EXHIBIT 1.2
FIRST CLOVER LEAF FINANCIAL CORP.
3,272,500 to 5,091,625 Shares of Common Stock
(par value $.10 per share)
AGENCY AGREEMENT
June __, 2006
Xxxxx, Xxxxxxxx & Xxxxx, Inc.
000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000-0000
Ladies and Gentlemen:
First Clover Leaf Financial Corp., a Maryland corporation (the
"Company"), First Federal Savings and Loan Association of Edwardsville, a
federally chartered savings and loan association located in Edwardsville,
Illinois (the "Bank"), First Federal Financial Services, Inc., a federal
corporation, the current mid-tier holding company of the Bank ("FFFS"), and
First Federal Financial Services MHC, a federally chartered mutual holding
company and the current majority owner of FFFS (the "MHC"), hereby confirm their
agreement with Xxxxx, Xxxxxxxx & Xxxxx, Inc. ("Xxxxx Xxxxxxxx" or the "Selling
Agent") to serve as agent of the Company to assist the Company in the sale of
between 3,272,500 and 5,091,625 shares of Common Stock (as defined below) of the
Company (the "Shares" or "Conversion Stock") in the Subscription and Community
Offerings, as defined below, as follows:
Introductory. The Company was recently incorporated under the laws of
the State of Maryland for the purpose of being the successor of FFFS. The
Company is authorized to issue 30,000,000 shares of capital stock, of which
20,000,000 shares are common stock having a par value of ten cents ($.10) per
share (the "Common Stock"). The Offering, as defined below, is being conducted
in connection with the mutual-to-stock conversion of the MHC (the "Conversion").
The Conversion is being conducted in accordance with the laws of the
United States and the applicable regulations of the Office of Thrift Supervision
(the "OTS") (such laws and the regulations of the OTS are referred to herein as
the "Conversion Regulations").
The Company, FFFS, the MHC and the Bank are sometimes referred to
herein as the "First Federal Parties."
The Conversion is to be conducted in accordance with a Plan of
Conversion and Reorganization (the "Plan") adopted by the Board of Directors of
the MHC, the Board of Directors of the Bank and the Board of Directors of FFFS
on January 31, 2006. The Plan provides that the
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Conversion will be effected as follows: the Bank will establish the Company as a
Maryland stock holding company subsidiary; the Company will charter an interim
federal savings bank as a wholly-owned subsidiary ("Interim Bank"); FFFS will
convert to an interim stock savings bank and will thereafter merge with and into
the Bank, with the Bank as the surviving entity; the MHC will contemporaneously
convert to an interim stock savings bank and merge with and into the Bank; the
Interim Bank will then merge with and into the Bank with the Bank as the
surviving entity. In connection with the foregoing transactions, each
stockholder of FFFS immediately prior to the Conversion, other than the MHC
("Public Stockholders"), will receive shares of the Company's Common Stock
pursuant to an exchange ratio described in the Plan. Pursuant to the Plan and in
connection with the Conversion, the Company will offer the Conversion Stock for
sale in the Offering, as defined below.
Simultaneous with or immediately after the consummation of the
Conversion and the Offering, as defined below, the Company will acquire Clover
Leaf Financial Corp., a Delaware corporation ("CLFC"), pursuant to the terms of
an Agreement and Plan of Reorganization dated as of February 3, 2006 (the
"Merger Agreement"). CLFC is the holding company of Clover Leaf Bank, an
Illinois state chartered bank headquartered in Edwardsville, Illinois ("Clover
Leaf"). CLFC will merge with and into the Company and Clover Leaf will merge
with and into the Bank pursuant to the Merger Agreement (the "Merger"). The
Merger will be accomplished in accordance with the laws of the State of
Illinois, the State of Maryland and the United States and applicable regulations
of the OTS (such laws and the regulations collectively, the "Merger
Regulations", and together with the Conversion Regulations, the "Reorganization
Regulations"). Pursuant to the terms of the Merger Agreement, upon consummation
of the Merger each outstanding share of common stock, par value ten cents ($.10)
per share, of CLFC ("CLFC Common Stock"), will convert into the right to receive
the Merger consideration ranging from $40 per share of CLFC Common Stock to $43
per share of CLFC Common Stock depending on the number of shares sold in the
Offering (as defined below) in the form of (i) cash, (ii) Common Stock of the
Company, or (iii) a combination of cash and Common Stock. The Merger Agreement
further provides that the aggregate Merger consideration shall be 30% cash and
70% Common Stock of the Company. The Merger is expected to close simultaneously
with or immediately after consummation of the Conversion. The Conversion and the
Merger are separate, distinct transactions. The Conversion, the Offering and the
Merger are sometimes collectively referred to herein as the "Reorganization."
The Company, FFFS, the MHC, the Bank, CLFC and Clover Leaf are sometimes
hereinafter collectively referred to as the "Constituent Institutions."
The Company, in accordance with the Plan, is offering, in a
subscription offering by way of nontransferable subscription rights, the Shares
for a purchase price of $10.00 per share (the "Purchase Price") in a
Subscription Offering, Community Offering and, if necessary, a Syndicated
Community Offering (in each case, as defined below and all of which,
collectively, are referred to herein as the "Offering"). The aggregate number of
Shares to be issued in the Offering will be between 3,272,500 to 5,091,625 and
will be based upon an independent appraisal of the estimated pro forma market
value of the Common Stock of the Company.
The Shares will be offered in descending order of priority to (i) the
Bank's Eligible Account Holders (defined as holders of deposit accounts totaling
$50 or more as of December 31, 2004); (ii) FFFS's tax-qualified employee stock
benefit plans, including any Employee Stock Ownership Plan (the "ESOP") and
401(k) Plan ("401(k) Plan") (for a total of up to 10% of the Shares issued in
the Offering); (iii) the Bank's Supplemental Eligible Account Holders (defined
as holders of deposit accounts totaling $50 or more as of March 31, 2006); and
(iv) depositors with
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accounts at the Bank as of April 29, 2006, and to borrowers of the Bank as of
January 2, 2001 whose borrowings remained outstanding as of April 29, 2006
(collectively, the "Subscription Offering"). Shares of Common Stock not
purchased in the Subscription Offering may be offered to FFFS public
stockholders, depositors of Clover Leaf and the general public in a community
offering that is expected to be conducted during the Subscription Offering (the
"Community Offering"). In the Community Offering, preference will be given to
natural persons residing in the Illinois county of Madison and the contiguous
Illinois counties of St. Clair, Montgomery, Clinton, Bond, Jersey and Macoupin,
FFFS public stockholders as of May 8, 2006 and to Clover Leaf Bank's depositors
as of May 8, 2006. It is acknowledged that the Company reserves the right, in
its absolute discretion, to accept or reject, in whole or in part, any or all
orders in the Community Offering and the Syndicated Community Offering (as
defined below). If the Company does not receive orders for at least 3,272,500
shares in the Subscription and Community Offerings, then, in the Company's
discretion in order to issue the minimum number of shares necessary to complete
the Offering, up to 1,429,067 of the unsubscribed Shares may be issued as Merger
consideration to CLFC stockholders, and any such Shares ("CLFC Shares") so
applied will be deemed issued in the Community Offering.
Shares of Common Stock not purchased in the Subscription Offering or in
the Community Offering or applied as CLFC Shares may be sold through a
syndicated community offering managed by Selling Agent (the "Syndicated
Community Offering").
Except for the ESOP and 401(k) Plan, generally no person may purchase
in the Offering more than 30,000 Shares; the maximum number of shares that an
individual together with persons acting in concert may purchase in all
categories of the Offering combined is 50,000; provided that the Company may,
subject to OTS approval, in its sole discretion and without further notice to or
solicitation of subscribers or other prospective purchasers, increase or
decrease such maximum purchase limitations.
The following applications have been filed in connection with the
Reorganization: (i) an Application for Conversion on Form AC (the "Conversion
Application") has been filed with the OTS; (ii) an Application H-(e)1 Holding
Company Application (the "Holding Company Application") has been filed with the
OTS; and (iii) a Bank Merger Act Application (the "BMA Application") has been
filed with the OTS; all amendments to the foregoing applications required to the
date hereof have also been filed. The Conversion Application, the Holding
Company Application and the BMA Application are referred to herein collectively
as the "Reorganization Applications." The Conversion Application includes, among
other things, the Plan. The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form SB-2 (File No.
333-132423) (the "SB-2 Registration Statement") containing a prospectus relating
to the Subscription Offering, the Community Offering and the Syndicated
Community Offering for the registration of the Shares under the Securities Act
of 1933, as amended (the "1933 Act"), and has filed such amendments thereto 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 SB-2
Registration Statement becomes effective is hereinafter called the "SB-2
Prospectus," except that if the prospectus filed by the Company pursuant to Rule
424(b) of the rules and regulations, as amended, of the Commission under the
1933 Act (the "1933 Act Regulations") differs from the prospectus on file at the
time the Registration Statement becomes effective, the term "SB-2 Prospectus"
shall refer to the prospectus filed pursuant to Rule 424(b) from and after the
time such prospectus is filed with or mailed to the Commission for filing, and
shall include any supplements and amendments thereto. Any document constituting
a "free
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writing prospectus" (as defined in Rule 405 of the 1933 Act Regulations) which
the Selling Agent has approved in advance for use by the First Federal Parties
in connection with the Offering is referred to herein as a "Permitted Free
Writing Prospectus."
The Company has also filed with the Commission a registration statement
on Form S-4 (File No. 333-132424) (the "S-4 Registration Statement") containing
a proxy statement/prospectus to be used to solicit proxies of the CLFC
stockholders and the FFFS stockholders with respect to the approval of the
Reorganization. The Company has filed such amendments to the S-4 Registration
Statement and such amended prospectuses as may have been required to the date
hereof. The proxy statement/prospectus, as amended, on file with the Commission
at the time the S-4 Registration Statement becomes effective is hereinafter
called the "S-4 Prospectus," except that if the S-4 Prospectus filed by the
Company pursuant to Rule 424(b) of the rules and regulations of the Commission
under the 1933 Act Regulations differs from the prospectus on file at the time
the Registration Statement becomes effective, the term "S-4 Prospectus" shall
refer to the prospectus filed pursuant to Rule 424(b) from and after the time
such prospectus is filed with or mailed to the Commission for filing, and shall
include any supplements and amendments thereto.
The SB-2 Registration Statement and the S-4 Registration Statement are
collectively referred to herein as the "Registration Statement." The SB-2
Prospectus and the S-4 Prospectus are collectively referred to herein as the
"Prospectus."
SECTION 1. Appointment of the Selling Agent; Compensation to the
Selling Agent. Subject to the terms and conditions set forth below, the Company
hereby appoints Xxxxx Xxxxxxxx as its exclusive agent to consult with and advise
the First Federal Parties, and to solicit subscriptions and purchase orders for
Shares on behalf of the Company, in connection with the Company's offering of
Common Stock in the Subscription and Community Offerings. On the basis of the
representations, warranties and agreements herein contained, and subject to the
terms and conditions herein set forth, Xxxxx Xxxxxxxx accepts such appointment
and agrees to consult with and advise the First Federal Parties as to the
matters set forth in the Engagement Letter between the Selling Agent, MHC and
FFFS dated December 27, 2005 attached as Exhibit A hereto ("Engagement Letter"),
and to use its best efforts to solicit subscriptions and purchase orders for
Shares in accordance with this Agreement; provided, however, that the Selling
Agent shall not be responsible for obtaining subscriptions or purchase orders
for any specific number of Shares, shall not be required to purchase any Shares
and shall not be obligated to take any action which is inconsistent with any
applicable law, regulation, decision or order.
The obligations of the Selling Agent pursuant to this Agreement (other
than those set forth in Section 1(a) and (c) hereof) shall terminate upon the
completion or termination or abandonment of the Plan by the Company or upon
termination of the Offering, but in no event later than 45 days after the
completion of the Subscription Offering (the "End Date"). All fees or expenses
due to the Selling Agent but unpaid will be payable to the Selling Agent in next
day funds at the earlier of the Closing Date (as hereinafter defined) or the End
Date. In the event the Offering is extended beyond the End Date, the Company,
the 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 3,272,500
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
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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 1 and in Sections 6, 7 and 8
hereof. In the event the Offering is terminated for any reason not attributable
to the action or inaction of the Agent, the Agent shall be paid the fees and
expenses due to the date of such termination pursuant to subparagraphs (a) and
(d) below.
If all conditions precedent to the consummation of the Offering,
including, without limitation, the sale of all Shares required by the Plan to be
sold, are satisfied, the Company agrees to issue, or have issued, the Shares
sold in the Offering and to release for delivery certificates for such Shares on
the Closing Date (as hereinafter defined) against payment to the Company by any
means authorized by the Plan; provided, however, that no funds shall be released
to the Company until the conditions specified in Section 8 hereof shall have
been complied with to the reasonable satisfaction of the Agent and its counsel.
The release of Shares against payment therefor shall be made on a date and at a
place acceptable to the Company, the Bank and the Selling 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 Selling Agent shall receive the following compensation for its
services hereunder:
(a) A management fee of $25,000 payable in four consecutive
monthly installments of $6,250 commencing with the adoption of the
Plan. This fee shall be due as it is earned and shall be
non-refundable.
