CITIZENS BANCORP
680,000 to 920,000 Shares
of
COMMON STOCK
(without par value)
Subscription Price $10.00 Per Share
SALES AGENCY AGREEMENT
_________ ___, 1997
Trident Securities, Inc.
Xxxxx 000
0000 Xxx Xxxxx Xxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Gentlemen:
Citizens Bancorp, a corporation formed under the laws of
Indiana (hereinafter referred to as the "Company"), and Citizens Savings Bank of
Frankfort, a federal savings bank formed under the laws of the United States
(hereinafter referred to as the "Bank"), hereby confirm their respective
agreements with Trident Securities, Inc., a corporation formed under the laws of
North Carolina (hereinafter referred to as "Trident") as follows:
1. The Offering. The Company was incorporated on June ___,
1997, for the purpose of serving as a savings and loan holding company which
will own of record all of the shares of common stock to be issued by the Bank in
the conversion of the Bank from the mutual form to the capital stock form of
organization (hereinafter referred to as the "Conversion") pursuant to a Plan of
Conversion adopted by the Board of Directors of the Bank on April 9, 1997
(hereinafter referred to as the "Plan of Conversion"), and in accordance with
the regulations of the Office of Thrift Supervision (hereinafter referred to as
the "OTS"). As set forth in the Plan of Conversion, the Company intends to
conduct a subscription offering in which a minimum of 680,000 and a maximum of
920,000 shares (subject to a possible increase to 1,058,000 shares) of common
stock of the Company, without par value (hereinafter referred to as the
"Shares"), will be offered to certain eligible subscribers at a purchase price
of $10.00 per Share (hereinafter referred to as the "Subscription Offering") in
accordance with the terms and subject to the conditions of the Plan of
Conversion and the Prospectus (as hereinafter defined). After the Subscription
Offering, the Company intends to offer the Shares to the public in a direct
community offering (hereinafter referred to as the "Community Offering").
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The Company has been advised by Trident that Trident will
utilize its best efforts to assist the Company and the Bank in the completion of
the Conversion and to assist the Company and the Bank with the sale of the
Shares in the Subscription Offering and in the Community Offering. At the time
of the execution of this Sales Agency Agreement (hereinafter referred to as this
"Agreement"), the Company delivered to Trident the Prospectus for use in the
Subscription Offering and in the Community Offering. The Prospectus contains
information with respect to the Company, the Bank and the Shares.
2. Representations and Warranties. The Company and the Bank,
jointly and severally, represent and warrant to Trident that:
(a) The Company has filed with the Securities and Exchange
Commission (hereinafter referred to as the "Commission") a Registration
Statement on Form S-1 (Registration No. ___________) and an amendment
or amendments thereto, in respect of the registration of the Shares
under the Securities Act of 1933, as amended (hereinafter referred to
as the "Act"). The Registration Statement complies in all material
respects with the Act and the Regulations (as hereinafter defined). The
Registration Statement became effective under the Act on __________
___, 1997, and no stop order has been issued with respect thereto and
no proceedings therefor have been initiated or, to the knowledge of the
Company, threatened by the Commission. Except as the context may
otherwise require, such Registration Statement, as amended, on file
with the Commission at the time the Registration Statement became
effective, including the Prospectus, financial statements, schedules,
exhibits and all other documents filed as part thereof, is herein
referred to as the "Registration Statement" and the Prospectus on file
with the Commission at the time the Registration Statement became
effective is herein referred to as the "Prospectus"; provided, however,
that if the prospectus filed by the Company with the Commission
pursuant to Rule 424(b) of the rules and regulations of the Commission
(herein referred to as the "Regulations") promulgated under the Act
differs from the form of Prospectus on file at the time the
Registration Statement became effective, the term "Prospectus" shall
refer to the Rule 424(b) prospectus from and after the time such
prospectus is filed with the Commission and shall include any
amendments or supplements thereto from and after their dates of
effectiveness or use, respectively.
(b) The Bank has filed with the OTS an Application for
Approval of Conversion on Form AC, including exhibits and amendments
and/or supplements thereto (hereinafter referred to as the "Form AC").
The Form AC complies in all material respects with the rules and
regulations of the OTS. The Form AC has been approved by the OTS and
such approval is in full force and effect. The Proxy Statement, which
is included in the Form AC as Form PS, and the Prospectus, which is
included in the Form AC as Form OC, have been approved for use by the
OTS and such approval is in full force and effect. No order has
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been issued by the OTS preventing or suspending the use of such Proxy
Statement or the Prospectus. No action by or before the OTS revoking
such approvals or orders of effectiveness is pending or, to the
knowledge of the Bank, threatened.
(c) The Company has filed with the OTS an Application on Form
H-(e)l-S, including exhibits and amendments and/or supplements thereto
(hereinafter referred to as the "Form H-(e)l-S"), for approval of the
acquisition of the common stock to be issued by the Bank in connection
with the Conversion. The Form H-(e)l-S complies in all material
respects with the rules and regulations of the OTS. On the Closing Date
(hereinafter defined), the Form H-(e)l-S and the acquisition by the
Company of all of the common stock of the Bank to be issued by the Bank
in connection with the Conversion will each have received the approval
of the OTS.
(d) Each part of the Registration Statement (as amended or
supplemented, if amended or supplemented), when such part became or
becomes effective, did not or will not contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. The
Prospectus and any amendment or supplement thereto, on the date of
filing thereof with the Commission and at the Closing Date (as
hereinafter defined), did not or will not contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
Representations or warranties in this subparagraph (d) shall not apply
to statements or omissions which relate to Trident and which were made
in reliance upon and in conformity with written information furnished
to the Company or the Bank by or on behalf of Trident expressly for use
in the Registration Statement and/or the Prospectus.
(e) The Company is a corporation duly organized and validly
existing under the laws of the State of Indiana with full power and
authority to own its properties and conduct its business as set forth
in the Prospectus. The Company has all necessary corporate power and
authority to enter into this Agreement, to perform all of its
obligations hereunder and to consummate the transactions contemplated
hereby. The Company has obtained all licenses, permits and other
governmental authorizations currently required for the conduct of its
business, all of which are in full force and effect, and the Company is
in all material respects complying therewith.
(f) The Bank is a mutual savings bank duly organized, validly
existing and in good standing under the laws of the United States with
full power and authority to own its properties and conduct its business
as set forth in the Prospectus and is a member in good standing of the
Federal Home Loan Bank of Indianapolis. The Bank has all necessary
corporate power and authority to enter
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into this Agreement, to perform all of its obligations hereunder and to
consummate the transactions contemplated hereby. The deposit accounts
of the Bank are insured up to applicable limits by the Federal Deposit
Insurance Corporation (hereinafter referred to as the "FDIC"). The Bank
has obtained all licenses, permits and other governmental
authorizations currently required for the conduct of its business, all
of which are in full force and effect, and the Bank is in all material
respects complying therewith.
(g) The Plan of Conversion has been adopted by the Boards of
Directors of the Bank and the Company and, before the Closing Date,
will be adopted by the members of the Bank. As of the date of this
Agreement, no person has sought to obtain review of the final action of
the OTS in approving the Plan of Conversion, the Conversion or the Form
H-(e)l-S pursuant to the Home Owners' Loan Act ("HOLA"), as amended, or
any other statute or regulation.
(h) Upon the effectiveness of the amendment of the Bank's
Charter and Bylaws in accordance with the rules and regulations of the
OTS, and the completion of the sale by the Company of the Shares as
contemplated by the Prospectus and the Plan of Conversion, (i) the Bank
will be converted pursuant to the Plan of Conversion to a capital stock
savings bank duly organized, validly existing and in good standing
under the laws of the United States with full power and authority to
own its property and conduct its business as described in the
Prospectus; (ii) all of the outstanding capital stock of the Bank will
be owned of record and beneficially by the Company, free and clear of
all liens, charges, encumbrances or restrictions, and (iii) the Company
will have no directly-owned subsidiaries other than the Bank and will
not own, directly or indirectly, any equity securities in any entity or
business enterprise other than the shares of the Bank and its
wholly-owned subsidiary, Citizens Loan and Service Corporation (the
"Subsidiary"), or as otherwise disclosed in the Prospectus.
(i) Each of the Company and the Bank is duly qualified and in
good standing as a foreign corporation in all jurisdictions 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
either the Company or the Bank.
