EXHIBIT 1
FIRST SHARES BANCORP, INC.
UP TO $5,000,000 IN PRINCIPAL AMOUNT OF 8%
REDEEMABLE SUBORDINATED DEBENTURES DUE JULY 1, 2011 AND
$5,000,000 IN FACE AMOUNT OF CANCELABLE MANDATORY STOCK PURCHASE CONTRACTS
AGENCY AGREEMENT
____________, 2002
▇▇▇▇▇ ▇. ▇▇▇▇▇ & Company
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Mr. ▇▇▇▇ ▇▇▇▇
Dear Sir:
First Shares Bancorp, Inc., an Indiana bank holding corporation (the
"Company"), proposes to issue and sell a minimum of $2,500,000 and a maximum of
$5,000,000 in principal amount of 8% Redeemable Subordinated Debentures Due July
1, 2011 ("Debentures") and a corresponding face amount of Cancelable Mandatory
Stock Purchase Contracts ("Equity Contracts" and, together with the Debentures,
the "Securities"). The Debentures will be issued under an indenture (the
"Indenture") between the Company and The Huntington National Bank, as trustee
(the "Trustee"). The Equity Contracts will be issued pursuant to an Equity
Contract Agency Agreement (the "Equity Contract Agency Agreement") between the
Company and First Bank, as equity contract agent (the "Equity Contract Agent").
The Equity Contracts require the obligors thereunder to purchase on January 1,
2011 up to an aggregate of 500,000 shares of the Company's Common Stock, $.01
par value per share (the "Common Stock") at a purchase price of $10.00 per
share, subject to adjustment.
The Company will be offering the Securities pursuant to an offering
registered with the Securities and Exchange Commission (the "Commission") on
Form SB-2 (the "Offering"). The Securities will be offered to the public by the
Company at a price of $990 per $1,000 in principal amount of Debentures and $10
per $1,000 in face amount of Equity Contracts. The purpose of this Agreement is
to set forth the understanding of the parties relating to the right of ▇▇▇▇▇ ▇.
▇▇▇▇▇ & Company (the "Agent") to participate in the sale of the Securities as
agent exercising its best efforts to sell the Securities.
1. REPRESENTATIONS AND WARRANTIES OF AGENT. Agent represents and warrants
that:
(a) Agent is a corporation duly organized, validly existing and in good
standing under the laws of the State of Illinois with all requisite
corporate power to carry on its business.
(b) Agent is licensed as a broker-dealer, authorized to conduct offerings
of the sort contemplated hereby by the Commission and the blue sky
authorities of each other state in which the Company and Agent have
agreed to offer the Securities and is a member in good standing of the
National Association of Securities Dealers, Inc. (the "NASD"), and, to
Agent's best knowledge, no proceedings are pending or threatened to
revoke or limit any such status.
(c) This Agreement has been duly authorized, executed and delivered by
Agent and is a valid and binding agreement on the part of Agent,
enforceable in accordance with its terms, except as enforceability may
be limited by the application of bankruptcy, insolvency, moratorium or
similar laws affecting the rights of creditors generally and by
judicial limitations on the right of specific performance, and except
as the enforceability of the indemnification or contribution
provisions hereby may be affected by applicable federal or state
securities laws.
