EFC BANCORP, INC.
Up to 6,936,513 Shares
COMMON STOCK
($0.01 Par Value)
Subscription Price $10.00 Per Share
AGENCY AGREEMENT
________ __, 1998
Xxxxxxx Xxxx & Company,
a division of Xxxxx, Xxxxxxxx & Xxxxx, Inc.
000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000-0000
Ladies and Gentlemen:
EFC Bancorp, Inc., a Delaware corporation (the "Company") and Elgin
Financial Center, S.B., an Illinois state chartered mutual savings bank (the
"Bank," which shall include all references to the Bank in the mutual or stock
form, as indicated by the context), with its deposit accounts insured by the
Savings Association Insurance Fund ("SAIF") administered by the Federal Deposit
Insurance Corporation ("FDIC"), hereby confirm their agreement with Xxxxxxx Xxxx
& Company, a division of Xxxxx, Xxxxxxxx & Xxxxx, Inc. ("Xxxx") as follows:
SECTION 1. THE OFFERING. The Bank, in accordance with its plan of
conversion adopted by its Board of Directors of the Bank (the "Plan"), intends
to convert from a state chartered mutual savings bank to a state chartered stock
savings bank, and to issue all of its issued and outstanding capital stock to
the Company. In addition, pursuant to the Plan, the Company will offer and sell
up to 6,936,513 shares of its common stock, par value $0.01 per share (the
"Shares" or "Common Stock"), in a subscription offering (the "Subscription
Offering") to (1) depositors of the Bank with savings accounts of $50 or more as
of July 31, 1996 ("Eligible Account Holders"), (2) the Company's and Bank's
Employee Stock Ownership Plan ("ESOP"), (3) depositors of the Bank with savings
accounts of $50 or more as of December 31, 1997 ("Supplemental Eligible Account
Holders") and (4) depositors of the Bank as of the Voting Record Date, _______
__, 1998 ("Other Members"). Subject to the prior subscription rights of the
above-listed parties, the Company is offering for sale in a direct community
offering (the "Community Offering" and, when referred to together with the
Subscription Offering, the "Subscription and Community Offering") conducted
concurrently with the Subscription Offering, the Shares not so subscribed for or
ordered in the Subscription Offering to certain members of
the general public to whom a copy of the Prospectus (as hereinafter defined) is
delivered, with a preference given to natural persons and trusts of natural
persons who are permanent residents of Xxxx, Cook and XxXxxxx Counties of
Illinois (the "Local Community") ("Other Subscribers") (all such offerees being
referred to in the aggregate as "Eligible Offerees"). It is anticipated that
shares not subscribed for in the Subscription and Community Offering will be
offered to members of the general public on a best efforts basis by a selling
group of broker-dealers managed by Xxxx (the "Syndicated Community Offering")
(the Subscription Offering, Community Offering and Syndicated Community Offering
are collectively referred to as the "Offering"). It is acknowledged that the
purchase of Shares in the Offering is subject to the maximum and minimum
purchase limitations as described in the Plan and that the Company and the Bank
may reject, in whole or in part, any orders received in the Community Offering
or Syndicated Community Offering. Collectively, these transactions are referred
to herein as the "Conversion."
In connection with the Conversion and pursuant to the terms of the Plan as
described in the Prospectus, immediately following the consummation of the
Conversion, subject to the approval of the members of Bank and compliance with
certain conditions as may be imposed by regulatory authorities, the Company will
contribute newly issued Common Stock equal to 8% of such Shares sold in the
Conversion to the Elgin Financial Foundation (the "Foundation") such shares
hereinafter being referred to as the ("Foundation Shares").
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (File No. 333-_____) (the
"Registration Statement") containing a prospectus relating to the Offering for
the registration of the Shares under the Securities Act of 1933 (the "1933
Act"), and has filed such amendments thereof, if any, and such amended
prospectuses as may have been required to the date hereof. The prospectus, as
amended, on file with the Commission at the time the Registration Statement
initially became effective is hereinafter called the "Prospectus," except that
if any prospectus is filed by the Company pursuant to Rule 424(b) or (c) of the
rules and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations") differing from the prospectus on file at the time the Registration
Statement initially becomes effective, the term "Prospectus" shall refer to the
prospectus filed pursuant to Rule 424(b) or (c) from and after the time said
prospectus is filed with the Commission.
In accordance with the Illinois Compiled Statutes Annotated and the
Illinois Administrative Rules promulgated pursuant thereto (together the
"ICSA"), the Bank has filed with the Illinois Commissioner of Banks and Real
Estate, Division of Banks (the "Division") an Application for Conversion (the
"Conversion Application"), including the prospectus, and has filed such
amendments thereto, if any, as may have been required by the Division. The
Conversion Application has been approved by the Division and the related
Prospectus has been authorized for use by the Division. The Bank has also filed
a Notice of Conversion (the "Notice") with the FDIC and has filed such
amendments thereto as may have been required by the FDIC. The FDIC has provided
the Bank with a Notice of Non-Objection (the "Non-Objection Notice") to the
Conversion. In addition, the Company has filed with the Board of Governors of
the Federal Reserve System ("FRB") and the Division an application (the "Holding
Company Application")
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to become a bank holding company and for approval to acquire the Bank.
SECTION 2. RETENTION OF XXXX; COMPENSATION; SALE AND DELIVERY OF THE
SHARES. Subject to the terms and conditions herein set forth, the Company and
the Bank hereby appoint Xxxx (ii) as their exclusive financial advisory and
marketing agent to utilize its best efforts to solicit subscriptions for Shares
of the Common Stock and to advise and assist the Company and the Bank with
respect to the Company's sale of the Shares in the Offering and (ii) to
participate in the Offering in the areas of market making, research coverage and
syndicate formation (if necessary).
On the basis of the representations, warranties, and agreements herein
contained, but subject to the terms and conditions herein set forth, Xxxx
accepts such appointment and agrees to consult with and advise the Company and
the Bank as to the matters set forth in the letter agreement ("Letter
Agreement"), dated September 2, 1997, between the Bank and Xxxx (a copy of which
is attached hereto as Exhibit A). It is acknowledged by the Company and the
Bank that Xxxx shall not be required to purchase any Shares and shall not be
obligated to take any action which is inconsistent with all applicable laws,
regulations, decisions or orders. In the event of a Syndicated Community
Offering, Xxxx will assemble and manage a selling group of broker-dealers which
are members of the National Association of Securities Dealers, Inc. (the "NASD")
to participate in the solicitation of purchase orders for shares under a
selected dealers' agreement ("Selected Dealers' Agreement"), the form of which
is set forth as Exhibit B to this Agreement.
The obligations of Xxxx pursuant to this Agreement 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 June 30, 1998 (the "End
Date"). All fees or expenses due to Xxxx but unpaid will be payable to Xxxx 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 Xxxx may agree to renew this Agreement under mutually
acceptable terms.
In the event the Company is unable to sell a minimum of 4,458,250 Shares
(or such lesser amount approved by the Division) within the period herein
provided, this Agreement shall terminate and the Company shall refund to any
persons who have subscribed for any of the Shares, the full amount which it may
have received from them plus accrued interest as set forth in the Prospectus;
and none of the parties to this Agreement shall have any obligation to the other
parties hereunder, except as otherwise set forth in this Section 2 and in
Sections 6, 8 and 9 hereof.
In the event the Offering is terminated for any reason not attributable to
the action or inaction of Xxxx, Xxxx shall be paid the fees and expenses due to
the date of such termination pursuant to subparagraphs (a) and (d) below.
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If all conditions precedent to the consummation of the Conversion,
including, without limitation, the sale of all Shares required by the Plan to be
sold, are satisfied, the Company agrees to issue, or have issued, the Shares
sold in the Offering and to release for delivery certificates for such Shares on
the Closing Date (as hereinafter defined) against payment to the Company by any
means authorized by the Plan, provided however, that no funds shall be released
to the Company until the conditions specified in Section 7 hereof shall have
been complied with to the reasonable satisfaction of Xxxx and its counsel. The
release of Shares against payment therefor shall be made at _____ _.m., Central
Time, on a date and at a place acceptable to the Company, the Bank and Xxxx (it
being understood that such date shall not be more than ten business days after
termination of the Offering) or such other time or place as shall be agreed upon
by the Company, the Bank and Xxxx. 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, or have released or delivered, the
Shares sold in the Offering, in accordance with the terms herein, is called the
"Closing Date."
Xxxx shall receive the following compensation for their services hereunder:
(a) A management fee to Xxxx in the amount of $40,000 payable in four
consecutive monthly installments of $10,000 commencing on September 2, 1997. As
of the date of this Agreement, $_______ had been received by Xxxx.
(b) A success fee of 1.25% of the dollar amount of Common Stock sold in
the Subscription and Community Offering, excluding Common Stock purchased by
directors, officers and employees (and members of their immediate families) of
the Bank and by the ESOP and any tax-qualified or stock-based compensation plan
(excluding individual retirement plans ("IRAs")) and any similar plan created by
the Bank for some or all of its directors or employees, payable on the Closing
Date.
(c) If any shares of the Company's stock remain available after the
Subscription and Community Offering, at the request of the Bank, Xxxx will seek
to form a syndicate of registered broker-dealers to assist in the sale of such
shares of Common Stock on a best efforts basis, subject to the terms and
conditions set forth in the selected dealers agreement. Xxxx will endeavor to
distribute the Common Stock among dealers in a fashion which best meets the
distribution objectives of the Bank and the Plan of Conversion. Xxxx will be
paid a fee not to exceed 5.5% of the aggregate Purchase Price of the shares of
Common Stock sold pursuant to the selected dealers agreement and then will pass
on to selected broker-dealers who assist in the syndicated community 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 affected with the assistance
of a broker/dealer shall be transmitted by Xxxx to such broker/dealer. The
decision to utilize selected broker-dealers will be made by the Bank upon
consultation with Xxxx. In the event, with respect to any stock purchases, fees
are paid pursuant to this subparagraph 2(c), such fees shall be in lieu of, and
not in addition to, payment pursuant to subparagraphs 2(a) and 2(b).
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(d) The Bank and the Company hereby agree to reimburse Xxxx, from time to
time upon Xxxx'x request, for its reasonable out-of-pocket expenses and the
reasonable fees and expenses of its counsel (such fees of counsel will not be
incurred without the prior approval of the Bank). Such reimbursement of legal
fees shall not exceed $40,000. The Bank will bear the expenses of the Offering
customarily borne by issuers including, without limitation, Division, SEC, "Blue
Sky," and NASD filing and registration fees; the fees of the Bank's accountants,
conversion agent, attorneys, appraiser, transfer agent and registrar, printing,
mailing and marketing expenses associated with the Conversion; and the fees set
forth under this Section 2.