(j) The Subsidiary is the sole direct or indirect subsidiary
of the Bank and is wholly owned by the Bank. The Subsidiary has been
duly organized and is validly existing and in good standing under the
laws of the State of Indiana with full power and authority to own its
properties and conduct its businesses as described in the Prospectus,
and the Subsidiary is not required to be qualified to do business as a
foreign corporation in any jurisdiction where non-qualification would
have a material adverse effect on the Bank, the Subsidiary and the
Company taken as a whole. The Subsidiary holds all material licenses,
certificates and permits from governmental authorities necessary for
the conduct
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of its business as described in the Prospectus, and all such licenses,
certificates and permits are in full force and effect and the
Subsidiary is in all material respects complying therewith. All of the
outstanding stock of the Subsidiary has been duly authorized and is
fully paid and nonassessable, and such stock is owned directly or
indirectly by the Bank free and clear of any liens or encumbrances. The
activities of the Subsidiary are permitted to subsidiaries of a
federally chartered savings bank by virtue of the applicable rules and
regulations of the OTS and Indiana law. The Subsidiary has good and
marketable title to all assets material to its businesses and to those
assets described in the Prospectus, if any, free and clear of all
material liens, charges, encumbrances or restrictions, except as set
forth in the Prospectus.
(k) Each of the Company and the Bank has good, marketable and
insurable title to all assets material to its respective business and
to those assets described in the Prospectus as owned by the Company or
the Bank, free and clear of all material liens, charges, encumbrances
or restrictions, except as set forth in the Prospectus. All of the
leases and subleases material to the business of the Company and the
Bank under which any one of them holds properties, including those set
forth in the Prospectus, are in full force and effect as described
therein.
(l) This Agreement has been duly and validly authorized,
executed and delivered by each of the Company and the Bank and
constitutes the valid and legally binding obligation of each of the
Company and the Bank, enforceable against each of them in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, receivership, conservatorship or other laws
affecting creditors' rights generally and as may be limited by the
exercise of judicial discretion in applying principles of equity and
except as the obligations of the Company and the Bank under the
indemnification and contribution provisions of Sections 7 and 8 hereof
may be unenforceable or against public policy.
(m) The Conversion will constitute a tax free reorganization
under the Internal Revenue Code of 1986, as amended, and will not be a
taxable transaction under the laws of Indiana to the Bank or to persons
receiving subscription rights in accordance with the Plan of
Conversion. The Bank and Trident have received the opinion of Xxxxxx &
Xxxxxxxxx, special counsel to the Bank, with respect to the federal and
Indiana state tax consequences of the Conversion, a copy of which is
included as an Exhibit to the Registration Statement. The facts relied
upon by such counsel as set forth in such opinion are accurate and
complete as of the date of such opinion.
(n) Each of the Company and the Bank has all such power,
authority, authorizations, approvals and orders as may be required to
enter into this Agreement and to carry out the terms and conditions
hereof. Without limiting the
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generality of the foregoing sentence, the Company has the power,
authority, authorizations, approvals and orders to issue and sell the
Shares to be sold by the Company in accordance with this Agreement and
the Bank has the power, authority, authorizations, approvals and orders
to issue and sell the shares of its capital stock to the Company as
provided in the Plan of Conversion, subject to the issuance to the Bank
of an amended Charter in the form required for a federal stock savings
bank (hereinafter referred to as the "Stock Charter"). The form of the
Stock Charter has been approved by the OTS.
(o) Neither the Company nor the Bank is in violation of any
rule or regulation of the Commission, the OTS or the FDIC which might
materially and adversely affect the condition (financial or otherwise),
operations, businesses, assets or properties of the Company or the
Bank. The Bank is not subject to any directive from the OTS or the FDIC
(or their predecessors) to make any change in the method of conducting
its business or affairs and has conducted its business in material
compliance with all applicable statutes and regulations (including,
without limitation, all regulations, decisions, directives and order of
the FHLB of Indianapolis, the OTS and the FDIC, or their predecessors).
Except as set forth in the Prospectus, there is not pending or, to the
knowledge of the Company or the Bank, threatened any litigation,
charge, investigation, action, suit or proceeding before or by any
court, regulatory authority or governmental agency or body which,
individually or in the aggregate, might affect the performance of the
terms and conditions of this Agreement or the consummation of the
transactions contemplated hereby or which, individually or in the
aggregate, might result in any material adverse change in the condition
(financial or otherwise), business, prospects or results of operations
of the Company and the Bank considered as one enterprise.
(p) The financial statements of the Bank which are included in
the Registration Statement and are part of the Prospectus fairly
present the financial condition, results of operations, changes in
retained income and cash flows of the Bank and the Subsidiary at the
respective dates thereof and for the respective periods covered thereby
and comply in all material respects with the applicable accounting
requirements of the Commission and the OTS. Such financial statements
have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved except
as specifically noted in such financial statements, and are true,
complete and correct. The tabular information in the Prospectus
accurately presents the information purported to be shown thereby at
the respective dates and for the respective periods covered thereby.
(q) There has been no material adverse change in the condition
(financial or otherwise) of the Company or the Bank or in the assets,
properties, operations, earnings or business prospects of the Company
or the Bank since the
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latest date as of which such condition is set forth in the Prospectus,
except as referred to therein. The capitalization, assets, properties
and business of each of the Company and the Bank conform in all
material respects to the descriptions thereof contained in the
Prospectus as of the date specified and, since such date, there has
been no material adverse change in either the condition (financial or
otherwise) of the Company or the Bank or in the assets, properties,
operations, earnings or business prospects of the Company or the Bank,
except as referred to therein. Neither the Company nor the Bank has any
material contingent liabilities of any kind, except as set forth in the
Prospectus.
(r) No material default exists, and no event has occurred
which, with notice or lapse of time, or both, would constitute a
default, on the part of either the Company or the Bank or, to their
knowledge, on the part of any other party in the due performance and
observance of any term, covenant or condition of any agreement which is
material to the condition (financial or otherwise) of the Company or
the Bank. Such agreements are in full force and effect, and no other
party to any such agreement has instituted or, to their knowledge,
threatened any action or proceeding wherein the Company or the Bank
would or might be alleged to be in default thereunder.
(s) Neither the Company nor the Bank is in violation of its
respective charter, articles of incorporation, code of bylaws or bylaws
or in default in any material respect in the performance of any
material obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness by which it is
bound. The execution, delivery and fulfillment of the terms of this
Agreement and the consummation of the transactions contemplated hereby
do not and will not violate or conflict with the respective charter,
articles of incorporation, code of bylaws or bylaws of the Company or
the Bank or, in any material respect, violate, conflict with or
constitute a breach of, or default (or an event which, with notice or
lapse of time, or both, would constitute a default) under any
agreement, indenture or other instrument by which the Company or the
Bank is bound, or under any governmental license or permit or any law,
administrative regulation or authorization, approval, order or court
decree, injunction or order to which the Company or the Bank is
subject.
(t) Subsequent to the respective dates as of which information
is given in the Prospectus and prior to the Closing Date, except as
otherwise may be indicated or contemplated therein, neither the Company
nor the Bank will issue any securities or incur any liability or
obligation, direct or contingent, for borrowed money, except borrowings
from the Federal Home Loan Bank of Indianapolis and other borrowings in
the ordinary course of business, or enter into any other transaction
not in the ordinary course of business which is material in light of
the businesses and properties of the Company and the Bank considered as
one enterprise.
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(u) No equity or debt securities of the Company have ever been
issued or are outstanding. Upon the consummation of the Conversion, the
authorized, issued and outstanding equity capital of the Company shall
be as set forth in the Prospectus under the caption "Capitalization,"
adjusted to give effect to the actual sale of the Shares. The offer,
sale and issuance of the Shares have been duly authorized by all
necessary action of the Company and approved by the OTS. When issued in
accordance with the terms of the Plan of Conversion, the Shares will be
validly issued, fully paid and nonassessable, will conform to the
description thereof set forth in the Prospectus and will be issued in
full compliance with all securities laws applicable to the Company or
the Bank. The issuance of the Shares is not subject to preemptive
rights. Good title to the Shares will be transferred to the purchasers
thereof upon issuance thereof against payment therefor, free and clear
of all claims, encumbrances, security interests and liens created by
the Company or the Bank. The certificates evidencing the Shares will
conform with the requirements of applicable laws and regulations.
(v) No equity securities of the Bank have ever been issued or
are outstanding. The sale and issuance of the capital stock of the Bank
to the Company have been duly authorized by all necessary action of the
Bank and the Company and approved by the OTS. Immediately after the
Closing Date, the authorized capital of the Bank will consist of 1,000
shares of common stock, par value $.01 per share, 1,000 of which will
be issued to and held of record by the Company, and 1,000,000 shares of
preferred stock, par value $1.00 per share, none of which will be
issued or outstanding. When issued to the Company in accordance with
the terms of the Plan of Conversion, such shares of common stock will
be validly issued, fully paid and nonassessable and will be issued in
full compliance with all securities laws applicable to the Bank or the
Company. There are no preemptive rights or rights to subscribe for or
to purchase any securities of the Bank. None of the shares of such
common stock will be issued in violation of any rights of any member of
the Bank. Good title to such common stock will be transferred to the
Company upon issuance thereof against the payment to the Bank of all
but 50% of the net proceeds of the sale of the Shares, after giving
effect to the loan to be made by the Company to its employee stock
ownership plan (the "ESOP Loan"), in cash, free and clear of all
claims, encumbrances, security interests and liens whatsoever. Upon the
consummation of the Conversion, the liquidation account will be duly
established in accordance with the requirements of the OTS and the Plan
of Conversion.
