollar amount of the Shares sold
in the Offering to members of the Mutual Holding Company and the shareholders of
the Savings Bank, other than those shares sold pursuant to (3) and (4) below (no
fee will be payable, however, with respect to Shares sold to officers,
directors, employees, immediate family members of officers, directors,
employees, ("Insiders") and qualified and non-qualified employee benefit plans
of the Savings Bank and of the Insiders). For purposes of this paragraph, the
term "immediate family members" shall be limited to spouses, parents, siblings,
mothers and fathers in-law, children and their spouses;
(3) a fee equal to 2.0% of the aggregate dollar amount of the Shares sold
in the Offering to all persons other than those described in (2) above or
pursuant to (4) below; and
(4) a fee equal to 1.5% of the aggregate dollar amount of the Shares sold
pursuant to the Selected Dealers' Agreement, provided that such fee along with
the fee payable directly by the Savings Bank to selected dealers shall not
exceed 7.0% of the aggregate dollar amount of all Shares sold pursuant to the
Selected Dealers' Agreement.
If (i) the Company or the Savings Bank abandons or terminates the Plan,
(ii) the Conversion is not consummated by June 30, 1998, or (iii) Xxxx Xxxx
terminates this Agreement pursuant to Section 10(b), then the Agent shall not
receive the fees described in (a)-(c) above but shall receive compensation of
$50,000 for its advisory and administrative services, in addition to
reimbursement of its reasonable out-of-pocket expenses as set forth in Section
6. In the event there is a resolicitation of subscriptions and you are required
to provide significant additional services, the Company, the Savings Bank and
the Agent shall negotiate in good faith an agreement to provide Agent additional
compensation. In addition, in the event of unforeseen developments that
otherwise require significant additional effort and expense on your part, the
Company and the Savings Bank, in their sole discretion, may agree to negotiate
in good faith an agreement to provide additional compensation and to cover such
additional expenses.
The compensation specified above shall be payable (to the extent not
already paid) to the Agent in next day clearing house funds on the earlier of:
(i) the consummation of the Conversion; or (ii) a determination by the Company
and the Savings Bank on one hand or the Agent on the other to terminate or
abandon the Conversion. The $25,000 paid to the Agent upon execution of the
engagement letter and the $25,000 paid to the Agent upon the execution of this
Agreement will be considered advance payments of compensation due hereunder.
The Company and the Savings Bank agree to reimburse the Agent for the costs and
expenses specified in Section 6, to the extent such costs and expenses are
reasonably incurred by the Agent, promptly upon receiving a reasonable
accounting of such costs and expenses from time to time.
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SECTION 2. CLOSING DATE; RELEASE OF FUNDS AND DELIVERY OF CERTIFICATES
If all conditions precedent to the consummation of the Conversion,
including, without limitation, the sale of the minimum number of Shares as set
forth in the Prospectus are satisfied, the Company agrees to issue or to cause
to be issued the Shares sold in the Offering and to authorize the release for
delivery of certificates for such Shares on the Closing Date (as hereinafter
defined) against payment therefor to the Company by release of funds from the
special interest-bearing account referred to in Section 5(o) hereof and by the
authorized withdrawal of funds from deposit accounts of those who choose to
purchase Shares in the Offering according to relevant section of the Plan;
provided, however, that no such funds shall be released to the Company or
withdrawn until the conditions specified in Section 9 hereof shall have been
complied with to the reasonable satisfaction of the Agent and its counsel. Such
release, withdrawal and payment shall be made at the Closing Date, on a business
day and at a time and place selected by the Agent, which date and place are
acceptable to the Company on at least two business days prior notice to the
Company (it being understood that such business day shall not be more than 10
business days after the later of the termination of the Offering or the receipt
of all necessary regulatory approvals, or such other time or place as shall be
agreed upon by the Agent, the Company and the Savings Bank). Certificates for
Shares shall be delivered directly to the purchasers thereof or in accordance
with their directions. The hour and date upon which the Company shall release or
deliver the Shares sold in the Offering, according to the terms hereof, are
herein called the "Closing Date."
SECTION 3. PROSPECTUS; THE OFFERING.
There will be a maximum and minimum number of shares to be offered in the
Offering and the anticipated price is $10.00 per share. The minimum and/or
maximum number of Shares may be increased or decreased by the Company, subject
to the provisions of the Plan, market conditions or a change in the estimated
pro forma market value of the Company.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
The Company and the Savings Bank represent and warrant to the Agent as
follows:
(a) The SEC declared the Registration Statement effective on ________,
1997. The Division granted conditional approval of the Application on ________,
1997, the FRB granted approval of the bank holding company application on
________, 1997, and the FDIC issued its conditional approval on ________, 1997.
At the time the Registration Statement was declared effective the Registration
Statement complied and at all times subsequent thereto until and at the Closing
Date the Registration Statement will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations, unless otherwise
expressly permitted by the SEC. At the time the Application was conditionally
approved the Application complied and at all times subsequent thereto until and
at the Closing Date the Application will comply in all material respects with
the Banking Regulations and all other requirements established by the Division
and the FDIC,
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unless otherwise expressly permitted by the Division and the FDIC. When the
Application was conditionally approved by the Division and when the Registration
Statement was declared effective by the SEC, and at all times subsequent thereto
until and at the Closing Date, the Application, the Registration Statement, any
preliminary or final Prospectus (including all amendments and supplements), and
any written information ("Blue Sky Information") supplied by the Company or the
Savings Bank or its representatives (including counsel) that is filed along with
other information authorized by the Company to be filed in any state or
jurisdiction to register or qualify any or all of the Shares under the
securities laws thereof (collectively "Blue Sky Applications") or any
application or other document, advertisement or communication prepared, made or
executed by or on behalf of the Company with its consent after review and
authorized by the Company for use in connection with the Offering ("Sales
Information") did not and will not contain an untrue statement of a material
fact or omit any material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that the
--------
representations and warranties in this Section 4(a) shall not apply to
statements in or omissions from such Application, Prospectus or Sales
Information or Blue Sky Application made in reliance upon and in conformity with
information furnished in writing to the Company by the Agent expressly regarding
the Agent for use under the captions "The Conversion -- Marketing Arrangements."
(b) At the Closing Date, the Company will have completed all conditions
precedent to the Conversion and the offer and sale of the Shares in accordance
with the Plan, the Banking Regulations and all other applicable laws,
regulations, decisions and orders, including all terms, conditions, requirements
and provisions precedent to the Conversion imposed upon the Company or the
Savings Bank by the Division, the FDIC, the FRB, the SEC or any other regulatory
authority other than those which the Division, the FDIC, the SEC or other
regulatory authorities waive or expressly permit to be completed after the
Conversion is consummated.
(c) No order has been issued by the Division, the FDIC, the FRB, the SEC or
any other Federal or state regulatory or blue sky authority preventing or
suspending the use of the Prospectus, and no action by or before any such
government entity to revoke any approval, authorization or order of
effectiveness related to the Conversion is pending or, to the best of the
Company's knowledge, threatened.
(d) RP Financial, LC. ("RP Financial"), which prepared the appraisal of the
Company in connection with the Conversion, is independent with respect to the
Company and the Savings Bank within the meaning of the Plan and the Banking
Regulations.
(e) KPMG Peat Marwick, LLP, the firm which audited the financial statements
filed as part of the Application and Prospectus, are, with respect to the
Company and the Savings Bank independent certified public accountants as
required by the regulations under the 1933 Act and the Securities Exchange Act
of 1934, as amended (the "1934 Act").
(f) The financial statements, together with the related schedules and notes
thereto included in the Application and the Registration Statement and which are
part of the Prospectus,
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present fairly the financial condition, results of operations, retained earnings
and cash flows of the Savings Bank and its wholly-owned subsidiaries, at and for
the dates indicated and the periods specified and comply as to form in all
material respects with the applicable accounting requirements of the Banking
Regulations and generally accepted accounting principles ("GAAP"). Said
financial statements have been prepared in conformity with GAAP applied on a
consistent basis during the periods involved, present fairly in all material
respects the information required to be stated therein and are consistent with
the most recent financial statements and other reports filed by the Savings Bank
with the Division and the FDIC except that accounting principles employed in
such filings conform to requirements of such authorities 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 financial statements of the Savings Bank
included in the Prospectus, and as to the pro forma adjustments, the adjustments
made therein have been properly applied on the basis described therein.
(g) Since the respective dates as of which information is given in the
Application, the Registration Statement and the Prospectus, except as may
otherwise be stated therein: (i) there has not been any material adverse change,
financial or otherwise, in the condition of the Company or the Savings Bank or
in the earnings, capital or properties of the Company or the Savings Bank,
whether or not arising in the ordinary course of business, (ii) there has not
been any material increase in the long term debt of the Company or the Savings
Bank other than in the ordinary course of business and neither the Company nor
the Savings Bank has issued any securities or incurred any material liability or
obligation for borrowing other than in the ordinary course of business; (iii)
there have not been any material transactions entered into by the Company or the
Savings Bank, except those transactions entered into in the ordinary course of
business; and (iv) the capitalization, liabilities, earnings, assets, properties
and business of the Company and the Savings Bank conform in all material
respects to the descriptions thereof contained in the Prospectus. Furthermore,
neither the Company nor the Savings Bank has any material liability of any kind,
contingent or otherwise, except as set forth in the Prospectus.