(b) A success fee upon completion of the Offering of 1.35% of the
aggregate Purchase Price of the Common Shares sold in the Subscription
Offering and Community Offering, excluding shares purchased by the
Bank's officers, directors, or employees (or members of their immediate
family) plus any ESOP, tax-qualified or stock based compensation plans
(except IRAs) or similar plan created by the Bank for some or all of
its directors or employees and any CLFC Shares issued in the Community
Offering. For purposes of this Agreement, "immediate family" includes
an officer's, director's or employee's spouse, siblings, parents and
also children who live in the same house with the officer, director or
employee. The management fee described in subparagraph 1(a) will be
applied against this success fee.
(c) If any of the Common Shares remain available after the
Subscription Offering, at the request of the Bank, the Agent will seek
to form a syndicate of registered broker-dealers ("Selected Dealers")
to assist in the sale of such Common Shares on a best efforts basis,
subject to the terms and conditions set forth in the selected dealers
agreement. The Agent will endeavor to distribute the Common Shares
among the Selected Dealers in a fashion which best meets the
distribution objectives of the Bank and the Plan. The Agent will be
paid a fee not to exceed 5.5% of the aggregate Purchase Price of the
Shares sold by the Selected Dealers. The Agent will pass onto the
Selected Dealers who assist in the Syndicated Community Offering an
amount competitive with gross underwriting discounts charged at such
time for comparable amounts of stock sold at a comparable price per
share in a similar market environment. Fees with respect to purchases
effected with the assistance of Selected Dealers other than the Agent
shall be transmitted by the Agent to such Selected Dealers. The
decision to utilize Selected Dealers will be made by the Bank upon
consultation with the Agent. In the event any fees are paid pursuant to
this subparagraph
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1(c), such fees shall be in lieu of, and not in addition to any fees
for the sale of Shares payable pursuant to subparagraph 1(b).
(d) The Bank and Company shall reimburse the Agent for reasonable
out-of-pocket expenses (including costs of travel, meals and lodging,
photocopying, telephone, facsimile and couriers). The Bank and the
Company will also reimburse the Agent for the fees of its counsel
(which do not include legal fees to complete the qualification of the
Common Shares under the various state securities "Blue Sky" laws) up to
$40,000 and reasonable out-of-pocket expenses. The Bank will bear the
expenses of the Offering customarily borne by issuers including,
without limitation, regulatory filing fees, SEC, "Blue Sky," and NASD
filing and registration fees; the fees of the Bank*s accountants,
attorneys, appraiser, transfer agent and registrar, printing, mailing
and marketing expenses associated with the Offering; and the fees set
forth under this Section 1. The Company or the Bank will reimburse the
Agent for any such expenses incurred by the Agent on their behalf. The
parties hereto acknowledge that the expense limitations set forth in
this paragraph may be exceeded in the event of a material delay in the
Offering that requires an update of financial information contained in
the Registration Statement for a period later than June 30, 2006.
If (i) the Plan is abandoned or terminated by the Company; (ii) the
Offering is not consummated by _____, 2006; (iii) the Selling Agent terminates
this Agreement because there has been a material adverse change in the financial
condition or operations of FFFS since March 31, 2006; or (iv) immediately prior
to the commencement of the Offering, the Selling Agent terminates this Agreement
because in its opinion, which shall have been formed in good faith after
reasonable determination and consideration of all relevant factors, there has
been a failure to satisfactorily disclose all relevant information in the
Registration Statement, the Prospectus or the Reorganization Applications or
market conditions exist which might render the sale of the Shares by the Company
inadvisable, the Management Fee shall serve as compensation for its advisory and
administrative services as set forth in the Engagement Letter, in addition to
reimbursement of the Selling Agent's reasonable out-of-pocket expenses as set
forth above. If, pursuant to a resolicitation undertaken by the Company, the
Selling Agent is required to provide significant additional services, or expend
significant additional time, the parties shall mutually agree to the dollar
amount of the additional compensation due.
The compensation specified above shall be payable (to the extent not
already paid) to the Selling Agent in next day clearinghouse funds on the
earlier of the Closing Date (as hereinafter defined), a determination by the
Company and the Bank to terminate or abandon the Plan, or the termination of
this Agreement by the Selling Agent or the Company and the Bank in accordance
with the preceding paragraph or otherwise. The Bank and the Company agree to
reimburse the Selling Agent from time to time for the reasonable costs and
expenses specified in Sections 6 and 7 hereof, promptly upon receiving a
reasonable accounting of such costs and expenses.
SECTION 2. Closing Date; Release of Funds and Delivery of Certificates.
If all conditions precedent to the consummation of the Conversion and the
Offering are satisfied, the Company agrees to issue or have issued the Shares
sold in the Subscription and Community Offerings and to release for delivery
certificates evidencing such Shares on the Closing Date against payment therefor
by release of funds from the special, interest-bearing account referred to in
Section 5(o) hereof and by the authorized withdrawal of funds from deposit
accounts at the Bank in accordance with the Plan; provided, however, that no
such funds shall be released to the Company or withdrawn until the conditions
specified in Section 8 hereof shall have been complied
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with to the reasonable satisfaction of the Selling Agent and its counsel. Such
release, withdrawal and payment shall be made on the Closing Date, on a business
day and at a time and place selected by the Selling Agent, which date and place
shall be acceptable to the Bank and the Company, on at least two (2) business
days prior notice to the Bank and the Company, or such other time or place as
shall be agreed upon by the Selling Agent, the Bank and the Company.
Certificates evidencing the Shares sold in the Subscription and Community
Offerings shall be delivered directly to the purchasers thereof or in accordance
with their directions. The hour and date upon which the Company shall release or
deliver the Shares sold in the Offering in accordance with the terms hereof is
called the "Closing Date."
SECTION 3. Prospectus; Offering. The Shares are to be offered in the
Offering at $10.00 per share, as set forth on the cover page of the Prospectus.
There will be a minimum and maximum, and an adjusted maximum, number of Shares
offered. The number of Shares offered may be changed by the Company, subject to
the provisions of the Plan, depending on market and financial conditions.
SECTION 4. Representations and Warranties; Certain Covenants.
-------------------------------------------------
4.1 Representations and Warranties of the First Federal Parties. The
First Federal Parties jointly and severally represent and warrant to and
covenant with the Selling Agent as follows. The representations and warranties
regarding CLFC, Clover Leaf and their subsidiaries are based solely on the
representations and warranties made by CLFC and Clover Leaf to the First Federal
Parties in the Merger Agreement.
a. The SB-2 Registration Statement was declared effective by the
Commission on May __, 2006, and the S-4 Registration Statement was declared
effective by the Commission on May __, 2006. At the time the Registration
Statement, including the Prospectus contained therein, 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, any
preliminary or final Prospectus, any Securities Communication (as defined in
Section 7 hereof) or any Sales Information (as defined in Section 7 hereof)
authorized by any First Federal Party for use in connection with the Offering
did not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and at the time any Rule 424(b) Prospectus is filed with or mailed
to the Commission for filing and at the Closing Date referred to in Section 2,
the Registration Statement, any preliminary or final Prospectus, any Securities
Communication or any Sales Information authorized by any First Federal Party for
use in connection with the Offering 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 4.1(a) shall not apply to statements in or omissions from the
Registration Statement, any preliminary or final Prospectus, any Securities
Communication or any Sales Information made in reliance upon and in conformity
with information furnished in writing to the First Federal Parties by the
Selling Agent expressly regarding the Selling Agent for use under the caption
"The Conversion--Plan of Distribution; Selling Agent Compensation" in the
Prospectus, provided, however, that nothing has come to the attention of the
First Federal Parties that would lead them to believe that the information under
such captions 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.
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b. No First Federal Party has directly or indirectly distributed
or otherwise used and will not directly or indirectly distribute or otherwise
use any prospectus, any "free writing prospectus" (as defined in Rule 405 of the
Rules and Regulations) or other offering material (including, without
limitation, content on the party's website that may be deemed to be a
prospectus, free writing prospectus or other offering material) in connection
with the offering and sale of the Shares other than any Permitted Free Writing
Prospectus or the Prospectus or other materials permitted by the 1933 Act and
the 1933 Act Regulations to be distributed by the First Federal Parties and
reviewed and approved in advance for distribution by the Selling Agent. No First
Federal Party has, directly or indirectly, prepared or used and no First Federal
Party will, directly or indirectly, prepare or use, any Permitted Free Writing
Prospectus except in compliance with the filing and other requirements of Rules
164 and 433 of the 1933 Act Regulations; assuming that such Permitted Free
Writing Prospectus is accompanied or preceded by the Prospectus and that such
Permitted Free Writing Prospectus is so sent or given after the SB-2
Registration Statement was filed with the Commission (and after such Permitted
Free Writing Prospectus was, if required pursuant to Rule 433(d) under the Act,
filed with the Commission), the sending or giving, by the Selling Agent, of any
Permitted Free Writing Prospectus will satisfy the provisions of Rules 164 and
433 (without reliance on subsections (b), (c) and (d) of Rule 164); and the
Company is not an "ineligible issuer" (as defined in Rule 405 of the Rules and
Regulations) as of the eligibility determination date for purposes of Rules 164
and 433 of the Rules and Regulations with respect to the offering of the Shares
or otherwise precluded under Rule 164 from using free writing prospectuses in
connection with the offering of the Shares.
c. As of the Applicable Time (as defined below), neither the
Prospectus or any preliminary Prospectus, nor any Permitted Free Writing
Prospectus (collectively, the "Disclosure Package"), will 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 4.1(c) shall not apply to statements in or omissions
from the Prospectus, any preliminary Prospectus or any Permitted Free Writing
Prospectus made in reliance upon and in conformity with information furnished in
writing to the First Federal Parties by the Selling Agent expressly regarding
the Selling Agent for use under the caption "The Conversion--Plan of
Distribution; Selling Agent Compensation" in the Prospectus, provided, however,
that nothing has come to the attention of the First Federal Parties that would
lead them to believe that the information under such captions 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. The term
"Applicable Time" means each and every date when a potential purchaser submits a
subscription or otherwise commits to purchase Shares.
d. The Company has filed with the OTS the Conversion Application,
including the Plan, the Registration Statement and the Prospectus, the Holding
Company Application and the BMA Application, each of which included exhibits and
supplemental material, and has filed an amendment or amendments thereto, as
required, and has published notice of such filings, as required, all of which
applications have been or prior to the Closing Date will be approved by the OTS;
and the Plan has been adopted by the Board of Directors of the MHC, and has been
or prior to the Closing Date will be approved by the Members of the MHC and the
stockholders of FFFS in accordance with the Conversion Regulations.
e. At the Closing Date, (i) the Conversion and the Offering will
have been
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effected in the manner described in the Prospectus and in accordance with the
Plan, the Conversion Regulations and all other applicable laws, regulations,
decisions and orders, including in compliance with all terms, conditions,
requirements and provisions precedent to the Conversion and the Offering imposed
upon the First Federal Parties by the Commission, the OTS, any state regulatory
or Blue Sky authority or any other regulatory authority, and (ii) the
Constituent Institutions will have completed the conditions precedent to the
Merger in accordance with the Merger Agreement, and all applicable laws,
regulations, decisions and orders, including all material terms, conditions,
requirements and provisions precedent to the Merger imposed upon the Constituent
Institutions by the OTS or any other regulatory authority, other than those
which the regulatory authority permits to be completed after the effective time
of the Merger ("Effective Time").
f. No order has been issued by the Commission, the OTS or any
state regulatory or Blue Sky authority preventing or suspending the use of the
Prospectus, and, to the knowledge of the First Federal Parties, no action by or
before any such governmental entity to revoke any approval, authorization or
order of effectiveness related to the Conversion or the Offering or the Merger
is pending or threatened.
g. At the time of the approval of the Reorganization Applications
(including any amendment or supplement thereto) by the applicable regulatory
authorities, the Reorganization Applications complied in all material respects
with the Reorganization Regulations. The Prospectus contained in the
Reorganization Applications (including any amendment or supplement thereto), at
the time of the approval of the Reorganization Applications by the OTS and at
all times subsequent thereto until the Closing Date and the Effective Time,
complied and will comply in all material respects with the Reorganization
Regulations.
x. Xxxxxx & Company, Inc. ("Xxxxxx"), which prepared the
Independent Valuation dated as of February 22, 2006 described in the Prospectus
("Independent Valuation"), is independent with respect to the First Federal
Parties within the meaning of the Plan and the Conversion Regulations and is
believed by the First Federal Parties to be experienced and expert in the
valuation and the appraisal of business entities, including savings
institutions, and the First Federal Parties believe that Xxxxxx has prepared the
pricing information set forth in the Prospectus in accordance with the
requirements of the Conversion Regulations.
i. McGladrey & Xxxxxx LLP ("McGladrey"), the firm which certified
the financial statements of FFFS filed as part of the Registration Statement,
is, with respect to the First Federal Parties, an independent certified public
accountant as required by the Code of Professional Ethics of the American
Institute of Certified Public Accountants, the 1933 Act and the 1933 Act
Regulations and the Securities Exchange Act of 1934, as amended (the "1934
Act"), and the regulations thereunder.
j. The consolidated financial statements, together with the
related schedules and notes thereto, included in the Registration Statement and
which are part of the Prospectus present fairly the financial condition, results
of operations, changes in retained earnings and cash flows of each of (i) FFFS
and its consolidated subsidiaries and (ii) CLFC and its consolidated
subsidiaries, at and for the dates indicated and the periods specified and
comply as to form in all material respects with the applicable accounting
requirements of the 1933 Act Regulations. Such financial statements have been
prepared in conformity with generally accepted accounting principles ("GAAP"),
applied on a consistent basis during the periods involved, present fairly in all
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material respects the information required to be stated therein and are
consistent with financial statements and other reports filed by FFFS and/or CLFC
with their applicable bank regulatory authorities except to the extent that
accounting principles employed in such filings conform to the requirements of
such authorities and not necessarily to GAAP. The other financial, statistical
and pro forma information and related notes thereto included in the Prospectus
present fairly the information shown therein on a basis consistent with the
audited financial statements of FFFS and/or CLFC included in the Registration
Statement and which are part of the Prospectus, and as to the pro forma
adjustments, such adjustments have been properly applied on the basis described
therein.
