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Exhibit 1.2
PFS BANCORP, INC.
1,520,875 Shares
COMMON SHARES
(Par Value $.01 Per Share)
Subscription Price $10.00 Per Share
AGENCY AGREEMENT
_________________, 2001
Prestige Financial Center, Inc.
North Shore Towers Financial Center
271-603 Grand Central Parkway
Floral Park, NY 11005
Ladies and Gentlemen:
PFS Bancorp, Inc., an Indiana corporation (the "Company"), and Peoples
Federal Savings Bank, Aurora, Indiana, a federally chartered mutual savings bank
(the "Bank") (references to the "Bank" include the Bank in the mutual or stock
form, as indicated by the context), with its deposit accounts insured by the
Savings Association Insurance Fund ("SAIF") administered by the Federal Deposit
Insurance Corporation ("FDIC"), hereby confirm their agreement with Prestige
Financial Center, Inc. ("Prestige" or "the Agent"), as follows:
SECTION 1. THE OFFERING. The Bank, in accordance with its plan of
conversion adopted by its Board of Directors (the "Plan"), intends to convert
from a federally chartered mutual savings bank to a federally chartered stock
savings bank, and will issue all of its issued and outstanding capital stock to
the Company. In addition, pursuant to the Plan, the Company will offer and sell
up to 1,520,875 of its common shares, par value $.01 per share (the "Shares" or
"Common Shares"), in a subscription offering (the "Subscription Offering") to
(1) depositors of the Bank with Qualifying Deposits (as defined in the Plan) as
of December 31, 1999 ("Eligible Account Holders"), (2) the Company's Employee
Stock Ownership Plan (the "ESOP"), (3) depositors of the Bank with Qualifying
Deposits as of June 30, 2000 ("Supplemental Eligible Account Holders") and (4)
the Bank's Other Members as defined in the Plan. Subject to the prior
subscription rights of the
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above-listed parties, the Company is offering for sale in a community offering
(the "Community Offering" and when referred to together with the Subscription
Offering, the "Subscription and Community Offering") conducted concurrently with
the Subscription Offering, the Shares not subscribed for or ordered in the
Subscription Offering to members of the general public to whom a copy of the
Prospectus (as hereinafter defined) is delivered with a preference given to
residents of Dearborn, Switzerland and Ohio Counties, Indiana. It is anticipated
that shares not subscribed for in the Subscription and Community Offering will
be offered to certain members of the general public on a best efforts basis
through a selected dealers agreement (the "Syndicated Community Offering") (the
Subscription Offering, Community Offering and Syndicated Community Offering are
collectively referred to as the "Offering"). In the event of a Syndicated
Community Offering, the Agent shall assemble and manage a selling group of
broker-dealers which are members of the National Association of Securities
Dealers, Inc. ("NASD"), to participate in the solicitation of purchase orders
for shares under a selected dealers' agreement in the form attached hereto as
Exhibit A. It is acknowledged that the purchase of Shares in the Offering is
subject to the maximum and minimum purchase limitations as described in the Plan
and that the Company and the Bank may reject, in whole or in part, any orders
received in the Community Offering or Syndicated Community Offering.
Collectively, these transactions are referred to herein as the "Conversion."
In connection with the Conversion, the Company will issue an additional
number of Shares equal to two percent of the Shares sold in the Offering to the
PFS Community Foundation (the "Foundation"), a charitable foundation which will
be formed to promote charitable activities, including community development
activities, within the communities served by the Bank. As a result of the
issuance of Common Stock to the Foundation the minimum number of Shares that
will be outstanding following the completion of the Conversion will be 997,050
Shares, and the maximum number of Shares that will be outstanding will be
1,551,293 Shares.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (File No. 333-____) (the
"Registration Statement") containing a prospectus relating to the Offering for
the registration of the Shares under the Securities Act of 1933 (the "1933
Act"), and has filed such amendments thereof and such amended prospectuses as
may have been required to the date hereof. The term "Registration Statement"
shall include any documents incorporated by reference therein and all financial
schedules and exhibits thereto, as amended, including post-effective amendments.
The prospectus, as amended, on file with the Commission at the time the
Registration Statement initially became effective is hereinafter called the
"Prospectus," except that if any Prospectus is filed by the Company pursuant to
Rule 424(b) or (c) of the rules and regulations of the Commission under the 1933
Act (the "1933 Act Regulations") differing from the prospectus on file at the
time the Registration Statement initially becomes effective, the term
"Prospectus" shall refer to the prospectus filed pursuant to Rule 424(b) or (c)
from and after the time said prospectus is filed with the Commission.
In accordance with Title 12, Part 563b of the Code of Federal
Regulations (the "Conversion Regulations") and the laws and regulations of the
State of Indiana, the Bank has filed with the Office of Thrift Supervision (the
"OTS") an Application for Conversion (the "Conversion Application"),
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including the Prospectus and the Conversion Valuation Appraisal Report prepared
by RP Financial, LC (the "Appraisal") and has filed such amendments thereto as
may have been required by the OTS. The Conversion Application has been approved
by the OTS and the related Prospectus has been authorized for use by the OTS. In
addition, the Company has filed with the OTS its application on Form H-(e)1 (the
"Holding Company Application") to become a registered savings and loan holding
company under the Home Owners' Loan Act, as amended ("HOLA"); and it has been
approved.
SECTION 2. RETENTION OF AGENT; COMPENSATION; SALE AND DELIVERY OF THE
SHARES. Subject to the terms and conditions herein set forth, the Company and
the Bank hereby appoint the Agent as their financial advisor and marketing agent
(i) to utilize its best efforts to solicit subscriptions for Common Shares and
to advise and assist the Company and the Bank with respect to the Company's sale
of the Shares in the Offering and (ii) to participate in the Offering in the
areas of market making, research coverage and in syndicate formation (if
necessary).
On the basis of the representations, warranties, and agreements herein
contained, but subject to the terms and conditions herein set forth, the Agent
accepts such appointment and agrees to consult with and advise the Company and
the Bank as to the matters set forth in the letter agreement, dated May 15,
2001, between the Bank and Prestige (a copy of which is attached hereto as
Exhibit B). It is acknowledged by the Company and the Bank that the Agent shall
not be required to purchase any Shares or be obligated to take any action which
is inconsistent with all applicable laws, regulations, decisions or orders.
The obligations of the Agent pursuant to this Agreement (other than
those set forth in Section 2(a) and (d) hereof) shall terminate upon the
completion or termination or abandonment of the Plan by the Company or upon
termination of the Offering, but in no event later than 45 days after the
completion of the Subscription Offering (the "End Date"). All fees or expenses
due to the Agent but unpaid will be payable to the Agent in next day funds at
the earlier of the Closing Date (as hereinafter defined) or the End Date. In the
event the Offering is extended beyond the End Date, the Company, the Bank and
the Agent may agree to renew this Agreement under mutually acceptable terms.
In the event the Company is unable to sell a minimum of 977,500 Shares
within the period herein provided, this Agreement shall terminate and the
Company shall refund to any persons who have subscribed for any of the Shares
the full amount which it may have received from them plus accrued interest, as
set forth in the Prospectus; and none of the parties to this Agreement shall
have any obligation to the other parties hereunder, except as set forth in this
Section 2 and in Sections 6, 8 and 9 hereof.
In the event the Offering is terminated for any reason not attributable
to the action or inaction of the Agent, the Agent shall be paid the fees due to
the date of such termination pursuant to subparagraphs (a) and (d) below.
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If all conditions precedent to the consummation of the Conversion,
including, without limitation, the sale of all Shares required by the Plan to be
sold, are satisfied, the Company agrees to issue, or have issued, the Shares
sold in the Offering and to release for delivery certificates for such Shares on
the Closing Date (as hereinafter defined) against payment to the Company by any
means authorized by the Plan; provided, however, that no funds shall be released
to the Company until the conditions specified in Section 7 hereof shall have
been complied with to the reasonable satisfaction of the Agent and their
counsel. The release of Shares against payment therefor shall be made on a date
and at a place acceptable to the Company, the Bank and the Agent. Certificates
for shares shall be delivered directly to the purchasers in accordance with
their directions. The date upon which the Company shall release or deliver the
Shares sold in the Offering, in accordance with the terms herein, is called the
"Closing Date."
The Agent shall receive the following compensation for its services
hereunder:
(a) A marketing fee of $85,000 which shall be payable upon the
consummation of the Conversion and the issuance of the Common
Shares.
(b) If any of the Common Shares remain available after the
Subscription and Community Offering, at the request of the
Bank, the Agent may, upon receipt of written authorization
from the Company, seek to form a syndicate of registered
broker-dealers ("Selected Dealers") to assist in the sale of
such Common Shares on a best efforts basis, subject to the
terms and conditions set forth in the selected dealers
agreement. Prestige will endeavor to distribute the Common
Shares among the Selected Dealers in a fashion which best
meets the distribution objectives of the Bank and the Plan.
Prestige will be paid a fee that will be mutually agreed upon
between the Agent and the Company. Prestige will pass onto the
Selected Dealers who assist in the Syndicated Community
Offering an amount competitive with gross underwriting
discounts charged at such time for comparable amounts of stock
sold at a comparable price per share in a similar market
environment. Fees with respect to purchases effected with the
assistance of Selected Dealers other than Prestige shall be
transmitted by Prestige to such Selected Dealers. The decision
to utilize Selected Dealers will be made by the Bank upon
consultation with Prestige.
(c) The Bank and Company shall reimburse the Agent on a timely
basis for all reasonable out-of-pocket expenses and
disbursements, including fees and expenses of counsel,
database charges, travel, printing, copying, communications,
mailing and delivery and all other related expenses incurred
in connection with the Conversion, provided that such fees and
expenses shall not exceed $25,000 unless an additional amount
is agreed upon in writing by the Bank. The Bank will bear the
expenses of the Offering customarily borne by issuers
including, without limitation, regulatory filing fees, SEC,
"Blue Sky," and NASD filing and registration fees; the fees of
the Bank's accountants, attorneys, appraiser, transfer agent
and registrar, printing,
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mailing and marketing expenses associated with the conversion;
and the fees set forth under this Section 2; and fees for
"Blue sky" legal work. The Company or the Bank will reimburse
Prestige for expenses incurred by Prestige on their behalf.
Full payment of Agent's actual and accountable expenses, advisory fees
and compensation shall be made in next day funds on the earlier of the Closing
Date or a determination by the Bank to terminate or abandon the Plan.
SECTION 3. PROSPECTUS; OFFERING. The Shares are to be initially offered
in the Offering at the Purchase Price as defined and set forth on the cover page
of the Prospectus.
SECTION 4. REPRESENTATIONS AND WARRANTIES. The Company and the Bank
jointly and severally represent and warrant to and agree with the Agent as
follows:
(a) The Registration Statement which was prepared by the Company
and the Bank and filed with the Commission was declared
effective by the Commission on ______________, 2001. At the
time the Registration Statement, including the Prospectus
contained therein (including any amendment or supplement),
became effective, the Registration Statement contained all
statements that were required to be stated therein in
accordance with the 1933 Act and the 1933 Act Regulations,
complied in all material respects with the requirements of the
1933 Act and the 1933 Act Regulations and the Registration
Statement, including the Prospectus contained therein
(including any amendment or supplement thereto), and any
information regarding the Company or the Bank contained in
Sales Information (as such term is defined in Section 8
hereof) authorized by the Company or the Bank for use in
connection with the Offering, did not contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading, and at the time any Rule
424(b) or (c) Prospectus was filed with the Commission and at
the Closing Date referred to in Section 2, the Registration
Statement, including the Prospectus contained therein
(including any amendment or supplement thereto), and any
information regarding the Company or the Bank contained in
Sales Information (as such term is defined in Section 8
hereof) authorized by the Company or the Bank for use in
connection with the Offering will contain all statements that
are required to be stated therein in accordance with the 1933
Act and the 1933 Act Regulations and will not contain an
untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the
representations and warranties in this Section 4(a) shall not
apply to statements or omissions made in reliance upon and in
conformity with written information furnished
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to the Company or the Bank by the Agent or its counsel
expressly regarding the Agent for use in the Prospectus under
the caption "The Conversion-Marketing Arrangements" or
statements in or omissions from any Sales Information or
information filed pursuant to state securities or blue sky
laws or regulations regarding the Agent.
