EXHIBIT 1
GUARANTY FEDERAL BANCSHARES, INC.
Up to 5,410,019 Shares
COMMON STOCK
($.10 Par Value)
Subscription Price $10.00 Per Share
AGENCY AGREEMENT
----------------
____________, 1997
Friedman, Billings, Xxxxxx & Co., Inc.
0000 Xxxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Guaranty Federal Bancshares, Inc., a Delaware corporation (the
"Company"), Guaranty Federal Bancshares, M.H.C. (the "MHC") and Guaranty Federal
Savings Bank, Springfield, Missouri, a federal stock savings bank (the "Bank"),
with its deposit accounts insured by the Savings Association Insurance Fund
("SAIF") administered by the Federal Deposit Insurance Corporation ("FDIC"),
hereby confirm their agreement with Friedman, Billings, Xxxxxx & Co., Inc. (the
"Agent") as follows (defined terms used herein shall have the same definition
given in the Prospectus dated ____________, 1997 unless otherwise defined
herein):
Section 1. The Offering. The MHC, in accordance with its plan of
conversion adopted by its Board of Directors (the "Plan"), intends to convert to
an interim federal stock savings bank and simultaneously merge with and into the
Bank, pursuant to which the MHC will cease to exist (the "Conversion"). In
connection with the Conversion, the Company will form an interim savings bank
subsidiary, which will then merge with and into the Bank, pursuant to which the
Bank will become a wholly-owned subsidiary of the Holding Company. In connection
therewith, each share of Bank Common Stock outstanding immediately prior to the
effective time that is held by Public Stockholders shall be automatically
converted, without further action by the holder thereof, into and become the
right to receive shares of Company Common Stock based on the Exchange Ratio,
plus cash in lieu of any fractional share interest.
Pursuant to the Plan and in connection with the Conversion, the Company
is offering up to 3,795,000 shares of its common stock (the "Conversion Stock")
in a subscription and community offering (the "Offerings"). Conversion Stock is
first being offered in a subscription offering with nontransferable subscription
rights being granted, in the following order of priority,
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to (i) depositors of the Bank with account balances of $50.00 or more as of the
close of business on December 31, 1995 ("Eligible Account Holders"); (ii) the
Bank's ESOP; (iii) depositors of the Bank with account balances of $50.00 or
more as of the close of business on September 30, 1997 ("Supplemental Eligible
Account Holders"); (iv) depositors of the Bank as of the close of business on
______________, 1997 (other than Eligible Account Holders and Supplemental
Eligible Account Holders) and borrowers of the Bank as of the close of business
on ________________ who continue to be borrowers as of the close of business on
______________, 1997 ("Other Members") and (v) stockholders of the Bank, other
than the Mutual Holding Company ("Public Stockholders"). Subscription rights
will expire if not exercised by [ ], Missouri time, on ______________, 1997,
unless extended.
Subject to the prior rights of holders of subscription rights,
Conversion Stock not subscribed for in the Subscription Offering is being
offered in the Community Offering to certain members of the general public to
whom a copy of the Prospectus is delivered, with preference given to natural
persons residing in the Local Community. It is anticipated that shares not
subscribed for in the Subscription and Community Offerings will be offered to
certain members of the general public in a Syndicated Community Offering. The
Primary Parties reserve the absolute right to reject or accept any orders in the
Community Offering or the Syndicated Community Offering, in whole or in part,
either at the time of receipt of an order or as soon as practicable following
the Expiration Date.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (File No. 333-_____) (the
"Registration Statement") containing a prospectus relating to the Offerings for
the registration of the Shares under the Securities Act of 1933 (the "1933
Act"), and has filed such amendments thereof, if any, and such amended
prospectuses as may have been required to the date hereof. The prospectus, as
amended, on file with the Commission at the time the Registration Statement
initially became effective is hereinafter called the "Prospectus," except that
if any prospectus is filed by the Company pursuant to Rule 424(b) or (c) of the
rules and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations") differing from the prospectus on file at the time the Registration
Statement initially becomes effective, the term "Prospectus" shall refer to the
prospectus filed pursuant to Rule 424(b) or (c) from and after the time said
prospectus is filed with the Commission.
In accordance with the regulations of the Office of Thrift Supervision
("OTS") governing the conversions of savings associations (the "Conversion
Regulations"), the MHC has filed with the OTS an Application for Conversion on
Form AC (the "Conversion Application"), including the prospectus, and has filed
such amendments thereto, if any, as may have been required by the OTS. The
Conversion Application has been approved by the OTS and the related Prospectus
has been authorized for use by the OTS. The Company has also filed an
Application H-(e)1 with the OTS to become the saving and loan holding company of
the Bank, which has been approved.
Section 2. Retention of the Agent; Compensation; Sale and Delivery of
the Shares. Subject to the terms and conditions herein set forth, the Company,
the MHC and the Bank hereby
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appoint the Agent as their financial advisor and marketing agent to utilize its
best efforts to solicit subscriptions for Shares of the Company's Common Stock
and to advise and assist the Company and the Bank with respect to the Company's
sale of the Shares in the Offerings and in the areas of market making, research
coverage and syndicate formation (if necessary).
On the basis of the representations, warranties, and agreements herein
contained, but subject to the terms and conditions herein set forth, the Agent
accepts such appointment and agrees to consult with and advise the Company, the
MHC and the Bank as to the matters set forth in the letter agreement ("Letter
Agreement"), dated June 25, 1997, between the Bank and the Agent (a copy of
which is attached hereto as Exhibit A). It is acknowledged by the Company, the
MHC and the Bank that the Agent shall not be required to purchase any Shares and
shall not be obligated to take any action which is inconsistent with all
applicable laws, regulations, decisions or orders. In the event of a Syndicated
Community Offering, the Agent will assemble and manage a selling group of
broker-dealers which are members of the National Association of Securities
Dealers, Inc. (the "NASD") to participate in the solicitation of purchase orders
for shares under a selected dealers' agreement ("Selected Dealers' Agreement"),
the form of which is set forth as Exhibit B to this Agreement.
The obligations of the Agent pursuant to this Agreement shall terminate
upon the completion or termination or abandonment of the Plan by the Company or
upon termination of the Offerings, but in no event later than 45 days after the
completion of the Subscription Offering (the "End Date"). All fees or expenses
due to the Agent but unpaid will be payable to the Agent in next day funds at
the earlier of the Closing Date (as hereinafter defined) or the End Date. In the
event the Offerings are extended beyond the End Date, the Company, the MHC, the
Bank and the Agent may agree to renew this Agreement under mutually acceptable
terms.
In the event the Company is unable to sell a minimum of 2,805,000
Shares within the period herein provided, this Agreement shall terminate and the
Company shall refund to any persons who have subscribed for any of the Shares,
the full amount which it may have received from them plus accrued interest as
set forth in the Prospectus; and none of the parties to this Agreement shall
have any obligation to the other parties hereunder, except as set forth in this
Section 2 and in Sections 6, 8 and 9 hereof.
In the event the Offerings are terminated for any reason not
attributable to the action or inaction of the Agent, the Agent shall be paid the
fees due to the date of such termination pursuant to subparagraphs (a) and (b)
below.
If all conditions precedent to the consummation of the Conversion,
including, without limitation, the sale of all Shares required by the Plan to be
sold, are satisfied, the Company agrees to issue, or have issued, the Shares
sold in the Offering and to release for delivery certificates for such Shares on
the Closing Date (as hereinafter defined) against payment to the Company by any
means authorized by the Plan, provided, however, that no funds shall be released
to the Company until the conditions specified in Section 7 hereof shall have
been complied with to the reasonable satisfaction of the Agent and their
counsel. The release of Shares against payment therefor shall
3
be made on a date and at a place acceptable to the Company, the MHC, the Bank
and the Agent (it being understood that such date shall not be more than ten
business days after termination of the Offering) or such other time or place as
shall be agreed upon by the Company, the MHC, the Bank and the Agent.
Certificates for shares shall be delivered directly to the purchasers in
accordance with their directions. The date upon which the Company shall release
or deliver the Shares sold in the Offering, in accordance with the terms herein,
is called the "Closing Date."
The Agent shall receive the following compensation for its services
hereunder:
(a) A financial advisory fee to the Agent in the amount of $20,000,
of which $10,000 has been paid and of which $10,000 will be paid
upon OTS approval of the Plan application. Such fees shall be
deemed to be earned when due. Should the Conversion be terminated
for any reason not attributable to the action or inaction of the
Agent, the Agent shall have earned and be entitled to be paid
fees accruing through the stage at which point the termination
occurred, including any accrued legal fees expanded by the Agent.
(b) A Marketing Fee of $150,000 (which includes the financial
advisory fee), payable to the Agent on the Closing Date.
(c) The decision to utilize other selected Broker-Dealers will be
made jointly by the Agent and the Bank. Selected broker-dealers
who assist in the subscription or purchase, excluding those
shares purchased by the Bank's officers, directors or employees
or by any ESOP, tax-qualified or stock based compensation plans
(except IRA's) or similar plan created by the Bank for some or
all of its directors or employees or by member depositors in the
original subscription phase of the offering, will be paid a fee
not to exceed 4% of the aggregate Actual Purchase Price of the
shares of common stock sold by them in the Subscription and/or
Community Offerings. The Agent's fee for such shares shall equal
1.5% of the aggregate Actual Purchase Price of the shares of
common stock sold by selected broker-dealers in the Subscription
and/or Community Offering. Fees with respect to subscriptions or
purchases effected with the assistance of Registered
Representatives employed by a Broker/Dealer other than the Agent
shall be paid to the Agent at Closing and then transmitted by the
Agent to such Broker/Dealer.
(d) The Bank and the Company hereby agree to reimburse the Agent,
from time to time upon the Agent's request, for its reasonable
out-of-pocket expenses, including without limitation, accounting,
communication, travel expenses, and legal fees and expenses, for
amounts not to exceed $50,000. Further, the Bank will reimburse
the Agent for (i) up to $35,000 of legal fees, and (ii) expenses
of such counsel. The Bank will bear the expenses of the Offerings
customarily borne by issuers including, without limitation, OTS,
SEC, "Blue Sky," and NASD filing and registration fees; the fees
of the Bank's accountants, conversion agent, data processor,
attorneys, appraiser, transfer agent and registrar, printing,
mailing and
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marketing expenses associated with the Conversion; and the fees
set forth under this Section 2.
Full payment of the Agent's actual and accountable expenses, advisory
fees and compensation shall be made in next day funds on the earlier of the
Closing Date or a determination by the Bank to terminate or abandon the Plan.
In the event of an oversubscription or other event, which causes the
Offerings to continue beyond the original expiration date or a resolicitation of
subscribers, the parties agree to renegotiate the expense cap on legal fees
applicable to the Agent.
Section 3. Prospectus; Offering. The Shares are to be initially offered
in the Offerings at the Purchase Price as defined and set forth on the cover
page of the Prospectus.