k. Since the respective dates as of which information is given in
the Registration Statement and Prospectus, except as may otherwise be stated
therein: (i) there has not been any material adverse change in the financial
condition, net income, capital, properties, affairs or prospects of the First
Federal Parties, CLFC, Clover Leaf, or their respective subsidiaries (the
"combined institution"), taken as a whole, whether or not arising in the
ordinary course of business, (ii) there has not been any material increase in
the long-term debt of the combined institution taken as a whole, or in the
principal amount of the combined institution*s assets which are classified as
substandard, doubtful or loss or in loans past due 90 days or more or real
estate acquired by foreclosure, by deed-in-lieu of foreclosure or deemed
in-substance foreclosure or any material decrease in equity capital or total
assets of the combined institution, nor have the First Federal Parties, CLFC,
Clover Leaf or their respective subsidiaries issued any securities or incurred
any liability or obligations for borrowing other than in the ordinary course of
business, (iii) there have not been any material transactions entered into by
the First Federal Parties, CLFC, Clover Leaf or their respective subsidiaries,
except those transactions entered into in the ordinary course of business and
those specifically described in or contemplated by the Prospectus, (iv) there
has not been any material adverse change in the aggregate dollar amount of the
combined institution's deposits or its net worth; (v) there has been no material
adverse change in the combined institution's relationship with its insurance
carriers, including, without limitation, cancellation or other termination of
any fidelity bond or any other type of insurance coverage; (vi) except as
disclosed in the Prospectus, there has been no material change in management of
the combined institution; (vii) neither the First Federal Parties, CLFC, Clover
Leaf, or their respective subsidiaries has sustained any material loss or
interference with its respective business or properties from fire, flood,
windstorm, earthquake, accident or other calamity, whether or not covered by
insurance; (viii) neither the First Federal Parties, CLFC, Clover Leaf, or their
respective subsidiaries has defaulted in the payment of principal or interest on
any outstanding debt obligations; and (ix) the capitalization, liabilities,
assets, properties and business of the First Federal Parties, CLFC, Clover Leaf
and their respective subsidiaries conform in all material respects to the
descriptions thereof contained in the Prospectus. The First Federal Parties,
CLFC, Clover Leaf and their respective subsidiaries have no material liability
of any kind, contingent or otherwise, except as reflected in the financial
statements filed as part of the Registration Statement or otherwise set forth in
the Prospectus.
l. The Company is a Maryland corporation, duly organized and
validly existing and in good standing under the laws of the State of Maryland
with the corporate power and authority to conduct the business and own the
property of FFFS as described in the Registration Statement and Prospectus under
Maryland law. FFFS is a federal corporation, duly organized and validly existing
and in good standing under the laws of the United States with the corporate
power and authority to conduct the business and own the property of FFFS as
described
10
in the Registration Statement and Prospectus under federal law. The Company is a
duly registered savings and loan holding company under the Home Owners' Loan Act
("HOLA").
m. The Bank is a federally chartered savings association
organized, validly existing and in good standing under the laws of the United
States with the corporate power and authority to conduct its business and own
its property as described in the Registration Statement and Prospectus under the
HOLA and the regulations thereunder.
n. The MHC is a federally chartered mutual holding company, duly
organized and validly existing and in good standing under the laws of the United
States with the corporate power and authority to conduct its business and own
its property as described in the Registration Statement and the Prospectus.
o. CLFC is a Delaware corporation, duly organized and validly
existing and in good standing under the laws of the State of Delaware with the
corporate power and authority to conduct its business and own its property as
described in the Registration Statement and Prospectus. CLFC is duly registered
with the Board of Governors of the Federal Reserve System (the "FRB") as a bank
holding company under the Bank Holding Company Act of 1956, as amended. Clover
Leaf is an Illinois state bank, duly organized and validly existing under the
laws of the State of Illinois with the corporate power and authority to conduct
its business and own its property as described in the Registration Statement and
Prospectus.
p. The First Federal Parties, CLFC, Clover Leaf and their
respective subsidiaries have obtained all material licenses, permits and other
governmental authorizations currently required for the conduct of their
respective businesses (including, in the case of the Company, for the conduct of
the business of FFFS following the Conversion); all such licenses, permits and
governmental authorizations are in full force and effect; the First Federal
Parties, CLFC, Clover Leaf and their respective subsidiaries are complying with
all laws, rules, regulations and orders applicable to the operation of their
respective businesses, except where noncompliance would not result in a material
adverse effect on the business, financial condition, results of operations,
affairs or prospects of the combined institution taken as a whole; and none of
the First Federal Parties, CLFC, Clover Leaf or their respective subsidiaries
has received notice of any proceeding or action relating to the revocation or
modification of any such license, permit or governmental authorization which,
singly or in the aggregate, if subject to an unfavorable decision, ruling or
finding, might materially and adversely affect the conduct of the business, the
financial condition the results of operations, affairs or prospects of the
combined institution taken as a whole.
q. The certificate of incorporation, charter or similar
instruments of the First Federal Parties, CLFC and Clover Leaf are in full force
and effect; no conservator or receiver has been appointed for any of the First
Federal Parties, CLFC, or Clover Leaf; and the Bank and Clover Leaf are each
operating as an insured depository institution. Each of the First Federal
Parties, CLFC, and Clover Leaf is duly qualified to transact business and is in
good standing in each jurisdiction in which its ownership or leasing of property
or the conduct of its business (currently and as contemplated following the
Reorganization) 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 business, financial condition, results of operations, affairs or
prospects of the combined institution taken as a whole.
11
r. Upon consummation of the Reorganization, all of the
outstanding capital stock of the Bank will be duly authorized and validly issued
and fully paid and nonassessable; and all such stock will be owned directly by
the Company, free and clear of all liens, encumbrances, claims or other
restrictions. Each of the First Federal Parties, CLFC, and Clover Leaf does not
own equity securities or any equity interest in any other business enterprise
except as described in the Prospectus; each of their respective subsidiaries has
been duly organized and is validly existing and in good standing under the laws
of its jurisdiction of organization with the authority to conduct its business
and own its property as described in the Registration Statement and the
Prospectus; all of the outstanding stock of each such subsidiary has been duly
authorized and validly issued and is fully paid and nonassessable; all such
stock is owned directly by FFFS, the Bank, CLFC or Clover Leaf, as the case may
be, free and clear of all liens, encumbrances, claims or other restrictions; and
each such subsidiary is duly qualified to transact business and is in good
standing in each jurisdiction in which its ownership or leasing of property 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 business, the
financial condition, the results of operations, affairs or prospects of the
combined institution taken as a whole. The activities of the Company's
subsidiaries are permitted to subsidiaries of federally chartered savings banks
(with respect to the Bank's subsidiaries) and to subsidiaries of savings and
loan holding companies (with respect to subsidiaries of MHC and FFFS), and the
activities of CLFC's subsidiaries are permitted to subsidiaries of national
banks (with respect to Clover Leaf's subsidiaries) and to subsidiaries of bank
holding companies (with respect to CLFC's subsidiaries), in each case by the
rules and regulations of the OTS (in the case of the Bank's subsidiaries), the
FRB and the OCC (in the case of CLFC subsidiaries), and any other state or
federal authority having jurisdiction over such matters.
s. The deposit accounts of the Bank and Clover Leaf are, and
following the Closing Date of the Reorganization the deposit accounts of the
Bank will be, insured by the Federal Deposit Insurance Corporation (the "FDIC"),
up to the maximum amounts allowed by law. Upon consummation of the Conversion,
the liquidation account for the benefit of Eligible Account Holders and
Supplemental Eligible Account Holders ("Liquidation Account") will be duly
established by the Bank in accordance with the requirements of the Conversion
Regulations.
t. Upon consummation of the Reorganization, the authorized equity
capital of the Company will consist of 20,000,000 shares of Common Stock and
10,000,000 shares of preferred stock, and the issued and outstanding equity
capital of the Company will be consistent with that set forth in the Prospectus
under the caption "Capitalization"; no shares of Common Stock, or securities
exercisable into or exchangeable for Common Stock, will have been issued prior
to the Closing Date; the Shares will have been duly and validly authorized for
issuance and, when issued and delivered by the Company pursuant to the Plan,
will be duly and validly issued and fully paid and nonassessable, the issuance
of the Shares is not subject to any preemptive rights; and the terms and
provisions of the Common Stock will conform in all material respects to the
description thereof contained in the Prospectus. Upon the issuance of the
Shares, good title to the Shares will be transferred from the Company to the
purchasers thereof against payment therefor, subject to such claims as may be
asserted against the purchasers thereof by third-party claimants.
u. As of the date hereof and as of the Closing Date, none of the
First Federal Parties, CLFC, Clover Leaf, or any of their respective
subsidiaries is or will be in violation of its charter or bylaws or in default
in the performance or observance of any material obligation, agreement, covenant
or condition contained in any contract, lease, loan agreement, indenture or
other instrument to which it is a party or by which it or any of its property
may be bound; such
12
agreements are in full force and effect; and no other party to any such
agreements has instituted or, to the knowledge of the First Federal Parties,
CLFC, Clover Leaf, or any of their respective subsidiaries, threatened any
action or proceeding wherein the First Federal Parties, CLFC, Clover Leaf, or
any of their respective subsidiaries would or might be alleged to be in default
thereunder, where such action or proceeding, if determined adversely to the
First Federal Parties, CLFC, Clover Leaf, or any of their respective
subsidiaries, would have a material adverse effect on the financial condition,
results of operations, or business of the First Federal Parties, CLFC, Clover
Leaf, or any of their respective subsidiaries considered as one enterprise.
v. The consummation of the Reorganization, 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 First Federal Parties, and this
Agreement has been validly executed and delivered by the First Federal Parties
and is the valid, legal and binding obligation of the First Federal Parties,
enforceable in accordance with its terms, except to the extent that rights to
indemnity hereunder may be limited under applicable law and subject to
bankruptcy, insolvency, reorganization or other laws related to or affecting the
enforcement of creditors' rights generally and equitable principles limiting the
right to obtain specific enforcement or similar equitable relief. The execution
and delivery of this Agreement, the fulfillment of the terms herein set forth
and the consummation of the transactions herein contemplated will not (i)
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, the charter
or bylaws of the First Federal Parties, or any of their respective subsidiaries,
or any material contract, lease or other instrument to which the First Federal
Parties, or any of their respective subsidiaries is a party or in which the
First Federal Parties, or any of their respective subsidiaries 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 First Federal Parties, or any of their respective
subsidiaries; or (iii) result in the creation of any lien, charge, encumbrance
or other restriction upon any property of the First Federal Parties, or any of
their respective subsidiaries.
w. The First Federal Parties have all such power, authority,
authorizations, approvals and orders as may be required to enter into this
Agreement and to carry out the provisions and conditions hereof, and the Company
has all such power, authority, authorizations and orders as may be required to
issue and sell the Shares as provided in the Plan and described in the
Prospectus, subject to the approval of the applicable regulatory authorities and
the satisfaction of any conditions of such approval.
x. The First Federal Parties, CLFC, Clover Leaf, and their
respective subsidiaries have good and marketable title to all properties and
assets which are material to the business of the combined institution taken as a
whole, including those properties and assets described in the Prospectus as
owned by them, free and clear of all liens, except such liens as are described
in the Prospectus or are not material in relation to the business of the
combined institution and its subsidiaries on a consolidated basis; and all
leases and subleases which are material to the business of the combined
institution taken as a whole under which the First Federal Parties, CLFC, Clover
Leaf, or any of their respective subsidiaries holds properties, including those
leases and subleases described in the Prospectus, are in full force and effect.
y. As of the date hereof and as of the Closing Date and the
effective date of the Registration Statement, the First Federal Parties, CLFC,
and Clover Leaf, are not and will not be in
13
violation of any directive from the Commission, the OTS, the FDIC, or any other
agency to make any material change in the method of conducting their respective
businesses so as to comply in all material respects with all applicable statutes
and regulations (including, without limitation, regulations, decisions,
directives and orders of such governmental agencies), and no suit or proceeding,
charge, investigation or action before or by any court, regulatory authority or
governmental agency or body is or will be pending or, to the knowledge of the
First Federal Parties, threatened, which might materially and adversely affect
the Conversion or the Merger, the performance of this Agreement or the
consummation of the transactions contemplated in the Plan and as described in
the Prospectus, or which might result in any material adverse effect on the
business, financial condition, results of operations, affairs or prospects of
the combined institution taken as a whole, or which would materially affect its
respective properties and assets.
z. The First Federal Parties have received an opinion of their
counsel, Xxxx Xxxxxx Xxxxxxxx & Xxxxxx, P.C., Washington, D.C. ("Xxxx Xxxxxx"),
with respect to the federal income tax consequences of the Reorganization, and
an opinion of McGladrey with respect to the Illinois state income tax
consequences of the Reorganization; the federal tax opinion of Xxxx Xxxxxx is
accurately summarized in the Conversion Application and the Prospectus. The
facts and representations upon which such opinions are based are truthful,
accurate and complete, and no First Federal Party will take any action
inconsistent therewith.