(w) At the Closing Date, the Company and the Bank will have
satisfied all conditions precedent to, and conducted the Conversion in
all material respects in accordance with the Plan of Conversion, the
Regulations and all other applicable laws, regulations, decisions and
orders, including all terms, conditions, requirements and conditions
precedent to the consummation of the transactions
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contemplated by the Plan of Conversion or the approval of the Form AC
and the Form H-(e)l-S imposed upon them by the OTS.
(x) Appropriate arrangements for placing the funds received
from subscriptions for Shares in special interest-bearing accounts with
the Bank until all Shares are sold and paid for (hereinafter referred
to as the "Escrow Account") were made before the commencement of the
Subscription Offering, with provision (i) for prompt refund to the
subscribers if the minimum number of Shares is not sold within the
period prescribed by the Plan of Conversion and Prospectus or if the
transactions contemplated by the Prospectus and Plan of Conversion are
otherwise not consummated or (ii) for delivery to the Company if the
minimum number of Shares is sold and the transactions contemplated by
the Prospectus and Plan of Conversion are consummated.
(y) No approval of any regulatory or supervisory or other
public authority is required in connection with the execution and
delivery of this Agreement or the issuance and sale of the Shares,
except (i) the approval of the OTS, (ii) the declaration of
effectiveness of any required post-effective amendment to the
Registration Statement by the Commission and approval thereof by the
OTS, (iii) the issuance to the Bank of the Stock Charter by the OTS,
(iv) the approval of the Form H-(e)l-S, (v) the approval by the
National Association of Securities Dealers, Inc. (the "NASD") of the
fairness of the compensation to be paid to Trident pursuant to this
Agreement, (vi) the listing of the Shares on the NASDAQ Small Cap
Market, and (vii) as may be otherwise required under the securities
laws of various jurisdictions.
(z) All contracts and other documents required to be filed as
exhibits to the Registration Statement, the Form AC and the Form
H-(e)l-S have been filed with the Commission and the OTS.
(aa) Ernst & Young LLP, the public accounting firm that has
certified the financial statements and supporting schedules of the Bank
included in the Prospectus, are independent public accountants within
the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants ("AICPA") and 12 C.F.R. ss.
571.2(c)(3).
(bb) Each of the Company and the Bank has (i) timely filed all
required federal, state and foreign tax returns and no deficiency has
been asserted with respect to such returns by any taxing authorities,
(ii) paid all taxes that have become due and (iii) made adequate
reserves for similar future tax liabilities.
(cc) The records of account holders, depositors, borrowers and
other members of the Bank delivered to Trident by the Bank or its agent
for use during the Conversion are reliable and accurate.
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(dd) The Bank has not engaged in any transaction in connection
with which the Bank or the Company could be subject to either a civil
penalty assessed pursuant to Section 502(i) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or a tax imposed by
Section 4975 of the Internal Revenue Code of 1986, as amended. No
material liability to the Pension Benefit Guaranty Corporation has been
or is expected by the Bank to be incurred by the Company or the Bank
with respect to any pension plan subject to ERISA (a "Pension Plan").
There has been no "reportable event" (within the meaning of Section
4043(b) of ERISA) with respect to any Pension Plan and no event or
condition which presents a material risk of the termination of any
Pension Plan by the Pension Benefit Guaranty Corporation. Full payment
has been made of all amounts which the Bank is required, under the
terms of any Pension Plan, to have paid as contributions to such
Pension Plan as of the date hereof, and no "accumulated funding
deficiency" (as defined in Section 302 of ERISA and Section 412 of the
Code), whether or not waived, exists with respect to any Pension Plan.
(ee) Xxxxxx & Company, Inc. (the "Appraiser"), the corporation
which prepared an appraisal of the estimated pro forma fair market
value of the Company and the Bank, has advised the Company and the Bank
that the Appraiser is independent with respect to each of them within
the meaning of the Conversion Regulations.
(ff) The Company and the Bank (including for all purposes of
this subsection (ff), the Subsidiary) are in compliance with all laws,
rules and regulations relating to environmental protection, and neither
the Company nor the Bank has any reason to believe that the Company or
the Bank is subject to liability under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, or any
similar law, except for violations which, if asserted, would not have a
material adverse effect on the Company and the Bank. There are no
actions, suits, regulatory investigations or other proceedings pending
or, to the best knowledge of the Company or the Bank, threatened
against the Company or the Bank relating to environmental protection.
No disposal, release or discharge of hazardous or toxic substances,
pollutants or contaminants, including petroleum and gas products, as
any of such terms may be defined under federal, state or local law, has
been caused by the Company or the Bank or, to their best knowledge, has
occurred on, in, at or about any of the facilities or properties of the
Company or the Bank, except such disposal, release or discharge which,
if discovered, would not have a material adverse effect on the Company
and the Bank.
(gg) All of the loans represented as assets of the Bank on the
most recent financial statements of the Bank included in the Prospectus
meet or are
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exempt from all requirements of federal, state or local law pertaining
to lending, including without limitation truth in lending (including
the requirements of 12 C.F.R. Part 226 ("Regulation Z")), real estate
settlement procedures, consumer credit protection, equal credit
opportunity and all disclosure laws applicable to such loans, except
for violations which, if asserted, would not have a material adverse
effect on the Company and the Bank taken as a whole.
(hh) Neither the Company nor the Bank nor any employee of the
Company or the Bank, has made any payment of funds of the Company or
the Bank prohibited by law, and no funds of the Company or the Bank
have been set aside to be used for any payment prohibited by law.
(ii) No labor dispute with the employees of the Company or the
Bank exists or, to the actual knowledge of the Company or the Bank, is
imminent; and the Company is not aware of any existing or imminent
labor disturbance by the employees of any of its principal suppliers or
contractors which might be expected to result in any material adverse
change in the financial condition, results of operations or business of
the Company and the Bank taken as a whole.
(jj) The Company and the Bank are in compliance in all
material respects with the applicable financial recordkeeping and
reporting requirements of the Currency and Foreign Transaction
Reporting Act of 1970, as amended, and the rules and regulations
thereunder.
(kk) The Company has received approval, subject to regulatory
approval to consummate the Conversion and issue the Shares and subject
to certain other standard conditions, to have the Shares quoted through
the NASDAQ Small Cap Market effective on the Closing Date.
3. Retention of Trident. On the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company and the Bank hereby agree with Trident as follows:
(a) Assistance with Conversion. The Bank and the Company
hereby retain Trident to assist the Bank and the Company in the
Conversion by (i) training and educating the Bank's employees in
respect of the mechanics and regulatory requirements of the conversion
process; (ii) keeping records of all subscriptions for the Shares; and
(iii) obtaining proxies from the Bank's members for use at the Special
Meeting of Members at which the Conversion is to be considered.
(b) Assistance with Community Offering. The Bank and the
Company hereby retain Trident to act as the exclusive agent of the Bank
and the Company in assisting in the sale of the Shares in the Community
Offering; provided,
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however, that the Bank and the Company acknowledge and agree that
Trident may offer to other NASD-registered broker dealers selected by
the Bank and Trident ("Selected Dealers") the opportunity to solicit
subscriptions for the Shares to be sold in the Community Offering on a
best efforts basis pursuant to the terms and conditions of Selected
Dealer Agreements between Trident and such Selected Dealers. Trident
and the Bank will determine the Selected Dealers to assist the Bank
during the Community Offering. Preference in the Community Offering
shall be given to residents of Clinton County, Indiana.
(c) Other Matters. Subscriptions shall be offered in the
Subscription Offering only during the subscription period by means of
Order Forms as described in the Prospectus and may be offered in the
Community Offering by means of Order Forms or by solicitations of
indications of interest from customers of Trident or Selected Dealers
residing in those states in which the Shares may be qualified for offer
and sale. The Bank and the Company shall notify Trident promptly after
the expiration of the Subscription Offering of the number of Shares
sold in the Subscription Offering and the aggregate number of Shares
remaining available to be sold in the Community Offering. The Bank and
the Company shall provide Trident with any information (which shall be
accurate and reliable) necessary to assist Trident in allocating the
Shares in the event of an oversubscription. The Bank and the Company,
jointly and severally, shall indemnify and hold harmless each of
Trident and the Selected Dealers against any losses, claims, damages or
liabilities resulting from reliance under any records of depositors,
borrowers and other members of the Bank delivered to Trident by the
Bank or its agents for use during the Conversion.