Full payment of Xxxx'x actual and accountable expenses, advisory fees and
compensation shall be made in next day funds on the earlier of the Closing Date
or a determination by the Bank to terminate or abandon the Plan.
Xxxx will provide financial advisory assistance for a period of one year
following completion of the Conversion as set forth in the Letter Agreement.
Following this initial one-year term, if Xxxx and the Company wish to continue
the relationship, a fee will be negotiated and an agreement entered into at that
time.
SECTION 3. PROSPECTUS: OFFERING. The Shares are to be initially offered
in the Offering at the Purchase Price as defined and set forth on the cover page
of the Prospectus.
SECTION 4. REPRESENTATIONS AND WARRANTIES. The Company and the Bank
jointly and severally represent and warrant to Xxxx on the date hereof as
follows:
(a) The Registration Statement was declared effective by the Commission on
_________, 1998. At the time the Registration Statement, including the
Prospectus contained therein (including any amendment or supplement thereto),
became effective, the Registration Statement complied in all material respects
with the requirements of the 1933 Act and the 1933 Act Regulations and the
Registration Statement, including the Prospectus contained therein (including
any amendment or supplement thereto), and any information regarding the Company
or the Bank contained in Sales Information (as such term is defined in Section 8
hereof) authorized by the Company or the Bank for use in connection with the
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) or (c) Prospectus was filed with
the Commission; provided, however, that the representations and warranties in
this Section 4(a) shall not apply to statements or omissions made in reliance
upon and in conformity with written information furnished to the Company or the
Bank by Xxxx expressly regarding Xxxx for use in the Prospectus under the
captions "The Conversion-Marketing and Underwriting Arrangements" or statements
in or omissions from any Sales Information or information filed pursuant to
state securities or blue sky laws or regulations regarding Xxxx.
(b) The Bank has filed with the Division, pursuant to the ICSA, the
Conversion Application and filed the FDIC Notice with the FDIC and has filed
such amendments thereto and
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supplementary materials as may have been required to the date hereof including
copies of the Bank's Proxy Statement, to be dated __________, 1998 relating to
the Conversion (the "Proxy Statement"), and the Prospectus. The Division has,
by order letter dated _________, 1998, approved the Conversion Application, such
order remains in full force and effect and no order has been issued by the
Division suspending or revoking such order and no proceedings therefor have been
initiated or, to the knowledge of the Company or the Bank, threatened by the
Division. At the date of such approval and at the Closing Date referred to in
Section 2, the Conversion Application complied and will comply in all material
respects with the applicable provisions of the ICSA except as waived in writing
by the Director of the Division. The FDIC has, by letter issued on ________,
1998, issued the Non-Objection Notice, such letter remains in full force and
effect and no letter or order has been issued by the FDIC suspending or revoking
such letter and no proceedings therefor have been initiated or, to the knowledge
of the Company or the Bank, threatened by the FDIC. At the date of such
approval, the FDIC Notice complied in all material respects with the applicable
provisions of the FDIC conversion regulations (the "Conversion Regulations").
The Conversion Application and the FDIC Notice, including the Prospectus
(including any amendment or supplement thereto), do not include any untrue
statement of a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the representations and warranties
in this Section 4(b) shall not apply to statements or omissions made in reliance
upon and in conformity with written information furnished to the Company or the
Bank by Xxxx expressly regarding Xxxx for use in the Prospectus contained in the
Conversion Application under the caption "The Conversion-Marketing and
Underwriting Arrangements" or statements in or omissions from any sales
information or information filed pursuant to state securities or blue sky laws
or regulations regarding Xxxx.
(c) The Company has filed with the Office of Thrift Supervision ("OTS")
its application on Form H-(e)1 (the "Holding Company Application") to become a
registered savings and loan holding company under the Home Owners' Loan Act, as
amended ("HOLA").
(d) No order has been issued by the Commission, the FDIC, the OTS or the
Division preventing or suspending the use of the Prospectus and no action by or
before any such government entity to revoke any approval, authorization or order
of effectiveness related to the Conversion is, to the best knowledge of the
Company or the Bank, pending or threatened.
(e) To the best knowledge of the Company, no person has sought to obtain
review of the final action of the FDIC, the OTS or the Division in approving or
taking no objection to the Plan or in approving the Conversion or the Holding
Company Application pursuant to the ICSA, the Conversion Regulations, the HOLA,
or any other applicable statute or regulation.
(f) At the time of their use, the Proxy Statement and any other proxy
solicitation materials will complying all material respects with the applicable
provisions of the ICSA and 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 the light of the circumstances under which they were made, not
misleading. The Company and the Bank will promptly file the Prospectus and any
6
supplemental sales literature with the Division and the FDIC. The Prospectus
and all supplemental sales literature, as of the date the Registration Statement
became effective and at the Closing Date referred to in Section 2, complied and
will comply in all material respects with the applicable requirements of the
ICSA and the Conversion Regulations and, at or prior to the time of their first
use, will have received all required authorizations of the Division and the FDIC
for use in final form.
(g) The Bank has been duly organized and is a validly existing state
chartered savings bank in the mutual form of organization under the laws of the
State of Illinois and upon consummation of the Conversion will become a duly
organized and validly existing state chartered savings bank in the capital stock
form of organization under the laws of the State of Illinois, in both instances
duly authorized to conduct its business and own its property as described in the
Registration Statement and the Prospectus; the Bank has obtained all material
licenses, permits and other governmental authorizations currently required for
the conduct of its business; all such licenses, permits and governmental
authorizations are in full force and effect, and the Bank is in all material
respects complying with all laws, rules, regulations and orders applicable to
the operation of its business; the Bank is duly qualified as a foreign
corporation to transact business and is in good standing in each jurisdiction in
which its ownership of property or leasing of property or the conduct of its
business requires such qualification, unless the failure to be so qualified in
one or more of such jurisdictions would not have a material adverse effect on
the financial condition, or the business, operations or income of the Bank. The
Bank does not own equity securities or any equity interest in any other business
enterprise except as described in the Prospectus or as would not be material to
the operations of the Bank.
(h) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware with
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and the
Prospectus, and the Company is qualified to do business as a foreign corporation
in each jurisdiction in which the conduct of its business requires such
qualification, except where the failure to so qualify would not have a material
adverse effect on the financial condition, or the business, operations or income
of the Company. The Company has obtained all material licenses, permits and
other governmental authorizations currently required for the conduct of its
business; all such licenses, permits and governmental authorizations are in full
force and effect, and the Company is in all material respects complying with all
laws, rules, regulations and orders applicable to the operation of its business.
(i) The Bank's wholly owned subsidiary, Fox Valley Service Corporation of
Elgin (the "Subsidiary"), is inactive.
(j) The Bank is a member of the Federal Home Loan Bank of Chicago
("FHLB-Chicago"). The deposit accounts of the Bank are insured by the FDIC up
to the applicable limits; and no proceedings for the termination or revocation
of such insurance are pending or, to the best knowledge of the Bank, threatened.
7
(k) The Company and the Bank have good and marketable title to all real
property and other assets material to the business of the Company and the Bank
and to those properties and assets described in the Registration Statement and
Prospectus as owned by them, free and clear of all liens, charges, encumbrances
or restrictions, except such as are described in the Registration Statement and
Prospectus or are not material to the business of the Company and the Bank,
taken as a whole; and all of the leases and subleases material to the business
of the Company and the Bank under which the Company or the Bank hold properties,
including those described in the Registration Statement and Prospectus, are
valid and binding agreements of the Company or the Bank, enforceable in
accordance with their terms, subject, as to enforceability, to bankruptcy,
insolvency, reorganization, moratorium and other laws of general applicability
relating to or affecting creditors' rights, and to general principles of equity.
(l) The Company and the Bank have all such power, authority,
authorizations, approvals and orders as may be required to enter into this
Agreement, to carry out the provisions and conditions hereof and to issue and
sell (i) the capital stock of the Bank to the Company and (ii) the Shares to be
sold by the Company as provided herein and as described in the Prospectus.
(m) The Company and the Bank are not in violation of any directive
received from the FDIC, the OTS or the Division to make any material change in
the method of conducting their businesses so as to comply in all material
respects with all applicable statutes and regulations (including, without
limitation, regulations, decisions, directives and orders of the FDIC, the OTS
and the Division), and, except as set forth in the Registration Statement and
the Prospectus, there is no action, suit or proceeding before or by any court,
regulatory authority or governmental agency or body, pending or, to the
knowledge of the Company and the Bank, threatened, which would materially and
adversely affect the Conversion, the performance of this Agreement or the
consummation of the transactions contemplated in the Plan and as described in
the Registration Statement and the Prospectus or which would result in any
material adverse change in the financial condition, results of operations or
business prospects of the Company and the Bank, taken as a whole.
(n) The Bank has obtained opinions of its special counsel, Xxxxxxx, Xxxxxx
& Xxxxxxxx with respect to the legality of the Securities issued and the federal
income tax consequences of the Conversion copies of which are filed as exhibits
to the Registration Statement; the summaries of the aforesaid opinions as
disclosed in the Prospectus are accurate and complete in all material respects;
and the facts and representations upon which such opinions are based are
truthful, accurate and complete in all material respects, and neither the Bank
nor the Company has taken or will take any action inconsistent therewith.
(o) The consolidated financial statements which are included in the
Prospectus fairly present the financial condition, results of operations,
retained earnings and cash flows of the Bank at the respective dates thereof and
for the respective periods covered thereby and comply as to form in all material
respects with the applicable accounting requirements of the Commission, and the
rules and regulations of the FDIC and the Division. Such financial statements
have been prepared in accordance with generally accepted accounting principles
consistently applied through
8
the periods involved except as noted therein, present fairly in all material
respects the information required to be stated therein and are consistent with
the most recent financial statements and other reports filed by the Bank with
the Division and the FDIC. The other financial, statistical and pro forma
information and related notes (except the appraisal data) included in the
Prospectus present fairly the information shown therein on a basis consistent
with the audited and unaudited consolidated financial statements of the Bank
included in the Prospectus, and as to the pro forma adjustments, the adjustments
made therein have been properly applied on the basis described therein.
