EXHIBIT 1
---------
CITY SAVINGS FINANCIAL CORPORATION
Up to 555,450 Shares
of
Common Stock
(No Par Value Per Share)
$10.00 Per Share
SALES AGENCY AGREEMENT
__________, 2001
Trident Securities, A Division of McDonald Investments, Inc.
0000 Xxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Dear Sirs:
City Savings Financial Corporation, an Indiana corporation (the "Company"),
and Michigan City Savings and Loan Association, an Indiana- chartered savings
association (the "Association"), hereby confirm as of the date above their
respective agreements with Trident Securities, a Division of McDonald
Investments Inc., ("McDonald"), a broker-dealer registered with the Securities
and Exchange Commission ("Commission") and a member of the National Association
of Securities Dealers, Inc. ("NASD"), as follows:
1. Introduction. The Association intends to convert from an Indiana-
chartered mutual savings association to an Indiana- chartered stock savings
association as a wholly-owned subsidiary of the Company (together with the
Offerings, as defined below, the issuance of shares of common stock of the
Association to the Company, and the incorporation of the Company, collectively
the "Conversion") pursuant to a plan of conversion adopted on July 11, 2001,
(the "Plan"). In accordance with the Plan, the Company is offering shares of its
common stock, no par value (the "Shares" or the "Common Stock"), pursuant to
nontransferable subscription rights in a subscription offering ("Subscription
Offering") to certain depositors and borrowers of the Association and the
Association's Employee Stock Ownership Plan (the "ESOP"). Shares of the Common
Stock not sold in the Subscription Offering are being offered to the general
public in a direct community offering, with preference being given to natural
persons residing in XxXxxxx and Xxxxxx Counties, Indiana (the "Community
Offering") and, if necessary, through a syndicate of registered broker-dealers
managed by McDonaldin a syndicated community offering (the "Syndicated Community
Offering"). The Subscription Offering, the Community Offering and the Syndicated
Community Offering are collectively referred to as the "Offerings." Purchases of
Shares in the Offerings are subject to certain limitations and restrictions as
described in the Plan.
The Company and the Association have been advised by McDonald that it will
utilize its best efforts to assist the Company and the Association with the sale
of the Shares in the Offerings. Prior to the execution of the Agreement, the
Company has delivered to McDonald a prospectus dated as of the date hereof and
all supplements thereto to be used in the Offerings. Such prospectus contains
information with respect to the Company, the Association, the Shares and the
Conversion.
2. Representations and Warranties.
(a) The Company and the Association (including the Association's only
subsidiary, City Savings Financial Services, Inc. ("Subsidiary")) jointly
and severally represent and warrant to McDonald that:
(i) The Company has filed with the Commission a registration
statement, including a prospectus relating to the Offerings and
exhibits, and an amendment or amendments thereto, on Form SB-2 (No.
333-20228) for the registration of the Shares under the Securities Act
of 1933, as amended ("Securities Act"); and such registration
statement has been declared effective under the Securities Act and no
stop order has been issued with respect thereto and no proceedings
therefor have been initiated or, to the best knowledge of the Company
and the Association, threatened by the Commission. Except as the
context may otherwise require, such registration statement, as amended
or supplemented, on file with the Commission at the time the
registration statement became effective, including the prospectus,
financial statements, schedules, exhibits and all other documents
filed as part thereof is herein called the "Registration Statement,"
and the prospectus, as amended or supplemented, on file with the
Commission at the time the Registration Statement became effective is
herein called the "Prospectus," except that if any prospectus filed by
the Company with the Commission pursuant to Rule 424(b) of the general
rules and regulations of the Commission under the Securities Act
(together with the enforceable published policies, releases and
actions of the Commission thereunder, hereinafter referred to as the
"Securities Act Regulations") differs from the form of prospectus on
file at the time the Registration Statement became effective, the term
"Prospectus" shall refer to the Rule 424(b) prospectus from and after
the time it is filed with the Commission and shall include any
amendments or supplements thereto from and after their dates of
effectiveness or use, respectively.
(ii) The Association has filed a Form AC Application for Approval of
Conversion and Application to Convert pursuant to IND. Code Section
28-1-21.4 et. seq., including exhibits (as amended or supplemented,
the "Conversion Application") with the Indiana Department of Financial
Institutions ("IDFI") under IND. CODE ss.28-1-21.4, et. seq., which
has been approved by the IDFI, and also with the Office of Thrift
Supervision (the "Office") under the Home Owners' Loan Act, as amended
("HOLA"), and the rules and regulations of the Office thereunder (the
"Office Regulations"), which has been approved by the Office; and the
Prospectus and the proxy statement for the solicitation of proxies
from members of the Association for the special meeting to approve the
Plan ("Proxy Statement") included as part of the Conversion
Application have been approved for use by the IDFI and the Office. The
Company has filed with the Office the Company's application to acquire
ownership of the Association on Form H-(e)1-S ("Holding Company
Application") promulgated under the savings and loan holding company
provisions of the HOLA and the regulations promulgated thereunder and
has received approval of its acquisition of the Association from the
Office. No order has been issued by the IDFI or the Office preventing
or suspending the use of the Prospectus or Proxy Statement, and no
action by or before the IDFI or the Office or any court or other
tribunal challenging or seeking to challenge the IDFI's or the
Office's approval of the use of the Prospectus or Proxy Statement or
their approval of the Conversion Application or the Office's approval
of the Holding Company application is pending, or to the best
knowledge of the Company and the Association, threatened.
(iii) As of the date hereof (i) the Registration Statement and the
Prospectus comply to form in all material respects with the Securities
Act and the Securities Act Regulations, (ii) the Registration
Statement does not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and (iii)
the Prospectus does not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Representations or warranties in this subsection shall not apply to
statements or omissions made in reliance upon and in conformity with
written information relating to McDonald furnished to the Company or
the Association by or on behalf of McDonald and expressly provided for
use in the Registration Statement or Prospectus.
(iv) The Company is incorporated as an Indiana corporation and the
Association is duly organized as a mutual savings association under
the laws of Indiana, and each of them is validly existing under the
laws of Indiana, with full power and authority to own its property and
conduct its business as described in the Registration Statement and
Prospectus; the Association is a member of the Federal Home Loan Bank
of Indianapolis; and the deposit accounts of the Association are
insured by the Savings Association Insurance Fund ("SAIF")
administered by the Federal Deposit Insurance Corporation ("FDIC") up
to the applicable legal limits. Each of the Company and the
Association is qualified to transact business as a foreign corporation
in all jurisdictions except those where non-qualification would
reasonably be expected not to have a Material Adverse Effect on the
condition (financial or otherwise), operations, business, earnings or
properties of the Company, the Association and the Subsidiary
considered as one enterprise ("Material Adverse Effect").
(v) The Association owns of record and beneficially all of the
outstanding shares of the Subsidiary. The Subsidiary is a corporation
duly organized, validly existing under the laws of the State of
Indiana with full power and authority to own its properties and
conduct its business as described in the Prospectus. The Subsidiary is
qualified to do business as a foreign corporation in all jurisdictions
except those where nonqualification would not have a Material Adverse
Effect. Neither the Company nor the Association owns, directly or
indirectly, more than fifteen percent of the outstanding capital stock
or other equity interest of any business enterprise other than the
Subsidiary.
(vi) The Company, the Association and the Subsidiary have good and
marketable title to all assets material to their respective businesses
and to those assets described in the Prospectus as owned by them, free
and clear of all liens, charges, encumbrances or restrictions, except
for liens for ad valorem taxes not yet due, except as described in the
Prospectus and except as do not, in the aggregate, have a Material
Adverse Effect; and all of the leases and subleases material to the
operations of the Company, Association or the Subsidiary, under which
it holds properties, including those described in the Prospectus, are
in full force and effect as described therein.
(vii) The Company, the Association and the Subsidiary have obtained
all licenses, permits and other governmental authorizations currently
required for the conduct of their respective businesses except where
the failure to obtain such licenses, permits and governmental
authorizations would reasonably be expected not to have a Material
Adverse Effect; all such licenses, permits and other governmental
authorizations are in full force and effect, and the Company, the
Association and the Subsidiary are complying therewith in all material
respects.
(viii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
and validly authorized by all necessary actions on the part of each of
the Company and the Association, and this Agreement is a valid and
binding obligation of each of the Company and the Association,
enforceable in accordance with its terms except as the enforceability
thereof may be limited by (a) bankruptcy, insolvency, moratorium,
reorganization, conservatorship, receivership or similar laws relating
to or affecting the enforcement of creditors' rights generally or the
rights of creditors of insured financial institutions and their
holding companies, the accounts of whose subsidiaries are insured by
the FDIC; (b) general equity principles, regardless of whether such
principles are applied in a proceeding in equity or at law; (c) laws
relating to the safety and soundness of insured depository
institutions and their affiliates, and except to the extent that the
provisions of Sections 8 and 9 hereof may be unenforceable as against
public policy or by applicable law, including without limitation,
Section 23A of the Federal Reserve Act, 12 U.S.C. Section 371c
("Section 23A").