Trident agrees that any Selected Dealer Agreements
between Trident and Selected Dealers will provide that Selected Dealers
will solicit indications of interest from their customers to place
orders for the purchase of Shares as of a certain date (the "Order
Date") and, upon request by Trident, (i) submit orders to purchase
Shares, for which they have previously received indications of interest
from their customers, (ii) mail confirmations of receipt of orders to
each subscriber confirming interest on the business day following the
Order Date, (iii) debit accounts of such subscribers on the third
business day from the Order Date ("Settlement Date"), and (iv) forward
completed Order Forms together with such funds to the Bank on the
Settlement Date for deposit in a segregated account.
(d) Fees and Expenses.
(i) As compensation for Trident's services hereunder, the
Company and the Bank, jointly and severally, agree to pay Trident
compensation and reimbursement as follows: (I) a commission equal
to one and one-half percent (1.5%) of the aggregate dollar
-12-
amount of shares sold in the Subscription Offering and the
Community Offering, excluding any Shares sold to the Bank's
directors (including advisory directors), executive officers
(including in each case shares sold to "associates" as that term
is defined in the Plan of Conversion) or to the employee stock
ownership plan; and (II) for shares sold under agreements with
Selected Dealers a commission not to exceed a fee to be agreed
upon by Trident and the Bank to reflect market requirements at
the time of the stock allocation in the Community Offering.
(ii) In addition to the fees described in subparagraph (i)
of this Section 3(d), the Company and the Bank jointly and
severally agree to reimburse Trident for all reasonable
out-of-pocket expenses (including fees and disbursements of
counsel) incurred by Trident in connection with the Conversion,
which expenses shall not exceed $10,000 (of which $10,000 has
previously been paid to Trident as an advance) without the Bank's
consent; provided, however, that such $10,000 shall be exclusive
of fees and disbursements of counsel (which shall not exceed
$30,000, excluding reimbursable expenses of counsel) and any
expenses payable by the Bank and the Company pursuant to
subparagraph (iii) of this Section 3(d) to the extent incurred in
the first instance by Trident. The expenses to be reimbursed
hereunder, including fees and disbursements of Trident's counsel,
shall be payable by the Bank and the Company as they are incurred
by Trident and billed to the Bank, and shall be payable whether
or not the Closing occurs or this Agreement is terminated for any
reason.
(iii) Whether or not the Closing occurs or this Agreement is
terminated for any reason, (I) the Company and the Bank will pay
all expenses incident to the performance of their obligations in
connection with the Conversion, including, without limitation,
all fees and disbursements of their counsel, all expenses
incurred in the preparation, printing, filing and distribution of
all documents relating to the Conversion, telephone charges, air
freight, rental equipment, supplies, marketing materials, all
fees and expenses of the Company's transfer agent, all transfer
taxes payable with respect to the sale of the Shares, and all
fees relating to auditing and accounting and costs of printing
all documents necessary in connection with the foregoing, (II)
the Company and the Bank will reimburse Trident for all expenses
required to be reimbursed pursuant to subparagraph (d)(ii) of
this Section 3 and (III) the Company and the Bank will reimburse
Trident for any out-of-pocket accountable expenses (including
fees and disbursements of counsel) incurred by them in connection
with the matters referred to in Section 5(d) of this Agreement
and the preparation of memoranda relating thereto and for any
filing fees of the NASD relating to the Shares. The expenses to
be reimbursed to Trident pursuant to subparagraph (d)(iii)(I) and
(III) of this Section 3 shall be in addition to, and not subject
to the limitations on, the expenses to be reimbursed to Trident
pursuant to (ii) above.
(e) Termination. The employment of Trident hereunder shall
terminate upon the first to occur of the following: (i) the forty-fifth
day after the expiration of the Subscription Offering, unless the Bank
and the Company, with the approval of the OTS, are permitted to extend
such date; (ii) the Closing; or (iii) the termination of this Agreement
pursuant to Section 10 hereof.
4. Closing.
(a) Upon the terms and subject to the conditions of this
Agreement, the closing of the purchase and sale of the Shares (herein
referred to as the "Closing") shall take place at the offices of Xxxxxx
& Xxxxxxxxx, 00 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx, at 10:00
a.m., Indianapolis time, on a business day which is agreed upon by the
parties hereto, but which is not later than the third business day
after the date upon which the Bank certifies to the OTS that at least
the minimum number of Shares permitted to be sold in the Conversion has
been sold against payment therefor (herein referred to as the "Closing
Date").
(b) In accordance with the regulations of the OTS and the
Regulations, before the commencement of the Subscription Offering,
appropriate arrangements will be made for placing the funds received in
payment for the shares of Common Stock in the Escrow Account until such
shares are sold and paid for at the Closing. If the Closing does not
occur within the time specified in Section 3(e)(i) of this Agreement,
the Bank will promptly refund all funds in the Escrow Account to the
persons who have the beneficial interests therein.
(c) At the Closing, the Shares will be issued by the Company
against payment of the purchase price therefor by wire transfer in
immediately available funds from the Escrow Account. Certificates
representing the Shares shall be prepared in definitive form and in
such denominations and registered in such names as set forth in the
Order Forms or, in the case of Shares not subscribed for pursuant to
Order Forms, in such names as Trident (or Selected Dealers, if
applicable) may request, upon at least two business days' prior notice
to the Bank, and shall be, (i) in the case of Shares subscribed for
pursuant to Order Forms, delivered by the Company directly to the
purchasers thereof as promptly as
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practicable following the Closing, and (ii) in the case of Shares not
subscribed for pursuant to Order Forms, made available for checking and
packaging at least one business day before the Closing at a location to
be designated by Trident.
5. Further Agreements. The Company and the Bank, jointly and
severally, covenant and agree that:
(a) The Company will deliver to Trident, from time to time,
such number of copies of the Prospectus as Trident may reasonably
require. The Company hereby authorizes and directs Trident to use the
Prospectus in connection with the offer and sale of the Shares.
(b) The Company will notify Trident immediately upon obtaining
knowledge thereof, and confirm the notice in writing: (i) when any
post-effective amendment to the Registration Statement becomes
effective or when any supplement to the Prospectus has been filed with
the Commission; (ii) of the issuance by the Commission of any stop
order relating to the Registration Statement or of the initiation or
the threat of any proceedings for such purpose; (iii) of the receipt of
any notice with respect to the suspension of the qualification of the
Shares for offering or sale in any jurisdiction; and (iv) of the
receipt of any comments from the staff of the Commission relating to
the Registration Statement or from the staff of the OTS relating to the
Form AC or the Form H-(e)l-S. In the event the Commission enters a stop
order relating to the Registration Statement at any time, the Company
will make every reasonable effort to obtain the lifting of such order
at the earliest possible moment.
(c) During the time when a prospectus is required to be
delivered under the Act, the Company will comply with all requirements
of the Act and the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), each as now in effect and as hereafter amended, and
with the Regulations, as from time to time in force, so far as
necessary to permit the continuance of offers and sales of or dealings
in the Shares in accordance with the provisions hereof and the
Prospectus. If, during the period when the Prospectus is used in
connection with the offer and sale of the Shares, any event relating to
or affecting the Company or the Bank shall occur as a result of which
it is necessary, in the opinion of counsel for the Company or counsel
for Trident, to amend or supplement the Prospectus in order to make the
Prospectus not false or misleading in light of the circumstances
existing at the time the Prospectus is delivered to a purchaser of the
Shares, the Company shall forthwith prepare and furnish to Trident a
reasonable number of copies of an amendment or amendments or of a
supplement or supplements to the Prospectus (in form and substance
reasonably satisfactory to counsel for Trident) which shall amend or
supplement the Prospectus so that, as amended or supplemented, the
Prospectus will not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
-14-
therein, in light of the circumstances existing at the time the
Prospectus is delivered to a purchaser of the Shares, not misleading.
The Company will not file or use any amendment or supplement to the
Registration Statement or the Prospectus of which Trident has not first
been furnished a copy or as to which Trident shall reasonably object
after having been furnished such copy. For the purposes of this
subsection (c), the Company and the Bank shall furnish such information
with respect to themselves as Trident from time to time reasonably may
request.
(d) The Company will take all reasonably necessary action as
may be required to qualify or register the Shares for offer and sale by
the Company under the securities or "blue sky" laws of such
jurisdictions as Trident and the Company or its counsel may agree upon;
provided, however, that the Company will not be obligated to qualify as
a foreign corporation under the laws of any such jurisdiction. In each
jurisdiction in which such qualification or registration will be
effected, the Company, unless Trident agrees that such action is not
necessary or advisable in connection with the distribution of the
Shares, will file and make such statements or reports as are, or
reasonably may be, required by the laws of such jurisdiction.
