EXHIBIT 1
1,395,232 Shares
Tower Financial Corporation
(an Indiana corporation)
Common Stock
(no par value)
AGENCY AGREEMENT
July 22, 2002
Xxxxxx, Xxxxxxxx & Company, Incorporated
000 Xxxxx Xxxxxxxx, 0xx Xxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Xxxxxxxxxx & Co. Inc.
000 Xxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
TOWER FINANCIAL CORPORATION, an Indiana corporation (the "Company")
confirms its agreement with XXXXXX, XXXXXXXX & COMPANY, INCORPORATED ("Stifel")
and XXXXXXXXXX & CO. INC. ("Xxxxxxxxxx, and together with Stifel the "Agents")
with respect to the offer and sale by the Company of up to 1,395,232 shares (the
"Shares") of common stock, no par value per share (the "Common Stock") of the
Company.
The Company is offering the Shares to the holders of record of Common Stock
and the holders of exercisable options to acquire shares of Common Stock (each a
"Record Date Holder") at the close of business on May 31, 2002 (the "Record
Date"), at a subscription price of $10.75 per share ("Subscription Price") and,
subject to the rights of such Record Date Holders described below, to certain
other investors.
Each Record Date Holder will receive one (1) non-transferable subscription
right ("Right") for each share of Common Stock held of record and for each
exercisable option to acquire a share of Common Stock held at the close of
business on the Record Date. For each two (2) Rights that a Record Date Holder
receives, he will be able to purchase from the Company one (1) share of Common
Stock (an "Underlying Share") at the Subscription Price (the "Basic Subscription
Privilege"). Rights may be exercised in whole or in part prior to the Rights
Offering Expiration Date (as defined below). No fractional shares will be issued
upon the exercise of Rights. Each Record Date Holder who subscribes to purchase
the maximum number of whole Underlying Shares pursuant to his Basic Subscription
Privilege and is a holder of Common Stock also will be eligible to subscribe at
the Subscription Price for Shares (the "Excess Shares") not otherwise purchased
by Record Date Holders pursuant to the exercise of
the Basic Subscription Privilege up to the total number of Excess Shares,
subject to availability, proration, and reduction by the Company in certain
circumstances and, in all instances, a limit of 100,000 Shares less the number
of Shares purchased pursuant to the Basic Subscription Privilege (the
"Oversubscription Privilege"). The offer and sale of the Underlying Shares
pursuant to the exercise of the Basic Subscription Privilege and the
Oversubscription Privilege are referred to herein as the "Rights Offering."
Record Date Holders may exercise Rights by delivering to EquiServe Trust
Company, N.A. (the "Subscription Agent") a properly completed and executed
subscription rights certificate together with payment in full of the
Subscription Price for each Underlying Share subscribed for by the Record Date
Holders. The completed subscription rights certificate and payment of the
Subscription Price must be received by the Subscription Agent by the close of
business, on August 21, 2002 (the "Rights Offering Expiration Date"). For the
purpose of accepting subscriptions in connection with the Rights Offering,
payment may be made only (i) by personal check, certified check, bank draft or
cashier's check drawn upon a U.S. bank, or (ii) by postal, telegraphic or
express money order payable in U.S. dollars to the order of "EquiServe Trust
Company, N.A., as Subscription Agent for Tower Financial Corporation."
To the extent that all of the Underlying Shares are not subscribed for
during the Rights Offering, the Company also intends, but is not obligated, to
offer, on a limited subscription basis at the Subscription Price, the remaining
Shares to potential investors ("Potential Investors") (the "Limited Public
Offering"). Subject to availability, proration and reduction by the Company in
certain circumstances, the maximum number of Shares that may be subscribed by
any Potential Investor is limited to 100,000 Shares, which limitation may be
waived by the Company in its sole discretion. The Company reserves the right to
accept or reject any subscription in the Limited Public Offering in whole or in
part.
Potential Investors may subscribe to purchase Shares in the Limited Public
Offering by delivering to the Subscription Agent a properly completed and
executed order form together with payment in full of the Subscription Price for
each Share subscribed for. The completed order form and payment of the
Subscription Price must be received by the Subscription Agent by the close of
business on August 28, 2002 (the "Limited Offering Expiration Date"), unless
extended by the Company. In the event the Company extends the Limited Offering
Expiration Date beyond September 12, 2002, the Company will allow subscribers in
the Offerings to change their subscriptions. For the purpose of accepting
subscriptions in connection with the Limited Public Offering, payment may be
made only (i) by personal check, certified check, bank draft or cashier's check
drawn upon a U.S. bank, or (ii) by postal, telegraphic or express money order
payable in U.S. dollars to the order of "EquiServe Trust Company, N.A. as
Subscription Agent for Tower Financial Corporation."
The Rights Offering and the Limited Public Offering are together referred
to herein as the "Offerings." The Company reserves the right to terminate either
of the Offerings at any time prior to the Closing Date (as defined herein).
Subscription proceeds from the Offerings will be held by the Subscription Agent
in accordance with Section 2 until the Closing Time (as defined herein), at
which time the proceeds from the Offerings, net of commissions, expenses and
fees, will be distributed to the Company, unless the Offerings are earlier
terminated, at which time the
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proceeds will be promptly returned to each Record Date Holder and Potential
Investor subscribing for Shares, without interest, as set forth in Section 9
hereof.
Concurrently with the execution of this Agreement, the Company is
delivering to the Agents copies of the Prospectus (as defined herein) to be used
in the Offerings. Such Prospectus contains information with respect to the
Company, on a consolidated basis, and the Shares.
Section 1. Representations and Warranties.
(a) The Company represents and warrants to and agrees with the Agents as of
the date hereof as follows:
(i) The reports filed with the Securities and Exchange Commission (the
"Commission") by the Company under the Securities Exchange Act of 1934, as
amended (the "1934 Act") and the rules and regulations thereunder (the "1934 Act
Regulations") at the time they were filed with the Commission, complied as to
form in all material respects with the requirements of the 1934 Act and the 1934
Act Regulations and 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 in which they were made,
not misleading.
(ii) The Company has prepared and filed with the Commission a
registration statement on Form SB-2 (File Number 333-88852) for the registration
of the Shares under the Securities Act of 1933, as amended (the "1933 Act"),
including the related prospectus subject to completion, and one or more
amendments to such registration statement may have been so filed, in each case
in conformity in all material respects with the requirements of the 1933 Act and
the rules and regulations promulgated thereunder (the "1933 Act Regulations").
Copies of such registration statement, including any amendments thereto and any
documents incorporated by reference therein, each Preliminary Prospectus (as
defined herein) contained therein and the exhibits, financial statements and
schedules to such registration statement, as finally amended and revised, have
heretofore been delivered by the Company to the Agents. After the execution of
this Agreement, the Company will file with the Commission, if then required, (A)
if such registration statement, as it may have been amended, has been declared
by the Commission to be effective under the 1933 Act, a prospectus in the form
most recently included in an amendment to such registration statement (or, if no
such amendment shall have been filed, in such registration statement), with such
changes or insertions as are required by Rule 430A of the 1933 Act Regulations
("Rule 430A") or permitted by Rule 424(b) of the 1933 Act Regulations ("Rule
424(b)") and as have been provided to and not objected to by the Agents prior to
(or as are agreed to by the Agents subsequent to) the execution of this
Agreement, or (B) if such registration statements, as may have been amended,
have not been declared by the Commission to be effective under the 1933 Act, an
amendment to such registration statement, including a form of final prospectus,
necessary to permit such registration statement to become effective, a copy of
which amendment has been furnished to and not objected to by the Agents prior to
(or is agreed to by the Agents subsequent to) the execution of this Agreement.
The Company will not file any amendment to the Registration Statement or any
Preliminary Prospectus or any amendment thereto, of which you have not been
previously furnished a copy or to which you or counsel for the Agents shall
reasonably object. As used in this Agreement, the term
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"Registration Statement" means such registration statement, as amended at the
time when it was or is declared effective under the 1933 Act, including (1) all
financial schedules and exhibits thereto, (2) all documents (or portions
thereof) incorporated by reference therein filed under the 1934 Act, and (3) any
information omitted therefrom pursuant to Rule 430A and included in the
Prospectus (as hereinafter defined); the term "Preliminary Prospectus" means
each prospectus subject to completion filed with such registration statement or
any amendment thereto, including the prospectus subject to completion, if any,
included in the Registration Statement and each prospectus filed pursuant to
Rule 424(a) under the 1933 Act; and the term "Prospectus" means the prospectus
first filed with the Commission pursuant to Rule 424(b) or, if no prospectus is
required to be filed pursuant to Rule 424(b), the prospectus included in the
Registration Statement, in each case including the financial schedules and all
documents (or portions thereof) incorporated by reference therein under the 1934
Act. The date on which the Registration Statement becomes effective is
hereinafter referred to as the "Effective Date."
(iii) No order preventing or suspending the use of any Prospectus (or,
if the Prospectus is not in existence, the Preliminary Prospectus) has been
issued by the Commission, any state or other jurisdiction or other regulatory
body, nor has the Commission, any state or other jurisdiction or other
regulatory body, to the knowledge of the Company, threatened to issue such an
order or instituted proceedings for that purpose. Each Preliminary Prospectus,
at the time of filing thereof, (A) complied in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and (B) did not
contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty does not apply to
statements or omissions made in reliance upon and in conformity with information
furnished in writing to the Company by Stifel expressly for inclusion in the
Prospectus set forth in the first and last paragraphs under the caption "The
Offerings - Opinion of Financial Advisor" and the Opinion (as defined hereafter)
attached as an appendix thereto (such information referred to herein as the
"Agents' Information"). Each Preliminary Prospectus and the Prospectus will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
("XXXXX") system, except to the extent permitted by Regulation S-T.
(iv) The Registration Statement has been declared effective under the
1933 Act and no post-effective amendment to the Registration Statement has been
filed with the Commission as of the date of this Agreement. No stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceeding for that purpose has been instituted or, to the Company's
knowledge, threatened by the Commission, any state or other jurisdiction or
other regulatory body. At the Effective Date and at all times subsequent
thereto, up to and including the Closing Time, the Registration Statement and
any post-effective amendment thereto (A) complied and will comply in all
material respects with the requirements of the 1933 Act, and the 1933 Act
Regulations and (B) did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, not misleading; provided, however,
that this representation and warranty does not apply to the Agents' Information.