(h) The Savings Bank is a Washington chartered stock savings bank with
corporate authority to conduct its business and own its property as described in
the Application and the Registration Statement. The Company has been duly
organized as a Washington corporation and has the corporate authority to conduct
its business and own its property as described in the Application and the
Registration Statement. The Company and the Savings Bank have obtained all
licenses, permits and other governmental authorizations currently required for
the conduct of their respective businesses; all such licenses, permits and
governmental authorizations currently are in full force and effect, and each is
in all material respects complying with all laws, rules, regulations and orders
applicable to the operation of its business; neither the Company nor the Savings
Bank has received notice of any proceeding or action relating to the revocation
or modification of any such license, permit or governmental authorization which,
singly or in the aggregate, if subject to an unfavorable decision, ruling or
finding, might materially and adversely affect the conduct of the business, or
the condition, financial or otherwise, or the earnings, affairs or prospects of
either the Company or the Savings Bank. The Savings Bank is in good standing
with the Division and the
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FDIC. The Company is in good standing with the State of Washington. Each of the
Company and the Savings Bank is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which its
ownership of property or leasing of properties or the conduct of its business
requires such qualification, unless the failure to be so qualified in one or
more of such jurisdictions would not have a material adverse effect on its
condition, financial or otherwise, or its business, operations or income of the
Company and the Savings Bank on a consolidated basis. The Savings Bank does not
own equity securities or any equity interest in any other business enterprise
except as described in the Prospectus.
(i) The deposit accounts of the Savings Bank are insured by the Savings
Association Insurance Fund ("SAIF") as administered by the FDIC up to the
maximum amount allowed under law.
(j) Upon consummation of the Conversion, (i) the authorized, issued and
outstanding equity capital of the Company will be as set forth in the
Prospectus; (ii) the Shares will have been duly and validly authorized for
issuance and, when issued and delivered by the Company pursuant to the Plan
against payment of the consideration calculated as set forth in the Plan and in
the Prospectus, will be duly and validly issued and fully paid and
nonassessable; (iii) the issuance of the Shares will not violate any preemptive
rights; (iv) the terms and provisions of the Shares will conform in all material
respects to the description thereof contained in the Application and the
Prospectus; and (v) the Company will own 100% of the capital stock of the
Savings Bank. Upon the issuance of the Shares, good title to the Shares will be
transferred to the purchasers thereof against payment therefor, subject to such
claims as may be asserted against the purchasers thereof by third-party
claimants.
(k) The Plan, the consummation of the Conversion, the execution, delivery
and performance of this Agreement and the consummation of the transactions
hereby contemplated have been duly and validly authorized by the Boards of
Directors of the Company and the Savings Bank and all other corporate action on
the part of the Company and the Savings Bank necessary to approve this
Agreement, the Plan and the transactions contemplated thereby has been taken,
excepting only the required approval of the shareholders of the Savings Bank and
the voting members of the Mutual Holding Company. This agreement has been
validly executed and delivered by the Company and the Savings Bank and is the
valid, legal and binding obligation of the Company and the Savings Bank,
enforceable according to its terms, except to the extent that the rights to
indemnity hereunder may be limited under applicable laws or regulations, and
subject to bankruptcy, insolvency, reorganization or other laws relating to or
affecting the enforcement of creditors' rights generally and equitable
principles limiting the right to obtain specific enforcement or similar
equitable relief. The consummation of the transactions herein contemplated will
not: (i) conflict with or constitute a breach of, or default under, the Articles
of Incorporation or bylaws of the Company or the Articles of Incorporation or
bylaws of the Savings Bank or any material contract, lease or other instrument
to which the Company or the Savings Bank is a party or in which either the
Company or the Savings Bank has a beneficial interest, or any applicable law,
rule, regulation or order; (ii) violate any authorization, approval, judgment,
decree, order, statute, rule or
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regulation applicable to the Company or the Savings Bank; or (iii) result in the
creation of any lien, charge or encumbrance upon any property of the Company or
the Savings Bank.
(l) The Company and the Savings Bank have all such power, authority,
authorizations, approvals and orders as may be required to enter into this
Agreement, to carry out the provisions and conditions hereof and to issue and
sell the Shares of the Company as provided in the Plan and as described in the
Prospectus, subject to the satisfaction or waiver of the conditions of the
Division's and the FDIC's approval of the Application, and except as may be
required under the Blue Sky laws of the various States.
(m) The Company and the Savings Bank have good and marketable title to all
properties and assets which are material to their respective businesses. The
properties and assets described in the Application and the Prospectus are owned
by them, free and clear of all liens, except such liens as are described in the
Application and the Prospectus or are not materially significant to the business
of the Company and the Savings Bank. All of the leases and subleases material to
the business of the Company and the Savings Bank under which the either company
holds properties, including those described in the Application, are in full
force and effect.
(n) Other than as disclosed in the Prospectus, neither the Company nor the
Savings Bank is in violation of any material directive from the Division, the
FDIC, the FRB, or any other agency to make any material change in the method of
conducting its business so as to comply in all material respects with all
applicable statutes and regulations (including, without limitation, regulations,
decisions, directives and orders of the Division, the FDIC and the FRB) and,
there is no suit, proceeding, charge, investigation or action before or by any
court, regulatory authority or governmental agency or body, domestic or foreign,
now pending or, to the knowledge of the Company or the Savings Bank, threatened,
which might materially and adversely affect the Offering, the performance of
this Agreement or the consummation of the transactions contemplated in the Plan
and as described in the Application, or which might result in any material
adverse change in the condition (financial or otherwise), earnings, capital or
properties, of the Company or the Savings Bank, or which would materially affect
their properties and assets.
(o) The Savings Bank is in compliance in all material respects with the
applicable financial record-keeping and reporting requirements of the Currency
and Foreign Transaction Reporting Act of 1970, as amended, and the regulations
and rules thereunder.
(p) The only subsidiaries of the Savings Bank are Sound Service Associates,
Inc. and Heritage Capital Corporation (the "Subsidiaries"). The Subsidiaries
have been duly incorporated and are validly existing as corporations in good
standing under the laws of the jurisdiction of their incorporation, have full
corporate power and authority to own, lease and operate their properties and to
conduct its business as described in the Registration Statement and Prospectus,
and are duly qualified to transact business and are in good standing in each
jurisdiction in which such qualification is required, except where the failure
to so qualify would not have a material adverse effect on the financial
condition, results of operations or business of the Company, the Savings
8
Bank and the Subsidiaries, taken as a whole; the activities of the Subsidiaries
are permitted to subsidiaries of a Washington-chartered savings bank by federal
and Washington law and the rules, regulations, resolutions and practices of the
FRB, the FDIC and the Division; all of the issued and outstanding capital stock
of the Subsidiaries has been duly authorized and validly issued, is fully paid
and nonassessable and is owned by the Savings Bank, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equitable
claim.
(q) The Company and the Savings Bank have received the opinion of KPMG Peat
Marwick LLP with respect to the federal income tax consequences of the
Conversion, the acquisition of the capital stock of the Savings Bank by the
Company and the sale and exchange of the Shares as described in the Prospectus.
The Company and the Savings Bank have receive the opinion of its counsel,
Xxxxxx, Xxxxxx, Honeywell, Malanca, Xxxxxxxx & Daheim, P.L.L.C., with respect to
the Washington income tax consequences of the Conversion, the acquisition of the
capital stock of the Savings Bank by the Company and the sale and exchange of
the Shares as described in the Prospectus. All material aspects of such
opinions are accurately summarized in the Prospectus, and the facts and
representations upon which such opinions are based are accurate and complete,
and neither the Company nor the Savings Bank will take any action inconsistent
therewith.
(r) As of the date hereof, neither the Company nor the Savings Bank is or
will be in violation of its Articles of Incorporation or bylaws. No default
exists, and no event has occurred which with notice or lapse of time, or both,
would constitute a default on the part of the Company or the Savings Bank, in
the due performance and observance of any term, covenant or condition of any
indenture, mortgage, deed of trust, note, bank loan or credit agreement or any
other instrument or agreement to which the Company, the Savings Bank or its
subsidiary is a party or by which they or their properties are bound or affected
in any respect which, in any such case, is material to the Company, the Savings
Bank and its subsidiary taken as a whole and no other party to any such
agreements has instituted or, to the knowledge of the Company or the Savings
Bank, threatened any action or proceeding wherein the Company or the Savings
Bank would or might be alleged to be in material default thereunder.
(s) Since the date of the financial information contained in the
Prospectus, except as otherwise may be indicated or contemplated in the
Application and Prospectus, neither the Company nor the Savings Bank has: (i)
issued any securities or incurred any liability or obligation, direct or
contingent, for borrowed money, except borrowings from the same or similar
sources indicated in the Prospectus in the ordinary course of its business, or
(ii) entered into any transaction which is material in light of the business and
properties of the Company and the Savings Bank, taken as a whole, excluding
origination, purchase and sale of loans and other investments made in the
ordinary course of its business.