(ix) Except as described in the Prospectus, there is no litigation or
governmental proceeding pending or, to the best knowledge of the
Company or the Association, threatened against or involving the
Company, the Association or the Subsidiary, or any of their respective
assets which individually or in the aggregate would reasonably be
expected to have a Material Adverse Effect.
(x) The Company and the Association each has all power, authority,
authorizations, approvals and orders as may be required to enter into
this Agreement, to carry out the provisions and conditions hereof and,
in the case of the Company, to issue and sell the Shares to be sold by
it as provided herein, and in the case of the Association, to issue
and sell the shares of its capital stock to be sold to the Company as
provided in the Plan (subject to the issuance of an amended charter in
the form required for an Indiana stock savings association ("Stock
Charter"), the form of which is filed as an exhibit to the Conversion
Application.
(xi) The Company and the Association have received the opinion of
Xxxxxx & Xxxxxxxxx with respect to the federal income tax consequences
of the Conversion to the effect that the Conversion will constitute a
tax-free reorganization under the Internal Revenue Code of 1986, as
amended (the "Code"), and the Company and the Association have
received the opinion of Xxxxxx & Xxxxxxxxx with respect to the state
income tax consequences of the Conversion to the effect that the
Conversion will not be a taxable transaction for the Association or
the Company under the laws of Indiana; and the facts and
representations provided by the Company and the Association and relied
upon in the rendering of such opinions are accurate and complete, and
neither the Company nor the Association have taken any action
inconsistent therewith.
(xii) Neither the Company, the Association nor the Subsidiary is in
violation of any rule or regulation of the IDFI, Office, the FDIC or
any state department or agency regulating the banking or other
activities of the Company, the Association or the Subsidiary that has
resulted or reasonably could result in any enforcement action against
the Company, the Association or the Subsidiary, or their officers or
directors, that could reasonably be expected to have a Material
Adverse Effect.
(xiii) Xxxxxx & Company, Inc., the firm that prepared the independent
appraisal included in the Conversion Application, is independent with
respect to the Company, the Association and the Subsidiary within the
meaning of IND. CODEss.28-1-21.4, et. seq. or the Office Regulations.
Based upon a certification provided to the Company from Xxxxxx &
Company, the Company and the Association believe such firm to be
experienced and expert in providing appraisals of thrift institutions,
and nothing has come to the attention of the Company or the
Association which has caused either of them to believe that the
appraisal included in the Conversion Application was not prepared in
accordance with the requirements of IND CODEss.28-1-21.4, et. seq. or
the Office Regulations.
(xiv) Each of BKD, LLP, the firm that certified the consolidated
financial statements for the year ended June 30, 2001, of the
Association filed as part of the Registration Statement and the
Conversion Application, and Xxxxxxxx & Xxxxxx, Inc., P.C., the firm
that certified the consolidated financial statements for the year
ended June 30, 2000 of the Association filed as part of the
Registration Statement and the Conversion Application are independent
with respect to the Company, the Association and the Subsidiary as
required by the Securities Act, the Securities Act Regulations, the
Code of Professional Ethics of the American Institute of Certified
Public Accountants, Title 12 of the Code of Federal Regulations Parts
563c and IND CODE ss.28-1-21.4, et. seq., and nothing has come to the
attention of the Company or the Association which has caused either of
them to believe that such firms are not independent within the meaning
of such provisions.
(xv) The consolidated financial statements and related notes which are
included in the Registration Statement and the Prospectus fairly
present the financial condition, results of operations, retained
earnings and cash flows of the Association on a consolidated basis at
the respective dates thereof and for the respective periods covered
thereby and comply as to form in all material respects with the
applicable accounting requirements of the Securities Act Regulations
and the IDFI or Office Regulations. Such financial statements have
been prepared in accordance with generally accepted accounting
principles ("GAAP") consistently applied throughout the periods
involved, except as set forth therein, and such financial statements
are consistent with financial statements and other reports filed by
the Association with the IDFI or Office, except as GAAP may otherwise
require. The financial tables in the Prospectus accurately present the
information purported to be shown thereby at the respective dates
thereof and for the respective periods covered thereby.
(xvi) There has been no material adverse change in the condition
(financial or otherwise), results of operations, business, assets or
properties, of the Company, the Association and the Subsidiary, taken
as a whole, since the latest date as of which such condition is set
forth in the Prospectus, except as set forth therein; and the
capitalization, assets, properties and business of each of the
Company, the Association and the Subsidiary conform in all material
aspects to the descriptions thereof contained in the Prospectus. None
of the Company, the Association and the Subsidiary, has any material
liabilities of any kind, contingent or otherwise, except as set forth
in the Prospectus.
(xvii) There has been no breach or default (or the occurrence of any
event which, with notice or lapse of time or both, would constitute a
default) under, or creation or imposition of any lien, charge or other
encumbrance upon any of the properties or assets of the Company, the
Association or the Subsidiary pursuant to any of the terms, provisions
or conditions of any agreement, contract, indenture, lease, bond,
debenture, note, instrument or obligation to which the Company, the
Association or the Subsidiary is a party or by which any of them or
any of their respective assets or properties may be bound or is
subject or any violation of any governmental license or permit or any
enforceable published law, administrative regulation or order or court
order, writ, injunction or decree, which breach, default, lien,
charge, encumbrance or violation would reasonably be expected to have
a Material Adverse Effect; all agreements which are material to the
financial condition, results of operations, business, assets or
properties of the Company, the Association and the Subsidiary, taken
as a whole, are in full force and effect, and no party to any such
agreement has instituted or, to the best knowledge of the Company and
the Association, threatened any action or proceeding wherein the
Company, the Association or the Subsidiary would be alleged to be in
default thereunder.
(xviii) Neither the Company, the Association nor the Subsidiary is in
violation of its respective charter, certificate or articles of
incorporation or bylaws. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby by the
Company and the Association do not conflict with or result in a breach
of the charter, certificate or articles of incorporation or bylaws of
the Company, the Association (in either mutual or stock form) or the
Subsidiary, or violate, conflict with or constitute a material breach
or default (or an event which, with notice or lapse of time or both,
would constitute a default) under, give rise to any right of
termination, cancellation or acceleration contained in, or result in
the creation or imposition of any lien, charge or other encumbrance
upon any of the properties or assets of the Company, the Association
or the Subsidiary pursuant to any of the terms, provisions or
conditions of, any agreement, contract, indenture, lease, bond,
debenture, note, instrument or obligation to which the Company, the
Association or the Subsidiary is a party (other than the establishment
of a liquidation account pursuant to the Plan) or violate any
governmental license or permit or any law, administrative regulation
or order or court order, writ, injunction or decree (subject to the
satisfaction of certain conditions imposed by the IDFI or Office in
connection with their approval of the Conversion Application), which
breach, default, encumbrance or violation would reasonably be expected
to have a Material Adverse Effect.
(xix) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, except as
otherwise may be indicated or contemplated therein, neither the
Company, the Association nor Subsidiary has issued any securities
(expect for notes to evidence bank loans or other liabilities in the
ordinary course of business or as described in the Prospectus) which
will remain issued at the Closing Date (as defined below) or incurred
any liability or obligation, direct or contingent, or borrowed money,
except borrowings or liabilities incurred in the ordinary course of
business, or entered into any other transaction not in the ordinary
course of business and not consistent with prior practices, which is
material in light of the business of the Company, the Association and
Subsidiary, taken as a whole.
(xx) Upon consummation of the Conversion, the authorized, issued and
outstanding equity capital of the Company shall be as set forth in the
Prospectus under the heading "Capitalization," and no equity
securities of the Company shall be outstanding immediately prior to
the Closing Date other than any shares of capital stock issued in
connection with the formation of the Company, which shares shall be
canceled on the Closing Date. The issuance and the sale of the Shares
of the Company have been duly authorized by all necessary action of
the Company and approved by the IDFI and the Office and, when issued
in accordance with the terms of the Plan and paid for as set forth in
the Prospectus, shall be validly issued, fully paid and nonassessable
and shall conform in all material respects to the description thereof
contained in the Prospectus; the issuance of the Shares is not subject
to preemptive rights, except as set forth in the Prospectus; and good
title to the Shares will be transferred by the Company upon issuance
thereof against payment therefor, free and clear of all claims,
encumbrances, security interests and liens against the Company
whatsoever. The issuance and sale of the capital stock of the
Association to the Company has been duly authorized by all necessary
action of the Association and the Company and all appropriate
regulatory authorities (subject to the satisfaction of various
conditions imposed by the IDFI and the Office in connection with their
approvals of the Conversion Application and the Office's approval of
the Holding Company Application), and such capital stock, when issued
in accordance with the terms of the Plan, will be validly issued,
fully paid and nonassessable and will conform in all material respects
to the description thereof contained in the Prospectus.