Section 4. Representations and Warranties. The Company, the MHC and the
Bank jointly and severally represent and warrant to the Agent on the date hereof
as follows:
(a) The Registration Statement was declared effective by the
Commission on _________, 1997. At the time the Registration Statement,
including the Prospectus contained therein (including any amendment or
supplement thereto), became effective, the Registration Statement
complied in all material respects with the requirements of the 1933 Act
and the 1933 Act Regulations and the Registration Statement, including
the Prospectus contained therein (including any amendment or supplement
thereto), and any information regarding the Company or the Bank
contained in Sales Information (as such term is defined in Section 8
hereof) authorized by the Company or the Bank for use in connection
with the Offerings, did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, and at the time any Rule
424(b) or (c) Prospectus was filed with the Commission and at the
Closing Date referred to in Section 2, the Registration Statement,
including the Prospectus contained therein (including any amendment or
supplement thereto), any information regarding the Company or the Bank
contained in Sales Information (as such term is defined in Section 8
hereof) authorized by the Company or the Bank for use in connection
with the Offerings will not contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the representations and
warranties in this Section 4(a) shall not apply to statements or
omissions made in reliance upon and in conformity with written
information furnished to the Company or the Bank by the Agent expressly
regarding the Agent for use in the Prospectus under the caption "The
Conversion-Marketing Arrangements" or statements in or omissions from
any Sales Information or information filed pursuant to state securities
or blue sky laws or regulations regarding the Agent.
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(b) The Conversion Application was approved by the OTS on
_________, 1997 and the related Prospectus has been authorized for use
by the OTS. At the time of the approval of the Conversion Application,
including the Prospectus (including any amendment or supplement
thereto), by the OTS and at all times subsequent thereto until the
Closing Date, the Conversion Application, including the Prospectus
(including any amendment or supplement thereto), will comply in all
material respects with the Conversion Regulations except to the extent
waived by the OTS. The Conversion Application, including the Prospectus
(including any amendment or supplement thereto), does not include any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the representations and warranties
in this Section 4(b) shall not apply to statements or omissions made in
reliance upon and in conformity with written information furnished to
the Company, the MHC or the Bank by the Agent expressly regarding the
Agent for use in the Prospectus contained in the Conversion Application
under the caption "The Conversion-Marketing Arrangements" or statements
in or omissions from any sales information or information filed
pursuant to state securities or blue sky laws or regulations regarding
the Agent.
(c) The Company filed with the OTS the Holding Company
Application H-(e)1 which has been approved as of the date hereof.
(d) No order has been issued by the OTS 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, to the best knowledge of
the Company, the MHC or the Bank, pending or threatened.
(e) At the Closing Date referred to in Section 2, the Plan
will have been adopted by the Boards of Directors of the Company, the
MHC and the Bank and the offer and sale of the Shares will have been
conducted in all material respects in accordance with the Plan, the
Conversion Regulations, and all other applicable laws, regulations,
decisions and orders, including all terms, conditions, requirements and
provisions precedent to the Conversion imposed upon the Company, the
MHC or the Bank by the OTS, the Commission or any other regulatory
authority and in the manner described in the Prospectus. To the best
knowledge of the Company, no person has sought to obtain review of the
final action of the OTS in approving or taking no objection to the Plan
or in approving or taking no objection to the Conversion or the Holding
Company Application pursuant to the Conversion Regulations or any other
statute or regulation.
(f) The Bank has been organized and is a validly existing
federally chartered savings and loan association in stock form of
organization and upon the Conversion will continue as such, is duly
authorized to conduct its business and own its property as described in
the Registration Statement and the Prospectus; the Bank has obtained
all material licenses, permits and other governmental authorizations
currently required for the
6
conduct of its business; all such licenses, permits and governmental
authorizations are in full force and effect, and the Bank is in all
material respects complying with all laws, rules, regulations and
orders applicable to the operation of its business; the Bank is
existing under the laws of the United States and is duly qualified as a
foreign corporation to transact business and is in good standing in
each jurisdiction in which its ownership of property or leasing or
property or the conduct of its business requires such qualification,
unless the failure to be so qualified in one or more of such
jurisdictions would not have a material adverse effect on the
condition, financial or otherwise, or the business, operations or
income of the Bank. The Bank does not own equity securities or any
equity interest in any other business enterprise except as described in
the Prospectus or as would not be material to the operations of the
Bank. Upon completion of the sale by the Company of the Shares
contemplated by the Prospectus, (i) the MHC will be succeeded by the
Company, a Delaware corporation, as the holding company of the Bank,
(ii) all of the authorized and outstanding capital stock of the Bank
will be owned by the Company, and (iii) the Company will have no direct
subsidiaries other than the Bank. The Conversion will have been
effected in all material respects in accordance with all applicable
statutes, regulations, decisions and orders; and, except with respect
to the filing of certain post-sale, post- Conversion reports, and
documents in compliance with the 1933 Act Regulations or the OTS's
resolutions or letters of approval or no objection taken, all terms,
conditions, requirements and provisions with respect to the Conversion
(except those that are conditions subsequent) imposed by the Commission
or the OTS, if any, will have been complied with by the Company, the
MHC and the Bank in all material respects or appropriate waivers will
have been obtained and all material notice and waiting periods will
have been satisfied, waived or elapsed.
(g) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware with corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus, and the Company is qualified
to do business as a foreign corporation in each jurisdiction in which
the conduct of its business requires such qualification, except where
the failure to so qualify would not have a material adverse effect on
the condition, financial or otherwise, or the business, operations or
income of the Company. The Company has obtained all material licenses,
permits and other governmental authorizations currently required for
the conduct of its business; all such licenses, permits and
governmental authorizations are in full force and effect, and the
Company is in all material respects complying with all laws, rules,
regulations and orders applicable to the operation of its business.
(h) The MHC has been duly organized and is a validly existing
federally chartered mutual holding company, with corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the Prospectus,
and the MHC is qualified to do business as a foreign corporation in
each jurisdiction in which the conduct of its business requires such
qualification, except where the failure to so qualify would not have a
material adverse effect on the condition,
7
financial or otherwise, or the business, operations or income of the
MHC. The MHC has obtained all material licenses, permits and other
governmental authorizations currently required for the conduct of its
business; all such licenses, permits and governmental authorizations
are in full force and effect, and the MHC is in all material respects
complying with all laws, rules, regulations and orders applicable to
the operation of its business.
(i) The Bank is a member of the Federal Home Loan Bank of Des
Moines ("FHLB-Des Moines"). The deposit accounts of the Bank are
insured by the FDIC up to the applicable limits; and no proceedings for
the termination or revocation of such insurance are pending or, to the
best knowledge of the Company, the MHC or the Bank, threatened. Upon
consummation of the Conversion, the liquidation account for the benefit
of Eligible Account Holders and Supplemental Eligible Account Holders
will be duly established in accordance with the requirements of the
Conversion Regulations.
(j) The Company, the MHC and the Bank have good and marketable
title to all real property and other assets material to the business of
the Company, the MHC and the Bank and to those properties and assets
described in the Registration Statement and Prospectus as owned by
them, free and clear of all liens, charges, encumbrances or
restrictions, except such as are described in the Registration
Statement and Prospectus or are not material to the business of the
Company, the MHC and the Bank taken as a whole; and all of the leases
and subleases material to the business of the Company, the MHC and the
Bank under which the Company, the MHC or the Bank hold properties,
including those described in the Registration Statement and Prospectus,
are in full force and effect.
(k) The Company, the MHC and the Bank have received an opinion
of their special counsel, Xxxxxxx, Spidi, Sloane & Xxxxx, P.C., with
respect to the federal income tax consequences of the conversion of the
MHC from mutual to stock form, the acquisition of the capital stock of
the Bank by the Company and the sale of the Shares as described in the
Registration Statement and the Prospectus, and an opinion from Xxxxx,
Xxxxx & Xxxxxx ("Xxxxx, Xxxxx") with respect to the Missouri state
income tax consequences of the proposed transaction; all material
aspects of the opinions of Xxxxxxx, Spidi, Sloane & Fish, P.C. and
Xxxxx, Xxxxx are accurately summarized in the Prospectus; and the facts
and representations upon which such opinions are based are truthful,
accurate and complete.
(l) The Company, the MHC and the Bank have all such power,
authority, authorizations, approvals and orders as may be required to
enter into this Agreement, to carry out the provisions and conditions
hereof and to issue and sell (i) the capital stock of the Bank to the
Company and (ii) the Shares to be sold by the Company as provided
herein and as described in the Prospectus.
(m) The Company, the MHC and the Bank are not in violation of
any directive received from the OTS, the FDIC, or any other agency to
make any material change in the method of conducting their businesses
so as to comply in all material respects with all
8
applicable statutes and regulations (including, without limitation,
regulations, decisions, directives and orders of the OTS and the FDIC)
and, except as set forth in the Registration Statement and the
Prospectus, there is no suit or proceeding or charge or action before
or by any court, regulatory authority or governmental agency or body,
pending or, to the knowledge of the Company, the MHC and the Bank,
threatened, which might materially and adversely affect the Conversion,
the performance of this Agreement or the consummation of the
transactions contemplated in the Plan and as described in the
Registration Statement and the Prospectus or which might result in any
material adverse change in the condition (financial or otherwise),
earnings, capital or properties of the Company, or the Bank, or which
would materially affect their properties and assets.
(n) The financial statements which are included in the
Prospectus fairly present the financial condition, results of
operations, retained earnings and cash flows of the Bank at the
respective dates thereof and for the respective periods covered thereby
and comply as to form in all material respects with the applicable
accounting requirements of Title 12 of the Code of Federal Regulations
and generally accepted accounting principles (including those requiring
the recording of certain assets at their current market value). Such
financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied through the periods
involved, present fairly in all material respects the information
required to be stated therein and are consistent with the most recent
financial statements and other reports filed by the Bank with the OTS,
and the FDIC, except that accounting principles employed in such
regulatory filings conform to the requirements of such authorities and
not necessarily to generally accepted accounting principles. The other
financial, statistical and pro forma information and related notes
included in the Prospectus present fairly the information shown therein
on a basis consistent with the audited and unaudited financial
statements of the Bank included in the Prospectus, and as to the pro
forma adjustments, the adjustments made therein have been properly
applied on the basis described therein.
(o) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus; (i) there has
not been any material adverse change, financial or otherwise, in the
condition of the Company, the MHC, the Bank or in the earnings, capital
or properties of the Company, the MHC or the Bank, whether or not
arising in the ordinary course of business; (ii) there has not been any
material increase in the long-term debt of the Bank or in loans past
due 90 days or more or real estate acquired by foreclosure, by
deed-in-lieu of foreclosure or deemed in-substance foreclosure or any
material decrease in surplus and reserves or total assets of the Bank
nor has the Company or the Bank issued any securities or incurred any
liability or obligation for borrowing other than in the ordinary course
of business; (iii) there have not been any material transactions
entered into by the Company, the MHC or the Bank, except with respect
to those transactions entered into in the ordinary course of business;
(iv) the capitalization, liabilities, assets, properties and business
of the Company, the MHC and the Bank conform in all material respects
to the descriptions thereof contained in the
9
Prospectus; and (v) neither the Company, the MHC nor the Bank has any
material contingent liabilities, except as set forth in the Prospectus.
