EXHIBIT 1.1
HERITAGE BANCORP, INC.
Up to 4,628,750 Shares
of
Common Stock
(Par Value $.01 Per Share)
$15.00 Per Share
SALES AGENCY AGREEMENT
----------------------
February ___, 1998
Trident Securities, Inc.
0000 Xxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Dear Sirs:
Heritage Bancorp, Inc., a Delaware-chartered corporation ("Company"), and
Heritage Federal Savings & Loan Association, a federally chartered and insured
mutual savings and loan association ("Association"), hereby confirm as of the
date above their respective agreements with Trident Securities, Inc.
("Trident"), a broker-dealer registered with the Securities and Exchange
Commission ("Commission") and a member of the National Association of Securities
Dealers, Inc. ("NASD"), as follows:
1. Introduction. The Association intends to convert from a federally
------------
chartered mutual savings and loan association to a federally chartered stock
savings and loan association as a wholly-owned subsidiary of the Company
(together with the Offerings, as defined below, the issuance of shares of common
stock of the Association to the Company, and the incorporation of the Company,
collectively the "Conversion") pursuant to a plan of conversion adopted on
September 10, 1997, as amended November 19, 1997, ("Plan"). In accordance with
the Plan, the Company is offering shares of its common stock, par value $.01 per
share ("Shares" or the "Common Stock"), pursuant to nontransferable subscription
rights in a subscription offering ("Subscription Offering"), in order of
priority, to (i) the Association's Eligible Account Holders (as defined in the
Plan), (ii) the Association's Employee Stock Ownership Plan ("ESOP"), (iii) the
Association's Supplemental Eligible Account Holders (as defined in the Plan),
(iv) the Association's Other Members (as defined in the Plan), and (v)
directors, officers and employees of the Association. Shares of the Common
Stock not sold in the Subscription Offering are being offered to the general
public in a direct community offering, with preference being given to natural
persons residing in Laurens, Anderson, Greenville and Greenwood Counties, South
Carolina ("Association's Local Community") ("Direct Community Offering"), and,
if necessary, through a syndicate of NASD-registered broker-dealers
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managed by Trident in a syndicated community offering ("Syndicated Community
Offering"). The Direct Community Offering and the Syndicated Community Offering
may commence any time during the Subscription Offering or after the expiration
of the Subscription Offering. The Subscription Offering, the Direct Community
Offering and the Syndicated Community Offering are collectively referred to as
the "Offerings." Purchases of Shares in the Offerings are subject to certain
limitations and restrictions as described in the Plan.
The Company and the Association have been advised by Trident that it
intends to utilize its best efforts to assist the Company and the Association
with the sale of the Shares in the Subscription Offering and, if deemed
necessary, in the Direct Community Offering and the Syndicated Community
Offering.
2. Representations and Warranties.
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(a) The Company and the Association jointly and severally represent and
warrant to Trident that:
(i) The Company has filed with the Commission a registration
statement, including exhibits and an amendment or amendments thereto, on
Form S-1 (No. 333-41857), including a Prospectus relating to the Offerings,
for the registration of the Shares under the Securities Act of 1933, as
amended ("Securities Act"); and such registration statement has been
declared effective under the Securities Act and no stop order has been
issued with respect thereto and no proceedings therefor have been initiated
or, to the Company's best knowledge, threatened by the Commission. Except
as the context may otherwise require, such registration statement, as
amended or supplemented, on file with the Commission at the time the
registration statement became effective, including the Prospectus,
financial statements, schedules, exhibits and all other documents filed as
part thereof, as amended and supplemented, is herein called the
"Registration Statement," and the prospectus, as amended or supplemented,
on file with the Commission at the time the Registration Statement became
effective is herein called the "Prospectus," except that if any prospectus
filed by the Company with the Commission pursuant to Rule 424(b) of the
general rules and regulations of the Commission under the Securities Act
(together with the published policies and actions of the Commission
thereunder, the "Securities Act Regulations") differs from the form of
prospectus on file at the time the Registration Statement became effective,
the term "Prospectus" shall refer to the Rule 424(b) prospectus from and
after the time it is filed with or mailed for filing to the Commission and
shall include any amendments or supplements thereto from and after their
dates of effectiveness or use, respectively.
(ii) The Association has filed an Application for Approval of
Conversion on Form AC, including exhibits (as amended or supplemented, the
"Form AC" or the "Conversion Application") with the Office of Thrift
Supervision ("OTS") under the Home Owners' Loan Act, as amended ("HOLA"),
and the rules and regulations, including published policies and
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actions, of the OTS thereunder (collectively, the "OTS Regulations"), which
has been approved by the OTS; and the Prospectus and the proxy statement
for the solicitation of proxies from members for the special meeting to
approve the Plan ("Proxy Statement") included as part of the Form AC have
been approved for use by the OTS. No order has been issued by the OTS
preventing or suspending the use of the Prospectus or the Proxy Statement
and no action by or before the OTS revoking such approvals is pending or,
to the Association's best knowledge, threatened. The Company has filed with
the OTS the Company's application on Form H-e(1)-S ("Holding Company
Application") promulgated under the savings and loan holding company
provisions of the HOLA and the regulations promulgated thereunder and has
received approval of its acquisition of the Association from the OTS.
(iii) As of the date hereof (i) the Registration Statement and the
Prospectus complied with the Securities Act and the Securities Act
Regulations, (ii) the Registration Statement does 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 (iii) the
Prospectus does not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading. Representations or warranties in this
subsection shall not apply to statements or omissions made in reliance upon
and in conformity with written information furnished to the Company or the
Association by or on behalf of Trident relating to Trident expressly for
use in the Registration Statement or Prospectus.
(iv) The Company has been duly incorporated as a Delaware
corporation and the Association has been duly organized as a mutual savings
and loan association under the laws of the United States, and each of them
is validly existing and in good standing under the laws of their
jurisdiction of organization with full power and authority to own its
property and conduct its business as described in the Registration
Statement and Prospectus; the Association is a member in good standing of
the Federal Home Loan Bank of Atlanta; and the deposit accounts of the
Association are insured by the Savings Association Insurance Fund ("SAIF")
administered by the Federal Deposit Insurance Corporation ("FDIC") up to
the applicable legal limits. Upon consummation of the Conversion, the
Company will be qualified to transact business as a foreign corporation in
the State of South Carolina. Each of the Company and the Association is not
required to be qualified to do business as a foreign corporation in any
jurisdiction where non-qualification would have a material adverse effect
on the financial condition, operations, business, properties or assets of
the Company and the Association.
(v) The Association has good, marketable and insurable title to all
assets material to its business and to those assets described in the
Prospectus as owned by it, free and clear
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of all liens, charges, encumbrances or restrictions, except for liens for
taxes not yet due, except as described in the Prospectus and except as do
not in the aggregate have a material adverse effect upon the financial
condition, operations, business, properties or assets of the Association;
and all of the leases and subleases material to the financial condition,
operations, business, assets or properties of the Association, under which
it holds properties, including those described in the Prospectus, are in
full force and effect as described therein.
(vi) The Association has no direct or indirect subsidiaries.
(vii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary actions on the part of each of the
Company and the Association, and this Agreement is a valid and binding
obligation of each of the Company and the Association, enforceable in
accordance with its terms (except as the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, reorganization,
conservatorship, receivership or similar laws relating to or affecting the
enforcement of creditors' rights generally or the rights of creditors of
insured financial institutions and their holding companies, the accounts of
whose subsidiaries are insured by the FDIC, by general equity principles,
regardless of whether such enforceability is considered in a proceeding in
equity or at law, or laws relating to the safety and soundness of insured
depository institutions and their affiliates, and except to the extent that
the provisions of Sections 8 and 9 hereof may be unenforceable as against
public policy or by applicable law, including without limitation, Section
23A of the Federal Reserve Act, 12 U.S.C. Section 371c (("Section 23A")).