(p) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus: (i) there has not been any material
adverse change in the financial condition of the Company or the Bank considered
as one enterprise, or in the financial condition, results of operation or
business prospects of the Company or the Bank, whether or not arising in the
ordinary course of business; (ii) except as disclosed in the Registration
Statement and Prospectus, there has not been any material increase in the long
term debt of the Bank or in loans past due 90 days or more or real estate
acquired by foreclosure, by deed-in-lieu of foreclosure or deemed in-substance
foreclosure or any material decrease in retained earnings or total assets of the
Bank nor has the Company or the Bank issued any securities (other than as
contemplated by this Agreement) or incurred any liability or obligation for
borrowing other than in the ordinary course of business and (iii) there have not
been any material transactions entered into by the Company or the Bank, except
with respect to those transactions entered into in the ordinary course of
business.
(q) The capitalization, liabilities, assets, properties and business of
the Company and the Bank conform in all material respects to the descriptions
thereof contained in the Prospectus.
(r) Neither the Company nor the Bank has any material contingent
liabilities, except as set forth in the Prospectus.
(s) As of the date hereof, neither the Company nor the Bank is in
violation of its articles of incorporation or bylaws or charter or bylaws, as
applicable (and the Bank will not be in violation of its charter or bylaws in
capital stock form at the time of consummation of the Conversion), or in default
in the performance or observance of any material obligation, agreement,
covenant, or condition contained in any material contract, lease, loan
agreement, indenture or other instrument to which it is a party or by which it
or any other instrument to which it is a party or by which it or any of its
property may be bound; the consummation of the Conversion, the execution,
delivery and performance of this Agreement and the consummation of the
transactions herein contemplated have been duly and validly authorized by all
necessary corporate action on the part of the Company and the Bank and this
Agreement has been validly executed and delivered by the Company and the Bank
and is the valid, legal and binding Agreement of the Company and the Bank
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by (i) bankruptcy, insolvency, or other laws now or hereafter in
effect affecting the enforceability of the rights of creditors generally or the
rights of creditors of Illinois state chartered savings banks and their holding
companies, (ii) general
9
equitable principles, and (iii) applicable law with respect to the
indemnification and/or contribution provisions contained herein (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
The consummation of the transactions herein contemplated will not: (i) conflict
with or constitute a breach of, or default under, the articles of incorporation
and bylaws of the Company or the charter and bylaws of the Bank (in either
mutual or capital stock form), or any material contract, lease or other
instrument to which the Company or the Bank is a party, or any applicable law,
rule, regulation or order; (ii) violate any authorization, approval, judgement,
decree, order, statute, rule or regulation applicable to the Company or the
Bank, except for such violation which would not have a material adverse effect
on the financial condition and results of operations of the Company and the Bank
on a consolidated basis; or (iii) with the exception of the liquidation account
established in the Conversion, result in the creation of any material lien,
charge or encumbrance upon any property of the Company or the Bank.
(t) No default exists, and no event has occurred which with notice or
lapse of time, or both, would constitute a default on the part of the Company or
the Bank, in the due performance and observance of any term, covenant or
condition of any indenture, mortgage, deed of trust, note, bank loan or credit
agreement or any other instrument of agreement to which the Company or the Bank
is a party or by which any of them or any of their property is bound or affected
except such defaults which would not have a material adverse effect on the
financial condition or results of operations of the Company and the Bank on a
consolidated basis; such agreements are in full force and effect; and no other
party to any such agreements has instituted or, to the best knowledge of the
Company and the Bank, threatened any action or proceeding wherein the Company,
the Bank would be alleged to be in default thereunder under circumstances where
such action or proceeding, if determined adversely to the Company or the Bank
would have a material adverse effect on the Company and the Bank, taken as a
whole.
(u) Upon consummation of the Conversion, the authorized, issued and
outstanding equity capital of the Company will be within the range set forth in
the Prospectus under the caption "Capitalization," and no shares of Common Stock
have been or will be issued and outstanding prior to the Closing Date referred
to in Section 2; the Shares will have been duly and validly authorized for
issuance and, when issued and delivered by the Company pursuant to the Plan
against payment of the consideration calculated as set forth in the Plan and in
the Prospectus, will be duly and validly issued, fully paid and non-assessable;
no preemptive rights exist with respect to the Shares (except for Subscription
Rights granted pursuant to the Plan); and the terms and provisions of the Shares
will conform in all material respects to the description thereof contained in
the Registration Statement and the Prospectus. To the best knowledge of the
Company and the Bank, upon the issuance of the Shares, good title to the Shares
will be transferred from the Company to the purchasers thereof against payment
therefor, subject to such claims as may be asserted against the purchasers
thereof by third-party claimants.
(v) Neither the Company nor the Bank is required to obtain any approval or
notice of non-objection from any regulatory or supervisory or other public
authority in connection with the execution and delivery of this Agreement or the
issuance of the Shares, except for the approval of the Commission, the Division,
the OTS and the non-objection of the FDIC and any necessary
10
qualification, notification, registration or exemption under the securities or
blue sky laws of the various states in which the Shares are to be offered, and
except as may be required under the rules and regulations of the NASD and/or the
National Market System of the Nasdaq Stock Market.
(w) KPMG Peat Marwick LLP, which has certified the consolidated
financial statements of the Bank included in the Prospectus as of December 31,
1996 and 1995 and for each of the years in the three-year period ended December
31, 1996, has advised the Company and the Bank in writing that they are, with
respect to the Company and the Bank, independent public accountants within the
meaning of the Code of Professional Ethics of the American Institute of
Certified Public Accountants as required by the 1933 Act and the 1933 Act
Regulations.
(x) FinPro, Inc., which has prepared the Bank's Conversion Valuation
Appraisal Report as of October 20, 1997 (as amended or supplemented) (the
"Appraisal"), has advised the Company in writing that it is independent of the
Company and the Bank within the meaning of the Conversion Regulations.
(y) The Company and the Bank have timely filed all required federal,
state and local tax returns for the last five years or such shorter period as
may be agreeable; applicable; the Company and the Bank have paid all taxes that
have become due and payable in respect of such returns, except where permitted
to be extended; and no deficiency has been asserted with respect thereto by any
taxing authority and, to the best knowledge of the Bank, adequate reserves have
been made for similar future tax liabilities.
(z) The Company and the Bank are 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.
(aa) To the knowledge of the Company and the Bank, neither the Company,
the Bank nor employees of the Company or the Bank have made any payment of funds
of the Company or the Bank as a loan for the purchase of the Shares.
(bb) To the knowledge of the Company and the Bank, all of the loans
represented as assets on the most recent consolidated financial statements or
consolidated selected financial information of the Company and the Bank included
in the Prospectus meet or are exempt from all requirements of federal, state or
local law pertaining to lending, including without limitation, truth in lending
(including requirements of Regulations 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 financial
condition, results of operations or business of the Company and the Bank, taken
as a whole.
11
(cc) Prior to the Conversion, the Bank was not authorized to issue shares
of capital stock and neither the Company nor the Bank has: (i) issued any
securities within the last 18 months (except for notes to evidence other bank
loans and reverse repurchase agreements or other liabilities in the ordinary
course of business or as described in the Prospectus); (ii) had any material
dealings within the 12 months prior to the date hereof with any member of the
NASD, or any person related to or associated with such member, other than
discussions and meetings relating to the proposed Offering and routine purchases
and sales of United States government and agency securities; (iii) entered into
a financial or management consulting agreement except as contemplated hereunder
and except for the Letter Agreement set forth in Exhibit A; and (iv) engaged any
intermediary between Xxxx and the Company and the Bank in connection with the
offering of the Shares, and no person is being compensated in any manner for
such service.
(dd) The Company and the Bank have not relied upon Xxxx or Xxxx'x counsel
for any legal, tax or accounting advice in connection with the Conversion.
(ee) The Company is not required to be registered under the Investment
Company Act of 1940, as amended.
Any certificates signed by an officer of the Company or the Bank pursuant
to the conditions of this Agreement and delivered to Xxxx or its counsel that
refers to this Agreement shall be deemed to be a representation and warranty by
the Company or the Bank to Xxxx as to the matters covered thereby with the same
effect as if such representation and warranty were set forth herein.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF XXXX.
(a) Xxxx represents and warrants to the Company and the Bank that:
(i) Xxxxx, Xxxxxxxx & Xxxxx, Inc. is a corporation and is
validly existing in good standing under the laws of the
State of New York with full power and authority to provide
the services to be furnished to the Bank and the Company
hereunder.
(ii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have
been duly and validly authorized by all necessary action
on the part of Xxxx, and this Agreement has been duly and
validly executed and delivered by Xxxx and is the legal,
valid and binding agreement of Xxxx, enforceable in
accordance with its terms, except as may be limited by
bankruptcy, insolvency or other laws affecting the
enforceability of the rights of creditors generally and
judicial limitations on the right of specific performance
and except as the enforceability of indemnification and
contribution provisions may be limited by applicable
securities laws.
12
(iii) Each of Xxxx and its employees, agents and representatives
who shall perform any of the services hereunder shall be
duly authorized and empowered, and shall have all
licenses, approvals and permits necessary to perform such
services.
(iv) The execution and delivery of this Agreement by Xxxx, the
consummation of the transactions contemplated hereby and
compliance with the terms and provisions hereof will not
conflict with, or result in a breach of, any of the terms,
provisions or conditions of, or constitute a default (or
event which with notice or lapse of time or both would
constitute a default) under, the articles of incorporation
of Xxxx or any agreement, indenture or other instrument to
which Xxxx is a party or by which it or its property is
hound.
(v) No approval of any regulatory or supervisory or other
public authority is required in connection with Xxxx'x
execution and delivery of this Agreement, except as may
have been received.
(vi) There is no suit or proceeding or charge or action before
or by any court, regulatory authority or government agency
or body or, to the best knowledge of Xxxx, pending or
threatened, which might materially adversely affect Xxxx'x
performance under this Agreement.
SECTION 5.1 COVENANTS OF THE COMPANY AND THE BANK. The Company and the
Bank hereby jointly and severally covenant with Xxxx as follows:
(a) The Company will not, at any time after the date the Registration
Statement is declared effective, file any amendment or supplement to the
Registration Statement without providing Xxxx and its counsel an opportunity to
review such amendment or supplement or file any amendment or supplement to which
amendment or supplement Xxxx or its counsel shall reasonably object.
(b) The Bank will not, at any time after the Conversion Application is
approved by the Division, file any amendment or supplement to such Conversion
Application without providing Xxxx and its counsel an opportunity to review such
amendment or supplement or file any amendment or supplement to which amendment
or supplement Xxxx or its counsel shall reasonably object.