At the Effective Date and at all times when the Prospectus is required to be
delivered in connection with offers and sales of Shares, including, without
limitation, the Closing Date, the Prospectus, as amended or supplemented, (A)
complied and will
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comply in all material respects with the requirements of the 1933 Act and the
1933 Act Regulations and (B) did not contain and will not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that this representation and warranty does not apply to the Agents' Information.
Since the date that the Registration Statement was filed with the Commission, no
event has or will have occurred which should have been set forth in an amendment
or supplement to the Registration Statement which has not then been set forth in
such an amendment or supplement. The Registration Statement will be identical to
the electronically transmitted copy thereof filed with the Commission pursuant
to its XXXXX system, except to the extent permitted by Regulation S-T.
(v) The Company is duly organized and validly existing under the laws
of the State of Indiana, with full corporate and other power and authority to
own, lease and operate its properties and conduct its business as described in
and contemplated by the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the Preliminary Prospectus) and as currently
being conducted and is duly registered as a financial holding company under the
Bank Holding Company Act of 1956, as amended (the "BHC Act") and the
Xxxxx-Xxxxx-Xxxxxx Act (the "GLB Act").
(vi) The Company has two direct or indirect subsidiaries, Tower Bank &
Trust Company (the "Bank") and Tower Capital Trust I (the "Trust")
(collectively, the "Subsidiaries"). The Company does not own or control,
directly or indirectly, more than 5% of any class of equity security of any
corporation, association or other entity other than the Subsidiaries. The Bank
is a banking corporation duly organized and validly existing under the laws of
the State of Indiana. The Trust is duly organized, validly existing and in good
standing as a business trust under the laws of the State of Delaware. Each such
Subsidiary has full corporate and other power and authority to own, lease and
operate its properties and to conduct its business as described in and
contemplated by the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) and as
currently being conducted. The deposit accounts of the Bank are insured by the
Bank Insurance Fund administered by the Federal Deposit Insurance Corporation
(the "FDIC") up to the maximum amount provided by law; and no proceedings for
the modification, termination or revocation of any such insurance are pending
or, to the knowledge of the Company, threatened.
(vii) The Company and each of the Subsidiaries have in effect
insurance coverage and bonds with financially sound and respectable insurers,
which in respect to amounts, types and risks insured management of the Company
and each of the Subsidiaries reasonably believes to be adequate for such risks
as companies engaged in a similar business would, in accordance with good
business practice, customarily be insured, all of which insurance is in full
force and effect.
(viii) The Company and each of the Subsidiaries is duly qualified to
transact business as a foreign corporation, bank or business trust, as the case
may be, and is in good standing in each other jurisdiction in which it owns or
leases property or conducts its business so as to require such qualification
except where the failure to so qualify would, individually or in the aggregate,
not have a material adverse effect on the condition (financial or otherwise),
5
earnings, affairs, business, prospects, or results of operations of the Company
and the Subsidiaries on a consolidated basis. All of the issued and outstanding
shares of capital stock or equity securities, as the case may be, of the
Subsidiaries (A) have been duly authorized and are validly issued and (B) are
fully paid and nonassessable except to the extent such shares or interests may
be deemed assessable under applicable state banking laws. Except as disclosed in
the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), the Company owns all of the issued and outstanding
capital stock of the Bank free and clear of any security interest, mortgage,
pledge, lien, encumbrance, restriction upon voting or transfer, preemptive
rights, claim or equity or other defect. The Company owns all of the issued and
outstanding common securities of the Trust free and clear of any security
interest, mortgage, pledge, lien, encumbrance, preemptive rights, claim or
equity or other defect.
(ix) The capital stock of the Company conforms to the description
thereof contained in the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus). The outstanding shares of capital stock
of the Company have been duly authorized and validly issued and are fully paid
and nonassessable and no such shares were issued in violation of the preemptive
or similar rights of any security holder of the Company. No person has any
preemptive or similar right to purchase any shares of capital stock of the
Company. Except in each case as disclosed in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) or
issued or issuable pursuant to compensatory plans or other programs disclosed in
the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), there are no outstanding rights, options or warrants to
acquire any capital stock, equity securities or other ownership interests of the
Company or the Subsidiaries, and there are no outstanding instruments or
securities convertible into or exchangeable for any capital stock, equity
securities or other ownership interests of the Company or the Subsidiaries and
no restrictions upon the voting or transfer of any capital stock of the Company
pursuant to the Company's Articles of Incorporation or bylaws or any agreement
or other instrument to which the Company is a party or by which the Company is
bound. As of the date set forth therein, the Company has an authorized and
outstanding capitalization as set forth in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(x) The Company has all requisite corporate power and authority to
issue, sell and deliver the Shares in accordance with and upon the terms and
conditions set forth in this Agreement, the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus). All corporate action required to be taken by the
Company for the authorization, issuance, sale and delivery of the Shares in
accordance with such terms and conditions has been validly and sufficiently
taken. The Shares, when delivered and paid for in accordance with this
Agreement, the Registration Statement and the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus), will be duly and
validly issued and outstanding, fully paid and nonassessable, will not be issued
in violation of or subject to any preemptive or similar rights, and will conform
to the description thereof in the Registration Statement and the Prospectus (or,
if the Prospectus is not in existence, the most recent Preliminary Prospectus).
None of the Shares, immediately prior to delivery, will be subject to any
security interest, lien, mortgage, pledge, encumbrance, restriction upon voting
or transfer, preemptive rights, claim, equity or other defect.
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(xi) The Company and the Subsidiaries have complied in all material
respects with all federal, state and local statutes, regulations, ordinances and
rules as now in effect and applicable to the ownership and operation of their
properties or the conduct of their businesses (including, without limitation,
their trust and money management operations) as described in and contemplated by
the Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) and as currently being
conducted, except in each case where any such noncompliance would not have a
material adverse effect upon the condition (financial or otherwise), earnings,
affairs, business, prospects, or results of operations of the Company and the
Subsidiaries on a consolidated basis.
(xii) The Company and the Subsidiaries have all permits, easements,
consents, licenses, franchises and other governmental and regulatory
authorizations from all appropriate federal, state, local or other public
authorities ("Permits") as are necessary to own and lease their properties and
conduct their businesses in the manner described in and contemplated by the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) and as currently being
conducted in all material respects except where the failure to possess any such
Permits would not have a material adverse effect upon the condition (financial
or otherwise), earnings, affairs, business, prospects, or results of operations
of the Company and the Subsidiaries on a consolidated basis. All Permits are in
full force and effect and each of the Company and the Subsidiaries are in all
material respects complying therewith, and no event has occurred that allows, or
after notice or lapse of time would allow, revocation or termination thereof or
will result in any other material impairment of the rights of the holder of any
such Permit, subject in each case to such qualification as may be adequately
disclosed in the Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus). Such Permits contain no restrictions that would
materially impair the ability of the Company or the Subsidiaries to conduct
their businesses in the manner consistent with their past practices. Neither the
Company nor the Subsidiaries has received notice or otherwise has knowledge of
any proceeding or action relating to the revocation or modification of any such
Permit.
(xiii) Neither the Company nor any of the Subsidiaries is in breach or
violation of its corporate charter, by-laws or other governing documents in any
material respect. Neither the Company nor any of the Subsidiaries is in
violation, breach or default (with or without notice or lapse of time or both)
in the performance or observance of any term, covenant, agreement, commitment,
obligation, representation, warranty or condition contained in (A) any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease,
franchise, license, Permit or any other agreement or instrument to which it is a
party or by which it or any of its properties may be bound, which breach,
violation or default could have a material adverse effect on the condition
(financial or otherwise), earnings, affairs, business, prospects, or results of
operations of the Company and the Subsidiaries on a consolidated basis, and to
the knowledge of the Company, no other party has asserted that the Company or
any of the Subsidiaries is in such violation, breach or default (provided that
the foregoing shall not apply to defaults by borrowers from the Bank), or (B)
except as disclosed in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), any order, decree, judgment,
rule or regulation of any court, arbitrator, government, or governmental agency
or instrumentality, domestic or foreign, having jurisdiction over the Company or
the Subsidiaries or any of their respective properties the breach, violation or
default of which could have a material adverse
7
effect on the condition (financial or otherwise), earnings, affairs, business,
prospects or results of operations of the Company and the Subsidiaries on a
consolidated basis.
(xiv) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated herein and in the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus) do not and will not conflict with, result in
the creation or imposition of any material lien, claim, charge, encumbrance or
restriction upon any property or assets of the Company or the Subsidiaries or
the Shares pursuant to, constitute a breach or violation of, or constitute a
default under, with or without notice or lapse of time or both, any of the
terms, provisions or conditions of the charter, by-laws or other governing
documents of the Company or the Subsidiaries, any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease, franchise, license, Permit
or any other agreement or instrument to which the Company or the Subsidiaries is
a party or by which any of them or any of their respective properties may be
bound or any order, decree, judgment, rule or regulation of any court,
arbitrator, government, or governmental agency or instrumentality, domestic or
foreign, having jurisdiction over the Company or the Subsidiaries or any of
their respective properties which conflict, creation, imposition, breach,
violation or default would have either singly or in the aggregate a material
adverse effect on the condition (financial or otherwise), earnings, affairs,
business, prospects, or results of operations of the Company and the
Subsidiaries on a consolidated basis. No authorization, approval, consent or
order of or filing, registration or qualification with, any person (including,
without limitation, any court, governmental body or authority) is required in
connection with the transactions contemplated by this Agreement, the
Registration Statement and the Prospectus, except such as have been obtained
under the 1933 Act and such as may be required under state securities laws or
Interpretations or Rules of the National Association of Securities Dealers, Inc.
("NASD") in connection with the purchase and distribution of the Shares by the
Agents.
(xv) The Company has all requisite corporate power and authority to
enter into this Agreement and this Agreement has been duly and validly
authorized, executed and delivered by the Company and constitutes the legal,
valid and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as the enforcement thereof may be limited by
general principles of equity and by bankruptcy or other laws relating to or
affecting creditors' rights generally and except as any indemnification or
contribution provisions thereof may be limited under applicable laws.