(t) The Savings Bank has filed all federal, state and local tax returns
required to be filed and has made timely payments of all taxes due and payable
with respect to such returns (except for any taxes which it might in good faith
be contesting) and no deficiency has been asserted with
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respect thereto by any taxing authority.
(u) Neither the Company nor the Savings Bank has made any payment of funds
as a loan for the purchase of the Shares.
(v) Neither the Company nor the Savings Bank has: (i) placed any securities
within the last 18 months (except for stock issued by the Savings Bank in its
reorganization into the mutual holding company structure in 1993 and notes to
evidence bank loans and mortgage-backed securities in the ordinary course of
business); (ii) had any material dealings within the 12 months prior to the date
hereof with any member of the NASD, or any person related to or associated with
such member, other than discussions and meetings relating to the proposed
Conversion and routine purchases and sales of securities for or from its
portfolio; (iii) entered into a financial or management consulting agreement,
except as contemplated hereunder; and (iv) engaged any intermediary between the
Agent and the Company in connection with any offering of the Shares, and no
person is being compensated in any manner for such service.
(w) To the best of the Company's knowledge, the Company has taken all
necessary action to make such filings and/or qualify or register the Shares for
offer and sale in the Conversion under the laws of the states wherein such
shares will be offered where such States require such filings or qualification
and/or registration.
(x) Neither the Company nor the Savings Bank has relied upon the Agent or
its legal or other advisors for any legal, tax or accounting advice in
connection with the Conversion.
(y) All supplemental sales literature, i.e., "marketing materials", used by
---
the Company in connection with the Offering, required by the Banking Regulations
or SEC regulations to be filed, has been filed with and cleared by the Division,
the FDIC and the SEC.
(z) The Company and the Savings Bank are in compliance with all laws, rules
and regulations relating to environmental protection, and neither the Company
nor the Savings Bank has been notified or is otherwise aware that either of them
is potentially liable, or is considered potentially liable, under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, or any similar state law. There are no actions, suits, regulatory
investigations or other proceedings pending, or, to the best knowledge of the
Company and the Savings Bank, threatened against the Company or the Savings Bank
relating to environmental protection, nor does the Company or the Savings Bank
have any reason to believe any such proceedings may be brought against either of
them. No disposal, release or discharge of hazardous or toxic substances,
pollutants or contaminants, including petroleum and gas products, as any of such
terms may be defined under federal, state or local law, has occurred on, in, at
or about any of the facilities or properties of the Company or the Savings Bank.
(aa) The records of Eligible Account Holders, Supplemental Eligible Account
Holders and Other Members (as those terms are defined in the Plan) delivered to
the Agent by the Savings
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Bank or its agent for use during the Conversion have been reviewed by the
Savings Bank and are believed to be accurate, reliable and complete and the
Agent shall have no liability to any person relating to the reliability,
accuracy or completeness of such records or for any denial or allocation of a
subscription to purchase shares to any person based upon such records.
Any certificate signed by an officer of the Company or of the Savings Bank
and delivered to the Agent or its counsel that refers to this Agreement and is
referred to therein as a "representation" or "warranty" shall be deemed to be a
representation and warranty by the Company or by the Savings Bank, respectively,
to the Agent and its counsel as to the matters covered thereby with the same
effect as if such representation and warranty were set forth herein.
SECTION 5. COVENANTS OF THE COMPANY AND THE SAVINGS BANK
The Company and the Savings Bank hereby covenant with you as follows:
(a) The Company and the Savings Bank will not file any amendment or
supplement to the Application or the Registration Statement without notifying
you of its intention to do so and shall provide you and your counsel with the
opportunity to review such amendment or supplement in advance of filing.
(b) The Company will use its best efforts to cause the bank holding company
application to be approved by the FRB and to satisfy all conditions imposed by
the FRB in its approval of the bank holding company application. The Company
will, immediately upon receipt of any information concerning the events listed
below, notify you in writing: (i) approval of the bank holding company
application; (ii) receipt of any comments from the Division, the FDIC, the FRB,
the SEC or any other governmental entity with respect to the Application, bank
holding company application and the Prospectus, or the transactions contemplated
by this Agreement; (iii) requests by the Division, the FDIC, the FRB, the SEC or
any other governmental entity for any amendment or supplement to the
Application, bank holding company application or the Prospectus or for
additional information; (iv) issuance by the Division, the FDIC, the FRB, the
SEC or any other governmental entity of any order or other action suspending the
Conversion or the use of the Application, bank holding company application or
the Prospectus or any other filing of the Company under the Banking Regulations
or other applicable law, or the threat of any such action; (v) issuance by the
Division, the FDIC, the FRB, the SEC or any state authority of any stop order
suspending the effectiveness of the Application, bank holding company
application or the Prospectus or of the initiation or threat of any proceedings
for that purpose; or (vi) occurrence of any event set forth in paragraph (f)
below. The Company will make every reasonable effort to prevent the issuance by
the Division, the FDIC, the FRB, the SEC or any state authority of any such
order and, if any such order shall at any time be issued, to obtain the lifting
thereof at the earliest possible time. The Company will provide copies of the
foregoing comments, requests and orders to you upon its receipt of such items.
(c) The Company will deliver to you and to your counsel two conformed
copies of each
11
of the following documents, with all exhibits: the Application and the
Registration Statement, as originally filed and of each amendment or supplement
thereto. In addition, the Company will deliver to you and your counsel such
number of copies of the Prospectus, as amended or supplemented, as you may
reasonably request.
(d) The Company will furnish to you, 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 you may reasonably
request for the purposes contemplated by the 1933 Act or the 1934 Act or the
respective applicable rules and regulations of the SEC as applicable thereunder.
The Company authorizes the Agent to use the Prospectus (as amended or
supplemented, if amended or supplemented) for any lawful manner in connection
with the sale of the Shares by the Agent.
(e) The Company will comply with any and all terms, conditions,
requirements and provisions with respect to the Conversion and the transactions
contemplated thereby imposed by the SEC, the Division, the FDIC, the FRB or any
other governmental agency, including the terms, conditions, requirements and
provisions contained in the Banking Regulations and the rules and regulations of
the SEC promulgated under the 1934 Act ("1934 Act Regulations"), to be complied
with prior and subsequent to the Closing Date. When the Prospectus is required
to be delivered, the Company will comply, at its own expense, with all
requirements imposed upon it by the Division and the FDIC and by the 1933 Act,
the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations, in each
case as from time to time in force, in accordance with the provisions thereof
and the Prospectus.
(f) If, at any time during the period when the Prospectus relating to the
Shares is required to be delivered to purchasers of Shares, any event relating
to or affecting the Company shall occur, as a result of which it is necessary,
in the reasonable opinion of counsel for the Company or, in your reasonable
opinion, after consultation with your counsel, to amend or supplement the
Application or Prospectus in order to make the Application or Prospectus not
misleading in light of the circumstances existing at the time it is delivered to
a purchaser, the Company will, at its expense, forthwith prepare, file with the
Division, the FDIC and the SEC and furnish to you a reasonable number of copies
of an amendment or amendments of, or a supplement or supplements to, the
Application or Prospectus (in form and substance reasonably satisfactory to you
and your counsel after a reasonable time for review) which will amend or
supplement the Application or Prospectus so that as amended or supplemented it
will not contain any untrue statement of a material fact or omit a material fact
necessary in order to make the statements therein, in light of the circumstances
existing at the time the Prospectus is delivered to a purchaser, not misleading.
For the purpose of this Agreement, the Company will timely furnish to you such
information with respect to itself as you may from time to time reasonably
request.
(g) The Company will take all necessary actions, in cooperation with you,
and furnish such information as may be required to qualify or register the
Shares for offering and sale by the Company under the applicable securities or
blue sky laws of such jurisdictions as you may
12
reasonably designate; provided, however, that the Company shall not be obligated
to file any general consent to service of process or to qualify to do business
in any jurisdiction in which it is not so qualified. In each jurisdiction where
any of the Shares shall have been qualified or registered as above provided, the
Company and the Savings Bank will make and file such statements and reports in
each fiscal period as are or may be required by the laws of such jurisdiction.
(h) The Company will not sell or issue, contract to sell or otherwise
dispose of any shares of, or securities convertible into or exercisable for,
shares of Common Stock for a period of 90 days after the closing date, excluding
transactions related to stock options or other stock based upon management
compensation plans.
(i) During the period during which the Common Stock is registered under the
1934 Act or for three years from the Closing Date, whichever period is greater,
the Company will furnish to its stockholders as soon as practicable after the
end of each fiscal year an annual report (including statements of income,
stockholders' equity and cash flow of the Company and the Savings Bank as of the
end of and for such year, certified by independent public accountants in
accordance with Regulation S-X under the 0000 Xxx) and make available as soon as
practicable after the end of the first three quarters of the fiscal year
(beginning with the fiscal quarter ending after the Closing Date) financial
information of the Company and the Savings Bank for such quarter in reasonable
detail. In addition, such annual results and quarterly results shall be made
public through the issuance of press releases as the Company deems appropriate
at the same time or prior to the time it is furnished or made available to
stockholders of the Company.