(c) The Bank will not, at any time after the FDIC issues its Notice of
Objection, file any amendment or supplement to the FDIC Notice without providing
Xxxx and its counsel an opportunity to review such amendment or supplement or
file any amendment or supplement to which amendment or supplement Xxxx or its
counsel shall reasonably object.
13
(d) The Company will not, at any time before the Holding Company
Application is approved by the OTS, file any amendment or supplement to such
Holding Company Application without providing Xxxx and its counsel an
opportunity to review such amendment or supplement or file any amendment or
supplement to which amendment or supplement Xxxx or its counsel shall reasonably
object.
(e) The Company and the Bank will use their best efforts to cause any
post-effective amendment to the Registration Statement to be declared effective
by the Commission and any post-effective amendment to the Conversion Application
to be approved by the Division and will immediately upon receipt of any
information concerning the events listed below notify Xxxx: (i) when the
Registration Statement, as amended, has become effective; (ii) when the
Conversion Application, as amended, has been approved by the Division; (iii)
when the Holding Company Application, as amended, has been approved by the OTS;
(iv) when the Notice of Non-Objection, as amended, has been received from the
FDIC; (v) of any comments from the Commission, the Division, the OTS, the FDIC
or any other governmental entity with respect to the Conversion or the
transactions contemplated by this Agreement; (vi) of the request by the
Commission, the Division, the OTS, or the FDIC or any other governmental entity
for any amendment or supplement to the Registration Statement, the Conversion
Application, the FDIC Notice or the Holding Company Application or for
additional information; (vii) of the issuance by the Commission, the Division,
the OTS, the FDIC or any other governmental entity of any order or other action
suspending the Offering or the use of the Registration Statement or the
Prospectus or any other filing of the Company or the Bank under the Conversion
Regulations, or other applicable law, or the threat of any such action; (viii)
the issuance by the Commission, the Division, the OTS, the FDIC or any state
authority of any stop order suspending the effectiveness of the Registration
Statement or the approval of the Conversion Application or Holding Company
Application, or of the initiation or threat of initiation or threat of any
proceedings for any such purpose; or (ix) of the occurrence of any event
mentioned in paragraph (i) below. The Company and the Bank will make every
reasonable effort (i) to prevent the issuance by the Commission, the Division,
the OTS, the FDIC or any state authority of any such order and, if any such
order shall at any time be issued, (ii) to obtain the lifting thereof at the
earliest possible time.
(f) The Company and the Bank will deliver to Xxxx and to its counsel two
conformed copies of the Registration Statement, the Conversion Application, the
FDIC Notice and the Holding Company Application, as originally filed and of each
amendment or supplement thereto, including all exhibits. Further, the Company
and the Bank will deliver such additional copies of the foregoing documents to
counsel to Xxxx as may be required for any NASD filings.
(g) The Company and the Bank will furnish to Xxxx, from time to time
during the period when the Prospectus (or any later prospectus related to this
offering) is required to be delivered under the 1933 Act or the Securities
Exchange Act of 1934, (the "1934 Act"), such number of copies of such Prospectus
(as amended or supplemented) as Xxxx may reasonably request for the purposes
contemplated by the 1933 Act, the 1933 Act Regulations, the 1934 Act or the
rules and regulations promulgated under the 1934 Act (the "1934 Act
Regulations"). The Company authorizes Xxxx to use the Prospectus (as amended or
supplemented, if amended or
14
supplemented) in any lawful manner contemplated by the Plan in connection with
the sale of the Shares by Xxxx.
(h) The Company and the Bank will comply with any and all material
terms, conditions, requirements and provisions with respect to the Conversion
imposed by the Commission, the Division, the OTS, the FDIC, the Conversion
Regulations, the ICSA or the HOLA, and by the 1933 Act, the 1933 Act
Regulations, the 1934 Act and the 1934 Act Regulations to be complied with prior
to or subsequent to the Closing Date and when the Prospectus is required to be
delivered, the Company and the Bank will comply, at their own expense, with all
material requirements imposed upon them by the Commission, the Division, the
OTS, the FDIC, the Conversion Regulations, the ICSA or the HOLA, and by the 1993
Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations, in
each case as from time to time in force, so far as necessary to permit the
continuance of sales or dealing in shares of Common Stock during such period in
accordance with the provisions hereof and the Prospectus.
(i) If, at any time during the period when the Prospectus relating to
the Shares is required to be delivered, any event relating to or affecting the
Company or the Bank shall occur, as a result of which it is necessary or
appropriate, in the opinion of counsel for the Company and the Bank to amend or
supplement the Registration Statement or Prospectus in order to make the
Registration Statement or Prospectus not misleading in light of the
circumstances existing at the time the Prospectus is delivered to a purchaser,
the Company and the Bank will, at their expense, prepare and file with the
Commission, the Division, the OTS and the FDIC and furnish to Xxxx a reasonable
number of copies of an amendment or amendments of, or a supplement or
supplements to, the Registration Statement and Prospectus (in form and substance
satisfactory to Xxxx and its counsel after a reasonable time for review) which
will amend or supplement the Registration Statement and 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 Company and the Bank each will timely furnish to Xxxx such information with
respect to itself as Xxxx may from time to time reasonably request.
(j) At the Closing Date referred to in Section 2, the Plan will have
been adopted by the Board of Directors of the Company and the Bank and the offer
and sale of the Shares will have been conducted in all material respects in
accordance with the Plan, the Conversion Regulations, the ICSA, the HOLA and all
other applicable laws, regulations, decisions and orders, including all terms,
conditions, requirements and provisions precedent to the Conversion imposed upon
the Company or the Bank by the Commission, Division, the OTS, the FDIC or any
other regulatory authority and in the manner described in the Prospectus.
(k) Upon completion of the sale by the Company of the Shares
contemplated by the Prospectus, (i) the Bank will be converted pursuant to the
Plan to an Illinois state chartered stock savings bank, (ii) all of the
authorized and outstanding capital stock of the Bank will be owned by the
Company, and (iii) the Company will have no direct subsidiaries other than the
Bank. The
15
Conversion will have been effected in all material respects in accordance with
all applicable statutes, regulations, decisions and orders; and, except with
respect to the filing of certain post-sale, post-Conversion reports, and
documents in compliance with the 1933 Act Regulations, and all terms,
conditions, requirements and provisions with respect to the Conversion (except
those that are conditions subsequent) imposed by the Commission, the Division,
the OTS and the FDIC, if any, will have been complied with by the Company and
the Bank in all material respects or appropriate waivers will have been obtained
and all material notice and waiting periods will have been satisfied, waived or
elapsed.
(l) The Company and the Bank will take all necessary actions, in
cooperation with Xxxx, and furnish to whomever Xxxx may direct, such information
as may be required to qualify or register the Shares for offering and sale by
the Company or to exempt such Shares from registration, or to exempt the Company
as a broker-dealer and its officers, directors and employees as broker-dealers
or agents under the applicable securities or blue sky laws of such jurisdictions
in which the Shares are to be offered and sold as Xxxx and the Company and the
Bank may reasonably agree upon; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify to do
business in any jurisdiction in which it is not so qualified. In each
jurisdiction where any of the Shares shall have been qualified or registered as
above provided, the Company will make and file such statements and reports in
each fiscal period as are or may be required by the laws of such jurisdiction.
(m) The liquidation account for the benefit of Eligible Account Holders
and Supplemental Eligible Account Holders will be duly established and
maintained in accordance with the requirements of the Division.
(n) The Company and the Bank will not sell or issue, contract to sell or
otherwise dispose of, for a period of 180 days after the Closing Date, without
Xxxx'x prior written consent, any shares of Common Stock other than the Shares
or other than in connection with any plan or arrangement described in the
Prospectus
(o) The Company shall register its Common Stock under Section 12(g) of
the 1934 Act concurrent with the Offering pursuant to the Plan and shall request
that such registration be effective no later than upon completion of the
Conversion. The Company shall maintain the effectiveness of such registration
for not less than three (3) years or such shorter period as may be required by
the Division.
(p) During the period during which the Company's Common Stock is
registered under the 1934 Act or for three years from the date hereof, whichever
period is greater, the Company will furnish to its stockholders as soon as
practicable after the end of each fiscal year an annual report of the Company
(including a consolidated balance sheet and statements of consolidated income,
stockholders' equity and cash flows of the Company and its subsidiaries as at
the end of and for such year, certified by independent public accountants in
accordance with Regulation S-X under the 1933 Act and the 1934 Act).
16
(q) During the period of three years from the date hereof, the Company
will furnish to Xxxx: (i) as soon as practicable after such information is
publicly available, a copy of each report of the Company furnished to or filed
with the Commission under the 1934 Act or any national securities exchange or
system on which any class of securities of the Company is listed or quoted
(including, but not limited to, reports on Forms 10-K, 10-Q and 8-K and all
proxy statements and annual reports to stockholders), (ii) a copy of each other
non-confidential report of the Company mailed to its stockholders or filed with
the Commission, the Division, or the FDIC or any other supervisory or regulatory
authority or any national securities exchange or system on which any class of
securities of the Company is listed or quoted, each press release and material
news items and additional documents and information with respect to the Company
or the Bank as Xxxx may reasonably request; and (iii) from time to time, such
other nonconfidential information concerning the Company or the Bank as Xxxx may
reasonably request.
(r) The Company and the Bank will use the net proceeds from the sale of
the Shares in the manner set forth in the Prospectus under the caption "Use of
Proceeds."
(s) Other than as permitted by the ICSA, the HOLA, the 1933 Act, the
1933 Act Regulations, and the laws of any state in which the Shares are
registered or qualified for sale or exempt from registration, neither the
Company nor the Bank will distribute any prospectus or other offering material
in connection with the offer and sale of the Shares.
(t) The Company will use its best efforts to (i) encourage and assist
three market makers to establish and maintain a market for the Shares and (ii)
list the Shares on a national or regional securities exchange or on the Nasdaq
National Market of the Nasdaq Stock Market effective on or prior to the Closing
Date.
(u) The Bank will maintain appropriate arrangements for depositing all
funds received from persons mailing subscriptions for or orders to purchase
Shares in the Offering on an interest bearing basis at the rate described in the
Prospectus until the Closing Date and satisfaction of all conditions precedent
to the release of the Bank's obligation to refund payments received from persons
subscribing for or ordering Shares in the Offering in accordance with the Plan
and as described in the Prospectus or until refunds of such funds have been made
to the persons entitled thereto or withdrawal authorizations cancelled in
accordance with the Plan and as described in the Prospectus. The Bank will
maintain such records of all funds received to permit the funds of each
subscriber to be separately insured by the FDIC (to the maximum extent
allowable) and to enable the Bank to make the appropriate refunds of such funds
in the event that such refunds are required to be made in accordance with the
Plan and as described in the Prospectus.