(xvi) The Company and the Subsidiaries have good and marketable title
in fee simple to all real property and good title to all personal property owned
by them and material to their business, in each case free and clear of all
security interests, liens, mortgages, pledges, encumbrances, restrictions,
claims, equities and other defects except such as are referred to or disclosed
in the financial statements included in the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus) or such as do not
materially affect the value of such property in the aggregate and do not
materially interfere with the use made or proposed to be made of such property;
and all of the leases material to the operations of the Company and the
Subsidiaries under which the Company or the Subsidiaries hold real or personal
property are valid, existing and enforceable leases and in full force and effect
with such exceptions as are not material and do not materially interfere with
the use made or proposed to be made of such real or
8
personal property, and neither the Company nor any of the Subsidiaries is in
default in any material respect of any of the terms or provisions of any such
leases.
(xvii) Xxxxx, Xxxxxx and Company LLP, who has audited certain of the
consolidated financial statements of the Company and the Subsidiaries including
the notes thereto, included in the Registration Statement and Prospectus, are
independent certified public accountants within the meaning of the Code of
Professional Conduct of the American Institute of Certified Public Accountants
and are independent public accountants with respect to the Company and the
Subsidiaries, as required by the 1933 Act and the 1933 Act Regulations.
(xviii) The consolidated financial statements including the notes
thereto, included in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) with
respect to the Company and the Subsidiaries comply in all material respects with
the 1933 Act and the 1933 Act Regulations and present fairly the consolidated
financial position of the Company and the Subsidiaries as of the dates indicated
and the consolidated statements of operations, cash flows and changes in
stockholders' equity of the Company and the Subsidiaries for the periods
specified and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis. The selected consolidated
financial data concerning the Company and the Subsidiaries included in the
Registration Statement and the Prospectus (or such Preliminary Prospectus)
comply in all material respects with the 1933 Act and the 1933 Act Regulations,
present fairly the information set forth therein, and have been compiled on a
basis consistent with that of the consolidated financial statements of the
Company and the Subsidiaries in the Registration Statement and the Prospectus
(or such Preliminary Prospectus). The other financial, statistical and numerical
information included in the Registration Statement and the Prospectus (or such
Preliminary Prospectus) complies in all material respects with the 1933 Act and
the 1933 Act Regulations, present fairly the information shown therein, and to
the extent applicable have been compiled on a basis consistent with the
consolidated financial statements of the Company and the Subsidiaries included
in the Registration Statement and the Prospectus (or such Preliminary
Prospectus).
(xix) The Company and the Subsidiaries make and keep accurate books
and records reflecting their respective assets and maintain internal accounting
controls which provide reasonable assurance that (i) transactions are executed
with management's authorization and in accordance with policies established by
the boards of directors of the Company and the Bank and by the Administrators of
the Trust; (ii) transactions are recorded as necessary to permit preparation of
the Company's consolidated financial statements and to maintain accountability
for the assets of the Company and the Subsidiaries; (iii) access to the assets
of the Company and the Subsidiaries is permitted only in accordance with
management's authorization; and (iv) the reported accountability of the assets
of the Company and the Subsidiaries is compared with existing assets at
reasonable intervals.
(xx) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), except as otherwise stated
therein:
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(A) neither the Company nor any of the Subsidiaries has sustained any
loss or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree which is material to the
condition (financial or otherwise), earnings, affairs, business, prospects,
or results of operations of the Company and the Subsidiaries on a
consolidated basis;
(B) there has not been any material adverse change in, or any
development which is reasonably likely to have a material adverse effect
on, the condition (financial or otherwise), earnings, affairs, business,
prospects, or results of operations of the Company and the Subsidiaries on
a consolidated basis, whether or not arising in the ordinary course of
business;
(C) neither the Company nor any of the Subsidiaries has incurred any
liabilities or obligations, direct or contingent, or entered into any
material transactions, other than in the ordinary course of business, which
is material to the condition (financial or otherwise), earnings, affairs,
business, prospects, or results of operations of the Company and the
Subsidiaries on a consolidated basis;
(D) the Company has not declared or paid any cash dividend, and
neither the Company nor the Subsidiaries has become delinquent in, or
elected to defer, the payment of principal or interest on any outstanding
borrowings;
(E) there has not been any change in the capital stock, equity
securities, long-term debt, obligations under capital leases or, other than
in the ordinary course of business, short-term borrowings of the Company or
the Subsidiaries; and
(F) there has not occurred any other event and there has arisen no set
of circumstances required by the 1933 Act or the 1933 Act Regulations to be
disclosed in the Registration Statement or Prospectus which has not been so
set forth in the Registration Statement or such Prospectus as fairly and
accurately summarized therein.
(xxi) Except as set forth in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), no charge, investigation, action, suit or proceeding is
pending or, to the knowledge of the Company, threatened, against or affecting
the Company or the Subsidiaries or any of their respective properties before or
by any court or any regulatory, administrative or governmental official,
commission, board, agency or other authority or body, or any arbitrator, wherein
an unfavorable decision, ruling or finding could reasonably be expected to have
a material adverse effect on the consummation of this Agreement or the
transactions contemplated herein or the condition (financial or otherwise),
earnings, affairs, business, prospects, or results of operations of the Company
and the Subsidiaries on a consolidated basis or which is required to be
disclosed in the Registration Statement or the Prospectus (or such Preliminary
Prospectus) and is not so disclosed.
(xxii) There are no contracts or other documents required to be filed
as exhibits to the Registration Statement by the 1933 Act or the 1933 Act
Regulations that have not been
10
filed as exhibits or incorporated by reference into the Registration Statement,
or that are required to be summarized in the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus) that are not so
summarized.
(xxiii) The Company has not taken, directly or indirectly, any action
designed to result in or which has constituted or which might reasonably be
expected to cause or result in stabilization or manipulation of the price of any
security of the Company in connection with the sale or resale of the Shares in
violation of the Commission's rules and regulations, including, but not limited
to, Regulation M, and the Company is not aware of any such action taken or to be
taken by any affiliate of the Company.
(xxiv) The Company and the Subsidiaries own, or possess adequate
rights to use, all patents, copyrights, trademarks, service marks, trade names
and other rights necessary to conduct the businesses now conducted by them in
all material respects or as described in the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus) and neither the
Company nor any of the Subsidiaries has received any notice of infringement or
conflict with asserted rights of others with respect to any patents, copyrights,
trademarks, service marks, trade names or other rights which, individually or in
the aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a material adverse effect on the condition (financial or otherwise),
earnings, affairs, business, prospects, or results of operations of the Company
and the Subsidiaries on a consolidated basis, and the Company does not know of
any basis for any such infringement or conflict.
(xxv) Except as disclosed in the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus), no labor dispute
involving the Company or the Subsidiaries exists or, to the knowledge of the
Company, is imminent which might be expected to have a material adverse effect
on the condition (financial or otherwise), earnings, affairs, business,
prospects, or results of operations of the Company and the Subsidiaries on a
consolidated basis or which is required to be disclosed in the Prospectus (or,
if the Prospectus is not in existence, the most recent Preliminary Prospectus).
Neither the Company nor any of the Subsidiaries has received notice of any
existing or threatened labor dispute by the employees of any of its principal
suppliers, customers or contractors which might be expected to have a material
adverse effect on the condition (financial or otherwise), earnings, affairs,
business, prospects, or results of operations of the Company and the
Subsidiaries on a consolidated basis.
(xxvi) The Company and the Subsidiaries have timely and properly
prepared and filed all necessary federal, state, local and foreign tax returns
which are required to be filed and have paid all taxes shown as due thereon and
have paid all other taxes and assessments to the extent that the same shall have
become due, except such as are being contested in good faith or where the
failure to so timely and properly prepare and file would not have a material
adverse effect on the condition (financial or otherwise), earnings, affairs,
business, prospects or results of operations of the Company and the Subsidiaries
on a consolidated basis. The Company has no knowledge of any tax deficiency
which has been or might be assessed against the Company or the Subsidiaries
which, if the subject of an unfavorable decision, ruling or finding, would have
a material adverse effect on the condition (financial or otherwise), earnings,
affairs, business, prospects or results of operations of the Company and the
Subsidiaries on a consolidated basis.
11
(xxvii) Each of the material contracts, agreements and instruments
listed, described, or referred to in the Registration Statement or the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) and each contract, agreement and instrument filed as an
exhibit to the Registration Statement is in full force and effect and is the
legal, valid and binding agreement of the Company or the Subsidiaries,
enforceable against the Company or the Subsidiary, as the case may be, in
accordance with its terms, except as the enforcement thereof may be limited by
general principles of equity, regardless of whether considered in a proceeding
at law or in equity, and by/or subject to bankruptcy, insolvency, reorganization
or other similar laws relating to or affecting the rights of creditors' rights
generally and, in the case of the Bank, by the provisions of the Federal Deposit
Insurance Act ("FDIA") affecting the rights of creditors of depository
institutions the deposits of which are insured by the FDIC.
(xxviii) No relationship, direct or indirect, exists between or among
the Company or the Subsidiaries, on the one hand, and the directors, officers,
trustees, shareholders, customers or suppliers of the Company or the
Subsidiaries, on the other hand, which is required to be described in the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) that is not adequately
described therein.
(xxix) No person has the right to request or require the Company or
the Subsidiaries to register any securities for offering and sale under the 1933
Act by reason of the filing of the Registration Statement with the Commission or
the issuance and sale of the Shares, except as disclosed in the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus).
(xxx) The Common Stock of the Company has been approved for quotation
on The Nasdaq National Market System, and the Shares, when issued, will be
eligible for trading thereon.
(xxxi) Except as described in or contemplated by the Prospectus (or,
if the Prospectus is not in existence, the most recent Preliminary Prospectus),
there are no material contractual encumbrances or restrictions or material legal
restrictions required to be described therein, on the ability of the
Subsidiaries (A) to pay dividends or make any other distributions on its capital
stock or to pay any indebtedness owed to the Company, (B) to make any loans or
advances to, or investments in, the Company (except as may be restricted by law
or regulation in the context of transactions between or among affiliated
parties) or (C) to transfer any of its property or assets to the Company.
(xxxii) The Company is not an "investment company," or an entity
"controlled" by an "investment company" or an "investment advisor" within the
meaning of the Investment Company Act of 1940, as amended (the "Investment
Company Act").
(xxxiii) The Company has not distributed and will not distribute prior
to the Closing Date any prospectus in connection with the offering of the
Shares, other than a Preliminary Prospectus, the Prospectus, the Registration
Statement and the other materials permitted by the 1933 Act and the 1933 Act
Regulations and reviewed by or on behalf of the Agents.