(j) The Company will furnish to you during the period of three years from
the date hereof: (i) as soon as available, a copy of each of its reports
furnished to or filed with the SEC under the 1934 Act or any national securities
exchange or system on which any class of securities of the Company is listed or
quoted, (including, but not limited to, reports on Forms 10-K, 10-Q and 8-K and
all proxy statements and annual reports to stockholders), a copy of each other
report of the Company mailed to its stockholders, each press release and
material news items and articles released by the Company or the Savings Bank as
you may reasonably request in writing, and (ii) from time to time, such other
nonconfidential information concerning the Company or the Savings Bank as you
may reasonably request in writing.
(k) The Company and the Savings Bank will use the net proceeds from the
sale of the Shares in the manner set forth in the Prospectus under the caption
"Use of Proceeds."
(l) Other than as permitted by the Banking Regulations and the laws of any
state in which the Shares are qualified for sale, the Company will not
distribute any Prospectus or other offering material in connection with the
offer and sale of the Shares.
(m) The Company and the Savings Bank will file with the Division, the FDIC
or the FRB, as applicable, such post-Conversion reports as may be required
pursuant to the Banking Regulations or the Division and the FDIC approval of the
Conversion.
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(n) The Company will register the Common Stock with the SEC under Section
12(g) of the 1934 Act prior to or upon completion of the Conversion.
(o) The Company will maintain appropriate arrangements for depositing all
funds received from persons mailing orders to purchase Shares in the Offering in
an interest-bearing account at the rate described in the Prospectus or until
refunds of such funds have been made to the persons entitled thereto. The
Company will maintain such records of all funds received as are necessary to
enable the Company to make appropriate refunds of such funds in the event that
such refunds are required to be made.
(p) The Company will take such actions and furnish such information as are
reasonably requested by the Agent in order for the Agent to ensure compliance
with the NASD interpretation relating to "Free Riding and Withholding."
(q) Prior to the Closing Date, the Company and the Savings Bank will
conduct their respective 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 FRB, the
Division and FDIC.
(r) The Company will not amend the Plan, without the Agent's prior consent,
which consent shall not be unreasonably withheld, in any manner that would
materially and adversely affect the sale of the Shares or the terms of this
Agreement, except as provided elsewhere herein.
(s) The Company will use its best efforts to obtain approval for quotation
of the Common Stock on the Nasdaq National Market effective on or before the
Closing Date.
(t) The Company and the Savings Bank will use all reasonable efforts to
comply with, or cause to be complied with, the conditions precedent to the
several obligations of the Agent specified in Section 9 hereof.
(u) The Company will promptly register as a bank holding company under the
Bank Holding Company Act and the regulations thereunder.
(v) The Company shall advise the Agent, if necessary, as to the allocation
of deposits, in the case of Eligible Account Holders and Supplemental Eligible
Account Holders, and votes, in the case of Other Members, and of the Shares in
the event of an oversubscription, and shall provide the Agent final instructions
as to the allocation of the Shares ("Allocation Instructions") in such event and
the Allocation Instructions shall be accurate, reliable and complete. The Agent
shall be entitled to rely on the Allocation Instructions and shall have no
liability in respect of its reliance thereon, including without limitation, no
liability for or related to any denial or grant of a subscription in whole or in
part.
14
SECTION 6. PAYMENT OF EXPENSES
The Company and the Savings Bank agree to pay all reasonable and customary
expenses incident to the performance of their obligations under this Agreement,
including the following: (i) the preparation, issuance and delivery of
certificates for the Shares to the purchasers in the Offering and the cost of
printing all other documents applicable to the Conversion; (ii) the fees and
disbursements of the Company's and the Savings Bank's counsel, accountants and
other advisors; (iii) the qualification of the Shares under all applicable
securities or Blue Sky laws, including filing fees and the fees and
disbursements of the Company's counsel in connection therewith and in connection
with the preparation of a Blue Sky Survey, concerning such jurisdictions as you
shall reasonably request; (iv) the printing and delivery of the Prospectus as
originally filed as amended or supplemented and all other documents in
connection with this Agreement; (v) filing fees incurred in connection with the
review of the Conversion by the Division, the FDIC, the SEC and the NASD; (vi)
fees and expenses relating to the Appraisal; (vii) fees and expenses relating to
advertising expenses, temporary personnel expenses, expenses related to
operations of a facility to coordinate the Offering, investor meeting expenses,
and other reasonable miscellaneous expenses relating to the marketing by the
Agent of the Shares; and (viii) the fees and charges of any transfer agent,
registrar and other agents. In the event the Agent incurs any of such expenses
on behalf of the Company or the Savings Bank, the Company and the Savings Bank
shall reimburse the Agent for such reasonable expenses regardless of whether the
Conversion is successfully completed, and such reimbursements shall not be
included in the expenses limitation discussed in the following paragraph. Xxxx,
Xxxx will not incur any single expense of more than $2,000 on behalf of the
Company or the Savings Bank without the prior approval of the Company or the
Savings Bank.
The Company and the Savings Bank shall reimburse the Agent for all
reasonable actual out-of-pocket expenses, including legal fees and expenses,
incurred by you in connection with the services provided by you to the Company
and the Savings Bank pursuant to this Agreement; the total out-of-pocket or
reimbursable expenses of the Agent, excluding legal fees of its counsel, shall
not exceed $15,000, unless otherwise agreed to by both parties in writing. The
maximum reimbursable legal fees of the Agent's counsel (excluding expenses of
counsel) shall not exceed $35,000, unless otherwise agreed to by both parties in
writing. The Agent will provide the Company and the Savings Bank with a
detailed accounting of all reimbursable expenses and will xxxx the Company and
the Savings Bank quarterly. In the event of a material delay in the Offering
which would require an update of the financial information presented in the
Prospectus, the Company, the Savings Bank and the Agent shall negotiate in good
faith an agreement to cover the Agent's additional expenses in connection
therewith, including attorney's fees and expenses. In addition, in the event of
unforeseen developments that otherwise require significant additional effort and
expense on the part of the Agent, the Company and the Savings Bank, in their
sole discretion, may agree to negotiate in good faith an agreement to cover such
additional expenses.
15
SECTION 7. INDEMNIFICATION
(a) The Company and the Savings Bank jointly and severally agree to
indemnify and hold harmless you, your officers, directors, agents, and employees
and each person, if any, who controls you within the meaning of Section 15 of
the 1933 Act or Section 20(a) of the 1934 Act, against any and all loss,
liability, claim, damage or expense whatsoever (including but not limited to
settlement expenses), joint or several, that you or any of them may suffer or to
which you or any of them may become subject under all applicable federal and
state laws or otherwise, and to promptly reimburse you and any such persons upon
written demand for any expenses (including reasonable fees and disbursements of
yours and your counsel and all of your reasonable travel and other out-of-pocket
expenses including hourly charges of your directors, officers and employees at
their normal hourly billing rates) incurred by you or any of them in connection
with investigating, preparing or defending any actions, proceedings or claims
(whether commenced or threatened) to the extent such losses, claims, damages,
liabilities or actions: (i) arise out of or are based upon any untrue statement,
or alleged untrue statements, of any material fact contained in the Application
(or any amendment or supplement thereto), the Prospectus (or any amendment or
supplement thereto), the Blue Sky Information, or the Sales Information, or any
instrument or document prepared by the Company, the Savings Bank or their
representatives; (ii) arise out of or are based upon the omission or alleged
omission to state in any of the foregoing documents or information, a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading; or,
(iii) arise from any theory of liability whatsoever relating to or arising from
or based upon any of the foregoing documents or information or other
documentation prepared by the Company or the Savings Bank and distributed in
connection with the Conversion; or (iv) are based on the treatment of the
Exchange Shares; except 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 any of the foregoing documents or information made in reliance
upon and in conformity with information furnished in writing to the Company by
you regarding you expressly for use under the caption "The Conversion --
Marketing Arrangements." Provided further, however, there shall be excluded
from such indemnification any such claim, damage, loss, liability or expense
that arises primarily out of or is based primarily upon any action or failure to
act by you, other than action or failure to act undertaken at the request or
with the consent of the Company or the Savings Bank beyond those services
contemplated by this Agreement, that is found in a final judicial determination
to constitute willful misconduct or gross negligence on the part of the Agent.
(b) You agree to indemnify and hold harmless the Company and the Savings
Bank, their officers, directors, agents, employees and each person, if any, who
controls the Company and the Savings Bank within the meaning of Section 15 of
the 1933 Act or Section 20(a) of the 1934 Act against any and all loss,
liability, claim, damage or expense whatsoever (including but not limited to
settlement expenses), joint or several, which they, or any of them, may suffer
or to which they, or any of them, may become subject under all applicable
federal and state laws or otherwise, and to promptly reimburse the Company and
the Savings Bank, and any such persons upon written
16
demand for any expenses (including fees and disbursements of counsel) incurred
by them, or any of them, in connection with investigating, preparing or
defending any actions, proceedings or claims (whether commenced or threatened)
to the extent such losses, claims, damages, liabilities or actions arise out of
or are based upon any untrue statement or alleged untrue statement of a material
fact contained in the Application (or any amendment or supplement thereto) or
the Prospectus (or any amendment or supplement thereto), any Blue Sky
Application, the 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 light of the
circumstances under which they were made, not misleading; provided however that
----------------
your obligations under this Section 7(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 any of the
foregoing documents or information in reliance upon and in conformity with
information furnished in writing to the Company or the Savings Bank by you
regarding you expressly for use under the caption "The Conversion -- Marketing
Arrangements." In addition, the Agent will not be liable under the foregoing
indemnification provision to the extent that any loss, claim, damage, liability
or action is found in a final judgment by a court to have resulted from the
Company or the Savings Bank's willful misconduct or gross negligence.