(p) As of the date hereof and as of the Closing Date, neither
the Company, the MHC nor the Bank is in violation of its articles of
incorporation or bylaws or charter or bylaws, as applicable, or in
default in the performance or observance of any material obligation,
agreement, covenant, or condition contained in any material contract,
lease, loan agreement, indenture or other instrument to which it is a
party or by which it or any of its property may be bound; the
consummation of the Conversion, the execution, delivery and performance
of this Agreement and the consummation of the transactions herein
contemplated have been duly and validly authorized by all necessary
corporate action on the part of the Company and the Bank and this
Agreement has been validly executed and delivered by the Company, the
MHC and the Bank and is the valid, legal and binding Agreement of the
Company, the MHC and the Bank enforceable in accordance with its terms,
except as the enforceability thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium, conservatorship, receivership
or other similar laws now or hereafter in effect relating to or
affecting the enforcement of creditors' rights generally or the rights
of creditors of Federal savings institutions and their holding
companies, (ii) general equitable principles, (iii) laws relating to
the safety and soundness of insured depository institutions, and (iv)
applicable law or public policy with respect to the indemnification
and/or contribution provisions contained herein, and except that no
representation or warranty need be made as to the effect or
availability of equitable remedies or injunctive relief (regardless of
whether such enforceability is considered in a proceeding in equity or
at law). The consummation of the transactions herein contemplated will
not: (i) conflict with or constitute a breach of, or default under, the
articles of incorporation and bylaws of the Company or the charters and
bylaws of the Bank or the MHC (in either mutual or capital stock form),
or any material contract, lease or other instrument to which the
Company, the MHC or the Bank has a beneficial interest, or any
applicable law, rule, regulation or order; (ii) violate any
authorization, approval, judgment, decree, order, statute, rule or
regulation applicable to the Company, the MHC or the Bank, except for
such violations which would not have a material adverse effect on the
financial condition and results of operations of the Company, the MHC
and the Bank on a consolidated basis; or (iii) with the exception of
the liquidation account established in the Conversion, result in the
creation of any material lien, charge or encumbrance upon any property
of the Company, the MHC or the Bank.
(q) No default exists, and no event has occurred which with
notice or lapse of time, or both, would constitute a default on the
part of the Company, the MHC or the Bank, in the due performance and
observance of any term, covenant or condition of any indenture,
mortgage, deed of trust, note, bank loan or credit agreement or any
other instrument or agreement to which the Company, the MHC or the Bank
is a party or by which any of them or any of their property is bound or
affected except such defaults which would not have a material adverse
effect on the financial condition or results of operations of the
Company, the MHC and the Bank on a consolidated basis; such agreements
are in
10
full force and effect; and no other party to any such agreements has
instituted or, to the best knowledge of the Company, the MHC or the
Bank, threatened any action or proceeding wherein the Company, the Bank
or the MHC would or might be alleged to be in default thereunder under
circumstances where such action or proceeding, if determined adversely
to the Company, the MHC or the Bank, would have a material adverse
effect on the Company, the MHC and the Bank, taken as a whole.
(r) Upon consummation of the Conversion, the authorized,
issued and outstanding equity capital of the Company will be within the
range set forth in the Prospectus under the caption "Capitalization,"
and, other than shares issued to the Bank which shall be canceled on
the Closing Date, no shares of Common Stock have been or will be issued
and outstanding prior to the Closing Date referred to in Section 2; the
Shares will have been duly and validly authorized for issuance and,
when issued and delivered by the Company pursuant to the Plan against
payment of the consideration calculated as set forth in the Plan and in
the Prospectus, will be duly and validly issued, fully paid and
non-assessable; no preemptive rights exist with respect to the Shares;
and the terms and provisions of the Shares will conform in all material
respects to the description thereof contained in the Registration
Statement and the Prospectus. To the best knowledge of the Company, the
MHC and the Bank, upon the issuance of the Shares, good title to the
Shares will be transferred from the Company to the purchasers thereof
against payment therefor, subject to such claims as may be asserted
against the purchasers thereof by third-party claimants.
(s) No approval of any regulatory or supervisory or other
public authority is required in connection with the execution and
delivery of this Agreement or the issuance of the Shares, except for
the approval or non-objection, as applicable, of the Commission, the
OTS, and any necessary qualification, notification, registration or
exemption under the securities or blue sky laws of the various states
in which the Shares are to be offered, and except as may be required
under the rules and regulations of the NASD and/or the Nasdaq National
Market.
(t) Baird, Kurtz, which has certified the financial statements
of the Bank included in the Prospectus as of June 30, 1997 and 1996 and
for each of the years in the three year period ended June 30, 1997, has
advised the Company, the MHC and the Bank in writing that they are,
with respect to the Company, the MHC and the Bank, independent public
accountants within the meaning of the Code of Professional Ethics of
the American Institute of Certified Public Accountants and Title 121 of
the Code of Federal Regulations and Section 571.2(c)(3).
(u) RP Financial, LC which has prepared the Bank's Conversion
Valuation Appraisal Report as of ______, 1997 (as amended or
supplemented, if so amended or supplemented) (the "Appraisal"), has
advised the Company in writing that it is independent of the Company,
the MHC and the Bank within the meaning of the Conversion Regulations.
11
(v) The Company, the MHC and the Bank have timely filed all
required federal, state and local tax returns; the Company, the MHC and
the Bank have paid all taxes that have become due and payable in
respect of such returns, except where permitted to be extended, have
made adequate reserves for similar future tax liabilities and no
deficiency has been asserted with respect thereto by any taxing
authority.
(w) The Company, the MHC and the Bank are in compliance in all
material respects with the applicable financial recordkeeping and
reporting requirements of the Currency and Foreign Transactions
Reporting Act of 1970, as amended, and the regulations and rules
thereunder.
(x) To the knowledge of the Company, the MHC and the Bank,
neither the Company, the MHC, the Bank nor employees of the Company,
the MHC or the Bank have made any payment of funds of the Company, the
MHC or the Bank as a loan for the purchase of the Shares (other than a
loan by the Company to the ESOP) or made any other payment of funds
prohibited by law, and no funds have been set aside to be used for any
payment prohibited by law.
(y) Prior to the Conversion, the Bank had ___________ shares
of authorized capital stock, of which _________ shares were issued and
outstanding, and the MHC was not authorized to issue shares. Neither
the Bank, the Company nor the MHC has: (i) other than as described in
the Prospectus issued any securities within the last 18 months (except
for notes to evidence other bank loans and reverse repurchase
agreements or other liabilities in the ordinary course of business or
as described in the Prospectus); (ii) had any material dealings within
the 12 months prior to the date hereof with any member of the NASD, or
any person related to or associated with such member, other than
discussions and meetings relating to the proposed offering and routine
purchases and sales of United States government and agency securities;
(iii) entered into a financial or management consulting agreement
except as contemplated hereunder and except for the Letter Agreement
set forth in Exhibit A; and (iv) engaged any intermediary between the
Agents and the Company, the MHC and the Bank in connection with the
offering of the Shares, and no person is being compensated in any
manner for such service.
(z) The Company, the MHC and the Bank have not relied upon the
Agent or the Agent's counsel for any legal, tax or accounting advice in
connection with the Conversion.
(aa) The Company is not required to be registered under the
Investment Company Act of 1940, as amended.
Any certificates signed by an officer of the Company, the MHC or the
Bank pursuant to the conditions of this Agreement and delivered to the Agent or
its counsel that refers to this Agreement shall be deemed to be a representation
and warranty by the Company, the MHC or the
12
Bank to the Agent as to the matters covered thereby with the same effect as if
such representation and warranty were set forth herein.
Section 5. Representations and Warranties of the Agent. The Agent
represents and warrants to the Company, the MHC and the Bank that:
(a) The Agent is a corporation and is validly existing in good
standing under the laws of the State of Delaware with full
power and authority to provide the services to be furnished to
the Bank, the MHC and the Company hereunder.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary action on the
part of the Agent, and this Agreement has been duly and
validly executed and delivered by the Agent and is the legal,
valid and binding agreement of the Agent, enforceable in
accordance with its terms.
(c) Each of the Agent and its employees, agents and
representatives who shall perform any of the services
hereunder shall be duly authorized and empowered, and shall
have all licenses, approvals and permits necessary to perform
such services.
(d) The execution and delivery of this Agreement by the Agent,
the consummation of the transactions contemplated hereby and
compliance with the terms and provisions hereof will not
conflict with, or result in a breach of, any of the terms,
provisions or conditions of, or constitute a default (or event
which with notice or lapse of time or both would constitute a
default) under, the articles of incorporation of the Agent or
any agreement, indenture or other instrument to which the
Agent is a party or by which it or its property is bound.
(e) No approval of any regulatory or supervisory or other
public authority is required in connection with the Agent's
execution and delivery of this Agreement, except as may have
been received.
(f) There is no suit or proceeding or charge of action before
or by any court, regulatory authority or government agency or
body or, to the knowledge of the Agent, pending or threatened,
which might materially adversely affect the Agent's
performance of this Agreement.
Section 5.1 Covenants of the Company, the MHC and the Bank. The
Company, the MHC and the Bank hereby jointly and severally covenant with the
Agent as follows:
(a) The Company has filed the Registration Statement with the
Commission. The Company will not, at any time after the date the
Registration Statement is declared effective, file any amendment or
supplement to the Registration Statement without
13
providing the Agent and its counsel an opportunity to review such
amendment or supplement or file any amendment or supplement to which
amendment or supplement the Agent or its counsel shall reasonably
object.
(b) The MHC has filed the Conversion Application with the OTS.
The Bank will not, at any time after the Conversion Application is
approved by the OTS, file any amendment or supplement to such
Conversion Application without providing the Agent and its counsel an
opportunity to review such amendment or supplement or file any
amendment or supplement to which amendment or supplement the Agent or
its counsel shall reasonably object.
(c) The Company has filed the Holding Company Application with
the OTS. The Company will not, at any time before the Holding Company
Application is approved by the OTS, file any amendment or supplement to
such Holding Company Application without providing the Agent and its
counsel an opportunity to review the nonconfidential portions of such
amendment or supplement or file any amendment or supplement to which
amendment or supplement the Agent or its counsel shall reasonably
object.
(d) The Company and the Bank will use their best efforts to
cause any post-effective amendment to the Registration Statement to be
declared effective by the Commission and any post-effective amendment
to the Conversion Application to be approved by the OTS and will
immediately upon receipt of any information concerning the events
listed below notify the Agent: (i) when the Registration Statement, as
amended, has become effective; (ii) when the Conversion Application, as
amended, has been approved by the OTS; (iii) when the Holding Company
Application, as amended, has been approved by the OTS; (iv) of any
comments from the Commission, the OTS or any other governmental entity
with respect to the Conversion or the transactions contemplated by this
Agreement; (v) of the request by the Commission, the OTS or any other
governmental entity for any amendment or supplement to the Registration
Statement, the Conversion Application or the Holding Company
Application or for additional information; (vi) of the issuance by the
Commission, the OTS or any other governmental entity of any order or
other action suspending the Offering or the use of the Registration
Statement or the Prospectus or any other filing of the Company or the
Bank under the Conversion Regulations, or other applicable law, or the
threat of any such action; (vii) the issuance by the Commission, the
OTS or any state authority of any stop order suspending the
effectiveness of the Registration Statement or the approval of the
Conversion Application or Holding Company Application, or of the
initiation or threat of initiation or threat of any proceedings for any
such purpose; or (viii) of the occurrence of any event mentioned in
paragraph (h) below. The Company, the MHC and the Bank will make every
reasonable effort (i) to prevent the issuance by the Commission, the
OTS or any state authority of any such order and, if any such order
shall at any time be issued, (ii) to obtain the lifting thereof at the
earliest possible time.