aa. No default exists, and no event has occurred which, with
notice or lapse of time or both, would constitute a default, on the part of any
First Federal Party or any subsidiary thereof in the due performance and
observance of any term, covenant or condition of any indenture, mortgage, deed
of trust, note, bank loan or credit agreement or any other instrument or
agreement to which any First Federal Party or any subsidiary thereof is a party
or by which any of them or any of their respective property is bound or affected
which, in any such case, is material to the First Federal Parties and their
subsidiaries taken as a whole; such agreements are in full force and effect and
no other party to any such agreement has instituted or, to the knowledge of the
First Federal Parties, threatened any action or proceeding wherein the First
Federal Parties or any subsidiary thereof would or might be alleged to be in
default thereunder. 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
CLFC, Clover Leaf or any subsidiary thereof 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 CLFC, Clover Leaf or any subsidiary thereof is a party or by
which any of them or any of their respective property is bound or affected
which, in any such case, is material to CLFC, Clover Leaf and their subsidiaries
taken as a whole; such agreements are in full force and effect and no other
party to any such agreement has instituted or, to the knowledge of the First
Federal Parties (based on inquiries of officers of CLFC and Clover Leaf),
threatened any action or proceeding wherein CLFC, Clover Leaf or any subsidiary
thereof would or might be alleged to be in default thereunder.
bb. Subsequent to the date the Registration Statement is declared
effective by the Commission and prior to the Closing Date, except as otherwise
may be indicated or contemplated in the Registration Statement, none of the
First Federal Parties or any of its subsidiaries has or will have issued any
securities or incurred any liability or obligation, direct or contingent, for
borrowed money, except borrowings from the same or similar sources indicated in
the Prospectus in the ordinary course of its business. Subsequent to the date
the Registration Statement is declared effective by the Commission and prior to
the Closing Date, except as otherwise may be indicated or contemplated therein,
none of CLFC, Clover Leaf or any of their
14
subsidiaries has or will have issued any securities or incurred any liability or
obligation, direct or contingent, for borrowed money, except borrowings from the
same or similar sources indicated in the Prospectus in the ordinary course of
its business. For purposes of this Section 4.1(z), obligations for borrowed
money do not include deposits. In addition, except as contemplated in the Merger
Agreement, the First Federal Parties will not enter into, nor will the First
Federal Parties consent to CLFC's or Clover Leaf's entering into, any
transaction which is material in light of the business and properties of the
First Federal Parties taken as a whole or CLFC and Clover Leaf taken as a whole,
as the case may be, without giving prior notice of such transaction to the
Selling Agent. In such event, the Company's obligations under Section 5(f) shall
apply.
cc. The First Federal Parties, CLFC, Clover Leaf and their
respective subsidiaries have filed all federal, state and local tax returns
required to be filed and have made timely payment of all taxes due and payable
in respect of such returns and no deficiency has been asserted with respect
thereto by any taxing authority.
dd. Except as disclosed in the Prospectus with respect to the ESOP
and 401(k) Plan, none of the First Federal Parties, CLFC, Clover Leaf or any of
their respective subsidiaries has made any payment of funds of the First Federal
Parties, CLFC, Clover Leaf or any of their respective subsidiaries as a loan for
the purchase of the Shares or made any other payment of funds prohibited by law,
and no funds have been set aside to be used for any payment prohibited by law.
ee. Prior to the Conversion, (x) the Bank had authorized capital
stock consisting of ____________ shares of common stock, ____________ of which
were outstanding, and ____________ shares of preferred stock, none of which were
outstanding, (y) FFFS had authorized capital stock consisting of ____________
shares of common stock, ____________ of which were publicly held and
____________ of which were held by the MHC, and ____________ shares of preferred
stock, none of which were outstanding and (z) the MHC was not authorized to
issue capital stock. None of the First Federal Parties 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); (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 Offering
and the Merger and routine purchases and sales of securities for or from its
portfolio, and other than arrangements for (A) the sale of mutual funds at the
Bank's branch offices and (B) commercial deposit sweep accounts into money
market mutual funds; (iii) entered into a financial or management consulting
agreement relating to the sale of stock, except as contemplated hereunder and in
connection with the Merger; or (iv) engaged any intermediary between the Selling
Agent and any First Federal Party in connection with any offering of shares of
its capital stock, and no person is being compensated in any manner for such
service. Appropriate arrangements have been made for placing the funds received
from subscriptions for Shares in a special interest-bearing account with the
Bank until all Shares are sold and paid for, with provision for refund to the
purchasers in the event that the Offering is not completed for whatever reason
or for delivery to the Company if all Shares are sold.
ff. Neither the First Federal Parties, CLFC, or Clover Leaf is
required to be registered under the Investment Company Act of 1940, as amended.
gg. All Sales Information used by the Company in connection with
the Offering that is required by the Conversion Regulations to be filed has been
filed with and approved by the
15
applicable regulatory authority.
hh. Except for information provided in writing to the First
Federal Parties by the Selling Agent related to the Selling Agent for use in the
Prospectus and appearing under the headings "The Conversion-Plan of
Distribution; Selling Agent Compensation" and "The Conversion-Syndicated
Community Offering," the Company and the Bank have not relied upon the Selling
Agent or its legal or other advisors for any legal, tax or accounting advice in
connection with the Conversion.
ii. Neither the First Federal Parties, CLFC, Clover Leaf and their
respective subsidiaries nor any properties owned or operated by the First
Federal Parties, CLFC, Clover Leaf and their respective subsidiaries, is in
violation of or liable under any Environmental Law (as defined below), except
for such violations or liabilities that, individually or in the aggregate, would
not have a material adverse effect on the financial condition, results of
operations or business of the the First Federal Parties, CLFC, Clover Leaf and
their respective subsidiaries, taken as a whole. There are no actions, suits or
proceedings, or demands, claims, notices or investigations (including, without
limitation, notices, demand letters or requests for information from any
environmental agency) instituted or pending or, to the knowledge of the First
Federal Parties, CLFC, Clover Leaf and their respective subsidiaries, threatened
relating to the liability of any property owned or operated by the First Federal
Parties, CLFC, Clover Leaf and their respective subsidiaries under any
Environmental Law. For purposes of this subsection, the term "Environmental Law"
means any federal, state, local or foreign law, statute, ordinance, rule,
regulation, code, license, permit, authorization, approval, consent, order,
judgment, decree, injunction or agreement with any regulatory authority relating
to (i) the protection, preservation or restoration of the environment
(including, without limitation, air, water, vapor, surface water, groundwater,
drinking water supply, surface soil, subsurface soil, plant and animal life or
any other natural resource), and/or (ii) the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production, release
or disposal of any substance presently listed, defined, designated or classified
as hazardous, toxic, radioactive or dangerous, or otherwise regulated, whether
by type or by quantity, including any material containing any such substance as
a component. The First Federal Parties' "knowledge" with respect to CLFC and
Clover Leaf in this subsection (gg) is based on inquiries of officers of CLFC
and Clover Leaf.
jj. All of the loans represented as assets on the most recent
financial statements or selected financial information of FFFS and CLFC included
in the Prospectus meet or are exempt from all requirements of federal, state and
local law pertaining to lending, including, without limitation, truth in lending
(including the requirements of Regulation Z and 12 C.F.R. Part 226), 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 result in a material adverse effect on the business,
financial condition, results of operations, affairs or prospects of the combined
institution taken as a whole.
kk. All documents made available to or delivered or to be made
available to or delivered by any First Federal Party or their representatives in
connection with the issuance and sale of the Shares, including records of
account holders, depositors and borrowers of the Bank, or in connection with the
Selling Agent's exercise of due diligence, except for those documents which were
prepared by parties other than any First Federal Party or their representatives,
to the knowledge of the First Federal Parties, were on the dates on which they
were delivered, or will be on the dates on which they are to be delivered, true,
complete and correct in all material respects.
16
ll. No approval of any regulatory or supervisory or other public
authority is required in connection with the execution and delivery of this
Agreement or the issuance of the Shares, except for the approval of the
Commission and 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 National Association of Securities
Dealers, Inc. ("NASD").
mm. The First Federal Parties, CLFC, Clover Leaf or any of their
respective subsidiaries, are and will be, as the case may be, in compliance in
all material respects with the applicable financial record-keeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act of 1970, as
amended, and the regulations and rules thereunder.
nn. Neither the First Federal Parties, CLFC, Clover Leaf or any of
their respective subsidiaries has made any payment of funds of any First Federal
Party, CLFC, Clover Leaf or any of their respective subsidiaries as a loan for
the purchase of the Shares as prohibited by law, and no funds have been set
aside to be used for any payment prohibited by law.
oo. The records used by the First Federal Parties to determine the
identity of Eligible Account Holders and Supplemental Eligible Account Holders
are accurate and complete in all material respects.
pp. The facts and representations provided to Xxxx Xxxxxx by the
First Federal Parties and upon which Xxxx Xxxxxx will base its opinion under
Section 8(b)(i) are and will be truthful, accurate and complete.
qq. The First Federal Parties and CLFC and Clover Leaf and their
respective subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (A) transactions are executed in
accordance with management*s general or specific authorizations, (B)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets, (C) access to assets is permitted only in
accordance with management*s general or specific authorization, and (D) the
recorded accounts or assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect thereto.
rr. The First Federal Parties and CLFC and Clover Leaf and their
respective subsidiaries carry, or are covered by, insurance in such amounts and
covering such risks as is adequate for the conduct of their respective
businesses and the value of their respective properties and as is customary for
companies engaged in similar industries. All policies of insurance insuring the
First Federal Parties and CLFC and Clover Leaf and their respective subsidiaries
or any of their respective businesses, assets, employees, officers and directors
are in full force and effect, and the First Federal Parties and CLFC and Clover
Leaf and their respective subsidiaries are in compliance with the terms of such
policies in all material respects. None of the First Federal Parties, CLFC,
Clover Leaf or any of their respective subsidiaries has received notice from any
insurer or agent of such insurer that substantial capital improvements or other
expenditures shall have to be made in order to continue such insurance. There
are no claims under any such policy or instrument as to which an insurance
company is denying liability or defending under a reservation of rights clause
where absence of coverage would have a material adverse effect on the business,
financial condition, results of operations, affairs or prospects of the combined
institution taken as a whole.
17
ss. To the knowledge of the First Federal Parties, there are no
affiliations or associations between any member of the NASD and any of the
Company's officers, directors, 5% or greater security holders or beneficial
owners of unregistered equity securities that were acquired within 180 days
prior to March 15, 2006, except as set forth in the Registration Statement.
tt. The First Federal Parties have taken all actions necessary to
obtain on the Closing Date a Blue Sky Memorandum from Xxxx Xxxxxx which
authorizes sales in each of the states of the United States and the District of
Columbia.
uu. Any certificate signed by an officer of any First Federal
Party and delivered to the Selling Agent or their counsel that refers to this
Agreement shall be deemed to be a representation and warranty by such First
Federal Party to the Selling Agent as to the matters covered thereby with the
same effect as if such representation and warranty were set forth herein.
4.2 Representations and Warranties of the Selling Agent. The Selling
Agent represents and warrants to the First Federal Parties as follows:
a. The Selling Agent is registered as a broker-dealer with the
Commission and is a member of the NASD.
b. The Selling Agent is validly existing and in good standing as
a corporation under the laws of the State of New York with the corporate power
and authority to provide the services to be furnished to the First Federal
Parties hereunder.
c. The execution and delivery 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 Selling Agent,
and this Agreement is a legal, valid and binding obligation of the Selling
Agent, enforceable in accordance with its terms, except to the extent that
rights to indemnity hereunder may be limited under applicable law and subject to
bankruptcy, insolvency, reorganization or other laws related to or affecting the
enforcement of creditors' rights generally and equitable principles limiting the
right to obtain specific enforcement or similar equitable relief.
d. The Selling Agent and, to the Selling Agent's knowledge, its
employees, agents and representatives who shall perform any of the services
required hereunder to be performed by the Selling Agent shall be duly authorized
and shall have all licenses, approvals and permits necessary to perform such
services, and Selling Agent is a registered selling agent in each of the
jurisdictions in which the Shares are to be offered by the Company in reliance
upon the Selling Agent as a registered selling agent as set forth in the blue
sky memorandum prepared with respect to the Offering.
e. The execution and delivery of this Agreement by the Selling
Agent, the fulfillment of the terms set forth herein and the consummation of the
transactions herein contemplated shall not violate or conflict with the
corporate charter or bylaws of the Selling Agent 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 the Selling Agent is bound or under any
governmental license or permit or any law, administrative regulation,
authorization, approval or order or court decree, injunction or order applicable
to it.
18
f. Any funds received by the Selling Agent to purchase Shares in
the Syndicated Community Offering will be handled in accordance with Rule 15c2-4
under the 1934 Act, to the extent applicable.
