CLOVER LEAF FINANCIAL CORP.
Up to 575,000 Shares
COMMON SHARES
($.01 Par Value)
Subscription Price $10.00 Per Share
AGENCY AGREEMENT
November __, 2001
Xxxxx, Xxxxxxxx & Xxxxx, Inc.
000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000-0000
Ladies and Gentlemen:
Clover Leaf Financial Corp., a Delaware corporation (the "Company"), and
Clover Leaf Bank, SB, an Illinois-chartered savings bank located in
Edwardsville, Illinois (the "Bank") (references to the "Bank" include the Bank
in the mutual or stock form, as indicated by the context), with its deposit
accounts insured by the Savings Association Insurance Fund ("SAIF") administered
by the Federal Deposit Insurance Corporation ("FDIC"), hereby confirm their
agreement with Xxxxx, Xxxxxxxx & Xxxxx, Inc. ("the Agent"), as follows:
Section 1. The Offering. The Bank, in accordance with its plan of
conversion adopted by its Board of Directors (the "Plan"), intends to convert
from an Illinois chartered mutual savings bank to an Illinois chartered stock
savings bank, and issue all of its issued and outstanding capital stock to the
Company. In addition, pursuant to the Plan, the Company will offer and sell up
to 575,000 shares of its common shares, $.01 par value per share (the "Shares"
or "Common Shares"), in a subscription offering (the "Subscription Offering") to
(1) depositors of the Bank with Qualifying Deposits (as defined in the Plan) as
of May 31, 2001 ("Eligible Account Holders"), (2) the Clover Leaf Bank Employee
Stock Ownership Plan (the "ESOP"), (3) depositors of the Bank with Qualifying
Deposits as of September 30, 2001 ("Supplemental Eligible Account Holders") and
(4) the Bank's Other Members as defined in the Plan. Subject to the prior
subscription rights of the above-listed parties, the Company may offer for sale
in a community offering (the "Community Offering" and when referred to together
with or subsequent to the Subscription Offering, the "Subscription and Community
Offering") conducted concurrently with the Subscription Offering, the Shares not
subscribed for or ordered in the Subscription Offering to members of the general
public to whom a copy of the Prospectus (as hereinafter defined) is delivered
with a preference given to natural people. It is anticipated that shares not
subscribed for in the Subscription and Community Offering may be offered to
certain members of the general public on a best efforts basis through a selected
dealers agreement (the "Syndicated Community Offering") (the Subscription
Offering, Community Offering and Syndicated Community Offering are collectively
referred to as the "Offering"). It is acknowledged that the purchase of Shares
in the Offering is subject to the maximum and minimum purchase limitations as
described in the Plan and that the Company and the Bank may reject, in whole or
in part, any orders received in the Community Offering or Syndicated Community
Offering. Collectively, these transactions are referred to herein as the
"Conversion."
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form SB-2 (File No. 333-_____) (the
"Registration Statement") containing a prospectus relating to the Offering for
the registration of the Shares under the Securities Act of 1933 (the "1933
Act"), and has filed such amendments thereof and such amended prospectuses as
may have been required to the date hereof. The term "Registration Statement"
shall include any documents incorporated by reference therein and all financial
schedules and exhibits thereto, as amended, including post-effective amendments.
The prospectus, as amended, on file with the Commission at the time the
Registration Statement initially became effective is hereinafter called the
"Prospectus," except that if any Prospectus is filed by the Company pursuant to
Rule 424(b) or (c) of the rules and regulations of the Commission under the 1933
Act (the "1933 Act Regulations") differing from the prospectus on file at the
time the Registration Statement initially becomes effective, the term
"Prospectus" shall refer to the prospectus filed pursuant to Rule 424(b) or (c)
from and after the time said prospectus is filed with the Commission.
In accordance with Title 12, Chapter III, Subchapter A, Part 303, Subpart I
(the "FDIC Regulations"), the Bank has filed with the FDIC a Notice of Intent to
convert to Stock Form (the "Notice"), and has filed such amendments thereto as
may have been required by the FDIC. In accordance with 38 Ill. Amin. Code
Section 1075.1800, et seq. (the "Office Regulations" and together with the FDIC
Regulations, the "Conversion Regulations"), the Bank has filed an Application to
Convert from the Mutual to Stock Form of Organization (the "Conversion
Application") with the Office of Banks and Real Estate of the State of Illinois
(the "Office") and has filed such amendments thereto as may have been required
by the Office. In addition, in accordance with the Bank Holding Company Act of
1956, as amended ("BHCA"), the Company has filed with the Board of Governors of
the Federal Reserve System ("FRB"), the Company's application to acquire
ownership of the Bank on Form FRY-3 ("Holding Company Application") and has
filed such amendments thereto as may have been required by the FRB.
Section 2. Retention of Agent; Compensation; Sale and Delivery of the
Shares. Subject to the terms and conditions herein set forth, the Company and
the Bank hereby appoint the Agent as their exclusive financial advisor and
marketing agent (i) to utilize its best efforts to solicit subscriptions for
Common Shares and to advise and assist the Company and the Bank with respect to
the Company's sale of the Shares in the Offering and (ii) to participate in the
Offering in the areas of market making, research coverage and in syndicate
formation (if necessary).
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On the basis of the representations, warranties, and agreements herein
contained, but subject to the terms and conditions herein set forth, the Agent
accepts such appointment and agrees to consult with and advise the Company and
the Bank as to the matters set forth in the letter agreement, dated June 26,
2001, between the Bank and the Agent. It is acknowledged by the Company and the
Bank that the Agent shall not be required to purchase any Shares or be obligated
to take any action which is inconsistent with all applicable laws, regulations,
decisions or orders.
The obligations of the Agent pursuant to this Agreement (other than those
set forth in Section 2(a) and (d) hereof) shall terminate upon the completion or
termination or abandonment of the Plan by the Company or upon termination of the
Offering, but in no event later than 45 days after the completion of the
Subscription Offering (the "End Date"). All fees or expenses due to the Agent
but unpaid will be payable to the Agent in next day funds at the earlier of the
Closing Date (as hereinafter defined) or the End Date. In the event the Offering
is extended beyond the End Date, the Company, the Bank and the Agent may agree
to renew this Agreement under mutually acceptable terms.
In the event the Company is unable to sell a minimum of 425,000 Shares
within the period herein provided, this Agreement shall terminate and the
Company shall refund to any persons who have subscribed for any of the Shares
the full amount which it may have received from them plus accrued interest, as
set forth in the Prospectus; and none of the parties to this Agreement shall
have any obligation to the other parties hereunder, except as set forth in this
Section 2 and in Sections 6, 8 and 9 hereof. In the event the Offering is
terminated for any reason not attributable to the action or inaction of the
Agent, the Agent shall be paid the fees due to the date of such termination
pursuant to subparagraphs (a) and (d) below.
If all conditions precedent to the consummation of the Conversion,
including, without limitation, the sale of all Shares required by the Plan to be
sold, are satisfied, the Company agrees to issue, or have issued, the Shares
sold in the Offering and to release for delivery certificates for such Shares on
the Closing Date (as hereinafter defined) against payment to the Company by any
means authorized by the Plan; provided, however, that no funds shall be released
to the Company until the conditions specified in Section 7 hereof shall have
been complied with to the reasonable satisfaction of the Agent and its counsel.
The release of Shares against payment therefor shall be made on a date and at a
place acceptable to the Company, the Bank and the Agent. Certificates for shares
shall be delivered directly to the purchasers in accordance with their
directions. The date upon which the Company shall release or deliver the Shares
sold in the Offering, in accordance with the terms herein, is called the
"Closing Date."
The Agent shall receive the following compensation for its services
hereunder:
(a) A management fee of $25,000, payable in four consecutive monthly
installments of $6,250. Such fees shall be deemed to have been earned when
due. Should the Conversion be terminated for any reason not attributable to
the action or inaction of the Agent, the Agent shall have earned and be
entitled to be paid fees accruing through the stage at which the
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termination occurred, including any accrued legal fees expended by the
Agent. The management fee shall be applied against the success fee
described in subparagraph 2(b).
(b) A success fee of $50,000.
(c) If any of the Common Shares remain available after the Subscription
Offering, at the request of the Bank, the Agent will seek to form a
syndicate of registered broker-dealers ("Selected Dealers") to assist in
the sale of such Common Shares on a best efforts basis, subject to the
terms and conditions set forth in the selected dealers agreement. The Agent
will endeavor to distribute the Common Shares among the Selected Dealers in
a fashion which best meets the distribution objectives of the Bank and the
Plan. The Agent will be paid a fee not to exceed __% of the aggregate
Purchase Price of the Shares sold by the Selected Dealers. The Agent will
pass onto the Selected Dealers who assist in the Syndicated Community
Offering an amount competitive with gross underwriting discounts charged at
such time for comparable amounts of stock sold at a comparable price per
share in a similar market environment. Fees with respect to purchases
effected with the assistance of Selected Dealers other than the Agent shall
be transmitted by the Agent to such Selected Dealers. The decision to
utilize Selected Dealers will be made by the Bank upon consultation with
the Agent.
(d) The Agent will be reimbursed for out-of-pocket expenses, including
costs of travel, meals and lodging, photocopying, telephone, facsimile and
couriers not to exceed $7,500. The Bank and Company shall reimburse the
Agent for fees and expenses of counsel, which shall not exceed $25,000. The
Bank will bear the expenses of the Offering customarily borne by issuers
including, without limitation, regulatory filing fees, SEC, "Blue Sky," and
NASD filing and registration fees; the fees of the Bank's accountants,
attorneys, appraiser, transfer agent and registrar, printing, mailing and
marketing expenses associated with the conversion; and the fees set forth
under this Section 2; and fees for "Blue Sky" legal work. The Company or
the Bank will reimburse the Agent for any such expenses incurred by the
Agent on their behalf.
Full payment of Agent's actual and accountable expenses, advisory fees and
compensation shall be made in next day funds on the earlier of the Closing Date
or a determination by the Bank to terminate or abandon the Plan.
Section 3. Prospectus; Offering. The Shares are to be initially offered in
the Offering at the Purchase Price as defined and set forth on the cover page of
the Prospectus.