(viii) Except as referred to in the Prospectus, there is no litigation
or governmental proceeding pending or, to the best knowledge of the Company
or the Association, threatened against or involving the Company or the
Association, or any of their respective assets which individually or in the
aggregate would reasonably be expected to have a material adverse effect on
the financial condition, results of operations, business, assets or
properties of the Company or the Association. Any litigation or
governmental proceeding is not considered "threatened" unless the potential
litigation or governmental authority had manifested to the management of
the Company or the Association a present intention to initiate such
litigation or proceeding.
(ix) The Company and the Association have received the opinions of
Breyer & Aguggia with respect to the federal income tax consequences of the
Conversion, and of Deloitte & Touche LLP with respect to South Carolina
income tax consequences of the Conversion, to the effect that the
Conversion will constitute a tax-free reorganization under the Internal
Revenue Code of 1986, as amended, and will not be a taxable transaction for
the Association or the Company under the laws of South Carolina; and the
facts and representations made by the Company and the Association and
relied upon in rendering such
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opinions are accurate and complete, and neither the Company nor the
Association have taken any action inconsistent therewith.
(x) Neither the Company nor the Association is in violation of any
rule or regulation of the OTS or the FDIC that could reasonably be expected
to result in any enforcement action against the Company or the Association,
or their officers or directors, that might have a material adverse effect
on the financial condition, operations, businesses, assets or properties of
the Company and the Association, taken as a whole.
(xi) RP Financial, LC. ("RP Financial"), the firm that prepared the
independent appraisal dated as of November 28, 1997, is independent with
respect to the Company and the Association within the meaning of the OTS
Regulations. The Company and the Association believe RP Financial to be
experienced and expert in rendering appraisals of thrift institutions, and
nothing has come to the attention of the Company and the Association which
has caused them to believe that the appraisal by RP Financial was not
prepared in accordance with the requirements of the OTS Regulations.
(xii) Deloitte & Touche LLP, the firm that certified the financial
statements of the Association filed as part of the Registration Statement
and the Conversion Application, is independent with respect to the Company
and the Association as required by the Securities Act, the Securities Act
Regulations, the Code of Professional Ethics of the American Institute of
Certified Public Accountants, and Title 12 of the Code of Federal
Regulations Parts 563c and 571, and nothing has come to the attention of
the Company and the Association which has caused them to believe that such
firm is not independent within the meaning of such provisions.
(xiii) The financial statements and related notes which are included
in the Registration Statement and the Prospectus fairly present the
financial condition, earnings, equity and cash flows of the Association at
the respective dates thereof and for the respective periods covered thereby
and comply as to form with the applicable accounting requirements of the
Securities Act Regulations and the OTS Regulations. Such financial
statements have been prepared in accordance with generally accepted
accounting principles ("GAAP") consistently applied throughout the periods
involved, except as set forth therein, and such financial statements are
consistent with financial statements and other reports filed by the
Association with the OTS, except as GAAP may otherwise require. The
financial tables in the Prospectus accurately present the information
purported to be shown thereby at the respective dates thereof and for the
respective periods covered thereby.
(xiv) There has been no material change in the financial condition,
operations, business, assets or properties of the Company and the
Association, taken as a whole, since the latest date as of which such
condition is set forth in the Prospectus, except as set forth therein; and
the capitalization, assets, properties and business of each of the Company
and
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the Association conform in all material aspects to the descriptions thereof
contained in the Prospectus. Neither the Company nor the Association has
any material liabilities of any kind, contingent or otherwise, except as
set forth in the Prospectus.
(xv) There has been no breach or default (or the occurrence of any
event which, with notice or lapse of time or both, would constitute a
default) under, or creation or imposition of any lien, charge or other
encumbrance upon any of the properties or assets of the Company or the
Association pursuant to any of the terms, provisions or conditions of, any
agreement, contract, indenture, bond, debenture, note, instrument or
obligation to which the Company or the Association is a party or by which
any of them or any of their respective assets or properties may be bound or
is subject, or violation of any governmental license or permit or any
enforceable published law, administrative regulation or order or court
order, writ, injunction or decree, which breach, default, encumbrance or
violation would have a material adverse effect on the financial condition,
operations, business, assets or properties of the Company and the
Association, taken as a whole; all agreements which are material to the
financial condition, results of operations or business of the Company and
the Association, taken as a whole, are in full force and effect, and no
party to any such agreement has instituted or, to the best knowledge of the
Company and the Association, threatened any action or proceeding wherein
the Company or the Association would be alleged to be in default
thereunder.
(xvi) Neither the Company nor the Association is in violation of its
respective charter, certificate of incorporation or bylaws. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby by the Company and the Association do not conflict with
or result in a breach of the charter, certificate of incorporation or
bylaws of the Company or the Association (in either mutual or stock form)
or constitute a material breach of or default (or an event which, with
notice or lapse of time or both, would constitute a default) under, give
rise to any right of termination, cancellation or acceleration contained
in, or result in the creation or imposition of any lien, charge or other
encumbrance upon any of the properties or assets of the Company or the
Association pursuant to any of the terms, provisions or conditions of, any
material agreement, contract, indenture, bond, debenture, note, instrument
or obligation to which the Company or the Association is a party (other
than the establishment of a liquidation account pursuant to the Plan) or
violate any governmental license or permit or any law, administrative
regulation or order or court order, writ, injunction or decree (subject to
the satisfaction of certain conditions imposed by the OTS in connection
with its approval of the Conversion Application), which breach, default,
encumbrance or violation would have a material adverse effect on the
financial condition, operations or business of the Company and the
Association, taken as a whole.
(xvii) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, except as otherwise may
be indicated or
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contemplated therein, none of the Company or the Association has issued any
securities which will remain issued at the Closing Date or incurred any
liability or obligation, direct or contingent, or borrowed money, except
borrowings or liabilities in the ordinary course of business, or entered
into any other transaction not in the ordinary course of business and not
consistent with prior practices, which is material in light of the business
of the Company and the Association, taken as a whole.
(xviii) The issuance and the sale of the Shares of the Company have
been duly authorized by all necessary action of the Company and approved by
the OTS and, when issued in accordance with the terms of the Plan and paid
for, shall be validly issued, fully paid and nonassessable and shall
conform to the description thereof contained in the Prospectus; the
issuance of the Shares is not subject to preemptive rights, except as set
forth in the Prospectus; and good title to the Shares will be transferred
by the Company upon issuance thereof against payment therefor, free and
clear of all claims, encumbrances, security interests and liens against the
Company whatsoever. The issuance and sale of the capital stock of the
Association to the Company has been duly authorized by all necessary action
of the Association and the Company and all appropriate regulatory
authorities (subject to the satisfaction of various conditions imposed by
the OTS in connection with its approvals of the Conversion Application and
the Holding Company Application), and such capital stock, when issued in
accordance with the terms of the Plan, will be fully paid and nonassessable
and will conform in all material respects to the description thereof
contained in the Prospectus.
(xix) 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 such approvals as have been
obtained and except for the declaration of effectiveness of any required
post-effective amendment by the Commission and approval thereof by the OTS,
the issuance of the Association's Federal Stock Charter by the OTS and as
may be required under the "blue sky" or securities laws of various
jurisdictions.
(xx) All contracts and other documents required to be filed as
exhibits to the Registration Statement, the Conversion Application or the
Holding Company Application have been filed with the Commission or the OTS
or both, as the case may be.
(xxi) The Company and the Association have timely filed all required
federal, state and local franchise tax returns, and no deficiency has been
asserted with respect to such returns by any taxing authorities, and the
Company and the Association have paid all taxes that have become due and,
to the best of their knowledge, have made adequate reserves for accrued tax
liabilities, except where any failure to make such filings, payments and
reserves, or the assertion of such a deficiency, would not have a material
adverse effect on the financial condition or results of operations of the
Company and the Association, taken as a whole.
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(xxii) All of the loans represented as assets of the Association as
of the most recent date for which financial condition data is included in
the Prospectus meet or are exempt from all requirements of federal, state
or local law pertaining to lending, including without limitation truth in
lending (including the requirements of Regulation Z and 12 C.F.R. Part 226
and Section 563.99), real estate settlement procedures, consumer credit
protection, equal credit opportunity and all disclosure laws applicable to
such loans, except for violations which, if asserted, would not have a
material adverse effect on the Company, the Association and the Subsidiary,
taken as a whole.