(d) Agent hereby represents and warrants to, and agrees with, the Company
that in connection with the Offering: (i) Agent has not distributed
and will not distribute any prospectus or any other offering material
in connection with the offering and sale of the Securities other than
a Preliminary Prospectus (as defined in Section 2(a)) relating to the
Offering and filed with the Commission or the Prospectus (as defined
in Section 2(a)) or other materials permitted by the Securities Act of
1933, as amended (the "Securities Act"), and the rules and regulations
promulgated by the Commission thereunder (the "Rules") to be
distributed by the Agent and consented to by the Company or its
counsel; (ii) neither Agent nor any officer or other person employed
by Agent will provide any information or make any representations to
purchasers of the Securities, other than such information and
representations as are either contained in a Preliminary Prospectus or
the Prospectus or are not inconsistent with the information set forth
in such Preliminary Prospectus or the Prospectus which shall be
pre-approved by the Company; and (iii) Agent will endeavor to comply
with Rule 2310, Conduct Rules, of the National Association of
Securities Dealers, Inc. Manual and similar applicable state and
federal securities laws regarding the suitability of the Securities
for its customers.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to the Agent and agrees with the Agent as follows:
(a) The Company has carefully prepared, in conformity with the
requirements of the Securities Act and the Rules, a registration
statement on Form SB-2 (Registration No. 333-83640), including a
Preliminary Prospectus, and has filed with the Commission the
registration statement and such amendments thereof as may have been
required to the date of this Agreement. Copies of such registration
statement (including all amendments thereof) and of the related
Preliminary Prospectus have
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heretofore been delivered by the Company to the Agent. The term
"Preliminary Prospectus" means any preliminary prospectus (as defined
in Rule 430 of the Rules) included at any time as a part of the
registration statement. The registration statement as amended
(including any supplemental registration statement under Rule 462(b)
or any amendment under Rule 462(c) of the Rules) at the time and on
the date it becomes effective (the "Effective Date"), including the
prospectus, financial statements, schedules, exhibits, and all other
documents incorporated by reference therein or filed as a part
thereof, is called the "Registration Statement;" provided, however,
that "Registration Statement" shall also include all Rule 430A
Information (as defined below) deemed to be included in such
Registration Statement at the time such Registration Statement becomes
effective as provided by Rule 430A of the Rules. The term "Prospectus"
means the Prospectus as filed with the Commission pursuant to Rule
424(b) of the Rules or, if no filing pursuant to Rule 424(b) of the
Rules is required, means the form of final prospectus included in the
Registration Statement at the time such Registration Statement becomes
effective. The term "Rule 430A Information" means information with
respect to the Securities and the offering thereof permitted to be
omitted from the Registration Statement when it becomes effective
pursuant to Rule 430A of the Rules. Reference made herein to any
Preliminary Prospectus or to the Prospectus shall be deemed to refer
to and include any document attached as an exhibit thereto or
incorporated by reference therein, as of the date of such Preliminary
Prospectus or the Prospectus, as the case may be. The Company will not
file any amendment of the Registration Statement or supplement to the
Prospectus to which the Agent shall reasonably object in writing after
being furnished with a copy thereof.
(b) Each Preliminary Prospectus, at the time of filing thereof, contained
all material statements which were required to be stated therein in
accordance with the Securities Act and the Rules, and conformed in all
material respects with the requirements of the Securities Act and the
Rules, and did not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The
Commission has not issued any order suspending or preventing the use
of any Preliminary Prospectus. When the Registration Statement shall
become effective, when the Prospectus is first filed pursuant to Rule
424(b) of the Rules, when any post-effective amendment of the
Registration Statement shall become effective, when any supplement to
or pre-effective amendment of the Prospectus is filed with the
Commission and at each Closing Date (as defined in Section 3), the
Registration Statement and the Prospectus (and any amendment thereof
or supplement thereto) will comply, or if previously filed complied,
with the applicable provisions of the Securities Act and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the respective rules and regulations of the Commission thereunder, and
neither the Registration Statement nor the Prospectus, nor any
amendment thereof or supplement thereto, will contain, or if
previously filed contains, any untrue statement of a material fact or
will omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
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circumstances under which they were made, not misleading; provided,
however, that the Company makes no representation or warranty as to
the information contained in the Registration Statement or the
Prospectus or any amendment thereof or supplement thereto in reliance
upon and in conformity with information furnished in writing to the
Company by the Agent, specifically for use in connection with the
preparation thereof.
(c) All contracts and other documents required to be filed as exhibits to
the Registration Statement have been filed with the Commission as
exhibits to the Registration Statement.
(d) ▇▇▇▇▇, ▇▇▇▇▇▇ and Company LLP, on behalf of the Company and First
Bank, the Company's wholly-owned subsidiary (the "Bank"), whose report
is filed with the Commission as part of the Registration Statement,
are, and during the periods covered by its report were, independent
public accountants as required by the Securities Act and the Rules.
(e) Each of the Company and the Bank has been duly organized and is
validly existing as a corporation or banking corporation, as
applicable, under the laws of the State of Indiana. Neither the
Company nor the Bank has any properties or conducts any business
outside of the State of Indiana that would require either of them to
be qualified as a foreign corporation or bank, as the case may be, in
any jurisdiction outside of Indiana. Neither the Company nor the Bank
has any directly or indirectly held subsidiary other than the Bank.
The Company has all power, authority, authorizations, approvals,
consents, orders, licenses, certificates and permits needed to enter
into, deliver and perform this Agreement and to issue and sell the
Securities.