(b) The Conversion Application which was prepared by the Company
and the Bank and filed with the OTS was approved on
______________, 2001 and the related Prospectus has been
authorized for use by the OTS. At the time of the approval of
the Conversion Application, including the Prospectus
(including any amendment or supplement thereto), by the OTS
and at all times subsequent thereto until the Closing Date,
the Conversion Application, including the Prospectus
(including any amendment or supplement thereto), will comply
in all material respects with the Conversion Regulations,
except to the extent waived in writing by the OTS. The
Conversion Application, including the Prospectus (including
any amendment or supplement thereto), does not include any
untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances
under which they were made, not misleading; provided, however,
that the representations and warranties in this Section 4(b)
shall not apply to statements or omissions made in reliance
upon and in conformity with written information furnished to
the Company or the Bank by the Agent or its counsel expressly
regarding the Agent for use in the Prospectus contained in the
Conversion Application under the caption "The
Conversion-Marketing Arrangements" or statements in or
omissions from any sales information or information filed
pursuant to state securities or blue sky laws or regulations
regarding the Agent. The Holding Company Application for
approval pursuant to the HOLA and the regulations promulgated
thereunder (the "Control Act Regulations") has been prepared
by the Bank and the Company in material conformity with the
requirements of the Control Act Regulations and has been filed
with and approved by the OTS. A conformed copy of the Holding
Company Application has been delivered to the Agent.
(c) The Company has filed with the OTS the Holding Company
Application, and such Application was deemed complete by the
OTS. As of the Closing Date, approval of the Company's
acquisition of the Bank will have been obtained from the OTS.
(d) No order has been issued by the OTS or the FDIC (hereinafter
any reference to the FDIC shall include the SAIF) preventing
or suspending the use of the Prospectus, and no action by or
before any such government entity to revoke any approval,
authorization or order of effectiveness related to the
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Conversion is, to the best knowledge of the Company or the
Bank, pending or threatened.
(e) At the Closing Date, the Plan will have been adopted by the
Boards of Directors of both the Company and the Bank and
approved by the members of the Bank, and the offer and sale of
the Shares will have been conducted in all material respects
in accordance with the Plan, the Conversion Regulations, and
all other applicable laws, regulations, decisions and orders,
including all terms, conditions, requirements and provisions
precedent to the Conversion imposed upon the Company or the
Bank by the OTS, the Commission, or any other regulatory
authority and in the manner described in the Prospectus. No
person has sought to obtain review of the final action of the
OTS in approving the Plan or in approving the Conversion or
the Holding Company Application pursuant to the HOLA or any
other statute or regulation.
(f) The Bank has been organized and is a validly existing
federally chartered savings bank in mutual form of
organization and upon the Conversion will become a duly
organized and validly existing federally chartered savings
bank in permanent capital stock form of organization, in both
instances duly authorized to conduct its business and own its
property as described in the Registration Statement and the
Prospectus; the Bank has obtained all licenses, permits and
other governmental authorizations currently required for the
conduct of its business, except those that individually or in
the aggregate would not materially adversely affect the
financial condition, earnings, capital, assets, properties or
business of the Company and the Bank, taken as a whole; all
such licenses, permits and governmental authorizations are in
full force and effect, and the Bank is in compliance with all
material laws, rules, regulations and orders applicable to the
operation of its business; the Bank is existing under federal
law and is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which
its ownership of property or leasing of property or the
conduct of its business requires such qualification, unless
the failure to be so qualified in one or more of such
jurisdictions would not have a material adverse effect on the
condition, financial or otherwise, or the business, operations
or income of the Bank. The Bank does not own equity securities
or any equity interest in any other business enterprise except
as described in the Prospectus or as would not be material to
the operations of the Bank. Upon completion of the sale by the
Company of the Shares contemplated by the Prospectus, (i) all
of the authorized and outstanding capital stock of the Bank
will be owned by the Company and (ii) the Company will have no
direct subsidiaries other than the Bank. The Conversion will
have been effected in all material respects in accordance with
all applicable statutes, regulations, decisions and orders;
and, except with respect to the filing of certain post-sale,
post-Conversion reports,
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and documents in compliance with the 1933 Act Regulations, the
OTS's resolutions or letters of approval, all terms,
conditions, requirements and provisions with respect to the
Conversion imposed by the Commission, the OTS and the FDIC, if
any, will have been complied with by the Company and the Bank
in all material respects or appropriate waivers will have been
obtained and all material notice and waiting periods will have
been satisfied, waived or elapsed.
(g) The Company has been duly incorporated and is validly existing
as a corporation under the laws of the State of Indiana with
corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the
Registration Statement and the Prospectus, and at the Closing
Date the Company will be qualified to do business as a foreign
corporation in each jurisdiction in which the conduct of its
business requires such qualification, except where the failure
to so qualify would not have a material adverse effect on the
condition, financial or otherwise, or the business, operations
or income of the Company. The Company has obtained all
licenses, permits and other governmental authorizations
currently required for the conduct of its business except
those that individually or in the aggregate would not
materially adversely affect the financial condition, earnings,
capital, assets, properties or business of the Company and the
Bank, taken as a whole; all such licenses, permits and
governmental authorizations are in full force and effect, and
the Company is in all material respects complying with all
laws, rules, regulations and orders applicable to the
operation of its business.
(h) The Bank is a member of the Federal Home Loan Bank of
Indianapolis ("FHLB-Indianapolis"). The deposit accounts of
the Bank are insured by the FDIC up to the applicable limits,
and no proceedings for the termination or revocation of such
insurance are pending or, to the best knowledge of the Company
or the Bank, threatened. Upon consummation of the Conversion,
the liquidation account for the benefit of Eligible Account
Holders and Supplemental Eligible Account Holders will be duly
established in accordance with the requirements of the
Conversion Regulations.
(i) The Company and the Bank have good and marketable title to all
real property and good title to all other assets material to
the business of the Company and the Bank, taken as a whole,
and to those properties and assets described in the
Registration Statement and Prospectus as owned by them, free
and clear of all liens, charges, encumbrances or restrictions,
except such as are described in the Registration Statement and
Prospectus, or are not material to the business of the Company
and the Bank, taken as a whole; and all of the leases and
subleases material to the business of the Company and
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the Bank, taken as a whole, under which the Company or the
Bank hold properties, including those described in the
Registration Statement and Prospectus, are in full force and
effect.
(j) The Company and the Bank have received an opinion of their
special counsel, Elias, Matz, Tiernan & Herrick L.L.P., with
respect to the federal and Indiana income tax consequences of
the Conversion; all material aspects of the opinion of Elias,
Matz, Tiernan & Herrick L.L.P. are accurately summarized in
the Registration Statement and will be accurately summarized
in the Prospectus; and further represent and warrant that the
facts upon which such opinion is based are truthful, accurate
and complete.
(k) The Company and the Bank have all such power, authority,
authorizations, approvals and orders as may be required to
enter into this Agreement, to carry out the provisions and
conditions hereof and to issue and sell the Shares to be sold
by the Company as provided herein and as described in the
Prospectus, except approval or confirmation by the OTS of the
final appraisal of the Bank. The consummation of the
Conversion, the execution, delivery and performance of this
Agreement and the consummation of the transactions herein
contemplated have been duly and validly authorized by all
necessary corporate action on the part of the Company and the
Bank and this Agreement has been validly executed and
delivered by the Company and the Bank and is the valid, legal
and binding agreement of the Company and the Bank enforceable
in accordance with its terms (except as the enforceability
thereof may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar laws relating to or affecting the
enforcement of creditors' rights generally or the rights of
creditors of savings and loan holding companies, the accounts
of whose subsidiaries are insured by the FDIC, or by general
equity principles, regardless of whether such enforceability
is considered in a proceeding in equity or at law, and except
to the extent, if any, that the provisions of Sections 8 and 9
hereof may be unenforceable as against public policy).
(l) Neither the Company nor the Bank are in violation of any
directive received from the OTS, the FDIC, or any other agency
to make any material change in the method of conducting their
businesses so as to comply in all material respects with all
applicable statutes and regulations (including, without
limitation, regulations, decisions, directives and orders of
the OTS and the FDIC) and, except as may be set forth in the
Registration Statement and the Prospectus, there is no suit or
proceeding or charge or action before or by any court,
regulatory authority or governmental agency or body, pending
or, to the knowledge of the Company or the Bank, threatened,
which might materially and adversely affect the Conversion,
the performance of this
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Agreement or the consummation of the transactions contemplated
in the Plan and as described in the Registration Statement and
the Prospectus or which might result in any material adverse
change in the condition (financial or otherwise), earnings,
capital or properties of the Company or the Bank, or which
would materially affect their properties and assets.
(m) The financial statements, schedules and notes related thereto
which are included in the Prospectus fairly present the
balance sheet, income statement, statement of changes in
equity capital and statement of cash flows of the Bank at the
respective dates indicated and for the respective periods
covered thereby and comply as to form in all material respects
with the applicable accounting requirements of Title 12 of the
Code of Federal Regulations and generally accepted accounting
principles (including those requiring the recording of certain
assets at their current market value) ("GAAP"). Such financial
statements, schedules and notes related thereto have been
prepared in accordance with generally accepted accounting
principles consistently applied through the periods involved,
present fairly in all material respects the information
required to be stated therein and are consistent with the most
recent financial statements and other reports filed by the
Bank with the OTS, except that accounting principles employed
in such regulatory filings conform to the requirements of the
OTS and not necessarily to GAAP. The other financial,
statistical and pro forma information and related notes
included in the Prospectus present fairly the information
shown therein on a basis consistent with the audited and
unaudited financial statements of the Bank included in the
Prospectus, and as to the pro forma adjustments, the
adjustments made therein have been properly applied on the
basis described therein.
(n) Since the respective dates as of which information is given in
the Registration Statement including the Prospectus: (i) there
has not been any material adverse change, financial or
otherwise, in the condition of the Company or the Bank and its
subsidiaries, considered as one enterprise, or in the
earnings, capital or properties of the Company or the Bank,
whether or not arising in the ordinary course of business;
(ii) there has not been any material increase in the long-term
debt of the Bank or in the principal amount of the Bank's
assets which are classified by the Bank as substandard,
doubtful or loss or in loans past due 90 days or more or real
estate acquired by foreclosure, by deed-in-lieu of foreclosure
or deemed in-substance foreclosure or any material decrease in
equity capital or total assets of the Bank, nor has the
Company or the Bank issued any securities (other than in
connection with the incorporation of the Company) or incurred
any liability or obligation for borrowing other than in the
ordinary course of business; (iii) there have not been any
material transactions entered into by the Company or the Bank;
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(iv) there has not been any material adverse change in the
aggregate dollar amount of the Bank's deposits or its
consolidated net worth or spread; (v) there has been no
material adverse change in the Company's or the Bank's
relationship with its insurance carriers, including, without
limitation, cancellation or other termination of the Company's
or the Bank's fidelity bond or any other type of insurance
coverage; (vi) except as disclosed in the Prospectus, there
has been no material change in management of the Company or
the Bank, neither of which has any material undisclosed
liability of any kind, contingent or otherwise; (vii) neither
the Company nor the Bank has sustained any material loss or
interference with its respective business or properties from
fire, flood, windstorm, earthquake, accident or other
calamity, whether or not covered by insurance; (viii) neither
the Company nor the Bank is in default in the payment of
principal or interest on any outstanding debt obligations;
(ix) the capitalization, liabilities, assets, properties and
business of the Company and the Bank conform in all material
respects to the descriptions thereof contained in the
Prospectus; and (x) neither the Company nor the Bank has any
material contingent liabilities, except as set forth in the
Prospectus. All documents made available to or delivered or to
be made available to or delivered by the Bank or the Company
or their representatives in connection with the issuance and
sale of the Shares, including records of account holders,
depositors, borrowers and other members of the Bank, or in
connection with the Agent's exercise of due diligence, except
for those documents which were prepared by parties other than
the Bank, the Company or their representatives, were on the
dates on which they were delivered, or will be on the dates on
which they are to be delivered, true, complete and correct in
all material respects.
(o) As of the date hereof and as of the Closing Date, neither the
Company nor the Bank is (i) in violation of its articles of
incorporation or code of regulations or charter or bylaws,
respectively (and the Bank will not be in violation of its
charter or bylaws in capital stock form upon consummation of
the Conversion), or (ii) in default in the performance or
observance of any material obligation, agreement, covenant, or
condition contained in any material contract, lease, loan
agreement, indenture or other instrument to which it is a
party or by which it or any of its property may be bound. The
consummation of the transactions herein contemplated will not:
(i) conflict with or constitute a breach of, or default under,
or result in the creation of any material lien, charge or
encumbrance (with the exception of the liquidation account
established in the Conversion) upon any of the assets of the
Company or the Bank pursuant to the Articles of Incorporation
and Bylaws of the Company or the Charter and Bylaws of the
Bank (in either mutual or capital stock form) or any material
contract, lease or other instrument in which the Company or
the Bank has a beneficial interest, or any applicable
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law, rule, regulation or order; (ii) violate any
authorization, approval, judgement, decree, order, statute,
rule or regulation applicable to the Company or the Bank,
except for such violations which would not have a material
adverse effect on the financial condition and results of
operations of the Company and the Bank on a consolidated
basis; or (iii) with the exception of the liquidation account
established in the Conversion, result in the creation of any
material lien, charge or encumbrance upon any property of the
Company or the Bank.
(p) No default exists, and no event has occurred which with notice
or lapse of time, or both, would constitute a default on the
part of the Company or the Bank in the due performance and
observance of any term, covenant or condition of any
indenture, mortgage, deed of trust, note, bank loan or credit
agreement or any other instrument or agreement to which the
Company or the Bank is a party or by which any of them or any
of their property is bound or affected, except such defaults
which would not have a material adverse affect on the
financial condition or results of operations of the Company
and the Bank on a consolidated basis; such agreements are in
full force and effect; and no other party to any such
agreements has instituted or, to the best knowledge of the
Company and the Bank, threatened any action or proceeding
wherein the Company or the Bank would or might be alleged to
be in default thereunder, where such action or proceeding, if
determined adversely to the Company or the Bank, would have a
material adverse effect on the Company or the Bank considered
as one enterprise.
(q) Upon consummation of the Conversion, the authorized, issued
and outstanding equity capital of the Company will be within
the range set forth in the Prospectus under the caption
"Capitalization," and no Shares have been or will be issued
and outstanding prior to the Closing Date; the Shares will
have been duly and validly authorized for issuance and, when
issued and delivered by the Company pursuant to the Plan
against payment of the consideration calculated as set forth
in the Plan and in the Prospectus, will be duly and validly
issued, fully paid and non-assessable, except for shares
purchased by the ESOP with funds borrowed from the Company to
the extent payment therefor in cash has not been received by
the Company; except to the extent that subscription rights and
priorities pursuant thereto exist pursuant to the Plan, no
preemptive rights exist with respect to the Shares; and the
terms and provisions of the Shares will conform in all
material respects to the description thereof contained in the
Registration Statement and the Prospectus. Upon the issuance
of the Shares, good title to the Shares will be transferred
from the Company to the purchasers thereof against payment
therefor, subject to such claims as may be asserted against
the purchasers thereof by third-party claimants.
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(r) No approval of any regulatory or supervisory or other public
authority is required in connection with the execution and
delivery of this Agreement or the issuance of the Shares,
except for the approval of the Commission and the OTS, and any
necessary qualification, notification, registration or
exemption under the securities or blue sky laws of the various
states in which the Shares are to be offered, and except as
may be required under the rules and regulations of the NASD
and/or The Nasdaq Stock Market.
(s) Grant Thornton, which has certified the audited financial
statements and schedules of the Bank included in the
Prospectus, has advised the Company and the Bank in writing
that they are, with respect to the Company and the Bank,
independent public accountants within the meaning of the Code
of Professional Ethics of the American Institute of Certified
Public Accountants and applicable regulations of the OTS.
(t) RP Financial, LC, which has prepared the Bank's Conversion
Valuation Appraisal Report as of June 8, 2001 (as amended or
supplemented, if so amended or supplemented) (the
"Appraisal"), has advised the Company in writing that it is
independent of the Company and the Bank within the meaning of
the Conversion Regulations.
(u) The Company and the Bank have timely filed all required
federal, state and local tax returns; the Company and the Bank
have paid all taxes that have become due and payable in
respect of such returns, except where permitted to be
extended, have made adequate reserves for similar future tax
liabilities and no deficiency has been asserted with respect
thereto by any taxing authority.
(v) The Bank is in compliance in all material respects with the
applicable financial record-keeping and reporting requirements
of the Currency and Foreign Transactions Reporting Act of
1970, as amended, and the regulations and rules thereunder.
(w) Neither the Company, the Bank nor employees of the Company or
the Bank has made any payment of funds of the Company or the
Bank as a loan for the purchase of the Shares or made any
other payment of funds prohibited by law, and no funds have
been set aside to be used for any payment prohibited by law.
(x) Prior to the Conversion, neither the Company nor the Bank has:
(i) issued any securities within the last 18 months (except
for notes to evidence bank loans and reverse repurchase
agreements or other liabilities in the ordinary course of
business or as described in the Prospectus); (ii) had any
material dealings
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within the 12 months prior to the date hereof with any member
of the NASD, or any person related to or associated with such
member, other than discussions and meetings relating to the
proposed Offering and routine purchases and sales of United
States government and agency and other securities in the
ordinary course of business; (iii) entered into a financial or
management consulting agreement except as contemplated
hereunder; and (iv) engaged any intermediary between the Agent
and the Company and the Bank in connection with the offering
of the Shares, and no person is being compensated in any
manner for such service. Appropriate arrangements have been
made for placing the funds received from subscriptions for
Shares in a special interest-bearing account with the Bank
until all Shares are sold and paid for, with provision for
refund to the purchasers in the event that the Conversion is
not completed for whatever reason or for delivery to the
Company if all Shares are sold.
(y) The Company and the Bank have not relied upon the Agent or its
legal counsel or other advisors for any legal, tax or
accounting advice in connection with the Conversion.
(z) The Company is not required to be registered under the
Investment Company Act of 1940, as amended.
(aa) Any certificates signed by an officer of the Company or the
Bank pursuant to the conditions of this Agreement and
delivered to the Agent or their counsel that refers to this
Agreement shall be deemed to be a representation and warranty
by the Company or the Bank to the Agent as to the matters
covered thereby with the same effect as if such representation
and warranty were set forth herein.
SECTION 5. REPRESENTATIONS AND WARRANTIES.
Prestige represents and warrants to the Company and the Bank that:
(i) it is a corporation and is validly existing in good
standing under the laws of the State of Delaware and licensed to
conduct business in the State of Indiana, with full power and authority
to provide the services to be furnished to the Bank and the Company
hereunder.
(ii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary action on the part of the Agent,
and this Agreement has been duly and validly executed and delivered by
the Agent and is a legal, valid and binding agreement of the Agent,
enforceable in accordance with its terms.
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(iii) Each of the Agent and its employees, agents and
representatives who shall perform any of the services hereunder shall
be duly authorized and empowered, and shall have all licenses,
approvals and permits necessary to perform such services; and the Agent
is a registered selling agent in each of the jurisdictions in which the
Shares are to be offered by the Company in reliance upon the Agent as a
registered selling agent as set forth in the blue sky memorandum
prepared with respect to the Offering.
(iv) The execution and delivery of this Agreement by the
Agent, the consummation of the transactions contemplated hereby and
compliance with the terms and provisions hereof will not conflict with,
or result in a breach of, any of the terms, provisions or conditions
of, or constitute a default (or an event which with notice or lapse of
time or both would constitute a default) under, the Articles of
Incorporation or Bylaws of the Agent or any agreement, indenture or
other instrument to which the Agent is a party or by which it or its
property is bound.
(v) No approval of any regulatory or supervisory or other
public authority is required in connection with the Agent's execution
and delivery of this Agreement, except as may have been received.
(vi) There is no suit or proceeding or charge or action before
or by any court, regulatory authority or government agency or body or,
to the knowledge of the Agent, pending or threatened, which might
materially adversely affect the Agent's performance of this Agreement.
SECTION 5.1 COVENANTS OF THE COMPANY AND THE BANK. The Company and the
Bank hereby jointly and severally covenant with the Agent as follows:
(a) The Company will not, at any time after the date the
Registration Statement is declared effective, file any
amendment or supplement to the Registration Statement without
providing the Agent and its counsel an opportunity to review
such amendment or supplement or file any amendment or
supplement to which amendment or supplement the Agent or its
counsel shall reasonably object.
(b) The Bank will not, at any time after the Conversion
Application is approved by the OTS, file any amendment or
supplement to such Conversion Application without providing
the Agent and its counsel an opportunity to review such
amendment or supplement or file any amendment or supplement to
which amendment or supplement the Agent or its counsel shall
reasonably object.
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(c) The Company will not, at any time before the Holding Company
Application is approved by the OTS, file any amendment or
supplement to such Holding Company Application without
providing the Agent and its counsel an opportunity to review
the nonconfidential portions of such amendment or supplement
or file any amendment or supplement to which amendment or
supplement the Agent or its counsel shall reasonably object.
(d) The Company and the Bank will use their best efforts to cause
any post-effective amendment to the Registration Statement to
be declared effective by the Commission and any post-effective
amendment to the Conversion Application to be approved by the
OTS and will immediately upon receipt of any information
concerning the events listed below notify the Agent: (i) when
the Registration Statement, as amended, has become effective;
(ii) when the Conversion Application, as amended, has been
approved by the OTS; (iii) any comments from the Commission,
the OTS, or any other governmental entity with respect to the
Conversion or the transactions contemplated by this Agreement;
(iv) of the request by the Commission, the OTS, or any other
governmental entity for any amendment or supplement to the
Registration Statement, the Conversion Application or for
additional information; (v) of the issuance by the Commission,
the OTS, or any other governmental entity of any order or
other action suspending the Offering or the use of the
Registration Statement or the Prospectus or any other filing
of the Company or the Bank under the Conversion Regulations,
or other applicable law, or the threat of any such action;
(vi) the issuance by the Commission, the OTS, or any authority
of any stop order suspending the effectiveness of the
Registration Statement or of the initiation or threat of
initiation or threat of any proceedings for that purpose; or
(vii) of the occurrence of any event mentioned in paragraph
(h) below. The Company and the Bank will make every reasonable
effort (i) to prevent the issuance by the Commission, the OTS,
or any other state authority of any such order and, if any
such order shall at any time be issued, (ii) to obtain the
lifting thereof at the earliest possible time.
(e) The Company and the Bank will deliver to the Agent and to its
counsel two conformed copies of the Registration Statement,
the Conversion Application and the Holding Company
Application, as originally filed and of each amendment or
supplement thereto, including all exhibits. Further, the
Company and the Bank will deliver such additional copies of
the foregoing documents to counsel to the Agent as may be
required for any NASD filings.
(f) The Company and the Bank will furnish to the Agent, from time
to time during the period when the Prospectus (or any later
prospectus related to this offering) is required to be
delivered under the 1933 Act or the Securities
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Exchange Act of 1934 (the "1934 Act"), such number of copies
of such Prospectus (as amended or supplemented) as the Agent
may reasonably request for the purposes contemplated by the
1933 Act, the 1933 Act Regulations, the 1934 Act or the rules
and regulations promulgated under the 1934 Act (the "1934 Act
Regulations"). The Company authorizes the Agent to use the
Prospectus (as amended or supplemented, if amended or
supplemented) in any lawful manner contemplated by the Plan in
connection with the sale of the Shares by the Agent.
(g) The Company and the Bank will comply with any and all material
terms, conditions, requirements and provisions with respect to
the Conversion and the transactions contemplated thereby
imposed by the Commission, the OTS or the Conversion
Regulations, and by the 1933 Act, the 1933 Act Regulations,
the 1934 Act and the 1934 Act Regulations to be complied with
prior to or subsequent to the Closing Date and when the
Prospectus is required to be delivered, and during such time
period the Company and the Bank will comply, at their own
expense, with all material requirements imposed upon them by
the Commission, the OTS or the Conversion Regulations, and by
the 1933 Act, the 1933 Act Regulations, the 1934 Act and the
1934 Act Regulations, including, without limitation, Rule
10b-5 under the 1934 Act, in each case as from time to time in
force, so far as necessary to permit the continuance of sales
or dealing in the Common Shares during such period in
accordance with the provisions hereof and the Prospectus.
(h) If, at any time during the period when the Prospectus relating
to the Shares is required to be delivered, any event relating
to or affecting the Company or the Bank shall occur, as a
result of which it is necessary or appropriate, in the opinion
of counsel for the Company and the Bank or in the reasonable
opinion of the Agent's counsel, to amend or supplement the
Registration Statement or Prospectus in order to make the
Registration Statement or Prospectus not misleading in light
of the circumstances existing at the time the Prospectus is
delivered to a purchaser, the Company and the Bank will
immediately so inform the Agent and prepare and file, at their
own expense, with the Commission, and the OTS and furnish to
the Agent a reasonable number of copies of an amendment or
amendments of, or a supplement or supplements to, the
Registration Statement or Prospectus (in form and substance
reasonably satisfactory to the Agent and its counsel after a
reasonable time for review) which will amend or supplement the
Registration Statement or Prospectus so that as amended or
supplemented it will not contain an untrue statement of a
material fact or omit to state a material fact necessary in
order to make the statements therein, in light of the
circumstances existing at the time the Prospectus is delivered
to a purchaser,
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not misleading. For the purpose of this Agreement, the Company
and the Bank each will timely furnish to the Agent such
information with respect to itself as the Agent may from time
to time reasonably request.
(i) The Company and the Bank will take all necessary actions in
cooperating with the Agent and furnish to whomever the Agent
may direct such information as may be required to qualify or
register the Shares for offering and sale by the Company or to
exempt such Shares from registration, or to exempt the Company
as a broker-dealer and its officers, directors and employees
as broker-dealers or agents under the applicable securities or
blue sky laws of such jurisdictions in which the Shares are
required under the Conversion Regulations to be sold or as the
Agent and the Company and the Bank may reasonably agree upon;
provided, however, that the Company shall not be obligated to
file any general consent to service of process, to qualify to
do business in any jurisdiction in which it is not so
qualified, or to register its directors or officers as
brokers, dealers, salesmen or agents in any jurisdiction. In
each jurisdiction where any of the Shares shall have been
qualified or registered as above provided, the Company will
make and file such statements and reports in each fiscal
period as are or may be required by the laws of such
jurisdiction.
(j) The liquidation account for the benefit of Eligible Account
Holders and Supplemental Eligible Account Holders will be duly
established and maintained in accordance with the requirements
of the OTS, and such Eligible Account Holders and Supplemental
Eligible Account Holders who continue to maintain their
savings accounts in the Bank will have an inchoate interest in
their pro rata portion of the liquidation account, which shall
have a priority superior to that of the holders of the Common
Shares in the event of a complete liquidation of the Bank.
(k) The Company and the Bank will not sell or issue, contract to
sell or otherwise dispose of, for a period of 90 days after
the Closing Date, without the Agent's prior written consent,
any of their common shares, other than the Shares or other
than in connection with any plan or arrangement described in
the Prospectus, including existing stock benefit plans.
(l) The Company shall register its Common Shares under Section
12(g) of the 1934 Act concurrently with the Offering and shall
request that such registration be effective prior to or upon
completion of the Conversion. The Company shall maintain the
effectiveness of such registration for not less than three
years or such shorter period as may be required by the OTS.
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(m) During the period during which the Common Shares are
registered under the 1934 Act or for three (3) years from the
date hereof, whichever period is greater, the Company will
furnish to its shareholders as soon as practicable after the
end of each fiscal year an annual report of the Company
(including a consolidated balance sheet and statements of
consolidated income, shareholders' equity and cash flows of
the Company and its subsidiaries as at the end of and for such
year, certified by independent public accountants in
accordance with Regulation S-X under the 1933 Act and the 1934
Act).
(n) During the period of three years from the date hereof, the
Company will furnish to the Agent: (i) as soon as practicable
after such information is publicly available, a copy of each
report of the Company furnished to or filed with the
Commission under the 1934 Act or any national securities
exchange or system on which any class of securities of the
Company is listed or quoted (including, but not limited to,
reports on Forms 10-K, 10-Q and 8-K and all proxy statements
and annual reports to stockholders), (ii) a copy of each other
non-confidential report of the Company mailed to its
shareholders or filed with the Commission, the OTS or any
other supervisory or regulatory authority or any national
securities exchange or system on which any class of securities
of the Company is listed or quoted, each press release and
material news items and additional documents and information
with respect to the Company or the Bank as the Agent may
reasonably request; and (iii) from time to time, such other
nonconfidential information concerning the Company or the Bank
as the Agent may reasonably request.
(o) The Company and the Bank will use the net proceeds from the
sale of the Shares in the manner set forth in the Prospectus
under the caption "Use of Proceeds."
(p) Other than as permitted by the Conversion Regulations, the
HOLA, the 1933 Act, the 1933 Act Regulations and its rules and
regulations and the laws of any state in which the Shares are
registered or qualified for sale or exempt from registration,
neither the Company nor the Bank will distribute any
prospectus, offering circular or other offering material in
connection with the offer and sale of the Shares.
(q) The Company will use its best efforts to (i) encourage and
assist a market maker to establish and maintain a market for
the Shares and (ii) list and maintain quotation of the Shares
on a national or regional securities exchange or on The Nasdaq
Stock Market effective on or prior to the Closing Date.
(r) The Bank will maintain appropriate arrangements for depositing
all funds received from persons mailing subscriptions for or
orders to purchase Shares
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in the Offering on an interest-bearing basis at the rate
described in the Prospectus until the Closing Date and
satisfaction of all conditions precedent to the release of the
Bank's obligation to refund payments received from persons
subscribing for or ordering Shares in the Offering in
accordance with the Plan and as described in the Prospectus or
until refunds of such funds have been made to the persons
entitled thereto or withdrawal authorizations canceled in
accordance with the Plan and as described in the Prospectus.
The Bank will maintain such records of all funds received to
permit the funds of each subscriber to be separately insured
by the FDIC (to the maximum extent allowable) and to enable
the Bank to make the appropriate refunds of such funds in the
event that such refunds are required to be made in accordance
with the Plan and as described in the Prospectus.
(s) The Company will promptly take all necessary action to
register as a savings and loan holding company under the HOLA.
(t) The Company and the Bank will take such actions and furnish
such information as are reasonably requested by the Agent in
order for the Agent to ensure compliance with the NASD's
"Interpretation Relating to Free Riding and Withholding."
(u) Neither the Company nor the Bank will amend the Plan of
Conversion without notifying the Agent prior thereto.
(v) The Company shall assist the Agent, if necessary, in
connection with the allocation of the Shares in the event of
an oversubscription and shall provide the Agent with any
information necessary to assist the Company in allocating the
Shares in such event and such information shall be accurate
and reliable in all material respects.
(w) Prior to the Closing Date, the Company and the Bank will
inform the Agent of any event or circumstances of which it is
aware as a result of which the Registration Statement and/or
Prospectus, as then amended or supplemented, would contain an
untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements
therein not misleading.
(x) Subsequent to the date the Registration Statement is declared
effective by the Commission and prior to the Closing Date,
except as otherwise may be indicated or contemplated therein
or set forth in an amendment or supplement thereto, neither
the Company nor the Bank will have: (i) issued any securities
or incurred any liability or obligation, direct or contingent,
for borrowed money, except borrowings from the same or similar
sources indicated in the
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Prospectus in the ordinary course of its business, or (ii)
entered into any transaction which is material in light of the
business and properties of the Company and the Bank, taken as
a whole.
(y) The facts and representations provided to Elias, Matz, Tiernan
& Herrick L.L.P. by the Bank and the Company and upon which
Elias, Matz, Tiernan & Herrick L.L.P. will base its opinion
under Section 7(c)(1) are and will be truthful, accurate and
complete.
SECTION 6. PAYMENT OF EXPENSES. Whether or not the Conversion is
completed or the sale of the Shares by the Company is consummated, the Company
and the Bank jointly and severally agree to pay or reimburse the Agent for: (a)
all filing fees in connection with all filings related to the Offering with the
NASD; (b) any stock issue or transfer taxes which may be payable with respect to
the sale of the Shares; (c) all reasonable expenses of the Conversion, including
but not limited to the Company's and the Bank's, and the Agent's attorneys' fees
and expenses and other out-of-pocket expenses incurred by Agent (provided such
Agent's attorneys' fees and other out-of-pocket expenses of Agent shall not
exceed $25,000 in the aggregate), blue sky fees, transfer agent, registrar and
other agent charges, fees relating to auditing and accounting or other advisors
and costs of printing all documents necessary in connection with the Conversion.
In the event the Company is unable to sell a minimum of 977,500 Shares or the
Conversion is terminated or otherwise abandoned, the Company and the Bank shall
promptly reimburse the Agent in accordance with Section 2(c) hereof.
SECTION 7. CONDITIONS TO THE AGENT'S OBLIGATIONS. The obligations of
the Agent hereunder, as to the Shares to be delivered at the Closing Date, are
subject, to the extent not waived in writing by the Agent, to the condition that
all representations and warranties of the Company and the Bank herein are, at
and as of the commencement of the Offering and at and as of the Closing Date,
true and correct in all material respects, the condition that the Company and
the Bank shall have performed all of their obligations hereunder to be performed
on or before such dates, and to the following further conditions:
(a) At the Closing Date, the Company and the Bank shall have
conducted the Conversion in all material respects in
accordance with the Plan, the Conversion Regulations, all
requirements of Indiana law, and all other applicable laws,
regulations, decisions and orders, including all terms,
conditions, requirements and provisions precedent to the
Conversion imposed upon them by the OTS.
(b) The Registration Statement shall have been declared effective
by the Commission and the Conversion Application approved by
the OTS not later than 5:30 p.m. on the date of this
Agreement, or with the Agent's consent at a later time and
date; and at the Closing Date, no stop order suspending the
effectiveness of the Registration Statement shall have been
issued under the 1933 Act or proceedings therefore initiated
or threatened by the Commission
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or any state authority, and no order or other action
suspending the authorization of the Prospectus or the
consummation of the Conversion shall have been issued or
proceedings therefore initiated or, to the Company's or the
Bank's knowledge, threatened by the Commission, the OTS, the
FDIC, or any other state authority.
(c) At the Closing Date, the Agent shall have received:
(1) The favorable opinion, dated as of the Closing Date and
addressed to the Agent and for its benefit, of Elias, Matz,
Tiernan & Herrick L.L.P., special counsel for the Company and
the Bank, in form and substance to the effect that:
(i) The Company has been duly incorporated
and is validly existing as a corporation under the
laws of the State of Indiana.
(ii) The Company has corporate power and
authority to own, lease and operate its properties
and to conduct its business as described in the
Registration Statement and the Prospectus.
(iii) The Bank is a validly existing
federally chartered savings bank in mutual form and
immediately following the completion of the
Conversion will be a validly existing federally
chartered savings bank in permanent capital stock
form of organization, in both instances duly
authorized to conduct its business and own its
property as described in the Registration Statement
and the Prospectus. All of the outstanding capital
stock of the Bank upon completion of the Conversion
will be duly authorized and, upon payment therefor,
will be validly issued, fully paid and non-assessable
and will be owned by the Company, to such counsel's
Actual Knowledge, free and clear of any liens,
encumbrances, claims or other restrictions.
(iv) The Bank is a member of the
FHLB-Indianapolis. The deposit accounts of the Bank
are insured by the FDIC up to the maximum amount
allowed under law and no proceedings for the
termination or revocation of such insurance are
pending or, to such counsel's Actual Knowledge,
threatened; the description of the liquidation
account as set forth in the Prospectus under the
captions "The Conversion-Liquidation Rights of
Certain Depositors," to the extent that such
information constitutes matters of law and legal
conclusions, has been reviewed by such counsel and is
accurately described in all material respects.
(v) Immediately following the consummation
of the Conversion, the authorized, issued and
outstanding Common Shares of the
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Company will be within the range set forth in the
Prospectus under the caption "Our Capitalization,"
and no Common Shares have been issued prior to the
Closing Date; at the time of the Conversion, the
Shares subscribed for pursuant to the Offering will
have been duly and validly authorized for issuance,
and when issued and delivered by the Company pursuant
to the Plan against payment of the consideration
calculated as set forth in the Plan and Prospectus,
will be duly and validly issued and fully paid and
non-assessable, except for shares purchased by the
ESOP with funds borrowed from the Company to the
extent payment therefor in cash has not been received
by the Company; except to the extent that
subscription rights and priorities pursuant thereto
exist pursuant to the Plan, the issuance of the
Shares is not subject to preemptive rights and the
terms and provisions of the Shares conform in all
material respects to the description thereof
contained in the Prospectus. Upon the issuance of the
Shares, good title to the Shares will be transferred
from the Company to the purchasers thereof against
payment therefor, subject to such claims as may be
asserted against the purchasers thereof by
third-party claimants.
(vi) The Bank and the Company have full
corporate power and authority to enter into the
Agreement and to consummate the transactions
contemplated thereby and by the Plan. The execution
and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been
duly and validly authorized by all necessary action
on the part of the Company and the Bank; and this
Agreement is a valid and binding obligation of the
Company and the Bank, enforceable against the Company
and the Bank in accordance with its terms, except as
the enforceability thereof may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium,
conservatorship, receivership or other similar laws
now or hereafter in effect relating to or affecting
the enforcement of creditors' rights generally or the
rights of creditors of federally chartered savings
institutions, (ii) general equitable principles,
(iii) laws relating to the safety and soundness of
insured depository institutions, and (iv) applicable
law or public policy with respect to the
indemnification and/or contribution provisions
contained herein, including without limitation the
provisions of Sections 23A and 23B of the Federal
Reserve Act and except that no opinion need be
expressed as to the effect or availability of
equitable remedies or injunctive relief (regardless
of whether such enforceability is considered in a
proceeding in equity or at law).
(vii) The Conversion Application has been
approved by the OTS and the Prospectus has been
authorized for use by the OTS. The OTS has approved
the Holding Company Application and the purchase by
the Company of all of the issued and outstanding
capital stock of the Bank and
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no action has been taken, and to such counsel's
Actual Knowledge, none is pending or threatened, to
revoke any such authorization or approval.
(viii) The Plan has been duly adopted by the
required vote of the directors of the Company and the
Bank, and based upon the certificate of the
inspectors of election, by the members of the Bank in
accordance with the Conversion Regulations and the
applicable requirements of the Bank's charter and
bylaws.
(ix) Subject to the satisfaction of the
conditions to the OTS's approval of the Conversion,
no further approval, registration, authorization,
consent or other order of any federal regulatory
agency is required in connection with the execution
and delivery of this Agreement, the issuance of the
Shares and the consummation of the Conversion, except
as may be required under the securities or blue sky
laws of various jurisdictions (as to which no opinion
need be rendered) and except as may be required under
the rules and regulations of the NASD and/or The
Nasdaq Stock Market (as to which no opinion need by
rendered).
(x) The Registration Statement is effective
under the 1933 Act and no stop order suspending the
effectiveness has been issued under the 1933 Act or
proceedings therefor initiated or, to such counsel's
Actual Knowledge, threatened by the Commission.
(xi) At the time the Conversion Application,
including the Prospectus contained therein, was
approved by the OTS, the Conversion Application,
including the Prospectus contained therein, complied
as to form in all material respects with the
requirements of the Conversion Regulations, federal
and state law and all applicable rules and
regulations promulgated thereunder (other than the
financial statements, the notes thereto, and other
tabular, financial, statistical and appraisal data
included therein, as to which no opinion need be
rendered).
(xii) At the time that the Registration
Statement became effective, (i) the Registration
Statement (as amended or supplemented, if so amended
or supplemented) (other than the financial
statements, the notes thereto, and other tabular,
financial, statistical and appraisal data included
therein, as to which no opinion need be rendered),
complied as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act
Regulations, and (ii) the Prospectus (other than the
financial statements, the notes thereto, and other
tabular, financial, statistical and appraisal data
included therein, as to which no opinion need be
rendered) complied as to form in all material
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respects with the requirements of the 1933 Act, the
1933 Act Regulations, the Conversion Regulations and
federal law.
(xiii) The terms and provisions of the
Shares of the Company conform, in all material
respects, to the description thereof contained in the
Registration Statement and Prospectus, and the form
of certificate used to evidence the Shares is in due
and proper form.
(xiv) To such counsel's Actual Knowledge,
there are no legal or governmental proceedings
pending or threatened which are required to be
disclosed in the Registration Statement and
Prospectus, other than those disclosed therein.
(xv) To such counsel's Actual Knowledge,
there are no material contracts, indentures,
mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to
in the Conversion Application, the Registration
Statement or the Prospectus or required to be filed
as exhibits thereto other than those described or
referred to therein or filed as exhibits thereto in
the Conversion Application, the Registration
Statement or the Prospectus. The description in the
Conversion Application, the Registration Statement
and the Prospectus of such documents and exhibits is
accurate in all material respects and fairly presents
the information required to be shown.
(xvi) The Plan complies in all material
respects with all applicable federal and Indiana
laws, rules, regulations, decisions and orders
including, but not limited to, the Conversion
Regulations; to such counsel's Actual Knowledge, no
order has been issued by the OTS, the Commission, the
FDIC, or any state authority to suspend the Offering
or the use of the Prospectus, and no action for such
purposes has been instituted or threatened by the
OTS, the Commission, the FDIC, or any other state
authority and, to such counsel's Actual Knowledge, no
person has sought to obtain regulatory or judicial
review of the final action of the OTS approving the
Plan, the Conversion Application, the Holding Company
Application or the Prospectus.
(xvii) To such counsel's Actual Knowledge, the
Company and the Bank have obtained all material
licenses, permits and other governmental
authorizations currently required for the conduct of
their businesses and all such licenses, permits and
other governmental authorizations are in full force
and effect, and the Company and the Bank are in all
material respects complying therewith.
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(xviii) To such counsel's Actual Knowledge,
neither the Company nor the Bank is in violation of
its Articles of Incorporation and Bylaws or its
Charter and Bylaws, as appropriate or, to such
counsel's Actual Knowledge, in default or violation
of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which
it is a party or by which it or its property may be
bound, except for such defaults or violations which
would not have a material adverse impact on the
financial condition or results of operations of the
Company and the Bank on a consolidated basis; to such
counsel's Actual Knowledge, the execution and
delivery of this Agreement, the incurrence of the
obligations herein set forth and the consummation of
the transactions contemplated herein will not
conflict with or constitute a breach of, or default
under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or
assets of the Company or the Bank pursuant to any
material contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which
the Company or the Bank is a party or by which any of
them may be bound, or to which any of the property or
assets of the Company or the Bank are subject (other
than the establishment of the liquidation account);
and such action will not result in any violation of
the provisions of the Articles of Incorporation or
Bylaws of the Company or the Charter or the Bylaws of
the Bank or, to such counsel's Actual Knowledge,
result in any violation of any applicable federal or
state law, act, regulation (except that no opinion
with respect to the securities and blue sky laws of
various jurisdictions or the rules or regulations of
the NASD and/or The Nasdaq Stock Market need be
rendered) or order or court order, writ, injunction
or decree.
(xix) The Company's Articles of
Incorporation and Bylaws comply in all material
respects with the laws of the State of Indiana. The
Bank's Charter and Bylaws comply in all material
respects with federal law.
(xx) To such counsel's Actual Knowledge,
neither the Company nor the Bank is in violation of
any directive from the OTS or the FDIC to make any
material change in the method of conducting its
respective business.
(xxi) The information in the Prospectus
under the captions "Regulation," "The Conversion,"
"Restrictions on Acquisition of Us and Peoples
Federal and Related Anti-Takeover Provisions" and
"Description of Our Capital Stock," to the extent
that such information constitutes matters of law,
summaries of legal matters, documents or proceedings,
or legal conclusions, has been reviewed by such
counsel and is correct in all material respects. The
description of the Conversion process in the
Prospectus under
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the caption "The Conversion" to the extent that such
information constitutes matters of law, summaries of
legal matters, documents or proceedings, or legal
conclusions, has been reviewed by such counsel and
fairly describes such process in all material
respects. The descriptions in the Prospectus of
statutes or regulations are accurate summaries and
fairly present the information required to be shown.
The information under the caption "The Conversion-Tax
Considerations" has been reviewed by such counsel and
fairly describes the opinions rendered by them to the
Company and the Bank with respect to such matters.
In addition, such counsel shall state that
during the preparation of the Conversion Application,
the Registration Statement and the Prospectus, they
participated in conferences with certain officers of,
the independent public and internal accountants for,
and other representatives of, the Company and the
Bank, at which conferences the contents of the
Conversion Application, the Registration Statement
and the Prospectus and related matters were discussed
and, while such counsel have not confirmed the
accuracy or completeness of or otherwise verified the
information contained in the Conversion Application,
the Registration Statement or the Prospectus and do
not assume any responsibility for such information,
based upon such conferences and a review of documents
deemed relevant for the purpose of rendering their
opinion (relying as to materiality as to factual
matters on certificates of officers and other factual
representations by the Company and the Bank), nothing
has come to their attention that would lead them to
believe that the Conversion Application, the
Registration Statement, the Prospectus, or any
amendment or supplement thereto (other than the
financial statements, the notes thereto, and other
tabular, financial, statistical and appraisal data
included therein as to which no view need be
rendered) contained an untrue statement of a material
fact or omitted to state a material fact required to
be stated therein or necessary to make the statements
therein, in light of the circumstances under which
they were made, not misleading.
In giving such opinion, such counsel may
rely as to all matters of fact on certificates of
officers or directors of the Company and the Bank and
certificates of public officials. Such counsel's
opinion shall be limited to matters governed by
federal laws and by the laws of the State of Indiana.
The term "Actual Knowledge" as used herein shall have
the meaning set forth in the Legal Opinion Accord of
the American Bar Association Section of Business Law.
For purposes of such opinion, no proceedings shall be
deemed to be pending, no order or stop order shall be
deemed to be issued, and no action shall be deemed to
be instituted unless, in each case, a director or
executive officer of the Company or the Bank shall
have received a copy of such proceedings, order, stop
order or action. In addition, such opinion
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may be limited to present statutes, regulations and
judicial interpretations and to facts as they
presently exist; in rendering such opinion, such
counsel need assume no obligation to revise or
supplement it should the present laws be changed by
legislative or regulatory action, judicial decision
or otherwise; and such counsel need express no view,
opinion or belief with respect to whether any
proposed or pending legislation, if enacted, or any
proposed or pending regulations or policy statements
issued by any regulatory agency, whether or not
promulgated pursuant to any such legislation, would
affect the validity of the Conversion or any aspect
thereof. Such counsel may assume that any agreement
is the valid and binding obligation of any parties to
such agreement other than the Company or the Bank.
(d) At the Closing Date, the Agent shall receive a
certificate of the Chief Executive Officer and the
Principal Accounting Officer of the Company and the
Bank in form and substance reasonably satisfactory to
the Agent's Counsel, dated as of such Closing Date,
to the effect that: (i) they have carefully examined
the Prospectus and, in their opinion, at the time the
Prospectus became authorized for final use, the
Prospectus did not contain any untrue statement of a
material fact or omit to state a material fact
necessary in order to make the statements therein, in
light of the circumstances under which they were
made, not misleading; (ii) since the date the
Prospectus became authorized for final use, no event
has occurred which should have been set forth in an
amendment or supplement to the Prospectus which has
not been so set forth, including specifically, but
without limitation, any material adverse change in
the condition, financial or otherwise, or in the
earnings, capital, properties or business of the
Company or the Bank and the conditions set forth in
this Section 7 have been satisfied; (iii) since the
respective dates as of which information is given in
the Registration Statement and the Prospectus, there
has been no material adverse change in the condition,
financial or otherwise, or in the earnings, capital
or properties of the Company or the Bank
independently, or of the Company and the Bank
considered as one enterprise, whether or not arising
in the ordinary course of business; (iv) the
representations and warranties in Section 4 are true
and correct with the same force and effect as though
expressly made at and as of the Closing Date; (v) the
Company and the Bank have complied in all material
respects with all agreements and satisfied all
conditions on their part to be performed or satisfied
at or prior to the Closing Date and will comply in
all material respects with all obligations to be
satisfied by them after the Conversion; (vi) no stop
order suspending the effectiveness of the
Registration Statement has been initiated or, to the
best knowledge of the Company or the Bank, threatened
by the Commission or any state authority; (vii) no
order suspending the Offering, the Conversion, the
acquisition of all of the shares of the Bank by the
Company or the
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effectiveness of the Prospectus has been issued and
no proceedings for that purpose are pending or, to
the best knowledge of the Company or the Bank,
threatened by the OTS, the Commission, the FDIC, or
any state authority; and (viii) to the best knowledge
of the Company or the Bank, no person has sought to
obtain review of the final action of the OTS
approving the Plan.
(e) Prior to and at the Closing Date: (i) in the
reasonable opinion of the Agent, there shall have
been no material adverse change in the condition,
financial or otherwise, or in the earnings or
business of the Company or the Bank independently, or
of the Company and the Bank considered as one
enterprise, from that as of the latest dates as of
which such condition is set forth in the Prospectus,
other than transactions referred to or contemplated
therein; (ii) the Company or the Bank shall not have
received from the OTS or the FDIC any direction (oral
or written) to make any material change in the method
of conducting their business with which it has not
complied (which direction, if any, shall have been
disclosed to the Agent) or which materially and
adversely would affect the business, operations or
financial condition or income of the Company and the
Bank taken as a whole; (iii) neither the Company nor
the Bank shall have been in default (nor shall an
event have occurred which, with notice or lapse of
time or both, would constitute a default) under any
provision of any agreement or instrument relating to
any outstanding indebtedness; (iv) no action, suit or
proceeding, at law or in equity or before or by any
federal or state commission, board or other
administrative agency, shall be pending or, to the
knowledge of the Company or the Bank, threatened
against the Company or the Bank or affecting any of
their properties wherein an unfavorable decision,
ruling or finding would materially and adversely
affect the business, operations, financial condition
or income of the Company or the Bank taken as a
whole; and (v) the Shares shall have been qualified
or registered for offering and sale or exempted
therefrom under the securities or blue sky laws of
the jurisdictions as the Agent shall have reasonably
requested and as agreed to by the Company and the
Bank.
(f) Concurrently with the execution of this Agreement,
the Agent shall receive a letter from Grant Thornton
dated the date hereof and addressed to the Agent: (i)
confirming that Grant Thornton is a firm of
independent public accountants within the meaning of
the 1933 Act, the 1933 Act Regulations, applicable
regulations of the OTS and the Code of Professional
Ethics of the American Institute of Certified Public
Accountants, and stating in effect that in their
opinion the consolidated financial statements of the
Bank as of June 30, 2000 and 1999, and for the fiscal
years ended June 30, 1998, 1999, and 2000, as are
included in the Registration Statement and the
Prospectus and covered by their opinion included
therein comply as to form in all material
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respects with the applicable accounting requirements
of the 1933 Act, the 1933 Act Regulations, the
Conversion Regulations, and GAAP applied
consistently; (ii) stating in effect that, on the
basis of certain agreed upon procedures (but not an
audit examination in accordance with generally
accepted auditing standards) consisting of a reading
of the latest available unaudited interim
consolidated financial statements of the Bank
prepared by the Bank, a reading of the minutes of the
meetings of the Boards of Directors of the Bank and
the Company and the members of the Bank and
consultations with officers of the Bank responsible
for financial and accounting matters, nothing came to
its attention which caused it to believe that: (A)
the unaudited financial statements of the Bank
included in the Prospectus are not in conformity with
GAAP applied on a basis substantially consistent with
that of the audited financial statements included in
the Prospectus; and (B) during the period from that
date of the latest audited consolidated financial
statements included in the Prospectus to a specified
date not more than three business days prior to the
date hereof, there was any increase in borrowings or
in non-performing assets by the Company or the Bank;
and (C) except as otherwise discussed in the
Prospectus there was any decrease in consolidated
retained earnings of the Bank at the date of such
letter as compared with amounts shown in the latest
audited consolidated statement of condition included
in the Prospectus or there was any decrease in
consolidated net income or net interest income of the
Bank for the number of full months commencing
immediately after the period covered by the latest
audited consolidated income statement included in the
Prospectus and ended on the latest month end prior to
the date of the Prospectus or in such letter as
compared to the corresponding period in the preceding
year (included in the Recent Developments Section of
the Prospectus); and (iii) stating that, in addition
to the audit referred to in its opinion included in
the Prospectus and the performance of the procedures
referred to in clause (ii) of this subsection (f), it
has compared with the general accounting records of
the Company and/or the Bank, as applicable, which are
subject to the internal controls of the Company's
and/or the Bank's, as applicable, accounting system
and other data prepared by the Company and/or the
Bank, as applicable, directly from such accounting
records, to the extent specified in such letter, such
amounts and/or percentages set forth in the
Prospectus as you may reasonably request, and they
have found such amounts and percentages to be in
agreement therewith.
(g) At the Closing Date, the Agent shall receive a letter
dated the Closing Date, addressed to the Agent,
confirming the statements made by Grant Thornton in
the letter delivered by it pursuant to subsection (f)
of this Section 7, the "specified date" referred to
in clause (ii) of subsection (f) to be a date
specified in the letter required by this subsection
(g) which for purposes of
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such letter shall not be more than three business
days prior to the Closing Date.
(h) At the Closing Date, the Agent shall receive a letter
from RP Financial, LC, dated the Closing Date thereof
and addressed to counsel for the Agent (i) confirming
that said firm is independent of the Company and the
Bank and is experienced and expert in the area of
corporate appraisals within the meaning of Title 12
of the Code of Federal Regulations, Section
563b.7(f)(1)(i), (ii) stating in effect that the
Appraisal prepared by such firm complies in all
material respects with the applicable requirements of
Title 12 of the Code of Federal Regulations, and
(iii) further stating that its opinion of the
aggregate pro forma market value of the Company and
the Bank expressed in its Appraisal dated as of June
8, 2001, as most recently updated, remains in effect.
(i) The Company and the Bank shall not have sustained
since the date of the latest financial statements
included in the Prospectus any material loss or
interference with its business from fire, explosion,
flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than
as set forth or contemplated in the Registration
Statement and Prospectus and since the respective
dates as of which information is given in the
Registration Statement and Prospectus, there shall
not have been any change in the long-term debt of the
Company or the Bank other than debt incurred in
relation to the purchase of Shares by the Bank's
eligible plans, or any change, or any development
involving a prospective change, in or affecting the
general affairs, management, financial position,
shareholders' equity or results of operations of the
Company or the Bank, otherwise than as set forth or
contemplated in the Registration Statement and
Prospectus, the effect of which, in any such case
described above, is in Prestige's reasonable judgment
sufficiently material and adverse as to make it
impracticable or inadvisable to proceed with the
Subscription Offering or the delivery of the Shares
on the terms and in the manner contemplated in the
Prospectus.
(j) At or prior to the Closing Date, the Agent shall
receive: (i) a copy of the letters from the OTS
approving the Conversion Application and authorizing
the use of the Prospectus; (ii) a copy of the order
from the Commission declaring the Registration
Statement effective; (iii) a certificate from the OTS
evidencing the good standing of the Bank; (iv) a
certificate of good standing from the State of
Indiana evidencing the good standing of the Company;
(v) a certificate from the FDIC evidencing the Bank's
insurance of accounts; (vi) a certificate from the
FHLB-Indianapolis evidencing the Bank's membership
thereof; (vii) a copy of the letter from the OTS
approving the Company's
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Holding Company Application; and (viii) any other
documents that the Agent shall reasonably request.
(k) As soon as available after the Closing Date, the
Agent shall receive a copy of the Bank's charter
(l) Subsequent to the date hereof, there shall not have
occurred any of the following: (i) a suspension or
limitation in trading in securities generally on the
New York Stock Exchange or in the over-the-counter
market, or quotations halted generally on The Nasdaq
Stock Market, or minimum or maximum prices for
trading have been fixed, or maximum ranges for prices
for securities have been required by either of such
exchanges or the NASD or by order of the Commission
or any other governmental authority; (ii) a general
moratorium on the operations of commercial banks, or
federal savings and loan associations or a general
moratorium on the withdrawal of deposits from
commercial banks or federal savings and loan
associations declared by federal or state
authorities; (iii) the engagement by the United
States in hostilities which have resulted in the
declaration, on or after the date hereof, of a
national emergency or war; or (iv) a material decline
in the price of equity or debt securities if the
effect of such a declaration or decline, in the
Agent's reasonable judgment, makes it impracticable
or inadvisable to proceed with the Offering or the
delivery of the Shares on the terms and in the manner
contemplated in the Registration Statement and the
Prospectus.
(m) At or prior to the Closing Date, counsel to the Agent
shall have been furnished with such documents and
opinions as they may reasonably require for the
purpose of enabling them to pass upon the sale of the
Shares as herein contemplated and related proceedings
or in order to evidence the occurrence or
completeness of any of the representations or
warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings
taken by the Company or the Bank in connection with
the Conversion and the sale of the Shares as herein
contemplated shall be satisfactory in form and
substance to Prestige and its counsel.
(n) Prior to the Closing Date, the Plan shall have been
approved by the eligible voting members of the Bank
in accordance with the Conversion Regulations and the
provisions of the Bank's mutual charter and bylaws.
SECTION 8. INDEMNIFICATION.
(a) The Company and the Bank jointly and severally agree
to indemnify and hold harmless the Agent, its
respective officers and directors, employees and
agents, and each person, if any, who controls the
Agent within the meaning
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of Section 15 of the 1933 Act or Section 20(a) of the
1934 Act, against any and all loss, liability, claim,
damage or expense whatsoever (including, but not
limited to, settlement expenses), joint or several,
that the Agent or any of them may suffer or to which
the Agent and any such persons may become subject
under all applicable federal or state laws or
otherwise, and to promptly reimburse the Agent and
any such persons upon written demand for any expense
(including reasonable fees and disbursements of
counsel) incurred by the Agent or any of them in
connection with investigating, preparing or defending
any actions, proceedings or claims (whether commenced
or threatened) to the extent such losses, claims,
damages, liabilities or actions: (i) arise out of or
are based upon any untrue statement or alleged untrue
statement of a material fact contained in the
Registration Statement (or any amendment or
supplement thereto), preliminary or final Prospectus
(or any amendment or supplement thereto), the
Conversion Application (or any amendment or
supplement thereto), the Holding Company Application
or any instrument or document executed by the Company
or the Bank or based upon written information
supplied by the Company or the Bank filed in any
state or jurisdiction to register or qualify any or
all of the Shares or to claim an exemption therefrom
or provided to any state or jurisdiction to exempt
the Company as a broker-dealer or its officers,
directors and employees as broker-dealers or agent,
under the securities laws thereof (collectively, the
"Blue Sky Application"), or any document,
advertisement, oral statement or communication
("Sales Information") prepared, made or executed by
or on behalf of the Company or the Bank with their
consent or based upon written or oral information
furnished by or on behalf of the Company or the Bank,
whether or not filed in any jurisdiction, in order to
qualify or register the Shares or to claim an
exemption therefrom under the securities laws
thereof; (ii) arise out of or are based upon the
omission or alleged omission to state in any of the
foregoing documents or information a material fact
required to be stated therein or necessary to make
the statements therein, in light of the circumstances
under which they were made, not misleading; (iii)
arise from any theory of liability whatsoever
relating to or arising from or based upon the
Registration Statement (or any amendment or
supplement thereto), preliminary or final Prospectus
(or any amendment or supplement thereto), the
Conversion Application (or any amendment or
supplement thereto), any Blue Sky Application or
Sales Information or other documentation distributed
in connection with the Conversion; or (iv) arise out
of or are based upon allegations that the records
maintained by the Bank with respect to its account
holders, depositors, borrowers and other members are
inaccurate, unreliable or incomplete, or that the
Agent improperly denied or reduced a subscription to
purchase Common Stock, whether as a result of a
properly calculated allocation pursuant to the Plan
or otherwise, if such denial is based
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upon such records; provided, however, that no
indemnification is required under this paragraph (a)
to the extent such losses, claims, damages,
liabilities or actions arise out of or are based upon
any untrue material statement or alleged untrue
material statements in, or material omission or
alleged material omission from, the Registration
Statement (or any amendment or supplement thereto),
preliminary or final Prospectus (or any amendment or
supplement thereto), the Conversion Application, any
Blue Sky Application or Sales Information made in
reliance upon and in conformity with information
furnished in writing to the Company or the Bank by
the Agent regarding the Agent, provided, that it is
agreed and understood that the only information
furnished in writing to the Company or the Bank by
the Agent regarding the Agent is set forth in the
Prospectus under the caption "The
Conversion-Marketing Arrangements;" and PROVIDED
FURTHER, that such indemnification shall be to the
extent not prohibited by the Commission, the OTS, the
FDIC and the Board of Governors of the Federal
Reserve.
(b) The Agent agrees to indemnify and hold harmless the
Company and the Bank, their directors and officers
and each person, if any, who controls the Company or
the Bank within the meaning of Section 15 of the 1933
Act or Section 20(a) of the 1934 Act against any and
all loss, liability, claim, damage or expense
whatsoever (including but not limited to settlement
expenses), joint or several, which they, or any of
them, may suffer or to which they, or any of them may
become subject under all applicable federal and state
laws or otherwise, and to promptly reimburse the
Company, the Bank, and any such persons upon written
demand for any expenses (including reasonable fees
and disbursements of counsel) incurred by them, or
any of them, in connection with investigating,
preparing or defending any actions, proceedings or
claims (whether commenced or threatened) to the
extent such losses, claims, damages, liabilities or
actions: (i) arise out of or are based upon any
untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement
(or any amendment or supplement thereto), the
Conversion Application (or any amendment or
supplement thereto), the preliminary or final
Prospectus (or any amendment or supplement thereto),
any Blue Sky Application or Sales Information, (ii)
are based upon the omission or alleged omission to
state in any of the foregoing documents a material
fact required to be stated therein or necessary to
make the statements therein, in the light of the
circumstances under which they were made, not
misleading, or (iii) arise from any theory of
liability whatsoever relating to or arising from or
based upon the Registration Statement (or any
amendment or supplement thereto), preliminary or
final Prospectus (or any amendment or supplement
thereto), the Conversion Application (or any
amendment or supplement thereto), or any Blue Sky
Application or Sales Information or other
documentation distributed in
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connection with the Conversion; provided, however,
that the Agent's obligations under this Section 8(b)
shall exist only if and only to the extent that such
untrue statement or alleged untrue statement was made
in, or such material fact or alleged material fact
was omitted from, the Registration Statement (or any
amendment or supplement thereto), the preliminary or
final Prospectus (or any amendment or supplement
thereto), the Conversion Application (or any
amendment or supplement thereto), any Blue Sky
Application or Sales Information in reliance upon and
in conformity with information furnished in writing
to the Company or the Bank by the Agent or its
counsel regarding the Agent, provided, that it is
agreed and understood that the only information
furnished in writing to the Company or the Bank by
the Agent regarding the Agent is set forth in the
Prospectus under the caption "The
Conversion-Marketing Arrangements."
(c) Each indemnified party shall give prompt written
notice to each indemnifying party of any action,
proceeding, claim (whether commenced or threatened),
or suit instituted against it in respect of which
indemnity may be sought hereunder, but failure to so
notify an indemnifying party shall not relieve it
from any liability which it may have on account of
this Section 8 or otherwise. An indemnifying party
may participate at its own expense in the defense of
such action. In addition, if it so elects within a
reasonable time after receipt of such notice, an
indemnifying party, jointly with any other
indemnifying parties receiving such notice, may
assume defense of such action with counsel chosen by
it and approved by the indemnified parties that are
defendants in such action, unless such indemnified
parties reasonably object to such assumption on the
ground that there may be legal defenses available to
them that are different from or in addition to those
available to such indemnifying party. If an
indemnifying party assumes the defense of such
action, the indemnifying parties shall not be liable
for any fees and expenses of counsel for the
indemnified parties incurred thereafter in connection
with such action, proceeding or claim, other than
reasonable costs of investigation. In no event shall
the indemnifying parties be liable for the fees and
expenses of more than one separate firm of attorneys
(and any special counsel that said firm may retain)
for each indemnified party in connection with any one
action, proceeding or claim or separate but similar
or related actions, proceedings or claims in the same
jurisdiction arising out of the same general
allegations or circumstances.
(d) The agreements contained in this Section 8 and in
Section 9 hereof and the representations and
warranties of the Company and the Bank set forth in
this Agreement shall remain operative and in full
force and effect regardless of: (i) any investigation
made by or on behalf of the Agent or its officers,
directors or controlling persons, agent or employees
or by or on behalf of the
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Company or the Bank or any officers, directors or
controlling persons, agent or employees of the
Company or the Bank; (ii) delivery of and payment
hereunder for the Shares; or (iii) any termination of
this Agreement.
SECTION 9. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 8 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Company, the Bank or the Agent, the Company,
the Bank and the Agent shall contribute to the aggregate losses, claims, damages
and liabilities (including any investigation, legal and other expenses incurred
in connection with, and any amount paid in settlement of, any action, suit or
proceeding, but after deducting any contribution received by the Company, the
Bank or the Agent from persons other than the other parties thereto, who may
also be liable for contribution) in such proportion so that the Agent is
responsible for that portion represented by the percentage that the fees paid to
the Agent pursuant to Section 2 of this Agreement (not including expenses) bears
to the gross proceeds received by the Company from the sale of the Shares in the
Offering, and the Company and the Bank shall be responsible for the balance. If,
however, the allocation provided above is not permitted by applicable law, then
each indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative fault of the Company and the Bank on the one hand and the Agent on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions, proceedings or claims in
respect thereto), but also the relative benefits received by the Company and the
Bank on the one hand and the Agent on the other from the Offering (before
deducting expenses). The relative benefits received by the Company and the Bank
on the one hand and the Agent on the other shall be deemed to be in the same
proportion as the total gross proceeds of the Offering received by the Company
bear to the total fees (excluding expenses) received by the Agent. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
and/or the Bank on the one hand or the Agent on the other and the parties'
relative intent, good faith, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company, the Bank and the
Agent agree that it would not be just and equitable if contribution pursuant to
this Section 9 were determined by pro-rata allocation or by any other method of
allocation which does not take into account the equitable considerations
referred to above in this Section 9. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions, proceedings or claims in respect thereof) referred to above in this
Section 9 shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action, proceeding or claim. It is expressly agreed that the Agent
shall not be liable for any loss, liability, claim, damage or expense or be
required to contribute any amount which in the aggregate exceeds the amount paid
(excluding reimbursable expenses) to the Agent under this Agreement. It is
understood that the above stated limitation on the Agent's liability is
essential to the Agent and that the Agent would not have entered into this
Agreement if such limitation had not been agreed to by the parties to this
Agreement. No person found guilty of any fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) shall be entitled to
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contribution from any person who was not found guilty of such fraudulent
misrepresentation. The obligations of the Company, the Bank and the Agent under
this Section 9 and under Section 8 shall be in addition to any liability which
the Company, the Bank and the Agent may otherwise have. For purposes of this
Section 9, each of the Agent's, the Company's or the Bank's officers and
directors and each person, if any, who controls the Agent or the Company or the
Bank within the meaning of the 1933 Act and the 1934 Act shall have the same
rights to contribution as the Agent, the Company or the Bank. Any party entitled
to contribution, promptly after receipt of notice of commencement of any action,
suit, claim or proceeding against such party in respect of which a claim for
contribution may be made against another party under this Section 9, will notify
such party from whom contribution may be sought, but the omission to so notify
such party shall not relieve the party from whom contribution may be sought from
any other obligation it may have hereunder or otherwise than under this Section
9. In no case shall the Agent be required to contribute any amount in excess of
the fees (excluding reimbursable expenses) received by the Agent pursuant to
Section 2 of this Agreement.
SECTION 10. SURVIVAL OF AGREEMENTS, REPRESENTATIONS AND INDEMNITIES.
The respective indemnities of the Company, the Bank and the Agent and the
representations and warranties and other statements of the Company, the Bank and
the Agent 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 the Agent, the Company,
the Bank or any controlling person referred to in Section 8 hereof, and shall
survive the issuance of the Shares, and any successor or assign of the Agent,
the Company, the Bank, and any such controlling person shall be entitled to the
benefit of the respective agreements, indemnities, warranties and
representations.
SECTION 11. TERMINATION. The Agent may terminate this Agreement by
giving the notice indicated below in this Section 11 at any time after this
Agreement becomes effective as follows:
(a) In the event the Company fails to sell the required
minimum number of the Shares by the End Date, and in
accordance with the provisions of the Plan or as
required by the Conversion Regulations, and
applicable law, this Agreement shall terminate upon
refund by the Company to each person who has
subscribed for or ordered any of the Shares the full
amount which it may have received from such person,
together with interest as provided in the Prospectus,
and no party to this Agreement shall have any
obligation to the other hereunder, except as set
forth in Sections 2, 6, 8 and 9 hereof.
(b) If any of the conditions specified in Section 7 shall
not have been fulfilled when and as required by this
Agreement, unless waived in writing, or by the
Closing Date, this Agreement and all of the Agent's
obligations hereunder may be cancelled by the Agent
by notifying the Company and the Bank of such
cancellation as provided in Section 12 hereof in
writing or by telegram at any time at or prior to the
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Closing Date, and any such cancellation shall be
without liability of any party to any other party
except as otherwise provided in Sections 2, 6, 8 and
9 hereof.
(c) If the Agent elects to terminate this Agreement as
provided in this Section, the Company and the Bank
shall be notified promptly by telephone or telegram,
confirmed by letter.
The Company and the Bank may terminate this Agreement in the event the
Agent is in material breach of the representations and warranties or covenants
contained in Section 5 and such breach has not been cured after the Company and
the Bank have provided the Agent with notice of such breach.
This Agreement may also be terminated by mutual written consent of the
parties hereto.
SECTION 12. NOTICES. All communications hereunder, except as herein
otherwise specifically provided, shall be mailed in writing and if sent to the
Agent shall be mailed, delivered or telegraphed and confirmed to Prestige
Financial Center, Inc., North Shore Towers Financial Center, 271-603 Grand
Central Parkway, Floral Park, NY 11005, Attention: Lawrence Kirshbaum (with a
copy to Barnes & Thornburg, 11 S. Meridian Street, Indianapolis, Indiana 46204,
Attention: Thomas M. Maxwell, Esquire) and, if sent to the Company and the Bank,
shall be mailed, delivered or telegraphed and confirmed to the Company and the
Bank at Second and Bridgeway Streets, Aurora, Indiana 47001, Attention Mel
Green, Chief Executive Officer (with a copy to Elias, Matz, Tiernan & Herrick
L.L.P., 12th Floor, 734 15th Street, N.W., Washington, D.C. 20005, Attention:
Kevin M. Houlihan, Esquire).
SECTION 13. PARTIES. The Company and the Bank shall be entitled to act
and rely on any request, notice, consent, waiver or agreement purportedly given
on behalf of the Agent when the same shall have been given by the undersigned.
The Agent shall be entitled to act and rely on any request, notice, consent,
waiver or agreement purportedly given on behalf of the Company or the Bank, when
the same shall have been given by the undersigned or any other officer of the
Company or the Bank. This Agreement shall inure solely to the benefit of, and
shall be binding upon, the Agent, the Company, the Bank, and their respective
successors and assigns, and no other person shall have or be construed to have
any legal or equitable right, remedy or claim under or in respect of or by
virtue of this Agreement or any provision herein contained. It is understood and
agreed that this Agreement is the exclusive agreement among the parties hereto,
and supersedes any prior agreement among the parties and may not be varied
except in writing signed by all the parties.
SECTION 14. CLOSING. The closing for the sale of the Shares shall take
place on the Closing Date at such location as mutually agreed upon by the Agent
and the Company and the Bank. At the closing, the Company and the Bank shall
deliver to the Agent in next day funds the commissions, fees and expenses due
and owing to the Agent as set forth in Sections 2 and 6 hereof and the opinions
and certificates required hereby and other documents deemed reasonably necessary
by the
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Agent shall be executed and delivered to effect the sale of the Shares as
contemplated hereby and pursuant to the terms of the Prospectus.
SECTION 15. PARTIAL INVALIDITY. In the event that any term, provision
or covenant herein or the application thereof to any circumstance or situation
shall be invalid or unenforceable, in whole or in part, the remainder hereof and
the application of said term, provision or covenant to any other circumstances
or situation shall not be affected thereby, and each term, provision or covenant
herein shall be valid and enforceable to the full extent permitted by law.
SECTION 16. CONSTRUCTION. This Agreement shall be construed in
accordance with the laws of the State of Indiana.
SECTION 17. COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which so executed and delivered shall be an original, but
all of which together shall constitute but one and the same instrument.
SECTION 18. ENTIRE AGREEMENT. This Agreement, including schedules and
exhibits hereto, which are integral parts hereof and incorporated as though set
forth in full, constitutes the entire agreement between the parties pertaining
to the subject matter hereof superseding any and all prior or contemporaneous
oral or prior written agreements, proposals, letters of intent and
understandings, and cannot be modified, changed, waived or terminated except by
a writing which expressly states that it is an amendment, modification or
waiver, refers to this Agreement and is signed by the party to be charged. No
course of conduct or dealing shall be construed to modify, amend or otherwise
affect any of the provisions hereof.
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If the foregoing correctly sets forth the arrangement among the
Company, the Bank and the Agent, please indicate acceptance thereof in the space
provided below for that purpose, whereupon this letter and the Agent's
acceptance shall constitute a binding agreement.
<Table>
Very truly yours,
PFS BANCORP, INC. PEOPLES FEDERAL SAVINGS BANK
By Its Authorized By Its Authorized
Representative: Representative:
- --------------------------- ----------------------------
Mel Green Mel Green
President and Chief Executive Officer Chief Executive Officer
</Table>
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Accepted as of the date first above written
PRESTIGE FINANCIAL CENTER, INC.
By Its Authorized
Representative:
- -----------------------------
Lawrence Kirshbaum
President
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EXHIBIT A
PFS BANCORP, INC.
Up to 1,520,875 Shares (Anticipated Maximum)
($0.01 Par Value)
SELECTED DEALERS' AGREEMENT
____________, 2001
Gentlemen:
We have agreed to assist Peoples Federal Savings Bank, a federal mutual
savings bank located in Aurora, Indiana (the "Bank"), in connection with the
offer and sale of up to 1,322,500 shares (subject to possible increase to
1,520,875 shares) of the common stock, $0.01 par value (the "Common Stock"), of
PFS Bancorp, Inc., Aurora, Indiana (the "Company"), an Indiana corporation, to
be issued in connection with the conversion of the Bank from a mutual
institution to a stock institution pursuant to the Home Owners' Loan Act, as
amended, and 12 C.F.R. Part 563b. The total number of shares of Common Stock to
be offered may be decreased to a minimum of 977,500 shares. The price per share
has been fixed at $10.00. An additional amount of Common Stock equal to 2% of
the shares sold in the offering will be contributed to the PFS Community
Foundation. As a result, the minimum number of shares of the Company that will
be outstanding upon completion of the offering will be 997,050 shares, and the
maximum number of shares of Common Stock that will be outstanding will be
1,551,293 shares. The Common Stock, the number of shares to be issued, and
certain of the terms on which they are being offered, are more fully described
in the enclosed Prospectus dated ____________, 2001 (the "Prospectus"). In
connection with the Conversion, the Company, on a best efforts basis, is
offering for sale between $9,775,000 of shares and $13,225,000 (subject to
possible increase to $15,208,750) of shares of the Common Stock (the "Shares"),
in a Subscription Offering (as defined in the Prospectus). Any Shares not sold
in the Subscription Offering will be offered to the general public in the
Community Offering (as defined in the Prospectus) giving preference to natural
persons residing in Dearborn, Switzerland and Ohio Counties, Indiana.
The Subscription and Community Offerings are being conducted under a
plan of conversion (the "Plan"), adopted by the Bank's Board of Directors.
Pursuant to the Plan, the Bank intends to convert from a federal mutual savings
bank to a federal stock savings bank and concurrently become the wholly-owned
subsidiary of the Company (the "Conversion"). The Subscription and Community
Offerings are further being conducted in accordance with the regulations of the
OTS and subject to the provisions contained in the Plan.
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The Common Stock is also being offered in accordance with the Plan by
broker/dealers licensed by the National Association of Securities Dealers, Inc.
(the "NASD") which have been approved by the Bank (the "Approved Brokers").
We are offering the Approved Brokers (of which you are one) the
opportunity to participate in the solicitation of offers to buy the Common Stock
and we will pay you a fee in the amount of ____ percent (____%) of the dollar
amount of the Common Stock sold on behalf of the Company by you, as evidenced by
the authorized designation of your firm on the order form or forms for payment
therefor to the special account established by the Bank for the purpose of
holding such funds. It is understood, of course, that payment of your fee will
be made only out of compensation received by us for the Common Stock sold on
behalf of the Company by you, as evidenced in accordance with the preceding
sentence. As soon as practicable after the closing date of the offering, we will
remit to you, only out of our compensation as provided above, the fees to which
you are entitled hereunder.
Each order form for the purchase of Common Stock must set forth the
identity and address of each person to whom the certificates for such Common
Stock should be issued and delivered. Such order form also must clearly identify
your firm in order for you to receive compensation. You shall instruct any
subscriber who elects to send his order form to you to make any accompanying
check payable to "PFS Bancorp, Inc."
This offer is made subject to the terms and conditions herein set forth
and is made only to Approved Brokers who are members in good standing of the
NASD who are to comply with all applicable rules of the NASD, including, without
limitation, the NASD's Interpretation With Respect to Free-Riding and
Withholding and Section 24 of Article III of the NASD's Rules of Fair Practice,
and Rules 2730, 2740, 2420 and 2750 of the NASD Conduct Rules.
Orders for Common Stock will be subject to confirmation and we, acting
on behalf of the Company and the Bank, reserve the right in our unfettered
discretion to reject any order in whole or in part, to accept or reject orders
in the order of their receipt or otherwise, and to allot. Neither you nor any
other person is authorized by the Company and the Bank, or by us to give any
information or make any representations other than those contained in the
Prospectus in connection with the sale of any of the Common Stock. No Approved
Broker is authorized to act as agent for us when soliciting offers to buy the
Common Stock from the public or otherwise. No Approved Broker shall engage in
any stabilizing (as defined in Rule 10b-7 promulgated under the Securities
Exchange Act of 1934) with respect to the Company's Common Stock during the
offering.
We and each Approved Broker assisting in selling Common Stock pursuant
hereto agree to comply with the applicable requirements of the Securities
Exchange Act of 1934 and applicable state rules and regulations. Each
customer-carrying selected dealer that is not a $250,000 net capital reporting
broker/dealer agrees that it will not use a sweep arrangement and that it will
transmit all customer checks by noon of the next business day after receipt
thereof. In addition, we and each selected dealer confirm that the Securities
and Exchange Commission interprets Rule 15c2-8
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promulgated under the Securities Exchange Act of 1934 as requiring that a
Prospectus be supplied to each person who is expected to receive a confirmation
of sale 48 hours prior to delivery of such person's order form.
We and each Approved Broker further agree that to the extent that your
customers desire to pay for shares with funds held by or to be deposited with
us, in accordance with the interpretations of the Securities and Exchange
Commission of Rule 15c2-4 promulgated under the Securities Exchange Act of 1934,
either (a) upon receipt of an executed order form or direction to execute an
order form on behalf of a customer to forward the offering price of the Common
Stock ordered on or before noon of the next business day following receipt or
execution of an order form by us to the Company for deposit in a segregated
account or (b) to solicit indications of interest in which event (i) we will
subsequently contact any customer 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 customer's behalf, (ii) we will
mail acknowledgments of receipt of orders to each customer confirming interest
on the business day following such confirmation, (iii) we will debit accounts of
such customers on the third business day (the "Debit Date") following receipt of
the confirmation referred to in (i), and (iv) we will forward complete order
forms together with such funds to the Company on or before twelve noon on the
next business day and each selected dealer acknowledges that if the procedure in
(b) is adopted, our customers' funds are not required to be in their accounts
until the Debit Date.
Unless earlier terminated by us, this Agreement shall terminate upon
the closing date of the Conversion. We may terminate this Agreement or any
provisions hereof at any time by written or telegraphic notice to you. Of
course, our obligations hereunder are subject to the successful completion of
the Conversion.
You agree that at any time or times prior to the termination of this
Agreement you will, upon our request, report to us the number of shares of
Common Stock sold on behalf of the Company by you under this Agreement.
We shall have full authority to take such actions as we may deem
advisable in respect of all matters pertaining to the offering. We shall be
under no liability to you except for lack of good faith and for obligations
expressly assumed by us in this Agreement.
Upon application to us, we will inform you as to the states in which we
believe the Common Stock has been qualified for sale under, or are exempt from
the requirements of, the respective blue sky laws of such states, but we assume
no responsibility or obligation as to your rights to sell Common Stock in any
state.
Additional copies of the Prospectus and any supplements thereto will be
supplied in reasonable quantities upon request.
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Any notice from us to you shall be deemed to have been duly given if
mailed, telephoned, or telegraphed to you at the address to which this Agreement
is mailed.
This Agreement shall be construed in accordance with the laws of the
State of Indiana.
Please confirm your agreement hereto by signing and returning the
confirmations accompanying this letter at once to us at Prestige Financial
Center, Inc., 271-603 Grand Central Parkway, Floral Park, New York 11005. The
enclosed duplicate copy will evidence the agreement between us.
PRESTIGE FINANCIAL CENTER, INC.
By:
-----------------------------------------
Lawrence Kirschbaum
CONFIRMED AS OF:
, 2001
- -----------------------------
- --------------------------------------------
(Name of Dealer)
By:
-----------------------------------------
Its:
----------------------------------------
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