(e) The liquidation account for the benefit of eligible
account holders as of December 31, 1995 and supplemental eligible
account holders as of June 30, 1997, will be duly established and
maintained in accordance with the requirements of the OTS and such
eligible account holders and supplemental eligible account holders who
continue to maintain their savings accounts in the Bank will have an
inchoate interest in their pro rata portion of the liquidation account
which shall have a priority superior to that of the holders of the
Shares in the event of a complete liquidation of the Bank.
(f) The Company will file a registration statement for the
Shares under Section 12(g) of the Exchange Act and will request that
such registration statement become effective upon the completion of the
Conversion. The Company will maintain the effectiveness of such
registration under Section 12(g) of the Exchange Act for not less than
three (3) years or such shorter period as may be required by the OTS'
approval of the Form AC.
(g) For a period of three (3) years from the date of this
Agreement, the Company will furnish the following to Trident:
(i) As soon as publicly available after the end of each
fiscal year, a copy of its Annual Report to Shareholders for such
year;
(ii) As soon as publicly available, a copy of each report or
definitive proxy statement of the Company filed with the
-15-
Commission under the Exchange Act or mailed to shareholders; and
(iii) From time to time, such other public information
concerning the Company as Trident may reasonably request.
(h) The Company 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."
(i) The Company will not deliver the Shares until each and
every condition set forth in Section 6 of this Agreement has been
satisfied in full, unless such condition is waived in writing by
Trident.
(j) The Company will provide Trident with any information
necessary to assist Trident in allocating the Shares in the event of an
oversubscription. Such information will be accurate and reliable. The
Company will indemnify and hold harmless Trident from and against any
liability arising out of any records of account holders, other
depositors, borrowers or other members of the Bank delivered to Trident
by the Company or the Bank or their agents for use during the
Conversion.
(k) The Company and the Bank will take such actions and
furnish such information as are reasonably requested by Trident in
order for Trident to ensure compliance with the NASD's "Interpretation
Relating to Free Riding and Withholding."
(l) The Company and the Bank will not, directly or indirectly,
offer, sell, contract to sell, or otherwise dispose of any additional
Shares or securities convertible into Shares, without Trident's prior
written consent, for a period of 120 days after the date of this
Agreement, except that the Company may grant stock options and share
awards pursuant to the Stock Option Plan and RRP (each as defined and
substantially upon the terms set forth in the Prospectus).
(m) As soon as practicable, but not later than 15 months after
the end of its current fiscal quarter, the Company will make generally
available to its shareholders an earnings statement covering a period
of at least 12 months beginning after the date of this Agreement which
will satisfy the provisions of Section 11(a) of the Act and Rule 158 of
the Regulations.
6. Conditions of Trident's Obligations. The obligations of
Trident set forth in this Agreement shall be subject to the accuracy of the
representations and warranties contained in Section 2 of this Agreement as of
the date hereof and as of the Closing Date, to the accuracy of the statements of
officers and directors of the Company, the Bank and Citizens made pursuant to
-16-
the provisions hereof, to the performance by the Company and the Bank of their
obligations hereunder, and to the following additional conditions:
(a) At the Closing Date, the Company and the Bank will have
satisfied the conditions precedent to, and will have conducted the
Conversion in all material respects in accordance with the Plan of
Conversion and all applicable laws, regulations, decisions and orders,
including all terms, conditions, requirements and conditions precedent
to the Conversion imposed by, among other authorities, the OTS and/or
the Commission.
(b) On the Closing Date, Trident shall receive an opinion of
Xxxxxx & Xxxxxxxxx, special counsel for the Company and the Bank
(hereinafter referred to as "Special Counsel"), dated as of the Closing
Date, addressed to Trident, in form and substance reasonably
satisfactory to counsel for Trident and to the effect that:
(i) The Company is a corporation duly organized and validly
existing under the laws of the State of Indiana with full power
and authority to own its properties and conduct its business as
set forth in the Prospectus. The Company has all necessary
corporate power and authority to enter into this Agreement, to
perform all of its obligations hereunder and to consummate the
transactions contemplated hereby. To their knowledge, the Company
has obtained all licenses, permits and other governmental
authorizations currently required for the conduct of its
business, all of which are in full force and effect, and the
Company is in all material respects complying therewith.
(ii) The Bank is a mutual savings bank validly existing and
in good standing under the laws of the United States with full
power and authority to own its properties and conduct its
business as set forth in the Prospectus and is a member in good
standing of the Federal Home Loan Bank of Indianapolis. The Bank
has all necessary corporate power and authority to enter into
this Agreement, to perform all of its obligations hereunder and
to consummate the transactions contemplated hereby. The deposit
accounts of the Bank are insured up to applicable limits by the
FDIC. To their knowledge, the Bank has obtained all licenses,
permits and other governmental authorizations currently required
for the conduct of its business, all of which are in full force
and effect, and the Bank is in all material respects complying
therewith.
(iii) The Plan of Conversion has been adopted by the Board
of Directors and members of the Bank and approved by the Board
-17-
of Directors of the Company. As of the Closing Date, no person
has sought to obtain review of the final action of the OTS in
approving the Plan of Conversion, the Conversion or the Form
H-(e)l-S pursuant to the HOLA, as amended, or any other statute
or regulation.
(iv) Upon the effectiveness of the amendment of the Bank's
Charter and Bylaws in accordance with the rules and regulations
of the OTS and the completion of the sale by the Company of the
Shares as contemplated by the Prospectus and the Plan of
Conversion, (I) the Bank will be converted pursuant to the Plan
of Conversion to a capital stock savings bank duly organized,
validly existing and in good standing under the laws of the
United States with full power and authority to own its property
and conduct its business as described in the Prospectus; (II) all
of the outstanding capital stock of the Bank will be owned of
record and beneficially by the Company; and (III) the Company
will have no direct subsidiaries other than the Bank.
(v) Each of the Company and the Bank is duly qualified and
in good standing to do business as a foreign corporation in all
jurisdictions 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 either the Company or the Bank.
(vi) Each of the Bank and the Subsidiary has obtained all
licenses, permits and other governmental authorizations currently
required for the conduct of its business, except where the
failure to obtain such licenses, permits and other governmental
authorizations would not have a material adverse effect on its
financial condition, business or results of its operations; and,
all such licenses, permits and other governmental authorizations
are in full force and effect.
(vii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been
fully and validly authorized by all necessary action on the part
of each of the Company and the Bank. This Agreement is a legal,
valid and binding obligation of each of the Company and the Bank,
enforceable against each of them in accordance with its terms,
except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, receivership, conservatorship or
other laws affecting creditors' rights generally and as may be
limited by the exercise of judicial discretion in applying
principles of equity
-18-
and except as the obligations of the Company and the Bank under
the indemnification and contribution provisions of Sections 7 and
8 hereof may be unenforceable or against public policy, as to
which no opinion need be rendered.
(viii) Each of the Company and the Bank has all such power,
authority, authorizations, approvals and orders as may be
required to enter into this Agreement and to carry out the terms
and conditions hereof. Without limiting the generality of the
foregoing sentence, the Company has the power, authority,
authorizations, approvals and orders to issue and sell the Shares
to be sold by the Company in accordance with this Agreement. The
Bank has the power, authority, authorizations, approvals and
orders to issue and sell the shares of its common stock to the
Company as provided in the Plan of Conversion, subject to the
issuance of an amended Charter in the form required for a federal
stock savings bank (hereinafter referred to as the "Stock
Charter"). The form of the Stock Charter has been approved by the
OTS.
(ix) To their knowledge, neither the Company nor the Bank is
in violation of any rule or regulation of the Commission or the
OTS, which might materially and adversely affect the condition
(financial or otherwise), operations, businesses, assets, or
properties of the Company or the Bank. To their knowledge, the
Bank is not subject to any written directive from the OTS or the
FDIC (or their predecessors) to make any material change in the
method of conducting its business or affairs and has conducted
its business in material compliance with all applicable statutes
and regulations (including, without limitation, all regulations,
decisions, directives and orders of the FHLB of Indianapolis, the
OTS, and the FDIC, or their predecessors). Except as set forth in
the Prospectus, to their knowledge, there is not pending or
threatened any litigation, charge, investigation, action, suit or
proceeding before or by any court, regulatory authority or
governmental agency or body which might affect the performance of
the terms and conditions of this Agreement or the consummation of
the transactions contemplated hereby or which might result in any
material adverse change in the condition (financial or
otherwise), business, prospects or results of operations of the
Company or the Bank.