(xxiii) The records of Eligible Account Holders, Supplemental Eligible
Account Holders and Other Members (as those terms are defined in the Plan)
delivered to Trident by the Association or its agent for use during the
Conversion have been reviewed by the Association and are believed to be
accurate, reliable and complete and Trident shall have no liability to any
person relating to the reliability, accuracy or completeness of such
records or for any denial or allocation of a subscription to purchase
shares to any person based upon such records.
(xxiv) Neither the Company nor the Association or, to the best
knowledge of the Company and the Association, the employees of the Company
or the Association, has made any payment of funds of the Company or the
Association prohibited by law, and no funds of the Company or the
Association have been set aside to be used for any payment prohibited by
law.
(xxv) To the best knowledge of the Company and the Association, the
Company and the Association are in compliance with all laws, rules and
regulations relating to environmental protection and neither the Company
nor the Association is subject to liability under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended,
or any similar law, except for violations which, if asserted, would not
have a material adverse effect on the Company and the Association, taken as
a whole. There are no actions, suits, regulatory investigations or other
proceedings pending or, to the best knowledge of the Company or the
Association, threatened against the Company or the Association relating to
environmental protection. To the best knowledge of the Company and the
Association, no disposal, release or discharge of hazardous or toxic
substances, pollutants or contaminants, including petroleum and gas
products, as any of such terms may be defined under federal, state or local
law, has been caused by the Company or the Association or, to the best
knowledge of the Company and the Association, and except as already
disclosed in the Prospectus, has occurred on, in or at any of the
facilities or properties owned or leased by the Company or the Association
or in which the Association has a security interest, except such disposal,
release or discharge which would not have a material adverse effect on the
financial condition, operations, business, assets or properties of the
Company and the Association, taken as a whole.
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(xxvi) All documents delivered by the Association or the Company or
their representatives in connection with the issuance and sale of the
Common Stock, except for those documents that were prepared by parties
other than the Association, the Company or their representatives, were, on
the dates on which they were delivered, true, complete and correct.
(b) Trident represents and warrants to the Company and the Association
that:
(i) Trident is registered as a broker-dealer and is in good
standing with the Commission and the NASD.
(ii) Trident is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation, with full corporate
power and authority to provide the services to be furnished to the Company
and the Association hereunder.
(iii) 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 Trident, and this
Agreement is a legal, valid and binding obligation of Trident, enforceable
in accordance with its terms (except as the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, reorganization or similar
laws relating to or affecting the enforcement of creditors' rights
generally or the rights of creditors of registered broker-dealers accounts
of whose may be protected by the Securities Investor Protection Corporation
or by general equity principles, regardless of whether such enforceability
is considered in a proceeding in equity or at law, and except to the extent
that the provisions of Sections 8 and 9 hereof may be unenforceable as
against public policy or pursuant to Section 23A).
(iv) Trident and, to Trident's best knowledge, its employees, agents
and representatives who shall perform any of the services required
hereunder to be performed by Trident, shall be duly authorized and shall
have all licenses, approvals and permits necessary to perform such
services, and Trident is a registered selling agent in the jurisdictions in
which the Company is relying on such registration for the sale of the
Shares, and will remain so registered until the Conversion is consummated
or terminated.
(v) The execution and delivery of this Agreement by Trident, the
fulfillment of the terms set forth herein and the consummation of the
transactions contemplated hereby shall not violate or conflict with the
charter or bylaws of Trident or violate, conflict with or constitute a
breach of, or default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, any material agreement, indenture
or other instrument by which Trident is bound or under any governmental
license or permit or any law, administrative regulation, authorization,
approval or order or court decree, injunction or order.
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(vi) All funds received by Trident to purchase Common Stock will be
handled in accordance with Rule 15c2-4 under the Securities Exchange Act of
1934, as amended ("Exchange Act").
(vii) No action or proceeding against Trident before the Commission,
the NASD, any state securities commission, or any state or federal court is
pending or, to Trident's best knowledge, threatened concerning Trident's
activities as a broker-dealer.
3. Employment of Trident; Sale and Delivery of the Shares. On the basis
------------------------------------------------------
of the representations and warranties herein contained, but subject to the terms
and conditions herein set forth, the Company and the Association hereby employ
Trident as their agent to utilize its best efforts to assist the Company with
the Company's sale of the Shares in the Offerings, and Trident hereby accepts
such employment. The employment of Trident hereunder shall terminate (a) forty-
five (45) days after the Subscription and Direct Community Offering closes,
unless the Company and the Association, with the approval of the OTS, are
permitted to extend such period of time, or (b) upon consummation of the
Conversion, whichever date shall first occur.
In the event the Company is unable to sell a minimum of 2,975,000 Shares
(or such lesser amount as the OTS may permit) within the period herein provided,
this Agreement shall terminate, and the Company and the Association shall refund
promptly to any persons who have subscribed for any of the Shares, the full
amount which it may have received from them, together with interest as provided
in the Prospectus, and no party to this Agreement shall have any obligation to
the other party hereunder, except as set forth in Sections 6, 8, 9 and 10
hereof. Appropriate arrangements for placing the funds received from
subscriptions for Shares in special interest-bearing accounts with the
Association until all Shares are sold and paid for will be made prior to the
commencement of the Subscription and Direct Community Offering, with provision
for prompt refund to the purchasers as set forth above, or for delivery to the
Company if all Shares are sold.
If all conditions precedent to the consummation of the Conversion are
satisfied, including the sale of all Shares required by the Plan to be sold, the
Company agrees to issue or have issued such Shares and to release for delivery
certificates to subscribers thereof for such Shares on or as soon as possible
following the Closing Date against payment to the Company by any means
authorized pursuant to the Prospectus, at the principal office of the Company,
000 X. Xxxx Xxxxxx, Xxxxxxx, Xxxxx Xxxxxxxx, or at such other place as shall be
agreed upon between the parties hereto. The date upon which the Company shall
release or deliver the Shares sold in the Offerings, in accordance with the
terms hereof, is herein called the "Closing Date."
Trident agrees either (a) upon receipt of an executed order form of a
subscriber to forward the offering price of the Common Stock ordered on or
before twelve noon on the next business day following receipt or execution of an
order form by Trident to the Association for deposit in a segregated account or
(b) to solicit indications of interest in which event (i) Trident will
subsequently contact any potential subscriber indicating interest to confirm the
interest and give
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instructions to execute and return an order form or to receive authorization to
execute the order form on the subscriber's behalf, (ii) Trident will mail
acknowledgements of receipt of orders to each subscriber confirming interest on
the business day following such confirmation, (iii) Trident will debit accounts
of such subscribers on the third business day ("debit date") following receipt
of the confirmation referred to in (i), and (iv) Trident will forward completed
order forms together with such funds to the Association on or before twelve noon
on the next business day following the debit date for deposit in a segregated
account. Trident acknowledges that if the procedure in (b) is adopted,
subscribers' funds are not required to be in their accounts until the debit
date.
Trident shall receive the following compensation and expense reimbursement
for its services hereunder:
(a) (i) A commission equal to one and one half percent (1.5%) of the
aggregate dollar amount of the Shares sold in the Subscription Offering and
Direct Community Offering (excluding Shares sold to the Association's
directors, executive officers, employees and all employee benefit plans
including the ESOP, and (ii) a commission to be agreed upon by Trident and
the Company for Shares sold by other member firms of the NASD through a
selected dealers arrangement in the Syndicated Community Offering, which
aggregate commission shall be determined at the discretion of the Company
and the Association with the advice of Trident. All such fees shall be
paid to Trident in next-day funds on the Closing Date.