14
(e) The Company, the MHC and the Bank will deliver to the
Agent and to its counsel two conformed copies of the Registration
Statement, the Conversion Application and the Holding Company
Application, as originally filed and of each amendment or supplement
thereto, including all exhibits. Further, the Company, the MHC and the
Bank will deliver such additional copies of the foregoing documents to
counsel to the Agent as may be required for any NASD and blue sky
filings.
(f) The Company, the MHC and the Bank will furnish to the
Agent, from time to time during the period when the Prospectus (or any
later prospectus related to this offering) is required to be delivered
under the 1933 Act or the Securities Exchange Act of 1934 (the "1934
Act"), such number of copies of such Prospectus (as amended or
supplemented) as the Agent may reasonably request for the purposes
contemplated by the 1933 Act, the 1933 Act Regulations, the 1934 Act or
the rules and regulations promulgated under the 1934 Act (the "1934 Act
Regulations"). The Company authorizes the Agent to use the Prospectus
(as amended or supplemented, if amended or supplemented) in any lawful
manner contemplated by the Plan in connection with the sale of the
Shares by the Agent.
(g) The Company, the MHC and the Bank will comply with any and
all material terms, conditions, requirements and provisions with
respect to the Conversion and the transactions contemplated thereby
imposed by the Commission, the OTS, the Conversion Regulations or the
OTS, and by the 1933 Act, the 1933 Act Regulations, the 1934 Act and
the 1934 Act Regulations to be complied with prior to or subsequent to
the Closing Date and when the Prospectus is required to be delivered,
the Company, the MHC and the Bank will comply, at their own expense,
with all material requirements imposed upon them by the Commission, the
OTS, the Conversion Regulations or the OTS, and by the 1933 Act, the
1933 Act Regulations, the 1934 Act and the 1934 Act Regulations,
including, without limitation, Rule 10b-5 under the 1934 Act, in each
case as from time to time in force, so far as necessary to permit the
continuance of sales or dealing in shares of Common Stock during such
period in accordance with the provisions hereof and the Prospectus.
(h) If, at any time during the period when the Prospectus
relating to the Shares is required to be delivered, any event relating
to or affecting the Company, the MHC or the Bank shall occur, as a
result of which it is necessary or appropriate, in the opinion of
counsel for the Company, the MHC and the Bank or in the reasonable
opinion of the Agent's counsel, to amend or supplement the Registration
Statement or Prospectus in order to make the Registration Statement or
Prospectus not misleading in light of the circumstances existing at the
time the Prospectus is delivered to a purchaser, the Company and the
Bank will at their expense, prepare and file with the Commission and
the OTS and furnish to the Agent a reasonable number of copies of an
amendment or amendments of, or a supplement or supplements to, the
Registration Statement or Prospectus (in form and substance
satisfactory to the Agent and its counsel after a reasonable time for
review) which will amend or supplement the Registration Statement or
Prospectus so that as amended or supplemented it will not contain an
untrue statement of a material fact or omit
15
to state a material fact necessary in order to make the statements
therein, in light of the circumstances existing at the time the
Prospectus is delivered to a purchaser, not misleading. For the purpose
of this Agreement, the Company, the MHC and the Bank each will timely
furnish to the Agent such information with respect to itself as the
Agent may from time to time reasonably request.
(i) The Company, the MHC and the Bank will take all necessary
actions, in cooperating with the Agent, and furnish to whomever the
Agent may direct, such information as may be required to qualify or
register the Shares for offering and sale by the Company or to exempt
such Shares from registration, or to exempt the Company as a
broker-dealer and its officers, directors and employees as
broker-dealers or agents under the applicable securities or blue sky
laws of such jurisdictions in which the Shares are required under the
Conversion Regulations to be sold or as the Agent and the Company, the
MHC and the Bank may reasonably agree upon; provided, however, that the
Company shall not be obligated to file any general consent to service
of process 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 will
make and file such statements and reports in each fiscal period as are
or may be required by the laws of such jurisdiction.
(j) The liquidation account for the benefit of Eligible
Account Holders and Supplemental Eligible Account Holders will be duly
established and maintained in accordance with the requirements of the
OTS, and such Eligible Account Holders and Supplemental Eligible
Account Holders who continue to maintain their savings accounts in the
Bank will have an inchoate interest in their pro rata portion of the
liquidation account which shall have a priority superior to that of the
holders of shares of Common Stock in the event of a complete
liquidation of the Bank.
(k) The Company, the MHC and the Bank will not sell or issue,
contract to sell or otherwise dispose of, for a period of 90 days after
the Closing Date, without the Agent's prior written consent, any shares
of Common Stock other than the Shares or other than in connection with
any plan or arrangement described in the Prospectus.
(l) The Company shall register its Common Stock under Section
12(g) of the 1934 Act concurrent with the Offerings pursuant to the
Plan and shall request that such registration be effective upon
completion of the Conversion. The Company shall maintain the
effectiveness of such registration for not less than three (3) years or
such shorter period as may be required by the OTS.
(m) During the period during which the Company's Common Stock
is registered under the 1934 Act or for three years from the date
hereof, whichever period is greater, the Company will furnish to its
stockholders as soon as practicable after the end of each fiscal year
an annual report of the Company (including a consolidated balance sheet
and statements of consolidated income, stockholders' equity and cash
flows of the Company
16
and its subsidiaries as at the end of and for such year, certified by
independent public accountants in accordance with Regulation S-X under
the 1933 Act and the 1934 Act).
(n) During the period of three years from the date hereof, the
Company will furnish to the Agent: (i) as soon as practicable after
such information is publicly available, a copy of each report of the
Company furnished to or filed with the Commission under the 1934 Act or
any national securities exchange or system on which any class of
securities of the Company is listed or quoted (including, but not
limited to, reports on Forms 10-K, 10- Q and 8-K and all proxy
statements and annual reports to stockholders), (ii) a copy of each
other non-confidential report of the Company mailed to its stockholders
or filed with the Commission, the OTS or any other supervisory or
regulatory authority or any national securities exchange or system on
which any class of securities of the Company is listed or quoted, each
press release and material news items and additional documents and
information with respect to the Company or the Bank as the Agent may
reasonably request; and (iii) from time to time, such other
nonconfidential information concerning the Company or the Bank as the
Agent may reasonably request.
(o) The Company and the Bank will use the net proceeds from
the sale of the Shares in the manner set forth in the Prospectus under
the caption "Use of Proceeds."
(p) Other than as permitted by the Conversion Regulations, the
HOLA, the 1933 Act, the 1933 Act Regulations, and the laws of any state
in which the Shares are registered or qualified for sale or exempt from
registration, neither the Company, the MHC nor the Bank will distribute
any prospectus, offering circular or other offering material in
connection with the offer and sale of the Shares.
(q) The Company will use its best efforts to (i) encourage and
assist two market makers to establish and maintain a market for the
Shares and (ii) list the Shares on a national or regional securities
exchange or on the Nasdaq National Market effective on or prior to the
Closing Date.
(r) The Bank will maintain appropriate arrangements for
depositing all funds received from persons mailing subscriptions for or
orders to purchase Shares in the Offerings on an interest bearing basis
at the rate described in the Prospectus until the Closing Date and
satisfaction of all conditions precedent to the release of the Bank's
obligation to refund payments received from persons subscribing for or
ordering Shares in the Offerings in accordance with the Plan and as
described in the Prospectus or until refunds of such funds have been
made to the persons entitled thereto or withdrawal authorizations
cancelled in accordance with the Plan and as described in the
Prospectus. The Bank will maintain such records of all funds received
to permit the funds of each subscriber to be separately insured by the
FDIC (to the maximum extent allowable) and to enable the Bank to make
the appropriate refunds of such funds in the event that such refunds
are required to be made in accordance with the Plan and as described in
the Prospectus.
17
(s) The Company will promptly take all necessary action to
register as a savings and loan holding company under the HOLA within 90
days of the Closing Date.
(t) The Company and the Bank will take such actions and
furnish such information as are reasonably requested by the Agent in
order for the Agent to ensure compliance with the NASD's
"Interpretation Relating to Free Riding and Withholding."
(u) Neither the Bank nor the MHC will amend the Plan of
Conversion without notifying the Agent prior thereto.
(v) The Company shall assist the Agent, if necessary, in
connection with the allocation of the Shares in the event of an
oversubscription and shall provide the Agent with any information
necessary to assist the Company in allocating the Shares in such event
and such information shall be accurate and reliable.
(w) Prior to the Closing Date, the Company, the MHC and the
Bank will inform the Agent of any event or circumstances of which it is
aware as a result of which the Registration Statement, the Conversion
Application and/or Prospectus, as then amended or supplemented, would
contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading.
(x) Prior to the Closing Date, the Company will have received
approval of the OTS to acquire the Bank.
Section 5.2 Covenants of the Agent. The Agent hereby covenants with the
Company, the MHC and the Bank as follows:
(a) During the period when the Prospectus is used, the Agent
will comply, in all material respects and at its own expense, with all
requirements imposed upon it by the OTS and, to the extent applicable,
by the 1933 Act and the 1934 Act and the rules and regulations
promulgated thereunder.
(b) The Agent shall return unused prospectuses, if any, to the
Company promptly upon the completion of the Conversion.
(c) The Agent will distribute the Prospectuses or offering
materials in connection with the sales of the common stock only in
accordance with OTS regulations, the 1933 Act and the rules and
regulations promulgated thereunder.
(d) The Agent shall assist the Bank in maintaining
arrangements for the deposit of funds and the making of refunds, as
appropriate (as described in Section 5.1(r)), and shall perform the
allocation of shares in the event of an oversubscription, in
conformance with the Plan and applicable regulations and based upon
information furnished to the Agent by the Bank (as described in Section
5.1(v)).
18
Section 6. Payment of Expenses. Whether or not the Conversion is
completed or the sale of the Shares by the Company is consummated, the Company,
the MHC and the Bank jointly and severally agree to pay or reimburse the Agent
for: (a) all filing fees in connection with all filings with the NASD; (b) any
stock issue or transfer taxes which may be payable with respect to the sale of
the Shares; (c) all reasonable expenses of the Conversion including but not
limited to the Company, the MHC and the Bank's attorneys' fees, transfer agent,
registrar and other agent charges, fees relating to auditing and accounting or
other advisors and costs of printing all documents necessary in connection with
the Conversion; and (d) all reasonable out-of-pocket expenses incurred by the
Agent not to exceed $50,000 (including legal fees and expenses). Such
out-of-pocket expenses include, but are not limited to, travel, communications
and postage. However, such out-of-pocket expenses do not include expenses
incurred with respect to the matters set forth in (a) or (b) above. In the event
the Company is unable to sell a minimum of 2,805,000 Shares or the Conversion is
terminated or otherwise abandoned, the Company, the MHC and the Bank shall
reimburse the Agent in accordance with Section 2 hereof.