(x) To their knowledge, no material default exists, and no
event has occurred which, with notice or lapse of time, or both,
would constitute a default, on the part of either the Company or
the
-19-
Bank in the due performance and observance of any term, covenant
or condition of any agreement which is material to the condition
(financial or otherwise) of the Company or the Bank. To their
knowledge, such agreements are in full force and effect, and no
other party to any such agreement has instituted or threatened
any action or proceeding wherein the Company or the Bank would or
might be alleged to be in default thereunder.
(xi) To their knowledge, neither the Company nor the Bank is
in violation of their respective charter, articles of
incorporation or bylaws or in default in any material respect in
the performance of any material obligation, agreement or
condition contained in any bond, debenture, note or any other
evidence of indebtedness. The execution, delivery and fulfillment
of the terms of this Agreement and the consummation of the
transactions contemplated hereby do not and will not violate or
conflict with the respective charter, articles of incorporation
or bylaws of the Company or the Bank or, in any material respect,
violate, conflict with or constitute a breach of, or default (or
an event which, with notice or lapse of time, or both, would
constitute a default) under any material agreement, indenture or
other instrument by which either the Company or the Bank is
bound, or under any governmental license or permit or any law,
administrative regulation or authorization, approval or order,
court decree, injunction or order to which the Company or the
Bank is subject.
(xii) No equity or debt securities of the Company have ever
been issued or are outstanding. Upon the consummation of the
Conversion, the authorized, issued and outstanding equity capital
of the Company shall be as set forth in the Prospectus under the
caption "Capitalization," adjusted to give effect to the actual
sale of the Shares. The offer, sale and issuance of the Shares
have been duly authorized by all necessary action of the Company
and approved by the OTS. When issued in accordance with the terms
of the Plan of Conversion, the Shares will be validly issued,
fully paid and nonassessable and will conform to the description
thereof set forth in the Prospectus. The issuance of the Shares
is not subject to preemptive rights. Good title to the Shares
will be transferred to the purchasers thereof upon issuance
thereof against payment therefor. The certificates evidencing the
Shares will conform in all material respects with the
requirements of applicable laws and regulations.
-20-
(xiii) No equity securities of the Bank have ever been
issued or are outstanding. The offer, sale and issuance of the
capital stock of the Bank to the Company have been duly
authorized by all necessary action of the Bank and the Company
and approved by the OTS. Immediately after the Closing Date, the
authorized capital of the Bank will consist of 1,000 shares of
common stock, par value $.01 per share, 1,000 of which will be
issued to and held of record by the Company, and 1,000,000 shares
of preferred stock, none of which will be issued or outstanding.
When issued in accordance with the terms of the Plan of
Conversion, such common stock will be validly issued, fully paid
and nonassessable. There are no preemptive rights or rights to
subscribe for or to purchase any capital stock of the Bank. None
of the shares of such capital stock will be issued in violation
of any rights of any member of the Bank. Good title to such
capital stock will be transferred to the Company upon issuance
thereof against the payment to the Bank of all but 50% of the net
proceeds of the sale of the Shares, after giving effect to the
ESOP Loan, in cash, free and clear of all claims, encumbrances,
security interests and liens whatsoever. Upon the consummation of
the Conversion, the liquidation account will be duly established
in accordance with the requirements of the OTS and the Plan of
Conversion.
(xiv) At the Closing Date, the Company and the Bank will
have satisfied all material conditions precedent to, and
conducted the Conversion in all material respects in accordance
with, the Plan of Conversion, the Regulations and all other
applicable laws, regulations, decisions and orders, including all
terms, conditions, requirements and provisions precedent to the
consummation of the transactions contemplated by the Plan of
Conversion and the approval of the Form AC and the Form H-(e)l-S
imposed upon them by the OTS.
(xv) No approval of any regulatory or supervisory or other
public authority is required in connection with the execution and
delivery of this Agreement or the issuance and sale of the
Shares, except (i) the approval of the OTS, (ii) the declaration
of effectiveness of any required post-effective amendment to the
Registration Statement by the Commission and approval thereof by
the OTS, (iii) the issuance to the Bank of the Stock Charter by
the OTS, (iv) the approval of the Form H-(e)l-S, (v) the approval
of the NASD of the fairness of the compensation to be paid to
Trident pursuant to this Agreement, (vi) the listing of the
Shares on the
-21-
NASDAQ Small Cap Market, and (vii) as may be otherwise required
under the securities laws of various jurisdictions.
(xvi) The Company may offer, issue and sell the Shares in
the Subscription Offering and, if necessary, in the Community
Offering without registration of the Company or its directors,
officers or employees as brokers, dealers, salesmen or investment
advisors under the Exchange Act or the Investment Company Act of
1940.
(xvii) The statements in the Prospectus under the captions
"Dividends," "Capitalization," "Regulation," "Taxation," "The
Conversion," "Restrictions on Acquisition of the Holding Company"
and "Description of Capital Stock," insofar as they are, or refer
to, statements of law or legal conclusions, have been reviewed by
such Special Counsel and are correct in all material respects.
(xviii) The Form AC and the Form H-(e)l-S have been approved
by the OTS and the Prospectus has been authorized by the OTS and
the Commission. The Stock Charter has been approved by the OTS.
The Registration Statement and any post-effective amendment
thereto have been declared effective by the Commission. No
proceedings are pending by or before the Commission or the OTS
seeking to revoke or rescind the orders declaring the
Registration Statement or the Prospectus effective nor, to their
knowledge, are any such proceedings contemplated or threatened.
(xix) The Form AC, the Registration Statement and the
Prospectus (in each case as amended or supplemented, if so
amended or supplemented) comply as to form in all material
respects with the requirements of the Act, and the applicable
rules, regulations, and all written decisions and orders of the
OTS and the Commission, as the case may be (except as to
financial statements, notes to financial statements, financial
tables and other financial and statistical data included therein
as to which no opinion need be expressed). All documents and
exhibits required to be filed with the Form AC and the
Registration Statement (in each case as amended or supplemented,
if so amended or supplemented) have been so filed, the
description in the Form AC and the Registration Statement of such
documents and exhibits is accurate in all material respects and
presents fairly the information required to be shown. To their
knowledge, there are no contracts or other
-22-
documents of a character required to be described in the
Registration Statement or the Prospectus which are not described
and there are no statutes or regulations applicable to,
certificates, permits or other authorizations from governmental
regulatory officials or bodies required to be obtained or
maintained by, or legal or governmental proceedings, past,
pending or threatened, against the Company or the Bank of a
character required to be disclosed in the Form AC, the
Registration Statement or the Prospectus which have not been so
disclosed and properly described therein.
(xx) In connection with the preparation of the Registration
Statement and Prospectus, Special Counsel has participated in
conferences with certain officers, employees and other
representatives of, and certain representatives of the
independent public accountants for the Company and the Bank as
well as reviewed various documents and other information deemed
relevant thereto and, in connection therewith, nothing has come
to the attention of Special Counsel that would lead them to
believe (I) that the Registration Statement, as amended or
supplemented, if amended or supplemented (except as to financial
statements, notes to financial statements, financial tables and
other financial and statistical data contained therein, as to
which Special Counsel need not express an opinion), at the time
it became effective, at the time any post-effective amendment
thereto became effective and at the Closing Date, contained any
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make
the statements made therein not misleading, or (II) that the
Prospectus, as amended or supplemented, if amended or
supplemented (except as to financial statements, notes to
financial statements, financial tables and other financial and
statistical data contained therein, as to which Special Counsel
need not express an opinion), at the time the Registration
Statement became effective or at the time any amendment or
supplement to the Prospectus was filed with the Commission or
transmitted to the Commission for filing, contained any untrue
statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. In
rendering such opinion, Special Counsel may state that they have
not undertaken to verify independently the information in the
Registration Statement or Prospectus and, therefore, do not
assume any responsibility for the accuracy or completeness
thereof.
-23-
In giving such opinion, such counsel may rely as to certain
matters of fact on certificates of officers and directors of the
Company and the Bank, and certificates of public officials delivered
pursuant hereto and on the opinion of qualified local counsel,
satisfactory to Trident, with respect to matters particularly within
the knowledge and scope of representation of such counsel. Such opinion
may be governed by, and interpreted in accordance with, the Legal
Opinion Accord of the ABA Section of Business Law (1991).
(c) On the Closing Date, Trident shall have received such
opinion of Xxxxx & Xxxxxxx, counsel for Trident, with respect to
certain matters as Trident may reasonably request, and such counsel
shall have received such documents, papers and records as they request
for the purpose of enabling them to pass upon such matters.
(d) Counsel for Trident shall have been furnished such
documents as they reasonably may require for the purpose of enabling
them to review or pass upon the matters required by Trident and for the
purpose of evidencing the accuracy, completeness or satisfaction of any
of the representations, warranties or conditions herein contained,
including, but not limited to, resolutions of the Board of Directors of
the Company and the Bank regarding the authorization of this Agreement
and the transactions contemplated hereby.