(b) Reimbursement for reasonable out-of-pocket allocable expenses,
including but not limited to travel, food, lodging and legal fees, incurred
by it whether or not the Offerings are successfully completed; provided,
however, that reimbursable legal fees will not exceed $27,500 and that
other reimbursable expenses will not exceed $7,500, and, provided further,
that neither the Company nor the Association shall reimburse Trident for
any of the foregoing expenses accrued after Trident shall have notified the
Company or the Association of its election to terminate this Agreement
pursuant to Section 11 hereof or after such time as the Company or the
Association shall have given notice in accordance with Section 12 hereof
that Trident is in breach of this Agreement. Full reimbursement of Trident
shall be made in next-day funds on the Closing Date or, if the Conversion
is not completed and is terminated for any reason, within ten (10) business
days of receipt by the Company of a written request detailing allocable
expenses from Trident for reimbursement of such expenses. Trident
acknowledges receipt of a $7,500 advance payment from the Association,
which shall be credited against the total reimbursement due Trident
hereunder. In the event this Agreement is terminated pursuant to Section
11 hereof, Trident shall be reimbursed only for its actual allocable
expenses.
(c) Reimbursement for any expenses of the Company and the Association
set forth in Section 6 hereof to the extent paid by Trident on behalf of
the Company and the Association. Full reimbursement shall be made in next-
day funds on the Closing Date or,
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if the Conversion is not completed and is terminated for any reason, within
ten (10) business days of receipt by the Company and the Association of a
written request for such reimbursement detailing such reimbursements.
Notwithstanding the limitations on reimbursement of Trident for its
allocable expenses provided in subsection (b) above and notwithstanding any
reimbursement of Trident pursuant to subsection (c) above, in the event that a
resolicitation or other event causes the Offerings to be extended beyond their
original expiration date, Trident shall be reimbursed for its reasonable
allocable expenses incurred during such extended period, provided that the
allowance for allocable expenses provided for in subsection (b) above has been
exhausted and subject to the following: such reimbursement shall be in an
amount equal to the product obtained by dividing $35,000 (the reimbursable
expenses and legal fees limitation set forth in Section (b) above by the total
number of days of the unextended Subscription Offering (calculated from the date
of the Prospectus to the intended close of the Subscription Offering as stated
in the Prospectus) and multiplying such product by the number of days of the
extension (that number of days from the date of the supplemental prospectus used
in the extended Subscription Offering to the closing of the extension of the
Subscription Offering described in such supplemental prospectus).
4. Offering. Subject to the provisions of Section 7 hereof, Trident is
--------
assisting the Company on a best efforts basis in offering a minimum of 2,975,000
and a maximum of 4,025,000 Shares, subject to adjustment up to 4,628,750 Shares
(except as the OTS may permit to be decreased or increased) in the Offerings.
The Shares are to be offered to the public at the price set forth on the cover
page of the Prospectus and the first page of this Agreement.
5. Further Agreements. The Company and the Association jointly and
------------------
severally covenant and agree that:
(a) Subsequent to the respective dates as of which information is given in
the Registration Statement and Prospectus and through and including the Closing
Date, except as otherwise may be indicated or contemplated therein, neither the
Company nor the Association will issue any securities which will remain issued
at the Closing Date or incur any liability or obligation, direct or contingent,
or borrow money, except borrowings or liabilities in the ordinary course of
business, or enter into any other transaction not in the ordinary course of
business and consistent with prior practices, which is material in light of the
financial condition, operations, business, properties or assets of the Company
and the Association, taken as a whole.
(b) If any Shares remain unsubscribed following completion of the
Subscription Offering and the Direct Community Offering, the Company (i) will,
if deemed necessary, promptly file with the Commission a post-effective
amendment to such Registration Statement relating to the results of the
Subscription and the Community Offerings, any additional information with
respect to the proposed plan of distribution and any revised pricing information
or (ii) if no such post-effective amendment is required, will file with, or mail
for filing to, the Commission a prospectus or
Trident Securities, Inc.
Page 13
prospectus supplement containing information relating to the results of the
Subscription and Community Offerings and pricing information pursuant to Rule
424(c) of the Securities Act Regulations, in either case in a form reasonably
acceptable to the Company and Trident.
(c) Upon consummation of the Conversion, the authorized, issued and
outstanding equity capital of the Company shall be within the range as set forth
in the Prospectus under the caption "Capitalization," and no Common Stock of the
Company shall be outstanding immediately prior to the Closing Date (other than
shares of Common Stock issued in connection with the initial capitalization of
the Company, which shares will be canceled upon consummation of the Conversion);
and the certificates representing the Shares will conform in all material
respects with the requirements of applicable laws and OTS Regulations.
(d) At all times subsequent to the date of the Prospectus through and
including the Closing Date (i) the Registration Statement and the Prospectus
will comply with the Securities Act and the Securities Act Regulations, (ii) the
Registration Statement will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and (iii) the Prospectus will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Agreements in this
subsection shall not apply to statements or omissions made in reliance upon and
in conformity with written information furnished to the Company or the
Association relating to Trident by or on behalf of Trident expressly for use in
the Registration Statement or Prospectus.
(e) Upon amendment of the Association's charter and bylaws as provided in
the OTS Regulations and completion of the sale by the Company of the Shares as
contemplated by the Prospectus, (i) the Association will be converted pursuant
to the Plan to a federally chartered capital stock savings bank with full power
and authority to own its property and conduct its business as described in the
Prospectus, (ii) all of the authorized and outstanding capital stock of the
Association will be owned of record and beneficially by the Company, and (iii)
the Company will have no direct subsidiaries other than the Association.
(f) The Company shall deliver to Trident, from time to time, such number
of copies of the Prospectus as Trident reasonably may request. The Company
authorizes Trident to use the Prospectus in any lawful manner in connection with
the offer and sale of the Shares.
(g) The Company will notify Trident immediately, and confirm the notice in
writing, (i) when any post-effective amendment to the Registration Statement
becomes effective or any supplement to the Prospectus has been filed, (ii) of
the issuance by the Commission of any stop order relating to the Registration
Statement or of the initiation or the threat of any proceedings for that
purpose, (iii) of the receipt of any notice with respect to the suspension of
the qualification of the Shares for offering or sale in any jurisdiction, and
(iv) of the receipt of any comments from the staff
Trident Securities, Inc.
Page 14
of the Commission relating to the Registration Statement. If the Commission
enters a stop order relating to the Registration Statement at any time, the
Company will make every reasonable effort to obtain the lifting of such order at
the earliest possible moment.
(h) During the time when a prospectus is required to be delivered under
the Securities Act, the Company will comply with all requirements imposed upon
it by the Securities Act and by the Securities Act Regulations to permit the
continuance of offers and sales of or dealings in the Shares in accordance with
the provisions hereof and the Prospectus. If during the period when the
Prospectus is required to be delivered in connection with the offer and sale of
the Shares any event relating to or affecting the Company and the Association,
taken as a whole, shall occur as a result of which it is necessary, in the
reasonable opinion of counsel for Trident, to amend or supplement the Prospectus
in order to make the Prospectus not false or misleading in light of the
circumstances existing at the time it is delivered to a purchaser of the Shares,
the Company forthwith shall prepare and furnish to Trident a reasonable number
of copies of an amendment or amendments or of a supplement or supplements to the
Prospectus (in form and substance reasonably satisfactory to counsel for
Trident) which shall amend or supplement the Prospectus so that, as amended or
supplemented, the Prospectus shall not contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances existing at the time the Prospectus is
delivered to a purchaser of the Shares, not misleading. The Company will not
file or use any amendment or supplement to the Registration Statement or the
Prospectus unless Trident has been first furnished a copy or if Trident shall
reasonably object after having been furnished such copy. For the purposes of
this subsection the Company and the Association shall furnish such information
with respect to themselves as Trident from time to time may reasonably request.
(i) The Company and the Association will take all reasonably necessary
action as may be required to qualify or register the Shares for offer and sale
by the Company under the securities or blue sky laws of such jurisdictions as
Trident and the Company or its counsel may agree upon; provided, however, that
the Company shall not be obligated to qualify as a foreign corporation to do
business under the laws of any such jurisdiction. In each jurisdiction where
such qualification or registration shall be effected, the Company, unless
Trident agrees that such action is not necessary or advisable in connection with
the distribution of the Shares, shall file and make such statements or reports
as are, or reasonably may be, required by the laws of such jurisdiction.