(xxi) No approval of any regulatory or supervisory or other public
authority is required of the Company and the Association in connection
with the execution and delivery of this Agreement or the issuance of
the Shares, except such approvals as have been obtained, except for
the declaration of effectiveness by the Commission of any required
post-effective amendment of the Registration Statement not yet filed,
except as may be required by the "blue sky" or securities laws of
various jurisdictions, and except as may be required by the conditions
of the approval of the Conversion Application by the IDFI and the
Office.
(xxii) All contracts and other documents required to be filed as
exhibits to the Registration Statement, the Conversion Application or
the Holding Company Application have been filed with the Commission,
the IDFI or the Office or both, as the case may be.
(xxiii) The Company, the Association and the Subsidiary have timely
filed all required federal, state and local franchise tax returns, and
no deficiency has been asserted with respect to such returns by any
taxing authorities; and the Company, the Association and the
Subsidiary have paid all taxes that have become due and, to the best
knowledge of the Company and the Association, have made adequate
reserves for future tax liabilities, except where any failure to make
such filings, payments and reserves, or the assertion of such a
deficiency, would not reasonably be expected to have a Material
Adverse Effect.
(xxiv) All of the loans represented as assets of the Association as of
the most recent date for which financial condition data is included in
the Prospectus meet or are exempt from all requirements of federal,
state or local law pertaining to lending, including without limitation
truth in lending (including the requirements of Regulation Z and 12
C.F.R. Part 226), real estate settlement procedures, consumer credit
protection, equal credit opportunity and all disclosure laws
applicable to such loans, except for violations which, would not
reasonably be expected to have a Material Adverse Effect.
(xxv) The records of depositors, account holders, borrowers and other
members of the Association delivered to McDonald by the Association or
its agent for use during the Conversion are believed to be accurate,
reliable and complete in all material respects.
(xxvi) Neither the Company, the Association nor the Subsidiary or, to
the best knowledge of the Company and the Association, the employees
of the Company, the Association or the Subsidiary, has made any
payment of funds of the Company, the Association or the Subsidiary
prohibited by law, and no funds of the Company, the Association or the
Subsidiary have been set aside to be used for any payment prohibited
by law.
(xxvii) To the best knowledge of the Company and the Association, the
Company, the Association and the Subsidiary are in compliance with all
laws, rules and regulations relating to environmental protection, and
neither the Company, the Association nor the Subsidiary is subject to
liability under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, or any similar law, except for
liabilities which, would not have a Material Adverse Effect. There are
no actions, suits, regulatory investigations or other proceedings
pending or, to the best knowledge of the Company or the Association,
threatened against the Company, the Association or the Subsidiary
relating to environmental protection. To the best knowledge of the
Company and the Association, no disposal, release or discharge of
hazardous or toxic substances, pollutants or contaminants, including
petroleum and gas products, as any of such terms may be defined under
federal, state or local law, has been caused by the Company, the
Association or the Subsidiary or, to the best knowledge of the Company
and the Association, except as disclosed in the Prospectus, has
occurred on, in or at any of the facilities or properties owned or
leased by the Company, the Association or the Subsidiary or on any
properties pledged to the Association or the Subsidiary as security
for any indebtedness that is 60 (sixty) days or more past due, except
such disposal, release or discharge as would not reasonably be
expected to have a Material Adverse Effect.
(xxviii) All documents delivered by the Company, the Association or
the Subsidiary or their representatives in connection with the
issuance and sale of the Common Stock, except for those documents that
were prepared by parties other than the Company, the Association, the
Subsidiary or their representatives, were, on the dates on which they
were delivered, true, complete and correct in all material respects.
(xxix) At the Closing Date, the Company and the Association will have
completed the conditions precedent to, and will have conducted the
Conversion in all material respects in accordance with, the Plan, the
HOLA, IND CODE ss.28-1-21.4 et. seq., the IDFI Regulations and Office
Regulations and all other applicable laws, regulations, published
decisions and orders, including all terms, conditions, requirements
and provisions precedent to the Conversion imposed by the IDFI or the
Office.
(b) McDonald represents and warrants to the Company and the Association
that:
(i) McDonald is registered as a broker-dealer with the NASD.
(ii) McDonald is validly existing as a corporation under the laws of
its jurisdiction of incorporation, with full corporate power and
authority to provide the services to be furnished to the Company and
the Association hereunder.
(iii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
and validly authorized by all necessary action on the part of
McDonald, and this Agreement is a legal, valid and binding obligation
of McDonald, enforceable in accordance with its terms (except as the
enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization or similar laws relating to or affecting
the enforcement of creditors' rights generally or the rights of
creditors of registered broker-dealers whose accounts may be protected
by the Securities Investor Protection Corporation or by general equity
principles, regardless of whether such principles are applied in a
proceeding in equity or at law, and except to the extent that the
provisions of Sections 8 and 9 hereof may be unenforceable as against
public policy or by applicable law).
(iv) McDonald and, to McDonald's best knowledge, its employees, agents
and representatives who shall perform any of the services required
hereunder to be performed by McDonald, shall be duly authorized and
shall have all licenses, approvals and permits necessary to perform
such services, and McDonald is a registered selling agent in the
jurisdictions in which the Company is relying on such registration for
the sale of the Shares, and will remain so registered until the
Conversion is consummated or terminated.
(v) The execution and delivery of this Agreement by McDonald, the
fulfillment of the terms set forth herein and the consummation of the
transactions contemplated hereby shall not violate or conflict with
the charter or bylaws of McDonald or violate, conflict with or
constitute a breach of, or default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, any
agreement, indenture or other instrument by which McDonald is bound or
under any governmental license or permit or any law, administrative
regulation, authorization, approval or order or court decree,
injunction or order which breach, default or violation could have a
material adverse effect on the condition (financial or otherwise),
operations, business, assets or properties of McDonald or its ability
to perform its obligations under this Agreement.
(vi) Any funds received by McDonald to purchase Common Stock will be
handled in accordance with Rule 15c2-4 under the Securities Exchange
Act of 1934, as amended ("Exchange Act").
(vii) No action or proceeding against McDonald before the Commission,
the NASD, any state securities commission, or any state or federal
court is pending or, to McDonald's best knowledge, threatened
concerning McDonald's activities as a broker-dealer which could have a
material adverse effect on the condition (financial or otherwise),
operations, business, assets or properties of McDonald or its ability
to perform its obligations under this Agreement.
3. Employment of McDonald; Sale and Delivery of the Shares. On the basis of
the representations and warranties herein contained, but subject to the terms
and conditions herein set forth, the Company and the Association hereby employ
McDonald as their agent to utilize its best efforts to assist the Company with
the Company's sale of the Shares in the Offerings, and McDonald hereby accepts
such employment. The employment of McDonald hereunder shall terminate (a)
forty-five (45) days after the Subscription Offering closes, unless the Company
and the Association, with the approval of the IDFI and Office, if required, are
permitted to extend such period of time, or (b) upon consummation of the
Conversion, whichever date shall first occur.
In the event the Company is unable to sell a minimum of 357,000 Shares (or
such lesser amount as the IDFI and the Office may permit) within the period of
McDonald's employment, this Agreement shall terminate, and the Company and the
Association shall refund promptly to any persons who have subscribed for any of
the Shares, the full amount which they may have received from them, together
with interest as provided in the Prospectus, and no party to this Agreement
shall have any obligation to the other party hereunder, except as set forth in
Sections 3(c) and 3(d) below and Sections 6, 8, 9 and 10 hereof. Appropriate
arrangements for placing the funds received from subscriptions for Shares in
special interest-bearing accounts with the Association until all Shares are sold
and paid for will be made prior to the commencement of the Subscription
Offering, with provision for prompt refund to the purchasers as set forth above,
or for delivery to the Company if all Shares are sold.
If all conditions precedent to the consummation of the Conversion are
satisfied, including the sale of all Shares required by the Plan to be sold, the
Company agrees to issue or have issued such Shares and to release for delivery
certificates to subscribers for such Shares on or as soon as possible following
the Closing Date against payment to the Company by any means authorized pursuant
to the Prospectus, at the principal executive office of the Association or at
such other place as shall be agreed upon between the parties hereto. The date
upon which the Company shall release or deliver the Shares sold in the
Offerings, in accordance with the terms hereof, is herein called the "Closing
Date."