Section 7. Conditions to the Agent's Obligations. The Agent's
obligations hereunder, as to the Shares to be delivered at the Closing Date, are
subject, to the extent not waived by the Agent, to the condition that all
representations and warranties of the Company, the MHC and the Bank herein are,
at and as of the commencement of the Offerings and at and as of the Closing
Date, true and correct in all material respects, the condition that the Company,
the MHC and the Bank shall have performed all of their obligations hereunder to
be performed on or before such dates, and to the following further conditions:
(a) At the Closing Date, the Company, the MHC and the Bank
shall have conducted the Conversion in all material respects in
accordance with the Plan, the Conversion Regulations, and all other
applicable laws, regulations, decisions and orders, including all
terms, conditions, requirements and provisions precedent to the
Conversion imposed upon them by the OTS.
(b) The Registration Statement shall have been declared
effective by the Commission, the Conversion Application approved by the
OTS, and the Holding Company Application approved by the OTS not later
than 5:30 p.m. on the date of this Agreement, or with the Agent's
consent at a later time and date; and at the Closing Date, no stop
order suspending the effectiveness of the Registration Statement shall
have been issued under the 1933 Act or proceedings therefore initiated
or threatened by the Commission, or any state authority and no order or
other action suspending the authorization of the Prospectus or the
consummation of the Conversion shall have been issued or proceedings
therefore initiated or, to the Company's, the MHC's or the Bank's
knowledge, threatened by the Commission, the OTS or any state
authority.
(c) At the Closing Date, the Agent shall have received:
(1) The favorable opinion, dated as of the Closing
Date and addressed to the Agent and for its benefit, of
Xxxxxxx, Spidi, Sloane & Xxxxx, P.C., special
19
counsel for the Company, the MHC and the Bank, in form and
substance to the effect that:
(i) The Company has been duly incorporated
and is validly existing as a corporation under the laws of the
State of Delaware and has corporate power and authority to
own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the
Prospectus.
(ii) The Bank has been duly organized and is
a validly existing federal savings association in capital
stock form of organization, duly authorized to conduct its
business and own its property as described in the Registration
Statement and Prospectus. All of the outstanding capital stock
of the Bank will be duly authorized and, upon payment
therefor, will be validly issued, fully paid and
non-assessable and will be owned by the Company, free and
clear of any liens, encumbrances, claims or other
restrictions.
(iii) The MHC has been duly organized and is
a validly existing federal mutual holding company duly
authorized to conduct its business and own its property as
described in the Registration Statement and Prospectus.
(iv) The Bank is a member of the FHLB-Des
Moines. The deposit accounts of the Bank are insured by the
FDIC up to the maximum amount allowed under law and no
proceedings for the termination or revocation of such
insurance are pending or, to such counsel's Actual Knowledge,
threatened; the description of the liquidation account as set
forth in the Prospectus under the caption "The Conversion and
Reorganization-Liquidation Rights" to the extent that such
information constitutes matters of law and legal conclusions
has been reviewed by such counsel and is accurate in all
material respects.
(v) Upon consummation of the Conversion, the
authorized, issued and outstanding capital stock of the
Company will be within the range set forth in the Prospectus
under the caption "Capitalization," and except for shares
issued upon incorporation of the Company, no shares of Common
Stock have been issued prior to the Closing Date; at the time
of the Conversion, the Shares subscribed for pursuant to the
Offerings 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 the Prospectus, will
be duly and validly issued and fully paid and non-assessable;
the issuance of the Shares is not subject to preemptive rights
and the terms and provisions of the Shares conform in all
material respects to the description thereof contained in the
Prospectus. To such counsel's Actual Knowledge, upon the
issuance of the Shares, good title to the Shares will be
transferred from the Company to the purchasers thereof against
payment therefor, subject to such claims as may be asserted
against the purchasers thereof by third-party claimants.
20
(vi) The execution and delivery of this
Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by
all necessary action on the part of the Company, the MHC, and
the Bank; and this Agreement is a valid and binding obligation
of the Company, the MHC and the Bank, enforceable in
accordance with its terms, except as the enforceability
thereof may be limited by (i) bankruptcy, insolvency,
moratorium, reorganization, conservatorship, receivership or
other similar laws now or hereafter in effect relating to or
affecting the enforcement of creditors' rights generally or
the rights of creditors of savings institutions and their
holding companies, (ii) general equitable principles, (iii)
laws relating to the safety and soundness of insured
depository institutions, and (iv) applicable law or public
policy with respect to the indemnification and/or contribution
provisions contained herein, including, without limitation,
the provisions of Section 23A and 23B of the Federal Reserve
Act, and except that no opinion need to be expressed as to the
effect or availability of equitable remedies or injunctive
relief (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(vii) The Conversion Application has been
approved by the OTS and the Prospectus has been authorized for
use by the OTS. The OTS has approved the Holding Company
Application, and the purchase by the Company of all of the
issued and outstanding capital stock of the Bank has been
authorized by the OTS and no action has been taken, and to
such counsel's Actual Knowledge, none is pending or
threatened, to revoke any such authorization or approval.
(viii) The Plan has been duly adopted by the
required vote of the directors of the Company, the MHC and the
Bank and, based upon the certificate of the inspector of
election, by the members of the MHC and the stockholders of
the Bank.
(ix) Subject to the satisfaction of the
conditions to the OTS's approval of to the Conversion, no
further approval, registration, authorization, consent or
other order of or notice to any federal or Delaware regulatory
agency is required in connection with the execution and
delivery of this Agreement, the issuance of the Shares and the
consummation of the Conversion, except as may be required
under the securities or blue sky laws of various jurisdictions
(as to which no opinion need be rendered) and except as may be
required under the rules and regulations of the NASD and/or
the Nasdaq National Market (as to which no opinion need be
rendered).
(x) The Registration Statement is effective
under the 1933 Act and no stop order suspending the
effectiveness has been issued under the 1933 Act or
proceedings therefor initiated or, to such counsel's Actual
Knowledge, threatened by the Commission.
21
(xi) At the time the Conversion Application,
including the Prospectus contained therein, was approved by
the OTS, the Conversion Application, including the Prospectus
contained therein, complied as to form in all material
respects with the requirements of the Conversion Regulations,
federal law and all applicable rules and regulations
promulgated thereunder (other than the financial statements,
the notes thereto, and other tabular, financial, statistical
and appraisal data included therein, as to which no opinion
need be rendered).
(xii) At the time that the Registration
Statement became effective, (i) the Registration Statement (as
amended or supplemented, if so amended or supplemented) (other
than the financial statements, the notes thereto and other
tabular, financial, statistical and appraisal data included
therein, as to which no opinion need be rendered) complied as
to form in all material respects with the requirements of the
1933 Act and the 1933 Act Regulations, and (ii) the Prospectus
(other than the financial statements, the notes thereto and
other tabular, financial, statistical and appraisal data
included therein, as to which no opinion need be rendered)
complied as to form in all material respects with the
requirements of the 1933 Act, the 1933 Act Regulations, the
Conversion Regulations and federal law.
(xiii) The terms and provisions of the
Shares of the Company conform, in all material respects, to
the description thereof contained in the Registration
Statement and Prospectus, and the form of certificate used to
evidence the Shares is in due and proper form.
(xiv) There are no legal or governmental
proceedings pending or to such counsel's Actual Knowledge,
threatened which are required to be disclosed in the
Registration Statement and Prospectus, other than those
disclosed therein, and to such counsel's Actual Knowledge, all
pending legal and governmental proceedings to which the
Company, the MHC or the Bank is a party or of which any of
their property is the subject, which are not described in the
Registration Statement and the Prospectus, including ordinary
routine litigation incidental to the Company's, the MHC's or
the Bank's business, are, considered in the aggregate, not
material.
(xv) To such counsel's Actual Knowledge,
there are no material contracts, indentures, mortgages, loan
agreements, notes, leases or other instruments required to be
described or referred to in the Conversion Application, the
Registration Statement or the Prospectus or required to be
filed as exhibits thereto other than those described or
referred to therein or filed as exhibits thereto in the
Conversion Application, the Registration Statement or the
Prospectus. The description in the Conversion Application, the
Registration Statement and the Prospectus of such documents
and exhibits is accurate in all material respects and fairly
presents the information required to be shown.
22
(xvi) To such counsel's Actual Knowledge,
the Company, the MHC and the Bank have conducted the
Conversion, in all material respects, in accordance with all
applicable requirements of the Plan and applicable federal
law, and the Plan complies in all material respects with all
applicable Delaware and federal laws, rules, regulations,
decisions and orders including, but not limited to, the
Conversion Regulations (except where a written waiver has been
received); no order has been issued by the OTS, the Commission
or any state authority to suspend the Offerings or the use of
the Prospectus, and no action for such purposes has been
instituted or, to such counsel's Actual Knowledge, threatened
by the OTS or the Commission or any state authority and, to
such counsel's Actual Knowledge, no person has sought to
obtain regulatory or judicial review of the final action of
the OTS approving the Plan, the Conversion Application, the
Holding Company Application or the Prospectus.
(xvii) To such counsel's Actual Knowledge,
the Company, the MHC and the Bank have obtained all material
federal and Delaware licenses, permits and other governmental
authorizations currently required for the conduct of their
businesses and all such licenses, permits and other
governmental authorizations are in full force and effect, and
the Company, the MHC and the Bank are in all material respects
complying therewith, except where the failure to have such
licenses, permits and other governmental authorizations or the
failure to be in compliance therewith would not have a
material adverse affect on the business or operations of the
Bank, the MHC and the Company, taken as a whole.
(xviii) To such counsel's Actual Knowledge,
neither the Company, the MHC nor the Bank is in violation of
its articles of incorporation, bylaws, or charter, as
applicable, or, to such counsel's Actual Knowledge, in default
or violation of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which it is a
party or by which it or its property may be bound except for
such defaults or violations which would not have a material
adverse impact on the financial condition or results of
operations of the Company, the MHC nor the Bank on a
consolidated basis; to such counsel's Actual Knowledge, the
execution and delivery of this Agreement, the occurrence of
the obligations herein set forth and the consummation of the
transactions contemplated herein will not conflict with or
constitute a breach of, or default under, or result in the
creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company, the MHC or the Bank
pursuant to any material contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the
Company, the MHC or the Bank is a party or by which any of
them may be bound, or to which any of the property or assets
of the Company, the MHC or the Bank is subject (other than the
establishment of a liquidation account), and such action will
not result in any violation of the provisions of the articles
of incorporation, bylaws or charter, as applicable, of the
Company, the MHC or the Bank, or any applicable federal or
23
Delaware law, act, regulation (except that no opinion need be
rendered with respect to the securities or blue sky laws of
various jurisdictions or the rules and regulations of the NASD
and/or the Nasdaq National Market) or order or court order,
writ, injunction or decree.
(xix) The Company's articles of
incorporation and bylaws comply in all material respects with
the General Corporation Law ("GCL") of the State of Delaware.
The Bank's and the MHC's charter and bylaws comply in all
material respects with the HOLA and the rules and regulations
of the OTS.