SECTION 5. Additional Covenants of the First Federal Parties. The First
Federal Parties hereby jointly and severally covenant with the Selling Agent as
follows:
a. The First Federal Parties will not file any amendment or
supplement to the Registration Statement, the Prospectus or any Reorganization
Application without written notice to the Selling Agent of its intention to do
so and providing the Selling Agent and its counsel an opportunity to review such
amendment or supplement, nor will any First Federal Party file any such
amendment or supplement to which the Selling Agent or its counsel shall
reasonably object.
b. The First Federal Parties will use their best efforts to cause
each Reorganization Application not heretofore approved to be approved by the
applicable regulatory authority and will promptly upon receipt of any
information concerning the events listed below notify the Selling Agent and its
counsel in writing: (i) of the approval of any Reorganization Application not
heretofore approved; (ii) of the receipt of any comments from the OTS or any
other governmental entity with respect to the Conversion, the Merger or the
transactions contemplated by this Agreement; (iii) of the receipt of any
comments from the Commission to the Registration Statement or the Prospectus,
(iv) of the request by the OTS or any other governmental entity for any
amendment or supplement to the Registration Statement, the Prospectus or any
Reorganization Application or for additional information; (v) of the issuance by
the Commission, the OTS or any other governmental entity of any order or other
action suspending the Conversion or the Merger or the use of the Registration
Statement or the Prospectus or any other filing of the Company and the Bank
under the Reorganization Regulations, the 1933 Act, 1933 Act Regulations or
other applicable law, or the threat of any such action; (vi) of the issuance by
the Commission, the OTS or any other state governmental authority of any stop
order suspending the effectiveness of the Registration Statement or any
Reorganization Application or of the initiation or threat of any proceedings for
such purpose; or (vii) of the occurrence of any event mentioned in paragraph (f)
below. The First Federal Parties will make every reasonable effort to prevent
the issuance by the Commission, the OTS or any other governmental authority of
any such order and, if any such order shall at any time be issued, to obtain the
lifting thereof at the earliest possible time. The First Federal Parties will
provide copies of the foregoing comments, requests and orders to the Selling
Agent upon receipt of such items. The First Federal Parties will cause any
Permitted Free Writing Prospectus required to be filed with the Commission to be
timely filed with the Commission in accordance with the 1933 Act Regulations.
c. The First Federal Parties will promptly deliver to the Selling
Agent and to its counsel two conformed copies of each of the following
documents, with all exhibits: each Reorganization Application as originally
filed and each amendment or supplement thereto and the Registration Statement as
originally filed and each amendment thereto. In addition, the First Federal
Parties will also promptly deliver to the Selling Agent such number of copies of
the closing documents with respect to the Conversion and the Offering as the
Selling Agent may reasonably request.
d. The First Federal Parties will furnish to the Selling Agent,
from time to time during the period when the Prospectus is required to be
delivered under federal or state securities laws or regulations or the
applicable rules and regulations of any other governmental entity, such
19
number of copies of the SB-2 Prospectus (as amended or supplemented) as the
Selling Agent may reasonably request for the purposes contemplated by such
federal or state securities laws or regulations or the applicable rules and
regulations of any other governmental entity. The Company authorizes the Selling
Agent to use the SB-2 Prospectus (as amended or supplemented) for any lawful
manner in connection with the sale of the Shares.
e. The First Federal Parties will comply with any and all terms,
conditions, requirements and provisions with respect to the Reorganization and
the transactions contemplated thereby imposed by the Commission, the OTS, any
state regulatory or Blue Sky authority or any other governmental entity,
including the terms, conditions, requirements and provisions contained in the
Reorganization Regulations, the 1933 Act, the 1933 Act Regulations, the 1934 Act
and the rules and regulations, as amended, of the Commission promulgated under
the 1934 Act (the "1934 Act Regulations") including, without limitation, Rule
10b-5 under the 1934 Act, in each case as from time to time in force, so far as
necessary to permit the continuance of sales or dealing in the Common Shares
during such period in accordance with the provisions hereof and the Prospectus.
f. If, at any time during the period when the Prospectus is
required to be delivered, any event relating to or affecting any First Federal
Party shall occur, as a result of which it is necessary or appropriate, in the
opinion of counsel for the First Federal Parties, to amend or supplement the
Registration Statement or the Prospectus in order to make the Registration
Statement or Prospectus not misleading in light of the circumstances existing at
the time it is delivered to a purchaser, the First Federal Parties will, at
their expense, forthwith prepare, file with the Commission and furnish to the
Selling Agent a reasonable number of copies of an amendment or amendments of, or
a supplement or supplements to, the Registration Statement or Prospectus (in
form and substance reasonably satisfactory to the Selling 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 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 First Federal Parties
each will timely furnish to the Agent such information with respect to itself as
the Selling Agent may from time to time reasonably request.
g. The Company will not sell or issue, contract to sell or
otherwise dispose of, for a period of 180 days after the Closing Date, without
the prior written consent of the Selling Agent, any shares of, or any securities
convertible into or exercisable for shares of, Common Stock other than in
connection with the Merger or any other plan or arrangement described in the
Prospectus.
h. During the period in which the Company's Common Stock is
registered under the 1934 Act, the Company will furnish to its stockholders as
soon as practicable after the end of each fiscal year an annual report
(including a consolidated balance sheet and consolidated statements of income,
stockholders' equity and cash flows of the Company and its subsidiaries as at
the end of and for such year, certified by independent public accountants in
accordance with the 1934 Act and Regulation S-X under the 0000 Xxx) and make
available as soon as practicable after the end of each of the first three
quarters of each fiscal year (beginning with the first fiscal quarter ending
after the Closing Date) financial information of the Company and its
subsidiaries for such quarter in reasonable detail.
i. During the period of three years from the date hereof, the
Company will
20
furnish to the Selling Agent: (i) promptly after it becomes available, a copy of
each report of the Company furnished generally to stockholders of the Company or
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), a copy of each
other report of the Company mailed to its stockholders or filed with the
Commission 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 and each press release and material news item and article
released by the Company or its subsidiaries, and (ii) from time to time, such
other public information concerning the Company and its subsidiaries as the
Selling Agent may reasonably request.
j. The Company and the Bank will use the net proceeds from the
sale of the Shares substantially in the manner set forth in the Prospectus under
the caption "How We Intend To Use the Proceeds from the Offering."
k. Other than as permitted by the Reorganization Regulations, the
HOLA, the 1933 Act, the 1933 Act Regulations and the laws of any jurisdiction in
which the Shares are qualified for sale, neither the Company nor the Bank will
distribute any Prospectus or other Sales Information or offering materials in
connection with the offer and sale of the Shares.
l. The Company will make generally available to its security
holders as soon as practicable, but not later than 60 days after the close of
the period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 of the 1933 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 such Rule 158) of the
Registration Statement.
m. The Company will register the Common Stock under Section 12(g)
of the 1934 Act effective on or prior to the Closing Date. The Company shall
maintain the effectiveness of such registration for not less than three years
from the time of effectiveness or such shorter period as may be required by the
OTS.
n. The Company will use its best efforts to obtain approval for,
effective on or prior to the Closing Date, and maintain quotation of the Common
Stock on the Nasdaq National Market System.
o. The First Federal Parties will maintain appropriate
arrangements for depositing all funds received from persons delivering orders to
purchase Shares in the Subscription and Community Offerings on an
interest-bearing basis at the rate described in the Prospectus until the Closing
Date or until the Offering is terminated in accordance with the Plan and as
described in the Prospectus. The First Federal Parties will maintain such
records of all funds received to permit the funds of each subscriber to be
separately insured by the FDIC and to enable the Company to make appropriate
refunds of such funds in the event that such refunds are required to be made in
accordance with the Plan and as described in the Prospectus.
p. The First Federal Parties will take such actions and furnish
such information as are reasonably requested by the Selling Agent in order for
the Selling Agent to ensure compliance with Article III, Section 1, of the
NASD's Rules of Fair Practice and the NASD's
21
"Free-Riding and Withholding Interpretation."
q. The First Federal Parties will conduct their respective
businesses in compliance in all material respects with all applicable federal
and state laws, rules, regulations, decisions, directives and orders including,
all decisions, directives and orders of the OTS.
r. The First Federal Parties will not amend the Plan without the
Selling Agent's prior written consent, which consent shall not be unreasonably
withheld, in any manner that, in the opinion of the Selling Agent, would affect
the sale of the Shares or the terms of this Agreement.
s. The First Federal Parties will use all reasonable efforts to
comply with, or cause to be complied with, the conditions precedent to the
several obligations of the Selling Agent specified in Section 8 hereof.
t. Prior to the Closing Date, the First Federal Parties shall
have received approval of each Reorganization Application required to consummate
the Merger, and all applicable waiting periods shall have expired.
u. The First Federal Parties shall assist the Selling Agent, if
necessary, in connection with the allocation of the Shares in the event of an
oversubscription and shall provide the Selling Agent with any information
necessary to assist the Company in allocating the Shares in such event and such
information shall be accurate and reliable in all material respects.
v. Prior to the Closing Date, the First Federal Parties will
inform the Selling Agent of any event or circumstances of which it is aware as a
result of which the Registration Statement and/or Prospectus, as then amended or
supplemented, would contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein not
misleading.
w. The Company will not deliver the Shares until the First
Federal Parties have satisfied or caused to be satisfied each condition set
forth in Section 8 hereof, unless such condition is waived in writing by the
Selling Agent.
x. The Company shall notify the Selling Agent when funds shall
have been received for the minimum number of Shares set forth in the Prospectus.
y. Subsequent to the date the Registration Statement is declared
effective by the Commission and prior to the Closing Date, except as otherwise
may be indicated or contemplated therein or set forth in an amendment or
supplement thereto, neither the First Federal Parties, CLFC, Clover Leaf or any
of their respective subsidiaries will have: (i) issued any securities or
incurred any liability or obligation, direct or contingent, for borrowed money,
except borrowings from the same or similar sources indicated in the Prospectus
in the ordinary course of its business, or (ii) entered into any transaction
which is material in light of the business and properties of First Federal
Parties, CLFC, Clover Leaf or any of their respective subsidiaries, taken as a
whole.
z. The First Federal Parties shall comply with any and all terms,
conditions, requirements and provisions with respect to the Offering and the
transactions contemplated thereby imposed by the OTS, the Commission, the 1933
Act and the 1933 Act Regulations, the 1934 Act
22
and the 1934 Act Regulations to be complied with subsequent to the Closing Date.
The Company will comply with all provisions of all undertakings contained in the
Registration Statement.
aa. The Company shall comply with all applicable provisions of the
Xxxxxxxx-Xxxxx Act.
SECTION 6. Payment of Expenses. Whether or not the Conversion is
completed or the sale of the Shares by the Company is consummated, the First
Federal Parties jointly and severally agree to pay all expenses incident to the
performance of the obligations of any First Federal Party under this Agreement,
including the following: (i) the preparation, printing, issuance and delivery of
the certificates evidencing the Shares sold to the purchasers in the Offering
and the printing and delivery of all other documents applicable to the
Conversion and the Merger; (ii) the fees and disbursements of the First Federal
Parties' counsel, accountants and other advisors; (iii) the qualification or
exemption from qualification of the Shares under all applicable securities or
Blue Sky laws, including filing fees and the reasonable fees and disbursements
of counsel in connection therewith and in connection with the preparation of a
Blue Sky Survey concerning such jurisdictions as the Selling Agent may
reasonably designate; (iv) the printing and mailing costs of the Offering,
including the delivery to the Selling Agent in such quantities as the Selling
Agent shall reasonably request of copies of the Registration Statement, the
Prospectus and the Reorganization Applications as originally filed and as
amended or supplemented and all other documents in connection with the
Conversion and this Agreement; (v) the filing fees incurred in connection with
the review of the Registration Statement, the Reorganization Applications and
any other application, form or filing by the Commission and the OTS; (vi) the
filing fees and the fees and disbursements of counsel to the Selling Agent
incurred in connection with the review of the Offering by the NASD; (vii) the
fees for listing the Shares on the Nasdaq National Market System; (viii) the
fees and expenses relating to the Independent Valuation; (ix) the fees and
expenses relating to proxy solicitation, advertising expenses, temporary
personnel expenses, expenses related to the Stock Information Center to be
established, investor meeting expenses and other miscellaneous expenses relating
to the marketing of the Shares; and (x) the fees and charges of any transfer
agent, registrar or other agent. In the event that the Selling Agent incurs any
such expenses on behalf of the First Federal Parties, the First Federal Parties
will pay or reimburse the Selling Agent for such expenses regardless of whether
the Conversion is successfully completed, and such reimbursements will not be
included in the expense limitations set forth in Section 1(d).
SECTION 7. Indemnification and Contribution.