(c) Each indemnified party shall give prompt written notice to each
indemnifying party of any action, proceeding, claim (whether commenced or
threatened), or suit instituted against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve it from any liability which it may have on account of this Section 7 and
Section 8 herein. 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 and approved by the indemnified parties that
are defendants in such action, unless such indemnified parties reasonably object
to such assumption on the ground that there may be legal defenses available to
them that are different from or in addition to those available to such
indemnifying party. If an indemnifying party assumes the defense of such
action, the indemnifying parties shall not be liable for any fees and expenses
of counsel for the indemnified parties incurred thereafter in connection with
such action, proceeding or claim, other than reasonable costs of investigation.
In no event shall the indemnifying parties be liable for the fees and expenses
of more than one separate firm of attorneys (and any special counsel that said
firm may retain) for each indemnified party in connection with any one action,
proceeding or claim or separate but similar or related actions, proceedings or
claims in the same jurisdiction arising out of the same general allegations or
circumstances. The indemnifying party shall not be liable for any settlement of
such action, proceeding or suit affected without its prior written consent.
(d) The agreement contained in this Section 7 and in Section 8 hereof and
the representations and warranties of the Company and the Savings Bank set forth
in this Agreement shall remain operative and in full force and effect regardless
of: (i) any investigation made by or on behalf of you or your officers,
directors or controlling persons, agents or employees or by or on behalf of the
Company, the Savings Bank, or any of their officers, directors or controlling
persons,
17
agents or employees; (ii) delivery of and payment hereunder for the Shares; or
(iii) any termination of this Agreement.
SECTION 8. CONTRIBUTION
In order to provide for just and equitable contribution in circumstances in
which the indemnification provided for in Section 7 is due in accordance with
its terms but is for any reason held by a court to be unavailable from the
Company and the Savings Bank or you, the Company and the Savings Bank, on the
one hand, and you, on the other, shall contribute to the aggregate losses,
claims, damages and liabilities (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding of any claims asserted, but after deducting any
contribution received by the Company and the Savings Bank or you from persons
other than the other parties hereto, who may also be liable for contribution) in
such proportion so that you are responsible for that portion represented by the
percentage that the fees paid to the Agent pursuant to Section 1 of this
Agreement (not including expenses) bears to the gross proceeds received by the
Company from the sale of the Shares in the Offering (net of the Agent's fees)
and the Company and the Savings Bank shall be responsible for the balance. If,
however, the allocation provided above is not permitted by applicable law or if
the indemnified party failed to give the notice required under Section 7 above,
then each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company and the
Savings Bank on the one hand and you on the other in connection with the
statements or omissions which resulted in such losses, claims, damage or
liabilities (or actions, proceedings or claims in respect thereof), as well as
any other relevant equitable considerations. The relative benefits received by
the Company and the Savings Bank on the one hand and you on the other shall be
deemed to be in the same proportion as the total gross proceeds from the
Offering (net of the Agent's fees) received by the Company bear to the total
fees (not including expenses) received by the Agent. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company and the Savings
Bank on the one hand or you on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The parties agree that it would not be just and equitable
if contribution pursuant to this Section 8 were determined by pro-rata
allocation or by other method of allocation which does not take into account the
equitable considerations referred to above in this Section 8. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions, proceedings or claims in respect thereof) referred to
above in this Section 8 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 required to contribute to the Company or the Savings Bank
for any loss, liability, claim, damage or expense any amount which in the
aggregate exceeds the amount paid to the Agent under this Agreement. It is
understood that the above-stated limitation on the Agent's liability for
contribution to the Company and the Savings Bank is essential to the Agent and
that the Agent would not have entered into this
18
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
from any person who was not found guilty of such fraudulent misrepresentation.
The obligations of the Company and the Savings Bank under this Section 8 and
under Section 7 shall be in addition to any liability which the Company or the
Savings Bank may otherwise have.
For purposes of this Section 8 each of your officers and directors and each
person, if any, who controls you within the meaning of the 1933 Act and the 1934
Act shall have the same rights to contribution as you and each person, if any,
who controls the Company and the Savings Bank within the meaning of the 1933 Act
and the 1934 Act, and each officer and director and each person, if any, who
controls the Company and the Savings Bank, shall have the same rights to
contribution as the Company and the Savings Bank. Any party entitled to
contribution shall notify such other party promptly after receipt of notice of
commencement of any action, suit, claim or proceeding against such party in
respect to which a claim for contribution may be made against another party, 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 8.
SECTION 9. CONDITIONS OF YOUR OBLIGATIONS
Your obligations hereunder, as to the Shares to be delivered at the Closing
Date, are subject in your discretion, to the condition that all representations
and warranties and other statements of the Company and the Savings Bank herein
are, at and as of commencement of the Offering and at and as of the Closing
Date, true and correct in all material respects, the condition that the Company
and the Savings Bank shall have performed in all material respects all of their
obligations hereunder on or before such dates, and to the following further
conditions:
(a) The Registration Statement shall have been declared effective not later
than 5:30 pm. on the date of this Agreement, or with your consent, not to be
unreasonably withheld, at a later time and date; and at the Closing Date no
order suspending the approval of the Application shall have been issued or
proceedings therefor initiated or threatened by any state authority, and no
order or other action suspending the effectiveness of the Registration Statement
shall have been issued or proceedings therefor initiated or to the best of the
Company's or the Savings Bank's knowledge threatened by the SEC, the FDIC, the
FRB or any state or other governmental authority.
(b) At the Closing Date you shall have received:
(1) The opinions, dated as of the Closing Date and addressed to Xxxx
Xxxx and for its benefit, of Xxxxxx, Xxxxxx, Honeywell, Malanca, Xxxxxxxx &
Daheim, P.L.L.C., in form and substance satisfactory to counsel for the Agent,
providing that:
(i) The Company has been duly organized and is validly existing
as a
19
corporation in good standing under the laws of the State of Washington. The
Company has full corporate authority to conduct its business and own its
properties as described in the Application, the Registration Statement and
the Prospectus. The Company is qualified as a foreign corporation to
transact business in each jurisdiction in which its ownership of property
or leasing of properties or the conduct of its business requires such
qualification unless the failure to be so qualified in one or more such
jurisdictions would not have a material adverse effect on the condition,
financial or otherwise, or the business, operations, income or prospects of
the Company and the Savings Bank, taken as a whole. The Savings Bank has
been organized and is validly existing as a state-chartered stock savings
bank under the laws of the State of Washington. The Savings Bank has full
corporate authority to conduct its business and own its properties as
described in the Application, the Registration Statement and the
Prospectus. The Savings Bank is qualified as a foreign corporation to
transact business in each jurisdiction in which its ownership of property
or leasing of properties or the conduct of its business requires such
qualification unless the failure to be so qualified in one or more such
jurisdictions would not have a material adverse effect on the condition,
financial or otherwise, or the business, operations, income or prospects of
the Company and the Savings Bank, taken as a whole.
(ii) The Subsidiaries have been duly incorporated and are
validly existing as corporations in good standing under the laws of the
state of Washington, have full corporate power and authority to own, lease
and operate their properties and to conduct their business as described in
the Prospectus and are duly qualified as foreign corporations to transact
business and are in good standing in each jurisdiction in which such
qualification is required, except where the failure to so qualify would not
have a material adverse effect upon the financial condition, results of
operations or business of the Company, the Savings Bank and the
Subsidiaries, taken as a whole; the activities of the Subsidiaries as
described in the Prospectus are permitted to subsidiaries of a bank holding
company and of a Washington chartered savings bank by federal and
Washington law and the rules, regulations, resolutions and practices of the
FRB, the FDIC and the Division; all of the issued and outstanding capital
stock of the Subsidiaries has been duly authorized and validly issued, is
fully paid and nonassessable and is owned directly by the Savings Bank, to
the best of such counsel's knowledge, free and clear of any security
interest, mortgage, pledge, lien, encumbrance or claim.
(iii) The Savings Bank is a member of the Federal Home Loan Bank
of Seattle. The deposit accounts of the Savings Bank are insured by the
SAIF up to the maximum amount allowed under law.
(iv) Upon consummation of the Conversion, the authorized,
issued and outstanding capital stock of the Company will be as set forth in
the Prospectus and no shares of Common Stock, or securities exercisable
into or exchangeable for Common Stock (except for those issued to the
Savings Bank as contemplated by the Plan), have been issued by the Company
prior to the Closing Date; the Shares issued in the Conversion have been
20
duly and validly authorized for issuance, and when issued and delivered by
the Company pursuant to the Prospectus against payment of the consideration
calculated as set forth in the Plan, will be duly and validly issued and
fully paid and nonassessable and at such time all such capital stock shall
be free and clear of any mortgage, pledge, lien, encumbrance or claim
(legal or equitable) created by the Company; and the issuance of the Shares
is not subject to preemptive rights. The Common Stock conforms to the
description thereof contained in the Prospectus, and the form of
certificate used to evidence the Common Stock is in due and proper form and
complies with all applicable statutory requirements. Upon consummation of
the Conversion, all of the issued and outstanding capital stock of the
Savings Bank will be duly and validly issued, fully paid and nonassessable,
and at such time the Company will own, beneficially and legally, all of the
outstanding capital stock of the Savings Bank, free and clear of any
mortgage, pledge, lien, encumbrance or claim (legal or equitable).