(xx) To such counsel's Actual Knowledge,
neither the Company, the MHC nor the Bank is in violation of
any directive from the OTS or the FDIC to make any material
change in the method of conducting its respective business.
(xxi) The information in the Prospectus
under the captions "Regulation," "The Conversion and
Reorganization," "Restrictions on Acquisition of the Company"
and "Description of Capital Stock of the Company," to the
extent that such information constitutes matters of law,
summaries of legal matters, documents or proceedings, or legal
conclusions, has been reviewed by such counsel and is correct
in all material respects. The description of the Conversion
process under the caption "The Conversion and Reorganization"
in the Prospectus has been reviewed by such counsel and is in
all material respects correct. The discussion of statutes or
regulations described or referred to in the Prospectus are
accurate summaries and fairly present the information required
to be shown. The information under the caption "The Conversion
and Reorganization-Tax Aspects" has been reviewed by such
counsel and constitutes a correct summary of the opinions
rendered by Xxxxxxx, Spidi, Sloane & Xxxxx, P.C. and Xxxxx,
Xxxxx to the Company, the MHC and the Bank with respect to
such matters.
In giving such opinion, such counsel may rely as to
all matters of fact on certificates of officers or directors
of the Company, the MHC and the Bank and certificates of
public officials. Such counsel's opinion shall be limited to
matters governed by federal laws and by the State of Delaware
General Corporation Law. With respect to matters involving the
application of Delaware law, such counsel may rely, to the
extent it deems proper and as specified in its opinion, upon
the opinion of local counsel (providing that such counsel
states that it believes the Agent is justified in relying upon
such specified opinion or opinions). The opinion of Xxxxxxx,
Spidi, Sloane & Xxxxx, P.C. shall be governed by the Legal
Opinion Accord ("Accord") of the American Bar Association
Section of Business Law (1991). The term "Actual Knowledge" as
used herein shall have the meaning set forth in the Accord.
For purposes of such opinion, no proceedings shall be deemed
to be pending, no order or stop order shall be deemed to be
issued, and no action shall be deemed to be instituted unless,
in each case, a director or executive officer of the Company,
the MHC or the Bank shall have received a copy of such
24
proceedings, order, stop order or action. In addition, such
opinion may be limited to present statutes, regulations and
judicial interpretations and to facts as they presently exist;
in rendering such opinion, such counsel need assume no
obligation to revise or supplement it should the present laws
be changed by legislative or regulatory action, judicial
decision or otherwise; and such counsel need express no view,
opinion or belief with respect to whether any proposed or
pending legislation, if enacted, or any proposed or pending
regulations or policy statements issued by any regulatory
agency, whether or not promulgated pursuant to any such
legislation, would affect the validity of the Conversion or
any aspect thereof. Such counsel may assume that any agreement
is the valid and binding obligation of any parties to such
agreement other than the Company, the MHC or the Bank.
In addition, such counsel shall provide a letter
stating that during the preparation of the Conversion
Application, the Registration Statement and the Prospectus,
they participated in conferences with certain officers of, the
independent public and internal accountants for, and other
representatives of the Company, the MHC and the Bank, at which
conferences the contents of the Conversion Application, the
Registration Statement and the Prospectus and related matters
were discussed and, while such counsel has not confirmed the
accuracy or completeness of or otherwise verified the
information contained in the Conversion Application, the
Registration Statement or the Prospectus, and does not assume
any responsibility for such information, based upon such
conferences and a review of documents deemed relevant for the
purpose of rendering their opinion (relying as to materiality
as to factual matters on certificates of officers and other
factual representations by the Company, the MHC and the Bank),
nothing has come to their attention that would lead them to
believe that the Conversion Application, the Registration
Statement, the Prospectus, or any amendment or supplement
thereto (other than the financial statements, the notes
thereto, and other tabular, financial, statistical and
appraisal data included therein as to which no opinion need be
rendered) contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(2) The favorable opinion, dated as of the Closing
Date and addressed to the Agent and for its benefit, of the
Bank's local counsel, in form and substance to the effect
that, to the best of such counsel's knowledge, (i) the
Company, the MHC and the Bank have good and marketable title
to all properties and assets which are material to the
business of the Company, the MHC and the Bank and to those
properties and assets described in the Registration Statement
and Prospectus, as owned by them, free and clear of all liens,
charges, encumbrances or restrictions, except such as are
described in the Registration Statement and Prospectus, or are
not material in relation to the business of the Company, the
MHC and the Bank considered as one enterprise; (ii) all of the
leases and subleases material to the business of the Company,
the MHC and the Bank under which the
25
Company, the MHC and the Bank hold properties, as described in
the Registration Statement and Prospectus, are in full force
and effect; (iii) the Bank is duly qualified as a foreign
corporation to transact business and is in good standing in
each jurisdiction in which its ownership of property or
leasing of property or the conduct of its business requires
such qualification, unless the failure to be so qualified in
one or more of such jurisdictions would not have a material
adverse effect on the condition, financial or otherwise, or
the business, operations or income of the Bank; and (iv) the
MHC is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which
its ownership of property or leasing of property or the
conduct of its business requires such qualification, unless
the failure to be so qualified in one or more of such
jurisdictions would not have a material adverse effect on the
condition, financial or otherwise, or the business, operations
or income of the MHC.
(3) The favorable opinion, dated as of the Closing
Date, of Xxxx Xxxxxx Xxxxxx Xxxxxxxx & Xxxxxx, P.C., the
Agent's counsel, with respect to such matters as the Agent may
reasonably require. Such opinion may rely upon the opinions of
counsel to the Company, the MHC and the Bank, and as to
matters of fact, upon certificates of officers and directors
of the Company, the MHC and the Bank delivered pursuant hereto
or as such counsel shall reasonably request.
(d) At the Closing Date, the Agents shall receive a
certificate of the Chief Executive Officer and the Chief Financial
Officer of the Company and a certificate of the Chief Executive Officer
and the Chief Financial Officer of the MHC and the Bank, both dated as
of such Closing Date, to the effect that: (i) they have reviewed the
Prospectus and, in their opinion, at the time the Prospectus became
authorized for final use, the Prospectus did not contain any untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading; (ii) since the date the
Prospectus became authorized for final use, no material adverse change
in the condition, financial or otherwise, or in the earnings, capital,
properties or business of the Company, the MHC and the Bank has
occurred and, to their knowledge, no other event has occurred, which
should have been set forth in an amendment or supplement to the
Prospectus which has not been so set forth, and the conditions set
forth in this Section 7 have been satisfied; (iii) since the respective
dates as of which information is given in the Registration Statement
and Prospectus, there has been no material adverse change in the
condition, financial or otherwise, or in the earnings, capital or
properties of the Company, the MHC or the Bank, independently, or of
the Company, the MHC and the Bank considered as one enterprise, whether
or not arising in the ordinary course of business; (iv) the
representations and warranties in Section 4 are true and correct with
the same force and effect although expressly made at and as of the
Closing Date; (v) the Company, the MHC and the Bank have complied in
all material respects with all agreements and satisfied all conditions
on their part to be performed or satisfied at or prior to the Closing
Date and will comply in all material respects with all obligations to
be satisfied by them after Conversion; (vi) no stop order suspending
the
26
effectiveness of the Registration Statement has been initiated or, to
the best knowledge of the Company, the MHC or the Bank, threatened by
the Commission or any state authority; (vii) no order suspending the
Offerings, the Conversion, the acquisition of all of the shares of the
Bank by the Company or the effectiveness of the Prospectus has been
issued and no proceedings for that purpose are pending or, to the best
knowledge of the Company, the MHC or the Bank, threatened by the OTS,
the Commission or any state authority; and (viii) to the best knowledge
or the Company or the Bank, no person has sought to obtain review of
the final action of the OTS approving the Plan.
(e) 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 (other than as a result of a
change in law or regulation and affecting the savings association
industry as a whole), or in the earnings or business of the Company,
the MHC or the Bank independently, or of the Company, the MHC and the
Bank considered as one enterprise, from that as of the latest dates as
of which such condition is set forth in the Prospectus other than
transactions referred to or contemplated therein; (iii) the Company,
the MHC or the Bank shall not have received from the OTS or the FDIC
any direction (oral or written) to make any material change in the
method of conducting their business with which it has not complied
(which direction, if any, shall have been disclosed to the Agents) or
which materially and adversely would affect the business, operations or
financial condition or income of the Company, the MHC and the Bank
considered as one enterprise; (iv) the Company, the MHC and the Bank
shall not have been in default (nor shall any event have occurred
which, with notice or lapse of time or both, would constitute a
default) under any provision of any agreement or instrument relating to
any outstanding indebtedness; (v) no action, suit or proceedings, at
law or in equity or before or by any federal or state commission, board
or other administrative agency, shall be pending or, to the knowledge
of the Company, the MHC or the Bank, threatened against the Company,
the MHC or the Bank or affecting any of their properties wherein an
unfavorable decision, ruling or finding would materially and adversely
affect the business operations, financial condition or income of the
Company, the MHC and the Bank considered as one enterprise; and (vi)
the Shares have been qualified or registered for offering and sale or
exempted therefrom under the securities or blue sky laws of the
jurisdictions as the Agents shall have requested and as agreed to by
the Company and the Bank.
(f) Concurrently with the execution of this Agreement, the
Agents shall receive a letter from Xxxxx, Xxxxx dated as of the date of
the Prospectus and addressed to the Agent: (i) confirming that Xxxxx,
Xxxxx is a firm of independent public accountants within the meaning of
Rule 101 of the Code of Professional Ethics of the American Institute
of Certified Public Accountants and applicable regulations of the OTS
and FDIC and stating in effect that in Xxxxx, Xxxxx'x opinion the
financial statements of the Bank as of June 30, 1997 and 1996 and for
each of the three years in the period ended June 30, 1997, as are
included in the Prospectus and covered by their opinion included
therein, comply as to form in all material respects with the applicable
accounting requirements and related published rules and regulations of
the OTS, the FDIC and the 1933 Act; (ii) a statement
27
from Xxxxx, Xxxxx in effect that, on the basis of certain agreed upon
procedures (but not an audit in accordance with generally accepted
auditing standards) consisting of a reading of the latest available
unaudited interim consolidated financial statements of the Bank
prepared by the Bank, a reading of the minutes of the meetings of the
Board of Directors and members of the Bank and consultations with
officers of the Bank responsible for financial and accounting matters,
nothing came to their attention which caused them to believe that: (A)
the unaudited financial statements included in the Prospectus, are not
in conformity with the 1933 Act, applicable accounting requirements of
the OTS, the FDIC and generally accepted accounting principles applied
on a basis substantially consistent with that of the audited financial
statements included in the Prospectus; or (B) during the period from
the date of the latest unaudited consolidated financial statements
included in the Prospectus to a specified date not more than three
business days prior to the date of the Prospectus, except as has been
described in the Prospectus, there was any material increase in
borrowings, other than normal deposit fluctuations, by the Bank; or (C)
there was any decrease in consolidated net assets of the Bank at the
date of such letter as compared with amounts shown in the latest
unaudited consolidated statement of condition included in the
Prospectus; and (iii) a statement from Xxxxx, Xxxxx that, in addition
to the audit referred to in their opinion included in the Prospectus
and the performance of the procedures referred to in clause (ii) of
this subsection (f), they have compared with the general accounting
records of the Bank, which are subject to the internal controls of the
Bank, the accounting system and other data prepared by the Bank,
directly from such accounting records, to the extent specified in such
letter, such amounts and/or percentages set forth in the Prospectus as
the Agent may reasonably request; and they have reported on the results
of such comparisons.