12
(xxxiv) The activities of the Company and the Subsidiaries are
permitted under applicable federal and state banking laws and regulations. The
Company and the Subsidiaries have all necessary approvals, including the
approval of the Indiana Department of Financial Institutions ("IDFI"), the FDIC
and the Board of Governors of the Federal Reserve System ("FRB"), as applicable.
Neither the Company nor the Subsidiaries is a party or subject to any agreement
or memorandum with, or directive or other order issued by, the FRB, the IDFI,
the FDIC or other regulatory authority having jurisdiction over it (each, a
"Regulator," and collectively, the "Regulators"), which imposes any restrictions
or requirements not generally applicable to entities of the same type as the
Company and the Subsidiaries. Neither the Company nor the Subsidiaries is
subject to any directive from any Regulator to make any material change in the
method of conducting their respective businesses, and no such directive is
pending or, to the best knowledge of the Company, threatened by such Regulators.
(xxxv) The Bank has properly administered all accounts for which it
acts as a fiduciary, including but not limited to accounts for which it serves
as a trustee, agent, custodian, personal agent, guardian, conservator or
investment advisor, in accordance with all material terms of the governing
documents and applicable state and federal law and regulation and common law,
except where the failure to be in compliance would not have a material adverse
effect upon the condition (financial or otherwise), earnings, affairs, business,
prospects or results of operations of the Company and the Bank on a consolidated
basis. Neither the Bank nor any of its directors, officers or employees, has
committed any material breach of trust with respect to any such fiduciary
account, and the accountings for each such fiduciary account are true and
correct in all material respects and accurately reflect the assets of such
fiduciary account in all material respects.
(xxxvi) The conditions for use of Form SB-2, as set forth in the
General Instructions thereto, have been satisfied.
(xxxvii) Neither the Company nor any Subsidiary has any liability
under any "pension plan," as defined in the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), except for any employer contribution for the
current plan year that has accrued to date. The employee benefit plans (as
defined in ERISA), including employee welfare benefit plans (as defined in
ERISA), of the Company and each of the Subsidiaries, if any (the "Employee
Plans"), have been operated in material compliance with the applicable
provisions of ERISA, the Internal Revenue Code of 1986, as amended (the "Code"),
all regulations, rulings and announcements promulgated or issued thereunder and
all other applicable governmental laws and regulations (except to the extent
such noncompliance would not, in the aggregate, have a material adverse effect
upon the condition (financial or otherwise), earnings, affairs, business,
prospects, or results of operations of the Company and the Subsidiaries on a
consolidated basis). No reportable event under Section 4043(c) of ERISA has
occurred with respect to any Employee Plan of the Company or the Subsidiaries
for which the reporting requirements have not been waived by the Pension Benefit
Guaranty Corporation. No prohibited transaction under Section 406 of ERISA, for
which an exemption does not apply, has occurred with respect to any Employee
Plan of the Company or any of the Subsidiaries. There are no pending or, to the
knowledge of the Company, threatened, claims by or on behalf of any Employee
Plan, by any employee or beneficiary covered under any such Employee Plan or by
any governmental authority or otherwise involving such Employee Plans or any of
their respective fiduciaries
13
(other than for routine claims for benefits). All Employee Plans that are group
health plans have been operated in material compliance with the group health
plan continuation coverage requirements of Section 4980B of the Code.
(xxxviii) Other than as contemplated by this Agreement and as
disclosed in the Registration Statement, the Company has not incurred any
liability for any finder's or broker's fee or agent's commission in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated herein.
(xxxix) No report or application filed by the Company or the
Subsidiaries with any Regulator, as of the date it was filed or amended, failed
to comply in all material respects with the applicable requirements of such
Regulator.
(xl) None of the Company, the Subsidiaries or, to the best knowledge
of the Company, any other person associated with or acting on behalf of the
Company or the Subsidiaries, including, without limitation, any director,
officer, agent, or employee of any of the Subsidiaries or the Company has,
directly or indirectly, while acting on behalf of such Company or Subsidiary (i)
used any corporate funds for unlawful contributions, gifts, entertainment, or
other unlawful expenses relating to political activity; (ii) made any unlawful
contribution to any candidate for foreign or domestic office, or to any foreign
or domestic government officials or employees or other persons charged with
similar public or quasi-public duties, other than payments required or permitted
by the laws of the United States or any jurisdiction thereof or to foreign or
domestic political parties or campaigns from corporate funds, or failed to
disclose fully any contribution in violation of law; (iii) violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended; or (iv) made
any other payment of funds of the Company or a Subsidiary or retained any funds
which constitute a material violation of any law, rule or regulation or which
was or is required to be disclosed in the Registration Statement or the
Prospectus pursuant to the requirements of the 1933 Act or the 1933 Act
Regulations.
(xli) Except as described in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), the Company knows of no factual basis for any action,
suit or other proceeding involving the Company nor the Subsidiaries or any of
their material assets for any failure of the Company or any of the Subsidiaries,
or any predecessor thereof, to comply with any requirements of federal, state or
local regulation relating to air, water, solid waste management, hazardous or
toxic substances, or the protection of health or the environment; except where
such action, suit or other proceeding would not have a material adverse effect
on the condition (financial or otherwise), earnings, affairs, business,
prospects, or results of operations of the Company and the Subsidiaries on a
consolidated basis. Except as described in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) or as would not have a material adverse effect on the
condition (financial or otherwise), earnings, affairs, business, prospects, or
results of operations of the Company and the Subsidiaries on a consolidated
basis, none of the property owned or leased by the Company, any of the
Subsidiaries is known by the Company to have a material spill, discharge, leak,
emission, ejection, escape, dumping, release of any kind or contamination of any
waste or hazardous substances, and to the knowledge of the Company neither the
Company nor any of the Subsidiaries may be deemed an "owner or operator" of a
"facility" or "vessel" which owns, possesses, transports, generates or disposes
of a
14
"hazardous substance" as those terms are defined inss.9601 of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.ss.9601
et seq.
(xlii) Neither the Company nor any Subsidiary has any agreement or
understanding with any person (A) concerning the future acquisition by the
Company or the Bank of a controlling interest in either entity or (B) concerning
the future acquisition by any person of a controlling interest in the Company or
any Subsidiary, in either case that is required by the 1933 Act or the 1933 Act
Regulations to be disclosed by the Company that is not disclosed in the
Prospectus (or if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(xliii) Any certificate signed by any officer of the Company and
delivered to either of the Agents or to counsel for the Agents shall be deemed a
representation and warranty by the Company as to each as to the matters covered
thereby.
Section 2. Appointment of the Agents; Fairness Opinion; Sale and Delivery of the
Shares; Closing.
(a) On the basis of the representations and warranties herein contained and
subject to the terms and conditions herein set forth, the Company hereby
appoints Stifel as its Lead Marketing Agent and Xxxxxxxxxx as its Co-Marketing
Agent to assist the Company with respect to the Offerings on a "best efforts"
basis. On the basis of the representations and warranties herein contained and
subject to the terms and conditions herein set forth, the Agents accept such
appointments and agree to provide the services to the Company as to the matters
described below; provided, however, that the Agents shall not be obligated to
sell any minimum number of Shares to any particular category of purchaser or in
the aggregate or take any action which is inconsistent with any applicable laws,
regulations, decisions or orders. The services to be rendered by the Agents
pursuant to these appointments include the following: (i) to consult with and
advise the Company regarding the structure of the Offerings; (ii) to use their
"best efforts" to solicit the exercise of Rights in the Rights Offering and the
subscription of Shares in the Limited Public Offering; (iii) to organize and
manage the distribution of the Prospectuses as well as to identify Potential
Investors; (iv) to establish and staff a toll-free call-in center, available
during regular business hours, to provide subscription assistance to Record Date
Holders and Potential Investors; and (v) to provide such other general advice
and assistance as may be requested by the Company and agreed to by Agents to
promote the successful completion of the Offerings.
(b) Stifel shall also provide financial advice to the Company and, in
connection therewith, shall issue an opinion (the "Opinion") to the board of
directors of the Company as to whether the Subscription Price of the Shares in
the Rights Offering is fair, from a financial point of view, to the existing
stockholders of the Company. Stifel has provided its Opinion to the board of
directors of the Company as of the date hereof. Stifel shall render its Opinion
in accordance with its customary practices, subject to customary assumptions and
qualifications as applicable.
(c) The Company agrees to issue or have issued the Shares sold and to
release for delivery certificates for such Shares at the Closing Time against
payment therefor by release of funds from the Subscription Agent. The closing
shall be held at the offices of Jenkens &
15
Xxxxxxxxx, a Professional Corporation, Dallas, Texas, at 10:00 a.m., Eastern
Time, or at such other place and time as shall be agreed upon by the parties
hereto, on a business day to be agreed upon by the parties hereto. The Company
shall notify the Agents by telephone, confirmed in writing, promptly after the
Rights Offering Expiration Date and the Limited Offering Expiration Dates, as
applicable, of (i) the amount of funds received upon the exercise of Rights in
the Basic Subscription Privilege and the Oversubscription Privilege and the
number of Shares to be issued to Record Date Holders; (ii) the amount of funds
received from the subscription of Shares by the Identified Potential Investors
(as defined herein) and the number of Shares to be issued to Identified
Potential Investors, if necessary; and (iii) the amount of funds received from
the subscription of Shares by Potential Investors who are not otherwise
Identified Potential Investors and the number of Shares to be issued to such
Potential Investors, if necessary. Certificates for the Shares shall be
delivered directly to the purchasers thereof in accordance with their
directions. The date upon which the Company shall release for delivery the
Shares purchased pursuant to the Offerings, in accordance with the terms hereof,
is herein called the "Closing Date." The hour on the Closing Date at which the
Company shall release for delivery all of the Shares in accordance with the
terms hereof is called the "Closing Time."
(d) The Closing Date shall occur promptly after the latter to occur of the
Rights Offering Expiration Date or the Limited Offering Expiration Date.
(e) Appropriate arrangements for placing the funds received from
subscriptions for the Shares or other offers to purchase Shares were made prior
to the commencement of the Rights Offering, with provision for refund to the
purchasers as set forth in Section 9 hereof, or for delivery to the Company if
Shares are sold. Each subscriber will pay any stock issue and transfer taxes
that may be payable with respect to the sale of the Shares.