McDonald agrees either (a) upon receipt of an executed order form of a
subscriber to forward to the Association for deposit in a segregated account the
offering price of the Common Stock ordered on or before twelve noon on the next
business day following receipt of an order form by McDonald or (b) to solicit
indications of interest in which event (i) McDonald will subsequently contact
any potential subscriber indicating interest to confirm the interest and give
instructions to execute and return an order form or to receive authorization to
execute the order form on the subscriber's behalf, (ii) McDonald will mail
acknowledgments of receipt of orders to each subscriber confirming interest on
the business day following such confirmation, (iii) McDonald will debit accounts
of such subscribers on the third business day ("Debit Date") following receipt
of the confirmation referred to in (i), and (iv) McDonald will forward completed
order forms together with such funds to the Association on or before twelve noon
on the next business day following the Debit Date for deposit in a segregated
account. McDonald acknowledges that if the procedure in (b) is adopted,
subscribers' funds are not required to be in their accounts until the Debit
Date.
The Company and the Association agree to pay McDonald the following
compensation and expense reimbursement for its services hereunder as set forth
in Exhibit A hereto.
(a) A management fee in the amount of $20,000, receipt of which is
acknowledged.
(b) A fee equal to $70,000 for stock sold in the subscription and community
offerings. This fee shall be paid to McDonald in next-day funds on the
Closing Date.
(c) Periodic reimbursement for all reasonable allocable out-of-pocket
expenses, including but not limited to travel, food, lodging and legal
fees, incurred by McDonald whether or not the Conversion is consummated:
provided, however, that neither the Company nor the Association shall
reimburse McDonald for any of the foregoing expenses accrued after McDonald
shall have notified the Company or the Association of its election to
terminate this Agreement pursuant to Section 11 hereof or after such time
as the Company or the Association shall have given notice in accordance
with Section 12 hereof that McDonald is in breach of this Agreement. Full
reimbursement of McDonald shall be made in next-day funds on the Closing
Date or, if the Conversion is not completed and is terminated for any
reason, within ten (10) business days of receipt by the Company of a
written request from McDonald detailing its allocable expenses.
(d) Reimbursement for any expenses of the Company and the Association set
forth in Section 6 hereof to the extent paid by McDonald on behalf of the
Company or the Association. Full reimbursement shall be made in next-day
funds on the Closing Date or, if the Conversion is not completed and is
terminated for any reason, within ten (10) business days of receipt by the
Company and the Association of a written request from McDonald detailing
such expenses.
Notwithstanding the limitations on reimbursement of McDonald for its
allocable expenses provided in subsection (c) above and notwithstanding any
reimbursement of McDonald pursuant to subsection (d) above, in the event that a
resolicitation or other event causes the Offerings to be extended beyond the
original expiration date of the Subscription Offering, as set forth in the
Prospectus, McDonald shall be reimbursed for its reasonable allocable expenses
incurred during such extended period.
4. Offering. Subject to the provisions of Section 7 hereof, McDonald is
assisting the Company and the Association on a best efforts basis in offering a
minimum of 357,000 and a maximum of 483,000 Shares, subject to adjustment up to
555,450 Shares, in the Offerings, subject to such other adjustments as may be
permitted by the IDFI and the Office. The Shares are to be offered to the public
at the price set forth on the cover page of the Prospectus and the first page of
this Agreement.
5. Further Agreements.
5.1 The Company and the Association jointly and severally covenant and
agree that:
(a) Subsequent to the respective dates as of which information is given in
the Registration Statement and Prospectus and through and including the
Closing Date, except as otherwise may be indicated or contemplated therein,
neither the Company, the Association nor the Subsidiary will issue any
securities (except for notes to evidence bank loans or other liabilities in
the ordinary course of business or as described in the Prospectus) which
will remain issued at the Closing Date or incur any liability or
obligation, direct or contingent, or borrow money, except borrowings or
liabilities in the ordinary course of business, or enter into any other
transaction not in the ordinary course of business and consistent with
prior practices, which is material in light of the financial condition or
operations of the Company, the Association and the Subsidiary, taken as a
whole.
(b) If any Shares remain unsubscribed following completion of the
Subscription Offering and the Community Offerings, the Company (i) will, if
required by the Securities Act Regulations, promptly file with the
Commission a post-effective amendment to such Registration Statement
relating to the results of the Subscription and the Community Offerings,
any additional information with respect to the proposed plan of
distribution and any revised pricing information or (ii) if no such
post-effective amendment is required, will, if required by the Securities
Act Regulations, file with the Commission a prospectus or prospectus
supplement containing information relating to the results of the
Subscription and Community Offerings and pricing information pursuant to
Rule 424(c) of the Securities Act Regulations, in either case in a form
reasonably acceptable to the Company and McDonald.
(c) Upon consummation of the Conversion, the authorized, issued and
outstanding equity capital of the Company shall be within the range as set
forth in the Prospectus under the caption "Capitalization," and no Common
Stock of the Company shall be outstanding immediately prior to the Closing
Date (other than shares of Common Stock issued in connection with the
initial capitalization of the Company, which shares will be canceled upon
consummation of the Conversion), and the certificates representing the
Shares will conform in all material respects with the requirements of
applicable laws and regulations.
(d) Upon amendment of the Association's charter and bylaws as provided in
the IDFI Regulations and completion of the sale by the Company of the
Shares as contemplated by the Prospectus, (i) the Association will be
converted pursuant to the Plan to an Indiana- chartered capital stock
savings association with full power and authority to own its property and
conduct its business as described in the Prospectus, (ii) all of the
authorized and outstanding capital stock of the Association will be owned
of record and beneficially by the Company, and (iii) the Company will have
no direct subsidiaries other than the Association.
(e) The Company shall deliver to McDonald, from time to time, such number
of copies of the Prospectus as McDonald reasonably may request. The Company
authorizes McDonald to use the Prospectus in any lawful manner in
connection with the offer and sale of the Shares.
(f) The Company will notify McDonald immediately, and confirm the notice in
writing, (i) when any post-effective amendment to the Registration
Statement becomes effective or any supplement to the Prospectus has been
filed, (ii) of the issuance by the Commission of any stop order relating to
the Registration Statement or of the initiation or the threat of any
proceedings for that purpose, (iii) of the receipt of any notice with
respect to the suspension of the qualification of the Shares for offering
or sale in any jurisdiction, (iv) of the receipt of any comments from the
staff of the Commission relating to the Registration Statement and (v) of
the issuance by the IDFI or Office of any stop order relating to the
Conversion or the use of the Prospectus or Proxy Statement or the
initiation or threat of any proceedings for that purpose. If the Commission
enters a stop order relating to the Registration Statement at any time, the
Company will make every reasonable effort to obtain the lifting of such
order at the earliest possible moment.
(g) During the time when a prospectus is required to be delivered under the
Securities Act, the Company will comply in all material respects with all
requirements imposed upon it by the Securities Act and by the Securities
Act Regulations to permit the continuance of offers and sales of or
dealings in the Shares in accordance with the provisions hereof and the
Prospectus. If during the period when the Prospectus is required to be
delivered in connection with the offer and sale of the Shares any event
relating to or affecting the Company, the Association or the Subsidiary,
shall occur as a result of which it is necessary, in the reasonable opinion
of counsel for McDonald after consultation with counsel for the Company and
the Association, to amend or supplement the Prospectus in order to make the
Prospectus not false or misleading in light of the circumstances existing
at the time it is delivered to a purchaser of the Shares, the Company shall
prepare and furnish to McDonald a reasonable number of copies of an
amendment or amendments or of a supplement or supplements to the Prospectus
(in form and substance reasonably satisfactory to counsel for McDonald)
which shall amend or supplement the Prospectus so that, as amended or
supplemented, the Prospectus shall not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in light of the circumstances existing at the time
the Prospectus is delivered to a purchaser of the Shares, not misleading.
The Company will not file or use any amendment or supplement to the
Registration Statement or the Prospectus unless McDonald has been first
furnished a copy or to which McDonald shall reasonably object after having
been furnished such copy. For the purposes of this subsection the Company
and the Association shall furnish such information with respect to
themselves as McDonald from time to time may reasonably request.
(h) The Company and the Association will take all necessary action and
furnish to appropriate counsel such information as may be required to
qualify or register the Shares for offer and sale by the Company under the
securities or blue sky laws of such jurisdictions as McDonald and the
Company or its counsel may agree upon; provided, however, that the Company
shall not be obligated to qualify as a foreign corporation to do business
under the laws of any such jurisdiction. In each jurisdiction where such
qualification or registration shall be effected, the Company, unless
McDonald agrees that such action is not necessary or advisable in
connection with the distribution of the Shares, shall file and make such
statements or reports as are, or reasonably may be, required by the laws of
such jurisdiction.
(i) Appropriate entries will be made in the financial records of the
Association to establish a liquidation account in accordance with the IDFI
and Office Regulations.
(j) The Company will file a registration statement for the Common Stock
under Section 12(b) or Section 12(g) of the Exchange Act, as applicable,
prior to completion of the Offerings and shall request that such
registration statement be effective upon or before completion of the
Conversion. The Company shall maintain the effectiveness of such
registration for a minimum period of three (3) years or for such shorter
period as may be required by applicable law.