Section 4. Representations and Warranties. The Company and the Bank jointly
and severally represent and warrant to and agree with the Agent as follows:
(a) The Registration Statement which was prepared by the Company and the
Bank and filed with the Commission was declared effective by the Commission
on November __,
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2001. At the time the Registration Statement, including the Prospectus
contained therein (including any amendment or supplement), became
effective, the Registration Statement complied in all material respects
with the requirements of the 1933 Act and the 1933 Act Regulations and the
Registration Statement, including the Prospectus contained therein
(including any amendment or supplement thereto), and any information
regarding the Company or the Bank contained in Sales Information (as such
term is defined in Section 8 hereof) authorized by the Company or the Bank
for use in connection with the Offering, did not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and at the
time any Rule 424(b) or (c) Prospectus is filed with the Commission and at
the Closing Date referred to in Section 2, the Prospectus (including any
amendment or supplement thereto) and any information regarding the Company
or the Bank contained in Sales Information (as such term is defined in
Section 8 hereof) authorized by the Company or the Bank for use in
connection with the Offering will contain all statements that are required
to be stated therein in accordance with the 1933 Act and the 1933 Act
Regulations and will not contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the representations and warranties in
this Section 4(a) shall not apply to statements or omissions made in
reliance upon and in conformity with written information furnished to the
Company or the Bank by the Agent or its counsel expressly regarding the
Agent for use in the Prospectus under the caption "The
Conversion--Marketing Arrangements" or statements in or omissions from any
Sales Information or information filed pursuant to state securities or blue
sky laws or regulations regarding the Agent.
(b) The Conversion Application which was prepared by the Company and the
Bank and filed with the Office was approved on November __, 2001 and the
related Prospectus has been authorized for use by the Office. At the time
of the approval of the Conversion Application, including the Prospectus
(including any amendment or supplement thereto), by the Office and at all
times subsequent thereto until the Closing Date, the Conversion
Application, including the Prospectus (including any amendment or
supplement thereto), will comply in all material respects with the Office
Regulations. The Conversion Application, including the Prospectus
(including any amendment or supplement thereto), does not include any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
provided, however, that the representations and warranties in this Section
4(b) shall not apply to statements or omissions made in reliance upon and
in conformity with written information furnished to the Company or the Bank
by the Agent or its counsel expressly regarding the Agent for use in the
Prospectus contained in the Conversion Application under the caption "The
Conversion--Marketing Arrangements" or statements in or omissions from any
sales information or information filed pursuant to state securities or blue
sky laws or regulations regarding the Agent. The Holding Company
Application has been prepared by the Bank and
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the Company in material conformity with the requirements of the BHCA and
has been filed with and approved by the FRB. A conformed copy of the
Holding Company Application has been delivered to the Agent.
(c) By letter dated November __, 2001, the FDIC has not objected to the
Notice or the transactions contemplated thereby. At the time of the
non-objection to the Notice, including the Prospectus (including any
amendment or supplement thereto), by the FDIC and at all times subsequent
thereto until the Closing Date, the Notice, including the Prospectus
(including any amendment or supplement thereto), will comply in all
material respects with the FDIC Regulations. The Notice, including the
Prospectus (including any amendment or supplement thereto), does not
include any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the representations and warranties in
this Section 4(c) shall not apply to statements or omissions made in
reliance upon and in conformity with written information furnished to the
Company or the Bank by the Agent or its counsel expressly regarding the
Agent for use in the Prospectus contained in the Notice under the caption
"The Conversion--Marketing Arrangements" or statements in or omissions from
any sales information or information filed pursuant to state securities or
blue sky laws or regulations regarding the Agent.
(d) No order has been issued by the Commission, the Office or the FDIC
(hereinafter any reference to the FDIC shall include the SAIF) preventing
or suspending the use of the Prospectus, and no action by or before any
such government entity to revoke any approval, authorization or order of
effectiveness related to the Conversion is, to the best knowledge of the
Company or the Bank, pending or threatened.
(e) At the Closing Date, the Plan will have been adopted by the Boards of
Directors of both the Company and the Bank and approved by the members of
the Bank, and the offer and sale of the Shares will have been conducted in
all material respects in accordance with the Plan, the Conversion
Regulations, and all other applicable laws, regulations, decisions and
orders, including all terms, conditions, requirements and provisions
precedent to the Conversion imposed upon the Company or the Bank by the
Office, the FDIC, the Commission, or any other regulatory authority and in
the manner described in the Prospectus. To the best knowledge of the
Company and the Bank, no person has sought to obtain review of the final
action of the Office or the FDIC in approving the Plan or in approving or
not objecting to the Conversion or the FRB in approving the Holding Company
Application pursuant to the BHCA.
(f) The Bank has been organized and is a validly existing Illinois
chartered savings bank in mutual form of organization and upon the
Conversion will become a duly organized and validly existing Illinois
chartered savings bank in permanent capital stock form of organization, in
both instances duly authorized to conduct its business and own its property
as described in the Registration Statement and the Prospectus; the Bank has
obtained all
6
licenses, permits and other governmental authorizations currently required
for the conduct of its business, except those that individually or in the
aggregate would not materially adversely affect the financial condition,
results of operations or business of the Company, the Bank and Clover Leaf
Financial Services, Inc., taken as a whole ("Material Adverse Effect"); all
such licenses, permits and governmental authorizations are in full force
and effect, and the Bank is in compliance with all material laws, rules,
regulations and orders applicable to the operation of its business, except
where failure to be in compliance would not have a Material Adverse Effect;
the Bank is duly qualified as a foreign corporation to transact business
and is in good standing in each jurisdiction in which its ownership of
property or leasing of property or the conduct of its business requires
such qualification, unless the failure to be so qualified in one or more of
such jurisdictions would not have a Material Adverse Effect. The Bank does
not own equity securities or any equity interest in any other business
enterprise except as described in the Prospectus or as would not be
material to the operations of the Bank. The Bank has one wholly owned
subsidiary, Clover Leaf Financial Services, Inc., which is not a
significant subsidiary for purposes of Regulation S-X. Upon completion of
the sale by the Company of the Shares contemplated by the Prospectus, (i)
all of the authorized and outstanding capital stock of the Bank will be
owned by the Company and (ii) the Company will have no direct subsidiaries
other than the Bank. The Conversion will be effected in all material
respects in accordance with all applicable statutes, regulations, decisions
and orders; and, except with respect to the filing of certain post-sale,
post-Conversion reports, and documents in compliance with the 1933 Act
Regulations, the Office's and the FDIC's resolutions or letters of approval
or non-objection, at the time of the Closing all terms, conditions,
requirements and provisions with respect to the Conversion imposed by the
Commission, the Office, the FDIC and the FRB, if any, will have been
complied with by the Company and the Bank in all material respects or
appropriate waivers will have been obtained and all material notice and
waiting periods will have been satisfied, waived or elapsed.
(g) The Company has been duly incorporated and is validly existing as a
corporation under the laws of the State of Delaware with corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the Prospectus, and
at the Closing Date the Company will be qualified to do business as a
foreign corporation in each jurisdiction in which the conduct of its
business requires such qualification, except where the failure to so
qualify would not have a Material Adverse Effect. The Company has obtained
all licenses, permits and other governmental authorizations currently
required for the conduct of its business except those that individually or
in the aggregate would not have a Material Adverse Effect; all such
licenses, permits and governmental authorizations are in full force and
effect, and the Company is in all material respects complying with all
laws, rules, regulations and orders applicable to the operation of its
business.
(h) The Bank is a member of the Federal Home Loan Bank of Chicago
("FHLB-Chicago"). The deposit accounts of the Bank are insured by the FDIC
up to the applicable limits, and no proceedings for the termination or
revocation of such insurance are pending or, to the best knowledge of the
Company or the Bank, threatened. Upon
7
consummation of the Conversion, the liquidation account for the benefit of
Eligible Account Holders and Supplemental Eligible Account Holders will be
duly established in accordance with the requirements of the Conversion
Regulations.
(i) The Company and the Bank have good and marketable title to all real
property and good title to all other assets material to the business of the
Company and the Bank, taken as a whole, and to those properties and assets
described in the Registration Statement and Prospectus as owned by them,
free and clear of all liens, charges, encumbrances or restrictions, except
such as are described in the Registration Statement and Prospectus, or are
not material to the business of the Company and the Bank, taken as a whole;
and all of the leases and subleases material to the business of the Company
and the Bank, taken as a whole, under which the Company or the Bank hold
properties, including those described in the Registration Statement and
Prospectus, are in full force and effect.
(j) The Company and the Bank have received an opinion of their special
counsel, Xxxx Xxxxxx Xxxxxx Xxxxxxxx & Xxxxxx, P.C., with respect to the
federal income tax consequences of the Conversion, and an opinion of RSM
McGladrey, Inc. with respect to the Illinois income tax consequences of the
Conversion; all material aspects of such opinions are accurately summarized
in the Registration Statement and the Prospectus. The Company and the Bank
represent and warrant that the facts upon which such opinions are based are
truthful, accurate and complete.
(k) The Company and the Bank have all such power, authority,
authorizations, approvals and orders as may be required to enter into this
Agreement, to carry out the provisions and conditions hereof and to issue
and sell the Shares to be sold by the Company as provided herein and as
described in the Prospectus, except approval or confirmation by the Office
and the FDIC of the final appraisal of the Bank. The execution, delivery
and performance of this Agreement and the consummation of the transactions
herein contemplated have been duly and validly authorized by all necessary
corporate action on the part of the Company and the Bank. This Agreement
has been validly executed and delivered by the Company and the Bank and is
the valid, legal and binding agreement of the Company and the Bank
enforceable in accordance with its terms (except as the enforceability
thereof may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar laws relating to or affecting the enforcement of
creditors' rights generally or the rights of creditors of savings and loan
holding companies, the accounts of whose subsidiaries are insured by the
FDIC, or by general equity principles, regardless of whether such
enforceability is considered in a proceeding in equity or at law, and
except to the extent, if any, that the provisions of Sections 8 and 9
hereof may be unenforceable as against public policy).
(l) Neither the Company nor the Bank is in violation of any directive
received from the Office, the FDIC, or any other agency to make any
material change in the method of conducting their businesses so as to
comply in all material respects with all applicable statutes and
regulations (including, without limitation, regulations, decisions,
directives and
8
orders of the Office and the FDIC) and, except as may be set forth in the
Registration Statement and the Prospectus, there is no suit or proceeding
or charge or action before or by any court, regulatory authority or
governmental agency or body, pending or, to the knowledge of the Company or
the Bank, threatened, which might materially and adversely affect the
Conversion, the performance of this Agreement or the consummation of the
transactions contemplated in the Plan and as described in the Registration
Statement and the Prospectus or which might result in any material adverse
change in the financial condition, results of operations or business of the
Company or the Bank, or which would materially affect their properties and
assets.