(v) This Agreement has been authorized by all necessary
corporate action by the Company and the Savings Bank, has been executed and
delivered by the Company and the Savings Bank and is the legal, valid and
binding agreement of the Company and the Savings Bank, enforceable in
accordance with its terms, except as the rights of indemnification and
contribution may be limited under applicable laws or regulations, and
subject to bankruptcy, insolvency, reorganization, moratorium and other
laws of general applicability relating to or affecting creditors' rights or
the rights of creditors of savings associations, the deposits of which are
insured by the FDIC, to general principles of equity (whether considered in
an action at law or in equity).
(vi) The Plan has been approved by the required vote of the
Directors, depositors and shareholders of the Savings Bank.
(vii) The Application has been approved by the Division and the
FDIC and no order suspending the approval has been issued or proceedings
therefor initiated or, to the knowledge of such counsel, threatened by the
Division or the FDIC. To such counsel's knowledge, no person has sought to
obtain the review of the final actions of the Division and the FDIC in
approving the Application.
(viii) Subject to the satisfaction of the conditions to the
approval of the Application by the Division and the FDIC no further
approval, registration, authorization, consent or other order of any
regulatory agency, public board or body is required in connection with the
execution and delivery of this Agreement, the consummation of the
Conversion, and the issuance of the Shares, except as may be required under
the securities or blue sky laws of various jurisdictions. The Conversion
has been consummated in all material respects according to all applicable
provisions of the Banking Regulations, federal and state law, applicable
Blue Sky laws and all applicable rules and regulations promulgated
thereunder.
21
(ix) The Registration Statement has been declared effective
under the 1933 Act. No stop order suspending its effectiveness has been
issued under the 1933 Act nor, to the knowledge of such counsel,
proceedings therefor initiated or threatened by the SEC or any state
authority.
(x) At such time as the Application was approved and at such
time when the Registration Statement was declared effective: (i) the
Application and the Registration Statement, and any amendment or supplement
thereto (other than the financial statements and other financial, pro forma
and statistical data included therein, and the Independent Valuation as to
which no opinion need be rendered), complied as to form in all material
respects with the Banking Regulations and with the 1933 Act and the 1933
Act Regulations, respectively, and (ii) the Prospectus (other than the
financial, statements and other financial, pro forma and statistical data
included therein, and the Independent Valuation as to which no opinion need
be rendered) complied as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations.
(xi) The information in the Prospectus under the captions
"RISK FACTORS -- Anti-Takeover Provisions", "BUSINESS OF THE BANK --
Federal Taxation", "-- State Taxation," "SUPERVISION AND REGULATION", "THE
CONVERSION", "RESTRICTIONS ON ACQUISITION OF THE COMPANY AND THE BANK",
"DESCRIPTION OF CAPITAL STOCK OF THE COMPANY", and "COMPARISON OF
STOCKHOLDERS' RIGHTS", to the extent that it constitutes matters of law,
summaries of legal matters, or proceedings, or legal conclusions, has been
reviewed by such counsel and is correct in all material respects.
(xii) To such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened against the Company or the
Savings Bank which are required to be disclosed in the Application and the
Prospectus, other than those disclosed therein, and all pending legal and
governmental proceedings to which the Company or the Savings Bank is a
party or to which any of their property is the subject which is not
discussed in the Application and the Prospectus, including ordinary routine
litigation incidental to the business, are, considered in the aggregate,
not material, provided that for this purpose, any litigation or
governmental proceeding is not considered to be "threatened" unless the
potential litigant or governmental authority has manifested to the
management of the Company or the Savings Bank, or to counsel, a present
intention to initiate such litigation or proceeding.
(xiii) To such counsel's knowledge, there are no contracts,
indentures, mortgages, loan agreements, notes, leases or other instruments
required to be described or referred to in the Application and the
Prospectus or required to be filed as exhibits thereto other than those
described or referred to therein or filed as exhibits thereto, the
descriptions thereof or references thereto are correct in all material
respects, and no default exists in the due performance or observance of any
material obligation, agreement, covenant or
22
condition contained in any contract, indenture, mortgage, loan agreement,
note or lease or other instrument so described, referred to or filed.
(xiv) To such counsel's knowledge, the Company and the Savings
Bank have obtained all material licenses, permits and other governmental
authorizations currently required for the conduct of their businesses and
all such material licenses, permits and other governmental authorizations
are in full force and effect, and the Company and the Savings Bank are in
all material respects complying therewith.
(xv) Neither the Company nor the Savings Bank is in violation
of its Articles of Incorporation or, to such counsel's knowledge, in
violation of any material obligation, agreement, covenant or condition
contained in any material 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; to such counsel's knowledge the execution,
delivery and performance of this Agreement and the consummation of the
Conversion will not conflict with or constitute a breach of, or default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or the Savings Bank
pursuant to any material contract, indenture, mortgage, loan agreement,
note, lease or other instrument to which the either company is a party or
by which either of them may be bound, or to which any of the property or
assets of either company is subject; and such action will not result in any
violation of the provisions of the Articles of Incorporation or bylaws of
the Company or the Savings Bank or any applicable law, regulation or order.
All provisions of the Company's and the Savings Bank's respective Articles
of Incorporation and bylaws comply in all material respects with applicable
law.
(xvi) To such counsel's knowledge all of the leases and
subleases material to the business of the Savings Bank under which the
Savings Bank and any subsidiary holds properties, as described in the
Application and Prospectus, are in full force and effect.
(xvii) To such counsel's knowledge, the Savings Bank is not in
violation of any directive from the Division or FDIC to make any material
change in the method of conducting its business.
In rendering such opinion, such counsels may rely (i) as to matters of
fact, to the extent such counsel deems proper, on such certificates of
responsible officers of the Company and the Savings Bank and public officials;
provided copies of any such opinion(s) or certificates are delivered to you
together with the opinion to be rendered hereunder by counsels to the Company
and the Savings Bank; and (ii) on the practices and policies of the Division and
the FDIC in approving similar transactions under the Banking Regulations.
(2) The letter of Xxxxxx, Xxxxxx, Honeywell, Malanca, Xxxxxxxx & Daheim,
P.L.L.C. special counsel for the Company and the Savings Bank, addressed to the
Agent, dated the Closing Date, in form and substance to the effect that:
23
Nothing has come to the attention of counsel that would lead them to
believe that the Application or any amendment or supplement thereto (other than
the financial statements and other financial, pro forma and statistical data
included therein, the Independent Valuation data and information relating to
Xxxx Xxxx as to which no view need be rendered), or the Prospectus or any
supplemental sales literature reviewed by such counsel and authorized by the
Company and the Savings Bank for use in the Offering (when read in conjunction
with the Prospectus), contains an untrue statement of a material fact or omits
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.
(3) The favorable opinion, dated as of the Closing Date, of Breyer &
Aguggia, your counsel, with respect to such matters as you may reasonably
require. Such opinion may rely upon the opinions of counsel to the Company and
the Savings Bank, and as to matters of fact, upon certificates of officers and
directors of the Company and the Savings Bank delivered pursuant hereto or as
such counsel shall reasonably request.
(c) At the Closing Date, you shall receive a certificate of the Chief
Executive Officer and the Treasurer of the Company and the Savings Bank, dated
the Closing Date, to the effect that: (i) since the respective dates as of which
information is given in the Application and the Prospectus, there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, capital, properties, affairs or prospects of the Company or the
Savings Bank, whether or not arising in the ordinary course of business; (ii)
the representations and warranties in Section 4 are true and correct with the
same force and effect as though expressly made at and as of the Closing Date;
(iii) the Company and the Savings Bank have complied with all agreements and
satisfied all conditions on their part to be performed or satisfied at or prior
to the Closing Date under the Agreement and the Plan and will comply with all
obligations under this Agreement and the Plan to be satisfied by them after the
Conversion; (iv) the Company and the Savings Bank have conducted the Conversion
in all material respects according to the Plan and all applicable laws and
regulations and in the manner described in the Prospectus; (v) no stop order
suspending the effectiveness of the Application has been initiated or threatened
by the Division, the FDIC, other federal authority or any other state authority;
and (vi) no order suspending the Conversion, or the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been initiated or threatened by the SEC, other federal authority or any state
authority.