(e) Prior to and at the Closing Date, in the reasonable
opinion of Trident: (i) there shall have been no material adverse
change in the financial or other condition of the Company or the Bank
considered as one enterprise from that as of the latest date as of
which such condition is set forth in the Prospectus; (ii) there shall
have been no material transaction entered into by the Company or the
Bank from the latest date as of which the financial condition of the
Company or the Bank is set forth in the Prospectus, other than
transactions referred to or contemplated therein and transactions in
the ordinary course of business; (iii) neither the Company nor the Bank
shall have received from the OTS any direction (oral or written) to
make any material change in the method of conducting their respective
businesses with which they have not complied (which direction, if any,
shall have been disclosed to Trident) or which materially and adversely
would affect the business, operations, financial condition or income of
the Company or the Bank; (iv) no action, suit or proceeding, at law or
in equity, or before or by any federal or state commission, board or
other administrative agency, or before any arbitrator or arbitrators,
shall be pending or threatened against the Company or the Bank or
affecting any of their respective assets wherein an unfavorable
decision, ruling or finding materially and adversely would affect the
business, operations, financial condition or income of the Company or
the Bank; and (v) the Shares shall have been qualified or registered
for offering and sale by the Company under the securities or "blue sky"
laws of each jurisdiction upon which Trident and the Company shall have
agreed.
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(f) At the Closing Date, Trident shall receive a certificate
of the President and the Principal Financial Officer of each of the
Company and the Bank (hereinafter referred to as the "Officers"), dated
the Closing Date, to the effect that: (i) the Officers have carefully
examined the Prospectus and at the time the Prospectus became
authorized for final use, the Prospectus did not contain any untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading; (ii) since the date the
Prospectus became authorized for final use, no event has occurred which
should have been set forth in an amendment or supplement to the
Prospectus which has not been so set forth, including, without
limitation, any material adverse change in the business, financial
condition, income or operations of the Company or the Bank and the
conditions set forth in clauses (ii) through (iv) inclusive of
subsection (e) of this Section 6 have been satisfied; (iii) no order
has been issued by the Commission or the OTS to suspend the
effectiveness of the Prospectus or to terminate the Subscription
Offering or the Community Offering and, to the best knowledge of the
Officers, no action for such purposes has been instituted or threatened
by the Commission or the OTS; (iv) to the best knowledge of the
Officers, no person has sought to obtain review of the final action of
the OTS approving the Plan pursuant to Section 5(i)(2)(B) of the Home
Owners' Loan Act of 1933, as amended; and (v) all of the
representations and warranties contained in Section 2 of this Agreement
are true and correct with the same force and effect as though expressly
made on the Closing Date.
(g) At the Closing Date, Trident shall receive, among other
documents, (i) a copy of the letter from the OTS approving the
Conversion and authorizing the use of the Prospectus, (ii) a copy of
the order of the Commission declaring the Registration Statement
effective; (iii) a copy of a letter from the OTS evidencing the good
standing of the Bank; (iv) a copy of a Certificate of Existence in
respect of the Company from the Indiana Secretary of State; (v) a copy
of the Company's articles of incorporation certified by the Indiana
Secretary of State; and (vi) a copy of the letter from the OTS
approving the Bank's Stock Charter.
(h) As soon as available after the Closing Date, Trident shall
receive a certified copy of the Bank's Stock Charter executed by the
OTS.
(i) Concurrently with the execution of this Agreement, Trident
shall have received a letter from Ernst & Young LLP, independent public
accountants, dated the date hereof and addressed to Trident: (i)
confirming that Ernst & Young LLP is a firm of independent public
accountants within the meaning of the Act and the Regulations and 12
C.F.R. ss. 571.2(c)(3) and stating in substance that in Ernst & Young
LLP's opinion the financial statements of the Bank and the
-25-
Subsidiary as are included in the Prospectus comply as to form in all
material respects with the applicable accounting requirements of the
Regulations and generally accepted accounting principles; (ii) stating
in substance that, on the basis of certain agreed upon procedures (but
not an audit examination in accordance with generally accepted auditing
standards) consisting of a reading of the latest available unaudited
interim financial statements of the Bank prepared by the Bank, a
reading of the minutes of the meetings of the Board of Directors of the
Bank, meetings of 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: (A) such
unaudited financial statements are not in conformity with generally
accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included in
the Prospectus; or (B) during the period from the date of the latest
unaudited financial statements included in the Prospectus to a
specified date not more than three business days prior to the date
hereof, there was any material increase in borrowings, defined as
advances from the FHLB of Indianapolis, securities sold under
agreements to repurchase and any other form of debt other than deposits
of the Bank (increases in borrowings will not be deemed to be material
if such increase in total borrowings outstanding does not exceed
$1,000,000); (C) there was any decrease in retained earnings of the
Bank at the date of such letter as compared with amounts shown in the
latest unaudited statement of condition included in the Prospectus; or
(D) there was any decrease in net income or net interest income of the
Bank for the number of full months commencing immediately after the
period covered by the latest unaudited income statement included in the
Prospectus, and ended on the latest month end prior to the date of the
Prospectus or of such letter as compared to the corresponding period in
the preceding year, and (iii) stating that, in addition to the audit
examination of the Bank referred to in its opinion included in the
Prospectus and the performance of the procedures referred to in clause
(ii) of this subsection (i), they have compared with the general
accounting records of the Bank, which are subject to the internal
controls of the Bank, 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 Trident may reasonably request; and they have found such
amounts and percentages to be in agreement therewith (subject to
rounding).
(j) At the Closing Date, Trident shall receive a letter in
form and substance satisfactory to counsel for Trident from Ernst &
Young LLP, independent public accountants, dated the Closing Date and
addressed to Trident, confirming the statements made by them in the
letter delivered by them pursuant to subsection (i) as of a specified
date not more than three (3) business days prior to the Closing Date.
-26-
(k) As of the Closing Date, Trident shall have received a
confirming letter from the Appraiser, dated the Closing Date, with
respect to its estimated pro forma market appraisal. Such letter shall
be of the type described in the Prospectus to be submitted promptly
after the completion of the Subscription Offering and Community
Offering (if any).
(l) All corporate proceedings and action taken by the Company
or the Bank in connection with the issuance and sale of the Shares as
herein contemplated and all opinions and certificates mentioned above
or elsewhere in this Agreement shall be reasonably satisfactory in form
and substance to Trident and its counsel.
All such opinions, certificates, letters and documents
prepared for Trident's reliance shall be in compliance with the provisions
hereof only if they are, in the reasonable opinion of Trident and its counsel,
satisfactory to Trident and its counsel. Any certificates signed by an officer
or director of the Company or the Bank prepared for Trident's reliance and
delivered to Trident or to counsel for Trident shall be deemed a representation
and warranty by the Company and the Bank to Trident as to the statements made
therein. If any condition to Trident's obligations hereunder to be fulfilled
prior to or at the Closing Date is not so fulfilled, Trident may terminate this
Agreement or, if Trident so elects, may waive any such conditions which have not
been fulfilled, or may extend the time of their fulfillment. If Trident
terminates this Agreement in accordance with the foregoing, the Company or the
Bank shall reimburse Trident for its accountable expenses as provided in Section
3(d) of this Agreement.
7. Indemnification. The Company and the Bank, jointly and
severally, hereby agree to indemnify and hold harmless Trident, its officers,
directors and employees and each person, if any, who controls Trident within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act:
(a) Against any and all loss, liability, claim, damage and
expense whatsoever, including, but not limited to, legal fees and
expenses, reasonably incurred by Trident in investigating, preparing to
defend or defending against any action, proceeding or claim (whether
commenced or threatened) (i) arising out of any misrepresentation by
the Company or the Bank in this Agreement, including, but not limited
to, the breach of any representation or warranty set forth in this
Agreement, or any breach of warranty by the Company or the Bank with
respect to this Agreement or (ii) arising out of or based upon any
untrue or alleged untrue statement of a material fact or the omission
or alleged omission of a material fact required to be stated or
necessary to make not misleading any statements contained in (I) the
Registration Statement or the Prospectus or (II) any application
(including, but not limited to, the Form AC) or other document or
communication (hereinafter collectively referred to in this Section 7
as the "Applications") prepared or executed by or on behalf of the
Company or the Bank or based upon written information furnished by or
on behalf of the Company or
-27-
the Bank with the consent of the Company or the Bank to effect the
Conversion or qualify the Shares under the securities laws of the
United States or any state or filed with the Commission or the OTS,
unless such statement or omission was made in reliance upon and in
conformity with written information furnished to the Company or the
Bank with respect to Trident by or on behalf of Trident expressly for
use in the Prospectus or any amendment or supplement thereof or in any
Application. This indemnity shall be in addition to any liability the
Company or the Bank may have to Trident otherwise.