(k) The Company will make generally available to its security holders as
soon as practicable, but not later than 90 days after the close of the
period covered thereby, copies of any Form 10-QSB or 10-KSB filed by the
Company with the Commission.
(l) For a period of three (3) years from the date of this Agreement, the
Company will furnish to McDonald, upon request and as soon as publicly
available after the end of each fiscal year, a copy of its annual report to
shareholders for such year; and the Company will furnish to McDonald (i) as
soon as publicly available, a copy of each report or definitive proxy
statement of the Company filed with the Commission under the Exchange Act
or mailed to shareholders, and (ii) from time to time, such other public
information concerning the Company as McDonald may reasonably request.
(m) The Company will use the net proceeds from the sale of the Shares in
the manner set forth in the Prospectus.
(n) The Company will not deliver the Shares until each and every condition
set forth in Section 7 hereof has been satisfied, unless such condition is
waived in writing by McDonald.
(o) The Company and the Association will advise McDonald as to the
allocation of the deposits of the Association's depositors and as to the
allocation of votes of its voting members, and in the event of an
oversubscription for Shares in the Offerings, will determine and provide
McDonald with instructions as to the allocation of the Shares to enable
McDonald to determine and make the final allocations and such information
shall be accurate, reliable and complete. McDonald shall be entitled to
rely upon all such information and instructions given to it by the Company
and the Association and shall have no liability related to its reliance
thereon, including, without limitation, any liability for or related to any
denial or satisfaction of any subscription in whole or in part based on its
good faith reliance on such information and instructions.
(p) The Company and the Association will take such actions and furnish such
information as are reasonably requested by McDonald in order for McDonald
to comply with the NASD's "Interpretation Relating to Free-Riding and
Withholding."
(q) At the Closing Date, the Company and the Association will have
completed all conditions precedent to, and shall have conducted the
Conversion in all material respects in accordance with, the Plan, IDFI and
Office Regulations and all other applicable laws, regulations, published
decisions and orders, including all terms, conditions, requirements and
provisions precedent to the Conversion imposed by IND CODE ss.28-1-21.4 et.
seq., the IDFI and the Office.
(r) The Company will use its best efforts to assist McDonald in obtaining
approval for and maintaining quotation of the Shares on the OTC Bulletin
Board effective on or prior to the Closing Date.
(s) The Company will not sell or issue, contract to sell or otherwise
dispose of, for a period of 90 days after the Closing Date, without
McDonald's prior written consent, any Shares other than as described in the
Prospectus.
(t) The Company and the Association will maintain appropriate arrangements
for depositing all funds received from persons mailing subscriptions for or
orders to purchase Common Stock in the Subscription and Community Offerings
on an interest bearing basis at the rate described in the Prospectus until
the Closing Date and satisfaction of all conditions precedent to the
delivery of certificates for the Shares to subscribers or until refunds of
such funds have been made to the persons entitled thereto in accordance
with the Plan and as described in the Prospectus.
Section 5.2. McDonald hereby covenants with the Company and the Association
as follows:
(a) McDonald shall remain a registered selling agent in all such
jurisdictions in which the Company is so relying for the sale of Shares as
set forth in the blue sky memorandum with respect to the Offering until the
Conversion is consummated or terminated.
(b) McDonald will use its best efforts to obtain approval for the Shares to
be quoted on the OTC Bulletin Board effective on or prior to the Closing
Date.
6. Payment of Expenses. Whether or not the Conversion is consummated, the
Company and the Association shall pay all expenses of the Conversion, including,
but not limited to, the following expenses: (a) all regulatory filing fees,
including but not limited to those payable to the Commission, the IDFI or the
Office, state blue sky authorities and the NASD (including fees payable to the
NASD for McDonald's filing pursuant to the NASD Corporate Finance Rule), (b) all
stock issue and transfer taxes which may be payable with respect to the sale of
the Shares, (c) attorneys' fees of the Company and the Association, (d)
attorneys' fees relating to any required state blue sky laws research and
filings, (e) telephone charges, (f) air freight, (g) rental equipment, (h)
supplies, (i) transfer agent and registrar fees and expenses, (j) auditing and
accounting fees and expenses, (k) fees for appraisals and business plans, (l)
conversion agent charges, (m) costs of printing and mailing all documents
necessary in connection with the Conversion, and (n) slide production expenses
in connection with any community investor meetings to be held in connection with
the Conversion.
7. Conditions of McDonald's Obligations. Except as may be waived in writing
by McDonald, the obligations of McDonald as provided herein shall be subject to
the accuracy of the representations and warranties contained in Section 2 hereof
as of the date hereof and as of the Closing Date, to the performance by the
Company and the Association of their obligations hereunder, and to the following
conditions:
(a) On the Closing Date, McDonald shall receive the favorable opinion of
Xxxxxx & Xxxxxxxxx, special counsel for the Company and the Association,
dated the Closing Date, addressed to McDonald, in form and substance
satisfactory to counsel for McDonald and stating that:
(i) the Company has been duly incorporated and is validly existing as
a corporation under the laws of the State of Indiana; the Association
is duly organized and validly existing as a mutual savings association
under the laws of Indiana; the Subsidiary is duly organized and
validly existing as a corporation under the laws of Indiana and each
of the Company, the Association the Subsidiary have full power and
authority to own their properties and conduct their businesses as
described in the Prospectus;
(ii) the Association is a member of the Federal Home Loan Bank of
Indianapolis, and the deposit accounts of the Association are insured
by the SAIF up to the applicable legal limits, and to such counsel's
Actual Knowledge, no actions or proceedings are pending or threatened
to revoke such membership or insurance coverage;
(iii) neither the Company nor the Association is required to be
registered as an investment company under the Investment Company Act
of 1940;
(iv) to such counsel's Actual Knowledge, each of the Company, the
Association and the Subsidiary is qualified to do business as a
foreign corporation in each jurisdiction where the ownership or
leasing of its properties or the conduct of its business requires such
qualification, unless the failure to be so qualified would not
reasonably be expected to have a Material Adverse Effect; and the
Association has no direct or indirect subsidiary corporations, other
than the Subsidiary;
(v) to such counsel's Actual Knowledge each of the Company, the
Association and the Subsidiary have obtained all licenses, permits and
other governmental authorizations required for the conduct of their
businesses as described in the Prospectus, except where the failure to
obtain such licenses, permits or governmental authorizations would not
reasonably be expected to have a Material Adverse Effect; to such
counsel's Actual Knowledge, all of the leases and subleases material
to the business of the Company, the Association or the Subsidiary
under which the Company, the Association or the Subsidiary holds
properties are in full force and effect;
(vi) the Plan has been duly adopted by the Boards of Directors of the
Association and the Company and approved by the members of the
Association; the Plan complies in all material respects with, and to
such counsel's Actual Knowledge, the Conversion has been effected by
the Company and the Association in all material respects in accordance
with, the HOLA, IND CODE ss.28-1-21.4 et. seq., and the IDFI or the
Office Regulations and applicable IDFI and Office approvals issued
thereunder; to such counsel's Actual Knowledge, all of the terms,
conditions, requirements and provisions with respect to the filing or
submission of the Registration Statement, the Conversion Application
and the Holding Company Application by the Company or the Association,
have been complied with by the Company and the Association in all
material respects except for reports and items required to be filed or
submitted after the Closing Date; and, to such counsel's Actual
Knowledge, no person has sought to obtain regulatory or judicial
review of the final action of the IDFI and the Office in approving the
Plan;
(vii) the Company has authorized Common Stock as set forth in the
Registration Statement and the Prospectus, and the description thereof
in the Registration Statement and the Prospectus is accurate and
complete in all material respects;
(viii) upon the effectiveness of the Association's Articles of Stock
Charter Conversion and Bylaws in accordance with the IDFI Regulations
and the completion of the sale by the Company of the Shares as
contemplated by the Prospectus and Plan, (a) the Association will be
converted pursuant to the Plan to an Indiana capital stock savings
association, with full power and authority to own its property and
conduct its business as described in the Prospectus, and (b) all of
the outstanding capital stock of the Association will be owned of
record and, to such counsel's Actual Knowledge, beneficially by the
Company free and clear of all material liens, charges, encumbrances
and restrictions created by the Company;
(ix) the issuance and sale of the Shares have been duly authorized by
all necessary corporate action on the part of the Company; the Shares,
upon receipt of consideration and issuance in accordance with the
terms of the Plan and this Agreement, will be validly issued, fully
paid, nonassessable and, except as disclosed in the Prospectus, free
of statutory preemptive rights, and purchasers of such shares from the
Company, upon issuance thereof against payment therefor, will acquire
such shares to such counsel's Actual Knowledge free and clear of all