(d) Prior to and at the Closing Date: (i) in the reasonable opinion of the
Agent, there shall have been no material adverse change in the condition,
financial or otherwise, in the earnings, affairs or prospects of the Company or
the Savings Bank from that as of the latest dates as of which such condition is
set forth in the Prospectus, except as referred to therein; (ii) there shall
have been no material transaction entered into by the Company or the Savings
Bank from the latest date as of which the financial condition of the Savings
Bank is set forth in the Prospectus other than transactions as contemplated by
and disclosed in the Prospectus or transactions specifically referred to or
contemplated therein; (iii) the Savings Bank shall not have received from the
Division or
24
FDIC any direction (oral or written) to make any material change in the method
of conducting its business with which it has not complied (which direction, if
any, shall have been disclosed to the Agent) or which materially and adversely
would affect the business, operations or financial condition or income of the
Savings Bank; (iv) neither the Company nor the Savings Bank shall have been in
material default (nor shall an event have occurred which, with notice or lapse
of time or both, would constitute a material default) under any provision of any
agreement or instrument relating to any material outstanding indebtedness; (v)
no action, suit or proceedings, at law or in equity before any court or by any
federal or state commission, board or other administrative agency, shall be
pending or, to the knowledge of the Company or the Savings Bank, threatened
against the Company or the Savings Bank or affecting any of their properties
wherein an unfavorable decision, ruling or finding would materially and
adversely affect the business, operations, financial condition or income of the
Company or the Savings Bank; (vi) the Shares shall have been qualified or
registered for offering and sale under the securities or blue sky laws of the
jurisdictions as set forth in the Blue Sky Memorandum of the law firm of Xxxxxx,
Xxxxxx, Honeywell, Malanca, Xxxxxxxx & Daheim, P.L.L.C.; and (vii) no suit has
been filed seeking judicial review of the final action of the Division and the
FDIC in approving the Plan.
(e) Concurrently with the execution of this Agreement, the Agent shall
receive a letter from KPMG Peat Marwick LLP dated the date hereof and addressed
to the Agent: (i) confirming that KPMG Peat Marwick LLP is a firm of independent
public accountants within the meaning of the Code of Ethics of the American
Institute of Certified Public Accountants, the 1933 Act and the 1933 Act
Regulations and no information concerning its relationship with or interests in
the Savings Bank is required to be disclosed in the Prospectus, and stating that
in its opinion the consolidated financial statements of the Savings Bank
included in the Prospectus and covered by its opinion included therein comply as
to form in all material respects with the applicable accounting requirements of
the '33 Act and the '33 Act Regulations; (ii) stating in effect that, on the
basis of certain agreed upon procedures (but not an examination in accordance
with generally accepted auditing standards) consisting of the performance of the
procedures specified by the American Institute of Certified Public Accountants
for review of interim financial information, including, but not limited to, a
reading of the latest available unaudited interim consolidated financial
statements of the Savings Bank prepared by the Savings Bank, a reading of the
minutes of the meetings of the Board of Directors and stockholders of the
Savings Bank and consultations with officers of the Savings Bank responsible for
financial and accounting matters, nothing came to its attention which caused it
to believe that: (A) during the period from the date of the latest audited
consolidated financial statements included in the Prospectus to a specified date
not more than four business days prior to the date hereof, there was any
material increase in borrowings by the Savings Bank; or (D) there was any
material decrease in stockholders' equity of the Savings Bank at the date of
such letter from the amounts shown in the latest audited statement of condition
included in the Prospectus or there was any material decrease in net income, net
interest income or non-interest income of the Savings Bank or any material
increase in non-interest income or provision for loan losses of the Savings Bank
for the number of full months commencing immediately after the period covered by
the latest unaudited income statement included in the Prospectus and ended on
the latest month end prior to the date of the Prospectus or as compared to the
corresponding period in the preceding year
25
except as set forth in the Prospectus; and (iii) stating that, in addition to
the examination referred to in its opinion included in the Prospectus and the
performance of the procedures referred to in clause (ii) of this subsection (e),
it has compared with the general accounting records of the Savings Bank, as
applicable, which are subject to the internal controls of the Savings Bank's
accounting system and other data prepared by the Savings Bank directly from such
accounting records, to the extent specified in such letter, such amounts and/or
percentages set forth in the Prospectus as you may reasonably request; and they
have found such amounts and/or percentages to be in agreement therewith (subject
to rounding).
(f) At the Closing Date, you shall receive a letter from KPMG Peat Marwick
LLP dated the Closing Date, addressed to the Agent, confirming the statements
made by it in the letter delivered by it pursuant to subsection (e) of this
Section 9, the "specified date" referred to in clause (ii) (A) thereof to be a
date specified in such letter, which shall not be more than five business days
prior to the Closing Date.
(g) At the Closing Date, you shall have received a letter from RP
Financial, dated the Closing Date, confirming its appraisal. Such appraisal
shall be in the form and substance reasonably satisfactory to you and shall be
consistent with the terms of the Plan.
(h) At the Closing Date, your counsel shall have been furnished with such
documents and opinions as they may reasonably require for the purpose of
enabling them to pass upon the sale of the Shares as herein contemplated and
related proceedings or in order to evidence the occurrence or completeness of
any of the representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company and the
Savings Bank in connection with the Conversion and the Offering and the sale of
the Shares as herein contemplated shall be satisfactory in form and substance to
you and your counsel.
(i) Neither the Company nor the Savings Bank shall have sustained since
the date of the latest unaudited financial statements included in the
Application and Prospectus any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth or contemplated in the Application and
Prospectus, and since the respective dates as of which information is given in
the Application and Prospectus, there shall not have been any material change in
the consolidated long-term debt of the Company or the Savings Bank or any
change, or any development involving a prospective change, in or affecting the
general affairs of management, financial position, stockholders' equity, cash
flow or results of operation of the Company or the Savings Bank, otherwise than
as set forth or contemplated in the Application and Prospectus, the effect of
which, in any such case described above, is in your reasonable judgment
sufficiently material and adverse as to make it impracticable or inadvisable to
proceed with the Conversion or the delivery of the Shares on the terms and in
the manner contemplated in the Prospectus.
(j) Subsequent to the date hereof, there shall not have occurred any of the
following: (i)
26
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 fixed, or maximum ranges for prices for securities required
by either of such exchanges or the NASD or by order of the SEC or any other
governmental authority; (ii) a general moratorium on the operation of commercial
banks or savings banks in Washington or a general moratorium on the withdrawal
of deposits from commercial banks, or savings banks in Washington declared by
either federal or Washington authorities; (iii) the engagement by the United
States in hostilities which have resulted in the declaration, on or after the
date hereof, of a national emergency or war; or (iv) a material decline in the
price of equity or debt securities if the effect of such a decline, in your
judgment, makes it impracticable or inadvisable to proceed with the Conversion
or the delivery of the Shares on the terms and in the manner contemplated in the
Application and Prospectus.
If any of the conditions specified in this Section 9 shall not have been
fulfilled when and as required by this Agreement, or by June 30, 1998, this
Agreement and all of your obligations hereunder may be canceled by you by
notifying the Company and the Savings Bank of such cancellation in writing or by
telegram at any time at or prior to the Closing Date, and any such cancellation
shall be without liability of any party to any other party, except as otherwise
provided in Section 1, 6, 7 and 8 hereof. Notwithstanding the above, if this
Agreement is canceled pursuant to this paragraph, the Company and the Savings
Bank agree to reimburse you for all of your reasonable out-of-pocket expenses
(including without limitation the fees and expenses of your counsel), subject to
the limits expressed in Section 6 hereof, reasonably incurred by you, and your
counsel in connection with preparation of the Application, the Prospectus and
contemplation of the proposed Reorganization.
SECTION 10. TERMINATION
(a) In the event the Savings Bank fails to sell the minimum number of the
Shares as set forth in the Prospectus and does not modify the Conversion within
the period specified in, and in accordance with the provisions of, the Plan or
as required by the Banking Regulations and applicable law, this Agreement shall
terminate upon refund by the Company to each person who has ordered any of the
Shares the full amount which it may have received from such persons, together
with interest as provided in the Prospectus, and no party to this Agreement
shall have any obligation to the other hereunder, except for payment by the
Company and the Savings Bank as set forth in Sections 1, 6, 7, 8 and 9 hereof
and payment by the Agent pursuant to the provisions set forth in Sections 7 and
8 hereof.
(b) This Agreement may be terminated by the Agent, with respect to the
Agent's obligations hereunder, by notifying the Company and the Savings Bank at
any time at or prior to the Closing Date, if any of the conditions specified in
Section 9 hereof shall not have been fulfilled or waived in writing by the Agent
when and as required by this Agreement, if the Company and the Savings Bank
abandon or terminate the Plan, or if the Conversion has not been completed by
June 30, 1998.
27
SECTION 11. SURVIVAL
The respective indemnities, agreements, representations, warranties and
other statements of the Company, the Savings Bank and you, as set forth in this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of you or any of your officers or directors or any person controlling you, or
the Company or the Savings Bank, or any officer, director or person controlling
the Company or the Savings Bank, and shall survive termination of the Agreement
and the receipt or delivery of any payment for the Shares.
SECTION 12. ARBITRATION
Any claims, controversies, demands, disputes or differences between or
among the parties hereto or any persons bound hereby arising out of, or by
virtue of, or in connection with, or otherwise relating to this Agreement shall
be submitted to and settled by arbitration conducted in Newark, New Jersey
before one or three arbitrators, each of whom shall be knowledgeable in the
field of securities law and investment banking. Such arbitration shall
otherwise be conducted in accordance with the rules then obtaining of the
American Arbitration Association. The parties hereto agree to share equally the
responsibility for all fees of the arbitrators, abide by any decision rendered
as final and binding, and waive the right to appeal the decision or otherwise
submit the dispute to a court of law for a jury or non-jury trial. The parties
hereto specifically agree that neither party may appeal or subject the award or
decision of any such arbitrator to appeal or review in any court of law or in
equity or by any other tribunal, arbitration system or otherwise. Judgement
upon any award granted by such an arbitrator may be enforced in any court having
jurisdiction thereof.