(j) Appropriate entries will be made in the financial records of the
Association to establish a liquidation account for the benefit of Eligible
Account Holders and Supplemental Eligible Account Holders (as those terms are
defined in the Plan) in accordance with the OTS Regulations.
(k) The Company will file a registration statement for the Common Stock
under Section 12(g) of the Exchange Act prior to completion of the Offerings
pursuant to the Plan and shall request that such registration statement be
effective upon completion of the Conversion. The Company shall
Trident Securities, Inc.
Page 15
maintain the effectiveness of such registration for a minimum period of three
years or for such shorter period as may be required by applicable law.
(l) The Company will make generally available to its security holders as
soon as practicable, but not later than 90 days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 of the Securities Act Regulations) covering a twelve-month period
beginning not later than the first day of the Company's fiscal quarter next
following the effective date (as defined in said Rule 158) of the Registration
Statement.
(m) For a period of three (3) years from the date of this Agreement, the
Company will furnish to Trident, as soon as publicly available after the end of
each fiscal year, a copy of its annual report to shareholders for such year; and
the Company will furnish to Trident (i) as soon as publicly available, a copy of
each report or definitive proxy statement of the Company filed with the
Commission under the Exchange Act or mailed to shareholders, and (ii) from time
to time, such other public information concerning the Company as Trident may
reasonably request.
(n) The Company shall use the net proceeds from the sale of the Shares in
the manner set forth in the Prospectus.
(o) The Company shall not deliver the Shares until each and every
condition set forth in Section 7 hereof has been satisfied, unless such
condition is waived in writing by Trident.
(p) The Company after consultation with Trident, shall make all
determinations, if necessary, as to the allocation of deposits, in the case of
Eligible Account Holders and Supplemental Eligible Account Holders, and votes,
in the case of Other Members, and of the Shares in the event of an
oversubscription, and shall provide Trident final instructions as to the
allocation of the Shares ("Allocation Instructions") in such event and the
Allocation Instructions shall be accurate, reliable and complete. Trident shall
be entitled to rely on the Allocation Instructions and shall have no liability
in respect of its reliance thereon, including without limitation, no liability
for or related to any denial or grant of a subscription in whole or in part.
(q) The Company and the Association will take such actions and furnish
such information as are reasonably requested by Trident in order for Trident to
comply with the NASD's "Interpretation Relating to Free-Riding and Withholding."
(r) At the Closing Date, the Company and the Association will have
completed the conditions precedent to, and shall have conducted the Conversion
in all material respects in accordance with, the Plan, OTS Regulations and all
other applicable laws, regulations, published decisions and orders, including
all terms, conditions, requirements and provisions precedent to the Conversion
imposed by the OTS.
Trident Securities, Inc.
Page 16
(s) The Company will use its best efforts to obtain approval for and
maintain quotation of its shares of common stock on the Nasdaq stock market
effective on or prior to the Closing Date.
6. Payment of Expenses. Subject to Section 3(c) hereof, whether or not
-------------------
the Conversion is consummated, the Company and the Association shall pay the
following expenses: (a) all regulatory filing fees, including but not limited to
those payable to the Commission, OTS, "blue sky" authorities and the NASD
(including fees payable to the NASD for Trident's filing pursuant to the NASD
Corporate Finance Rule), (b) all stock issue and transfer taxes which may be
payable with respect to the sale of the Shares, (c) attorneys' fees of the
Company and the Association, (d) attorneys' fees relating to any required "blue
sky" laws research and filings, (e) telephone charges, (f) air freight, (g)
rental equipment, (h) supplies, (i) transfer agent and registrar fees and
expenses, (j) auditing and accounting fees and expenses, (k) costs of printing
and mailing all documents necessary in connection with the Conversion, and (l)
slide production expenses in connection with any community investor meetings to
be held by Trident.
7. Conditions of Trident's Obligations. Except as may be waived in
-----------------------------------
writing by Trident, the obligations of Trident as provided herein shall be
subject to the accuracy of the representations and warranties contained in
Section 2 hereof as of the date hereof and as of the Closing Date, to the
performance by the Company and the Association of their obligations hereunder,
and to the following conditions:
(a) At the Closing Date, Trident shall receive the favorable opinion
of Breyer & Aguggia, special counsel for the Company and the Association,
dated the Closing Date, addressed to Trident, in form and substance
reasonably satisfactory to counsel for Trident and stating that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, and the Association is validly existing in good standing
as a mutual savings and loan association under the laws of the United
States, each with full power and authority to own its properties and
conduct its business as described in the Prospectus;
(ii) the Association is a member of the Federal Home Loan Bank
of Atlanta, and the deposit accounts of the Association are insured by
the SAIF up to the applicable legal limits, and no action or
proceeding to suspend or revoke such membership or insurance coverage
is pending or, to such counsel's Actual Knowledge, threatened;
(iii) the activities of the Association as described in the
Prospectus are permitted under the HOLA and OTS Regulations;
Trident Securities, Inc.
Page 17
(iv) to such counsel's actual knowledge, the Association has no
direct or indirect subsidiary corporations;
(v) the Company and the Association are each duly qualified to
do business and are in good standing as a foreign corporation in each
jurisdiction where the ownership or leasing of its properties or the
conduct of its business requires such qualification, unless the
failure to be so qualified would not have a material adverse effect on
the Company and the Association, taken as a whole.
(vi) to such counsel's Actual Knowledge, the Association has
obtained all licenses, permits and other governmental authorizations
required for the conduct of its business as described in the
Prospectus, except where the failure to obtain such licenses, permits
or governmental authorizations would not have a material adverse
effect on the financial condition, operations, business, properties or
assets of the Company and the Association, taken as a whole; to such
counsel's Actual Knowledge, all of the leases and subleases material
to the business of the Association under which the Association holds
properties are in full force and effect; to such counsel's Actual
Knowledge, the Association is not in violation of its charter or
bylaws;
(vii) the Plan has been duly adopted and approved by the Boards
of Directors of the Association and the Company and the members of the
Association; the Plan complies with, and to such counsel's Actual
Knowledge, the Conversion has been effected in all material respects
in accordance with, the HOLA and the OTS Regulations and applicable
OTS approvals issued thereunder; to such counsel's Actual Knowledge,
all of the terms, conditions, requirements and provisions with respect
to the Plan and the Conversion imposed by the OTS, except with respect
to the Conversion Application (which is covered by opinion (xix)
below) and the filing or submission of certain required post-
Conversion reports or other materials by the Company or the
Association, have been complied with by the Company and the
Association; and, to such counsel's Actual Knowledge, no person has
sought to obtain regulatory or judicial review of the final action of
the OTS in approving the Plan;
(viii) the Company has authorized Common Stock as set forth in
the Registration Statement and the Prospectus, and the description
thereof in the Registration Statement and the Prospectus is accurate
and complete in all material respects;
(ix) the issuance and sale of the Shares have been duly and
validly authorized by all necessary corporate action on the part of
the Company; the Shares, upon receipt of consideration and issuance in
accordance with the terms of the Plan
Trident Securities, Inc.