(g) At the Closing Date, the Agent shall receive a letter from
Xxxxx, Xxxxx dated the Closing Date, addressed to the Agent, confirming
the statements made by them in the letter delivered by them pursuant to
subsection (f) of this Section 7, the "specified date" referred to in
clause (ii) of subsection (f) thereof to be a date specified in such
letter, which shall not be more than three business days prior to the
Closing Date.
(h) At the Closing Date, the Agent shall receive a letter from
RP Financial, LC, dated the date thereof and addressed to counsel for
the Agent (i) confirming that said firm is independent of the Company,
the MHC and the Bank and is experienced and expert in the area of
corporate appraisals within the meaning of Title 12 of the Code of
Federal Regulations, Part 303, (ii) stating in effect that the
Appraisal prepared by such firm complies in all material respects with
the applicable requirements of Title 12 of the Code of Federal
Regulations, and (iii) further stating that their opinion of the
aggregate pro forma market value of the Company, the MHC and the Bank
expressed in their Appraisal dated as of _______, 1997, and most
recently updated, remains in effect.
(i) The Company, the MHC and the Bank shall not have sustained
since the date of the latest audited financial statements included in
the Prospectus any material loss or interference with their businesses
from fire, explosion, flood or other calamity, whether
28
or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Registration Statement and Prospectus.
(j) At or prior to the Closing Date, the Agent shall receive:
(i) a copy of the letter from the OTS approving the Conversion
Application and authorizing the use of the Prospectus; (ii) a copy of
the order from the Commission declaring the Registration Statement
effective; (iii) certificates from the OTS evidencing the existence of
the Bank and the MHC; (iv) certificates of good standing from the State
of Delaware evidencing the good standing of the Company; (v) a
certificate from the FDIC evidencing the Bank's insurance of accounts,
(vi) a certificate of the FHLB-Des Moines evidencing the Bank's
membership thereof; and (vii) a copy of the letter from the OTS
approving the Company's Holding Company Application.
(k) As soon as available after the Closing Date, the Agent
shall receive, upon request, a copy of the Company's Delaware
Certificate of Incorporation.
(l) Subsequent to the date hereof, there shall not have
occurred any of the following: (i) a suspension or limitation in
trading in securities generally on the New York Stock Exchange or in
the over-the-counter market, or quotations halted generally on the
Nasdaq National Market, or minimum or maximum prices for trading have
been fixed, or maximum ranges for prices for securities have been
required by either of such exchanges or the NASD or by order of the
Commission or any other governmental authority; (ii) a general
moratorium on the operations of commercial banks or federal savings
associations or a general moratorium on the withdrawal of deposits from
commercial banks or federal savings associations declared by federal or
state authorities; (iii) the engagement by the United States in
hostilities which have resulted in the declaration, on or after the
date hereof, of a national emergency or war; or (iv) a material decline
in the price of equity or debt securities if the effect of such a
declaration or decline, in the Agent's reasonable judgment, makes it
impracticable or inadvisable to proceed with the Offerings or the
delivery of the shares on the terms and in the manner contemplated in
the Registration Statement and Prospectus.
Section 8. Indemnification.
(a) The Company, the MHC and the Bank jointly and severally
agree to indemnify and hold harmless the Agent, its officers,
directors, agents, servants and employees and each person, if any, who
controls the Agent within the meaning of Section 15 of the 1933 Act or
Section 20(a) of the 1934 Act , against any and all loss, liability,
claim, damage or expense whatsoever (including but not limited to
settlement expenses), joint or several, that the Agent or any of them
may suffer or to which the Agent and any such persons may become
subject under all applicable federal or state laws or otherwise, and to
promptly reimburse the Agent and any such persons upon written demand
for any expense (including fees and disbursements of counsel) incurred
by the Agent or any of
29
them in connection with investigating, preparing or defending any
actions, proceedings or claims (whether commenced or threatened) to the
extent such losses, claims, damages, liabilities or actions: (i) arise
out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement
(or any amendment or supplement thereto), preliminary or final
Prospectus (or any amendment or supplement thereto), the Conversion
Application (or any amendment or supplement thereto), the Holding
Company Application or any blue sky application or other instrument or
document executed by the Company, the MHC or the Bank based upon
written information supplied by the Company, the MHC or the Bank filed
in any state or jurisdiction to register or qualify any or all of the
Shares or to claim an exemption therefrom, or provided to any state or
jurisdiction to exempt the Company as a broker-dealer or its officers,
directors and employees as broker-dealers or agents, under the
securities laws thereof (collectively, the "Blue Sky Application"), or
any application or other document, advertisement, oral statement or
communication ("Sales Information") prepared, made or executed by or on
behalf of the Company, the MHC or the Bank with their consent or based
upon written or oral information furnished by or on behalf of the
Company, the MHC or the Bank, whether or not filed in any jurisdiction,
in order to qualify or register the Shares or to claim an exemption
therefrom under the securities laws thereof; (ii) arise out of or based
upon the omission or alleged omission to state in any of the foregoing
documents or information, a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; or (iii)
arise from any theory of liability whatsoever relating to or arising
from or based upon the Registration Statement (or any amendment or
supplement thereto), preliminary or final Prospectus (or any amendment
or supplement thereto), the Conversion Application (or any amendment or
supplement thereto), any Blue Sky Application or Sales Information or
other documentation distributed in connection with the Conversion;
provided, however, that no indemnification is required under this
paragraph (a) to the extent such losses, claims, damages, liabilities
or actions arise out of or are based upon any untrue material statement
or alleged untrue material statements in, or material omission or
alleged material omission from, the Registration Statement (or any
amendment or supplement thereto), preliminary or final Prospectus (or
any amendment or supplement thereto), the Conversion Application, any
Blue Sky Application or Sales Information made in reliance upon and in
conformity with information furnished in writing to the Company or the
Bank by the Agent regarding the Agent and provided further that such
indemnification shall be to the extent permitted by the OTS and the
FDIC.
(b) The Agent agrees to indemnify and hold harmless the
Company, the MHC and the Bank, their directors and officers and each
person, if any, who controls the Company, the MHC or the Bank within
the meaning of Section 15 of the 1933 Act or Section 20(a) of the 1934
Act against any and all loss, liability, claim, damage or expense
whatsoever (including but not limited to settlement expenses), joint or
several, which they, or any of them, may suffer or to which they, or
any of them may become subject under all applicable federal and state
laws or otherwise, and to promptly reimburse the Company, the MHC, the
Bank, and any such persons upon written demand for any expenses
30
(including reasonable fees and disbursements of counsel) incurred by
them, or any of them, in connection with investigating, preparing or
defending any actions, proceedings or claims (whether commenced or
threatened) to the extent such losses, claims, damages, liabilities or
actions arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (or any amendment or supplement thereto), the Conversion
Application (or any amendment or supplement thereto) or the preliminary
or final Prospectus (or any amendment or supplement thereto), or are
based upon the omission or alleged omission to state in any of the
foregoing documents a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the Agent's obligations under this Section 8(b) shall
exist only if and only to the extent (i) that such untrue statement or
alleged untrue statement was made in, or such material fact or alleged
material fact was omitted from, the Registration Statement (or any
amendment or supplement thereto), the preliminary or final Prospectus
(or any amendment or supplement thereto) or the Conversion Application
(or any amendment or supplement thereto), any Blue Sky Application or
Sales Information in reliance upon and in conformity with information
furnished in writing to the Company or the Bank by the Agent regarding
the Agent. In no case shall the Agent be liable or responsible for any
amount in excess of the fees received by the Agent pursuant to Section
2 of this Agreement.
(c) Each indemnified party shall given prompt written notice
to each indemnifying party of any action, proceeding, claim (whether
commenced or threatened), or suit instituted against it in respect of
which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve it from any liability which it may
have on account of this Section 8 or otherwise. An indemnifying party
may participate at its own expense in the defense of such action. In
addition, if it so elects within a reasonable time after receipt of
such notice, an indemnifying party, jointly with any other indemnifying
parties receiving such notice, may assume defense of such action with
counsel chosen by it and approved by the indemnified parties that are
defendants in such action, unless such indemnified parties reasonably
object to such assumption on the ground that there may be legal
defenses available to them that are different from or in addition to
those available to such indemnifying party. If an indemnifying party
assumes the defense of such action, the indemnifying parties shall not
be liable for any fees and expenses of counsel for the indemnified
parties incurred thereafter in connection with such action, proceeding
or claim, other than reasonable costs of investigation. In no event
shall the indemnifying parties be liable for the fees and expenses of
more than one separate firm of attorneys (and any special counsel that
said firm may retain) for each indemnified party in connection with any
one action, proceeding or claim or separate but similar or related
actions, proceedings or claims in the same jurisdiction arising out of
the same general allegations or circumstances.
(d) The agreements contained in this Section 8 and in Section
9 hereof and the representations and warranties of the Company, the MHC
and the Bank set forth in this Agreement shall remain operative and in
full force and effect regardless of: (i) any
31
investigation made by or on behalf of the Agent or its officers,
directors or controlling persons, agents or employees or by or on
behalf of the Company, the MHC or the Bank or any officers, directors
or controlling persons, agents or employees of the Company, the MHC or
the Bank; (ii) deliver of and payment hereunder for the Shares; or
(iii) any termination of this Agreement.
Section 9. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 8 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Company, the Bank or the Agent, the Company,
the Bank and the Agent shall contribute to the aggregate losses, claims, damages
and liabilities (including any investigation, legal and other expenses incurred
in connection with, and any amount paid in settlement of, any action, suit or
proceeding of any claims asserted, but after deducting any contribution received
by the Company, the Bank or the Agent from persons other than the other party
thereto, who may also be liable for contribution) in such proportion so that the
Agent are responsible for that portion represented by the percentage that the
fees paid to the Agent pursuant to Section 2 of this Agreement (not including
expenses) bears to the gross proceeds received by the Company from the sale of
the Shares in the Offerings and the Company and the Bank shall be responsible
for the balance. If, however, the allocation provided above is not permitted by
applicable law or if the indemnified party failed to give the notice required
under Section 8 above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative fault of the Company and the Bank
on the one hand and the Agent on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions, proceedings or claims in respect thereto), but also the relative
benefits received by the Company and the Bank on the one hand and the Agent on
the other from the Offerings (before deducting expenses). The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company and/or
the Bank on the one hand or the Agent on the other and the parties' relative
intent, good faith, knowledge, access to information and opportunity to correct
or prevent such statement or omission. The Company, the Bank and the Agent agree
that it would not be just and equitable if contribution pursuant to this Section
9 were determined by pro-rata allocation or by any other method of allocation
which does not take into account the equitable considerations referred to above
in this Section 9. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions, proceedings or
claims in respect thereof) referred to above in this Section 9 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action, proceeding
or claim. It is expressly agreed that the Agent shall not be liable for any
loss, liability, claim, damage or expense or be required to contribute any
amount which in the aggregate exceeds the amount paid (excluding reimbursable
expenses) to the Agent under this Agreement. It is understood that the above
stated limitation on the Agent's liability is essential to the Agent and that
the Agent would not have entered into this Agreement if such limitation had not
been agreed to by the parties to this Agreement. No person found guilty of any
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to
32
contribution from any person who was not found guilty of such fraudulent
misrepresentation. The obligations of the Company and the Bank under this
Section 9 and under Section 8 shall be in addition to any liability which the
Company and the Bank may otherwise have. For purposes of this Section 9, each of
the Agent's, the Company's or the Bank's officers and directors and each person,
if any, who controls the Agent or the Company or the Bank within the meaning of
the 1933 Act and the 1934 Act shall have the same rights to contribution as the
Agent, the Company or the Bank. Any party entitled to contribution, promptly
after receipt of notice of commencement of any action, suit, claim or proceeding
against such party in respect of which a claim for contribution may be made
against another party under this Section 9, will notify such party from whom
contribution may be sought, but the omission to so notify such party shall not
relieve the party from whom contribution may be sought from any other obligation
it may have hereunder or otherwise than under this Section 9.