(v) Prior to the Closing Date, the Holding Company Application shall
have been approved by the OTS. The Company will promptly take all necessary
action to register as a savings and loan holding company under the HOLA within
90 days of the Closing Date.
17
(w) The Company and the Bank will take such actions and furnish such
information as are reasonably requested by Xxxx in order for Xxxx to ensure
compliance with the NASD's "Interpretation Relating to Free Riding and
Withholding."
(x) The Bank will not amend the Plan of Conversion without notifying
Xxxx prior thereto.
(w) The Company shall assist Xxxx, if necessary, in connection with the
allocation of the Shares in the event of an oversubscription and shall provide
Xxxx with any information necessary in allocating the Shares in such event.
(z) Prior to the Closing Date, the Company and the Bank will inform Xxxx
of any event or circumstances of which it is aware as a result of which the
Registration Statement, the Conversion Application and/or Prospectus, as then
amended or supplemented, would contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein
not misleading.
SECTION 5.2 COVENANTS OF XXXX. Xxxx hereby covenants with the Company and
the Bank as follows:
(a) During the period when the Prospectus is delivered, Xxxx will
comply, in all material respects and at its own expense, with all requirements
imposed upon it by the Commission and the NASD, including to the extent
applicable, by the 1933 Act and the 1934 Act and the rules and regulations
promulgated thereunder.
(b) Xxxx will distribute copies of the Prospectus and Sales Information
in connection with the sales of the Common Stock only in accordance with NASD
and SEC regulations, the 1933 Act and the rules and regulations promulgated
thereunder.
(c) Xxxx shall use its best efforts to assist the Company in obtaining
at least three market makers for the shares of Common Stock.
SECTION 6. PAYMENT OF EXPENSES. Whether or not the Conversion is
completed or the sale of the Shares by the Company is consummated, the Company
and the Bank jointly and severally agree to pay or reimburse Xxxx for: (a) all
filing fees in connection with all filings with the NASD; (b) any stock issue or
transfer taxes which may be payable with :respect to the sale of the Shares; (c)
all reasonable expenses of the Conversion, including but not limited to, the
Company's and the Bank's attorneys' fees, transfer agent, registrar and other
agent charges, fees relating to auditing and accounting or other advisors and
costs of printing all documents necessary in connection with the Conversion and
(d) all reasonable out-of-pocket expenses incurred by Xxxx. Such out-of-pocket
expenses include, but are not limited to, travel, communications and postage and
reasonable legal fees of counsel, which legal fees shall not exceed $35,000.
However, such out-of-pocket expenses do not include expenses incurred with
respect to the matters set forth in (a) and (b) above. In the event the Company
is unable to sell a minimum of
18
4,250,000 Shares or the Conversion is terminated or otherwise abandoned, the
Company and the Bank shall reimburse Xxxx in accordance with Section 2 hereof.
SECTION 7. CONDITIONS TO XXXX'X OBLIGATIONS. Xxxx'x obligations
hereunder, as to the Shares to be issued at the Closing Date, are subject, to
the extent not waived by Xxxx, to the condition that all representations and
warranties of the Company and the Bank 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 Company and the Bank shall have
performed all of their obligations hereunder to be performed on or before such
dates, and to the following further conditions:
(a) At the Closing Date, the Company and the Bank shall have conducted
the Conversion in all material respects in accordance with the Plan, the
Conversion Regulations, the ICSA and all other applicable laws, regulations,
decisions and orders, including all terms, conditions, requirements and
provisions precedent to the Conversion imposed upon them by the Division, the
FDIC and the OTS.
(b) The Registration Statement shall have been declared effective by the
Commission, the Conversion Application approved by the Division and the Notice
of Non-Objection received from the FDIC not later than 5:30 p.m. on the date of
this Agreement, or with Xxxx'x consent at a later time and date; and at the
Closing Date, the Holding Company Application shall have been approved by the
OTS and no stop order suspending the effectiveness of the Registration Statement
shall have been issued under the 1933 Act or proceedings therefore initiated or
threatened by the Commission, or any state authority and no order or other
action suspending the authorization of the Prospectus or the consummation of the
Conversion shall have been issued or proceedings therefore initiated or, to the
Company's or the Bank's knowledge threatened by the Commission, the Division,
the OTS, the FDIC or any other federal or state authority.
(c) At the Closing Date, Xxxx shall have received:
(1) The favorable opinion, dated as of the Closing Date and
addressed to Xxxx and for its benefit, of Xxxxxxx, Xxxxxx &
Xxxxxxxx, special counsel for the Company and the Bank, in
form and substance to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing
under the laws of the State of Delaware and has
full corporate power and authority to own, lease
and operate its properties and to conduct its
business as described in the Registration
Statement and the Prospectus and to enter into and
perform its obligations under this Agreement. The
Company is duly qualified as a foreign corporation
to transact business and is in good standing in
each jurisdiction where it owns or leases any
material properties or conducts any material
19
business, unless the failure to so qualify would
not have a material adverse effect on the
financial condition, results of operations or
business of the Company.
(ii) The Bank is organized and is validly existing as a
state chartered savings bank under the laws of the
State of Illinois in mutual form of organization
and upon the Conversion will become a duly
organized and validly existing state chartered
savings bank in capital stock form of organization
under the laws of the State of Illinois, in both
instances duly authorized to conduct its business
and own its property as described in the
Registration Statement and Prospectus. All of the
outstanding capital stock of the Bank will be duly
authorized and, upon payment therefor, will be
validly issued, fully paid and non-assessable and,
to the best of such counsel's knowledge, will be
owned by the Company, free and clear of any liens,
encumbrances, claims or other restrictions.
(iii) The Bank is a member of the FHLB-Chicago. The
Bank is an insured depository institution under
the provisions of Section 4(a) of the FDI Act, as
amended, and no proceedings for the termination or
revocation of such insurance are, to the best of
such counsel's knowledge, pending or threatened;
the description of the liquidation account as set
forth in the Prospectus under the caption "The
Conversion-Liquidation Account" to the extent that
such information constitutes matters of law and
legal conclusions has been reviewed by such
counsel and is accurate in all material respects.
(iv) Upon consummation of the Conversion, the
authorized, issued and outstanding capital stock
of the Company will be within the range set forth
in the Prospectus under the caption
"Capitalization," and except for shares issued
upon incorporation of the Company, no shares of
Common Stock have been issued prior to the Closing
Date; at the time of the Conversion, the Shares
subscribed for pursuant to the Offering will have
been duly and validly authorized for issuance, and
when issued and delivered by the Company pursuant
to the Plan against payment of the consideration
calculated as set forth in the Plan and the
Prospectus, will be duly and validly issued and
fully paid and non-assessable; the issuance of the
Shares is not subject to
20
statutory preemptive rights (except for
Subscription Rights granted pursuant to the
Plan) and the terms and provisions of the Shares
conform in all material respects to the
description thereof contained in the Prospectus.
To the best of such counsel's knowledge, upon
the issuance of the Shares, good title to the
Shares will be transferred from the Company to
the purchasers thereof against payment therefor,
subject to such claims as may be asserted
against the purchasers thereof by third-party
claimants.
(v) The OTS has duly approved the Holding Company
Application and, to the best of such counsel's
knowledge, no action is pending or threatened
respecting the Holding Company Application or
the acquisition by the Company of all of the
Bank's issued and outstanding capital stock; the
Holding Company Application complies as to form
in all material respects with the HOLA.
(vi) The Division has duly approved the Conversion
Application and, to the best of such counsel's
knowledge, no action is pending or threatened
respecting the Division's approval of the
Conversion Application; the Conversion
Application complies as to form in all material
respects with the ICSA.
(vii) The FDIC has issued a Notice of Non-Objection to
the Conversion and, to the best of such
counsel's knowledge, no action is pending or
threatened respecting the FDIC's Notice of
Non-Objection to the Conversion; the FDIC Notice
complies as to form in all material respects
with the rules and regulations of the FDIC.
(viii) The execution and delivery of the Agreement and
the consummation of the transactions
contemplated hereby have been duly and validly
authorized by all necessary action on the part
of the Company and the Bank; and the Agreement
is a valid and binding obligation of the Company
and the Bank, enforceable in accordance with its
terms, except as the enforceability thereof may
be limited by (i) bankruptcy, insolvency, or
other laws now or hereafter in effect affecting
the enforceability of the rights of creditors
generally or the rights of creditors of Illinois
state chartered savings banks and their holding
companies, (ii) general principles of equity,
(iii) applicable law with respect to the
indemnification and/or contribution provisions
contained
21
herein, (regardless of whether such enforceability
is considered in a proceeding in equity or at
law); and such action will not result in any
violation of the provisions of the articles of
incorporation, bylaws or charter, as applicable,
of the Company or the Bank or any applicable
federal law, act, regulation (except that no
opinion need be rendered with respect to the
securities or blue sky laws of various
jurisdictions or the rules and regulations of the
NASD and/or the National Market System of the
Nasdaq Stock Market).
(ix) The Plan has been duly adopted by the required
vote of the directors of the Company and the Bank
and, based upon the certificate of the inspector
of election, by the depositors and borrowers of
the Bank.
(x) Subject to the satisfaction of the conditions to
the Division's, the OTS's and the FDIC's approval
of the Conversion, the Company and the Bank are
not required to receive any further approval,
authorization, consent or other order of, register
with, or submit a notice to any other federal or
state agency in connection with the execution and
delivery of the Agreement, the issuance of the
Shares and the consummation of the Conversion,
except as may be required under the securities or
blue sky laws of various jurisdictions (as to
which no opinion need be rendered), except as may
be required under the rules and regulations of the
NASD and/or the National Market System of the
Nasdaq Stock Market (as to which no opinion need
be rendered) and except for the registration of
the Company as a savings bank holding company.
(xi) The Registration Statement is effective under the
1933 Act and no stop order suspending the
effectiveness has been issued under the 1933 Act
or, to the best of such counsel's knowledge,
proceedings therefor pending or threatened by the
Commission.