(f) In addition to reimbursement of the expenses specified in Section 4
hereof, the Company will pay the following compensation for the services of the
Agents hereunder:
(i) Stifel shall receive a cash fee equal to $100,000 payable upon
delivery of the Opinion;
(ii) the Agents shall receive a fee equal to 1.80% of the aggregate
purchase price of the Shares sold (A) in the Rights Offering pursuant to
the exercise of the Rights (whether by Basic Subscription Privilege or
Oversubscription Privilege) by Record Date Holders, and (B) to any existing
shareholders of the Company and to certain other Potential Investors
previously identified in writing by the Company and Stifel (the "Identified
Potential Investors") in the Limited Public Offering; and
(iii) the Agents shall receive a fee equal to 6.50% of the aggregate
purchase price of the Shares sold to Potential Investors, who are not
Identified Potential Investors, in the Limited Public Offering.
All fees payable to the Agents hereunder shall be payable in immediately
available funds. The amount due to Stifel pursuant to Section 2(f)(i) shall be
due upon delivery of the Opinion. The amount due pursuant to Section 2(f)(ii)
and (iii) shall be due at the Closing Time.
16
Section 3. Covenants of the Company.
The Company covenants with the Agents as follows:
(a) If the Registration Statement has become or becomes effective pursuant
to Rule 430A and information has been omitted therefrom in reliance on Rule
430A, then the Company will prepare and file in accordance with Rule 430A and
Rule 424(b) copies of the Prospectus or, if required by Rule 430A, a
post-effective amendment to the Registration Statement (including the
Prospectus) containing all information so omitted and will provide evidence
satisfactory to the Agents of such timely filing.
(b) The Company shall notify the Agents immediately, and, if requested by
the Agents, shall promptly confirm such notice in writing:
(i) when the Registration Statement, or any post-effective amendment
to the Registration Statement, has become effective, or when the Prospectus or
any supplement to the Prospectus or any amended Prospectus has been filed;
(ii) of the receipt of any comments or requests from the Commission
relating in any way to the Registration Statement, any Preliminary Prospectus or
the Prospectus;
(iii) of any request of the Commission to amend or supplement the
Registration Statement, any Preliminary Prospectus or the Prospectus or for
additional information; and
(iv) of the issuance by the Commission or any state or other
regulatory body of any stop order or other order suspending the effectiveness of
the Registration Statement, preventing or suspending the use of any Preliminary
Prospectus or the Prospectus, or suspending the qualification of any of the
Shares for offering or sale in any jurisdiction or the institution or threat of
institution of any proceedings for any of such purposes. The Company shall use
its best efforts to prevent the issuance of any such stop order or of any other
such order and if any such order is issued, to cause such order to be withdrawn
or lifted as soon as possible.
(c) The Company shall furnish to the Agents, from time to time without
charge, as soon as available, as many copies as the Agents may reasonably
request of (i) the Registration Statement as originally filed and of all
amendments thereto, in executed form, including exhibits, whether filed before
or after the Effective Date, (ii) all exhibits and documents incorporated
therein or filed therewith, (iii) all consents and certificates of experts in
executed form, (iv) the each Preliminary Prospectus and all amendments and
supplements thereto, and (v) the Prospectus, and all amendments and supplements
thereto.
(d) During the time when a Prospectus is required to be delivered under the
1933 Act, the Company shall comply to the best of its ability with the 1933 Act
and the 1933 Act Regulations and the 1934 Act and the 1934 Act Regulations so as
to permit the completion of the distribution of the Shares as contemplated
herein and in the Prospectus. The Company shall not file any amendment to the
Registration Statement and shall not make any amendment or supplement to the
most recent Preliminary Prospectus or to the Prospectus unless the Agents shall
previously have been advised in writing and provided a copy a reasonable time
prior to the
17
proposed filings thereof and the Agents or counsel for the Agents shall not have
objected to such proposed filing. If it is necessary, in the Company's
reasonable opinion or in the reasonable opinion of the Company's counsel, to
amend or supplement the Registration Statement or the Prospectus in connection
with the distribution of the Shares, the Company shall forthwith amend or
supplement the Registration Statement or the Prospectus, as the case may be, by
preparing and filing with the Commission (provided the Agents or counsel for the
Agent do not reasonably object), and furnishing to the Agents such number of
copies as you may reasonably request of an amendment or amendments of, or a
supplement or supplements to, the Registration Statement or the Prospectus, as
the case may be (in form and substance reasonably satisfactory to the Agents and
counsel for the Agents). If any event shall occur as a result of which it is
necessary to amend or supplement the Prospectus to correct an untrue statement
of a material fact or to include a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or if for any reason it is necessary at any time to amend or
supplement the Prospectus to comply with the 1933 Act and the 1933 Act
Regulations, the Company shall, subject to the second sentence of this
subsection (d), forthwith at their cost and expense amend or supplement the
Prospectus by preparing and filing with the Commission, and furnishing to you,
such number of copies as you may reasonably request of an amendment or
amendments of, or a supplement or supplements to, the Prospectus (in form and
substance satisfactory to you and counsel for the Agents) so that, as so amended
or supplemented, the Prospectus shall not contain an untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(e) The Company will use its best efforts, in cooperation with the Agents
and counsel for the Agents, in order to qualify the Shares for offering and sale
under the securities or blue sky laws, if required, of such jurisdictions as may
be reasonably necessary, in the mutually agreed upon opinion of the Company and
the Agents, to conduct the Offering and shall continue such qualifications in
effect so long as may be advisable for distribution of the Shares; provided,
however, that the Company shall not be required to qualify to do business as a
foreign corporation or to file a general consent to service of process in any
jurisdiction. The Company shall file such statements and reports as may be
required by the laws of each jurisdiction in which the Shares have been
qualified as above. The Company will notify the Agents immediately of, and
confirm in writing, the suspension of qualification of the Shares or threat
thereof in any jurisdiction.
(f) The Company shall make generally available to their security holders in
the manner contemplated by Rule 158 of the 1933 Act Regulations and furnish to
you as soon as practicable, but in any event not later than 16 months after the
Effective Date, a consolidated earnings statement of the Company in reasonable
detail, covering a period of at least 12 consecutive months beginning after the
effective date of the Registration Statement, conforming with the requirements
of Section 11(a) of the 1933 Act and Rule 158.
(g) The Company shall use the net proceeds from the sale of the Shares
hereunder in the manner specified in the Prospectus under the caption "Use of
Proceeds."
(h) For five years from the Effective Date, the Company shall furnish to
the Agents copies of all reports and communications (financial or otherwise)
furnished by the Company to
18
the holders of the Common Stock as a class, copies of all reports and financial
statements filed with or furnished to the Commission (other than portions for
which confidential treatment has been obtained from the Commission) or with any
national securities exchange or The Nasdaq National Market System or other
self-regulatory organization and such other documents, reports and information
filed by the Company or any of the Subsidiaries with any governmental agency
concerning the business and financial condition of the Company or the
Subsidiaries as any of the Agents may reasonably request, other than such
documents, reports and information for which the Company or any of the
Subsidiaries has obtained confidential treatment or has the legal obligation not
to reveal to the Agents.
(i) For a period of 180 days from the Effective Date, the Company shall
not, directly or indirectly, offer for sale, sell or agree to sell or otherwise
dispose of any shares of Common Stock (other than pursuant to this Agreement) or
any securities of the Company that are substantially similar to the Common
Stock, or securities convertible into, exercisable or exchangeable for, or are
the voting equivalent of, the Common Stock or that represent the right to
receive any such beneficial interest or substantially similar securities,
without the prior written consent of Stifel other than the issuance of options
pursuant to existing employee stock option plans and the issuance of Common
Stock upon the exercise of options currently outstanding under such plans.
(j) The Company either has caused to be delivered to Stifel or will cause
to be delivered to Stifel prior to the Effective Date a letter from each of the
Company's directors and executive officers stating that such person agrees that
he or she will not, without Stifel's prior written consent, directly or
indirectly, offer for sale, sell, contract to sell or otherwise dispose of any
shares of Common Stock or rights to purchase Common Stock (except for the
exercise of stock options previously issued), for a period of 180 days after the
Effective Date (the "Lock-Up Agreement"). The Company shall not recognize any
transfers of Common Stock made in violation of such Lock-Up Agreement.
(k) The Company shall use its best efforts to obtain any necessary approval
for the inclusion of the Shares on The Nasdaq National Market System, or in lieu
thereof on a national securities exchange, and shall use its best efforts to
cause the Common Stock to remain so quoted for at least three years from the
Effective Date or for such shorter period as may be specified in a written
consent of Stifel and will file with The Nasdaq National Market System all
documents and notices required by The Nasdaq National Market System of companies
that have securities that are traded in the over-the-counter market and
quotations for which are reported by The Nasdaq National Market System.
(l) The Company will promptly provide you with copies of all correspondence
to the Commission from the Company or from the Commission to the Company in
connection with (i) the registration of the Shares under the 1933 Act or (ii),
from the date of this Agreement and through the Closing Date, the Company,
generally.
(m) Subsequent to the date of this Agreement and through the Closing Date
neither the Company nor any of the Subsidiaries shall, except in the ordinary
course of business, take any action (or refrain from taking any action) which
will result in the Company or the Subsidiaries incurring any material liability
or obligation, direct or contingent, or enter into any
19
material transaction or take or refrain from taking any action which will cause
or result in any material adverse change in the financial position, capital
stock, or any material increase in long- term debt, obligations under capital
leases or short-term borrowings of the Company and the Subsidiaries on a
consolidated basis.
(n) The Company shall not, for a period of 180 days after the date hereof,
without the prior written consent of Stifel, purchase, redeem or call for
redemption, or prepay or give notice of prepayment (or announce any redemption
or call for redemption, or any repayment or notice of prepayment) of the
Company's securities.
(o) The Company shall not take, directly or indirectly, any action designed
to result in or which constitutes or which might reasonably be expected to (i)
cause or result in stabilization or manipulation of the price of any security of
the Company in connection with the sale or resale of the Shares or (ii)
otherwise violate the Commission's Regulation M, and the Company is not aware of
any such action taken or to be taken by any affiliate of the Company.