Page 18
and this Agreement, will be validly issued, fully paid, nonassessable
and, except as disclosed in the Prospectus, free of preemptive rights,
and good title thereto shall be transferred by the Company free and
clear of all claims, encumbrances, security interests and liens
created by the Company;
(x) the certificates for the Shares are in due and proper form
and comply in all material respects with applicable Delaware law and
OTS Regulations;
(xi) the issuance and sale of the capital stock of the
Association to the Company have been duly authorized by all necessary
corporate action of the Association and the Company and have received
the approval of the OTS, and such capital stock, upon receipt of
payment and issuance in accordance with the terms of the Plan, will be
validly issued, fully paid and nonassessable;
(xii) subject to the satisfaction of the conditions to the OTS
approval of the Conversion Application and the Holding Company
Application, no further approval, authorization, consent or other
order of any regulatory agency is required in connection with the
execution and delivery of this Agreement, the issuance and sale of the
Shares and the consummation of the Conversion, except with respect to
the issuance to the Association's Federal Stock Charter by the OTS,
and except as may be required under the "blue sky" securities laws of
various jurisdictions and the regulations of the NASD (as to which no
opinion need be rendered);
(xiii) the execution and delivery of this Agreement and the
consummation of the Conversion have been duly and validly authorized
by all necessary corporate action on the part of each of the Company
and the Association; and this Agreement is a legal, valid and binding
obligation of each of the Company and the Association, enforceable in
accordance with its terms (except as the enforceability thereof may be
limited by (i) bankruptcy, insolvency, moratorium, reorganization,
receivership, conservatorship or other similar laws relating to or
affecting the enforcement of creditors' rights generally or the rights
of creditors of depository institutions whose accounts are insured by
the FDIC or savings and loan holding companies the accounts of whose
subsidiaries are insured by the FDIC; (ii) general equity principles,
regardless of whether such enforceability is considered in a
proceeding in equity or at law, or (iii) laws relating to the safety
and soundness of insured depository institutions and their affiliates,
and except to the extent that the provisions of Sections 8 and 9
hereof may be unenforceable as against public policy or applicable
law, including but not limited to, Section 23A of the Federal Reserve
Act, as amended);
(xiv) except as set forth in the Prospectus, there are no legal
or governmental proceedings pending or, to such counsel's Actual
Knowledge,
Trident Securities, Inc.
Page 19
threatened against or involving the assets of the Company or the
Association which would have a material adverse effect on the Company
and the Association, taken as a whole (provided that for this purpose
such counsel need not regard any litigation or governmental procedure
to be "threatened" unless the potential litigant or government
authority has manifested to the management of the Company or the
Association, or to such counsel, a present intention to initiate such
litigation or proceeding);
(xv) the statements in the Prospectus under the captions
"Regulation," "Taxation," "Dividend Policy," "Restrictions on
Acquisition of the Holding Company" and "Description of Capital Stock
of the Holding Company," insofar as they are, or refer to, statements
of federal law or legal conclusions (excluding financial or
statistical data or stock valuation information included therein, as
to which an opinion need not be expressed), have been prepared or
reviewed by such counsel and are accurate and complete in all material
respects;
(xvi) the Form AC has been approved by the OTS, and the
Prospectus and the Proxy Statement have been authorized for use by the
OTS; the Registration Statement has been declared effective by the
Commission; and no proceedings are pending by or before the Commission
or the OTS seeking to revoke or rescind the orders declaring the
Registration Statement effective or approving the Conversion
Application or, to such counsel's Actual Knowledge, are contemplated
or threatened (provided that for this purpose such counsel need not
regard any litigation or governmental procedure to be "threatened"
unless the potential litigant or government authority has manifested
to the management of the Company or the Association, or to such
counsel, a present intention to initiate such litigation or
proceeding);
(xvii) the execution and delivery of this Agreement and the
consummation of the Conversion by the Company and the Association do
not conflict with or result in a breach of the charter, certificate of
incorporation or bylaws of the Company or the Association (in either
mutual or stock form), or, to such counsel's Actual Knowledge,
constitute a breach of or default (or an event which, with notice or
lapse of time or both, would constitute a default) under, give rise to
any right of termination, cancellation or acceleration contained in,
or result in the creation or imposition of any lien, charge or other
encumbrance upon any of the properties or assets of the Company or the
Association pursuant to any of the terms, provisions or conditions of,
any material agreement, contract, indenture, bond, debenture, note,
instrument or obligation to which the Company or the Association is a
party (other than the establishment of the liquidation account
pursuant to the Plan) or violate any governmental license or permit or
any enforceable published law, administrative regulation or order or
court order, writ, injunction or decree (subject to the
Trident Securities, Inc.
Page 20
satisfaction of certain conditions imposed by the OTS in connection
with its approval of the Conversion Application and the Holding
Company Application), which breach, default, encumbrance or violation
would have a material adverse effect on the financial condition,
operations, business, assets or properties of the Company and the
Association taken as a whole;
(xviii) to such counsel's Actual Knowledge, there has been no
breach of any provision of the Company's or the Association's charter,
certificate of incorporation or bylaws or breach or default (or the
occurrence of any event which, with notice or lapse of time or both,
would constitute a default) by the Company or the Association under
any agreement, contract, indenture, bond, debenture, note, instrument
or obligation to which the Company or the Association is a party or by
which any of them or any of their respective assets or properties may
be bound, which breach or default would have a material adverse effect
on the financial condition, operations, business, assets or properties
of the Company and the Association, taken as a whole;
(xix) at the time the Conversion Application was approved by
the OTS and the Registration Statement was declared effective by the
Commission, the Conversion Application and the Registration Statement
(including the Prospectus and the Proxy Statement contained therein),
complied as to form in all material respects with the requirements of
the Securities Act, the HOLA, the Securities Act Regulations and the
OTS Regulations, as the case may be (except as to information provided
in writing by Trident with respect to Trident included therein and
financial statements, notes to financial statements, financial tables
and other financial and statistical data and stock valuation
information included therein, as to which no opinion need be
rendered); to such counsel's Actual Knowledge, all documents and
exhibits required to be filed with the Conversion Application and the
Registration Statement have been so filed; and the descriptions in the
Conversion Application and the Registration Statement of such
documents and exhibits are accurate and complete in all material
respects; and
(xx) upon the effectiveness of the Association's stock
charter and bylaws in accordance with applicable regulations and
completion of the sale by the Company of the Shares as contemplated by
the Prospectus and the Plan, (i) the Association will be converted to
a permanent capital stock savings bank under the laws of the United
States with full power and authority to own its property and conduct
its business as described in the Prospectus, and (ii) all of the
outstanding capital stock of the Association will be owned of record
and, to such counsel's Actual Knowledge, beneficially by the Company,
free and clear of all liens, charges, encumbrances and restrictions.
Trident Securities, Inc.
Page 21
In rendering such opinions, such counsel may rely as to certain
matters of fact on certificates of executive officers and directors of the
Company and the Association and certificates of public officials delivered
pursuant hereto. Such counsel may assume that any agreement is the valid
and binding obligation of any parties to such agreement other than the
Company and the Association. The opinion of Breyer & Aguggia shall cover
matters governed by federal law and, Delaware General Corporation Law and,
the laws of the state of South Carolina. With respect to matters of South
Carolina law, such counsel may rely on the Opinion of qualified local
counsel, which opinion shall be in form and substance satisfactory to
Trident and its counsel. The opinion of Breyer & Aguggia shall be governed
by, and interpreted in accordance with, the Legal Opinion Accord ("Accord")
of the ABA Section of Business Law (1991), and, as a consequence,
references in such opinion to such counsel's "Actual Knowledge" shall be as
such term is defined in the Accord (or knowledge based on certificates).
For purposes of such opinion, no proceeding shall be deemed to be pending,
no order or stop order shall be deemed to be issued, and no action shall be
deemed to be instituted unless, in each case, a director or executive
officer of the Company or the Association, or its counsel, shall have
received a copy of such proceeding, order, stop order or action. Such
opinion may be limited to statutes, regulations and judicial
interpretations and to facts as they exist as of the date of such opinions.
In rendering such opinion, such counsel need assume no obligation to revise
or supplement it should such statutes, regulations and judicial
interpretations be changed by legislative or regulatory action, judicial
decision or otherwise. 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 execution and delivery by the
Company and the Association of this Agreement or the issuance of the
Shares.
(b) At the Closing Date, Trident shall receive the letter of Breyer
& Aguggia, special counsel for the Company and the Association, dated the
Closing Date, addressed to Trident, in form and substance reasonably
satisfactory to counsel for Trident and to the effect that: (i) based on
such counsel's participation in conferences with representatives of the
Company, the Association, its counsel, the independent appraiser, the
independent certified public accountants, Trident and its counsel, review
of documents and applicable law (including the requirements of Form S-1)
and the experience such counsel has gained in its practice under the
Securities Act (relying as to factual matters on certificates of officers
and other written factual representations by the Company and the
Association), nothing has come to such counsel's attention that would lead
it to believe that the Registration Statement, as amended or supplemented
(except as to information in respect of Trident contained therein and
except as to the financial statements, notes to financial statements,
financial tables and other financial and statistical data and stock
valuation information contained therein, as to which such counsel need
express no view), at the time it became effective contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated
Trident Securities, Inc.