(m) The financial statements, schedules and notes related thereto which are
included in the Prospectus fairly present the balance sheet, income
statement, statement of changes in equity capital and statement of cash
flows of the Bank at the respective dates indicated and for the respective
periods covered thereby and comply as to form in all material respects with
the applicable accounting requirements of the 1933 Act Regulations and
applicable regulations of the Office and the FDIC. Such financial
statements, schedules and notes related thereto have been prepared in
accordance with generally accepted accounting principles consistently
applied through the periods involved, present fairly in all material
respects the information required to be stated therein and are consistent
with the most recent financial statements and other reports filed by the
Bank with the Office and the FDIC, except that accounting principles
employed in such regulatory filings conform to the requirements of the
Office and the FDIC and not necessarily to GAAP. The other financial,
statistical and pro forma information and related notes included in the
Prospectus present fairly the information shown therein on a basis
consistent with the audited and unaudited financial statements of the Bank
included in the Prospectus, and as to the pro forma adjustments, the
adjustments made therein have been properly applied on the basis described
therein.
(n) Since the respective dates as of which information is given in the
Registration Statement including the Prospectus: (i) there has not been any
material adverse change, financial or otherwise, in the condition of the
Company or the Bank, considered as one enterprise, or in the earnings,
capital or properties of the Company or the Bank, whether or not arising in
the ordinary course of business; (ii) there has not been any material
increase in the long-term debt of the Bank or in the principal amount of
the Bank's assets which are classified by the Bank as substandard, doubtful
or loss or in loans past due 90 days or more or real estate acquired by
foreclosure, by deed-in-lieu of foreclosure or deemed in-substance
foreclosure or any material decrease in equity capital or total assets of
the Bank, nor has the Company or the Bank issued any securities (other than
in connection with the incorporation of the Company) or incurred any
liability or obligation for borrowing other than in the ordinary course of
business; (iii) there have not been any material transactions entered into
by the Company or the Bank; (iv) there has been no material adverse change
in the Company's or the Bank's relationship with its insurance carriers,
including, without limitation, cancellation or other termination of the
Company's or the Bank's fidelity bond or any other type of insurance
coverage; (v) except as disclosed in the Prospectus, there has
9
been no material change in management of the Company or the Bank; (vi)
neither the Company nor the Bank has sustained any material loss or
interference with its respective business or properties from fire, flood,
windstorm, earthquake, accident or other calamity, whether or not covered
by insurance; and (vii) neither the Company nor the Bank has defaulted in
the payment of principal or interest on any outstanding debt obligations.
All documents made available to or delivered or to be made available to or
delivered by the Bank or the Company or their representatives in connection
with the issuance and sale of the Shares, including records of account
holders, depositors, borrowers and other members of the Bank, or in
connection with the Agent's exercise of due diligence, except for those
documents which were prepared by parties other than the Bank, the Company
or their representatives, to the best knowledge of the Bank and the
Company, were on the dates on which they were delivered, or will be on the
dates on which they are to be delivered, true, complete and correct in all
material respects.
(o) Neither the Company nor the Bank is (i) in violation of its certificate
of incorporation or articles of incorporation, respectively, or bylaws (and
the Bank will not be in violation of its articles of incorporation or
bylaws in capital stock form upon consummation of the Conversion), or (ii)
in default in the performance or observance of any material obligation,
agreement, covenant, or condition contained in any material contract,
lease, loan agreement, indenture or other instrument to which it is a party
or by which it or any of its property may be bound. The consummation of the
transactions herein contemplated will not: (i) conflict with or constitute
a breach of, or default under, or result in the creation of any material
lien, charge or encumbrance (with the exception of the liquidation account
established in the Conversion) upon any of the assets of the Company or the
Bank pursuant to the Certificate of Incorporation and Bylaws of the Company
or the Articles of Incorporation and Bylaws of the Bank (in either mutual
or capital stock form) or any material contract, lease or other instrument
in which the Company or the Bank has a beneficial interest, or any
applicable law, rule, regulation or order; (ii) violate any authorization,
approval, judgement, decree, order, statute, rule or regulation applicable
to the Company or the Bank, except for such violations which would not have
a Material Adverse Effect; or (iii) with the exception of the liquidation
account established in the Conversion, result in the creation of any
material lien, charge or encumbrance upon any property of the Company or
the Bank.
(p) No default exists, and no event has occurred which with notice or lapse
of time, or both, would constitute a default on the part of the Company or
the Bank in the due performance and observance of any term, covenant or
condition of any indenture, mortgage, deed of trust, note, bank loan or
credit agreement or any other instrument or agreement to which the Company
or the Bank is a party or by which either of them or any of their property
is bound or affected, except such defaults which would not have a Material
Adverse Effect; such agreements are in full force and effect; and no other
party to any such agreements has instituted or, to the best knowledge of
the Company and the Bank, threatened any action or proceeding wherein the
Company or the Bank would or might be alleged to be in default
10
thereunder, where such action or proceeding, if determined adversely to the
Company or the Bank, would have a Material Adverse Effect.
(q) Upon consummation of the Conversion, the authorized, issued and
outstanding equity capital of the Company will be within the range set
forth in the Prospectus under the caption "Capitalization," and no Shares
have been or will be issued and outstanding prior to the Closing Date; the
Shares will have been duly and validly authorized for issuance and, when
issued and delivered by the Company pursuant to the Plan against payment of
the consideration calculated as set forth in the Plan and in the
Prospectus, will be duly and validly issued, fully paid and non-assessable,
except for shares purchased by the ESOP with funds borrowed from the
Company to the extent payment therefor in cash has not been received by the
Company; except to the extent that subscription rights and priorities
pursuant thereto exist pursuant to the Plan, no preemptive rights exist
with respect to the Shares; and the terms and provisions of the Shares will
conform in all material respects to the description thereof contained in
the Registration Statement and the Prospectus. To the best knowledge of the
Company and the Bank, upon the issuance of the Shares, good title to the
Shares will be transferred from the Company to the purchasers thereof
against payment therefor, subject to such claims as may be asserted against
the purchasers thereof by third-party claimants.
(r) No approval of any regulatory or supervisory or other public authority
is required in connection with the execution and delivery of this Agreement
or the issuance of the Shares, except for the approval or non-objection of
the Commission, the Office, the FDIC and the FRB, and any necessary
qualification, notification, registration or exemption under the securities
or blue sky laws of the various states in which the Shares are to be
offered, and except as may be required under the rules and regulations of
the National Association of Securities Dealers, Inc. ("NASD").
(s) RSM McGladrey, Inc., which has certified the audited financial
statements and schedules of the Bank included in the Prospectus, has
advised the Company and the Bank in writing that they are, with respect to
the Company and the Bank, independent public accountants within the meaning
of the Code of Professional Ethics of the American Institute of Certified
Public Accountants.
(t) Xxxxxx & Company, Inc., which has prepared the Bank's Conversion
Valuation Appraisal Report as of August 24, 2001 (as amended or
supplemented, if so amended or supplemented) (the "Appraisal"), has advised
the Company in writing that it is independent of the Company and the Bank
within the meaning of the Conversion Regulations.
(u) The Company and the Bank have timely filed all required federal, state
and local tax returns; the Company and the Bank have paid all taxes that
have become due and payable in respect of such returns, except where
permitted to be extended, have made adequate reserves for similar future
tax liabilities and no deficiency has been asserted with respect thereto by
any taxing authority.
11
(v) The Bank is in compliance in all material respects with the applicable
financial record-keeping and reporting requirements of the Currency and
Foreign Transactions Reporting Act of 1970, as amended, and the regulations
and rules thereunder.
(w) To the knowledge of the Company and the Bank, neither the Company, the
Bank nor employees of the Company or the Bank has made any payment of funds
of the Company or the Bank as a loan for the purchase of the Shares or made
any other payment of funds prohibited by law, and no funds have been set
aside to be used for any payment prohibited by law.
(x) Prior to the Conversion, neither the Company nor the Bank has: (i)
issued any securities within the last 18 months (except for notes to
evidence bank loans and reverse repurchase agreements or other liabilities
in the ordinary course of business or as described in the Prospectus); (ii)
had any material dealings within the 12 months prior to the date hereof
with any member of the NASD, or any person related to or associated with
such member, other than discussions and meetings relating to the proposed
Offering and routine purchases and sales of United States government and
agency and other securities in the ordinary course of business; (iii)
entered into a financial or management consulting agreement except as
contemplated hereunder; and (iv) engaged any intermediary between the Agent
and the Company and the Bank in connection with the offering of the Shares,
and no person is being compensated in any manner for such service.
Appropriate arrangements have been made for placing the funds received from
subscriptions for Shares in a special interest-bearing account with the
Bank until all Shares are sold and paid for, with provision for refund to
the purchasers in the event that the Conversion is not completed for
whatever reason or for delivery to the Company if all Shares are sold.
(y) The Company and the Bank have not relied upon the Agent or its legal
counsel for any legal, tax or accounting advice in connection with the
Conversion.
(z) The Company is not required to be registered under the Investment
Company Act of 1940, as amended.
(aa) Any certificates signed by an officer of the Company or the Bank
pursuant to the conditions of this Agreement and delivered to the Agent or
their counsel that refers to this Agreement shall be deemed to be a
representation and warranty by the Company or the Bank to the Agent as to
the matters covered thereby with the same effect as if such representation
and warranty were set forth herein.
Section 5. Representations and Warranties. The Agent represents and
warrants to the Company and the Bank as follows:
(i) The Agent is a corporation and is validly existing in good
standing under the laws of the State of New York and licensed to
conduct business in the State of Illinois with
12
full power and authority to provide the services to be furnished to
the Bank and the Company hereunder.
(ii) The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly
authorized by all necessary action on the part of the Agent, and this
Agreement has been duly and validly executed and delivered by the
Agent and is a legal, valid and binding agreement of the Agent,
enforceable in accordance with its terms.
(iii) Each of the Agent and its employees, agents and representatives
who shall perform any of the services hereunder shall be duly
authorized and empowered, and shall have all licenses, approvals and
permits necessary to perform such services; and the Agent is a
registered selling agent in each of the jurisdictions in which the
Shares are to be offered by the Company in reliance upon the Agent as
a registered selling agent as set forth in the blue sky memorandum
prepared with respect to the Offering.
(iv) The execution and delivery of this Agreement by the Agent, the
consummation of the transactions contemplated hereby and compliance
with the terms and provisions hereof will not conflict with, or result
in a breach of, any of the terms, provisions or conditions of, or
constitute a default (or an event which with notice or lapse of time
or both would constitute a default) under, the Articles of
Incorporation or Bylaws of the Agent or any agreement, indenture or
other instrument to which the Agent is a party or by which it or its
property is bound.