(p) Prior to the Closing Time, the Company will not issue any press release
or other communication directly or indirectly or hold any press conference with
respect to the Company, the Subsidiaries or the offering of the Shares without
the prior written consent of Stifel.
(q) The Company will establish appropriate procedures to ensure that, prior
to the issuance of the Shares, subscription funds are held in a separate escrow
account and not in the Company's general funds. The Company may appoint one or
more subscription agents and/or escrow agents, who are acceptable to the Agents,
to assist the Company in connection with the receipt and escrow of subscription
funds.
(r) The Company 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 National Association of Securities Dealers, Inc.'s "Interpretation
Relating to Free-Riding and Withholding" in connection with the sale of the
Shares.
(s) Other than the Prospectus or as permitted by applicable law, the
Company will not distribute any prospectus or other offering material in
connection with the offer and sale of the Shares and will not publish any
writing which constitutes an offer or prospectus.
(t) The Company will use all reasonable efforts to comply with such
requirements as may be necessary for the Agents or other brokerage firms to make
an active market for the Common Stock.
(u) The Company will cause to be maintained records of all funds submitted
to the Subscription Agent, in connection with the Offerings, to enable the
Company to make appropriate refunds of such funds in the event that such refunds
are required to be made in accordance with the offering as described in the
Prospectus.
(v) The Company will use its best efforts to consummate the Offering as
contemplated by this Agreement.
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Section 4. Payment of Expenses.
Whether or not this Agreement is terminated or the sale of any of the
Shares is consummated, the Company covenants and agrees that it will pay or
cause to be paid (directly or by reimbursement) all costs and expenses incident
to the performance of its obligations under this Agreement, including:
(a) the preparation, printing, filing, delivery and shipping of the
initial registration statement, each Preliminary Prospectus, the Registration
Statement and the Prospectus and any amendments or supplements thereto, and the
printing, delivery and shipping of this Agreement and any other documents
(including, without limitation, questionnaires, powers of attorney, and
subscription agreements);
(b) all fees, expenses and disbursements of the Company's counsel and
accountants;
(c) all fees and expenses incurred in connection with the qualification of
the Shares under the securities or blue sky laws of such jurisdictions as
mutually agreed to by the Agents and the Company, including all filing fees, if
any, and fees and disbursements of the Company's and the Agents' counsel in
connection therewith, including, without limitation, in connection with the
preparation of the Preliminary and Final Blue Sky Memoranda and any legal
investment surveys and any supplements thereto;
(d) all fees and expenses incurred in connection with filings made with the
NASD;
(e) any applicable fees and other expenses incurred in connection with the
inclusion of the Shares in The Nasdaq National Market System;
(f) the cost of furnishing the Agents and its legal counsel copies of the
initial registration statements, any Preliminary Prospectus, the Registration
Statement and the Prospectus and all amendments or supplements thereto;
(g) the costs and charges of any transfer agent or registrar and the fees
and disbursements of counsel for any transfer agent or registrar;
(h) all costs and expenses (including stock transfer taxes) incurred in
connection with the printing, issuance and delivery of the Shares;
(i) all other costs and expenses incident to the performance of the
obligations of the Company hereunder that are not otherwise specifically
provided for in this Section 4.
In addition, whether or not this Agreement is terminated or the sale of any
of the Shares is consummated, the Company will reimburse the Agents, upon
request, for their reasonable out of pocket expenses, including reasonable
travel expenses, outside computer charges and fees and expenses of legal counsel
in connection with its activities hereunder, not to exceed $100,000 without the
consent of the Company. This expense reimbursement will cover all work done by
the Agents or their counsel in connection with any discussion of the offering of
the Shares or the contents of the Registration Statement, any investigation of
the Company and the Subsidiaries or any preparation for the marketing, issuance,
purchase, sale or delivery of the Shares. This
21
expense reimbursement will not be reduced by any amounts paid by the Company to
Stifel or Stifel's legal counsel prior to the date of this Agreement in
reimbursement of legal fees.
Section 5. Conditions of the Agents' Obligations.
The Company and the Agents agree that the issuance and the sale of the
Shares and all obligations of the Agents hereunder are subject to (i) the
accuracy of the representations and warranties of the Company herein contained
as of the date hereof and as of the Closing Date, (ii) the accuracy of the
written statements of officers and directors of the Company made pursuant to the
provisions hereof, (iii) the performance by the Company of its obligations
hereunder, and (iv) the following further conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, no order suspending the sale of the
Shares in any jurisdiction shall have been issued, and no order, directive,
request or other correspondence has been received by the Company or the Bank
from the FRB, the IDFI or the FDIC which could have the effect of delaying or
canceling the Offering.
(b) At the Closing Time, the Agents shall have received:
(i) The favorable opinion, dated as of Closing Date, of Xxxxx &
Xxxxxxx, counsel for the Company and the Bank, in form and substance
satisfactory to counsel for the Agents, to the effect that:
(A) The Company has been duly incorporated and is validly
existing under the laws of the State of Indiana, and is duly
registered as a financial holding company under the BHC Act and the
GLB Act. Each of the Subsidiaries is validly existing under the laws
of its jurisdiction of incorporation or organization. Each of the
Company and the Subsidiaries has full corporate and other power and
authority to own or lease its properties and to conduct its business
as such business is described in the Prospectus. All outstanding
shares of capital stock of the Bank have been duly authorized and
validly issued and are fully paid and nonassessable except to the
extent such shares may be deemed assessable under applicable state
banking laws, and, to the best of such counsel's knowledge after due
inquiry, except as disclosed in the Prospectus, there are no
outstanding rights, options or warrants to purchase any such shares or
securities convertible into or exchangeable for any such shares. All
outstanding securities of the Trust have been duly authorized and
validly issued and are fully paid and nonassessable, and, to the best
of such counsel's knowledge after due inquiry, except as disclosed in
the Prospectus, there are no outstanding rights, options or warrants
to purchase any such shares or securities convertible into or
exchangeable for any such securities.
(B) The capital stock of the Company conforms to the description
thereof contained in the Prospectus in all material respects. To the
best of such counsel's knowledge, the equity capitalization of the
Company as of March 31,
22
2002 is as set forth under the caption "Capitalization" in the Prospectus, and
the outstanding capital stock of the Company has been duly authorized and
validly issued, and is fully paid and nonassessable and is not in violation of
or subject to any other rights to subscribe for or purchase any securities. The
form of certificates to evidence the Shares has been approved by the Company and
is in due and proper form and complies with all applicable requirements. To the
best of such counsel's knowledge, there are no outstanding rights, options or
warrants to purchase, no other outstanding securities convertible into or
exchangeable for, and no commitments, existing approved plans or arrangements to
issue, any shares of capital stock of the Company except as described in or
contemplated by the Prospectus.
(C) All necessary corporate actions required to be taken by the
Company for the authorization, issuance, sale and delivery of the
Shares in accordance with the terms and conditions of the Offerings as
set forth in the Prospectus have been duly and validly taken. The
Shares have been duly and validly authorized, and when issued and
delivered by the Company against payment of the consideration therefor
in the manner described in the Prospectus, the Shares will be fully
paid and nonassessable. The Common Stock of the Company has been
approved for quotation on The Nasdaq National Market System, and no
further action is required to render the Shares eligible for trading
therein upon issuance. There are no preemptive or other rights to
subscribe for or to purchase, and other than as disclosed in the
Prospectus no restrictions upon the voting or transfer of, any shares
of capital stock or equity securities of the Company or the
Subsidiaries pursuant to the corporate charter, by-laws or other
governing documents of the Company or the Subsidiaries, or, to the
best of such counsel's knowledge after due inquiry, any agreement or
other instrument to which either Company or any of the Subsidiaries is
a party or by which either Company or any of the Subsidiaries may be
bound.
(D) The Company has all requisite corporate power to enter into
and perform its obligations under this Agreement, and this Agreement
has been duly and validly authorized, executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms,
except as the enforcement hereof or thereof may be limited by general
principles of equity, regardless of whether considered in a proceeding
at law or in equity, and by bankruptcy or other laws relating to or
affecting creditors rights generally and except as the indemnification
and contribution provisions hereof may be limited under applicable
laws and certain remedies may not be available in the case of a
non-material breach.
(E) To the best of such counsel's knowledge after due inquiry,
neither the Company nor any of the Subsidiaries is in breach or
violation of, or default under, with or without notice or lapse of
time or both, its corporate charter, by- laws or governing documents
to the extent, in each case, that any violation, conflict or default
would reasonably be expected to have a material adverse effect on the
Company and the Subsidiaries taken as a whole. The execution, delivery
23
and performance by the Company of this Agreement and the consummation
of the transactions contemplated by this Agreement, (A) do not violate
or conflict with their respective governing documents, and (B) to the
best of such counsel's knowledge after due inquiry, do not conflict
with, or constitute a material default or result in the imposition of
any material lien, charge, encumbrance or restriction upon any
property or assets of the Company or the Subsidiaries, or constitute a
material breach or violation of, or constitute a material default
under, with or without notice or lapse of time or both, any material
contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease, or other agreement, to which the Company or
any Subsidiary is a party or by which any of them or any of their
respective properties may be bound, or, to the best of such counsel's
knowledge after due inquiry, any order, decree, judgment, rule or
regulation of any court, arbitrator, government, or governmental
agency or instrumentality, domestic or foreign, having jurisdiction
over the Company or the Subsidiaries or any of their respective
properties, to the extent, in each case, that any such violation,
conflict, default or lien would reasonably be expected to have a
material adverse effect on the Company and the Subsidiaries on a
consolidated basis.
(F) To the best of such counsel's knowledge after due inquiry,
holders of securities of the Company either do not have any right
that, if exercised, would require the Company to cause such securities
to be included in the Registration Statement or have waived such
right. To the best of such counsel's knowledge after due inquiry,
neither the Company nor any of the Subsidiaries is a party to any
agreement or other instrument which grants rights for or relating to
the registration of any securities of the Company.
(G) Except as set forth in the Registration Statement and the
Prospectus, to the best of such counsel's knowledge after due inquiry,
(i) no action, suit or proceeding at law or in equity is pending or
threatened in writing to which the Company or the Subsidiaries is or
is threatened to be made a party, and (ii) no action, suit or
proceeding is pending or threatened in writing against or affecting
the Company or the Subsidiaries or any of their properties, before or
by any court or governmental official, commission, board or other
administrative agency, authority or body, or any arbitrator, wherein
an unfavorable decision, ruling or finding could reasonably be
expected to have a material adverse effect on the consummation of the
Offerings or the issuance and sale of the Shares as contemplated
herein or the financial condition, earnings, affairs, business,
prospects, or results of operations of the Company and the
Subsidiaries on a consolidated basis or which is required to be
disclosed in the Registration Statement or the Prospectus and is not
so disclosed.