SECTION 13. MISCELLANEOUS
(a) Notices hereunder, except as otherwise provided herein, shall be given
in writing or by telegraph, addressed (a) to the Agent at 000 X. Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxx Xxxxxx 00000 (Attention: Xxx X. Xxxxxxx, President), with a copy
to Xxxx X. Xxxxxx, Xx., Breyer & Aguggia, 0000 X Xxxxxx, XX, Xxxxx 000 Xxxx,
Xxxxxxxxxx, XX 00000 and (b) to the Company and the Savings Bank at their
principal office (Attention: Xxxxxx X. Xxxxxx, President and Chief Executive
Officer) with a copy to J. Xxxxx Xxxxxxxxx, Esquire, Xxxxxx, Xxxxxx Honeywell,
Malanca, Xxxxxxxx & Daheim, P.L.L.C., 0000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx,
Xxxxxxxxxx 00000.
(b) This Agreement is made solely for the benefit of and will be binding
upon the parties hereto and their respective successors and the controlling
persons, directors and officers referred to in Section 7 hereof, and no other
person will have any right or obligation hereunder. The term "successors" shall
not include any purchaser of any of the Shares.
(c) To the extent that terms in this Agreement are co-terminus with terms
included in the letter of intent dated June 26, 1997 entered into by the Savings
Bank, the Mutual Holding
28
Company and the Agent (the "Letter Agreement"), the terms of this Agreement
shall supersede the terms of the Letter Agreement and shall be the controlling
terms.
(d) This Agreement shall be governed by and construed in accordance with
the laws of the State of New Jersey except as superseded by federal or other
state law.
(e) Time shall be of the essence of this Agreement.
(f) This Agreement may be signed in various counterparts which together
will constitute one agreement.
If the foregoing correctly sets forth the arrangement among the Savings
Bank, the Company and the Agent, please indicate acceptance thereof in the space
provided below for that purpose, whereupon this letter and your acceptance shall
constitute a binding agreement.
Very truly yours,
HERITAGE FINANCIAL CORPORATION HERITAGE SAVINGS BANK
By:______________________________ By:______________________________
Xxxxxx X. Xxxxxx Xxxxxx X. Xxxxxx
President and Chief President and Chief
Executive Officer Executive Officer
Accepted as of the date first
above written.
Xxxx, Xxxx & Co., Inc.
By:______________________________
Xxx X. Xxxxxxx
President
29
EXHIBIT B
HERITAGE FINANCIAL CORPORATION
HERITAGE SAVINGS BANK
Common Stock
(No Par Value)
SELECTED DEALERS' AGREEMENT
___________________, 1997
Gentlemen:
We have agreed to assist Heritage Financial Corporation (the "Holding
Company"), the proposed holding company of Heritage Savings Bank, in connection
with the offer and sale of a minimum of and a maximum of shares of common stock,
no par value ("Common Stock"). The price per share has been fixed at $10.00. The
Common Stock, the number of shares to be issued, and certain of the terms on
which they are being offered, are more fully described in the Prospectus of the
Company dated ______________, 1997 (the "Prospectus").
The Company has offered the Common Stock to certain depositors of the
Savings Bank; the Company's and the Savings Bank's employee benefit plans and
certain members of the Company's community and the general public, subject to
the purchase and other limitations contained in the Plan (the "Offering").
Common Stock is also being offered according to the Plan by a selling group of
broker-dealers.
We are offering the selected dealers (of which you are one) the
opportunity to participate in the solicitation of offers to buy the Common
Stock. We will pay you a fee in the amount of _____ percent (_____%) of the
dollar amount of the Common Stock sold on behalf of the Company by you, as
evidenced by the authorized designation of your firm on the order form or forms
for the Common Stock accompanying the funds transmitted for payment therefor to
the' special account established by the Company for the purpose of holding such
funds. It is understood
1
that payment of your fee will be made only out of compensation received by us
for the Common Stock sold on behalf of the Company by you, as evidenced
according to the preceding sentence. As soon as practicable after the closing
date of the Offering, we will remit to you, only out of our compensation as
provided above, the fees to which you are entitled hereunder.
Each order form for the purchase of Common Stock must set forth the
identity and address of each person to whom the certificates for such Common
Stock should be issued and delivered. Such order form should clearly identify
your firm. You shall instruct any subscriber who elects to send his order form
to you to make any accompanying check payable to Heritage Financial Corporation.
This offer is made subject to the terms and conditions herein set
forth and is made only to selected dealers who are (i) members in good standing
of the National Association of Securities Dealers, Inc. ("NASD") who are to
comply with all applicable rules of the NASD, including, without limitation, the
NASD's Interpretation With Respect to Free-Riding and Withholding and Section 24
of Article III of the NASD's Rules of Fair Practice; or (ii) foreign dealers not
eligible for membership in the NASD who agree (A) not to sell any Common Stock
within the United States, its territories or possessions or to persons who are
citizens thereof or resident therein and (B) in making other sales to comply
with the above-mentioned Article III as if they were NASD members, and Section
25 of such Article III as it applies to non-member brokers or dealers in a
foreign country.
Orders for Common Stock will be strictly subject to confirmation and
we, acting on behalf of the Company, reserve the right in our uncontrolled
discretion to reject any order in whole or in part, to accept or reject orders
in the order of their receipt or otherwise, and to allot. Neither you nor any
other person is authorized by either the Company or us to give any information
or make any representations other than those contained in the Prospectus in
connection with the sale of any of the Common Stock. No selected dealer is
authorized to act as agent for us when soliciting orders to buy the Common Stock
from the public or otherwise. No selected dealer shall engage in any
stabilization (as defined in Regulation M promulgated under the Securities
Exchange Act of 1934, as amended ("1934 Act")) with respect to the Company's
Common Stock during the Offering.
We and each selected dealer assisting in selling Common Stock pursuant
hereto agree to comply with the applicable requirements of the 1934 Act and
applicable state rules and regulations. In addition, we and each selected dealer
confirm that the Securities and Exchange Commission ("SEC") interprets Rule
15c2-8 promulgated under the 1934 Act as requiring that a Prospectus be supplied
to each person who is expected to receive a confirmation of sale 48 hours prior
to delivery of such person's order form.
We and each selected dealer further agree to the extent that your
customers desire to pay for shares with funds held by or to be deposited with
us, according to the interpretation of the SEC of Rule 15c-2-4 promulgated under
the 1934 Act, either (a) upon receipt of an executed order form or direction to
execute an order form on behalf of a customer to forward the offering price of
2
the Common Stock ordered on or before twelve noon local New Jersey time of the
next business day following receipt or execution of an order form by us to the
Company for deposit in a segregated account or (b) to solicit indications of
interest in which event (i) we will subsequently contact any customer indicating
interest to confirm the interest and give instructions to execute and return an
order form or to receive authorization to execute the order form on the
customer's behalf, (ii) we will mail acknowledgements of receipt of orders to
each customer confirming interest on the business day following such
confirmation, (iii) we will debit accounts of such customers on the fifth
business day ("debit date") following receipt of the confirmation referred to in
(i), and (iv) we will forward completed order forms together with such funds to
the Company on or before twelve noon on the next business day following the
debit date for deposit in a segregated account. We and each selected dealer
acknowledge that if the procedure in (b) is adopted, our customers' funds are
not required to be in their accounts until the debit date.
Unless terminated earlier by us, this Agreement shall terminate upon
the closing date of the Offering. We may terminate this Agreement or any
provisions thereof at any tune by written or telegraphic notice to you. Our
obligations hereunder are subject to the successful completion of the Offering.
You agree that at any time or times prior to the termination of this
Agreement you will, upon our request, report to us the number of shares of
Common Stock sold on behalf of the Company by you under this Agreement.
We shall have full authority to take such actions as we may deem
advisable in respect of all matters pertaining to the Offering. We shall be
under no liability to you except for lack of good faith and for obligations
expressly assumed by us in this Agreement.
Upon application to us, we will inform you as to the states in which
we believe the Common Stock has been qualified for sale under or are exempt from
the requirements of, the respective blue sky laws of such states, but we assume
no responsibility or obligation as to your rights to sell Common Stock in any
state.
Additional copies of the Prospectus and any supplements thereto will
be supplied in reasonable quantities upon request.
Any notice from us to you shall be deemed to have been duly given if
mailed, telephoned, or telegraphed to you at the address to which this Agreement
is mailed.
This Agreement shall be construed in accordance with the laws of the
State of New Jersey.
3
Please confirm your agreement hereto by signing this agreement and
returning it at once to the attention of the undersigned at Xxxx, Xxxx & Co.,
Inc., 000 X. Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000. The enclosed
duplicate copy will evidence the agreement between us.
XXXX, XXXX & CO., INC.
By:__________________________
Xxx X. Xxxxxxx
President
Dated:___________________, 1997
[Name of Firm]
By: _____________________
4