--------------------------------
a. The First Federal Parties jointly and severally agree to
indemnify and hold harmless the Selling Agent, its officers, directors,
employees and agents and each person, if any, who controls the Selling Agent
within the meaning of Section 15 of the 1933 Act or Section 20(a) of the 1934
Act, against any loss, liability, claim, damage, and expense whatsoever (which
shall include, but not be limited to amounts incurred in investigating,
preparing, or defending against any litigation, commenced or threatened, or any
claim or investigation whatsoever and any and all amounts paid in settlement of
any claim or litigation), as and when incurred, arising out of, based upon, or
in connection with (i) any untrue statement or alleged untrue statement of a
material fact or any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, contained in (A) any preliminary prospectus, the Registration
Statement, the Prospectus, any Permitted Free Writing Prospectus, any "free
writing prospectus" (as defined in Rule 405 of the 1933 Act Regulations) that is
not a Permitted Free Writing Prospectus used by a First Federal Party in
violation of Section 4.1(b) of this Agreement,
23
or any amendment or supplement thereto or in any document
incorporated by reference therein or required to be delivered with any
preliminary prospectus or the Prospectus or (B) in any application or other
document or communication filed with the Commission or any securities exchange
("Securities Communication") or (C) in any application or other document,
advertisement or communication prepared, made or executed by or on behalf of any
First Federal Party or based upon written information or statements furnished or
made by any First Federal Party or its representatives (including counsel)
whether or not filed in any jurisdiction in order to register or qualify any or
all of the Shares under the securities law thereof (the "Sales Information");
unless such statement or omission was made in reliance upon and in conformity
with written information concerning the Selling Agent or the compensation of the
Selling Agent furnished to the Company by or on behalf of the Selling Agent
expressly for inclusion in any preliminary prospectus, the Registration
Statement, or the Prospectus, or any amendment or supplement thereto, or in any
Securities Communication or Sales Information, as the case may be, or (ii) any
breach of any representation, warranty, covenant, or agreement of the First
Federal Parties contained in this Agreement. For purposes of this section, the
term "expense" shall include, but not be limited to, counsel fees and costs,
court costs, out-of-pocket costs and compensation for the time spent by the
Selling Agent's directors, officers and employees according to his or her normal
hourly billing rates. The indemnification provisions shall also extend to all
affiliates of the Selling Agent, their respective directors, officers,
employees, legal counsel, agents and controlling persons within the meaning of
the federal securities laws. The foregoing agreement to indemnify shall be in
addition to any liability the First Federal Parties may otherwise have to the
Selling Agent or the persons entitled to the benefit of these indemnification
provisions.
b. The Selling Agent agrees to indemnify and hold harmless the
Company, its directors, officers who signed the Registration Statement, and each
person, if any, who controls the Company 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 and expense described in the indemnity contained in subsection (a)
above, as incurred, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in the Registration Statement or
the Prospectus in reliance upon and in conformity with written information about
the Selling Agent, or the compensation of the Selling Agent, furnished to the
Company by the Selling Agent expressly for use in the Registration Statement or
the Prospectus and appearing under the headings "The Conversion-Plan of
Distribution; Selling Agent Compensation" and "The Conversion-Syndicated
Community Offering."
c. An indemnified party shall give prompt notice to the
indemnifying party if any action, suit, proceeding or investigation is commenced
in respect of which indemnity may be sought hereunder, but failure to so notify
an indemnifying party shall not relieve the indemnifying party from its
obligations to indemnify hereunder. If it so elects within a reasonable time
after receipt of such notice, an indemnifying party may assume the defense of
such action, including the employment of counsel satisfactory to the indemnified
parties, and payment of all expenses of the indemnified party in connection with
such action. Such indemnified party or parties shall have the right to employ
its or their own counsel (but only one counsel) in any such case, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
or parties unless the employment of such counsel shall have been authorized in
writing by the indemnifying party in connection with the defense of such action
or the indemnifying party shall not have promptly employed counsel satisfactory
to such indemnified party or parties or such indemnified party or parties shall
have reasonably concluded that there may be one or more legal defenses available
to it or them or to other indemnified parties which are different from or
additional to those available to
24
one or more of the indemnifying parties, in any of which events such fees and
expenses shall be borne by the indemnifying party and the indemnifying party
shall not have the right to direct the defense of such action on behalf of the
indemnified party or parties. The First Federal Parties shall be liable for any
settlement of any claim against the Selling Agent (or its directors, officers,
employees, affiliates or controlling persons), made with the First Federal
Parties' written consent, which consent shall not be unreasonably withheld. The
First Federal Parties shall not, without the written consent of the Selling
Agent, settle or compromise any claim against the Selling Agent based upon
circumstances giving rise to an indemnification claim against the First Federal
Parties hereunder unless such settlement or compromise provides that the Selling
Agent and the other indemnified parties shall be unconditionally and irrevocably
released from all liability in respect of such claim.
d. In order to provide for just and equitable contribution, if a
claim for indemnification pursuant to these indemnification provisions is made
but it is found in a final judgment by a court that such indemnification may not
be enforced in such case, even though the express provisions hereof provide for
indemnification in such case, then the First Federal Parties, on the one hand,
and the Selling Agent, on the other hand, shall contribute to the amount paid or
payable by such indemnified persons as a result of such loss, liability, claim,
damage and expense in such proportion as is appropriate to reflect the relative
benefits received by the First Federal Parties, on the one hand, and the Selling
Agent, on the other hand, from the Offering, and also the relative fault of the
First Federal Parties, on the one hand, and the Selling Agent, on the other
hand, in connection with the statements, acts or omissions which resulted in
such loss, liability claim, damage and expense, and any other relevant equitable
considerations shall also be considered. No person found liable for a fraudulent
misrepresentation or omission shall be entitled to contribution from any person
who is not also found liable for such fraudulent misrepresentation or omission.
Notwithstanding the foregoing, the Selling Agent shall not be obligated to
contribute any amount hereunder that exceeds the total amount of the fees paid
to the Selling Agent hereunder.
e. The indemnity and contribution agreements contained herein are
in addition to any liability which the First Federal Parties may otherwise have
to the Selling Agent.
f. Neither termination nor completion of the engagement of the
Selling Agent nor any investigation made by or on behalf of the Selling Agent
shall affect the indemnification, obligations of the First Federal Parties or
the Selling Agent hereunder, which shall remain and continue to be operative and
in full force and effect.
SECTION 8. Conditions of the Selling Agent's Obligations. The
obligations of the Selling Agent hereunder as to the Shares to be delivered at
the Closing Date are subject, in the discretion of the Selling Agent, to the
condition that all representations and warranties and other statements of the
First Federal Parties herein are, at and as of the commencement of the Offering
and at and as of the Closing Date, true and correct in all material respects,
the condition that the First Federal Parties shall have performed in all
material respects all of their respective obligations hereunder to be performed
on or before such dates, and to the following conditions:
a. At the Closing Date, the First Federal Parties shall have
conducted the Reorganization in all material respects in accordance with the
Plan, the Reorganization Regulations and all other applicable laws, regulations,
decisions and orders, including all terms, conditions, requirements and
provisions precedent to the Offering imposed upon them by the OTS.
25
b. The Registration Statement shall have been declared effective
by the Commission and cleared for use by the OTS not later than 5:30 p.m. on the
date of this Agreement, or with the written consent of the Selling Agent at a
later time and date; and at the Closing Date no stop order suspending the
effectiveness of the Registration Statement or the consummation of the
Conversion shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission or any state securities or Blue Sky
authority, and no order or other action suspending the effectiveness of the
Prospectus or the consummation of the Conversion shall have been issued or
proceedings therefore initiated or threatened by the OTS.
c. At the Closing Date, the Selling Agent shall have received:
(i) The favorable opinion, dated as of the Closing Date addressed to
the Selling Agent and for its and its counsel's benefit, of Xxxx Xxxxxx, as to
issues of federal, Illinois, Maryland and New York law set forth below. The
opinion of Xxxx Xxxxxx shall be in form and substance to the effect that:
(1) Prior to the Conversion, FFFS was validly existing as
a corporation under the laws of the United States of America, the Bank was
validly existing under the laws of the United States as a federal savings
association, and the MHC was duly organized and validly existing under the laws
of the United States as a mutual holding company; and each had the corporate
power and authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and Prospectus.
(2) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of Maryland, and has
the corporate power and authority to own, lease and operate the combined
properties and to conduct the combined operations of FFFS and CLFC following the
Merger, as described in the Registration Statement and Prospectus. Each of the
Company's direct and indirect subsidiaries is validly existing and in good
standing under the laws of its jurisdiction of organization, and each has the
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and Prospectus.
(3) Each of the First Federal Parties and their
subsidiaries is duly qualified as a foreign corporation to transact business and
is in good standing in each jurisdiction in which such qualification is and,
following consummation of the Reorganization, will be required, unless the
failure to be so qualified in one or more of such jurisdictions would not have a
material adverse effect on the business, the financial condition or the results
of operations, affairs or prospects of the First Federal Parties taken as a
whole.
(4) All of the outstanding capital stock of the Bank is
duly authorized and validly issued, fully paid and non-assessable and, upon
consummation of the Reorganization, will be owned by the Company, free and clear
of any liens, encumbrances, claims or other restrictions.
(5) The Bank is a member of the FHLB-Chicago. The deposit
accounts of the Bank are insured by the FDIC up to the maximum amount allowed
under law and to Xxxx Xxxxxx'x knowledge no proceedings for the termination or
revocation of such insurance are pending or threatened;
26
(6) The activities of each subsidiary of FFFS, the MHC
and the Bank as described in the Registration Statement and Prospectus are
permitted to subsidiaries of a federally chartered savings association or a
savings and loan holding company, by the rules, regulations, policies and
practices of the OTS and any other federal or state authority having
jurisdiction over such matters. The activities of each subsidiary of the Company
following the Merger (which will include each of the direct and indirect
subsidiaries of FFFS and CLFC) as described in the Registration Statement and
Prospectus are permitted to subsidiaries of a savings and loan holding company
by the rules, regulations, policies and practices of the OTS and any other
federal or state authority having jurisdiction over such matters. The activities
of each subsidiary of the Bank following the Merger (including each of the
direct and indirect subsidiaries of the Bank and Clover Leaf) as described in
the Registration Statement and Prospectus are permitted to subsidiaries of a
federally chartered savings bank by the rules, regulations, policies and
practices of the OTS and any other federal or state authority having
jurisdiction over such matters. All of the outstanding stock of each subsidiary
of FFFS, the MHC and the Bank has been duly authorized and validly issued and is
fully paid and nonassessable; and upon consummation of the Reorganization all
such stock will be owned of record and beneficially by the Bank, free and clear
of any security interest, mortgage, pledge, lien, encumbrance, claim or other
restriction.
(7) Upon consummation of the Reorganization, the
authorized equity capital of the Company will consist of 20,000,000 shares of
common stock and 10,000,000 shares of preferred stock, and the issued and
outstanding equity capital of the Company will be consistent with that set forth
in the Registration Statement and the Prospectus under the caption
"Capitalization;" no shares of the Company's common stock, or securities
exercisable into or exchangeable for common stock, will have been issued prior
to the Closing Date; at the time of the Conversion the Shares will have been
duly and validly authorized for issuance, and when issued and delivered by the
Company pursuant to the Plan, will be duly authorized and validly issued and
fully paid and nonassessable; the issuance of the Shares is not subject to any
preemptive rights. Upon the issuance of the Shares, against payment therefor in
accordance with the Prospectus, the purchasers will have full legal title to the
Shares, subject to such claims as may be asserted against the purchasers thereof
by third-party claimants of such purchasers.
(8) Each Reorganization Application has been approved by
the applicable regulatory authority pursuant to the Reorganization Regulations
and the Prospectus has been authorized for use by the OTS, and no action has
been taken or is pending or, to Xxxx Xxxxxx'x knowledge, threatened to revoke
any such authorization or approval.
(9) Each Reorganization Application, as amended or
supplemented, if amended or supplemented, as filed with the applicable
regulatory authority complied as to form in all material respects with the
requirements of the Reorganization Regulations. At the time the Registration
Statement became effective, (i) the Registration Statement (as amended or
supplemented, if so amended or supplemented) (other than the financial
statements, stock valuation information and other financial and statistical 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, stock
valuation information and other financial and statistical data included therein,
as to which no opinion need be rendered) complied as to form in all material
respects with the requirements of the Conversion Regulations.
(10) The OTS's approval of the Plan remains in full force
and effect; the
27
First Federal Parties have conducted the Reorganization in all material respects
in accordance with the requirements of the Reorganization Regulations, federal
law, all other applicable regulations, decisions and orders and the Plan,
including all material applicable terms, conditions, requirements and conditions
precedent to the Reorganization imposed by the OTS; the Reorganization
Application and Plan complies in all material respects with all applicable
federal law, rules, regulations, decisions and orders, including but not limited
to the Reorganization Regulations; no order has been issued by the OTS to
suspend the Conversion or the Merger and no action for such purpose has been
instituted or, to Xxxx Xxxxxx'x knowledge, threatened by the OTS; and, to Xxxx
Xxxxxx'x knowledge, no person has sought to obtain review of the final action of
the OTS in approving any Reorganization Application or the Plan.
(11) The MHC, FFFS, the Company and the Bank each have
full corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated thereby and by the Plan and the
Reorganization Applications; this Agreement and the consummation of the
transactions contemplated hereby has been duly authorized, executed and
delivered by the MHC, FFFS, the Company and the Bank and is the legal, valid and
binding agreement of the MHC, FFFS, the Company and the Bank, subject, as to
enforceability, to bankruptcy, insolvency, reorganization, moratorium,
conservatorship, receivership and other laws of general applicability relating
to or affecting creditors' rights or the rights of creditors of depository
institutions the deposits of which are insured by the FDIC, to general
principles of equity (whether considered in an action at law or in equity) and
to the extent that rights to indemnity and contribution thereunder may be
limited under applicable laws or under considerations of public policy.
(12) The Registration Statement is effective under the
1933 Act, any required filing of the Prospectus and any Permitted Free Writing
Prospectus pursuant to Rule 424(b) or Rule 433 has been made within the time
period required by Rule 424(b) or Rule 433, and no stop order suspending
effectiveness of the Registration Statement has been issued under the 1933 Act
and, to Xxxx Xxxxxx'x knowledge, no proceedings therefor have been initiated or
threatened by the Commission.
(13) All conditions imposed by the OTS in connection with
its approvals of the Reorganization Applications have been satisfied, other than
any post-closing filings and submissions, and no further approval,
authorization, consent or other order of any federal or state board or body is
required in connection with the execution and delivery of this Agreement, the
issuance of the Shares and the consummation of the Reorganization.