(xii) At the time that the Registration Statement became
effective, (i) the Registration Statement (as
amended or supplemented, if so amended or
supplemented) (other than the financial
statements, the notes thereto and other tabular,
financial, statistical and appraisal data included
therein or omitted therefrom, as to which no
opinion need be
22
rendered) complied as to form in all material
respects with the requirements of the 1933 Act
and the 1933 Act Regulations, and (ii) the
Prospectus (other than the financial statements,
the notes thereto and other tabular, financial,
statistical and appraisal data included therein
or omitted therefrom, 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.
(xiii) The terms and provisions of the Shares of the
Company conform, in all material respects, to
the description thereof contained in the
Registration Statement and Prospectus, and the
form of certificate used to evidence the Shares
complies with applicable law.
(xiv) The descriptions in the Conversion Application,
the Registration Statement and the Prospectus of
the contracts, indentures, mortgages, loan
agreements, notes, leases or other instruments
filed as exhibits thereto are accurate in all
material respects and fairly present the
information required to be shown.
(xv) To the best of such counsel's knowledge the
Company and the Bank have conducted the
Conversion in all material respects in
accordance with applicable requirements of the
Plan, the Conversion Regulations, the ICSA and
all other applicable regulations, decisions and
orders thereunder, including all material
applicable terms, conditions, requirements and
conditions precedent to the Conversion imposed
upon the Company or the Bank by the OTS, the
Division or the FDIC and, to the best of such
counsel's knowledge, no person has sought to
obtain review of the final action of the
Division or the FDIC in approving the Plan.
(xvi) To the best of such counsel's knowledge, the
Company and the Bank have obtained all material
federal licenses, permits and other Federal
governmental authorizations currently required
under the HOLA and the FDI Act and all
applicable rules and regulations promulgated
thereunder for the conduct of their businesses
and to the best of such counsel's knowledge all
such licenses, permits and other governmental
authorizations are in full force and effect, and
the Company, the Bank and the Subsidiary are in
all
23
material respects complying therewith, except
whether the failure to have such licenses,
permits and other governmental authorizations or
the failure to be in compliance therewith would
not have a material adverse affect on the
business or operations of the Bank, the Company
and the Subsidiary, taken as a whole).
(xvii) The Company' certificate of incorporation and
bylaws comply in all material respects with the
Delaware General Corporation Law. The Bank's
charter and bylaws in mutual form and, upon the
completion of the Conversion, in stock form,
comply in all material respects with the ICSA.
(xviii) To the best of such counsel's knowledge, neither
the Company nor the Bank is in violation of any
directive from the Division, the FDIC or the OTS
to make any material change in the method of
conducting its respective business.
(xix) The information in the Prospectus under the
captions "Regulation and Supervision," "The
Conversion," "Restrictions on Acquisition of the
Company and the Bank" and "Description of
Capital Stock of the Company," to the extent
that such information constitutes matters of
law, summaries of legal matters, documents or
proceedings, or legal conclusions, has been
reviewed by such counsel and is correct in all
material respects. The description of the
Conversion process under the caption "The
Conversion" in the Prospectus has been reviewed
by such counsel and is in all material respects
correct. The discussion of Federal statutes or
regulations described or referred to in the
Prospectus are accurate summaries. The
information regarding the federal tax opinion
under the caption "The Conversion-Tax Effects"
has been reviewed by such counsel and
constitutes an accurate summary of the opinion
rendered by such counsel to the Company and the
Bank with respect to such matters subject to the
qualifications and limitations noted therein.
In rendering such opinion, such counsel may rely as to all matters of fact
on certificates of officers or directors of the Company and the Bank and
certificates of public officials.
In addition, such counsel shall provide a letter to Xxxx stating that
nothing has come to their attention that would lead them to believe that the
Conversion Application and the Registration Statement, or any amendment or
supplement thereto (other than the financial
24
statements, the notes thereto, and other tabular, financial, statistical and
appraisal data included therein or omitted therefrom as to which no statement
need be made), as of the date of approval or effectiveness, as the case may be,
and the Prospectus, as of its date and as of the Closing Date, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(2) The favorable opinion, dated as of the Closing Date and
addressed to Xxxx and for their benefit, of __________, the
Bank's local counsel, in form and substance to the effect
that:
(i) to the best of such counsel's knowledge, the
Company and the Bank have good and marketable
title to all properties and assets which are
material to the business of the Company and the
Bank and to those properties and assets
described in the Registration Statement and
Prospectus, as owned by them, free and clear of
all liens, charges, encumbrances or
restrictions, except such as are described in
the Registration Statement and Prospectus, or
are not material in relation to the business of
the Company and the Bank considered as one
enterprise;
(ii) to the best of such counsel's knowledge, all of
the leases and subleases material to the
business of the Company and the Bank under which
the Company and the Bank hold properties, as
described in the Registration Statement and
Prospectus, are in full force and effect;
(iii) the Bank is duly qualified to transact business
in each jurisdiction in which its ownership of
property or leasing of property or the conduct
of its business requires such qualification,
unless the failure to be so qualified in one or
more of such jurisdictions would not have a
material adverse effect on the financial
condition, or the business, operations or income
of the Bank;
(iv) to the best of such counsel's knowledge, the
execution and delivery of the Agreement, the
occurrence of the obligations therein set forth
and the consummation of the transactions
contemplated therein will not conflict with or
constitute a breach of, or default under, or
result in the creation or imposition of any
lien, charge or encumbrance upon any property or
assets of the Company or the Bank pursuant to
any contract, indenture, mortgage, loan
agreement, note, lease or other instrument
described in the Prospectus or filed as an
exhibit to the Registration Statement to which
the Company or the Bank is a party or by which
any of
25
them may be bound, or to which any of the
property or assets of the Company or the Bank is
subject (other than the establishment of a
liquidation account) and such action will not
result in any violation of any court order,
writ, injunction or decree naming the Company or
the Bank;
(v) to the best of such counsel's knowledge, the
Company and the Bank have obtained all material
Illinois licenses, permits and other
governmental authorizations currently required
for the conduct of their businesses and to the
best of such counsel's knowledge, all such
licenses, permits and other governmental
authorizations are in full force and effect, and
the Company and the Bank are in all material
respects complying therewith, except where the
failure to have such licenses, permits and other
governmental authorizations or the failure to be
in compliance therewith would not have a
material adverse affect on the business or
operations of the Bank and the Company, taken as
a whole;
(vi) there are no legal or governmental proceedings
pending or to the best of such counsel's
knowledge, threatened which are required to be
disclosed in the Registration Statement and
Prospectus, other than those disclosed therein,
and to the best of such counsel's knowledge, all
pending legal and governmental proceedings to
which the Company and the Bank is a party or of
which any of their property is the subject,
which are not described in the Registration
Statement and the Prospectus, including ordinary
routine litigation incidental to the Company's
or the Bank's business, are, considered in the
aggregate, not material; and
(vii) neither the Company nor the Bank is in violation
of its articles of incorporation, bylaws or
charter nor, to the best of such counsel's
knowledge, in default (nor has any event
occurred which, with notice or lapse of time or
both, would constitute a default) in the
performance or observance of any obligation,
agreement, covenant or condition contained in
any material contract, indenture, mortgage, loan
agreement, note, lease or other instrument to
which the Company or the Bank is a party or by
which the Company or the Bank or any of their
property may be bound (in any respect that would
have a material adverse effect upon the
financial condition, results of operations or
business of the Company and the Bank, taken as a
whole).
(3) The favorable opinion, dated as of the Closing Date, of
Xxxxx, Xxxx, Xxxxxxx & Xxxxxxx L.L.P., Xxxx'x counsel,
with respect to such matters
26 as Xxxx
may reasonably require. Such opinion may rely upon the
opinions of counsel to the Company and the Bank, and as to
matters of fact, upon certificates of officers and
directors of the Company and the Bank delivered pursuant
hereto or as such counsel shall reasonably request.
(d) At the Closing Date, Xxxx shall receive a certificate of the Chief
Executive Officer and the Chief Financial Officer of the Company and a
certificate of the Chief Executive Officer and the Chief Financial Officer of
the Bank, both dated as of such Closing Date, to the effect that: (i) they have
reviewed the Prospectus and, in their opinion, at the time the Prospectus became
authorized for final use, the Prospectus did not contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; (ii) since the date the Prospectus became authorized for final
use, no material adverse change in the financial condition, or in the earnings,
capital, properties or business of the Company and the Bank has occurred and, to
their knowledge, no other event has occurred, which should have been set forth
in an amendment or supplement to the Prospectus which has not been so set forth,
and the conditions set forth in this Section 7 have been satisfied; (iii) since
the respective dates as of which information is given in the Registration
Statement and Prospectus, there has been no material adverse change in the
financial condition, results of operations or business prospects of the Company
and the Bank, independently, or of the Company, the Bank and the Subsidiary
considered as one enterprise, whether or not arising in the ordinary course of
business; (iv) the representations and warranties in Section 4 are true and
correct with the same force and effect a though expressly made at and as of the
Closing Date; (v) the Company and the Bank have complied in all material
respects with all agreements and satisfied all conditions on their part to be
performed or satisfied at or prior to the Closing Date and will comply in all
material respects with all obligations to be satisfied by them after Conversion;
(vi) no stop order suspending the effectiveness of the Registration Statement is
pending or, to the best knowledge of the Company or the Bank, threatened by the
Commission or any state authority; (vii) no order suspending the Offering, the
Conversion, the acquisition of all of the shares of the Bank by the Company or
the effectiveness of the Prospectus has been issued and no proceedings for that
purpose are pending or, to the best knowledge of the Company or the Bank,
threatened by the Division, the OTS, the FDIC, the Commission or any other
federal or state authority; and (viii) to the best knowledge of the Company or
the Bank, no person has sought to obtain review of the final action of the
Division or the FDIC approving the Plan.
(e) Prior to and at the Closing Date: (i) in the reasonable opinion of
Xxxx, there shall have been no material adverse change in the financial
condition, or in the earnings or business of the Bank independently, or of the
Company or the Bank considered as one enterprise, from that as of the latest
dates as of which such condition is set forth in the Prospectus other than
transactions referred to or contemplated therein; (iii) the Company or the Bank
shall not have received from the Division, the OTS or the FDIC any direction
(oral or written) to make any material change in the method of conducting their
business with which it has not complied (which direction, if any, shall have
been disclosed to Xxxx) or which materially and adversely would affect the
business, operations or financial condition or income of the Company and the
Bank
27
considered as one enterprise; (iv) the Company and the Bank shall not have been
in material default (nor shall an event have occurred which, with notice or
lapse of time or both, would constitute a default) under any material provision
of any agreement or instrument relating to any outstanding indebtedness; (v) no
action, suit or proceedings, at law or in equity or before or by any federal or
state commission, board or other administrative agency, shall be pending or, to
the knowledge of the Company or the Bank, threatened against the Company or the
Bank or affecting any of their properties wherein an unfavorable decision,
ruling or finding would materially and adversely affect the business operations,
financially condition or income of the Company and the Bank considered as one
enterprise; and (vi) the Shares have been qualified or registered for offering
and sale or exempted therefore under the securities or blue sky laws of the
jurisdictions as Xxxx shall have requested and as agreed to by the Company and
the Bank.