(v) No approval of any regulatory or supervisory or other public
authority is required in connection with the Agent's execution and
delivery of this Agreement, except as may have been received.
(vi) There is no suit or proceeding or charge or action before or by
any court, regulatory authority or government agency or body or, to
the knowledge of the Agent, pending or threatened, which might
materially adversely affect the Agent's performance of this Agreement.
Section 5.l Covenants of the Company and the Bank. The Company and the Bank
hereby jointly and severally covenant with the Agent as follows:
(a) The Company will not, at any time after the date the Registration
Statement is declared effective, file any amendment or supplement to the
Registration Statement without providing the Agent and its counsel an
opportunity to review such amendment or supplement or file any amendment or
supplement to which amendment or supplement the Agent or its counsel shall
reasonably object.
13
(b) The Bank will not, at any time after either the Conversion Application
is approved by the Office or the Notice is not objected to by the FDIC,
file any amendment or supplement to such Conversion Application or Notice
without providing the Agent and its counsel an opportunity to review such
amendment or supplement or file any amendment or supplement to which
amendment or supplement the Agent or its counsel shall reasonably object.
(c) The Company will not, at any time after the Holding Company Application
is approved by the FRB, file any amendment or supplement to such Holding
Company Application without providing the Agent and its counsel an
opportunity to review the non-confidential portions of such amendment or
supplement or file any amendment or supplement to which amendment or
supplement the Agent or its counsel shall reasonably object.
(d) The Company and the Bank will use their best efforts to cause any
post-effective amendment to the Registration Statement to be declared
effective by the Commission any post-effective amendment to the Conversion
Application to be approved by the Office and any post-effective amendment
to the Notice to be not objected to by the FDIC and will immediately upon
receipt of any information concerning the events listed below notify the
Agent: (i) when the Registration Statement, as amended, has become
effective; (ii) when the Conversion Application, as amended, has been
approved by the Office; (iii) when the Bank receives a letter of
non-objection from the FDIC regarding the Notice; (iv)of any comments from
the Commission, the Office or the FDIC, or any other governmental entity
with respect to the Conversion or the transactions contemplated by this
Agreement; (v) of the request by the Commission, the Office, or any other
governmental entity for any amendment or supplement to the Registration
Statement, the Conversion Application, the Notice or for additional
information; (vi) of the issuance by the Commission, the Office or the
FDIC, or any other governmental entity of any order or other action
suspending the Offering or the use of the Registration Statement or the
Prospectus or any other filing of the Company or the Bank under the
Conversion Regulations, or other applicable law, or the threat of any such
action; (vii) of the issuance by the Commission, the Office or the FDIC, or
any authority of any stop order suspending the effectiveness of the
Registration Statement or of the initiation or threat of initiation or
threat of any proceedings for that purpose; or (viii) of the occurrence of
any event mentioned in paragraph (h) below. The Company and the Bank will
make every reasonable effort (i) to prevent the issuance by the Commission,
the Office or the FDIC, or any other state authority of any such order and,
if any such order shall at any time be issued, and (ii) to obtain the
lifting thereof at the earliest possible time.
(e) The Company and the Bank will deliver to the Agent and to its counsel
two conformed copies of the Registration Statement, the Conversion
Application, the Notice and the Holding Company Application, as originally
filed and of each
14
amendment or supplement thereto, including all exhibits. Further, the
Company and the Bank will deliver such additional copies of the foregoing
documents to counsel to the Agent as may be required for any NASD filings.
(f) The Company and the Bank will furnish to the Agent, from time to time
during the period when the Prospectus (or any later prospectus related to
this offering) is required to be delivered under the 1933 Act or the
Securities Exchange Act of 1934 (the "1934 Act"), such number of copies of
such Prospectus (as amended or supplemented) as the Agent may reasonably
request for the purposes contemplated by the 1933 Act, the 1933 Act
Regulations, the 1934 Act or the rules and regulations promulgated under
the 1934 Act (the "1934 Act Regulations"). The Company authorizes the Agent
to use the Prospectus (as amended or supplemented, if amended or
supplemented) in any lawful manner contemplated by the Plan in connection
with the sale of the Shares by the Agent.
(g) The Company and the Bank will comply with any and all material terms,
conditions, requirements and provisions with respect to the Conversion and
the transactions contemplated thereby imposed by the Commission, the
Office, the FDIC, the FRB or the Conversion Regulations, and by the 1933
Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations to
be complied with prior to or subsequent to the Closing Date and when the
Prospectus is required to be delivered, and during such time period the
Company and the Bank will comply, at their own expense, with all material
requirements imposed upon them by the Commission, the Office, the FDIC, the
FRB or the Conversion Regulations, and by the 1933 Act, the 1933 Act
Regulations, the 1934 Act and the 1934 Act Regulations, including, without
limitation, Rule 10b-5 under the 1934 Act, in each case as from time to
time in force, so far as necessary to permit the continuance of sales or
dealing in the Common Shares during such period in accordance with the
provisions hereof and the Prospectus.
(h) If, at any time during the period when the Prospectus relating to the
Shares is required to be delivered, any event relating to or affecting the
Company or the Bank shall occur, as a result of which it is necessary or
appropriate, in the opinion of counsel for the Company and the Bank or in
the reasonable opinion of the Agent's counsel, to amend or supplement the
Registration Statement or Prospectus in order to make the Registration
Statement or Prospectus not misleading in light of the circumstances
existing at the time the Prospectus is delivered to a purchaser, the
Company and the Bank will immediately so inform the Agent and prepare and
file, at their own expense, with the Commission, the Office and the FDIC,
and furnish to the Agent a reasonable number of copies, of an amendment or
amendments of, or a supplement or supplements to, the Registration
Statement or Prospectus (in form and substance reasonably satisfactory to
the Agent and its counsel after a reasonable time for review) which will
amend or supplement the Registration Statement or
15
Prospectus so that as amended or supplemented it will not contain an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in light of the circumstances
existing at the time the Prospectus is delivered to a purchaser, not
misleading. For the purpose of this Agreement, the Company and the Bank
each will timely furnish to the Agent such information with respect to
itself as the Agent may from time to time reasonably request.
(i) The Company and the Bank will take all necessary actions in cooperating
with the Agent and furnish to whomever the Agent may direct such
information as may be required to qualify or register the Shares for
offering and sale by the Company or to exempt such Shares from
registration, or to exempt the Company as a broker-dealer and its officers,
directors and employees as broker-dealers or agents under the applicable
securities or blue sky laws of such jurisdictions in which the Shares are
required under the Conversion Regulations to be sold or as the Agent and
the Company and the Bank may reasonably agree upon; provided, however, that
the Company shall not be obligated to file any general consent to service
of process, to qualify to do business in any jurisdiction in which it is
not so qualified, or to register its directors or officers as brokers,
dealers, salesmen or agents in any jurisdiction. In each jurisdiction where
any of the Shares shall have been qualified or registered as above
provided, the Company will make and file such statements and reports in
each fiscal period as are or may be required by the laws of such
jurisdiction.
(j) The liquidation account for the benefit of Eligible Account Holders and
Supplemental Eligible Account Holders will be duly established and
maintained in accordance with the requirements of the Office and the FDIC,
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 Common
Shares in the event of a complete liquidation of the Bank.
(k) The Company and the Bank will not sell or issue, contract to sell or
otherwise dispose of, for a period of 90 days after the Closing Date,
without the Agent's prior written consent, any of their common shares,
other than the Shares or other than in connection with any plan or
arrangement described in the Prospectus, including existing stock benefit
plans.
(l) The Company will file a registration statement for the Common Shares
under Section 12(g) of the 1934 Act prior to the completion of the Offering
and shall request that such registration statement be effective upon or
before completion of the Conversion. The Company shall maintain the
effectiveness of such registration for not less than three years or such
shorter period as may be required by applicable law.
16
(m) During the period during which the Common Shares are registered under
the 1934 Act or for three years from the date hereof, whichever period is
greater, the Company will furnish to its shareholders as soon as
practicable after the end of each fiscal year an annual report of the
Company (including a consolidated balance sheet and statements of
consolidated income, shareholders' equity and cash flows of the Company and
its subsidiaries as at the end of and for such year, certified by
independent public accountants in accordance with Regulation S-X under the
1933 Act and the 1934 Act).
(n) During the period of three years from the date hereof, the Company will
furnish to the Agent: (i) as soon as practicable after such information is
publicly available, a copy of each report of the Company furnished to or
filed with the Commission under the 1934 Act or any national securities
exchange or system on which any class of securities of the Company is
listed or quoted (including, but not limited to, reports on Forms 10-K or
10-KSB, 10-Q or 10-QSB and 8-K and all proxy statements and annual reports
to stockholders), (ii) a copy of each other non-confidential report of the
Company mailed to its shareholders or filed with the Commission, the FDIC
or any other supervisory or regulatory authority or any national securities
exchange or system on which any class of securities of the Company is
listed or quoted, each press release and material news items and additional
documents and information with respect to the Company or the Bank as the
Agent may reasonably request; and (iii) from time to time, such other
nonconfidential information concerning the Company or the Bank as the Agent
may reasonably request.
(o) The Company and the Bank will use the net proceeds from the sale of the
Shares in the manner set forth in the Prospectus under the caption "Use of
Proceeds."
(p) Other than as permitted by the Conversion Regulations, the BHCA, the
1933 Act, the 1933 Act Regulations and the rules and regulations and the
laws of any state in which the Shares are registered or qualified for sale
or exempt from registration, neither the Company nor the Bank will
distribute any prospectus, offering circular or other offering material in
connection with the offer and sale of the Shares.
(q) The Company will use its best efforts to encourage and assist a
broker-dealer to maintain quotation of the Shares on the OTC-Bulletin
Board.
(r) The Bank will maintain appropriate arrangements for depositing all
funds received from persons mailing subscriptions for or orders to purchase
Shares in the Offering on an interest-bearing basis at the rate described
in the Prospectus until the Closing Date and satisfaction of all conditions
precedent to the release of the Bank's obligation to refund payments
received from persons subscribing for or ordering Shares in the Offering in
accordance with the Plan and as described in the Prospectus or until
refunds of such funds have been made to the persons entitled thereto or
17
withdrawal authorizations canceled in accordance with the Plan and as
described in the Prospectus. The Bank will maintain such records of all
funds received to permit the funds of each subscriber to be separately
insured by the FDIC (to the maximum extent allowable) and to enable the
Bank to make the appropriate refunds of such funds in the event that such
refunds are required to be made in accordance with the Plan and as
described in the Prospectus.