(H) No authorization, approval, consent or order of or filing,
registration or qualification with, any person, court, governmental
body or authority is required in connection with the transactions
contemplated by this Agreement, the Registration Statement and the
Prospectus, except such as have been obtained under the 1933 Act, the
1934 Act, state securities laws, and except such as may be required
under Interpretations or Rules of the NASD, in
24
connection with the purchase and distribution of the Shares by
the Agents and from The Nasdaq National Market System relating to the
listing of the Shares.
(I) The Registration Statement and the Prospectus and any
amendments or supplements thereto (other than the financial statements
or other financial data included therein or omitted therefrom and
Agents' Information as to which such counsel need express no opinion)
comply as to form in all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations as of their respective dates
of effectiveness or issuance and the conditions for use of Form SB-2
have been satisfied.
(J) To the best of such counsel's knowledge after due inquiry,
there are no contracts, agreements, leases or other documents of a
character required to be disclosed in the Registration Statement or
Prospectus or to be filed as exhibits to the Registration Statement
that are not so disclosed or filed.
(K) The statements under the captions "Business - Regulation and
Supervision," "Description of Capital Stock," "Shares Eligible for
Future Sale," and "Federal Income Tax Consequences" in the Prospectus,
insofar as such statements constitute matters of law, legal
conclusions or summaries of legal and regulatory matters or the
Company's charter and bylaws, are accurate descriptions of the matters
purported to be summarized therein in all material respects and fairly
present the information called for with respect to such legal and
regulatory matters.
(L) Such counsel has been advised by the staff of the Commission
that the Registration Statement has become effective under the 1933
Act; any required filing of the Prospectus pursuant to Rule 424(b) has
been made within the time period required by Rule 424(b); to the best
of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for a stop order are pending or threatened by the
Commission.
(M) The Company is not and, after giving effect to the offering
and sale of the Shares and the application of the proceeds thereof as
described in the Prospectus, the Company will not be, an "investment
company," or an entity "controlled" by an "investment company" as
defined in the Investment Company Act.
In giving the above opinion, such counsel may state that, insofar as such
opinion involves factual matters, they have relied upon certificates of officers
of the Company including, without limitation, certificates as to the identity of
any and all material contracts, indentures, mortgages, deeds of trust, loans or
credit agreements, notes, leases, franchises, licenses or other agreements or
instruments, and all material permits, easements, consents, licenses, franchises
and government regulatory authorizations and certificates of public officials.
In rendering such opinions, all statements contained therein "to our knowledge"
or "to our attention" means the actual knowledge of the attorneys who have
worked on the transactions contemplated herein.
25
Such counsel shall also confirm that, in connection with the preparation of
the Registration Statement and Prospectus, such counsel has participated in
conferences with officers and directors of the Company and with their
independent public accountants and with you and your counsel, at which
conferences such counsel discussed the contents of the Registration Statement
and Prospectus and such counsel reviewed certain documents (without taking
further action to verify independently the statements made in the Registration
Statement and the Prospectus, and without assuming responsibility for the
accuracy or completeness of such statements, except to the extent expressly
provided in paragraphs (B) and (J) above), and such counsel has no reason to
believe (A) that the Registration Statement or any amendment thereto (except for
the financial statements and related schedules and statistical data included
therein or omitted therefrom or Agents' Information, as to which such counsel
need express no opinion), at the time the Registration Statement or any such
amendment became effective, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading or (B) that the Prospectus or any amendment or supplement
thereto and the documents incorporated therein by reference (except for the
financial statements and related schedules and statistical data included therein
or omitted therefrom or Agents' Information, as to which such counsel need
express no opinion), at the time the Registration Statement became effective
(or, if the term "Prospectus" refers to the prospectus first filed pursuant to
Rule 424(b) of the 1933 Act Regulations, at the time the Prospectus was issued),
at the time any such amended or supplemented Prospectus was issued, at the
Closing Date, contained or contains any untrue statement of a material fact or
omitted or omits to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading or (C) that there is any amendment to the
Registration Statement required to be filed that has not already been filed.
(ii) The favorable opinion, dated as of Closing Date, of Jenkens &
Xxxxxxxxx, a Professional Corporation, counsel for the Agents, with respect to
the validity of the Shares, the Registration Statement, the Prospectus, as
amended or supplemented, and such other related matters as the Agents may
reasonably require, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters. In giving such opinion, Jenkens & Xxxxxxxxx, a Professional
Corporation, may rely as to matters of fact upon statements and certifications
of officers of the Company and its Subsidiaries and of other appropriate persons
and may rely as to matters of law, other than the law of the United States, upon
the opinions of Xxxxx & Xxxxxxx herein.
(c) At the Closing Time, there shall not have been, since the date hereof
or since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change in the
financial condition, results of operations, or business of the Company and the
Subsidiaries, taken as a whole, whether or not arising in the ordinary course of
business, and the Agents shall have received a certificate of the President and
Chief Executive Officer of the Company, and the Chief Financial Officer or Chief
Accounting Officer of the Company, dated as of Closing Date, to the effect that
(i) there has been no such material adverse change, (ii) there shall have been
no material transaction entered into by the Company from the date of the latest
statement of financial condition of the Company, the Bank or the Subsidiaries as
set forth in the Registration Statement and the Prospectus other than
transactions referred to or contemplated therein and transactions in the
ordinary course of
26
business, (iv) the representations and warranties in Section 1 hereof are true
and correct with the same force and effect as though expressly made at and as of
the Closing Time, except as to any such representation or warranty which
specifically relates to an earlier date, (v) the Company has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to Closing Time, and (vi) no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose have been initiated or threatened by the Commission.
(d) On the date of this Agreement, the Agents shall have received from
Xxxxx, Xxxxxx and Company LLP a letter, dated the date of this Agreement, in
form and substance satisfactory to the Agents, confirming that they are
independent public accountants with respect to the Company and the Subsidiaries,
within the meaning of the 1933 Act and the 1933 Act Regulations, and stating in
effect that:
(i) In their opinion, the consolidated financial statements of the
Company audited by them and included in the Registration Statement comply as to
form in all material respects with the applicable accounting requirements of the
1933 Act and the 1933 Act Regulations.
(ii) On the basis of the procedures specified by the American
Institute of Certified Public Accountants as described in SAS No. 71, "Interim
Financial Information," inquiries of officials of the Company responsible for
financial and accounting matters, and such other inquiries and procedures as may
be specified in such letter, which procedures do not constitute an audit in
accordance with U.S. generally accepted auditing standards, nothing came to
their attention that caused them to believe that, if applicable, the unaudited
interim consolidated financial statements of the Company included in the
Registration Statement do not comply as to form in all material respects with
the applicable accounting requirements of the 1933 Act and the 1933 Act
Regulations or are not in conformity with U.S. generally accepted accounting
principles applied on a basis substantially consistent, except as noted in the
Registration Statement, with the basis for the audited consolidated financial
statements of the Company included in the Registration Statement.
(iii) On the basis of limited procedures, not constituting an audit in
accordance with U.S. generally accepted auditing standards, consisting of a
reading of the unaudited interim financial statements and other information
referred to below, a reading of the latest available unaudited condensed
consolidated financial statements of the Company, inspection of the minute books
of the Company since the date of the latest audited financial statements of the
Company included or incorporated by reference in the Registration Statement,
inquiries of officials of the Company responsible for financial and accounting
matters and such other inquiries and procedures as may be specified in such
letter, nothing came to their attention that caused them to believe that:
(A) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated
capital stock of the Company, any increase in the consolidated debt of
the Company, any decreases in consolidated total assets or
stockholders' equity of the Company, or any changes, decreases or
increases in other items specified by the Agents, in each case as
27
compared with amounts shown in the latest unaudited interim
consolidated statement of financial condition of the Company included
in the Registration Statement except in each case for changes,
increases or decreases which the Registration Statement specifically
discloses have occurred or may occur or which are described in such
letter; and
(B) for the period from the date of the latest unaudited interim
consolidated financial statements of the Company included or
incorporated by reference in the Registration Statement to the
specified date referred to in Clause (iii)(A), there were any
decreases in the consolidated interest income, net interest income or
net income of the Company or in the per share amount of net income of
the Company or any changes, decreases or increases in any other items
specified by the Agents, in each case as compared with the comparable
period of the preceding year and with any other period of
corresponding length specified by the Agents, except in each case for
increases or decreases which the Registration Statement discloses have
occurred or may occur or which are described in such letter.
(iv) In addition to the audit referred to in their report included or
incorporated by reference in the Registration Statement and the limited
procedures, inspection of minute books, inquiries and other procedures referred
to in paragraphs (ii) and (iii) above, they have carried out certain specified
procedures, not constituting an audit in accordance with U.S. generally accepted
auditing standards, with respect to certain amounts, percentages and financial
information specified by the Agents which are derived from the general
accounting records and consolidated financial statements of the Company which
appear in the Registration Statement, and have compared such amounts,
percentages and financial information with the accounting records and the
material derived from such records and consolidated financial statements of the
Company and have found them to be in agreement.
In the event that the letters to be delivered on the date hereof and on the
Closing Date referred to above set forth any such changes, decreases or
increases as specified in Clauses (iii)(A) or (iii)(B) above, or any exceptions
from such agreement specified in Clause (iv) above, it shall be a further
condition to the obligations of the Agents that the Agents shall have
determined, after discussions with officers of the Company responsible for
financial and accounting matters, that such changes, decreases, increases or
exceptions as are set forth in such letters do not (x) reflect a material
adverse change in the items specified in Clause (iii)(A) above as compared with
the amounts shown in the latest unaudited consolidated statement of financial
condition of the Company included or incorporated by reference in the
Registration Statement, (y) reflect a material adverse change in the items
specified in Clause (iii)(B) above as compared with the corresponding periods of
the prior year or other period specified by the Agents, or (z) reflect a
material adverse change in items specified in Clause (iv) above from the amounts
shown in the most recent Preliminary Prospectus distributed by the Agents in
connection with the offering contemplated hereby or from the amounts shown in
the Prospectus.