Section 10. Survival of Agreements, Representations and Indemnities.
The respective indemnities of the Company, the Bank and the Agent and the
representations and warranties and other statements of the Company and the Bank
set forth in or made pursuant to this Agreement shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of the Agent, the Company, the Bank or any
controlling person referred to in Section 8 hereof, and shall survive the
issuance of the Shares, and any legal representative, successor or assign of the
Agent, the Company, the Bank, and any such controlling person shall be entitled
to the benefit of the respective agreements, indemnities, warranties and
representations.
Section 11. Termination. The Agent may terminate its obligations under
this Agreement by giving the notice indicated below in this Section 11 at any
time after this Agreement becomes effective as follows:
(a) In the event the Company fails to sell all of the Shares
by ___________, 1997, and in accordance with the provisions of the Plan
or as required by the Conversion Regulations, and applicable law, this
Agreement shall terminate upon refund by the Bank to each person who
has subscribed for or ordered any of the Shares the full amount which
it may have received from such person, together with interest as
provided in the Prospectus, and no party to this Agreement shall have
any obligation to the other hereunder, except for payment by the
Company and/or the Bank as set forth in Sections 2(a) and (d), 6, 8 and
9 hereof.
(b) If any of the conditions specified in Section 7 shall not
have been fulfilled when and as required by this Agreement unless
waived in writing, or by the Closing Date, this Agreement and all of
the Agent's obligations hereunder may be canceled by the Agent by
notifying the Company, the MHC and the Bank of such cancellation in
writing or by telegram at any time at or prior to the Closing Date, and
any such cancellation shall be without liability of any party to any
other party except as otherwise provided in Sections 2, 6, 8 and 9
hereof.
33
(c) If the Agent elects to terminate this Agreement as
provided in this Section, the Company, the MHC and the Bank shall be
notified promptly by the Agent by telephone or telegram, confirmed by
letter.
The Company, the MHC and the Bank may terminate this Agreement in the
event the Agent is in material breach of the representations and warranties or
covenants contained in Section 5 and such breach has not been cured after the
Company and the Bank have provided the Agent with notice of such breach.
This Agreement may also be terminated by mutual written consent of the
parties hereto.
Section 12. Notices. All communications hereunder, except as herein
otherwise specifically provided, shall be mailed in writing and if sent to the
Agent shall be mailed, delivered or telegraphed and confirmed to Friedman,
Billings, Xxxxxx & Co., Inc., 0000 00xx Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx
00000-0000, Attention: Xxxxxxx X. Xxxxxxx (with a copy to Xxxx Xxxxxx Xxxxxx
Xxxxxxxx & Xxxxxx, P.C., Attention: Xxxxxx X. Xxxxxxxx, Esq.) and, if sent to
the Company, the MHC and the Bank, shall be mailed, delivered or telegraphed and
confirmed to the Company, the MHC and the Bank at 0000 Xxxx Xxxxxxxxxxx,
Xxxxxxxxxxx, Xxxxxxxx 00000, Attention: Xxxxx X. Xxxxxxxxx, President and Chief
Executive Officer (with a copy to Xxxxxxx, Spidi, Sloane & Xxxxx, P.C.,
Attention: Xxxxxxx Xxxxxx, Esq.)
Section 13. Parties. The Company, the MHC and the Bank shall be
entitled to act and rely on any request, notice, consent, waiver or agreement
purportedly given on behalf of the Agent, when the same shall have been given by
the undersigned. The Agent shall be entitled to act and rely on any request,
notice, consent, waiver or agreement purportedly given on behalf of the Company,
the MHC or the Bank, when the same shall have been given by the undersigned or
any other officer of the Company, the MHC or the Bank. This Agreement shall
inure solely to the benefit of, and shall be binding upon, the Agent, the
Company, the MHC, the Bank, and their respective successors, legal
representatives and assigns, and no other person shall have or be construed to
have any legal or equitable right, remedy or claim under or in respect of or by
virtue of this Agreement or any provision herein contained. It is understood and
agreed that this Agreement is the exclusive agreement among the parties hereto,
and supersedes any prior agreement among the parties and may not be varied
except in writing signed by all the parties.
Section 14. Closing. The closing for the sale of the Shares shall take
place on the Closing Date at such location as mutually agreed upon by the Agent
and the Company, the MHC and the Bank. At the closing, the Company, the MHC and
the Bank shall deliver to the Agent in next day funds the commissions, fees and
expenses due and owing to the Agent as set forth in Sections 2 and 6 hereof and
the opinions and certificates required hereby and other documents deemed
reasonably necessary by the Agent shall be executed and delivered to effect the
sale of the Shares as contemplated hereby and pursuant to the terms of the
Prospectus.
Section 15. Partial Invalidity. In the event that any term, provision
or covenant herein or the application thereof to any circumstance or situation
shall be invalid or unenforceable, in
34
whole or in part, the remainder hereof and the application of said term,
provision or covenant to any other circumstances or situation shall not be
affected thereby, and each term, provision or covenant herein shall be valid and
enforceable to the full extent permitted by law.
Section 16. Construction. This Agreement shall be construed in
accordance with the laws of the State of Delaware.
Section 17. Counterparts. This Agreement may be executed in separate
counterparts, each of which so executed and delivered shall be an original, but
all of which together shall constitute but one and the same instrument.
35
EXHIBIT B
GUARANTY FEDERAL BANCSHARES, INC.
Up to 3,795,000 Shares (Anticipated Maximum)
(Par Value $.10 Per Share)
Selected Dealers' Agreement
---------------------------
______________, 1997
Gentlemen:
We have agreed to assist Guaranty Federal Savings Bank (the "Bank"), a
federally chartered stock savings bank, and the Bank's federal mutual holding
company, Guaranty Federal Bancshares, M.H.C. (the "MHC"), in connection with the
offer and sale of up to 3,795,000 shares of the conversion common stock, par
value $.10 per share (the "Common Stock") of Guaranty Federal Bancshares, Inc.
(the "Company"), a Delaware corporation, to be issued in connection with the
conversion of the MHC. The total number of shares of Common Stock to be offered
may be decreased to a minimum of 25 shares. 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
enclosed Prospectus dated _________, 1997 (the "Prospectus"). In connection with
the Conversion, the Company, on a best-efforts basis is offering for sale
between 2,805,000 and 3,795,000 shares (the "Shares") of the Common Stock, in a
Subscription Offering, as defined, as contemplated by Office of Thrift
Supervision (the "OTS") Regulation. Any Shares not sold in the Subscription
Offering will be offered to the general public in a community offering (the
"Community Offering") giving preference to residents of the Bank's Local
Community, as defined in the Prospectus.
The Subscription and Community Offerings are being conducted under a
Plan of Conversion (the "Plan") adopted by the Bank and the MHC pursuant to
which the MHC intends to convert from a federal mutual holding company to a
Delaware stock corporation (the "Company") (the "Conversion"). As part of the
Conversion, the Bank will sell all its to-be-issued common stock to the Company
which, in turn, will sell the Common Stock to the public as provided for in the
Plan. The Subscription and Community Offerings are further being conducted in
accordance with the regulations of the OTS subject to the restrictions contained
in the Plan.
The Common Stock is also being offered in accordance with the Plan by
broker/dealers licensed by the National Association of Securities Dealers, Inc.
("NASD"), which have been approved by the Bank ("Approved Brokers").
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
and we will pay you a fee in the amount of four percent (4%) 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 payment therefor to the special account established by the Bank for
the purpose of holding such funds. It is understood, of course, 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 in accordance with 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 also must clearly identify
your firm in order for you to receive compensation. You shall instruct any
subscriber who elects to send his order form to you to make any accompanying
check payable to "Guaranty Federal Bancshares, Inc."
This offer is made subject to the terms and conditions herein set forth
and is made only to selected dealers who are members in good standing of the
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.
Orders for Common Stock will be subject to confirmation and we, acting
on behalf of the Company, the MHC and the Bank, reserve the right in our
unfettered 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 the Company, the MHC and the Bank, or
by 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
offers to buy the Common Stock from the public or otherwise. No selected dealer
shall engage in any stabilizing (as defined in Rule 10b-7 promulgated under the
Securities Exchange Act of 1934) 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 Securities
Exchange Act of 1934 and applicable state rules and regulations. Each
customer-carrying selected dealer that is not a $250,000 net capital reporting
broker/dealer agrees that it will not use a sweep arrangement and that it will
transmit all customer checks by noon of the next business day after receipt
thereof. In addition, we and each selected dealer confirm that the Securities
and Exchange Commission interprets Rule 15c2-8 promulgated under the Securities
Exchange Act of 1934 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 that to the extent that your
customers desire to pay for shares with funds held by or to be deposited with
us, in accordance with the interpretations of the Securities and Exchange
Commission of Rule 15c2-4 promulgated under the Securities and
B-2
Exchange Act of 1934, 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 the Common Stock ordered on or before twelve noon Delaware
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 acknowledgments 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 third business day (the "Debit Date") following receipt of the confirmation
referred to in (i), and (iv) we will forward complete order forms together with
such funds to the Company on or before twelve noon on the next business day and
each selected dealer acknowledges that if the procedure in (b) is adopted, our
customers' funds are not required to be in their accounts until the Debit Date.
Unless earlier terminated by us, this Agreement shall terminate upon
the closing date of the Conversion. We may terminate this Agreement or any
provisions hereof any time by written or telegraphic notice to you. Of course,
our obligations hereunder are subject to the successful completion of the
Conversion.
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 Delaware.
B-3
Please confirm your agreement hereto by signing and returning the
confirmations accompanying this letter at once to us at Friedman, Billings,
Xxxxxx & Co., Inc., Potomac Tower, 0000 Xxxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxxx,
Xxxxxxxx 00000. The enclosed duplicate copy will evidence the agreement between
us.
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
By:
---------------------------------
Xxxxxxx X. Xxxxxxx
Senior Vice President
CONFIRMED AS OF:
, 1997
---------------------------
--------------------------------------
(Name of Dealer)
By:
---------------------------------
Its:
---------------------------------
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