Page 22
therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading, and that the
Prospectus, as amended or supplemented (except as to information in respect
of Trident contained therein and except as to financial statements, notes
to financial statements, financial tables and other financial and
statistical data and stock valuation information contained therein as to
which such counsel need express no view), at the time the Prospectus was
filed with the Commission under Rule 424(b) of the Securities Act
regulations and at the Closing Date, contained any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading (in issuing such letter, such counsel may indicate
that it has not confirmed the accuracy or completeness of or otherwise
verified the factual information contained in the Registration Statement or
the Prospectus and that it does not assume any responsibility for the
accuracy or completeness thereof.)
(c) Counsel for Trident shall have been furnished such documents as
they reasonably may require for the purpose of enabling them to review or
pass upon the sale of the Shares as herein contemplated and related
proceedings, and for the purpose of evidencing the accuracy, completeness
or satisfaction of any of the representations, warranties or conditions
herein contained, including but not limited to, resolutions of the Board of
Directors of the Company and the Association regarding the authorization of
this Agreement and the transactions contemplated hereby.
(d) Prior to and at the Closing Date, in the reasonable opinion of
Trident, (i) there shall have been no material adverse change in the
financial condition, business, operations, assets or properties of the
Company and the Association, taken as a whole, since the latest date as of
which such condition is set forth in the Prospectus, except as referred to
or contemplated therein; (ii) there shall have been no transaction entered
into by the Company or the Association after the latest date as of which
the financial condition of the Company or the Association is set forth in
the Prospectus other than transactions referred to or contemplated therein,
transactions in the ordinary course of business, and transactions which are
not material to the Company and the Association, taken as a whole; (iii)
none of the Company or the Association shall have received from the OTS or
Commission any directive (oral or written) to make any change in the method
of conducting their respective businesses which is material to the business
of the Company and the Association, taken as a whole, with which they have
not complied; (iv) no action, suit or proceeding, at law or in equity or
before or by any federal or state commission, board or other administrative
agency, shall be pending or threatened against the Company or the
Association or affecting any of their respective assets, wherein an
unfavorable decision, ruling or finding would have a material adverse
effect on the business, operations, financial condition or income of the
Company and the Association, taken as a whole; and (v) the Shares shall
have been qualified or registered for offering and sale by the Company
under the securities or "blue sky" laws of such jurisdictions as Trident
and the Company shall have agreed upon.
Trident Securities, Inc.
Page 23
(e) At the Closing Date, Trident shall receive a certificate of the
principal executive officer and the principal financial officer of each of
the Company and the Association, dated the Closing Date, to the effect
that: (i) they have examined the Prospectus and, the Prospectus does 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 with respect to
the Company or the Association; (ii) since the date the Prospectus became
authorized for final use, no event has occurred which should have been set
forth in an amendment or supplement to the Prospectus which has not been so
set forth, including specifically, but without limitation, any material
adverse change in the business, financial condition, operations, assets or
properties of the Company or the Association and, the conditions set forth
in clauses (ii) through (iv) inclusive of subsection (d) of this Section 7
have been satisfied; (iii) no order has been issued by the Commission or
the OTS to suspend the Offerings or the effectiveness of the Prospectus,
and, to the best knowledge of such officers, no action for such purposes
has been instituted or threatened by the Commission or the OTS; (iv) to the
best knowledge of such officers, no person has sought to obtain review of
the final actions of the OTS approving the Plan; and (v) all of the
representations and warranties contained in Section 2 of this Agreement are
true and correct, with the same force and effect as though expressly made
on the Closing Date.
(f) At the Closing Date, Trident shall receive, among other
documents, (i) copies of the letters from the OTS authorizing the use of
the Prospectus and the Proxy Statement, (ii) a copy of the order of the
Commission declaring the Registration Statement effective; (iii) copy of
the certificate from the OTS evidencing the corporate existence of the
Association; (iv) copy of the certificate from the FDIC evidencing the
insured status of the Association, (v) a copy of the letter from the
appropriate Delaware authority evidencing the incorporation (and, if
generally available from such authority, good standing) of the Company;
(vi) a copy of the Company's certificate of incorporation certified by the
appropriate Delaware governmental authority; and, (vii) if available, a
copy of the letter from the OTS approving the Association's Federal Stock
Charter.
(g) As soon as available after the Closing Date, Trident shall
receive a certified copy of the Association's Federal Stock Charter as
executed by the OTS.
(h) Concurrently with the execution of this Agreement, Trident
acknowledges receipt of a letter from Deloitte & Touche LLP, independent
certified public accountants, addressed to Trident and the Company, in
substance and form reasonably satisfactory to counsel for Trident, with
respect to the consolidated financial statements of the Association and
certain financial information contained in the Prospectus.
(i) At the Closing Date, Trident shall receive a letter in form and
substance reasonably satisfactory to counsel for Trident from Deloitte &
Touche LLP, independent
Trident Securities, Inc.
Page 24
certified public accountants, dated the Closing Date and addressed to
Trident and the Company, confirming the statements made by them in the
letter delivered by them pursuant to the preceding subsection as of a
specified date not more than five (5) days prior to the Closing Date.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are, in the reasonable
opinion of Trident and its counsel, satisfactory to Trident and its counsel.
Any certificates signed by an officer or director of the Company or the
Association prepared for Trident's reliance and delivered to Trident or to
counsel for Trident shall be deemed a representation and warranty by the Company
and the Association to Trident as to the statements made therein. If any
condition to Trident's obligations hereunder to be fulfilled prior to or at the
Closing Date is not so fulfilled, Trident may terminate this Agreement or, if
Trident so elects, may waive in writing any such conditions which have not been
fulfilled, or may extend the time of their fulfillment.
8. Indemnification.
---------------
(a) The Company and the Association jointly and severally agree to
indemnify and hold harmless Trident, its officers, directors and employees and
each person, if any, who controls Trident within the meaning of Section 15 of
the Securities Act or Section 20(a) of the Exchange Act, against any and all
loss, liability, claim, damage and expense whatsoever and shall further promptly
reimburse such persons for any legal or other expenses reasonably incurred by
each or any of them in investigating, preparing to defend or defending against
any action, proceeding or claim (whether commenced or threatened) arising out of
or based upon (A) any untrue or alleged untrue statement of a material fact or
the omission or alleged omission of a material fact required to be stated or
necessary to make the statements, in light of the circumstances under which they
were made, not misleading in (i) the Registration Statement or the Prospectus or
(ii) any application (including the Form AC) or other document or communication
(in this Section 8 collectively called "Application") prepared or executed by or
on behalf of the Company, the Association or based upon written information
furnished by or on behalf of the Company or the Association, filed in any
jurisdiction to register or qualify the Shares under the securities laws thereof
or filed with the OTS or Commission with respect to the offering of the Shares,
unless such statement or omission was made in reliance upon and in conformity
with information furnished in writing to the Company or the Association with
respect to Trident by or on behalf of Trident expressly for use in the
Prospectus or any amendment or supplement thereof or in any Application, as the
case may be, or (B) the Conversion or other actions taken by Trident where
acting as an agent of the Company or the Association; provided, however, that
such indemnification shall be unavailable if such action, proceeding or claim
arises as a result of Trident's gross negligence, bad faith or willful
misconduct.
(b) The Company shall indemnify and hold Trident harmless for any
liability whatsoever arising out of (i) the Allocation Instructions or (ii) any
records of Eligible Account Holders,
Trident Securities, Inc.
Page 25
Supplemental Eligible Account Holders and Other Members (as those terms are
defined in the Plan) delivered to Trident by the Association or its agents for
use during the Conversion.