(s) The Company and the Bank will take such actions and furnish such
information as are reasonably requested by the Agent in order for the Agent
to ensure compliance with the NASD's "Interpretation Relating to Free
Riding and Withholding."
(t) Neither the Company nor the Bank will amend the Plan of Conversion
without notifying the Agent prior thereto.
(u) The Company shall assist the Agent, if necessary, in connection with
the allocation of the Shares in the event of an oversubscription and shall
provide the Agent with any information necessary to assist the Company in
allocating the Shares in such event and such information shall be accurate
and reliable in all material respects.
(v) Prior to the Closing Date, the Company and the Bank will inform the
Agent of any event or circumstances of which it is aware as a result of
which the Registration Statement and/or Prospectus, as then amended or
supplemented, would contain an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein
not misleading.
(w) Subsequent to the date the Registration Statement is declared effective
by the Commission and prior to the Closing Date, except as otherwise may be
indicated or contemplated therein or set forth in an amendment or
supplement thereto, neither the Company nor the Bank will have: (i) issued
any securities or incurred any liability or obligation, direct or
contingent, for borrowed money, except borrowings from the same or similar
sources indicated in the Prospectus in the ordinary course of its business,
or (ii) entered into any transaction which is material in light of the
business and properties of the Company and the Bank, taken as a whole.
(x) The facts and representations provided to Xxxx Xxxxxx Xxxxxx Xxxxxxxx &
Xxxxxx, P.C. by the Bank and the Company and upon which Xxxx Xxxxxx Xxxxxx
Xxxxxxxx & Xxxxxx, P.C. will base its opinion under Section 7(c)(1) are and
will be truthful, accurate and complete.
Section 6. Payment of Expenses. Whether or not the Conversion is completed
or the sale of the Shares by the Company is consummated, the Company and the
Bank jointly and severally agree to pay or reimburse the Agent for: (a) all
filing fees in connection with all filings related to the Offering with the
NASD; (b) any stock issue or transfer taxes which may be payable with respect
18
to the sale of the Shares; (c) subject to Section 2(d), all reasonable expenses
of the Conversion, including but not limited to the Agent's attorneys' fees and
expenses, blue sky fees, transfer agent, registrar and other agent charges, fees
relating to auditing and accounting or other advisors and costs of printing all
documents necessary in connection with the Conversion. In the event the Company
is unable to sell the minimum number of shares necessary to complete the
offering or the Conversion is terminated or otherwise abandoned, the Company and
the Bank shall promptly reimburse the Agent in accordance with Section 2(d)
hereof.
Section 7. Conditions to the Agent's Obligations. The obligations of the
Agent hereunder, as to the Shares to be delivered at the Closing Date, are
subject, to the extent not waived in writing by the Agent, to the condition that
all representations and warranties of the Company and the Bank herein are, at
and as of the commencement of the Offering and at and as of the Closing Date,
true and correct in all material respects, the condition that the Company and
the Bank shall have performed all of their obligations hereunder to be performed
on or before such dates, and to the following further conditions:
(a) At the Closing Date, the Company and the Bank shall have conducted the
Conversion in all material respects in accordance with the Plan, the
Conversion Regulations, the applicable laws of Delaware and Illinois, and
all other applicable laws, regulations, decisions and orders, including all
terms, conditions, requirements and provisions precedent to the Conversion
imposed upon them by the Office and the FDIC.
(b) The Registration Statement shall have been declared effective by the
Commission, the Conversion Application approved by the Office and the
Notice not objected to by the FDIC not later than 5:30 p.m. on the date of
this Agreement, or with the Agent's consent at a later time and date; and
at the Closing Date, no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act or
proceedings therefore initiated or threatened by the Commission or any
state authority, and no order or other action suspending the authorization
of the Prospectus or the consummation of the Conversion shall have been
issued or proceedings therefore initiated or, to the Company's or the
Bank's knowledge, threatened by the Commission, the Office, the FDIC, or
any other state authority.
(c) At the Closing Date, the Agent shall have received:
(1) The favorable opinion, dated as of the Closing Date and addressed
to the Agent and for its benefit, of Xxxx Xxxxxx Xxxxxx Xxxxxxxx &
Xxxxxx, P.C., special counsel for the Company and the Bank, in form
and substance to the effect that:
19
(i) The Company has been duly incorporated and is validly
existing as a corporation under the laws of the State of
Delaware.
(ii) The Company has corporate power and authority to own, lease
and operate its properties and to conduct its business as
described in the Registration Statement and the Prospectus.
(iii) The Bank is a validly existing Illinois chartered savings
bank in mutual form and immediately following the completion of
the Conversion will be a validly existing Illinois chartered
savings bank in permanent capital stock form of organization, in
both instances duly authorized to conduct its business and own
its property as described in the Registration Statement and the
Prospectus. All of the outstanding capital stock of the Bank upon
completion of the Conversion will be duly authorized and, upon
payment therefor, will be validly issued, fully-paid and
non-assessable and will be owned by the Company, to such
counsel's Actual Knowledge, free and clear of any liens,
encumbrances, claims or other restrictions.
(iv) The Bank is a member of the FHLB-Chicago. The deposit
accounts of the Bank are insured by the FDIC up to the maximum
amount allowed under law and to such counsel's Actual Knowledge,
no proceedings for the termination or revocation of such
insurance are pending or threatened; the description of the
liquidation account as set forth in the Prospectus under the
caption "The Conversion--Effects of Conversion to Stock Form on
Depositors and Borrowers of Clover Leaf Bank--Effect on
Liquidation Rights," to the extent that such information
constitutes matters of law and legal conclusions, has been
reviewed by such counsel and is accurately described in all
material respects.
(v) Immediately following the consummation of the Conversion, the
authorized, issued and outstanding Common Shares of the Company
will be within the range set forth in the Prospectus under the
caption "Capitalization," and no Common Shares have been issued
prior to the Closing Date; at the time of the Conversion, the
Shares subscribed for pursuant to the Offering will have been
duly and validly authorized for issuance, and when issued and
delivered by the Company pursuant to the Plan against payment of
the consideration calculated as set forth in the Plan and
Prospectus, will be duly and validly issued and fully paid and
non-assessable, except for shares purchased by the ESOP with
funds borrowed from the Company to the extent payment therefor in
cash has not been received by the
20
Company; except to the extent that subscription rights and
priorities pursuant thereto exist pursuant to the Plan, the
issuance of the Shares is not subject to preemptive rights and
the terms and provisions of the Shares conform in all material
respects to the description thereof contained in the Prospectus.
Upon the issuance of the Shares, good title to the Shares will be
transferred from the Company to the purchasers thereof against
payment therefor, subject to such claims as may be asserted
against the purchasers thereof by third-party claimants.
(vi) The Bank and the Company have full corporate power and
authority to enter into the Agreement and to consummate the
transactions contemplated thereby and by the Plan. The execution
and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly
authorized by all necessary action on the part of the Company and
the Bank; and this Agreement is a valid and binding obligation of
the Company and the Bank, enforceable against the Company and the
Bank in accordance with its terms, except as the enforceability
thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium, conservatorship, receivership or
other similar laws now or hereafter in effect relating to or
affecting the enforcement of creditors' rights generally or the
rights of creditors of federally chartered savings institutions,
(ii) general equitable principles, (iii) laws relating to the
safety and soundness of insured depository institutions, and (iv)
applicable law or public policy with respect to the
indemnification and/or contribution provisions contained herein,
including without limitation the provisions of Sections 23A and
23B of the Federal Reserve Act and except that no opinion need be
expressed as to the effect or availability of equitable remedies
or injunctive relief (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
(vii) The Conversion Application has been approved by the Office
and the Prospectus has been authorized for use by the Office. The
FRB has approved the Holding Company Application and the purchase
by the Company of all of the issued and outstanding capital stock
of the Bank and to such counsel's Actual Knowledge, no action has
been taken, and none is pending or threatened, to revoke any such
authorization or approval.
21
(viii) The Plan has been duly adopted by the required vote of the
directors of the Company and the Bank, and based upon the
certificate of the inspectors of election, by the members of the
Bank.
(ix) Subject to the satisfaction of the conditions to the
Office's approval of the Conversion, the FDIC's non-objection to
the Conversion and the FRB's approval of the Holding Company
application, no further approval, registration, authorization,
consent or other order of any federal regulatory agency is
required in connection with the execution and delivery of this
Agreement, the issuance of the Shares and the consummation of the
Conversion, except as may be required under the securities or
blue sky laws of various jurisdictions (as to which no opinion
need be rendered) and except as may be required under the rules
and regulations of the NASD (as to which no opinion need be
rendered).
(x) The Registration Statement is effective under the 1933 Act
and no stop order suspending the effectiveness has been issued
under the 1933 Act or proceedings therefor initiated or, to such
counsel's Actual Knowledge, threatened by the Commission.
(xi) At the time the Conversion Application, including the
Prospectus contained therein, was approved by the Office, the
Conversion Application, including the Prospectus contained
therein, complied as to form in all material respects with the
requirements of the Office Regulations (other than the financial
statements, the notes thereto, and other tabular, financial,
statistical and appraisal data included therein, as to which no
opinion need be rendered).
(xii) At the time of the Notice, including the Prospectus
contained therein, was not objected to by the FDIC, the Notice,
including the Prospectus contained therein, complied as to form
in all material respects with the requirements of the FDIC
Regulations (other than the financial statements, the notes
thereto, and other tabular, financial, statistical and appraisal
data included therein, as to which no opinion need be rendered).
(xiii) At the time that the Registration Statement became
effective, (i) the Registration Statement (as amended or
supplemented, if so amended or supplemented) (other than the
financial statements, the notes thereto, and other tabular,
financial, statistical and appraisal data included therein, as to
which no opinion need be rendered), complied as to form in all
material respects with the requirements of
22
the 1933 Act and the 1933 Act Regulations, and (ii) the
Prospectus (other than the financial statements, the notes
thereto, and other tabular, financial, statistical and appraisal
data included therein, as to which no opinion need be rendered)
complied as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations.
(xiv) The terms and provisions of the Shares of the Company
conform, in all material respects, to the description thereof
contained in the Registration Statement and Prospectus, and the
form of certificate used to evidence the Shares is in due and
proper form.
(xv) To the Actual Knowledge of such counsel, there are no legal
or governmental proceedings pending or threatened which are
required to be disclosed in the Registration Statement and
Prospectus, other than those disclosed therein.