(f) Concurrently with the execution of this Agreement, Xxxx shall receive a
letter from KPMG Peat Marwick LLP dated as of the date of the Prospectus and
addressed to Xxxx: (i) confirming that KPMG Peat Marwick LLP is a firm of
independent public accountants within the meaning of the 1933 Act and stating in
effect that in KPMG Peat Marwick LLP's opinion the consolidated financial
statements of the Bank as of December 31, 1995 and 1996 and for each of the
three years in the period ended December 31, 1996, as are included in the
Prospectus and covered by its opinion included therein, comply as to form in all
material respects with the applicable accounting requirements and related
published rules and regulations of the 1933 Act; (ii) a statement from KPMG Peat
Marwick LLP in effect that, on the basis of certain agreed upon procedures (but
not an audit in accordance with generally accepted auditing standards)
consisting of a reading of the latest available unaudited interim consolidated
financial statements of the Bank prepared by the Bank, a reading of the minutes
of the meetings of the Board of Directors and members of the Bank and
consultations with officers of the Bank responsible for financial and accounting
matters, nothing came to their attention which caused them to believe that: (A)
the unaudited consolidated financial statements included in the Prospectus, are
not in conformity with the 1933 Act and generally accepted accounting principles
applied on a basis substantially consistent with that of the audited
consolidated financial statements included in the Prospectus; or (B) during the
period from the date of the latest unaudited consolidated financial statements
included in the Prospectus to a specified date not more than three business days
prior to the date of the Prospectus, except as has been described in the
Prospectus, other than normal deposit fluctuations, there was any material
increase in consolidated long-term debt, short-term debt, real estate owned or
real estate acquired by deed in lieu of foreclosure by the Bank; or (C) there
was any decrease in consolidated total assets, allowance for estimated losses on
loans, total savings deposits or capital of the Bank at the date of such letter
as compared with amounts shown in the latest unaudited consolidated statement of
condition included in the Prospectus; and (iii) a statement from KPMG Peat
Marwick LLP that, in addition to the audit referred to in their opinion included
in the Prospectus and the performance of the procedures referred to in clause
(ii) of this subsection (f), they have compared with the general accounting
records of the Bank, which are subject to the internal controls of the Bank, the
accounting system and other data prepared by the Bank, directly from such
accounting records, to the extent specified in such letter, such amounts and/or
percentages set forth in the Prospectus as Xxxx may reasonably request; and they
have reported on the results of such comparisons.
28
(g) At the Closing Date, Xxxx shall receive a letter from KPMG Peat Marwick
LLP dated the Closing Date, addressed to Xxxx, confirming the statements made by
them in the letter delivered by it pursuant to subsection (f) of this Section 7,
the "specified date" referred to in clause (ii) of subsection (f) thereof to be
a date specified in such letter, which shall not be more than three business
days prior to the Closing Date.
(h) At the Closing Date, Xxxx shall receive a letter from FinPro, Inc.,
dated the date thereof and addressed to counsel for Xxxx, (i) confirming that
said firm is independent of the Company and the Bank and is experienced and
expert in the area of corporate appraisals and (ii) stating that its opinion of
the aggregate pro forma market value of the Company and the Bank expressed in
its Appraisal dated as of October 20, 1997, and most recently updated, remains
in effect.
(i) The Company and the Bank shall not have sustained since the date of the
latest audited financial statements included in the Prospectus any material loss
or interference with their businesses from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth or
contemplated in the Registration Statement and Prospectus.
(j) At or prior to the Closing Date, Xxxx shall receive: (i) a copy of the
letter from the Division approving the Conversion Application and authorizing
the use of the Prospectus; (ii) a copy of the order from the Commission
declaring the Registration Statement effective; (iii) a certificate from the
Division evidencing the existence of the Bank; (iv) certificates of good
standing from the State of Delaware evidencing the good standing of the Company;
(v) a certificate from the FDIC evidencing the Bank's insurance of accounts;
(vi) a certificate of the FHLB-Chicago evidencing the Bank's membership thereof;
(vii) a copy of the letter from the OTS approving the Company's Holding Company
Application; and (ix) a copy of the Notice of Non-Objection to the Conversion
Application from the FDIC.
(k) As soon as available after the Closing Date, Xxxx shall receive, upon
request, a copy of the Bank's Illinois state stock charter.
(l) Subsequent to the date hereof, there shall not have occurred any of the
following: (i) a suspension or limitation in trading in securities generally on
the New York Stock Exchange or in the over-the-counter market, or quotations
halted generally on the AMEX, 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 AMEX or by order of the Commission or any other
governmental authority; (ii) a general moratorium on the operations of
commercial banks or federal or state savings associations or a general
moratorium on the withdrawal of deposits from commercial banks or federal or
state AMEX savings associations declared by federal or Illinois authorities;
(iii) the engagement by the United States in hostilities which have resulted in
the declaration, on or after the date hereof, of a national emergency or war; or
(iv) a material decline in the price of equity or debt securities if the effect
of such a decline, in Xxxx'x reasonable judgment, makes it impracticable or
inadvisable to proceed with the Offering or the delivery of the shares on the
terms and in the manner contemplated in the Registration Statement and
Prospectus.
29
SECTION 8. INDEMNIFICATION.
(a) The Company and the Bank jointly and severally agree to indemnify and
hold harmless Xxxx, its officers, directors, agents, servants and employees and
each person, if any, who controls Xxxx within the meaning of Section 15 of the
1933 Act or Section 20(a) of the 1934 Act, against any and all loss, liability,
claim, damage or expense whatsoever (including but not limited to reasonable and
documented settlement expenses), joint or several, that Xxxx or any of them may
suffer or to which Xxxx and any such persons may become subject under all
applicable federal or state laws or otherwise, and to promptly reimburse Xxxx
and any such persons upon written demand for any expense (including reasonable
and documented fees and disbursements of counsel) incurred by Xxxx or any of
them in connection with investigating, preparing or defending any actions,
proceedings or claims (whether commenced or threatened) to the extent such
losses, claims, damages, liabilities or actions: (i) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement (or any amendment or supplement
thereto), preliminary or final Prospectus (or any amendment or supplement
thereto), the Conversion Application (or any amendment or supplement thereto),
the Holding Company Application or any blue sky application or other instrument
or document executed by the Company or the Bank or based upon written
information supplied by the Company or the Bank filed in any state or
jurisdiction to register or qualify any or all of the Shares or to claim an
exemption therefrom, or provided to any state or jurisdiction to exempt the
Company as a broker-dealer or its officers, directors and employees as
broker-dealers or agents, under the securities laws thereof (collectively, the
"Blue Sky Application"), or any application or other document, advertisement,
oral statement or communication ("Sales Information") prepared, made or executed
by or on behalf of the Company or the Bank with their consent or based upon
written or oral information furnished by or on behalf of the Company or the
Bank, whether or not filed in any jurisdiction, in order to qualify or register
the Shares or to claim an exemption therefrom under the securities laws thereof;
(ii) arise out of or based upon the omission or alleged omission to state in any
of the foregoing documents or information, a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; or (iii) arise from
any theory of liability whatsoever relating to or arising from or based upon the
Registration Statement (or any amendment or supplement thereto), preliminary or
final Prospectus (or any amendment or supplement thereto), the Conversion
Application (or any amendment or supplement thereto), any Blue Sky Application
or Sales Information or other documentation distributed in connection with the
Conversion; PROVIDED, HOWEVER, that no indemnification is required under this
paragraph (a) to the extent such losses, claims, damages, liabilities or actions
arise out of or are based upon Xxxx'x xxxxx negligence, bad faith or willful
misconduct (as determined in a final judgment by a court of competent
jurisdiction) or upon any untrue material statement or alleged untrue material
statements in, or material omission or alleged material omission from, the
Registration Statement (or any amendment or supplement thereto), preliminary or
final Prospectus (or any amendment or supplement thereto), the Conversion
Application, any Blue Sky Application or Sales Information made in reliance upon
and in conformity with information furnished in writing to the Company or the
Bank by Xxxx regarding Xxxx or statistical information regarding
30
national averages provided by Xxxx for the Sales Information and PROVIDED
FURTHER that such indemnification shall be to the extent permitted by Sections
23A and 23B of the Federal Reserve Act, as amended.
(b) Xxxx agrees to indemnify and hold harmless the Company and the Bank,
their directors and officers and each person, if any, who controls the Company
or the Bank within the meaning of Section 15 of the 1933 Act or Section 20(a) of
the 1934 Act against any and all loss, liability, claim, damage or expense
whatsoever (including but not limited to reasonable and documented settlement
expenses), joint or several, which it, or any of them, may suffer or to which
it, or any of them may become subject under all applicable federal and state
laws or otherwise, and to promptly reimburse the Company, the Bank, and any such
persons upon written demand for any expenses (including reasonable and
documented fees and disbursements of counsel) incurred by it, or any of them, in
connection with investigating, preparing or defending any actions, proceedings
or claims (whether commenced or threatened) to the extent such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment or supplement thereto), the Conversion
Application (or any amendment or supplement thereto) or the preliminary or final
Prospectus (or any amendment or supplement thereto), or are based upon the
omission or alleged omission to state in any of the foregoing documents a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; PROVIDED, HOWEVER, that Xxxx'x obligations under this Section 8(b)
shall exist only if and only to the extent that such untrue statement or alleged
untrue statement was made in, or such material fact or alleged material fact was
omitted from, the Registration Statement (or any amendment or supplement
thereto), the preliminary or final Prospectus (or any amendment or supplement
thereto) or the Conversion Application (or any amendment or supplement thereto),
any Blue Sky Application or Sales Information in reliance upon and in conformity
with information furnished in writing to the Company or the Bank by Xxxx
regarding Xxxx or statistical information regarding national averages provided
by Xxxx for the Sales Information.