material claims, encumbrances, security interests and liens created by
the Company;
(x) the certificates for the Shares comply in all material respects
with the applicable law of the jurisdiction in which the Company is
incorporated;
(xi) the issuance and sale of the capital stock of the Association to
the Company have been duly authorized by all necessary corporate
action of the Association and the Company and have received the
approval of the IDFI and the Office, and such capital stock, upon
receipt of payment and issuance in accordance with the terms of the
Plan, will be validly issued, fully paid and nonassessable and, except
as disclosed in the Prospectus, free of preemptive rights; the Company
upon issuance thereof against payment to the Association of a portion
of the net proceeds from the sale of the Shares, will acquire such
shares which, to such counsel's Actual Knowledge, are free and clear
of all material claims, encumbrances, security interests and liens;
(xii) subject to the satisfaction of the conditions to the IDFI and
the Office approvals of the Conversion Application and the Office's
approval of the Holding Company Application, no further approval,
authorization, consent or other order of any regulatory agency is
required of the Company and the Association in connection with the
execution and delivery of this Agreement, the issuance and sale of the
Shares and the consummation of the Conversion, except with respect to
the issuance of the Association's Articles of Stock Charter Conversion
by the IDFI, and except as may be required under the blue sky
securities laws of various jurisdictions and the regulations of the
NASD (as to which no opinion need be rendered in such letter);
(xiii) the execution and delivery of this Agreement and the
consummation of the Conversion have been duly authorized by all
necessary corporate action on the part of each of the Company and the
Association, and this Agreement is a legal, valid and binding
obligation of each of the Company and the Association, enforceable in
accordance with its terms except as the enforceability thereof may be
limited by (i) bankruptcy, insolvency, moratorium, reorganization,
receivership, conservatorship or other similar laws relating to or
affecting the enforcement of creditors' rights generally or the rights
of creditors of depository banks whose accounts are insured by the
FDIC or savings and loan holding companies the accounts of whose
subsidiaries are insured by the FDIC; (ii) general equity principles,
regardless of whether such enforceability is considered in a
proceeding in equity or at law, or (iii) laws relating to the safety
and soundness of insured depository banks and their affiliates, and
except to the extent that the provisions of Sections 8 and 9 hereof
may be unenforceable as against public policy or applicable law,
including but not limited to, Section 23A;
(xiv) to such counsel's Actual Knowledge, the Association is not
subject to any directive from the IDFI or the Office to make any
change in the method of conducting its business and there are no legal
or governmental proceedings pending or, to such counsel's Actual
Knowledge, threatened against or involving the assets of the Company
or the Association, which violation or proceedings would reasonably be
expected to have a Material Adverse Effect (provided that for this
purpose such counsel need not regard any litigation or governmental
proceeding to be "threatened" unless the potential litigant or
government authority has manifested to the management of the Company
or the Association, or to such counsel, a present intention to
initiate such litigation or proceeding);
(xv) the statements in the Prospectus under the captions "Regulation,"
"Taxation" "Dividends," "Restrictions on Acquisition of the Holding
Company," "Regulatory Capital Compliance" and "Description of Capital
Stock," insofar as they are, or refer to, statements of federal law or
Indiana law or legal conclusions (excluding financial or statistical
data or stock valuation information included therein, as to which an
opinion need not be expressed), have been prepared or reviewed by such
counsel and are accurate in all material respects;
(xvi) the Conversion Application has been approved by the IDFI and the
Office, and the Holding Company Application has been approved by the
Office and the Prospectus and the Proxy Statement have been authorized
for use by the IDFI and the Office; the Registration Statement and any
post-effective amendment thereto have been declared effective by the
Commission; and no proceedings are pending by or before the Commission
or the Office seeking to revoke or rescind the orders declaring the
Registration Statement or any post-effective amendment thereto
effective or approving the Conversion Application or the Holding
Company Application and, to such counsel's Actual Knowledge, no such
proceedings are contemplated or threatened (provided that for this
purpose such counsel need not regard any litigation or governmental
proceeding to be "threatened" unless the potential litigant or
government authority has manifested to the management of the Company
or the Association, or to such counsel, a present intention to
initiate such litigation or proceeding);
(xvii) the execution and delivery of this Agreement and the
consummation of the Conversion by the Company and the Association do
not (i) violate or conflict with the articles of stock charter
conversion, articles of incorporation or bylaws of the Company, the
Association (in either mutual or stock form) or the Subsidiary or (ii)
violate Indiana statutes (including IND. CODE ss.28-1-21.4 et. seq.)
or regulations, the HOLA or the Office Regulations or, to such
counsel's Actual Knowledge, any law or administrative regulation or
any court order, writ, injunction or decree to which the Company and
the Association is a party (subject to the satisfaction of certain
post-closing conditions imposed by the IDFI or the Office in
connection with their approval of the Conversion Application or the
Office in connection with its approval of the Holding Company
Application);
(xviii) the execution and delivery of this Agreement and the
consummation of the Conversion by the Company and the Association do
not, to such counsel's Actual Knowledge, constitute a breach of or
default (or an event which, with notice or lapse of time or both,
would constitute a default) under, give rise to any right of
termination, cancellation or acceleration contained in, or result in
the creation or imposition of any lien, charge or other encumbrance
upon any of the properties or assets of the Company, the Association
or the Subsidiary pursuant to any of the terms, provisions or
conditions of, any agreement, contract, indenture, bond, lease,
debenture, note, instrument or obligation to which the Company, the
Association or the Subsidiary is a party (other than the required
establishment of the liquidation account pursuant to the Plan) which
in any such event would reasonably be expected to result in a Material
Adverse Effect;
(xix) to such counsel's Actual Knowledge, there has been no violation
of any provision of the Company's, the Association's or the
Subsidiary's articles of stock charter conversion, articles of
incorporation or bylaws or breach or default (or the occurrence of any
event which, with notice or lapse of time or both, would constitute a
default) by the Company, the Association or the Subsidiary under any
agreement, contract, indenture, lease, bond, debenture, note,
instrument or obligation to which the Company, the Association or the
Subsidiary is a party or by which any of them or any of their
respective assets or properties may be bound, or violation of any
license, permit, law, administrative regulation or order, court order,
injunction or decree which violation, breach or default would
reasonably be expected to have a Material Adverse Effect;
(xx) the Conversion Application, the Holding Company Application, the
Registration Statement, the Prospectus and the Proxy Statement, in
each case, as amended and supplemented, comply as to form in all
material respects with the requirements of the Securities Act, Indiana
statutes (including IND. CODE ss.28-1-21.4 et. seq.) and regulations,
the HOLA, the Securities Act Regulations and the IDFI and the Office
Regulations, as the case may be (except as to information provided in
writing by McDonald with respect to McDonald included therein and
financial statements, notes to financial statements, financial tables
and other financial and statistical data and appraisal information
included therein, as to which no opinion need be rendered); to such
counsel's Actual Knowledge, all documents and exhibits required to be
filed with the Conversion Application and the Registration Statement
have been so filed; and the descriptions in the Conversion Application
and the Registration Statement of the documents filed as exhibits to
the Registration Statement and the Conversion Application are accurate
in all material respects.
In rendering such opinions, such counsel may rely as to certain
matters of fact on certificates of executive officers and directors of the
Company and the Association and certificates of public officials delivered
pursuant hereto. Such counsel may assume that any agreement is the valid
and binding obligation of any parties to such agreement other than the
Company and the Association. As used in such counsel's opinion, the phrase
"Actual Knowledge" shall mean the conscious awareness of facts or other
information by Xxxxxxx X. Xxxxxx, Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxxx or
Xxxxxx X. Xxxxxxxxxx who are all the lawyers employed by such counsel who
have had active involvement in representing the Company or the Association,
and except to the extent stated in such opinion, such counsel will not be
deemed to have undertaken any independent investigation or inquiry to
determine the existence or absence of any facts. For purposes of such
opinion, no proceeding shall be deemed to be pending, no order or stop
order shall be deemed to be issued, and no action shall be deemed to be
instituted unless, in each case, a director or executive officer of the
Company or the Association, or its counsel, shall have received a copy of
such proceeding, order, stop order or action. Such opinion may be limited
to statutes, regulations and judicial interpretations and to facts as they
exist as of the date of such opinion. In rendering such opinion, such
counsel need assume no obligation to revise or supplement it should such
statutes, regulations and judicial interpretations be changed thereafter by
legislative or regulatory action, judicial decision or otherwise.