(xvi) To such counsel's Actual Knowledge, there are no material
contracts, indentures, mortgages, loan agreements, notes, leases
or other instruments required to be described or referred to in
the Conversion Application, the Notice, the Registration
Statement or the Prospectus or required to be filed as exhibits
thereto other than those described or referred to therein or
filed as exhibits thereto in the Conversion Application, the
Notice, the Registration Statement or the Prospectus. The
description in the Conversion Application, the Notice, the
Registration Statement and the Prospectus of such documents and
exhibits is accurate in all material respects and fairly presents
the information required to be shown.
(xvii) The Plan complies in all material respects with all
applicable federal and Illinois law, rules, regulations,
decisions and orders including, but not limited to, the
Conversion Regulations; to such counsel's Actual Knowledge, the
Conversion has been effected by the Company and the Bank in all
material respects in accordance with the Conversion Regulations
and applicable Office, FDIC and FRB approvals or letters of
non-objection issued thereunder; to such counsel's Actual
Knowledge, no order has been issued by the Office, the FDIC , the
FRB, the Commission or any state authority to suspend the
Offering or the use of the Prospectus, and no action for such
purposes has been instituted or threatened by the Office, the
FDIC, the FRB, the Commission or any other state authority and,
to such counsel's Actual Knowledge, no person has sought to
obtain regulatory or judicial review of the final action of the
Office, the
23
FDIC or the FRB, as the case may be, approving the Plan, the
Conversion Application, the Holding Company Application, Notice
or the Prospectus.
(xviii) To such counsel's Actual Knowledge, the Company and the
Bank have obtained all material licenses, permits and other
governmental authorizations currently required for the conduct of
their businesses and all such licenses, permits and other
governmental authorizations are in full force and effect, and the
Company and the Bank are in all material respects complying
therewith.
(xix) Neither the Company nor the Bank is in violation of its
Certificate of Incorporation and Bylaws or its Articles of
Incorporation and Bylaws, as appropriate or, to such counsel's
Actual Knowledge, in default or violation of any obligation,
agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other
instrument to which it is a party or by which it or its property
may be bound, except for such defaults or violations which would
not have a material adverse impact on the financial condition or
results of operations of the Company and the Bank on a
consolidated basis; to such counsel's Actual Knowledge, the
execution and delivery of this Agreement, the incurrence of the
obligations herein set forth and the consummation of the
transactions contemplated herein will not conflict with or
constitute a breach of, or default under, or result in the
creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or the Bank pursuant to any
material contract, indenture, mortgage, loan agreement, note,
lease or other instrument to which the Company or the Bank is a
party or by which any of them may be bound, or to which any of
the property or assets of the Company or the Bank are subject
(other than the establishment of the liquidation account); and
such action will not result in any violation of the provisions of
the Certificate of Incorporation or Bylaws of the Company or the
Articles of Incorporation or the Bylaws of the Bank or result in
any violation of any applicable federal or state law, act,
regulation (except that no opinion with respect to the securities
and blue sky laws of various jurisdictions or the rules or
regulations of the NASD need be rendered) or order or court
order, writ, injunction or decree.
(xix) The Company's Certificate of Incorporation and Bylaws
comply in all material respects with the laws of the State of
Delaware. The Bank's Articles of Incorporation and Bylaws comply
in all material respects with Illinois law.
24
(xx) The information in the Prospectus under the captions
"Regulation," "The Conversion," "Restrictions on Acquisitions of
Stock and Related Takeover Defensive Provisions" and "Description
of Capital Stock," to the extent that such information
constitutes matters of law, summaries of legal matters, documents
or proceedings, or legal conclusions, has been reviewed by such
counsel and is correct in all material respects. The description
of the Conversion process in the Prospectus under the caption
"The Conversion" to the extent that such information constitutes
matters of law, summaries of legal matters, documents or
proceedings, or legal conclusions, has been reviewed by such
counsel and fairly describes such process in all material
respects. The descriptions in the Prospectus of statutes or
regulations are accurate summaries and fairly present the
information required to be shown. The information under the
caption "The Conversion--Income Tax Consequences" has been
reviewed by such counsel and fairly describes the federal and
state tax opinions rendered by them and RSM McGladrey, Inc.,
respectively, to the Company and the Bank with respect to such
matters.
In giving such opinion, such counsel may rely as to all
matters of fact on certificates of officers or directors of the
Company and the Bank and certificates of public officials. Such
counsel's opinion shall be limited to matters governed by federal
laws and by the laws of the State of Delaware.
The term "Actual Knowledge" as used herein shall have the
meaning set forth in the Legal Opinion Accord of the American Bar
Association Section of Business Law. For purposes of such
opinion, no proceedings shall be deemed to be pending, no order
or stop order shall be deemed to be issued, and no action shall
be deemed to be instituted unless, in each case, a director or
executive officer of the Company or the Bank shall have received
a copy of such proceedings, order, stop order or action. In
addition, such opinion may be limited to present statutes,
regulations and judicial interpretations and to facts as they
presently exist; in rendering such opinion, such counsel need
assume no obligation to revise or supplement it should the
present laws be changed by legislative or regulatory action,
judicial decision or otherwise; and such counsel need express no
view, opinion or belief with respect to whether any proposed or
pending legislation, if enacted, or any proposed or pending
regulations or policy statements issued by any regulatory agency,
whether or not promulgated pursuant to any such legislation,
would affect the validity of the Conversion or
25
any aspect thereof. Such counsel may assume that any agreement is
the valid and binding obligation of any parties to such agreement
other than the Company or the Bank.
In addition, such counsel shall state that during the
preparation of the Conversion Application, the Registration
Statement and the Prospectus, they participated in conferences
with certain officers of, the independent public and internal
accountants for, and other representatives of, the Company and
the Bank, at which conferences the contents of the Conversion
Application, the Registration Statement and the Prospectus and
related matters were discussed and, while such counsel have not
confirmed the accuracy or completeness of or otherwise verified
the information contained in the Conversion Application, the
Registration Statement or the Prospectus and do not assume any
responsibility for such information, based upon such conferences
and a review of documents deemed relevant for the purpose of
rendering their opinion (relying as to materiality as to factual
matters on certificates of officers and other factual
representations by the Company and the Bank), nothing has come to
their attention that would lead them to believe that the
Conversion Application, the Notice, the Registration Statement,
the Prospectus, or any amendment or supplement thereto (other
than the financial statements, the notes thereto, and other
tabular, financial, statistical and appraisal data included
therein as to which no view need be rendered) contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading.
(d) At the Closing Date, the Agent shall receive a certificate of the Chief
Executive Officer and the Principal Accounting Officer of the Company and
the Bank in form and substance reasonably satisfactory to the Agent's
Counsel, dated as of such Closing Date, to the effect that: (i) they have
carefully examined the Prospectus and, in their opinion, at the time the
Prospectus became authorized for final use, the Prospectus did not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; (ii) since the
date the Prospectus became authorized for final use, no event has occurred
which should have been set forth in an amendment or supplement to the
Prospectus which has not been so set forth, including specifically, but
without limitation, any material adverse change in the condition, financial
or otherwise, or in the earnings, capital, properties or business of the
Company or the Bank and the conditions set forth in this Section 7 have
been satisfied; (iii) since the respective dates as of which information is
given
26
in the Registration Statement and the Prospectus, there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, capital or properties of the Company or the Bank independently,
or of the Company and the Bank considered as one enterprise, whether or not
arising in the ordinary course of business; (iv) the representations and
warranties in Section 4 are true and correct with the same force and effect
as though expressly made at and as of the Closing Date; (v) the Company and
the Bank have complied in all material respects with all agreements and
satisfied all conditions on their part to be performed or satisfied at or
prior to the Closing Date and will comply in all material respects with all
obligations to be satisfied by them after the Conversion; (vi) no stop
order suspending the effectiveness of the Registration Statement has been
initiated or, to the best knowledge of the Company or the Bank, threatened
by the Commission or any state authority; (vii) no order suspending the
Offering, the Conversion, the acquisition of all of the shares of the Bank
by the Company or the effectiveness of the Prospectus has been issued and
no proceedings for that purpose are pending or, to the best knowledge of
the Company or the Bank, threatened by the Office, the FDIC, the
Commission, the FRB, or any state authority; and (viii) to the best
knowledge of the Company or the Bank, no person has sought to obtain review
of the final action of the Office approving the Plan.
(e) Prior to and at the Closing Date: (i) in the reasonable opinion of the
Agent, there shall have been no material adverse change in the financial
condition, results of operations or business of the Company and the Bank
considered as one enterprise, from that as of the latest dates as of which
such condition is set forth in the Prospectus, other than transactions
referred to or contemplated therein; (ii) the Company or the Bank shall not
have received from the Office or the FDIC any direction (oral or written)
to make any material change in the method of conducting their business with
which it has not complied (which direction, if any, shall have been
disclosed to the Agent) or which materially and adversely would affect the
financial condition, results of operations or business of the Company and
the Bank taken as a whole; (iii) neither the Company nor the Bank shall
have been in default (nor shall an event have occurred which, with notice
or lapse of time or both, would constitute a default) under any provision
of any agreement or instrument relating to any outstanding indebtedness;
(iv) no action, suit or proceeding, at law or in equity or before or by any
federal or state commission, board or other administrative agency, shall be
pending or, to the knowledge of the Company or the Bank, threatened against
the Company or the Bank or affecting any of their properties wherein an
unfavorable decision, ruling or finding would materially and adversely
affect the financial condition, results of operations or business taken as
a whole; and (v) the Shares shall have been qualified or registered for
offering and sale or exempted therefrom under the securities or blue sky
laws of the jurisdictions as the Agent shall have reasonably requested and
as agreed to by the Company and the Bank.