(14) The Registration Statement and the Prospectus and any
amendments or supplements thereto, as of their respective effective or issue
dates (other than the financial statements and other financial and statistical
data included therein, as to which no opinion need be rendered) comply as to
form in all material respects with the requirements of the 1933 Act and the 1933
Act Regulations. The information in the Registration Statement and Prospectus
under the captions "Supervision and Regulation," "Taxation," "Restrictions on
Acquisition of First Clover Leaf Financial Corp" and "Description of Capital
Stock of First Clover Leaf Financial Corp. Following the Conversion," to the
extent that it constitutes matters of law, summaries of legal matters, documents
or proceedings or legal conclusions, has been reviewed by Xxxx Xxxxxx and is
correct in all material respects. The descriptions in the Prospectus of statutes
or regulations are accurate summaries and fairly present the information
required to be shown. The information under the caption "The Conversion - Tax
Aspect" has been reviewed by such counsel and fairly describes the federal and
state tax opinions rendered by them and ___________________,
28
respectively, to FFFS, the MHC and the Bank with respect to such matters.
(15) The terms and provisions of the Common Stock conform
in all material respects to the description thereof contained in the Prospectus,
and the form of certificate used to evidence the Shares is in due and proper
form.
(16) There are no legal or governmental proceedings
pending or, to Xxxx Xxxxxx'x knowledge, threatened against any First Federal
Party or any subsidiary which are required to be disclosed in the Registration
Statement and Prospectus other than those disclosed therein, and all pending
legal and governmental proceedings to which any First Federal Party or any of
their respective subsidiaries is the subject which are not disclosed in the
Registration Statement, including ordinary routine litigation, are, considered
in the aggregate, not material.
(17) There are no material contracts, indentures,
mortgages, loan agreements, notes, leases or other instruments required to be
described or referred to in the Reorganization Applications, Registration
Statement and Prospectus or to be filed as exhibits thereto other than those
described or referred to therein or filed as exhibits thereto, and the
description thereof or references thereto are correct in all material respects
and hereby presents the information required to be shown.
(18) FFFS, the Bank and their respective subsidiaries have
obtained all material licenses, permits and other governmental authorizations
currently required for the conduct of their respective businesses, taken as a
whole, as described in the Registration Statement and Prospectus; the Company
has obtained all material licenses, permits and other governmental
authorizations required for the conduct of the business of FFFS, taken as a
whole, as described in the Registration Statement and Prospectus, following
consummation of the Reorganization; all such licenses, permits and other
governmental authorizations are in full force and effect; and FFFS, the Company,
the Bank and their respective subsidiaries are in all material respects
complying therewith.
(19) All corporate acts and other proceedings required to
be taken by or on the part of the First Federal Parties to adopt and approve the
Plan have been properly taken, including the votes of the Board of Directors of
the MHC, the stockholders of FFFS, and the members of the MHC.
(20) The Company's articles of incorporation and bylaws
comply in all material respects with the Maryland General Corporation Law
("MGCL"). The Company is not in violation of its articles of incorporation or
bylaws; the execution and delivery of this Agreement, the incurrence of the
obligations herein set forth and the consummation of the transactions
contemplated herein will not result in any violation of the provisions of the
articles of incorporation or bylaws of the Company.
(21) The Bank's charter and bylaws comply in all material
respects with the HOLA and the rules and regulations of the OTS. The Bank is not
in violation of its charter or bylaws; the execution and delivery of this
Agreement, the incurrence of the obligations herein set forth and the
consummation of the transactions contemplated herein will not result in any
violation of the provisions of the charter or bylaws of the Bank.
(22) To Xxxx Xxxxxx'x knowledge, neither the MHC, FFFS,
the
29
Company nor the Bank is in violation of its Charter and Bylaws or in default or
violation of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other instrument
to which it is a party or by which it or its property may be bound, except for
such defaults or violations which would not have a material adverse impact on
the financial condition or results of operations of the MHC, FFFS, the Company
and the Bank on a consolidated basis. To Xxxx Xxxxxx'x knowledge, the execution
and delivery of this Agreement, the incurrence 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 MHC, FFFS, the Company or the Bank pursuant to any material
contract, indenture, mortgage, loan agreement, note, lease or other instrument
to which the MHC, FFFS, the Company 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 MHC, FFFS,
the Company or the Bank are subject; and such action will not result in any
violation of the provisions of the Charter or Bylaws of the Company, Bank or
MHC, or result in any violation of any applicable federal or state law, act,
regulation (except that no opinion with respect to the securities and blue sky
laws of various jurisdictions or the rules or regulations of the NASD need be
rendered) or order or court order, writ, injunction or decree.
(23) To Xxxx Xxxxxx'x knowledge, none of the First Federal
Parties is in violation of any directive from the OTS to make any material
change in the method of conducting its business, and the First Federal Parties
CFLC and Clover Leaf have conducted and are conducting their respective
businesses so as to comply in all material respect with all applicable statutes
and regulations (including, without limitation, regulations, decisions,
directives and orders of the Illinois Division of Banking, the FDIC and the
OTS).
(24) Neither FFFS, the Company nor the Bank is required to
be registered as an investment company under the Investment Company Act of 1940,
as amended.
(25) The First Federal Parties have the power and
authority to enter into and consummate the transactions contemplated by the
Merger Agreement and this Agreement.
(26) The Merger Agreement has been duly authorized,
executed and delivered by each of the First Federal Parties and constitutes the
valid and binding obligation of each of them, enforceable in accordance with its
terms subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally and subject, as to enforceability, to
general principles of equity (whether considered in an action at law or in
equity).
(27) All corporate acts and other proceedings required to
be taken by or on the part of the First Federal Parties to consummate the Merger
have been properly taken and, as of the closing of the merger of Clover Leaf
into the Bank (the "Bank Merger"), all corporate acts and other proceedings
required to be taken by or on the part of the First Federal Parties to
consummate the Bank Merger will have been properly taken; neither the execution
and delivery of the Merger Agreement, nor the consummation of the transactions
contemplated thereby, with and without the giving of notice or the lapse of
time, or both, will violate any provision of the certificate of incorporation,
charter or bylaws of any First Federal Party.
(28) Except as disclosed in such opinion, there are no
actions, suits, proceedings or investigations (public or private) of any nature
pending or, to Xxxx Xxxxxx'x knowledge, threatened that challenge the validity
or propriety of the Reorganization or which seek
30
or threaten to restrain, enjoin or prohibit or to obtain substantial damages in
connection with the consummation of the Reorganization.
(29) All regulatory and governmental approvals and
consents which are necessary to be obtained by the First Federal Parties and
their subsidiaries to permit the execution, delivery and performance of the
Merger Agreement have been obtained.
(30) All conditions precedent to consummation of the
Merger have been satisfied or waived, including but not limited to those
referenced in the Merger Agreement, and all statutory waiting periods with
respect to all regulatory and governmental approvals of the Merger have expired.
Xxxx Xxxxxx may expressly exclude any opinions as to choice of law and
antitrust matters and may add other qualifications and explanations of the basis
of its opinions as are consistent with the Legal Opinion Accord prepared by the
Section of Business Law of the American Bar Association.
In rendering their opinion, Xxxx Xxxxxx may rely, to the extent such
counsel deems such reliance necessary or appropriate, upon certificates of
governmental officials, certificates or opinions of other counsel reasonably
satisfactory to the Selling Agent and, as to matters of fact, officers'
certificates. The opinion of such counsel need refer only to matters of New
York, Illinois, Maryland and federal law and may add other qualifications and
explanations of the basis of their opinion as may be reasonably acceptable to
the Selling Agent.
(ii) The letter of Xxxx Xxxxxx, addressed to the Selling Agent,
dated the Closing Date, in form and substance to the effect that:
During the preparation of the Conversion Application, the
Registration Statement and the Prospectus, such counsel participated in
conferences with management of and the independent certified public accountants
for the First Federal Parties. Based upon such conferences and such review of
corporate records of the First Federal Parties as such counsel conducted in
connection with the preparation of the Registration Statement and Conversion
Application, nothing has come to their attention that would lead them to believe
that any Conversion Application, the Registration Statement, the Prospectus or
any amendment or supplement thereto (other than financial statements, stock
valuation information and other financial and statistical data included therein,
as to which such counsel need express no view), 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.
(iii) The favorable opinion, dated as of the Closing Date, of
Silver, Xxxxxxxx & Xxxx, L.L.P., counsel for the Selling Agent, with respect to
such matters as the Selling Agent may reasonably require. Such opinion may rely
upon certificates of officers and directors of the First Federal Parties
delivered pursuant hereto or as such counsel shall reasonably request.
(iv) A Blue Sky Memorandum from Xxxx Xxxxxx relating to the
Offering, including Selling Agent's participation therein, and should be
furnished to the Company with a
31
copy thereof addressed to Selling Agent or upon which Xxxx Xxxxxx shall state
Selling Agent may rely. The Blue Sky Memorandum will relate to the necessity of
obtaining or confirming exemptions, qualifications or the registration of the
Common Stock under the state securities laws of all of the states of the United
States and the District of Columbia.
d. At the Closing Date, the Selling Agent shall receive a
certificate of the Chief Executive Officer and the Chief Financial Officer of
each of the First Federal Parties, dated the Closing Date, to the effect that:
(i) they have carefully examined 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 event has occurred which should have been
set forth in an amendment or supplement to the Prospectus which has not been so
set forth, including specifically, but without limitation, any material adverse
change in the condition, financial or otherwise, or in the earnings, capital,
properties or business of the Company, FFFS, the MHC or the Bank and the
conditions set forth in this Section 8 have been satisfied; (iii) since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, there has been no material adverse effect on the business,
financial condition, results of operations, affairs or prospects of the First
Federal Parties and CLFC and Clover Leaf taken as a whole, whether or not
arising in the ordinary course of business; (iv) the representations and
warranties in Section 4 of this Agreement are true and correct with the same
force and effect as though expressly made at and as of the Closing Date;
provided that the representations and warranties as to CLFC and Clover Leaf (and
their subsidiaries) are to the knowledge of the signing officers based on
information provided by CLFC or Clover Leaf; (v) the First Federal Parties have
complied 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 with all
obligations to be satisfied by them after the Conversion; (vi) no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been initiated or threatened by the
Commission or any state securities or Blue Sky authority; (vii) no order
suspending the Offering, the Conversion or the effectiveness of the Prospectus
has been issued and no proceedings for that purpose have been issued and no
proceedings for that purpose have been initiated or threatened by the OTS; and
(viii) to the knowledge of 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) there shall have been no
material adverse effect on the business, financial condition, results of
operations, affairs or prospects of the First Federal Parties, CLFC, Clover Leaf
or any subsidiary thereof taken as a whole since the respective dates as of
which information is given in the Prospectus, except as referred to therein;
(ii) there shall have been no material transaction entered into by any First
Federal Party, CLFC, Clover Leaf or any subsidiary thereof since the latest
dates as of which the financial condition of the Company and the Bank is set
forth in the Prospectus, other than transactions referred to or contemplated
therein; (iii) no First Federal Party shall have received from the OTS or any
other government agency any direction (oral or written) to make any material
change in the method of conducting its business with which it has not complied
(which direction, if any, shall have been disclosed to the Selling Agent) or
which would materially and adversely affect the business, financial condition,
results of operations, affairs or prospects; (iv) no First Federal Party, nor
CLFC, Clover Leaf or any subsidiary thereof shall have been in default (nor
shall an event have occurred which, with notice or lapse of time or both, would
constitute a default) under any provision of any agreement or instrument
relating to any outstanding indebtedness; (v) no action,
32
suit or proceeding, at law or in equity or before or by any federal or state
commission, board or other administrative agency, shall be pending or, to the
knowledge of any First Federal Party, threatened against any First Federal
Party, CLFC, Clover Leaf or any subsidiary thereof or affecting any of their
respective properties wherein an unfavorable decision, ruling or finding would
materially and adversely affect the business, financial condition, results of
operations, affairs or prospects of the First Federal Parties, CLFC and Clover
Leaf taken as a whole; and (vi) the Shares shall have been qualified or
registered for offering and sale or exempted therefrom under the securities or
blue sky laws of the jurisdictions as the Selling Agent shall have reasonably
requested and as agreed to by the Company.