(c) Each indemnified party shall give prompt written notice to each
indemnifying party of any action, proceeding, claim (whether commenced or
threatened), or suit instituted against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve it from any liability which it may have on account of this Section 8 or
otherwise. An indemnifying party may participate at its own expense in the
defense of such action. In addition, if it so elects within a reasonable time
after receipt of such notice, an indemnifying party, jointly with any other
indemnifying parties receiving such notice, may assumed defense of such action
with counsel chosen by it and approved by the indemnified parties that are
defendants in such action, unless such indemnified parties reasonably object to
such assumption on the ground that there may be legal defenses available to them
that are different from or in addition to those available to such indemnifying
party. If an indemnifying party assumes the defense of such action, the
indemnifying parties shall not be liable for any fees and expenses of counsel
for the indemnified parties incurred thereafter in connection with such action,
proceeding or claim, other than reasonable costs of investigation. In no event
shall the
31
indemnifying parties be liable for the reasonable fees and expenses of more than
one separate firm of attorneys (and any special counsel that said firm may
retain) for each indemnified party in connection with any one action, proceeding
or claim or separate but similar or related actions, proceeding or claim or
separate but similar or related actions, proceedings or claims in the same
jurisdiction arising out of the same general allegations or circumstances.
(d) The agreements contained in this Section 8 and in Section 9 hereof and
the representations and warranties of the Company and the Bank set forth in this
Agreement shall remain operative and in full force and effect regardless of: (i)
any investigation made by or on behalf of Xxxx or its officers, directors or
controlling persons, agents or employees or by or on behalf of the Company or
the Bank or any officers, directors or controlling persons, agents or employees
of the Company or the Bank; (ii) delivery of and payment hereunder for the
Shares; or (iii) any termination of this Agreement.
SECTION 9. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 8 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Company, the Bank or Xxxx, the Company, the
Bank and Xxxx shall contribute to the aggregate losses, claims, damages and
liabilities (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding of any claims asserted, but after deducting any contribution received
by the Company, the Bank or Xxxx from persons other than the other party
thereto, who may also be liable for contribution) in such proportion so that
Xxxx are responsible for that portion represented by the percentage that the
fees paid to Xxxx pursuant to Section 2 of this Agreement (not including
expenses) bears to the gross proceeds received by the Company from the sale of
the Shares in the Offering and the Company and the Bank shall be responsible for
the balance. If, however, the allocation provided above is not permitted by
applicable law or if the indemnified party failed to give the notice required
under Section 8 above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative fault of the Company and the Bank
on the one hand and Xxxx on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions, proceedings or claims in respect thereto), but also the relative
benefits received by the Company and the Bank on the one hand and Xxxx on the
other from the Offering (before deducting expenses). The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company and/or the Bank
on the one hand or Xxxx on the other and the parties' relative intent, good
faith, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company, the Bank and Xxxx agree that it would
not be just and equitable if contribution pursuant to this Section 9 were
determined by pro-rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to above in
this Section 9. The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions, proceedings or claims
in respect thereof) referred to above in this Section 9 shall be deemed to
include any legal or other expenses reasonably
32
incurred by such indemnified party in connection with investigating or defending
any such action, proceeding or claim. It is expressly agreed that Xxxx shall
not be required to contribute any amount which in the aggregate exceeds the
amount paid (excluding reimbursable expenses) to Xxxx under this Agreement. It
is understood that the above stated limitation on Xxxx'x liability for
contribution is essential to Xxxx and that Xxxx would not have entered into this
Agreement if such limitation had not been agreed to by the parties to this
Agreement. No person found guilty of any fraudulent misrepresentation (within
the meaning of Section ll(f) of the 1933 Act) shall be entitled to contribution
from any person who was not found guilty of such fraudulent misrepresentation.
The obligations of the Company and the Bank under this Section 9 and under
Section 8 shall be in addition to any liability which the Company and the Bank
may otherwise have. For purposes of this Section 9, each of Xxxx'x, the
Company's or the Bank's officers and directors and each person, if any, who
controls Xxxx or the Company or the Bank within the meaning of the 1933 Act and
the 1934 Act shall have the same rights to contribution as Xxxx, the Company or
the Bank. Any party entitled to contribution, promptly after receipt of notice
of commencement of any action, suit, claim or proceeding against such party in
respect of which a claim for contribution may be made against another party
under this Section 9, will notify such party from whom contribution may be
sought, but the omission to so notify such party shall not relieve the party
from whom contribution may be sought from any other obligation it may have
hereunder or otherwise than under this Section 9.
SECTION 10. SURVIVAL OF AGREEMENTS REPRESENTATIONS AND INDEMNITIES. The
respective indemnities of the Company, the Bank and Xxxx and the representations
and warranties and other statements of the Company, the Bank and Xxxx set forth
in or made pursuant to this Agreement shall remain in full force and effect,
regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of Xxxx, the Company, the Bank or any
controlling person referred to in Section 8 hereof, and shall survive the
issuance of the Shares, and any legal representative, successor or assign of
Xxxx, the Company, the Bank, and any such controlling person shall be entitled
to the benefit of the respective agreements, indemnities, warranties and
representations.
SECTION 11. TERMINATION. Xxxx may terminate its obligations under this
Agreement by giving the notice indicated below in this Section 11 at any time
after this Agreement becomes effective as follows:
(a) In the event the Company fails to sell all of the Shares by June 30,
1998, and in accordance with the provisions of the Plan or as required by the
Conversion Regulations, and applicable law, this Agreement shall terminate upon
refund by the Bank to each person who has subscribed for or ordered any of the
Shares the full amount which it may have received from such person, together
with interest as provided in the Prospectus, and no party to this Agreement
shall have any obligation to the other hereunder, except for payment by the
Company and/or the Bank as set forth in Sections 2(a) and (d), 6, 8 and 9
hereof.
(b) If any of the conditions specified in Section 7 shall not have been
fulfilled when and as required by this Agreement unless waived in writing, or by
the Closing Date, this Agreement
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and all of Xxxx'x obligations hereunder may be cancelled by Xxxx by notifying
the Company and the Bank of such cancellation in writing at any time at or prior
to the Closing Date, and any such cancellation shall be without liability of any
party to any other party except as otherwise provided in Sections 2, 6, 8 and 9
hereof.
(c) If Xxxx elects to terminate this Agreement with respect to it as
provided in this Section, the Company and the Bank shall be notified promptly by
such Agent by telephone or telegram, confirmed by letter.
The Company and the Bank may terminate this Agreement with respect to Xxxx
in the event Xxxx is in material breach of the representations and warranties or
covenants contained in Section 5 and such breach has not been cured after the
Company and the Bank have provided Xxxx with notice of such breach.
This Agreement may also be terminated by mutual written consent of the
parties hereto.
SECTION 12. NOTICES. All communications hereunder, except as herein
otherwise specifically provided, shall be mailed in writing and if sent to Xxxx
shall be mailed, delivered or telegraphed and confirmed to Xxxxxxx Xxxx &
Company, 000 Xxxxxxxxx, Xxxxxx, Xxxx 00000-5034, Attention: Xxxxxxxx X. XxXxxxx
(with a copy to Xxxxx, Xxxx, Xxxxxxx & Xxxxxxx L.L.P., 000 00xx Xxxxxx, X.X.,
Xxxxxxxxxx, X.X. 00000, Attention: Xxxxx X. Xxxxxxxx, Esq.) and, if sent to the
Company and the Bank, shall be mailed, delivered or telegraphed and confirmed to
the Company and the Bank at EFC Bancorp, Inc., 0000 Xxxxxx Xxxxxx, Xxxxx,
Xxxxxxxx 00000, Attention: Xxxxxxx X. X'Xxxxxx, President and Chief Executive
Officer (with a copy to Xxxxxxx, Xxxxxx & Xxxxxxxx, 0000 Xxxxxxxxx Xxxxxx, X.X.,
Xxxxxxxxxx, X.X. 00000, Attention: Xxx Xxx Xxxxxx, Esq.).
SECTION 13. PARTIES. The Company and the Bank shall be entitled to act
and rely on any request, notice, consent, waiver or agreement purportedly given
on behalf of Xxxx when the same shall have been given by the undersigned. Xxxx
shall be entitled to act and rely on any request, notice, consent, waiver or
agreement purportedly given on behalf of the Company or the Bank, when the same
shall have been given by the undersigned or any other officer of the Company or
the Bank. This Agreement shall inure solely to the benefit of, and shall be
binding upon, Xxxx, the Company, the Bank, and their respective successors,
legal representatives and assigns, and no other person shall have or be
construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provision herein contained. It
is understood and agreed that this Agreement, including Exhibit A thereto, is
the exclusive agreement among the parties hereto, and supersedes any prior
agreement among the parties and may not be varied except in writing signed by
all the parties.
SECTION 14. CLOSING. The closing for the sale of the Shares shall take
place on the Closing Date at such location as mutually agreed upon by Xxxx and
the Company and the Bank. At the closing, the Company and the Bank shall
deliver to Xxxx in next day funds the commissions, fees and expenses due and
owing to Xxxx as set forth in Sections 2 and 6 hereof
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and the opinions and certificates required hereby and other documents deemed
reasonably necessary by Xxxx shall be executed and delivered to effect the sale
of the Shares as contemplated hereby and pursuant to the terms of the
Prospectus.
SECTION 15. PARTIAL INVALIDITY. In the event that any term, provision or
covenant herein or the application thereof to any circumstance or situation
shall be invalid or unenforceable, in whole or in part, the remainder hereof and
the application of said term, provision or covenant to any other circumstances
or situation shall not be affected thereby, and each term, provision or covenant
herein shall be valid and enforceable to the full extent permitted by law.
SECTION 16. CONSTRUCTION. This Agreement shall be construed in accordance
with the laws of the State of New York.
SECTION 17. COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which so executed and delivered shall be an original, but
all of which together shall constitute a binding agreement.
35
If the foregoing correctly sets forth the arrangement among the Company,
the Bank and Xxxx, please indicate acceptance thereof in the space provided
below for that purpose, whereupon this letter and Xxxx'x acceptance shall
constitute a binding agreement.
Very truly yours,
EFC BANCORP, INC. ELGIN FINANCIAL CENTER, S.B.
By: _________________________ By: ____________________________________
Xxxxxxx X. O'Xxxxxx Xxxxxxx X. X'Xxxxxx
President and Chief President and Chief
Executive Officer Executive Officer
Accepted as of the date first above written
XXXXXXX XXXX & COMPANY A DIVISION OF XXXXX,
XXXXXXXX & XXXXX, INC.
By: ____________________________
Xxxxxxxx X. XxXxxxx
Executive Vice President
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