27
(f) Concurrently with the execution of this Agreement, the Agent shall
receive a letter from RSM McGladrey, Inc. dated as of the date of the
Prospectus and addressed to the Agent: (i) confirming that RSM McGladrey,
Inc. is a firm of independent public accountants within the meaning of Rule
101 of the Code of Professional Ethics of the American Institute of
Certified Public Accountants and applicable regulations of the Office, the
FDIC and the Commission and stating in effect that in its opinion the
financial statements, schedules and related notes of the Bank as of
December 31, 2000 and 1999, and for each of the two years in the period
ended December 31, 2000, included in the Prospectus and covered by their
opinion included therein, comply as to form in all material respects with
the applicable accounting requirements and related published rules and
regulations of the Office, the FDIC and the Commission and the 1933 Act;
(ii) stating in effect that, on the basis of certain agreed upon procedures
(but not an audit in accordance with generally accepted auditing standards)
consisting of a reading of the latest available unaudited interim financial
statements of the Bank prepared by the Bank, a reading of the minutes of
the meetings of the Board of Directors and members of the Bank and
consultations with officers of the Bank responsible for financial and
accounting matters, nothing came to their attention which caused them to
believe that: (A) the unaudited financial statements included in the
Prospectus are not in conformity with the 1933 Act, applicable accounting
requirements of the Office, the FDIC and the Commission and generally
accepted accounting principles applied on a basis substantially consistent
with that of the audited financial statements included in the Prospectus;
or (B) during the period from the date of the latest unaudited financial
statements included in the Prospectus to a specified date not more than
three business days prior to the date of the Prospectus, except as has been
described in the Prospectus, there was any increase in borrowings, other
than normal deposit fluctuations, by the Bank; or (C) there was any
decrease in the net assets of the Bank at the date of such letter as
compared with amounts shown in the latest unaudited balance sheets included
in the Prospectus; and (iii) stating that, in addition to the audit
referred to in their opinion included in the Prospectus and the performance
of the procedures referred to in clause (ii) of this subsection (g), they
have compared with the general accounting records of the Bank, which are
subject to the internal controls of the Bank, the accounting system and
other data prepared by the Bank, directly from such accounting records, to
the extent specified in such letter, such amounts and/or percentages set
forth in the Prospectus as the Agent may reasonably request; and they have
reported on the results of such comparisons.
(g) At the Closing Date, the Agent shall receive a letter dated the Closing
Date, addressed to the Agent, confirming the statements made by RSM
McGladrey, Inc. in the letter delivered by it pursuant to subsection (g) of
this Section 7, the "specified date" referred to in clause (ii) of
subsection (g) to be a date specified in the letter required by this
subsection (h) which for purposes of such letter shall not be more than
three business days prior to the Closing Date.
28
(h) At the Closing Date, the Bank shall receive a letter from Xxxxxx &
Company, Inc., dated the Closing Date (i) confirming that said firm is
independent of the Company and the Bank and is experienced and expert in
the area of corporate appraisals, (ii) stating in effect that the Appraisal
prepared by such firm complies in all material respects with the applicable
requirements of the Office and the FDIC Regulations, and (iii) further
stating that its opinion of the aggregate pro forma market value of the
Company and the Bank expressed in its Appraisal dated as of August 24,
2001, as most recently updated, remains in effect.
(i) At or prior to the Closing Date, the Agent shall receive: (i) a copy of
the letters from the Office approving the Conversion Application and
authorizing the use of the Prospectus and the Proxy Statement; (ii) a copy
of the order from the Commission declaring the Registration Statement
effective; (iii) a certificate from the Office evidencing the valid
existence of the Bank; (iv) a certificate from the State of Delaware
evidencing the good standing of the Company; (v) a certificate from the
FDIC evidencing the Bank's insurance of accounts; (vi) a certificate from
the FHLB-Chicago evidencing the Bank's membership therein; (vii) a copy of
the letter from the FRB approving the Company's Holding Company
Application; (viii) a certified copy of the Bank's Articles of
Incorporation and Bylaws; and (ix) a copy of the letter of non-objection
from the FDIC.
(j) Subsequent to the date hereof, there shall not have occurred any of the
following; (i) a suspension or limitation in trading in securities
generally on the New York Stock Exchange (the "NYSE") or in the
over-the-counter market, or quotations halted generally on The Nasdaq Stock
Market, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices for securities have been required by either of
such exchanges or the NASD or by order of the Commission or any other
governmental authority; (ii) a general moratorium on the operations of
commercial banks, Illinois savings banks or federal savings banks or a
general moratorium on the withdrawal of deposits from commercial banks,
Illinois savings banks or federal savings banks declared by federal or
state authorities; (iii) the engagement by the United States in hostilities
which have resulted in the declaration, on or after the date hereof, of a
national emergency or war; or (iv) a material decline in the price of
equity or debt securities if the effect of such a declaration or decline,
in the Agent's reasonable judgement, makes it impracticable or inadvisable
to proceed with the Offering or the delivery of the Shares on the terms and
in the manner contemplated in the Registration Statement and the
Prospectus.
(k) At or prior to the Closing Date, counsel to the Agent shall have been
furnished with such documents and opinions as they may reasonably require
for the purpose of enabling them to pass upon the sale of the Shares as
herein contemplated and related proceedings or in order to evidence the
occurrence or completeness of any of the representations or warranties, or
the fulfillment of any of the conditions, herein
29
contained; and all proceedings taken by the Company or the Bank in
connection with the Conversion and the sale of the Shares as herein
contemplated shall be satisfactory in form and substance to the Agent and
its counsel.
Section 8. Indemnification.
(a) The Company and the Bank jointly and severally agree to indemnify and
hold harmless the Agent, its respective officers and directors, employees
and agents, and each person, if any, who controls the Agent within the
meaning of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act,
against any and all loss, liability, claim, damage or expense whatsoever
(including, but not limited to, settlement expenses), joint or several,
that the Agent or any of them may suffer or to which the Agent and any such
persons may become subject under all applicable federal or state laws or
otherwise, and to promptly reimburse the Agent and any such persons upon
written demand for any expense (including reasonable fees and disbursements
of counsel) incurred by the Agent or any of them in connection with
investigating, preparing or defending any actions, proceedings or claims
(whether commenced or threatened) to the extent such losses, claims,
damages, liabilities or actions: (i) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement (or any amendment or supplement thereto),
preliminary or final Prospectus (or any amendment or supplement thereto),
the Conversion Application (or any amendment or supplement thereto), the
Notice (or any amendment or supplement thereto), the Holding Company
Application or any instrument or document executed by the Company or the
Bank or based upon written information supplied by the Company or the Bank
filed in any state or jurisdiction to register or qualify any or all of the
Shares or to claim an exemption therefrom or provided to any state or
jurisdiction to exempt the Company as a broker-dealer or its officers,
directors and employees as broker-dealers or agent, under the securities
laws thereof (collectively, the "Blue Sky Application"), or any document,
advertisement, oral statement or communication ("Sales Information")
prepared, made or executed by or on behalf of the Company or the Bank with
their consent or based upon written or oral information furnished by or on
behalf of the Company or the Bank, whether or not filed in any
jurisdiction, in order to qualify or register the Shares or to claim an
exemption therefrom under the securities laws thereof; (ii) arise out of or
are based upon the omission or alleged omission to state in any of the
foregoing documents or information a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; or (iii) arise
from any theory of liability whatsoever relating to or arising from or
based upon the Registration Statement (or any amendment or supplement
thereto), preliminary or final Prospectus (or any amendment or supplement
thereto), the Conversion Application (or any amendment or supplement
thereto), the Notice (or any amendment or supplement thereto) any Blue Sky
Application or Sales Information or other documentation distributed in
connection
30
with the Conversion; provided, however, that no indemnification is required
under this paragraph (a) to the extent such losses, claims, damages,
liabilities or actions arise out of or are based upon any untrue material
statement or alleged untrue material statement in, or material omission or
alleged material omission from, the Registration Statement (or any
amendment or supplement thereto), preliminary or final Prospectus (or any
amendment or supplement thereto), the Conversion Application (or any
amendment or supplement thereto), the Notice (or any amendment or
supplement thereto) any Blue Sky Application or Sales Information made in
reliance upon and in conformity with information furnished in writing to
the Company or the Bank by the Agent or its counsel regarding the Agent,
provided, that it is agreed and understood that the only information
furnished in writing to the Company or the Bank by the Agent regarding the
Agent is set forth in the Prospectus under the caption "The
Conversion--Marketing Arrangements"; and, provided further, that such
indemnification shall be to the extent not prohibited by the Commission,
the Office, the FDIC and the FRB.
(b) The Agent agrees to indemnify and hold harmless the Company and the
Bank, their directors and officers and each person, if any, who controls
the Company or the Bank within the meaning of Section 15 of the 1933 Act or
Section 20(a) of the 1934 Act against any and all loss, liability, claim,
damage or expense whatsoever (including but not limited to settlement
expenses), joint or several, which they, or any of them, may suffer or to
which they, or any of them may become subject under all applicable federal
and state laws or otherwise, and to promptly reimburse the Company, the
Bank, and any such persons upon written demand for any expenses (including
reasonable fees and disbursements of counsel) incurred by them, or any of
them, in connection with investigating, preparing or defending any actions,
proceedings or claims (whether commenced or threatened) to the extent such
losses, claims, damages, liabilities or actions: (i) arise out of or are
based upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or any amendment or
supplement thereto), the Conversion Application (or any amendment or
supplement thereto), the preliminary or final Prospectus (or any amendment
or supplement thereto), the Notice (or any amendment or supplement thereto)
any Blue Sky Application or Sales Information, (ii) are based upon the
omission or alleged omission to state in any of the foregoing documents a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or (iii) arise from any theory of liability
whatsoever relating to or arising from or based upon the Registration
Statement (or any amendment or supplement thereto), preliminary or final
Prospectus (or any amendment or supplement thereto), the Conversion
Application (or any amendment or supplement thereto), the Notice (or any
amendment or supplement thereto) or any Blue Sky Application or Sales
Information or other documentation distributed in connection with the
Conversion; provided, however, that the Agent's obligations under this
Section 8(b) shall exist only if and only to the extent that such untrue
statement or alleged untrue statement was made
31
in, or such material fact or alleged material fact was omitted from, the
Registration Statement (or any amendment or supplement thereto), the
preliminary or final Prospectus (or any amendment or supplement thereto),
the Conversion Application (or any amendment or supplement thereto), the
Notice (or any amendment or supplement thereto) any Blue Sky Application or
Sales Information in reliance upon and in conformity with information
furnished in writing to the Company or the Bank by the Agent or its counsel
regarding the Agent, provided, that it is agreed and understood that the
only information furnished in writing to the Company or the Bank by the
Agent regarding the Agent is set forth in the Prospectus under the caption
"The Conversion--Marketing Arrangements."
(c) Each indemnified party shall give prompt written notice to each
indemnifying party of any action, proceeding, claim (whether commenced or
threatened), or suit instituted against it in respect of which indemnity
may be sought hereunder, but failure to so notify an indemnifying party
shall not relieve it from any liability which it may have on account of
this Section 8 or otherwise. An indemnifying party may participate at its
own expense in the defense of such action. In addition, if it so elects
within a reasonable time after receipt of such notice, an indemnifying
party, jointly with any other indemnifying parties receiving such notice,
may assume defense of such action with counsel chosen by it and approved by
the indemnified parties that are defendants in such action, unless such
indemnified parties reasonably object to such assumption on the ground that
there may be legal defenses available to them that are different from or in
addition to those available to such indemnifying party. If an indemnifying
party assumes the defense of such action, the indemnifying parties shall
not be liable for any fees and expenses of counsel for the indemnified
parties incurred thereafter in connection with such action, proceeding or
claim, other than reasonable costs of investigation. In no event shall the
indemnifying parties be liable for the fees and expenses of more than one
separate firm of attorneys (and any special counsel that said firm may
retain) for each indemnified party in connection with any one action,
proceeding or claim or separate but similar or related actions, proceedings
or claims in the same jurisdiction arising out of the same general
allegations or circumstances.