f. Concurrently with the execution of this Agreement, the Selling
Agent and the First Federal Parties shall receive a letter from McGladrey dated
the date hereof and addressed to the Selling Agent: (i) confirming that
McGladrey is a firm of independent certified public accountants with respect to
FFFS and the Bank within the meaning of the 1933 Act and the 1933 Act
Regulations, the 1934 Act and the 1934 Act Regulations and the Code of Ethics of
the American Institute of Certified Public Accountants and no information
concerning McGladrey's relationship with or interests in any First Federal Party
is required to be disclosed in the SB-2 Prospectus, and stating in effect that
in McGladrey's opinion the consolidated financial statements of FFFS included in
the SB-2 Prospectus and covered by McGladrey's opinion included therein comply
as to form in all material respects with the applicable accounting requirements
of the 1933 Act, the 1934 Act, the 1933 Act Regulations, the 1934 Act
Regulations and accounting principles generally accepted in the United States of
America; (ii) stating in effect that, on the basis of certain agreed upon
procedures (but not an examination in accordance with generally accepted
auditing standards) consisting of a review, in accordance with Statement on
Auditing Standards No. 71, of the latest available unaudited interim
consolidated financial statements of FFFS prepared by FFFS, a reading of the
minutes of the meetings of the Board of Directors, Executive Committee, Audit
Committee and stockholders of FFFS and the Bank and consultations with officers
of FFFS and the Bank responsible for financial and accounting matters, nothing
has come to McGladrey's attention which causes McGladrey to believe that: (A)
such unaudited consolidated financial statements including any "Recent
Developments" section in the SB-2 Prospectus do not comply as to form in all
material respects with applicable accounting requirements; (B) such unaudited
consolidated financial statements including any "Recent Developments" section
are not in conformity with accounting principles generally accepted in the
United States of America, applied on a basis substantially consistent with that
of the audited consolidated financial statements included in the SB-2
Prospectus; (C) during the period from the date of the latest unaudited
consolidated financial statements included in the SB-2 Prospectus to a specified
date not more than five business days prior to the date hereof, there was any
material increase in borrowings (defined as securities sold under agreements to
repurchase and any other form of debt other than deposits) or non-performing
loans, special mention loans or decrease in the deposits or loan allowance,
total assets, stockholders' equity or there was any change in common stock
outstanding (other than for stock option plans) or (D) there was any material
decrease in retained earnings of FFFS at the date of such letter as compared
with amounts shown in the latest unaudited consolidated balance sheet included
in the SB-2 Prospectus or there was any decrease in net income, net interest
income, provision for loan losses or net income after provision or increase in
non-interest expense of FFFS for the number of full months commencing
immediately after the period covered by the latest unaudited consolidated income
statement included in the SB-2 Prospectus and ended on the latest month end
prior to the date of the SB-2 Prospectus as compared to the corresponding period
in the preceding year; and (iii) stating that, in addition to the examination
referred to in McGladrey's
33
opinion included in the SB-2 Prospectus and the performance of the procedures
referred to in clause (ii) of this paragraph (e), McGladrey has compared with
the general accounting records of FFFS's and/or the Bank's, as applicable, which
are subject to the internal controls of the accounting system and other data
prepared by FFFS and/or the Bank, as applicable, directly from such accounting
records, to the extent specified in such letter, such amounts and/or percentages
set forth in the SB-2 Prospectus as the Selling Agent may reasonably request;
and they have found such amounts and percentages to be in agreement therewith
(subject to rounding).
g. At the Closing Date, the Selling Agent shall receive a letter
from McGladrey, dated the Closing Date, addressed to the Selling Agent,
confirming the statements made by McGladrey in the letter delivered pursuant to
paragraph (f) of this Section 8, the "specified date" referred to in clause (ii)
(C) thereof to be a date specified in such letter, which shall not be more than
three (3) business days prior to the Closing Date.
h. At the Closing Date, the Bank shall receive a letter from
Xxxxxx & Company, Inc., dated the Closing Date (i) confirming that said firm is
independent of the First Federal Parties and is experienced and expert in the
area of corporate appraisals within the meaning of Title 12 of the Code of
Federal Regulations, Section 563b.200(b), (ii) stating in effect that the
Independent Valuation 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 its opinion of the aggregate pro forma market
value of the Company and the Bank, as most recently updated, remains in effect.
i. At or prior to the Closing Date, the Selling Agent shall
receive: (i) a copy of the letters from the OTS approving the Reorganization
Applications and authorizing the use of the Prospectus; (ii) a copy of the
orders from the Commission declaring the Registration Statement and the Exchange
Act Registration Statement effective; (iii) a certificate from the OTS
evidencing the valid existence of the Bank; (iv) a certificate from the FDIC
evidencing the Bank*s insurance of accounts; (v) a certificate from the
FHLB-Chicago evidencing the Bank*s membership therein; (vi) a certificate from
the OTS evidencing the Company's standing as a registered savings and loan
holding company; (vii) a copy of the Bank's federal stock charter; and (viii) a
copy of the Company's articles of incorporation.
j. At the Closing Date, counsel to the Selling Agent shall have
been furnished with such other documents and opinions as they may reasonably
require for the purpose of enabling them to pass upon the sale of the Shares as
herein contemplated and related proceedings or in order to evidence the accuracy
or completeness of any of the representations and warranties, or the fulfillment
of any of the conditions, herein contained; and all proceedings taken by the
First Federal Parties in connection with the Reorganization and the sale of the
Shares as herein contemplated shall be satisfactory in form and substance to the
Selling Agent and counsel to the Selling Agent.
k. The First Federal Parties shall not have sustained since the
date of the latest audited consolidated financial statements included in the
Registration Statement and Prospectus any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, other than as set forth or contemplated in the Registration Statement,
which is in the judgment of the Selling Agent sufficiently material and adverse
as to make it impracticable or inadvisable to proceed with the Offering or the
delivery of the Shares on the terms and in the
34
manner contemplated in the Prospectus.
l. Subsequent to the date hereof, there shall not have occurred
any of the following: (i) a suspension or limitation in trading in securities
generally on the New York Stock Exchange or American Stock Exchange or in the
over-the-counter market, or quotations halted generally on the Nasdaq Stock
Market, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices for securities have been required by either of such exchanges
or the NASD or by order of the Commission or any other governmental authority
other than temporary trading halts or limitation (A) imposed as a result of
intraday changes in the Dow Xxxxx Industrial Average, (B) lasting no longer than
until the regularly scheduled commencement of trading on the next succeeding
business-day and (C) which when combined with all other such halts occurring
during the previous five (5) business days, total less than two (2) hours; (ii)
a general moratorium on the operations of operation of commercial banks, federal
or state savings banks in New York or a general moratorium on the withdrawal of
deposits from commercial banks, federal or state savings and loan associations
or savings banks in New York declared by either federal or state authorities; or
(iii) there shall not have occurred any material adverse change in the financial
markets in the United States or elsewhere or any outbreak of hostilities or
escalation thereof or other calamity or crisis, including, without limitation,
terrorist activities after the date hereof, the effect of which, in the judgment
of the Agent, is so material and adverse as to make it impracticable to market
the Shares or to enforce contracts, including subscriptions or purchase orders,
for the sale of the Shares.
m. All such opinions, certificates, letters and documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to the Selling Agent and to counsel for the
Selling Agent. Any certificate signed by an officer of the MHC, FFFS, the
Company or the Bank and delivered to the Selling Agent or to counsel for the
Selling Agent shall be deemed a representation and warranty by the MHC, FFFS,
the Company or the Bank, as the case may be, to the Selling Agent as to the
statements made therein.
n. If any of the conditions specified in this Section 8 shall not
have been fulfilled when and as required by this Agreement, or by September 30,
2006, this Agreement and all of the Selling Agent's obligations hereunder may be
canceled by the Selling Agent by notifying the First Federal Parties of such
cancellation in writing or by fax 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 1, 6 and 7 hereof.
Notwithstanding the above, if this Agreement is canceled pursuant to this
paragraph, the First Federal Parties jointly and severally agree to reimburse
the Selling Agent for all of the Selling Agent's out-of-pocket expenses
reasonably incurred by the Selling Agent, including any legal fees (and out-of-
pocket expenses) to be paid to the Selling Agent's counsel, subject to the
limits expressed in Section 1(d) hereof.
SECTION 9. Termination. The Selling Agent may terminate this Agreement
by giving the notice indicated below in this Section 9 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 the Selling Agent*s opinion, impracticable to proceed with the offering
of the Shares; or if trading on the NYSE shall have suspended (except that this
shall not apply to the imposition of NYSE trading collars imposed on program
trading); or if the United States shall have become involved in a war or major
hostilities;
35
or if a general banking moratorium has been declared by a state or
federal authority which has a material effect on the combined institution or the
Offering; 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
adverse change in the financial condition, results of operations or business of
the combined institution, or if the combined institution 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 adverse change
in the financial condition, results of operations or business of the combined
institution.
b. In the event the Company fails to sell the required minimum
number of the Shares by _________ __, 2006, and in accordance with the
provisions of the Plan or as required by the MHC Regulations, and applicable
law, this Agreement shall terminate upon refund by the Company to each person
who has subscribed for or ordered any of the Shares the full amount which it may
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 as set forth in Sections 1, 6 and 7 hereof.
c. If any of the conditions specified in Section 8 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 Selling Agent*s
obligations hereunder may be cancelled by the Selling Agent by notifying the
Company 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 1, 6 and 7
hereof.
d. If the Selling Agent elects to terminate this Agreement as
provided in this Section, the Company shall be notified promptly by telephone or
telegram, confirmed by letter.
The Company, FFFS, the MHC and the Bank may terminate this Agreement in
the event the Selling Agent is in material breach of the representations and
warranties or covenants contained in Section 4.2 and such breach has not been
cured after the Selling Agent was provided with notice of such breach.
This Agreement may also be terminated by mutual written consent of the
parties hereto.
SECTION 10. Notices. All communications hereunder, except as herein
otherwise specifically provided, shall be mailed in writing and if sent to the
Selling Agent shall be mailed, delivered or telegraphed and confirmed to Xxxxx,
Xxxxxxxx & Xxxxx, 000 Xxxxxxxxx Xxxxx, Xxxxxx, Xxxx 00000-0000, Attention:
Xxxxxxx X. Xxxxxx (with a copy to Silver, Xxxxxxxx & Xxxx, L.L.P., 0000
Xxxxxxxxx Xxxxxx, XX, Xxxxxxxxxx, XX 00000, Attention: Xxxx X. Xxxxxxxxxx, P.C.)
and, if sent to a First Federal Party, shall be mailed, delivered or telegraphed
and confirmed to such First Federal Party at 000 Xx. Xxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxxx 00000, Attention: Xxxxx X. Xxxxx, President (with a copy to Xxxx Xxxxxx
Xxxxxxxx & Xxxxxx P.C., 0000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 000, Xxxxxxxxxx, X.X.
00000, Attention: Xxxxxx X. Xxxxxxxx, Esq.)
SECTION 11. Parties. The First Federal Parties shall be entitled to act
and rely on any request, notice, consent, waiver or agreement purportedly given
on behalf of the Selling Agent when the same shall have been given by the
undersigned. The Selling Agent shall be entitled to act and rely on any request,
notice, consent, waiver or agreement purportedly given on behalf of the
36
First Federal Parties, when the same shall have been given by the undersigned or
any other officer of the First Federal Parties This Agreement shall inure solely
to the benefit of, and shall be binding upon, the Selling Agent, the Company,
FFFS, the MHC, the Bank, and their respective successors and assigns, and no
other person shall have or be construed to have any legal or equitable right,
remedy 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 12. Closing. The closing for the sale of the Shares shall take
place on the Closing Date at such location as determined pursuant to Section 2.
At the closing, the Company shall deliver to the Selling Agent in next day funds
the commissions, fees and expenses due and owing to the Selling Agent as set
forth in Sections 1 and 6 hereof and the opinions and certificates required
hereby and other documents deemed reasonably necessary by the Selling 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 13. Partial Invalidity. In the event that any term, provision
or covenant herein or the application thereof to any circumstance or situation
shall be invalid or unenforceable, in whole or in part, the remainder hereof and
the application of said term, provision or covenant to any other circumstances
or situation shall not be affected thereby, and each term, provision or covenant
herein shall be valid and enforceable to the full extent permitted by law.
SECTION 14. Governing Law and Construction. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
SECTION 15. 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.
SECTION 16. Entire Agreement. This Agreement, including schedules and
exhibits hereto, which are integral parts hereof and incorporated as though set
forth in full, constitutes the entire agreement between the parties pertaining
to the subject matter hereof superseding any and all prior or contemporaneous
oral or prior written agreements, proposals, letters of intent and
understandings, and cannot be modified, changed, waived or terminated except by
a writing which expressly states that it is an amendment, modification or
waiver, refers to this Agreement and is signed by the party to be charged. No
course of conduct or dealing shall be construed to modify, amend or otherwise
affect any of the provisions hereof.
SECTION 17. Survival. The respective indemnities, agreements,
representations, warranties and other statements of the First Federal Parties
and the Selling Agent, as set forth in this Agreement, shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement or any investigation (or any statement as to the results thereof) made
by or on behalf of the Selling Agent or any of the Selling Agent's officers or
directors or any person controlling the Selling Agent, or the First Federal
Parties, or any of their respective officers or directors or any person
controlling the First Federal Parties, and shall survive termination of this
Agreement and receipt or delivery of any payment for the Shares.
SECTION 18. Waiver of Trial by Jury. Each of the Selling Agent and the
First
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Federal Parties waives all right to trial by jury in any action, proceeding,
claim or counterclaim (whether based on contract, tort, or otherwise) related to
or arising out of this Agreement.
This Agreement is made solely for the benefit of and will be binding
upon the parties hereto and their respective successors and the directors,
officers and controlling persons referred to in Section 7 hereof, and no other
person will have any right or obligation hereunder.
The term "successors" shall not include any purchaser of any of the
Shares. Time shall be of the essence for this Agreement.
This Agreement may be signed in various counterparts which together
will constitute one agreement. The remainder of this page has been intentionally
left blank.
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If the foregoing correctly sets forth the arrangement among the
Company, FFFS, the MHC, the Bank and the Agent, please indicate acceptance
thereof in the space provided below for that purpose, whereupon this letter and
the Agent's acceptance shall constitute a binding agreement.
Very truly yours,
FIRST CLOVER LEAF FINANCIAL FIRST FEDERAL FINANCIAL
CORP. SERVICES, INC.
By Its Authorized Representative: By Its Authorized Representative:
---------------------------------- ------------------------------------
Xxxxx X. Xxxxx, President Xxxxx X. Xxxxx, President
FIRST FEDERAL FINANCIAL FIRST FEDERAL SAVINGS &
SERVICES, MHC LOAN ASSOCIATION OF
EDWARDSVILLE
By Its Authorized Representative: By Its Authorized Representative
---------------------------------- ------------------------------------
Xxxxx X. Xxxxx, President Xxxxx X. Xxxxx, President
Accepted as of the date first above written:
Xxxxx, Xxxxxxxx & Xxxxx, Inc.
-----------------------------
Xxxxxxx X. Xxxxxx, Managing Director
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