(e) At the Closing Time, the Agents shall have received from Xxxxx, Xxxxxx
and Company LLP a letter, dated as of Closing Time, to the effect that it
reaffirms the statements
28
made in the letter furnished pursuant to Subsection (d) of this Section, except
that the specified date referred to shall be a date not more than five days
prior to Closing Time.
(f) At the Closing Time, counsel for the Agents shall have been furnished
with such documents and opinions as they may require for the purpose of enabling
them to pass upon the issuance and sale of the Shares as herein contemplated and
related proceedings, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company in connection with
the issuance and sale of the Shares as herein contemplated shall be satisfactory
in form and substance to the Agents and counsel for the Agents.
(g) At any time prior to Closing Time, (i) there shall not have occurred
any material adverse change in the financial markets in the United States or
elsewhere or any outbreak of hostilities or escalation thereof or other calamity
or crisis the effects of which, in the judgment of the Agents, are so material
and adverse as to make it impracticable to market the Shares or to enforce
contracts, including subscriptions or orders, for the sale of the Shares, and
(ii) trading generally on either the New York Stock Exchange or The Nasdaq
National Market System shall not have been suspended, and minimum or maximum
prices for trading shall not have been fixed, or maximum ranges for prices for
securities have been required, by either the New York Stock Exchange, The Nasdaq
National Market System or by order of the Commission or any other governmental
authority, and (iii) a banking moratorium shall not have been declared by
federal or Indiana authorities.
Section 6. Indemnification.
(a) The Company will indemnify and hold harmless the Agents against any
losses, claims, damages or liabilities, joint or several, to which the Agents
may become subject, under the 1933 Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are related to the Offering, or any action taken by the Agents where acting as
agent of the Company or as otherwise described in Section 2 hereof, or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Agents for any legal or other expenses reasonably incurred by the Agents in
connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in the Registration Statement or the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by the Agents
expressly for use therein, in accordance with Section 6(b) hereof.
(b) The Agents, jointly and severally, will indemnify and hold harmless the
Company against any losses, claims, damages or liabilities to which the Company
may become subject, under the 1933 Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement
29
of a material fact contained in the Registration Statement or the Prospectus, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the
Registration Statement or the Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by the Agents expressly for use therein; and will reimburse the Company
for any legal or other expenses reasonably incurred by the Company in connection
with investigating or defending any such action or claims as such expenses are
incurred. The Company acknowledges for all purposes of this Agreement that the
statements set forth in the first and last paragraphs under the caption "The
Offerings - Opinion of Financial Advisor" in the Prospectus and the Opinion
attached as an appendix thereto constitute the only information that has been
furnished in writing by Stifel for inclusion in the Registration Statement or
the Prospectus, each as amended or supplemented or any amendment or supplement
thereto. The Company acknowledges that Xxxxxxxxxx has not furnished any written
information to the Company for inclusion in the Registration Statement or the
Prospectus.
(c) Promptly after receipt by an indemnified party under Subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such Subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(d) The obligations of the Company under this Section 6 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls the
Agents within the meaning of the 1933 Act or who is an affiliate or partner of
the Agents; and the obligations of the Agents under this Section 6 shall be in
addition to any liability which the Agents may otherwise have and shall extend,
upon the same terms and conditions, to each officer and director of the Company
and to
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each other person, if any, who controls the Company within the meaning of the
1933 Act or who is an affiliate of the Company.
Section 7. Contribution.
In order to provide for just and equitable contribution in circumstances in
which the indemnity agreement provided for in Section 6 hereof is for any reason
held to be unenforceable by the indemnified parties although applicable in
accordance with its terms, the Company and the Agents shall contribute to the
aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by said indemnity agreement incurred by the Company and the Agents,
as incurred, in such proportions (i) that the Agents are responsible for that
portion represented by the percentage that the maximum aggregate marketing fees
appearing on the cover page of the Prospectus bears to the maximum aggregate
gross proceeds appearing thereon and the Company is responsible for the balance
or (ii) if, but only if, the allocation provided for in clause (i) is for any
reason held unenforceable, in such proportion as is appropriate to reflect not
only the relative benefits to the Company on the one hand and the Agents on the
other, as reflected in clause (i), but also the relative fault of the Company on
the one hand and the Agents on the other, as well as any other relevant
equitable considerations; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section, each person, if any, who
controls one of the Agents within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as the
Agents, and each director of the Company, each officer of the Company who signed
the Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
shall have the same rights to contribution as the Company. Notwithstanding
anything to the contrary set forth herein, to the extent permitted by applicable
law, in no event shall the Agents be required to contribute an aggregate amount
in excess of the aggregate marketing fees to which the Agents are entitled and
actually paid pursuant to this Agreement. Neither party shall be liable for
contribution for claims settled without such party's consent provided such
consent is not unreasonably withheld.
Section 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement,
or contained in certificates of officers of the Company submitted pursuant
hereto, shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any Agents or controlling person, or by or
on behalf of the Company, and shall survive delivery of the Shares.
Section 9. Termination of Agreement.
(a) The Agents may terminate this Agreement, by notice to the Company, at
any time at or prior to Closing Time (i) if there has been, since the date of
this Agreement or since the respective dates as of which information is given in
the Registration Statement, any material adverse change in the condition
(financial or otherwise), results of operations, or business of the Company and
the Subsidiaries, taken as a whole, whether or not arising in the ordinary
course of business; (ii) if there has occurred any material adverse change in
the financial markets in the
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United States or elsewhere or any outbreak of hostilities or escalation thereof
or other calamity or crisis the effects of which, in the judgment of the Agents,
are so material and adverse as to make it impracticable to market the Shares or
to enforce contracts, including subscriptions or orders, for the sale of the
Shares; (iii) if trading generally on either the New York Stock Exchange or The
Nasdaq National Market System has been suspended, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices for securities have
been required, by either the New York Stock Exchange, The Nasdaq National Market
System or by order of the Commission or any other governmental authority, or if
a banking moratorium has been declared by either federal or Indiana authorities;
(iv) if any condition specified in Section 5 shall not have been fulfilled when
and as required to be fulfilled; (v) if there shall have been such material
adverse change in the condition or prospects of the Company or the Bank or the
prospective market for the Company's securities as in the Agents' good faith
opinion would make it inadvisable to proceed with the offering, sale or delivery
of the Shares; (vi) if the Company shall have terminated either the Rights
Offering or the Limited Public Offering; or (vii) if either of the Offerings are
not consummated for any other reason, prior to September 12, 2002.
(b) If this Agreement is terminated pursuant to this Section or if the
Company shall terminate either the Rights Offering or the Limited Public
Offering prior to the Closing Date, the Company shall immediately notify the
Subscription Agent who shall refund to any persons who have subscribed for any
of the Shares in such terminated offering the full amount which it may have
received from them, without interest, as provided in the Prospectus, such
termination shall be without liability of any party to any other party except
that the provisions of Section 4 hereof relating to reimbursement of expenses
and the provisions of Section 6 hereof shall survive any termination of this
Agreement.
Section 10. Notices.
Except as otherwise provided in this Agreement, all notices and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered by hand, mailed by registered or certified mail, return
receipt requested, or transmitted by any standard form of telecommunication and
confirmed. Notices to the Company shall be sent to Tower Financial Corporation,
000 Xxxx Xxxxx Xxxxxx, Xxxx Xxxxx, XX 00000 Attention: Xxxxxx X. Xxxxxxxx,
President. (with a copy to Xxxxx & Xxxxxxx, 000 Xxxx Xxxxx Xxxxxx, Xxxxx 000,
Xxxx Xxxxx, XX 00000, Attention: Xxxxxxxx Xxxxx, Esq.) and notices to the Agents
shall be sent to Xxxxxx, Xxxxxxxx & Company, Incorporated, 000 Xxxxx Xxxxxxxx,
0(xx) Xxxxx, Xx. Xxxxx, Xxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxx (with a
copy to Jenkens & Xxxxxxxxx, a Professional Corporation 0000 Xxxx Xxxxxx, Xxxxx
0000, Xxxxxx, Xxxxx 00000, Attention: Xxxxx Xxxxxxxxx, Esq.). In all dealings
with the Company under this Agreement, Xxxxxx, Xxxxxxxx & Company, Incorporated
shall act as the Representative of and on behalf of the Agents, and the Company
shall be entitled to act and rely upon any statement, request, notice or
agreement on behalf of the Agents, made or given by Xxxxxx, Xxxxxxxx & Company,
Incorporated on behalf of the Agents, as if the same shall have been made or
given in writing by the Agents.
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Section 11. Parties.
The Agreement herein set forth, including all conditions and provisions
hereof, is made solely for the benefit of the Agents and the Company and, to the
extent expressed, directors, trustees and officers of the Company, any person
controlling the Company or the Agents, and their respective successors and
assigns. No other person shall acquire or have any right under or by virtue of
this Agreement.
Section 12. Governing Law.
This Agreement shall be governed by the laws of the State of New York,
without giving effect to the choice of law or conflicts of law principles
thereof.
Section 13. Authority.
Any certificate signed by an authorized officer of the Company and
delivered to the Agents or to counsel for the Agents pursuant to this Agreement
shall be deemed a representation and warranty by the Company to the Agents as to
the matters covered thereby.
Section 14. Counterparts.
This Agreement may be executed by facsimile and in one or more
counterparts, and when a counterpart has been executed by each party hereto all
such counterparts taken together shall constitute one and the same Agreement.
Section 15. Amendment.
No waiver, amendment or other modification of this Agreement shall be
effective unless in writing and signed by the parties hereto.
Section 16. Severability.
Any term or provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement or affecting
the validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, the provision shall be interpreted to be only so
broad as is enforceable.
Section 17. Headings.
Section headings are not to be considered part of this Agreement, are for
convenience and reference only, and are not to be deemed to be full or accurate
descriptions of the contents of any paragraph or subparagraph.
SIGNATURES APPEAR ON THE FOLLOWING PAGE
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If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Agents and the Company in accordance with its terms.
Very truly yours,
TOWER FINANCIAL CORPORATION
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
CONFIRMED AND ACCEPTED, as of the date first above written:
XXXXXX, XXXXXXXX & COMPANY,
INCORPORATED
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
XXXXXXXXXX & CO. INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
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