(b) At the Closing Date, McDonald shall receive the letter of Xxxxxx &
Xxxxxxxxx, special counsel for the Company and the Association, dated the
Closing Date, addressed to McDonald, in form and substance reasonably
satisfactory to counsel for McDonald and to the effect that nothing has
come to such counsel's attention that would lead it to believe that the
Registration Statement, as amended or supplemented (except as to
information in respect of McDonald contained therein and except as to the
financial statements, notes to financial statements, financial tables and
other financial and statistical data and appraisal information contained
therein, as to which such counsel need express no view), at the time it
became effective and at the time any post-effective amendment thereto
became effective, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
to make the statements made therein, in light of the circumstances under
which they were made, not misleading, or that the Prospectus, as amended or
supplemented (except as to information in respect of McDonald contained
therein and except as to financial statements, notes to financial
statements, financial tables and other financial and statistical data and
appraisal information contained therein as to which such counsel need
express no view), as of its date, at the time the Prospectus was filed with
the Commission under Rule 424(b) of the Securities Act regulations and at
the Closing Date, contained any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading
(in issuing such letter, such counsel may indicate that it has not
confirmed the accuracy or completeness of or otherwise verified the factual
information contained in the Registration Statement or the Prospectus and
that it does not assume any responsibility for the accuracy or completeness
thereof.)
(c) Counsel for McDonald shall have been furnished such documents as they
reasonably may require for the purpose of enabling them to review or pass
upon the matters required by McDonald, and for the purpose of evidencing
the accuracy, completeness or satisfaction of any of the representations,
warranties or conditions herein contained, including but not limited to,
resolutions of the Board of Directors of the Company and the Association
regarding the authorization of this Agreement and the transactions
contemplated hereby.
(d) Prior to and at the Closing Date, in the reasonable opinion of
McDonald, (i) there shall have been no material adverse change in the
financial condition, results of operations, business or prospects of the
Company , the Association and the Subsidiary, taken as a whole, since the
latest date as of which such condition is set forth in the Prospectus,
except as referred to or contemplated therein; (ii) there shall have been
no transaction entered into by the Company, the Association or the
Subsidiary after the latest date as of which the financial condition of the
Company or the Association is set forth in the Prospectus other than
transactions referred to or contemplated therein, transactions in the
ordinary course of business, and transactions which are not material to the
Company, the Association and the Subsidiary, taken as a whole; (iii) none
of the Company, the Association nor the Subsidiary shall have received from
the IDFI or the Office, or Commission any directive (oral or written) to
make any change in the method of conducting their respective businesses
which is material to the business of the Company, the Association and the
Subsidiary, taken as a whole, with which they have not complied; (iv) no
action, suit or proceeding, at law or in equity or before or by any federal
or state commission, board or other administrative agency, shall be pending
or threatened against the Company, the Association or the Subsidiary or
affecting any of their respective assets, wherein an unfavorable decision,
ruling or finding could have a Material Adverse Effect; and (v) the Shares
shall have been qualified or registered for offering and sale by the
Company under the securities or blue sky laws of such jurisdictions as
McDonald and the Company shall have agreed upon.
(e) On the Closing Date, McDonald shall receive a certificate of the
principal executive officer and the principal financial officer of each of
the Company and the Association, dated the Closing Date, to the effect
that: (i) they have examined the Prospectus, and the Prospectus does not
contain an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading with respect to
the Company, the Association or the Subsidiary; (ii) since the date the
Prospectus became authorized for final use, no event has occurred which
should have been set forth in an amendment or supplement to the Prospectus
which has not been so set forth, including specifically, but without
limitation, any material adverse change in the business, financial
condition, or results of operations of the Company, the Association or the
Subsidiary, and the conditions set forth in clauses (i) through (v)
inclusive of subsection (d) of this Section 7 have been satisfied; (iii) to
the best knowledge of such officers, no order has been issued by the
Commission or the IDFI or the Office to suspend the Offerings or the
effectiveness of the Prospectus, and no action for such purposes has been
instituted or, to the best knowledge of such officers, threatened by the
Commission or the IDFI or the Office; (iv) to the best knowledge of such
officers, no person has sought to obtain review of the final action of the
IDFI or the Office approving the Plan; and (v) all of the representations
and warranties contained in Section 2 of this Agreement are true and
correct, with the same force and effect as though expressly made on the
Closing Date.
(f) At the Closing Date, McDonald shall receive, among other documents, (i)
copies of the letters from the IDFI or Office authorizing the use of the
Prospectus and the Proxy Statement, (ii) a copy of the order of the
Commission declaring the Registration Statement effective; (iii) a copy of
the certificate from the IDFI evidencing the corporate existence of the
Association; (iv) a copy of the certificate from the FDIC evidencing the
insured status of the Association, (v) a copy of the letter from the
appropriate state authority evidencing the incorporation (and, if generally
available from such authority, good standing) of the Company and the
Subsidiary (vi) a copy of the charter, certificate of incorporation or
articles of incorporation of the Company, Association and Subsidiary each
certified by the appropriate state governmental authority; (vii) a copy of
the letter from the IDFI approving the Association's Stock Charter; (viii)
and evidence of payment of all taxes, including any franchise taxes by each
of the Company, Association and Subsidiary.
(g) As soon as available after the Closing Date, McDonald shall receive a
certified copy of the Association's Stock Charter as executed by the
appropriate governmental authority.
(h) Concurrently with the execution of this Agreement, McDonald
acknowledges receipt of a letter from BKD, LLP, independent certified
public accountant, addressed to McDonald and the Company, in substance and
form reasonably satisfactory to counsel for McDonald, with respect to the
financial statements of the Association and certain financial information
contained in the Prospectus.
(i) At the Closing Date, McDonald shall receive a letter from BKD, LLP,
independent certified public accountant, dated the Closing Date and
addressed to McDonald and the Company, in form and substance reasonably
satisfactory to counsel for McDonald, confirming the statements made by
such accountants in the letter delivered by them pursuant to the preceding
subsection and dated as of a specified date not more than five (5) days
prior to the Closing Date.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are, in the reasonable
opinion of McDonald and its counsel, satisfactory to McDonald and its counsel.
Any certificates signed by an officer or director of the Company or the
Association prepared for McDonald's reliance and delivered to McDonald or to
counsel for McDonald shall be deemed a representation and warranty by the
Company and the Association to McDonald as to the statements made therein. If
any condition to McDonald's obligations hereunder to be fulfilled prior to or at
the Closing Date is not so fulfilled, McDonald may terminate this Agreement or,
if McDonald so elects, may waive in writing any such conditions which have not
been fulfilled, or may extend the time of their fulfillment. If McDonald
terminates this Agreement as aforesaid, the Company and the Association shall
reimburse McDonald for its expenses as provided in Section 3 hereof.
8. Indemnification.
(a) The Company and the Association jointly and severally agree to
indemnify and hold harmless McDonald, its officers, directors and employees
and each person, if any, who controls McDonald within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Exchange Act,
against any and all loss, liability, claim, damage and expense whatsoever
and shall further promptly reimburse such persons for any legal or other
expenses reasonably incurred by each or any of them in investigating,
preparing to defend or defending against any action, proceeding or claim
(whether commenced or threatened) arising out of or based upon (A) any
untrue or alleged untrue statement of a material fact or the omission or
alleged omission of a material fact required to be stated or necessary to
make the statements, in light of the circumstances under which they were
made, not misleading contained in (i) the Registration Statement or the
Prospectus or (ii) any application (including the Conversion Application)
or other document or communication (in this Section 8 collectively called
"Application") prepared or executed by or on behalf of the Company or the
Association or based upon written information furnished by or on behalf of
the Company or the Association, filed in any jurisdiction to register or
qualify the Shares under the securities laws thereof or filed with the
IDFI, Office or Commission with respect to the offering of the Shares,
unless such statement or omission was made in reliance upon and in
conformity with information furnished in writing to the Company or the
Association with respect to McDonald by or on behalf of McDonald expressly
for use in the Registration Statement or Prospectus or any amendment or
supplement thereto or in any Application, as the case may be, (B) any
written or unwritten statement made to a purchaser of the Shares by any
director, officer or employee of the Company or the Association, or (C) the
inaccuracy of any representation or warranty set forth in Section 2(a)
above or the breach of any covenant or agreement of the Company or the
Association set forth herein or (D) the participation by McDonald in the
Conversion and the Offering, provided however, that this indemnification
agreement will not apply to any loss, liability, claim, damage or expense
found in a final judgement by a court of competent jurisdiction to have
resulted from the bad faith, willful misconduct or gross negligence of any
other party who may otherwise be entitled to indemnification pursuant to
this Section (8) (a); and, provided further, however, that this
indemnification will not apply to any suit action or proceeding instituted
by the Company or the Association against McDonald, its officers, directors
and each person who controls McDonald within the meaning of Section 15 of
the Securities Act or Section 20(a) of the Exchange Act to enforce the
terms of this Agreement; and provided further, that such indemnification
shall be to the extent not prohibited by the Commission, the Office, the
IDFI, the FDIC and the Board of Governors of the Federal Reserve System.
(b) The Company shall indemnify and hold McDonald harmless for any
liability whatsoever arising out of (i) any instructions given to McDonald
as set forth in Section 5(o) above or (ii) any records of account holders,
depositors, borrowers, and other members of the Association delivered to
McDonald by the Association or its agents for use during the Conversion,
provided, however, that this indemnification shall not apply to any loss,
liability, claim, damage or expense found in a final judgment of a court of
competent jurisdiction to have resulted primarily from the bad faith,
willful misconduct or gross negligence of McDonald.