(c) Trident agrees to indemnify and hold harmless the Company and the
Association, their officers, directors and employees and each person, if any,
who controls the Company and the Association within the meaning of Section 15 of
the Securities Act or Section 20(a) of the Exchange Act, to the same extent as
the foregoing indemnity from the Company and the Association to Trident, but
only with respect to statements or omissions, if any, made in the Prospectus or
any amendment or supplement thereof, in any Application or to a purchaser of the
Shares in reliance upon, and in conformity with, information furnished in
writing to the Company or the Association with respect to Trident by or on
behalf of Trident expressly for use in the Prospectus or any amendment or
supplement thereof or in any Application.
(d) Promptly after receipt by an indemnified party under this Section 8 of
notice of any action, proceeding or claim (whether commenced or threatened) such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party of such
action, proceeding or claim; but the omission so to notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party otherwise than under this Section 8. In case any such action
is brought against any indemnified party, and it notifies the indemnifying party
of the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with the other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section 8 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than the
reasonable cost of investigation except as otherwise provided herein. In the
event the indemnifying party elects to assume the defense of any such action and
retain counsel acceptable to the indemnified party, the indemnified party may
retain additional counsel, but shall bear the fees and expenses of such counsel
unless (i) the indemnifying party shall have specifically authorized the
indemnified party to retain such counsel or (ii) the parties to such suit
include such indemnifying party and the indemnified party, and such indemnified
party shall have been advised by counsel that one or more material legal
defenses may be available to the indemnified party which may not be available to
the indemnifying party, in which case the indemnifying party shall not be
entitled to assume the defense of such suit notwithstanding the indemnifying
party's obligation to bear the fees and expenses of such counsel. 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 all indemnified parties in connection with any one action,
proceeding, claim or suit or separate but similar or related actions,
proceedings or claims in the same jurisdiction arising out of the same general
allegations or circumstances. An indemnifying party against whom indemnity may
be sought shall not be liable to indemnify an indemnified party under this
Section 8 if any settlement of any such action is effected without such
indemnifying party's consent. To the extent applicable, this Section 8 is
Trident Securities, Inc.
Page 26
subject to and limited by public policy and the provisions of applicable law,
including but not limited to, Section 23A.
9. Contribution. In order to provide for just and equitable contribution
------------
in circumstances in which the indemnity agreement provided for in Section 8
above is for any reason held to be unavailable to Trident, the Company and/or
the Association other than in accordance with its terms, the Company and the
Association or Trident shall contribute to the aggregate losses, liabilities,
claims, damages, and expenses of the nature contemplated by said indemnity
agreement incurred by the Company and the Association or Trident (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Association on the one hand and Trident on the other from the
offering of the Shares or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above, but also the
relative fault of the Company or the Association on the one hand and Trident on
the other hand in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or judgments, as well as any other
relevant equitable considerations. The relative benefits received by the
Company and the Association on the one hand and Trident on the other shall be
deemed to be in the same proportion as the total net proceeds from the
Conversion received by the Company and the Association bear to the total fees
received by Trident under this Agreement. The relative fault of the Company or
the Association on the one hand and Trident on the other 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 or the Association or by Trident
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the Association and Trident 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 account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities or judgments referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
the indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 9, Trident
shall not be required to contribute any amount in excess of the amount by which
fees owed Trident pursuant to this Agreement exceeds the amount of any damages
which Trident has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation. To the extent applicable, this
Section 9 is subject to and limited by public policy and the provisions of
applicable law, including but not limited to, Section 23A.
Trident Securities, Inc.
Page 27
10. Survival of Agreements, Representations and Indemnities. The
--------------------------------------------------------
respective indemnities of the Company and the Association and Trident and the
representation and warranties of the Company and the Association and of Trident
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 Trident or the Company or the Association
or any controlling person or indemnified party referred to in Section 8 hereof,
and shall survive any termination or consummation of this Agreement and/or the
issuance of the Shares, and any legal representative of Trident, the Company,
the Association and any such controlling persons shall be entitled to the
benefit of the respective agreements, indemnities, warranties and
representations.
11. Termination. Trident may terminate this Agreement by giving the
-----------
notice indicated below in this Section at any time after this Agreement becomes
effective as follows:
(a) If any domestic or international event or act or occurrence has
materially disrupted the United States securities markets such as to make it, in
Trident's reasonable opinion, impracticable to proceed with the offering of the
Shares; or if trading on the New York Stock Exchange shall have suspended; or if
the United States shall have become involved in a war or major hostilities; or
if a general banking moratorium has been declared by a state or federal
authority which has material effect on the Association or the Conversion; or if
a moratorium in foreign exchange trading by major international banks or persons
has been declared; or if there shall have been a material change in the
capitalization, condition or business of the Company, or if the Association
shall have sustained a material or substantial loss by fire, flood, accident,
hurricane, earthquake, theft, sabotage or other calamity or malicious act,
whether or not said loss shall have been insured; or if there shall have been a
material change in the condition or prospects of the Company or the Association.
(b) Any party hereto may terminate this Agreement by giving notice
pursuant to Section 12 hereof of a material breach of this Agreement by the
other party at any time after this Agreement becomes effective.
(c) If this Agreement is terminated as provided in this Section 11, the
party terminating this Agreement shall notify the non-terminating party promptly
by telephone or telegram, confirmed by letter.
(d) If this Agreement is terminated by Trident for any of the reasons set
forth in subsection (a) above, and to fulfill its obligations, if any, pursuant
to Sections 3, 6, 8(a) and 9 of this Agreement and upon demand, the Company and
the Association shall pay Trident the full amount so owing thereunder.
(e) The Association may terminate the Conversion in accordance with the
terms of the Plan. Such termination shall be without liability to any party,
except that the Company and the Association shall be required to fulfill their
obligations pursuant to Sections 3(b), 3(c), 6, 8(a), 9 and 10 of this
Agreement.
Trident Securities, Inc.
Page 28
12. Notices. All communications hereunder, except as herein otherwise
-------
specifically provided, shall be in writing and if sent to Trident shall be
mailed, delivered or telegraphed and confirmed to Trident Securities, Inc., 0000
Xxx Xxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxx Xxxxxxxx 00000, Attention: Mr. R. Xxx
Xxxxxxx, Xx. (with a copy to Xxxx Xxxxxx Xxxxxx Xxxxxxxx & Xxxxxx, 0000
Xxxxxxxxx Xxxxxx, X.X., Xxxxx 000, Xxxxxxxxxx, X.X. 00000, Attention: Xxxxxx X.
Xxxxxxx, Esquire) and if sent to the Company or the Association, shall be
mailed, delivered or telegraphed and confirmed to Heritage Bancorp, Inc. or
Heritage Federal Savings & Loan Association, 000 X. Xxxx Xxxxxx, Xxxxxxx, Xxxxx
Xxxxxxxx 00000, Attention: J. Xxxxxx Xxxxx, President (with a copy to Breyer &
Aguggia, 0000 X Xxxxxx, X.X., Xxxxx 000 Xxxx, Xxxxxxxxxx, X.X. 00000, Attention
Xxxx X. Xxxxxxx, Esquire).
13. Parties. This Agreement shall inure solely to the benefit of, and
-------
shall be binding upon, Trident, the Company, the Association and the controlling
and other persons referred to in Section 8 hereof, 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.
14. Construction. Unless preempted by federal law, this Agreement shall
------------
be governed by and construed in accordance with the substantive laws of North
Carolina.
15. Counterparts. This Agreement may be executed in separate
------------
counterparts, each of which when so executed and delivered shall be an original,
but all of which together shall constitute but one and the same instrument.
Trident Securities, Inc.
Page 29
Please acknowledge your agreement to the foregoing by signing below and
returning to the Company one copy of this letter.
HERITAGE BANCORP, INC.
By:
------------------------------------------
J. Xxxxxx Xxxxx
President and Chief Executive Officer
HERITAGE FEDERAL SAVINGS & LOAN ASSOCIATION
By:
------------------------------------------
J. Xxxxxx Xxxxx
President and Chief Executive Officer
Agreed to and accepted as of
the date first written above:
TRIDENT SECURITIES, INC.
By:
------------------------------------
Name:
Title:
