EXHIBIT 1.1
FIRST CAPITAL, INC.
(an Indiana corporation)
Up to 1,026,375 Shares
(Subject to Increase Up to 1,180,331 Shares)
COMMON STOCK
($0.01 Par Value)
Purchase Price $10.00 Per Share
AGENCY AGREEMENT
----------------
____________, 1998
Charles Webb & Company, a Division
of Keefe, Bruyette & Woods, Inc.
211 Bradenton Avenue
Dublin, Ohio 43017-5034
Ladies and Gentlemen:
First Capital, Inc. (the "Holding Company"), First Capital, Inc., M.H.C.
(the "MHC") and First Federal Bank, A Federal Savings Bank (the "Bank" and,
together with the Holding Company and the MHC, the "Primary Parties") hereby
confirm, jointly and severally, their agreement with Charles Webb & Company, a
division of Keefe, Bruyette & Woods, Inc. (the "Agent"), as follows:
SECTION 1. THE OFFERING.
------------
(a) The Holding Company is offering up to 1,026,375 shares of common stock,
$0.01 par value per share (the "Common Stock") (subject to an increase up to
1,180,331 shares), in (i) an exchange offering (the "Exchange Offering") (ii) a
subscription offering (the "Subscription Offering"), (iii) a direct community
offering (the "Direct Community Offering") and, if necessary, (iv) a syndicated
community offering (the "Syndicated Community Offering"), in connection with the
reorganization of the Bank from a majority-owned subsidiary of the MHC to a
wholly-owned subsidiary of the Holding Company (the "Reorganization"), all
pursuant to a Plan of Conversion from Mutual Holding Company to Stock Holding
Company and Agreement and Plan of Reorganization (the "Plan"). Pursuant to the
Plan, the Reorganization will be effected as follows: (i) the MHC will convert
to an interim stock savings bank and merge simultaneously with and into the
Bank, with the Bank as the surviving entity and (ii) a newly-formed interim
stock savings bank ("Interim"), wholly owned by the Holding Company, will merge
with and into the Bank, resulting in the Bank becoming a wholly owned subsidiary
of the Holding Company.
Charles Webb & Company
____________, 1998
Page 2
(b) In the Exchange Offering, each share of the common stock, $1.00 par
value, of the Bank (the "Bank Common Stock") held by the MHC will be cancelled
and each share of Bank Common Stock held by the Bank's other stockholders (the
"Public Stockholders") will be exchanged for shares of Common Stock ("Exchange
Shares") pursuant to an exchange ratio (the "Exchange Ratio") that will result
in the Public Stockholders owning in the aggregate approximately the same
percentage of the outstanding shares of Common Stock, upon consummation of the
Reorganization, as the percentage of outstanding Bank Common Stock they owned
immediately prior to the Reorganization, excluding fractional shares for which
cash will be received and shares purchased by the Public Stockholders in the
Conversion Offerings (defined below), all as described in the Plan.
(c) In the Subscription Offering, non-transferable rights to subscribe for
up to 1,026,375 shares (subject to an increase up to 1,180,331 shares) of the
Common Stock ("Subscription Rights") will be granted, in the following priority:
(1) the Bank's depositors with account balances of $50.00 or more as of March
31, 1997 ("Eligible Account Holders"); (2) the Bank's tax-qualified Employee
Stock Ownership Plan ("ESOP"); (3) the Bank's depositors with account balances
of $50.00 or more as of September 30, 1998 ("Supplemental Eligible Account
Holders"); and (4) the Bank's depositors as of __________, 1998 and borrowers of
the Bank as of February 1, 1993 whose loans continue to be outstanding as of
__________, 1998 ("Other Members"), subject to the priorities and purchase
limitations set forth in the Plan. Concurrently with the Subscription Offering,
the Holding Company will offer all shares of Common Stock offered but not
subscribed for in the Subscription Offering, if any, in the Direct Community
Offering to members of the general public, with first preference given to Public
Stockholders (who are not Eligible Account Holders or Supplemental Eligible
Account Holders) and then to natural persons and trusts of natural persons who
are permanent residents of Crawford, Clark, Floyd, Harrison and Washington
Counties of Indiana. Depending on market conditions, shares not subscribed for
in the Subscription Offering or purchased in the Direct Community Offering may
be offered in the Syndicated Community Offering to eligible members of the
general public on a best efforts basis by approved broker-dealer firms
("Assisting Brokers") which are members of the National Association of
Securities Dealers, Inc. ("NASD").
(d) The Holding Company will issue shares of its Common Stock (the
"Conversion Shares") in the Subscription Offering, Direct Community Offering,
and Syndicated Community Offering (collectively, the "Conversion Offerings") at
a purchase price of $10.00 per share (the "Purchase Price"). If the number of
Conversion Shares and Exchange Shares (collectively, the "Shares") is increased
or decreased in accordance with the Plan, the term "Shares" shall mean such
greater or lesser number, where applicable.
(e) The Holding Company has filed with the U.S. Securities and Exchange
Commission (the "Commission") a Registration Statement on Form SB-2 (File No.
333-63515) containing a prospectus relating to the Exchange Offering and the
Conversion Offerings (collectively, the
Charles Webb & Company
____________, 1998
Page 3
"Offerings") for the registration of the Shares under the Securities Act of
1933, as amended (the "1933 Act"), and has filed such amendments thereto as have
been required to the date hereof (the "Registration Statement"). The prospectus,
as amended, included in the Registration Statement at the time it initially
became effective is hereinafter called the "Prospectus," except that if any
prospectus is filed by the Holding Company pursuant to Rule 424(b) or (c) of the
regulations of the Commission under the 1933 Act (the "1933 Act Regulations")
differing from the prospectus included in the Registration Statement at the time
it 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 and shall include any supplements and
amendments thereto from and after their dates of effectiveness or use,
respectively.
(f) The MHC has filed with the Office of Thrift Supervision (the "OTS") an
Application for Approval of Conversion, including exhibits and the Prospectus,
and has filed amendments and supplements thereto (as so amended and
supplemented, the "Conversion Application") as may have been required pursuant
to the Home Owners' Loan Act, as amended (the "HOLA"), and 12 C.F.R. 575.12(a)
and 12 C.F.R. Part 563b (the "Conversion Regulations"). In addition, the
Holding Company has filed with the OTS an application on Form H-(e)1, with
exhibits, and has filed such amendments or supplements thereto, if any (as so
amended and supplemented, the "Holding Company Application" and, together with
the Conversion Application, the "OTS Applications"), as may have been required
to become a registered savings and loan holding company under the HOLA and the
applicable rules and regulations of the OTS (the "Holding Company Regulations"
and, together with the Conversion Regulations, the "OTS Regulations").
SECTION 2. RETENTION OF AGENT; COMPENSATION AND EXPENSES; SALE AND
-------------------------------------------------------
DELIVERY OF THE SHARES.
- ----------------------
(a) Subject to the terms and conditions herein set forth, the Primary
Parties hereby appoint the Agent as their exclusive financial advisor and
marketing agent to utilize its best efforts to solicit subscriptions for the
Conversion Shares and to advise and assist the Primary Parties with respect to
the sale of the Conversion Shares in the Conversion Offerings.
(b) On the basis of the representations and warranties and the agreements
herein, but subject to the terms and conditions herein, the Agent accepts such
appointment and agrees to consult with and advise the Primary Parties as to the
matters set forth in Exhibit A to the letter agreement dated April 27, 1998 (the
---------
"Letter Agreement"), between the Bank and the Agent. The Agent shall not be
required to purchase any Conversion Shares or take any action inconsistent with
all applicable laws, regulations, decisions or orders. In the event the
Syndicated Community Offering is undertaken, the Agent (at the direction of the
Primary Parties after consultation with the Agent) shall seek to assemble and
manage a selling group of selected registered broker-dealers which are
Charles Webb & Company
____________, 1998
Page 4
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.
(c) The obligations of the Agent pursuant to this Agreement shall terminate
upon the completion, termination or abandonment of the Plan by the Primary
Parties or upon termination of the Offering, but in no event later than 45 days
after completion of the Subscription Offering and Direct Community Offering,
including any extensions of the Subscription Offering and Direct Community
Offering permitted pursuant to the Conversion Regulations (the "End Date"). All
unpaid fees and expenses due to the Agent shall be payable 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 Primary Parties and
the Agent may agree to renew this Agreement under mutually acceptable terms.
(d) In the event the Holding Company is unable to sell a minimum of 758,625
Conversion Shares within the period herein provided, this Agreement shall
terminate and the Holding Company shall refund to all persons who have
subscribed for any of the Conversion Shares, the full amount of their
subscription 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 8, 9, and 10
hereof.
(e) In the event the Offering is terminated for any reason not attributable
to the action or inaction of the Agent, the Agent shall have earned and be
entitled to be paid the fees and expenses accruing to the date of such
termination pursuant to this Section 2.
(f) If all conditions precedent to the consummation of the Reorganization,
including, without limitation, the receipt of subscriptions for the minimum
number of Conversion Shares permitted to be sold in the Reorganization on the
basis of the most recent updated appraisal report and compliance by the Primary
Parties with the conditions set forth in Section 7 hereof to the reasonable
satisfaction of the Agent and its counsel, are satisfied, the Holding Company
agrees to issue, or have issued, the Conversion Shares sold in the Offering and
release for delivery certificates for such Conversion Shares on the Closing Date
(as hereinafter defined) against payment to the Holding Company by any means
authorized by the Plan. The release of Conversion Shares against payment
therefor shall be made at a time, date and place mutually acceptable to the
Primary Parties and the Agent. Certificates for Conversion Shares shall be
delivered directly to the purchasers in accordance with their directions. The
date upon which the Holding Company shall release or deliver the Conversion
Shares sold in the Offering, in accordance with the terms herein, is called the
"Closing Date."
Charles Webb & Company
____________, 1998
Page 5
(g) As soon as practicable after the Closing Date, the Holding Company and
the Bank shall cause a letter of transmittal to be mailed to each Public
Stockholder advising such Public Stockholder of the terms of the Exchange
Offering and the procedure for surrendering to an agent, duly appointed by the
Holding Company (the "Exchange Agent"), the certificates evidencing shares of
Bank Common Stock issued and outstanding as of the Closing Date. Upon surrender
of each such certificate to the Exchange Agent, the Holding Company agrees to
issue to the holder thereof or his or her designee a certificate or certificates
representing the number of full Exchange Shares to which such holder is entitled
based on the Exchange Ratio.
(h) The Agent shall receive the following compensation for its services
hereunder:
(1) A management fee of $25,000, payable in four consecutive monthly
installments, all of which the Primary Parties and the Agent
acknowledge has been paid.
(2) A success fee equal to (i) 1.5% of the aggregate purchase price of the
Conversion Shares sold in the Subscription Offering and Direct
Community Offering, excluding Conversion Shares subscribed or purchased
by the ESOP or by the Bank's officers, directors or employees (or their
immediate family members) or by any tax-qualified or stock-based
compensation plans (except Individual Retirement Accounts) or similar
plan created by the Bank for some or all of its directors or employees,
less (ii) the management fee described in subsection (1) above.
(3) For Conversion Shares sold in the Syndicated Community Offering by
selected broker-dealers, the Agent shall receive a fee not to exceed
5.5% of the aggregate purchase price of the Conversion Shares sold by
such selected broker-dealers, and the Agent shall pass on to such
selected broker-dealers 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. In the
event any fees are paid pursuant to this subsection (3) with respect to
the sale of specific Conversion Shares, such fees shall be in lieu of,
and not in addition to, the fees paid pursuant to subsections (1) and
(2) above with respect to such Conversion Shares. Fees with respect to
purchases effected with the assistance of broker-dealers other than the
Agent shall be transmitted by the Agent to such broker-dealer. The
decision to utilize selected broker dealers will be made by the Primary
Parties upon consultation with the Agent.
(i) Whether or not the Reorganization is completed or the sale of the
Conversion Shares by the Holding Company is consummated, the Primary Parties
jointly and severally agree to pay or reimburse the Agent, from time to time
upon the Agent's request, for the reasonable legal fees and
Charles Webb & Company
____________, 1998
Page 6
expenses of its counsel. Such reimbursement of legal fees (including any legal
fees for "Blue Sky" legal work) will not exceed $30,000.
(j) The Primary Parties alone shall bear the expenses of the Offering
customarily borne by issuers of securities including, without limitation, OTS,
Commission, "Blue Sky," and NASD filing and registration fees; the fees of
accountants, attorneys, appraiser, transfer agent and registrar, and other Agent
fees and expenses; any stock issue or transfer taxes; printing, mailing and
marketing and syndicate expenses associated with the Reorganization. The out-of-
pocket expenses of the Agent (including expenses of Agent's counsel) to be
reimbursed by the Primary Parties will not exceed $5,000 without the approval of
the Primary Parties.
(k) Full payment of the Agent's fees and expenses, as described above,
shall be made in next day funds on the earlier of the Closing Date or the End
Date.
(l) The Agent further agrees to provide financial advisory assistance to
the Primary Parties for a period of one year following completion of the
Reorganization, including formation of a dividend policy and share repurchase
program, assistance with shareholder reporting and shareholder relations
matters, general advice on mergers and acquisitions and other related financial
matters, without the payment by the Primary Parties of any fees in addition to
these set forth in this Section 2. Nothing in this Agreement requires the
Primary Parties to obtain such services from the Agent.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE PRIMARY PARTIES. The
-----------------------------------------------------
Primary Parties jointly and severally represent and warrant to the Agent as
follows:
(a) The Registration Statement has been declared effective by the
Commission; at the time the Registration Statement, including the Prospectus
contained therein, became effective, the Registration Statement, including the
Prospectus contained therein, complied as to form 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, and any
information regarding the Primary Parties contained in Sales Information (as
such term is defined in Section 11 hereof) authorized by the Primary Parties 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 as of the Closing Date, the
Registration Statement, including the Prospectus contained therein (including
any amendment or supplement thereto), and any information regarding the Primary
Parties contained in Sales Information (as such term is defined in Section 8
hereof) authorized by the Primary Parties for use in connection with the
Offerings, did not contain an untrue statement of a
Charles Webb & Company
____________, 1998
Page 7
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 3(a) shall not apply to statements or omissions made in reliance
upon and in conformity with written information furnished to the Primary Parties
by the Agent expressly regarding the Agent for use in the Prospectus under the
captions "Market for Common Stock" and "The Conversion--Plan of Distribution and
Selling Commissions."
(b) The Conversion Application has been approved by the OTS and the related
Prospectus and the proxy statement of the MHC relating to the special meeting of
members at which the Plan shall be considered for approval by the MHC's eligible
voting members, and the proxy statement of the Bank relating to the annual
meeting of stockholders at which the Plan shall be considered for approval by
the Bank's eligible voting stockholders have each been authorized for use by the
OTS; at the time of the approval of the Conversion Application, including the
Prospectus contained therein, and as of the date of this Agreement, the
Conversion Application, including the Prospectus, complied as to form in all
material respects with the Conversion Regulations. At the time of the approval
of the Conversion Application, including the Prospectus contained therein, and
as of the date of this Agreement, the Conversion Application, including the
Prospectus contained therein, 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; provided, however, that the representations and
-------- -------
warranties in this Section (3)(b) shall not apply to statements or omissions
made in reliance upon and in conformity with written information furnished to
the Primary Parties by the Agent expressly regarding the Agent for use in the
Prospectus under the captions "Market for Common Stock" and "The Conversion--
Plan of Distribution and Selling Commissions."
(c) The Holding Company Application has been approved by the OTS. At the
time of the approval of the Holding Company Application and as of the date of
this Agreement, the Holding Company Application complied as to form in all
material respects with the Holding Company Regulations.
(d) No order has been issued by the OTS, the Commission or any other
governmental agency preventing or suspending the use of the Prospectus and no
action by or before any governmental entity to revoke any approval, authority or
order of effectiveness related to the Reorganization is pending or, to the best
knowledge of the Primary Parties, threatened. The Plan complies with the OTS
Regulations and has been adopted by the Boards of Directors of the MHC and the
Bank as required by the OTS Regulations and has been approved by the Board of
Directors of the Holding Company. To the best knowledge of the Primary Parties,
no person has sought to obtain review of the final action of the OTS in
approving the Plan or in approving the OTS Applications pursuant to the HOLA and
the OTS Regulations.
Charles Webb & Company
____________, 1998
Page 8
(e) The Bank is organized and is validly existing as a federally chartered
capital stock savings bank in good standing under the laws of the United States
and is 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 required for the conduct
of its business, except where the failure to obtain such licenses, permits or
other governmental authorizations would not materially and adversely affect the
financial condition, earnings, capital, assets or properties of the Primary
Parties, taken as a whole; all such licenses, permits and governmental
authorizations are in full force and effect and the Bank is complying therewith
in all material respects; the Bank is duly qualified as a foreign corporation to
transact business in each jurisdiction in which the failure to be so qualified
would have a material adverse effect on the financial condition, earnings,
capital, assets, properties or business of the Primary Parties, taken as a
whole.
(f) The Bank does not own any equity securities or any equity interest in
any business enterprise except as described in the Prospectus.
(g) The MHC is organized and is validly existing as a federally chartered
mutual holding company in good standing under the laws of the United States and
is duly authorized to conduct its business and own its property as described in
the Registration Statement and the Prospectus; the MHC has obtained all
licenses, permits and other governmental authorizations required for the conduct
of its business, except where the failure to obtain such licenses, permits or
other governmental authorizations would not materially adversely affect the
financial condition, earnings, capital, assets or properties of the Primary
Parties, taken as a whole; all such licenses, permits and governmental
authorizations are in full force and effect and the MHC is complying therewith
in all material respects; the MHC is duly qualified as a foreign corporation to
transact business in each jurisdiction in which the failure to be so qualified
would have a material adverse effect on the financial condition, earnings,
capital, assets, properties or business of the Primary Parties, taken as a
whole.
(h) The MHC does not own any equity securities or any equity interest in
any business enterprise except as described in the Prospectus.
(i) The Holding Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Indiana, with
corporate power and authority to conduct its business and own its property as
described in the Registration Statement and the Prospectus; the Holding Company
has obtained all licenses, permits and other governmental authorizations
required for the conduct of its business, except where the failure to obtain
such licenses, permits or other governmental authorizations would not materially
adversely affect the financial condition, earnings, capital, assets or
properties of the Primary Parties, taken as a whole;
Charles Webb & Company
____________, 1998
Page 9
all such licenses, permits and governmental authorizations are in full force and
effect and the Holding Company is complying therewith in all material respects;
the Holding Company is duly qualified as a foreign corporation to transact
business in each jurisdiction in which the failure to be so qualified would have
a material adverse effect on the financial condition, earnings, capital, assets,
properties or business of the Primary Parties, taken as a whole.
(j) The Holding Company does not own any equity securities or any equity
interest in any business enterprise except as described in the Prospectus.
(k) 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
under the SAIF up to applicable legal limits; and no proceedings for the
termination or revocation of such membership or insurance are pending or, to the
best knowledge of the Bank, threatened.
(l) The Primary Parties have good and marketable title to all real property
and other assets material to the business of the Primary Parties and to those
properties and assets described in the Prospectus as owned by the Primary
Parties, free and clear of all liens, charges, encumbrances or restrictions,
except as described therein or are not material to the business of the Primary
Parties, taken as a whole; and all of the leases and subleases material to the
business of the Primary Parties, including those described in the Registration
Statement and the Prospectus, are in full force and effect, and the Primary
Parties are complying therewith in all material respects.
(m) The Primary Parties have received an opinion of Breyer & Aguggia LLP,
Washington, D.C., with respect to the federal income tax consequences of the
Reorganization and an opinion from Monroe Shine & Company, Inc., New Albany,
Indiana, with respect to the Indiana income tax consequences of the
Reorganization as described in the Prospectus; and the facts and representations
upon which such opinions are based are true, accurate and complete, and the
Primary Parties have not taken any actions inconsistent therewith.
(n) Each of the Primary Parties has all such power, authority,
authorizations, approvals and order as may be required to enter into this
Agreement, to carry out the provisions and conditions hereof, to consummate the
Reorganization and to issue and sell the Conversion Shares as provided herein
and as described in the Prospectus; the consummation of the Reorganization, 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 Primary Parties, and this
Agreement has been validly executed and delivered by and is the valid, legal and
binding Agreement of each of the Primary Parties, enforceable in accordance with
its terms, except as the enforceability thereof may be limited by (i)
bankruptcy, insolvency, moratorium, reorganization, conservatorship,
receivership or other similar laws relating to or affecting the
Charles Webb & Company
____________, 1998
Page 10
enforcement or creditors' rights generally or the rights of creditors of insured
financial institutions and their holding companies, the accounts of whose
subsidiaries are insured by the FDIC, (ii) general equity principles regardless
of whether such enforceability is considered in a proceeding in equity or at
law, (iii) laws relating to the safety and soundness of insured depository
institution and their affiliates, or (iv) to the extent that the provisions of
Section 8 and 9 hereof may be unenforceable as against public policy or by
applicable law, including without limitation Sections 23A and 23B of the Federal
Reserve Act, as amended.
(o) The execution, delivery and performance of this Agreement by the
Primary Parties will not: (i) conflict with or constitute a breach of, or
default under, the articles of incorporation or bylaws of the Holding Company or
the respective charter or bylaws of the MHC or the Bank, or any material
contract, lease or other instrument to which any of the Primary Parties is or
immediately following the Reorganization will be a party, or any applicable law,
rule, regulation or order; (ii) violate any authorization, approval, judgement,
decree, order, statute, rule or regulation applicable to the Primary Parties,
except for a violation which would not have a material adverse effect on the
financial condition and results of operations of the Primary Parties, taken as a
whole; or (iii) result in the creation of any material lien, charge or
encumbrance upon any property of the Primary Parties.
(p) Upon consummation of the Reorganization, the authorized, issued and
outstanding equity capital of the Holding Company will be within the range set
forth in the Prospectus under the caption "Capitalization," and except for any
shares of Common Stock held by the Bank, which will be canceled as of the
Closing Date, no shares of Common Stock have been or will be issued and
outstanding prior to the Closing Date; the Shares have been duly and validly
authorized for issuance and, when issued and delivered by the Holding Company
Bank 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; the issuance of the Shares is not subject to preemptive
rights, except for the Subscription Rights granted pursuant to the Plan; and the
terms and provisions of the Shares will 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 Holding Company to
the Public Stockholders in the Exchange Offering and to the purchasers of
Conversion Shares against payment therefor in the Conversion Offerings, subject
to such claims as may be asserted against the purchasers thereof by third-party
claimants.
(q) None of the Primary Parties is in violation of any directive from the
OTS, FDIC or any other governmental agency to make any change in the method of
conducting its business so as to comply in all material respects with all
applicable statutes and regulations; and, except as set forth in the Prospectus,
there is no suit, proceeding, charge or action before or by any court,
regulatory authority or governmental agency or body, pending or, to the best
knowledge of the Primary Parties, threatened, which might materially and
adversely affect the Reorganization, the performance of this
Charles Webb & Company
____________, 1998
Page 11
Agreement, the consummation of the transactions contemplated by the Plan and as
described in the Prospectus or which might have a material adverse affect on the
financial condition, earnings, capital, properties, assets or business of the
Primary Parties, taken as a whole.
(r) The financial statements of the Bank which are included in the OTS
Applications, the Registration Statement and the Prospectus present fairly the
financial condition, results of operations, retained earnings and cash flows of
the Bank at the respective dates thereof and for the respective periods covered
thereby, and comply as to form in all material respects with the applicable
accounting requirements of the OTS Regulations, Item 310 of Regulation S-B of
the Commission and generally accepted accounting principles ("GAAP") properly
and consistently applied through the periods involved (except as noted therein).
Such financial statements 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 financial statements of the Bank included in the OTS
Applications, the Registration Statement and the Prospectus, and as to the pro
forma adjustments, the adjustments made therein have been properly applied on
the basis described therein.
(s) Since the respective dates as of which information is given in the
Prospectus, except as may otherwise be stated therein: (i) there has not been
any material adverse change in the financial condition, earnings, capital,
properties or business of the Primary Parties, taken as a whole, whether or not
arising in the ordinary course of business; (ii) with respect to the Bank, there
has not been any material increase in loans past due 90 days or more or in real
estate acquired by foreclosure, by deed-in-lieu of foreclosure, or deemed in-
substance foreclosure; (iii) there has not been any material decrease in
stockholders' equity, reserves or total assets of the Bank; (iv) none of the
Primary Parties has issued any securities (other than equity securities issued
by the Holding Company in connection with its formation which will be canceled
as of the Closing Date) or incurred any liability or obligation for borrowing
other than in the ordinary course of business; (v) there have not been any
transactions entered into by any of the Primary Parties, except with respect to
those transactions entered into in the ordinary course of business; (vi) the
properties and business of the Primary Parties conform in all material respects
to the descriptions thereof contained in the Prospectus; and (vii) none of the
Primary Parties has any material contingent liabilities except as disclosed in
the Prospectus.
(t) None of the Primary Parties is, or immediately following the
Reorganization will be, in violation of its articles of incorporation or bylaws,
or charter or bylaws, as applicable, or in default in the performance or
observance of any obligation, agreement, covenant, or condition contained in any
contract, lease, loan agreement, indenture or other instrument to which it is a
party or by which
Charles Webb & Company
____________, 1998
Page 12
it or any of its property may be bound, which would result in a material adverse
effect on the financial condition, earnings, capital, assets, properties or
business of the Primary Parties, taken as a whole.
(u) 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 any of the Primary
Parties 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 such Primary Party is a party or
by which any Primary Party or any of its property is bound or affected, except
such defaults which would not have a material adverse affect on the financial
condition, earnings, capital, assets, properties or business of the Primary
Parties, taken as a whole; and 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 Primary Parties, threatened any action or proceeding wherein any of the
Primary Parties might be alleged to be in default thereunder under circumstances
where such action or proceeding, if determined adversely to such Primary Party,
would have a material adverse effect on the financial condition, earnings,
capital, assets, properties or business of the Primary Parties, taken as a
whole.
(v) No approval of any regulatory or supervisory or other public authority
is required in connection with the execution and delivery of this Agreement by
any of the Primary Parties or the issuance of the Shares by the Holding Company,
except for the approvals of the OTS and the Commission, and any necessary
qualification, notification, registration or exemption under the state
securities laws and regulations (collectively, "Blue Sky Laws") of the various
jurisdictions in which the Shares are to be offered.
(w) Monroe Shine & Company, Inc., which has certified the financial
statements of the Bank contained in the OTS Applications and the Prospectus,
are, with respect to the Primary Parties, independent public accountants within
the meaning of the Code of Professional Ethics of the American Institute of
Certified Public Accountants, the OTS Regulations and the 1933 Act Regulations.
(x) Keller & Company, Inc., which has prepared the Reorganization Valuation
Appraisal Report as of August 14, 1998, as amended or supplemented, if so
amended or supplemented (the "Appraisal"), is independent of the Primary Parties
within the meaning of the OTS Regulations.
(y) The Primary Parties have timely filed all required federal, state and
local tax returns and have paid all taxes due and payable in respect of such
returns, except where permitted to be extended, and have made adequate reserves
for similar future tax liabilities and no deficiency has been asserted with
respect thereto by any taxing authority.
Charles Webb & Company
____________, 1998
Page 13
(z) The Bank complies in all material respects with the applicable
financial recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, and the regulations and rules
thereunder.
(aa) None of the Primary Parties has lent any funds for the purchase of
Shares or has 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.
(bb) None of the Primary Parties has: (i) issued any securities within the
last 18 months (except for (A) notes to evidence other bank loans or other
liabilities in the ordinary course of business or as described in the
Prospectus, (B) with respect to the Holding Company, shares issued in connection
with its initial capitalization which will be canceled as of the Closing Date,
and (C) with respect to the Bank, shares of Bank Common Stock issued pursuant to
options under the Bank's 1994 Stock Option Plan); (ii) had any dealings within
the immediate prior 12 months with any NASD member (other than the Agent with
respect to the transactions contemplated hereunder), or any person related to or
associated with such member, other than discussions and meetings relating to the
Offerings and 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 except for the Letter Agreement; and (iv) engaged any intermediary other
than the Agent in connection with the Offerings, and no person other than the
Agent is being compensated in any manner for such service.
(cc) None of the Primary Parties has relied upon the Agent or the Agent's
counsel for any legal, tax or accounting advice in connection with the
Reorganization.
(dd) All documents delivered by the Primary Parties or their
representatives in connection with the issuance and sale of the Common Stock and
the Agent's exercise of due diligence, were, on the dates on which they were
delivered, accurate and complete in all material respects or were amended in
writing to be accurate and complete in all material respects.
(ee) The records of Eligible Account Holders, Supplemental Eligible Account
Holders and Other Members are accurate and complete in all material respects.
The Agent will have no liability to any person for the accuracy, reliability and
completeness of such records or for any denial or reduction of a subscription or
order to purchase Common Stock, whether as a result of a properly calculated
allocation pursuant to the Plan or otherwise, based upon such records.
(ff) To the best knowledge of the Primary Parties, each of the Primary
Parties complies with all laws, rules and regulations relating to environmental
protection, and none of the Primary Parties has been notified or is not
otherwise aware that any of the Primary Parties is or, following
Charles Webb & Company
____________, 1998
Page 14
the Reorganization, will be, potentially liable, or is or will be considered
potentially liable, under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, or any other federal, state or local
environmental laws and regulations; no action, suit, regulatory investigation or
other proceeding is pending, or to the best knowledge of the Primary Parties,
threatened against any of the Primary Parties relating to environmental
protection, nor do any of the Primary Parties have any reason to believe any
such proceedings may be brought against any of the Primary Parties; and to the
best knowledge of the Primary Parties, no disposal, release or discharge of
hazardous or toxic substances, pollutants or contaminants, including petroleum
and gas products, as any of such terms may be defined under federal, state or
local law, has occurred on, in, at or about any facilities or properties owned
or leased by any of the Primary Parties or in which the Bank has a security
interest.
(gg) The Bank's authorized capital stock consists of 4,000,000 shares of
Bank Common Stock, $1.00 par value per share, of which [504,015] shares are
issued and outstanding as of the date hereof, and 1,000,000 shares of preferred
stock, $1.00 par value per share, none of which is issued and outstanding as of
the date hereof. The Holding Company's authorized capital stock consists of
5,000,000 shares of Common Stock, $.01 par value per share, of which ________
shares are issued and outstanding as of the date hereof (all of which will be
canceled as of the Closing Date), and 1,000,000 shares of preferred stock,
$.01 par value per share, none of which is issued and outstanding as of the date
hereof. The MHC is not authorized to issue any shares of capital stock.
Any certificate signed by an officer of any of the Primary Parties pursuant
to the conditions of this Agreement and delivered to the Agent or its counsel
that refers to this Agreement shall be deemed to be a representation and
warranty by such Primary Party to the Agent as to the matters covered thereby
with the same effect as if such representation and warranty were set forth
herein.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE AGENT.
-------------------------------------------
The Agent represents and warrants to the Bank that:
(a) The Agent is a corporation in good standing under the laws of the State
of New York with full power and authority to provide the services to be
furnished to the Primary Parties hereunder.
(b) The Agent is a registered broker dealer in good standing with the
Commission and the NASD.
(c) The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate
Charles Webb & Company
____________, 1998
Page 15
action on the part of the Agent, and this Agreement has been duly and validly
executed and delivered by the Agent and is the legal, valid and binding
agreement of the Agent, enforceable in accordance with its terms, except as the
enforceability thereof may be limited by (i) bankruptcy, insolvency, moratorium,
reorganization, conservatorship, receivership or other similar laws relating to
or affecting the enforcement or creditors' rights generally, or (ii) general
equity principles regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(d) 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 event
which with notice or laps of time or both would constitute a default) under, the
articles of incorporation of the Agent or any material agreement, indenture or
other instrument to which the Agent is a party or by which it or its property is
bound.
(e) The Agent and its employees, and to the best knowledge of the Agent,
its 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.
(f) No approval of any regulatory, supervisory or other public authority
other than the NASD is required in connection with the Agent's execution and
delivery of this Agreement.
(g) There is no suit, proceeding, charge, or action before or by any court,
regulatory authority or government agency or body pending or, to the best
knowledge of the Agent, threatened, which might materially and adversely affect
the Agent's performance of this Agreement.
(h) The Agent is a registered broker dealer in good standing in all
jurisdictions in which the Company will offer and sell the Shares and will
remain so registered until the consummation of the Reorganization.
SECTION 5. COVENANTS OF THE PRIMARY PARTIES. The Primary Parties hereby
--------------------------------
jointly and severally covenant with the Agent as follows:
(a) From the time the Registration Statement, including the Prospectus
contained therein (including any amendment or supplement thereto), became
effective and up to the Closing Date, the Registration Statement, including the
Prospectus contained therein (including any amendment or supplement thereto),
and any information regarding the Primary Parties contained in Sales Information
(as such term is defined in Section 8 hereof) authorized by the Primary Parties
for use in connection with the Offerings, 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
Charles Webb & Company
____________, 1998
Page 16
under which they were made, not misleading; provided, however, that the covenant
-------- -------
in this Section 5(a) will not apply to statements or omissions made in reliance
upon and in conformity with written information furnished to the Primary Parties
by the Agent expressly regarding the Agent for use in the Prospectus under the
captions "Market for Common Stock" and The Conversion-Plan of Distribution and
Selling Commissions."
(b) From the time of the approval of the Conversion Application, including
the Prospectus contained therein, became effective and up to the Closing Date,
the Conversion Application, including the Prospectus contained therein 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 covenant
-------- -------
in this Section 5(b) will not apply to statements or omissions made in reliance
upon and in conformity with written information furnished to the Primary Parties
by the Agent expressly regarding the Agent for use in the Prospectus under the
captions "Market for Common Stock" and The Conversion-Plan of Distribution and
Selling Commissions."
(c) The Holding Company will not file any amendment or supplement to the
Registration Statement (including the Prospectus therein) without providing the
Agent and its counsel an opportunity to review such amendment or supplement, and
will not file any amendment or supplement to which the Agent or its counsel
shall reasonably object.
(d) The MHC will not file any amendment or supplement to the Conversion
Application (including the Prospectus therein) without providing the Agent and
its counsel an opportunity to review such amendment or supplement, and will not
file any amendment or supplement to which the Agent or its counsel shall
reasonably object.
(e) The Holding Company will not file any amendment or supplement to the
Holding Company Application without providing the Agent and its counsel an
opportunity to review such amendment or supplement, and will not file any
amendment or supplement to which the Agent or its counsel shall reasonably
object.
(f) The Primary Parties will notify the Agent in writing of any violation
of its articles of incorporation or bylaws, in the case of the Holding Company,
or its charter or bylaws, in the case of the Bank or the MHC, at any time after
the date hereof and prior to the Closing Date. Unless waived in writing by the
Agent, which waiver shall not be unreasonably withheld, the Company shall not be
in violation of its articles of incorporation or bylaws, and neither the MHC nor
the Bank shall be in violation of its charter or bylaws, at any time after the
date hereof and prior to the Closing Date.
Charles Webb & Company
____________, 1998
Page 17
(g) The Primary Parties 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-approval amendment to the OTS Applications to be
approved by the OTS, and will immediately notify the Agent upon receipt of any
information concerning any of the following events: (i) when any post-effective
amendment to the Registration Statement has become effective; (ii) when any
post-approval amendment to the OTS Applications has been approved; (iii) when
any comments from the Commission, the OTS or any other governmental entity are
issued with respect to the Registration Statement, the OTS Applications or the
transactions contemplated by this Agreement; (iv) when any request is made by
the Commission, the OTS or any other governmental entity for any amendment or
supplement to the Registration Statement, the OTS Applications or for any other
additional information; (v) when the Commission, the OTS or any other
governmental entity issues any order or takes or threatens any action to suspend
any of the Offerings or the use of the Prospectus or any other filing of the
Primary Parties under the 1933 Act Regulations, the OTS Regulations, or other
applicable law; (vi) the issuance by the Commission, the OTS or any other
governmental authority of any stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto or the approval
of any of the OTS Applications, or of the initiation or threat of initiation of
any proceedings for any such purpose; or (vii) the occurrence of any event
mentioned in subsection (n) below; and the Primary Parties will make every
reasonable effort to prevent the issuance by the Commission, the OTS or any
state authority of any order referred to in (v) and (vi) above, and if any such
order shall at any time be issued, to obtain the lifting thereof at the earliest
possible time.
(h) As of the Closing Date, the Bank shall have all approvals and authority
to issue and sell its common stock to the Holding Company and the Holding
Company shall have all approvals and orders to issue and sell the Shares as
provided for herein and as described in the Prospectus.
(i) The shares of Bank Common Stock issued and outstanding to the MHC on
the Closing Date shall be canceled on the Closing Date.
(j) The Primary Parties shall deliver to the Agent and to its counsel two
conformed copies of each of the Registration Statement and the OTS Applications
as originally filed and of each amendment or supplement thereto, including all
exhibits. The Primary Parties shall also deliver such additional copies of the
foregoing documents to counsel to the Agent as may be required for any NASD
filings.
(k) The Primary Parties will furnish to the Agent, from time to time during
the period when the Prospectus is required to be delivered under OTS Regulations
or the Securities Exchange Act of 1934 (the "1934 Act"), such number of copies
of such Prospectus as the Agent may reasonably request for the purposes
contemplated by the 1933 Act, the OTS Regulations, the 1934
Charles Webb & Company
____________, 1998
Page 18
Act or the rules and regulations promulgated under the 1934 Act (the "1934 Act
Regulations"); and the Primary Parties authorize the Agent to use the Prospectus
in any lawful manner contemplated by the Plan in connection with the sale of the
Shares.
(l) The Primary Parties shall deliver to the Agent and to its counsel at
least two copies of each proxy statement delivered to members of the MHC or
stockholders of the Bank, as applicable.
(m) The Primary Parties will comply with all terms, conditions,
requirements and provisions with respect to the Reorganization and the
transactions contemplated thereby imposed by the Commission or the OTS or by the
1933 Act Regulations, the 1934 Act Regulations or the OTS Regulations to be
complied with subsequent to the Closing Date; and when the Prospectus is
required to be delivered, the Primary Parties will comply, at their own expense,
with all requirements imposed upon them by the Commission or the OTS, or by the
1933 Act Regulations, the 1934 Act Regulations or the OTS Regulations, in each
case as from time to time in force, so far as necessary to permit the
continuance of sales or dealing in shares of Common Stock during such period in
accordance with the provisions hereof and the Prospectus.
(n) If, at any time during the period when the Prospectus is required to be
delivered, any event relating to or affecting any of the Primary Parties shall
occur, as a result of which it is necessary or appropriate, in the opinion of
counsel for the Primary Parties and in the 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, the Primary
Parties shall, at their own expense, prepare and file 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 satisfactory to the Agent and its counsel
after a reasonable time for review) which shall amend or supplement the
Registration Statement or Prospectus, so that as amended or supplemented the
Registration Statement and the Prospectus shall not contain an untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements therein, in light of the circumstances existing at the time the
Prospectus is delivered to a purchaser, not misleading.
(o) The offer, sale and issuance of the Shares will be conducted in all
material respects in accordance with the Plan and the 1933 Act Regulations and
OTS Regulations and all other applicable laws, regulations, decisions and
orders, including all terms, conditions, requirements and provisions precedent
to the Reorganization imposed upon the Primary Parties by the Commission, the
OTS or any other applicable regulatory authority and in the manner described in
the Prospectus.
Charles Webb & Company
____________, 1998
Page 19
(p) The Primary Parties shall timely furnish to the Agent such information
with respect to the Primary Parties as the Agent may from time to time
reasonably request.
(q) The Holding Company shall take all necessary action required to
register the Shares for offering and sale by the Holding Company or to exempt
such Shares from registration and to exempt the Holding Company as a broker-
dealer and its or the Bank's officers, directors and employees as broker-dealers
or agents under the Blue Sky Laws of such jurisdictions in which the Agent and
the Primary Parties may reasonably agree upon; provided, however, that the
-------- -------
Holding Company shall not be obligated to file any general consent to service of
process or to qualify to do business in any jurisdiction in which it is not so
qualified; and in each jurisdiction where any of the Shares shall have been
qualified or registered the Holding Company shall prepare and file, at its own
expense, such statements and reports as may be required by the laws of such
jurisdiction.
(r) The Holding Company shall not sell or issue, contract or sell or
otherwise dispose of, for a period of 180 days after the Closing Date, without
the prior written consent of the Agent, any shares of Common Stock other than in
connection with any plan or arrangement described in the Prospectus.
(s) The Common Stock shall be the subject of an effective registration
statement under Section 12(g) of the 1934 Act as of the Closing Date, and the
Holding Company shall maintain the effectiveness of such registration for not
less than three years.
(t) The liquidation account for the benefit of Eligible Account Holders and
Supplemental Eligible Account Holder will be duly established and maintained by
the Bank in accordance with the Conversion Regulations.
(u) During the period during which the Common Stock is registered under the
1934 Act or for three years from the Closing Date, whichever period is greater,
the Holding Company shall furnish to its shareholders as soon as practicable
after the end of each fiscal year an annual report in accordance with Rule 14a-
3(b) of the 1934 Act Regulations.
(v) During the period of three years from the Closing Date, the Holding
Company shall furnish to the Agent upon the Agent's request: (i) as soon as
practicable after such information is publicly available, a copy of each report
of the Holding 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 Holding 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 shareholders), (ii) a copy of each other non-confidential
report of the Holding Company mailed to its shareholders or filed with the
Commission, the OTS or any other supervisory or regulatory authority or any
national
Charles Webb & Company
____________, 1998
Page 20
securities exchange or system on which any class of securities of the
Holding Company is listed or quoted, each press release and material news items
and additional documents and information with respect to the Holding Company or
the Bank as the Agent may reasonably request; and (iii) from time to time, such
other non-confidential information concerning the Holding Company or the Bank as
the Agent may reasonably request.
(w) The Holding 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." The Holding Company will report the use of proceeds of the
Conversion Offerings as required pursuant to Rule 463 under the 1933 Act.
(x) The Primary Parties will not distribute any prospectus, as defined in
Section 2(10) of the Securities Act of 1933, as amended (the "1933 Act"), other
than the Prospectus and the Sales Information (as defined in Section 8 hereof),
in connection with the offer and sale of the Shares without first notifying the
Agent.
(y) The Holding Company shall use its best efforts to (i) encourage and
assist three market makers to establish and maintain a market for the Shares and
(ii) list the Shares on a national securities exchange or on the Nasdaq Stock
Market effective on or prior to the Closing Date.
(z) In accordance with the Plan and as described in the Prospectus, the
Primary Parties will maintain appropriate arrangements for depositing all funds
received from persons mailing subscriptions for or orders to purchase Shares in
the Offerings on an interest-bearing basis at the rate described in the
Prospectus until the Closing Date and satisfaction of all conditions precedent
to the release of the obligation to refund payments received from persons
subscribing for or ordering Shares in the Offerings 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 Primary
Parties will ensure that the funds of each subscriber are separately insured by
the FDIC (to the maximum extent allowable), and the Primary Parties will 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.
(aa) The Holding Company will register as a savings and loan holding
company under the HOLA within 90 days after the Closing Date.
(bb) The Holding Company will comply with Section 11(a) of the 1933 Act and
Rule 158 of the 1933 Act.
Charles Webb & Company
____________, 1998
Page 21
(cc) The Primary Parties 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."
(dd) The Primary Parties will not amend the Plan without notifying the
Agent prior thereto.
(ee) The Primary Parties will assist the Agent, if necessary, in connection
with the allocation of the Conversion Shares in the event of an oversubscription
and will provide the Agent with any information necessary in allocating the
Conversion Shares in such event.
(ff) The Primary Parties shall conduct the Reorganization in accordance
with the Plan, all applicable laws and regulations and in the manner described
in the Prospectus.
(gg) The Primary Parties shall use all reasonable efforts to comply with,
or cause to be complied with, the conditions precedent to the several
obligations of the Agent specified in Section 7 hereof.
(hh) The Primary Parties shall conduct their respective businesses in
material compliance with all applicable federal and state laws, rules,
regulations, decisions, directives and orders, including all decisions,
directives and orders of the Commission, the OTS and the FDIC.
(ii) Upon completion of the sale by the Holding Company of the Shares
contemplated by the Prospectus, (i) the MHC shall have been converted pursuant
to the Plan to a federally chartered interim stock savings bank and
simultaneously merged with and into the Bank, (ii) all of the authorized, issued
and outstanding capital stock of the Bank shall be owned by the Holding Company,
(iii) the Holding Company shall have no direct subsidiaries other than the Bank,
and (iv) the Reorganization shall have been effected in accordance with all
applicable statutes, regulations, decisions and orders; and all terms,
conditions, requirements and provisions with respect to the Reorganization
(except those that are conditions subsequent) imposed by the Commission, the OTS
or any other governmental agency, if any, shall have been complied with by the
Primary Parties in all material respects or appropriate waivers shall have been
obtained and all notice and waiting periods shall have been satisfied, waived or
elapsed.
(jj) The Primary Parties will use their best efforts to assure that the
representations and warranties set forth in Section 3 of this Agreement remain
true and complete in all material respects throughout the period from the date
of this Agreement up to and including the Closing Date.
SECTION 6. COVENANTS OF THE AGENT. The Agent hereby covenants with the
----------------------
Primary Parties as follows:
Charles Webb & Company
____________, 1998
Page 22
(a) During the Offerings, the Agent shall comply in all material respects
with all requirements imposed upon it by the OTS and, to the extent applicable,
by the 1933 Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act
Regulations.
(b) The Agent shall distribute the Prospectus in connection with the sales
of the Common Stock in accordance with the 1933 Act, the 1933 Act Regulations,
the 1934 Act and the 1934 Act Regulations.
(c) The Agent shall remain a registered broker dealer in good standing with
the Commission and the NASD and in each jurisdiction in which the Holding
Company shall offer and sell the Shares.
(d) During the Offerings, the Agent will cause sufficient number of
personnel of the Agent to be at the Bank to handle all transactions associated
with the Offerings without the use of Bank personnel.
SECTION 7. CONDITIONS TO THE AGENT'S OBLIGATIONS. The Agent's obligations
-------------------------------------
hereunder are subject, to the extent not waived in writing by the Agent, to the
condition that all representations and warranties of the Primary Parties herein
are, at and as of the commencement of the Offerings and at and as of the Closing
Date, true and correct in all material respects, the condition that the Primary
Parties shall have performed all of their respective obligations hereunder to be
performed on or before such dates, and to the following further conditions:
(a) At the Closing Date, the Primary Parties shall have conducted the
Reorganization in all material respects in accordance with the Plan, the OTS
Regulations, and all other applicable laws, regulations, decisions and orders,
including all terms, conditions, requirements and provisions precedent to the
Reorganization imposed upon them by the OTS, the Commission and any state
securities agency.
(b) The Registration Statement shall have been declared effective by the
Commission, the Conversion Applications shall have been approved by the OTS and
the Holding Company Application shall have been approved by the OTS not later
than 5:30 p.m., Eastern Time, on the date of this Agreement, or with the
Agent's consent at a later time and date; and at the Closing Date, no order or
other action suspending the effectiveness of the Registration Statement shall
have been issued under the 1933 Act or proceedings therefor initiated or, to the
knowledge of the Primary Parties, threatened by the Commission, or any state
authority and no order or other action suspending the authorization of the
Prospectus or the consummation of the Reorganization shall have been issued or
proceedings therefor initiated or, to the knowledge of the Primary Parties,
threatened by the OTS or any other federal or state authority.
Charles Webb & Company
____________, 1998
Page 23
(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 for its benefit, of Breyer & Aguggia LLP, special counsel for
the Primary Parties, in form and substance to the effect that:
(i) The Holding Company has been duly incorporated and is validly
existing under the laws of the State of Indiana with full corporate
power and authority to conduct its business and own its property as
described in the Prospectus; the Holding Company is duly qualified as
a foreign corporation to transact business in each jurisdiction in
which the failure to so qualify would have a material adverse effect
on the financial condition, results of operations or the business of
the Primary Parties, taken as a whole; and upon consummation of the
Reorganization, all of the Shares issued and outstanding shall be duly
authorized and, upon payment therefor, shall be validly issued, fully
paid and non-assessable.
(ii) The Bank is validly existing as a federally chartered
savings bank in capital stock form of organization under the laws of
the United States, with full corporate power and authority to conduct
its business and own its property as described in the Prospectus; the
Bank is duly qualified as a foreign corporation to transact business
in each jurisdiction in which the failure to so qualify would have a
material adverse effect on the financial condition, results of
operations or the business of the Bank; and upon consummation of the
Reorganization, all of the issued and outstanding capital stock of the
Bank shall be duly authorized and, upon payment therefor, shall be
validly issued, fully paid and non-assessable, and all of such capital
stock shall be owned of record and, to such counsel's knowledge,
beneficially by the Holding Company, free and clear of any liens,
encumbrances or claims.
(iii) The Bank is a member of the FHLB-Indianapolis; the deposit
accounts of the Bank are insured by the FDIC under the SAIF up to the
maximum amount allowed under law; and, to such counsel's knowledge, no
proceedings for the termination or revocation of such membership or
insurance are pending or threatened.
(iv) The MHC is validly existing as a federally chartered mutual
holding company under the laws of the United States, with full
corporate power and authority to conduct its business and own its
property as described in the Prospectus.
Charles Webb & Company
____________, 1998
Page 24
(v) Upon consummation of the Reorganization, the authorized,
issued and outstanding capital stock of the Holding Company shall be
within the range set forth in the Prospectus under the caption
"Capitalization," and except for shares issued upon incorporation of
the Holding Company which will be canceled as part of the
Reorganization, no shares of Common Stock have been issued prior to
the Closing Date; the issuance of the Shares is not subject to
statutory or regulatory preemptive rights except as contemplated by
the Conversion Regulations; the terms and provisions of the Shares
conform to the description thereof contained in the Prospectus; and
the form of certificate used to evidence the Common Stock complies
with applicable law. To such counsel's knowledge, upon the issuance
of the Shares, good title to the Shares will be transferred from the
Holding 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 Plan has been duly adopted by the vote of the directors
of each of the Primary Parties as required by the OTS Regulations and
approved by the eligible voting members of the MHC and the eligible
voting stockholders of the Bank in accordance with the OTS Regulations
and the MHC's and the Bank's respective charter and bylaws.
(vii) The Registration Statement has been declared effective
under the 1933 Act and no stop order suspending the effectiveness
thereof has been issued or proceedings therefor initiated or, to such
counsel's knowledge, threatened by the Commission or any other
governmental agency.
(viii) The OTS Applications and the Plan have been approved by
the OTS and the Prospectus and the proxy statements of the MHC and the
Bank have been authorized for use by the OTS; to such counsel's
knowledge, no order has been issued by the OTS or the Commission to
suspend the Offerings or the use of the Prospectus, and no action for
such purposes has been instituted or threatened; and, to such
counsel's knowledge, no person has sought to obtain regulatory or
judicial review of the final action of the OTS approving the Plan, the
OTS Applications or the Prospectus, and no action is pending or, to
such counsel's knowledge, threatened to revoke any such authorizations
or approvals.
(ix) At the time the OTS Applications, including the Prospectus
contained therein, were approved by the OTS, the OTS Applications,
including the Prospectus contained therein (other than the financial
statements, the notes thereto, financial tables, and other financial,
statistical and appraisal data included therein or omitted
Charles Webb & Company
____________, 1998
Page 25
therefrom, as to which no opinion need be rendered), complied as to
form in all material respects with the requirements of the OTS
Regulations.
(x) At the time the Registration Statement became effective, the
Registration Statement, including the Prospectus contained therein
(other than the financial statements, the notes thereto, financial
tables, and other financial, statistical and appraisal data included
therein or omitted therefrom, 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.
(xi) To such counsel's knowledge, the Primary Parties have
conducted the Reorganization in all material respects in accordance
with the Plan, the 1933 Act, the 1933 Act Regulations, the OTS
Regulations, and the HOLA. The Plan complies in all material respects
with the HOLA and the OTS Regulations.
(xii) 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
Primary Parties; and this Agreement is a valid and binding obligation
of each of the Primary Parties, enforceable in accordance with its
terms, except as the enforceability thereof may be limited (a) by
bankruptcy, insolvency, moratorium, reorganization, 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 savings institutions and their holding
companies, (b) by general equitable principles, regardless of whether
such enforceability is considered in a proceeding in equity or at law,
(c) laws relating to the safety and soundness of insured depository
institution and their affiliates, or (d) to the extent that the
provisions of Section 8 and 9 hereof may be unenforceable as against
public policy or by applicable law, including without limitation
Sections 23A and 23B of the Federal Reserve Act, as amended.
(xiii) The execution, delivery and performance of this Agreement
and the incurrence of the obligations set forth herein by the Primary
Parties do not (a) result in any violation of the HOLA or the OTS
Regulations, (b) conflict with or violate the charter and bylaws of
the MHC or the Bank or the articles of incorporation and bylaws of the
Holding Company, or (c) constitute a breach of, or default under (or
an event which, with notice or lapse of time or both, would constitute
a default under), or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of any of the
Primary Parties pursuant to any contract, indenture, mortgage, loan
agreement, note, lease or other instruments filed as an exhibit to the
Charles Webb & Company
____________, 1998
Page 26
Registration Statement or the OTS Applications to which any of the
Primary Parties is a party or by which any of the Primary Parties may
be bound, or to which any of the property or assets of any of the
Primary Parties is subject that, individually or in the aggregate
would have a material adverse effect on the financial condition,
results of operations or business of the Primary Parties, taken as a
whole.
(xiv) Subject to the satisfaction of the conditions to the OTS
approval of the Reorganization, no further approval, registration,
authorization, consent or other order of or notice to any governmental
agency is required with respect to any of the Primary Parties in
connection with the execution and delivery of this Agreement, the
issuance of the Shares and the consummation of the Reorganization,
except as may be required under the Blue Sky Laws of various
jurisdictions (as to which no opinion need be rendered).
(xv) To such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened against any of the
Primary Parties or principals of any of the Primary Parties that are
required to be disclosed in the Prospectus other than those disclosed
therein (provided that for this purpose such counsel need not regard
any litigation or governmental proceeding to be "threatened" unless
the potential litigant or governmental authority has manifested to the
management of the Primary Parties or to such counsel a present
intention to initiate such litigation or proceeding).
(xvi) The descriptions in the OTS Applications and the
Registration Statement of the contracts, indentures, mortgages, loan
agreements, notes, leases or other instruments filed as exhibits
thereto are accurate in all material respects and fairly present the
information required to be shown.
(xvii) To such counsel's knowledge, the Bank has obtained all
Federal banking licenses, permits and authorizations currently
required for the conduct of its business as described in the
Prospectus, except for such licenses, approvals or authorizations the
failure of which to have would not result in a material adverse change
in the financial condition, results of operation or the business of
the Bank, and, to such counsel's knowledge, all such licenses, permits
and other governmental authorizations are in full force and effect,
and, to such counsel's knowledge, the Bank is in all material respects
in compliance therewith.
(xviii) To such counsel's knowledge, the MHC and the Bank are
not in violation of their respective charter and bylaws, and the
Holding Company is not in
Charles Webb & Company
____________, 1998
Page 27
violation of its articles of incorporation and bylaws nor, to such
counsel's knowledge, is either the MHC or the Bank in default (nor has
any event occurred which, with notice or lapse of time or both, would
constitute a default) in the performance or observance of any
obligation, agreement, covenant or condition contained in any material
contract, indenture, mortgage, loan agreement, note, lease or other
instrument filed as an exhibit to the Registration Statement or the
OTS Applications to which the MHC or the Bank is a party or by which
the MHC or the Bank or any of its property may be bound in any respect
that would have a material adverse effect upon the financial
condition, results of operations or business of the Primary Parties,
taken as a whole.
(xix) To such counsel's knowledge, neither the MHC 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 business.
(xx) The information in the Prospectus under the captions
"Regulation," "The Conversion," "Comparison of Stockholders' Rights,"
"Restrictions on Acquisition of the Holding Company," "Taxation--
Federal Taxation" and "Description of Capital Stock of the Holding
Company," 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 accurate and
complete in all material respects.
In giving such opinion, such counsel may rely as to all matters of fact on
certificates of officers or directors of the Primary Parties and certificates of
public officials. All references to "to such counsel's knowledge" in such
opinion shall have the meaning of "actual knowledge" as set forth in the
American Bar Association Legal Opinion Accord (1991) (the "Accord"). 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 a Primary
Party, or their counsel, shall have received a copy of such proceedings, order,
stop order or action. Such counsel may assume that any agreement is the valid
and binding obligation of any parties to such agreement other than the Primary
Parties.
In addition, such counsel shall provide a letter stating that during the
preparation of the Registration Statement, the OTS Applications and the
Prospectus, such counsel participated in conferences with certain officers and
other representatives of the Primary Parties, representatives of the Agent,
counsel to the Agent, representatives of the independent public accountants for
the Primary Parties at which the contents of the Registration Statement, the OTS
Applications and the Prospectus and related matters were discussed and, although
they are not passing upon and do not
Charles Webb & Company
____________, 1998
Page 28
assume the responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement, the OTS Applications and
Prospectus, on the basis of the foregoing (relying as to factual matters on
certificates of officers and other factual representations by the Primary
Parties), nothing has come to such counsel's attention that caused them to
believe that the Prospectus as of its date and as of the Closing Date, contained
or contains any untrue statement of a material fact or omitted or omits to state
any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (it being understood that such counsel shall express no
comment or opinion with respect to the financial statements, schedules and other
financial information and statistical and stock valuation data included or
omitted from, or statistical methodology employed, in the Registration
Statement, the OTS Applications and Prospectus).
(2) The favorable opinion, dated as of the Closing Date, of Bose
McKinney & Evans, Indianapolis, Indiana, counsel to the Agent, with respect
to such matters as the Agent may reasonably require. Such opinion may
rely, as to matters of fact, upon certificates of officers and directors of
the Primary Parties delivered pursuant hereto or as such counsel shall
reasonably request.
(3) The favorable opinion, dated as of the Closing Date and addressed
to the Agent for its benefit, of ____________, counsel for the Primary
Parties, in form and substance to the effect that:
(i) The execution, delivery and performance of this Agreement and
the incurrence of the obligations set forth herein by the Primary
Parties do not (a) result in any violation of any applicable law or
regulation (except that no opinion need be rendered with respect to
the HOLA, the OTS Regulations or the Blue Sky Laws of various
jurisdictions) or (b) constitute a breach of, or default under (or an
event which, with notice or lapse of time or both, would constitute a
default under), or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Primary
Parties pursuant to any contract, indenture, mortgage, loan agreement,
note, lease or other instruments to which any of the Primary Parties
is a party or by which any of the Primary Parties may be bound, or to
which any of the property or assets of any of the Primary Parties is
subject that, individually or in the aggregate would have a material
adverse effect on the financial condition, results of operations or
business of the any of the Primary Parties, taken as a whole.
(ii) To such counsel's knowledge, each of the MHC and the Bank
has good and marketable title to all properties and assets which are
material to its
Charles Webb & Company
____________, 1998
Page 29
business and to those properties and assets described in the
Prospectus as owned by it, free and clear of all liens, charges,
encumbrances or restrictions, except such as are described in the
Prospectus, or as are not material in relation to the business of the
Primary Parties, taken as a whole.
(iii) To such counsel's knowledge, all of the leases and
subleases material to the business of the Primary Parties under which
any of the Primary Parties holds properties, as described in the
Prospectus, are in full force and effect.
(iv) To such counsel's knowledge, none of the Primary Parties is
in default (nor has any event occurred which, with notice or lapse of
time or both, would constitute a default) in the performance or
observance of any obligation, agreement, covenant or condition
contained in any material contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which such Primary Party
is a party or by which such Primary Party or any of its property may
be bound in any respect that would have a material adverse effect upon
the financial condition, results of operations or business of the
Primary Parties, taken as a whole.
(d) At the Closing Date, the Agent shall receive a certificate of the
Chief Executive Officer and the Chief Financial Officer of each of the Primary
Parties, dated as of the Closing Date, that states that: (i) they have reviewed
the Registration Statement and, at the time the Registration Statement was
declared effective, the Registration Statement 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 as of which information is given
in the Prospectus and as of the Closing Date, no material adverse change in the
financial condition or in the earnings, capital, properties or business of the
Primary Parties, taken as a whole, has occurred and no other event has occurred,
which should have been set forth in an amendment or supplement to the Prospectus
which has not been so set forth, and the conditions set forth in this Section 7
have been satisfied; (iii) the representations and warranties in Section 3 are
true and correct with the same force and effect as though expressly made at and
as of the Closing Date; (iv) the Primary Parties 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 Closing
Date; (v) no order suspending the effectiveness of the Registration Statement or
suspending the Offerings or the Reorganization has been issued and no
proceedings for that purpose are pending or, to their knowledge, threatened by
the Commission, the OTS or any other authority; and (vi) to their knowledge no
person has sought to obtain review of the final action of the OTS approving the
Plan.
Charles Webb & Company
____________, 1998
Page 30
(e) Prior to and at the Closing Date; (i) in the reasonable opinion of the
Agent, there shall have been no material adverse change in the financial
condition, or in the earnings or business of the Primary Parties, taken as a
whole, from that as of the latest date as of which such condition is set forth
in the Prospectus other than transactions referred to or contemplated therein;
(ii) none of the Primary Parties shall have received any directive from the
Commission, the OTS or the FDIC to make any material change in the method of
conducting its business with which it has not complied in al material respects
(which directive, 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 Primary Parties, taken as a whole; (iii) none of the
Primary Parties shall have been in material 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 proceedings, 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 Primary
Parties; threatened against any of the Primary Parties or affecting any of their
respective properties wherein an unfavorable decision, ruling or finding would
materially and adversely affect the business operations, financial condition or
income of the Primary Parties, taken as a whole; and (v) where required, the
Shares have been qualified or registered for offering and sale under the Blue
Sky Laws of the jurisdictions in which the Shares have been offered for sale.
(f) Concurrently with the execution of this Agreement, the Agent shall
receive a letter from Monroe Shine & Co., Inc. dated the date hereof and
addressed to the Primary Parties and the Agent; (i) confirming that Monroe Shine
& Co., Inc. are independent public accountants within the meaning of the 1933
Act, the 1933 Act Regulations, 12 C.F.R. (S)571.2(c)(3) and the Code of
Professional Ethics of the American Institute of Certified Public Accountants,
and stating in effect that in their opinion the financial statements of the Bank
as of June 30, 1998, and 1997 and for the years ended June 30, 1998, and 1997
included in the Prospectus and covered by their opinion included therein, comply
as to form in all material respects with the applicable accounting requirements
of the 1933 Act, the 1933 Act Regulations (and specifically Item 310 of
Regulation S-B thereof), OTS Regulations and GAAP applied consistently (except
as noted therein); (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 financial statements of the Bank prepared by the Bank, a
reading of the minutes of the meetings of the Board of Directors of the Primary
Parties, the members of the MHC and the stockholders 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 financial statements included in the
Prospectus to a specified date not more than three business days prior to the
date
Charles Webb & Company
____________, 1998
Page 31
hereof, there was any increase in borrowings by or in non-performing assets
of the Bank; and (C) except as otherwise discussed in the Prospectus, there was
any decrease in retained earnings of the Bank at the date of such letter as
compared with amounts shown in the latest audited statement of condition
included in the Prospectus or there was any decrease in net income or net
interest income of the Bank for the number of full months commencing immediately
after the period covered by the latest audited 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 any 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 Bank which are subject to the internal controls of the Bank's accounting
system and other data prepared by the Bank directly from such accounting
records, to the extent specified in such letter, such amounts and/or percentages
set forth in the Prospectus as you may reasonably request, and it has found such
amounts and percentages to be in agreement therewith.
(g) At the Closing Date, the Agent shall receive a letter from Monroe Shine
& Company, Inc. dated the Closing Date, addressed to the Agent, confirming the
statements made by them in the letter delivered by them pursuant to subsection
(f) of this Section 10, the "specified date" referred to in clause (ii) of
subsection (f) thereof to be a date specified in such letter, which shall not be
more than three business days prior to the Closing Date.
(h) At the Closing Date, the Agent shall have received the favorable
opinion, dated as of the Closing Date and addressed to the Agent for its
benefit, of Monroe Shine & Company, Inc. in form and substance to the effect
that the information in the Prospectus under the caption "Taxation-Indiana
Taxation" has been reviewed by such firm and is accurate and complete in all
material respects.
(i) At the Closing Date, the Agent shall receive a letter from
Keller & Company, Inc., dated the Closing Date and addressed to the Agent,
(i) confirming that said firm is independent of the Primary Parties and is
experienced and expert in the area of corporate appraisals within the meaning of
the OTS Regulations, (ii) stating in effect that the Appraisal prepared by such
firm complies in all material respects with the applicable requirements of the
OTS Regulations, and (iii) further stating that its opinion of the pro forma
market value of the MHC and the Bank expressed in the appraisal as most recently
updated, remains in effect.
(j) The Bank shall not have sustained since the date of the latest audited
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
Charles Webb & Company
____________, 1998
Page 32
or court or governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus.
(k) At or prior to the Closing Date, the Agent shall receive: (i) a copy of
the order of the Commission declaring the Registration Statement effective;
(ii) a copy of the letters from the OTS approving the OTS Applications and
authorizing the use of the Prospectus; (iii) a certificate from the Secretary of
State of Indiana evidencing the existence of the Holding Company; (iv)
certificates from the OTS evidencing the existence of the MHC and the Bank;
(v) a certificate from the FDIC evidencing the Bank's insurance of accounts;
(vi) a letter of the FHLB-Indianapolis evidencing the Bank's membership therein,
and (vii) any other documents that the Agent shall reasonably request.
(l) The Agent shall receive a copy of the Bank's federal stock charter as
executed by the OTS, certified by an officer of the Bank, and a copy of the
Holding Company's articles of incorporation and bylaws certified by an officer
of the Holding Company.
(m) 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 Nasdaq Stock Market or by order of
any governmental authority; (ii) a general moratorium on the operations of
commercial banks, Indiana or federal savings and loan associations or a general
moratorium on the withdrawal of deposits from commercial banks, Indiana 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 in the effect
of any of the above in the Agent's reasonable judgment, makes it impracticable
or inadvisable to proceed with the Offerings or the delivery of the Shares on
the terms and in the manner contemplated in the Prospectus.
SECTION 8. INDEMNIFICATION.
---------------
(a) The Primary Parties jointly and severally agree to indemnify and hold
harmless the Agent, its officers, directors, agents, servants and employees and
each person, if any, who controls the Agent within the meaning of 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 expenses (including reasonable fees and disbursements of counsel)
incurred by the Agent or any of them in connection with investigating,
Charles Webb & Company
____________, 1998
Page 33
preparing to defend 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 related to the Reorganization or any action
taken by the Agent where acting as agent of the Primary Parties; (ii) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Prospectus (or any amendment or supplement
thereto), the OTS Applications (or any amendment or supplement thereto) or any
blue sky application or other instrument or document executed by any of the
Primary Parties or based upon written information supplied by any of the Primary
Parties 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 any of the Primary Parties as a broker-dealer or their
respective officers, directors and employees as broker-dealers or agents, under
the securities laws thereof (collectively, the "Blue Sky Application"), or any
application or other document, advertisement, oral statement or communication
("Sales Information") prepared, made or executed by or on behalf of any of the
Primary Parties based upon written or oral information furnished by or on behalf
of any of the Primary Parties, 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; (iii) arise out of or based upon the omission or
alleged omission to state in any of the foregoing documents or information, a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; or (iv) arise from any theory of liability whatsoever relating to or
arising from or based upon the Registration Statement or Prospectus (or any
amendment or supplement thereto), the OTS Applications (or any amendment or
supplement thereto), any Blue Sky Application or Sales Information or any
documentation distributed in connection with the Reorganization; 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 omissions or alleged material omission from, the Registration
Statement or Prospectus (or any amendment or supplement thereto), the OTS
Applications (or any amendment or supplement thereto), any Blue Sky Application
or Sales Information made in reliance upon and in conformity with information
furnished in writing to any of the Primary Parties by the Agent regarding the
Agent; and provided further, however, that the Primary Parties shall not be
liable under this Section 8(a) to the extent that any loss, claim, damage,
liability or action is found in a final judgment by a court of competent
jurisdiction to have resulted from the Agent's bad faith, willful misconduct or
gross negligence.
(b) The Agent agrees to indemnify and hold harmless the Primary Parties,
their respective directors and officers and each person, if any, who controls
any of the Primary Parties within the meaning of 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 Primary Parties and any such
Charles Webb & Company
____________, 1998
Page 34
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 to defend or defending any actions, proceedings or
claims (whether commenced or threatened) to the extent such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus (or any amendment or supplement
thereto) or the OTS Applications (or any amendment or supplement thereto), and
Blue Sky Application or Sales Information, or 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;
provided, however, that the Agent's obligations under this Section 8(b)
- -------- -------
shall exist only if and only to the extent (i) 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 the Prospectus (or any
amendment or supplement thereto) or the OTS Applications (or any amendment or
supplement thereto), and Blue Sky Application or Sales Information in reliance
upon and in conformity with information furnished in writing to the Primary
Parties by the Agent regarding the Agent.
(c) Each indemnified party shall give prompt written notice to each
indemnifying party of any action, proceeding, claim (whether commenced or
threatened), or suit instituted against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve it from any liability which it may have on account of this Section 8 or
otherwise. An indemnifying party may participate at its own expense in the
defense of such action. In addition, if it so elects within a reasonable time
after receipt of such notice, an indemnifying party, jointly with any other
indemnifying parties receiving such notice, may assume defense of such action
with counsel chosen by it and approved by the indemnified parties that are
defendants in such action, unless such indemnified parties reasonably object to
such assumption on the ground that there may be legal defenses available to them
that are different from or in addition to those available to such indemnifying
party. If an indemnifying party assumes the defense of such action, the
indemnifying parties shall not be liable for any fees and expenses of counsel
for the indemnified parties incurred thereafter in connection with such action,
proceeding or claim, other than reasonable costs of investigation. In no event
shall the indemnifying parties be liable for the fees and expenses of more than
one separate firm of attorneys (and any special counsel that said firm may
retain) for each indemnified party in connection with any one action, proceeding
or claim or separate but similar or related actions, proceedings or claims in
the same jurisdiction arising out of the same general allegations or
circumstances.
SECTION 9. CONTRIBUTION. In order to provide for just and equitable
------------
contribution in circumstances in which the indemnification provided for in
Section 8 is due in accordance with its terms but is for any reason held by a
court to be unavailable from any of the Primary Parties or the
Charles Webb & Company
____________, 1998
Page 35
Agent, as the case may be, the Primary Parties 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 of any claims
asserted, but after deducting any contribution received by the Primary Parties
or the Agent from persons other than the other party 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 bears to the gross proceeds received by
the Holding Company from the sale of the Conversion Shares in the Offerings, and
the Primary Parties shall be jointly and severally responsible for the balance.
If, however, the allocation provided above is not permitted by applicable law or
if the indemnified party failed to give the notice required under Section 8
above, 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 Primary Parties, 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 Primary Parties, on the one hand, and the Agent, on the other,
from the Offerings (before deducting expenses). The relative benefits received
by the Primary Parties, on the one hand, and the Agent, on the other, shall be
deemed to be in the same proportion as the gross proceeds from the Offerings
received by the Primary Parties bear to the total fees and 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 Primary Parties, 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 Primary
Parties 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 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 Securities Act of 1933, as amended)
shall be entitled to contribution from any person who was not found guilty of
such fraudulent misrepresentation. The obligations of the Primary Parties under
this Section 9 and under Section 8 shall be in addition to any liability which
the Primary Parties may otherwise have. For purposes of
Charles Webb & Company
____________, 1998
Page 36
this Section 9, each of the Agent's officers and directors or the officers and
directors of the Primary Parties and each person, if any, who controls the Agent
or the Primary Parties within the meaning of the 1934 Act shall have the same
rights to contribution as the Agent or the Primary Parties. 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, shall
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 that under
this Section 9. To the extent applicable, the Primary Parties' and the Agent's
obligations under this Section 9 are subject to and limited by public policy and
the provisions of applicable law.
SECTION 10. SURVIVAL OF AGREEMENTS, REPRESENTATIONS AND INDEMNITIES. The
-------------------------------------------------------
respective indemnities of the Primary Parties and the Agent, and the
representations and warranties and other statements of the Primary Parties and
the Agent set forth in or made pursuant to this Agreement, shall survive and
remain in full force and effect, regardless of (i) any termination or
cancellation of this Agreement or (ii) any investigation made by or on behalf of
the Agent, the Primary Parties or any officer, director, controlling person
referred to in Section 8 hereof, agent or employee, and (iii) the issuance and
delivery of and payment for the Shares; and any legal representative, successor
or assign of the Agent, the Primary Parties, and any such controlling person
shall be entitled to the benefit of the respective agreements, indemnities,
warranties and representations.
SECTION 11. TERMINATION. (a) The Agent may terminate its obligations
-----------
under this Agreement by giving the notice indicated below in subsection (b) at
any time after this Agreement becomes effective as follows:
(i) In the event the Holding Company fails to sell the required
minimum number of Conversion Shares by the End Date, and in accordance with
the provisions of the Plan or as required by the OTS Regulations, and
applicable law, this Agreement shall terminate upon refund by the Primary
Parties to each person who has subscribed for or ordered any of the
Conversion 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
for such obligations of Primary Parties as are set forth in Sections 2,
8(a), 9 and 10 hereof.
(ii) 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 canceled by the Agent by notifying the Primary
Parties of such cancellation as provided in Section 12 hereof in writing or
at any time at or prior to the Closing Date, and any such cancellation
shall be
Charles Webb & Company
____________, 1998
Page 37
without liability of any party to any other party except as otherwise
provided in Sections 2, 8, 9 and 10 hereof.
(iii) In the event any of the Primary Parties is in material breach
of the representations and warranties or covenants contained in Sections 3
and 5 and such breach has not been cured after the Agent has provided the
Primary Parties with notice of such breach.
(b) If the Agent elects to terminate this Agreement with respect to it as
provided in this Section 11, the Primary Parties shall be notified promptly by
telephone, confirmed by letter.
(c) The Primary Parties may collectively terminate this Agreement with
respect to the Agent in the event the Agent is in material breach of the
representations and warranties or covenants contained in Sections 4 and 6 and
such breach has not been cured after the Primary Parties have provided the Agent
with notice of such breach.
(d) 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 in writing; and if sent to the Agent,
shall be mailed or delivered and confirmed to Charles Webb & Company, 211
Bradenton, Dublin, Ohio 43017-5034, Attention: Harold T. Hanley, III (with a
copy to Bose McKinney & Evans, 135 North Pennsylvania Street, Suite 2700,
Indianapolis, Indiana 46204, Attention: David A. Butcher, Esquire); and if sent
to the Primary Parties, shall be mailed or delivered and confirmed to the
Primary Parties at 220 Federal Drive, N.W., Corydon, Indiana 47112, Attention:
James G. Pendleton (with a copy to Breyer & Aguggia LLP, 1300 I Street, N.W.,
Suite 470 East, Washington, D.C. 20005, Attention: Paul M. Aguggia, Esquire).
SECTION 13. PARTIES. The Primary Parties shall be entitled to act and
-------
rely on any request, notice, consent, waiver or agreement 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 any of the Primary Parties, when the same shall
have been given by the undersigned or any other officer of the Primary Parties.
This Agreement shall inure solely to the benefit of, and shall be binding upon,
the Agent, the Primary Parties and their respective successors, legal
representatives and assigns, and no other person shall have or be construed to
have any legal or equitable right, remedy or claim under or in respect of or by
virtue of this Agreement or any provision herein contained.
Charles Webb & Company
____________, 1998
Page 38
SECTION 14. ENTIRE AGREEMENT. It is understood and agreed that this
----------------
Agreement is the exclusive agreement among the parties hereto, and supersedes
any prior agreement among the parties (except for specific references herein to
the Letter Agreement) and may not be varied except in writing signed by all the
parties.
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 New York, except to the extent that federal law
shall apply.
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.
Charles Webb & Company
____________, 1998
Page 39
If the foregoing correctly sets forth the arrangement between the Primary
Parties and the Agent, please indicate acceptance thereof in the space provided
below for that purpose, whereupon this letter and the Agent's acceptance shall
constitute a binding agreement.
Very truly yours,
FIRST FEDERAL BANK, A FEDERAL SAVINGS BANK
By:______________________________
James G. Pendleton
Chairman and Chief Executive Officer
FIRST CAPITAL, INC., M.H.C.
By:______________________________
James G. Pendleton
Chairman and Chief Executive Officer
FIRST CAPITAL, INC.
By:______________________________
James G. Pendleton
Chairman and Chief Executive Officer
Charles Webb & Company
____________, 1998
Page 40
Accepted as of the date first above written
CHARLES WEBB & COMPANY, A
DIVISION OF KEEFE, BRUYETTE &
WOODS, INC.
By:______________________________
Patricia A. McJoynt
Executive Vice President
EXHIBIT A
FIRST CAPITAL, INC.
Up to __________ Conversion Shares
($0.01 Par Value)
Selected Dealers' Agreement
---------------------------
_____________, 1998
Gentlemen:
Charles Webb & Company, a division of Keefe, Bruyette & Woods, Inc.
("Webb"), has agreed to assist First Capital, Inc., Corydon, Indiana (the
"Holding Company"), an Indiana corporation, in connection with the offer and
sale (the "Offering") of up to 1,026,375 shares of its common stock, $0.01 par
value ("Common Stock"), to be issued in connection with the reorganization (the
"Reorganization") of First Capital, Inc., M.H.C. (the "MHC") and its majority-
owned subsidiary, First Federal Bank, A Federal Savings Bank (the "Bank") from a
stock savings bank subsidiary of a federally-chartered mutual holding company to
a stock savings bank subsidiary of the Holding Company pursuant to the Home
Owners' Loan Act, as amended, and 12 C.F.R. Part 575. The total number of
shares of Common Stock to be offered may be decreased to a minimum of 758,625
shares and increased to an adjusted maximum of 1,180,331 shares. The price per
share has been fixed at $10.00. 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 November __, 1998 (the "Prospectus").
In connection with the Reorganization, the Holding Company, on a best efforts
basis, is offering for sale such shares of Common Stock ("Shares"), in a
Subscription Offering and a Direct Community Offering (each as defined in the
Prospectus). Any Shares not sold in the Subscription Offering and Direct
Community Offering shall be offered to the general public in the Syndicated
Community Offering (as defined in the Prospectus) giving preference first, to
natural persons residing in Crawford, Clark, Floyd, Harrison and Washington
Counties, Indiana.
The Subscription and Community Offerings are being conducted under an
Agreement and Plan of Reorganization (the "Plan"), adopted by the Bank's and the
MHC's Board of Directors. The Subscription and Community Offerings are further
being conducted in accordance with the regulations of the Office of Thrift
Supervision (the "OTS") and subject to the provisions contained in the Plan.
A-1
The Shares are also being offered by broker-dealers licensed by the
National Association of Securities Dealers, Inc. (the "NASD") which have been
selected by Webb and the Holding Company.
Webb is offering the selected dealers (of which you are one) the
opportunity to participate in the solicitation of offers to buy the Shares and
as consideration for your services Webb will pay you a selling concession equal
to an agreed upon percentage of the dollar amount of the Shares sold on behalf
of the Holding Company by you, as evidenced by the authorized designation of
your firm on the order form or forms for payment therefor to the Holding
Company. It is understood, of course, that payment of your fee will be made
only out of compensation received by Webb for the Common Stock sold on behalf of
the Holding Company by you, as evidenced in accordance with the preceding
sentence. As soon as practicable after the closing date of the Offering, Webb
will remit to you, only out of Webb's compensation as provided above, the fees
to which you are entitled hereunder.
Each order form for the purchase of Shares must set forth the identity and
address of each person to whom the certificates for such Shares 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 directly to you to make any accompanying check payable to
"First Capital, Inc." unless you elect to hold and escrow such funds in
accordance with the terms and conditions specified below.
This offer is made subject to the terms and conditions herein set forth and
is made only to selected dealers 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 NASD Rule 2110.
Orders for Shares will be subject to confirmation and Webb, acting on
behalf of the Holding Company, reserves the right in its 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 Holding Company, or by Webb to give any information or make
any representations other than those contained in the Prospectus in connection
with the sale of any of the Shares. No selected dealer is authorized to act as
agent for Webb when soliciting offers to buy the Shares from the public or
otherwise.
As a selected dealer assisting in selling the Shares pursuant hereto, you
hereby agree to comply with the applicable requirements of the Act and
applicable state rules and regulations. In addition, you confirm that you have
complied with the prospectus delivery requirements of Rule 15c2-8 under Act.
As a selected dealer you will either: (1) no later than the business day
following receipt transmit all customer orders and customer checks in payment
therefor to the Holding Company or (2) if your customers desire to pay for their
shares with funds on deposit with you or forwarded by such customers to you and
retained by you, you will (a) deposit such customer funds no later than
A-2
twelve noon Eastern Time of the business day next following your receipt of the
orders or funds in a segregated account all in accordance with Rule 15c2-4 of
the Act; (b) timely transmit such orders or a summary hereof to the Holding
Company; and (c) remit funds deposited in accordance with (a) above to the
Holding Company on Webb's instructions no later than 24 hours before the closing
date of the transaction.
Unless earlier terminated by Webb, this Agreement shall terminate upon the
closing date of the Offering. Webb may terminate this Agreement or any
provisions hereof any time by written or telegraphic notice to you. Of course,
Webb's obligations hereunder are subject to the successful completion of the
Offering.
You agree that at any time or times prior to the termination of this
Agreement you will, upon Webb's request, report to Webb the number of Shares
ordered by you under this Agreement and provide, if applicable, a list of
beneficial owners for the Shares.
Webb shall have full authority to take such actions as Webb may deem
advisable in respect of all matters pertaining to the Offering. Webb shall be
under no liability to you except for lack of good faith and for obligations
expressly assumed by Webb in this Agreement.
Upon application to Webb, Webb will inform you as to the states in which
Webb believes the Shares have been qualified for sale under, or are exempt from
the requirements of, the respective blue sky laws of such states, however, Webb
assumes no responsibility or obligation as to your rights to sell Shares in any
state.
Additional copies of the Prospectus and any supplements thereto will be
supplied in reasonable quantities upon request.
Any notice from Webb 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 New York.
A-3
Please confirm your agreement hereto by signing and returning the
confirmations accompanying this letter at once to Webb at Charles Webb &
Company, 211 Bradenton Avenue, Dublin, Ohio 43017. The enclosed duplicate copy
shall evidence the agreement between us.
CHARLES WEBB & COMPANY,
A DIVISION OF
KEEFE, BRUYETTE & WOODS, INC.
By:_____________________________
CONFIRMED AS OF:
_____________________, 199__
________________________________
(Name of Dealer)
By:_____________________________
Its:____________________________
A-4