(b) Against any and all loss, liability, claim, damage and
expense whatsoever to the extent of the aggregate amount paid in
settlement of any litigation, investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, if such settlement is
effected with the written consent of the Company or the Bank.
(c) Against any and all expenses whatsoever (including the
fees and disbursements of counsel chosen by Trident) reasonably
incurred in investigating, preparing or defending against any
litigation, investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue statement
or omission, to the extent that any such expense is not paid under
subsection (a) or (b) of this Section 7.
(d) Trident hereby agrees to indemnify and hold harmless the
Company and the Bank, their respective officers, directors and
employees and each person, if any, who controls the Company and the
Bank within the meaning of Section 15 of the Act or Section 20(a) of
the Exchange Act, to the same extent as the foregoing indemnity from
the Company and the Bank to Trident, but only with respect to
statements or omissions, if any, made in the Prospectus or any
amendment or supplement thereof or in any Application in reliance upon,
and in conformity with, written information furnished to the Company or
the Bank with respect to Trident by or on behalf of Trident expressly
for use in the Prospectus or in any Application.
(e) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 7, notify the indemnifying party
of the commencement thereof; provided, however, that the omission to so
notify the indemnifying party will not relieve the indemnifying party
from any liability which it may have to any indemnified party otherwise
than under this Section 7. In case any such action is brought against
any indemnified party, and the indemnified party notifies the
indemnifying party of the commencement thereof, the indemnifying party
will be entitled to
-28-
participate therein and, to the extent that the indemnifying party may
wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of the indemnifying party's election so to assume the
defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof, other than the reasonable cost of investigation,
except as otherwise provided herein. In the event the indemnifying
party elects to assume the defense of any such action and retain
counsel acceptable to the indemnified party, the indemnified party may
retain additional counsel, but shall bear the fees and expenses of such
counsel unless (i) the indemnifying party shall have specifically
authorized the indemnified party to retain such counsel or (ii) the
parties to such suit include such indemnifying party and the
indemnified party, and such indemnified party shall have been advised
by counsel that one or more material legal defenses may be available to
the indemnified party which may not be available to the indemnifying
party, in which case the indemnifying party shall not be entitled to
assume the defense of such suit notwithstanding the indemnifying
party's obligation to bear the fees and expenses of such counsel. An
indemnifying party against whom indemnity may be sought shall not be
liable to indemnify an indemnified party under this Section 7 if any
settlement of any such action is effected without such indemnifying
party's consent.
8. Contribution.
(a) In order to provide for just and equitable contribution in
circumstances in which the indemnity provided for in Section 7 of this
Agreement is for any reason held to be unavailable to Trident other
than in accordance with its terms, the Company and/or the Bank and
Trident shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by such indemnity
incurred by the Company and/or the Bank and Trident (i) in such
proportion as is appropriate to reflect the relative benefits received
by the Company and/or the Bank on the one hand and Trident on the other
from the offering of the Shares or, (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to
in clause (i) above but also the relative fault of the Company and/or
the Bank on the one hand and Trident on the other, in connection with
the statements or omissions which resulted in such losses, claims,
damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative benefits received by the Company
and/or the Bank, on the one hand, and Trident, on the other, shall be
deemed to be in the same proportions as the total proceeds from the
Conversion (before deducting expenses) received by the Company and/or
the Bank bear to the total fees received by Trident under this
Agreement. The relative fault of the Company and/or the
-29-
Bank on the one hand and Trident on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company
and/or the Bank or by Trident, the relative intent of the parties, the
knowledge of the parties, access to information, and opportunity to
correct or prevent such statement or omission.
(b) The Company and the Bank and Trident agree that it would
not be just and equitable if contribution pursuant to this Section 8
were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or
payable by an indemnified party as a result of the losses, claims,
damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of
this Section 8, Trident shall not be required to contribute any amount
in excess of the amount by which fees owed Trident pursuant to this
Agreement exceed the amount of any damages which Trident has otherwise
been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation.
9. Survival of Agreements, Representations and Indemnities.
The respective indemnities of the Company and the Bank and Trident and the
representations and warranties of the Company and the Bank set forth in or made
pursuant to this Agreement shall remain in full force and effect regardless of
any termination or cancellation of this Agreement or any investigation made by
or on behalf of Trident or the Company or the Bank or any controlling person or
indemnified party referred to in Section 7 of this Agreement, and shall survive
any termination of this Agreement and/or the issuance of the Shares. Any
successor or assign of Trident, the Company or the Bank, any such controlling
person and any legal representative of Trident, the Company or the Bank, and any
such controlling person of Trident, the Company or the Bank shall be entitled to
the benefit of the respective agreements, indemnities, warranties and
representations contained in this Agreement.
10. Termination. Trident may terminate this Agreement,
without liability on the part of Trident, by giving notice at any time after
this Agreement becomes effective, as follows:
(a) If any domestic or international event or act or
occurrence has materially disrupted the United States securities
markets such as to make impracticable, in Trident's opinion, proceeding
with the offering of the Shares; or
-30-
if trading on the New York Stock Exchange shall have been suspended or
if limits in prices or volumes or the manner of trading shall have been
imposed by the New York Stock Exchange; or if the United States shall
have become involved in a war or major hostilities; or if a general
banking moratorium has been declared by a state or federal authority;
or if a moratorium in foreign exchange trading by major international
banks or persons has been declared; or if there shall have been a
material adverse change in the capitalization, condition or business of
the Company or the Bank; or if the Company or the Bank shall have
sustained a material or substantial loss by, but not limited to, fire,
flood, accident, hurricane, earthquake, theft, sabotage or other
calamity or malicious act, whether or not said loss shall have been
insured; if there shall have been a material adverse change in the
condition or prospects of the Company or the Bank, considered as one
enterprise; or if Trident elects to terminate this Agreement under any
other section of this Agreement.
(b) If Trident elects to terminate this Agreement as provided
in this Section 10, the Company and the Bank shall be notified promptly
by Trident by telephone or telegram, confirmed by letter.
(c) If this Agreement is terminated by Trident for any of the
reasons set forth in subsection (a) of this Section 10, the Company or
the Bank shall reimburse Trident for any expenses incurred by it and
reimbursable in accordance with Section 3(d)(ii) and (iii) of this
Agreement.
11. Notices. All communications hereunder, except as herein
otherwise specifically provided, shall be in writing and:
If sent to Trident, shall be mailed, delivered or telegraphed
and confirmed to:
Trident Securities, Inc.
0000 Xxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
with a copy to:
J. Xxxxxxx Xxxxx
Xxxxx & Xxxxxxx
000 X. Xxxxxxxx Xx., Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000
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If sent to the Company or the Bank, shall be mailed, delivered
or telegraphed and confirmed to:
Citizens Savings Bank of Frankfort
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxxx
with a copy to:
Xxxxxxx X. Xxxxxx
Xxxxxx & Xxxxxxxxx
1313 Merchants Bank Building
00 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
12. 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 Trident when the same shall have been given by the undersigned.
Trident 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, Trident, the Company, the Bank and the controlling
persons and indemnified parties referred to in Section 7 of this Agreement, 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.
13. Closing. At the Closing, Trident shall submit a list of
the persons subscribing for the Shares and the number of Shares so subscribed.
The Company or the Bank shall deliver to Trident in immediately available funds
the fees, commissions and remaining expenses due and owing to Trident as set
forth in Section 3(d) of this Agreement and the opinions and certificates
required hereby and other documents deemed reasonably necessary by Trident shall
be executed and delivered to effect the sale of the Shares as contemplated
hereby and pursuant to the terms of the Prospectus.
14. Partial Invalidity. In the event that any term, provision
or covenant of this Agreement 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 such term, provision or covenant to any other
circumstance or situation shall not be affected thereby, and each term,
provision or covenant of this Agreement shall be valid and enforceable to the
full extent permitted by law.
-32-
15. Construction. This Agreement shall be construed in
accordance with the substantive laws of the State of Indiana, except to the
extent that federal law applies.
16. Counterparts. This Agreement may be executed in separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which together shall constitute but one and the same instrument.
If the foregoing correctly sets forth the understanding
between Trident and the Company and the Bank, please so indicate in the space
provided below for that purpose, whereupon it shall constitute a binding
agreement between Trident and the Company and the Bank.
Very truly yours,
CITIZENS BANCORP
By:
-------------------------------------------
Xxxx X. Xxxxxx
President and Chief Executive Officer
CITIZENS SAVINGS BANK OF FRANKFORT
By:
-------------------------------------------
Xxxx X. Xxxxxx
President and Chief Executive, Officer
Accepted as of the date first above written.
TRIDENT SECURITIES, INC.
By:
----------------------------------------
Xxxxxxx X. Xxxxxxx
President
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