(c) McDonald agrees to indemnify and hold harmless the Company and the
Association, their officers, directors and employees and each person, if
any, who controls the Company and the Association within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Exchange Act, to
the same extent as the foregoing indemnity from the Company and the
Association to McDonald, but only with respect to (A) statements or
omissions, if any, made in the Prospectus or any amendment or supplement
thereof, in any Application or to a purchaser of the Shares in reliance
upon, and in conformity with, information furnished in writing to the
Company or the Association with respect to McDonald by or on behalf of
McDonald expressly for use in the Prospectus or any amendment or supplement
thereof or in any Application or (B) the inaccuracy of any representation
or warranty set forth in Section 2(b) above or the breach of any covenant
or agreement of McDonald set forth herein.
(d) Promptly after receipt by an indemnified party under this Section 8 of
notice of any action, proceeding or claim (whether commenced or threatened)
such indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under this Section 8, notify the
indemnifying party of such action, proceeding or claim; but the omission so
to notify the indemnifying party will not relieve it from any liability
which it may have to any indemnified party otherwise than under this
Section 8. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof,
the indemnifying party will be entitled to participate therein and, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof other than the reasonable cost of investigation except as
otherwise provided herein. In the event the indemnifying party elects to
assume the defense of any such action and retain counsel reasonably
acceptable to the indemnified party, the indemnified party may retain
additional counsel, but shall bear the fees and expenses of such counsel
unless (i) the indemnifying party shall have specifically authorized the
indemnified party to retain such counsel or (ii) the parties to such suit
include such indemnifying party and the indemnified party, and such
indemnified party shall have been advised by counsel that there are
substantive or procedural issues which raise conflicts of interest between
the indemnified party and indemnifying party, in which case the
indemnifying party shall not be entitled to assume the defense of such suit
notwithstanding the indemnifying party's obligation to bear the fees and
expenses of such counsel. An indemnifying party against whom indemnity may
be sought shall not be liable to indemnify an indemnified party under this
Section 8 if any settlement of any such action is effected without such
indemnifying party's consent.
9. Contribution. In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 8 above
is for any reason held to be unavailable to McDonald, the Company and/or the
Association other than in accordance with its terms, the Company and the
Association or McDonald 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 Association or McDonald(i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Association on the one hand and McDonald on the other from the
offering of the Shares or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above, but also the
relative fault of the Company or the Association on the one hand and McDonald on
the other hand in connection with the statements, acts or omissions which
resulted in such losses, claims, damages, liabilities or judgments, as well as
any other relevant equitable considerations. The relative benefits received by
the Company and the Association on the one hand and McDonald on the other shall
be deemed to be in the same proportion as the total net proceeds from the
Conversion received by the Company and the Association bear to the total fees
received by McDonald under this Agreement. The relative fault of the Company or
the Association on the one hand and McDonald on the other shall be determined by
reference to, among other things, whether any untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Association or by McDonald
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the Association and McDonald agree that it would not be
just and equitable if contribution pursuant to this Section 9 were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by the indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 9, McDonald shall not be required
to contribute any amount in excess of the amount by which fees owed McDonald
pursuant to this Agreement exceed the amount of any damages which McDonald has
otherwise been required to pay by reason of such untrue or alleged untrue
statement, act, omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation.
10. Survival of Agreements, Representations and Indemnities. The respective
indemnities of the Company and the Association and McDonald and the
representations and warranties of the Company and the Association and of
McDonald set forth in or made pursuant to this Agreement shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of McDonald or the Company
or the Association or any controlling person or indemnified party referred to in
Section 8 hereof, and shall survive any termination or consummation of this
Agreement and/or the issuance of the Shares, and any legal representative of
McDonald, the Company, the Association and any such controlling persons shall be
entitled to the benefit of the respective agreements, indemnities, warranties
and representations.
11. Termination. The parties may terminate this Agreement by giving the
notice indicated below in this Section at any time after this Agreement becomes
effective as follows:
(a) McDonald may terminate this Agreement if any domestic or international
event or act or occurrence has materially disrupted the United States
securities markets such as to make it, in McDonald's reasonable opinion,
impracticable to proceed with the offering of the Shares; or if trading on
the New York Stock Exchange shall have suspended; or if the United States
shall have become involved in a war or major hostilities; or if a general
banking moratorium has been declared by a state or federal authority which
has material effect on the Association or the Conversion; or if a
moratorium in foreign exchange trading by major international banks or
persons has been declared; or if there shall have been a material change in
the capitalization, financial condition or business of the Company, the
Association and the Subsidiary, taken as a whole, or if the Company, the
Association and the Subsidiary, taken as a whole, shall have sustained a
material or substantial loss by fire, flood, accident, hurricane,
earthquake, theft, sabotage or other calamity or malicious act, whether or
not said loss shall have been insured.
(b) McDonald may terminate this Agreement in the event of a material breach
of this Agreement by the Company or the Association at any time after this
Agreement becomes effective if such breach is not cured within five (5)
days after McDonald delivers written notice thereof to the Company and the
Association, and the Company and the Association may terminate this
Agreement in the event of a material breach of this Agreement by McDonald
at any time after this Agreement becomes effective if such breach is not
cured within five (5) days after the Company or the Association delivers
written notice thereof to McDonald.
(c) The Association may terminate the Conversion in accordance with the
terms of the Plan. Such termination shall be without liability to any
party, except that the Company and the Association shall be required to
fulfill their obligations pursuant to Sections 3, 6, 8, and 9 of this
Agreement.
(d) The Company and the Association, and McDonald, may terminate this
Agreement by mutual written agreement.
(e) If this Agreement is terminated by McDonald for any of the reasons set
forth in subsections (a) or (b) above, and to fulfill their obligations, if
any, pursuant to Sections 3, 6, 8 and 9 of this Agreement and upon demand,
the Company and the Association shall pay McDonald the full amount so owing
thereunder.
(f) If this Agreement is terminated as provided in this Section 11, the
party terminating this Agreement shall notify any non-terminating party
promptly by telephone or telegram, confirmed by letter.
12. Notices. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and if sent to McDonald shall be
mailed, delivered or telegraphed and confirmed to Trident Securities, a Division
of McDonald Investments Inc., The Pinnacle, Suite 650, 0000 Xxxxxxxxx Xxxx,
X.X., Xxxxxxx, Xxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxx (with a copy to
Xxxxxxx Xxxxxx & Xxxxxxxx, LLP, 0000 Xxxxxxxxx Xxxxxx XX, Xxxxxxxxxx, XX 00000,
Attention Xxxx X. Xxxxxxxxx, Esquire) and if sent to the Company or the
Association, shall be mailed, delivered or telegraphed and confirmed to Michigan
City Savings and Loan Association 0000 Xxxxxxxx Xxxxxx, Xxxxxxxx Xxxx, Xxxxxxx
00000, Attention: Xxxxxx X. Xxxxxxx, President (with a copy to Xxxxxx &
Xxxxxxxxx 00 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx 00000, Attention Xx.
Xxxxxxx X. Xxxxxx, Esquire).
13. Parties. The Company and the Association shall be entitled to act and
rely on any request, notice, consent, waiver or agreement purportedly given on
behalf of McDonald when the same shall have been given by the undersigned or any
other officer of McDonald. McDonald shall be entitled to act and rely on any
request, notice, consent, waiver or agreement purportedly given on behalf of the
Company or the Association, when the same shall have been given by the
undersigned or any other officer of the Company or the Association. This
Agreement shall inure solely to the benefit of, and shall be binding upon,
McDonald, the Company, the Association and the controlling and other persons
referred to in Section 8 hereof, and their respective successors, legal
representatives and assigns, and no other person shall have or be construed to
have any legal or equitable right, remedy or claim under or in respect of or by
virtue of this Agreement or any provision herein contained.
14. Construction. Unless preempted by federal law, this Agreement shall be
governed by and construed in accordance with the substantive laws of Indiana.
15. Counterparts. This Agreement may be executed in separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which together shall constitute but one and the same instrument.
16. Amendment. This Agreement may be amended at any time only by a writing
signed by all parties hereto.
Please acknowledge your agreement to the foregoing by signing below and
returning to the Company one copy of this letter.
CITY SAVINGS FINANCIAL CORPORATION
By:
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Xxxxxx X. Xxxxxxx
President and Chief Executive Officer
MICHIGAN CITY SAVINGS AND LOAN ASSOCIATION
By:
---------------------------------------
Xxxxxx X. Xxxxxxx
President and Chief Executive Officer
Agreed to and accepted as
of the date first written above:
TRIDENT SECURITIES, a Division of McDonald Investments Inc.
By:
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