Section 9. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 8 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Company, the Bank or the Agent, the Company,
the Bank and the Agent shall contribute to the aggregate losses, claims, damages
and liabilities (including any investigation, legal and other expenses incurred
in connection with, and any amount paid in settlement of, any action, suit or
proceeding, but after deducting any contribution received by the Company, the
Bank or the Agent from persons other than the other parties thereto, who may
also be liable for contribution) in such proportion so that the Agent is
responsible for that portion represented by the percentage that the fees paid to
the Agent pursuant to Section 2 of this Agreement (not including expenses) bears
to the gross proceeds received by the
32
Company from the sale of the Shares in the Offering, and the Company and the
Bank shall be responsible for the balance. If, however, the allocation provided
above is not permitted by applicable law, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative fault of the
Company and the Bank on the one hand and the Agent on the other in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions, proceedings or claims in respect thereto), but also
the relative benefits received by the Company and the Bank on the one hand and
the Agent on the other from the Offering (before deducting expenses). The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company and/or the Bank on the one hand or the Agent on the other and the
parties' relative intent, good faith, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company, the
Bank and the Agent agree that it would not be just and equitable if contribution
pursuant to this Section 9 were determined by pro-rata allocation or by any
other method of allocation which does not take into account the equitable
considerations referred to above in this Section 9. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions, proceedings or claims in respect thereof) referred to
above in this Section 9 shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action, proceeding or claim. It is expressly agreed that
the Agent shall not be liable for any loss, liability, claim, damage or expense
or be required to contribute any amount pursuant to Section 8(b) or this Section
9 which in the aggregate exceeds the amount paid (excluding reimbursable
expenses) to the Agent under this Agreement. It is understood that the above
stated limitation on the Agent's liability is essential to the Agent and that
the Agent would not have entered into this Agreement if such limitation had not
been agreed to by the parties to this Agreement. No person found guilty of any
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not found guilty
of such fraudulent misrepresentation. The obligations of the Company, the Bank
and the Agent under this Section 9 and under Section 8 shall be in addition to
any liability which the Company, the Bank and the Agent may otherwise have. For
purposes of this Section 9, each of the Agent's, the Company's or the Bank's
officers and directors and each person, if any, who controls the Agent or the
Company or the Bank within the meaning of the 1933 Act and the 1934 Act shall
have the same rights to contribution as the Agent, the Company or the Bank. Any
party entitled to contribution, promptly after receipt of notice of commencement
of any action, suit, claim or proceeding against such party in respect of which
a claim for contribution may be made against another party under this Section 9,
will notify such party from whom contribution may be sought, but the omission to
so notify such party shall not relieve the party from whom contribution may be
sought from any other obligation it may have hereunder or otherwise than under
this Section 9.
Section 10. Survival of Agreements, Representations and Indemnities. The
respective indemnities of the Company, the Bank and the Agent, the
representations and warranties and other statements of the Company, the Bank and
the Agent set forth in or made pursuant to this Agreement and the provisions
relating to contribution shall remain in full force and effect, regardless of
any termination or cancellation of this Agreement or any investigation made by
or on behalf of the
33
Agent, the Company, the Bank or any controlling person referred to in Section 8
hereof, and shall survive the issuance of the Shares, and any successor or
assign of the Agent, the Company, the Bank, and any such controlling person
shall be entitled to the benefit of the respective agreements, indemnities,
warranties and representations.
Section 11. Termination. The Agent may terminate this Agreement by giving
the notice indicated below in this Section 11 at any time after this Agreement
becomes effective as follows:
(a) If any domestic or international event or act or occurrence has
materially disrupted the United States securities markets such as to make
it, in the Agent's reasonable opinion, impracticable to proceed with the
offering of the Shares; or if trading on the NYSE shall have suspended
(except that this shall not apply to the imposition of NYSE trading collars
imposed on program trading); or if the United States shall have become
involved in a war or major hostilities; or if a general banking moratorium
has been declared by a state or federal authority which has a material
effect on the Bank or the Conversion; or if a moratorium in foreign
exchange trading by major international banks or persons has been declared;
or if there shall have been a material adverse change in the financial
condition, results of operations or business of the Company, or if the Bank
shall have sustained a material or substantial loss by fire, flood,
accident, hurricane, earthquake, theft, sabotage or other calamity or
malicious act, whether or not said loss shall have been insured; or if
there shall have been a material adverse change in the financial condition,
results of operations or business of the Company or the Bank.
(b) In the event the Company fails to sell the required minimum number of
the Shares by March 31, 2002, and in accordance with the provisions of the
Plan or as required by the Conversion Regulations, and applicable law, this
Agreement shall terminate upon refund by the Company to each person who has
subscribed for or ordered any of the Shares the full amount which it may
have received from such person, together with interest as provided in the
Prospectus, and no party to this Agreement shall have any obligation to the
other hereunder, except as set forth in Sections 2(a), 6, 8 and 9 hereof.
(c) If any of the conditions specified in Section 7 shall not have been
fulfilled when and as required by this Agreement, unless waived in writing,
or by the Closing Date, this Agreement and all of the Agent's obligations
hereunder may be cancelled by the Agent by notifying the Company and the
Bank of such cancellation in writing or by telegram at any time at or prior
to the Closing Date, and any such cancellation shall be without liability
of any party to any other party except as otherwise provided in Sections
2(a), 6, 8 and 9 hereof.
(d) If the Agent elects to terminate this Agreement as provided in this
Section, the Company and the Bank shall be notified promptly by telephone
or telegram, confirmed by letter.
34
The Company and the Bank may terminate this Agreement in the event the
Agent is in material breach of the representations and warranties or covenants
contained in Section 5 and such breach has not been cured after the Company and
the Bank have provided the Agent with notice of such breach.
This Agreement may also be terminated by mutual written consent of the
parties hereto.
Section 12. Notices. All communications hereunder, except as herein
otherwise specifically provided, shall be mailed in writing and if sent to the
Agent shall be mailed, delivered or telegraphed and confirmed to Xxxxx, Xxxxxxxx
& Xxxxx, 000 Xxxxxxxxx Xxxxx, Xxxxxx, Xxxx 00000-0000, Attention: Xxxxxxx Xxxxxx
(with a copy to Xxxxx, Xxxx, Xxxxxxx & Xxxxxxx L.L.P., 000 00xx Xxxxxx, X.X.,
Xxxxxxxxxx, X.X. 00000, Attention: Xxxxx Xxxxxxxx and, if sent to the Company
and the Bank, shall be mailed, delivered or telegraphed and confirmed to the
Company and the Bank at 000 Xxxx Xxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxx 00000,
Attention: Xxxxxx X. Xxxxx, President (with a copy to Xxxx Xxxxxx Xxxxxx
Xxxxxxxx & Xxxxxx, P.C., 0000 Xxxxxxxxx Xxxxxx, XX, Xxxxx 000, Xxxxxxxxxx, XX
00000, Attention: Xxxx Xxxxxx).
Section 13. Parties. The Company and the Bank shall be entitled to act and
rely on any request, notice, consent, waiver or agreement purportedly given on
behalf of the Agent when the same shall have been given by the undersigned. The
Agent shall be entitled to act and rely on any request, notice, consent, waiver
or agreement purportedly given on behalf of the Company 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, the Agent, the Company, the Bank, and their respective
successors and assigns, and no other person shall have or be construed to have
any legal or equitable right, remedy or claim under or in respect of or by
virtue of this Agreement or any provision herein contained. It is understood and
agreed that this Agreement is the exclusive agreement among the parties hereto,
and supersedes any prior agreement among the parties and may not be varied
except in writing signed by all the parties.
Section 14. Closing. The closing for the sale of the Shares shall take
place on the Closing Date at such location as mutually agreed upon by the Agent
and the Company and the Bank. At the closing, the Company and the Bank shall
deliver to the Agent in next day funds the commissions, fees and expenses due
and owing to the Agent as set forth in Sections 2 and 6 hereof and the opinions
and certificates required hereby and other documents deemed reasonably necessary
by the Agent shall be executed and delivered to effect the sale of the Shares as
contemplated hereby and pursuant to the terms of the Prospectus.
Section 15. Partial Invalidity. In the event that any term, provision or
covenant herein or the application thereof to any circumstance or situation
shall be invalid or unenforceable, in whole or in part, the remainder hereof and
the application of said term, provision or covenant to any other circumstances
or situation shall not be affected thereby, and each term, provision or covenant
herein shall be valid and enforceable to the full extent permitted by law.
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Section 16. Construction. This Agreement shall be construed in accordance
with the laws of the State of Ohio.
Section 17. Counterparts. This Agreement may be executed in separate
counterparts, each of which so executed and delivered shall be an original, but
all of which together shall constitute but one and the same instrument.
Section 18. Entire Agreement. This Agreement, including schedules and
exhibits hereto, which are integral parts hereof and incorporated as though set
forth in full, constitutes the entire agreement between the parties pertaining
to the subject matter hereof superseding any and all prior or contemporaneous
oral or prior written agreements, proposals, letters of intent and
understandings, and cannot be modified, changed, waived or terminated except by
a writing which expressly states that it is an amendment, modification or
waiver, refers to this Agreement and is signed by the party to be charged. No
course of conduct or dealing shall be construed to modify, amend or otherwise
affect any of the provisions hereof.
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If the foregoing correctly sets forth the arrangement among the Company,
the Bank and the Agent, please indicate acceptance thereof in the space provided
below for that purpose, whereupon this letter and the Agent's acceptance shall
constitute a binding agreement.
Very truly yours,
CLOVER LEAF FINANCIAL CLOVER LEAF BANK, SB
CORP.
By Its Authorized Representative: By Its Authorized Representative:
--------------------------------- ---------------------------------
Xxxxxx X. Xxxxx, President Xxxxxx X. Xxxxx, President
Accepted as of the date first above
written
Xxxxx, Xxxxxxxx & Xxxxx, Inc.
By Its Authorized Representative:
---------------------------------
Xxxxxxx Xxxxxx
Managing Director
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