(f) No authorization, approval, consent, order, license, certificate or
permit of or from any federal, state, or local governmental or
regulatory official, body, or tribunal, is required for the Company or
the Bank to conduct their respective businesses and own their
respective properties as described in the Prospectus, except such
authorizations, approvals, consents, orders, licenses, certificates,
or permits as have been obtained by them or are not material to the
commencement or conduct of their respective businesses or to the
ownership of their respective properties.
(g) The financial statements of the Company and any related notes thereto,
included in the Registration Statement and the Prospectus, present
fairly the financial position of the Company as of the date of such
financial statements and for the period covered thereby. Such
statements and any related notes have been prepared in accordance with
accounting principles generally accepted in the United States applied
on a consistent basis and certified by the independent accountants
named in subsection 2(d) above. No other financial statements are
required to be included in the Prospectus or the Registration
Statement.
(h) The Company and the Bank own adequate and enforceable rights to use
any patents, patent applications, trademarks, trademark applications,
service marks, copyrights,
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copyright applications and other similar rights (collectively,
"Intangibles") necessary for the conduct of the material aspects of
their business as described in the Prospectus, and neither the Company
nor the Bank has infringed, is infringing, or has received any notice
of infringement of, any Intangible of any other person.
(i) The Company or the Bank owns its offices located in Morgantown and in
Trafalgar and has valid and enforceable leasehold interests in the
real property in which its branch facilities are located in Greenwood,
Bargersville and Nashville, Indiana, which are as described in the
Prospectus and are, except as otherwise described in the Prospectus,
free and clear of all liens, encumbrances, claims, security interests
and defects except to the extent they would not have a material
adverse effect on commencement or conduct of the respective businesses
of the Company or the Bank or the ownership of their respective
properties.
(j) There are no litigation, governmental or other proceedings or
investigations pending before any court or before or by any public
body or board or threatened against the Company or the Bank, and to
the best of the Company's knowledge, except as set forth in the
Prospectus, there is no reasonable basis for any such litigation,
proceedings or investigations, which would have a material adverse
effect on the commencement or conduct of the respective businesses of
the Company or the Bank or the ownership of their respective
properties.
(k) The Company and Bank have filed all federal, state, and local tax
returns required to be filed by them and paid all taxes shown due on
such returns as well as all other material taxes, assessments and
governmental charges which have become due; no material deficiency
with respect to any such return has been assessed or proposed.
(l) Subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, there has not been any
material adverse change in the condition (financial or other),
business, properties or prospects of the Company or the Bank.
(m) No default exists, and no event has occurred which with notice or
lapse of time, or both, would constitute a default, in the due
performance and observance of any material term, covenant or
condition, by the Company, the Bank or, to the best of the Company's
knowledge, any other party, of any lease, indenture, mortgage, note or
any other agreement or instrument to which the Company or the Bank is
a party or by which either of them or either of their businesses may
be bound or affected, except such defaults or events as are not
material to the commencement or conduct of their respective businesses
or ownership of their respective properties.
(n) Neither the Company nor the Bank is in violation of any term or
provision of the articles of incorporation, charter or bylaws of the
Company or the Bank. Neither the Company nor the Bank is in violation
of, nor is either of them required to take any action to avoid any
material violation of, any franchise, license, permit, judgment,
decree, order, statute, rule or regulation.
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(o) Neither the execution, delivery or performance of this Agreement, the
Indenture or the Equity Contract Agency Agreement by the Company nor
the consummation of the transactions contemplated hereby and thereby
(including, without limitation, the issuance and sale by the Company
of the Securities or the issuance and sale by the Company of its
Common Stock pursuant to the Equity Contracts) will give rise to a
right to terminate or accelerate the due date of any payment due
under, or conflict with or result in the breach of any term or
provision of, or constitute a default (or an event which with notice
or lapse of time, or both, would constitute a default) under, or
require any consent under, or result in the execution or imposition of
any lien, charge or encumbrance upon any properties or assets of the
Company or the Bank pursuant to the terms of, any lease, indenture,
mortgage, note or other agreement or instrument to which the Company
or the Bank is a party or by which either of them or either of their
businesses may be bound or affected, or any franchise, license,
permit, judgment, decree, order, statute, rule or regulation or
violate any provision of the articles of incorporation, charter or
bylaws of the Company or the Bank, except those which are immaterial
in amount or effect.
(p) The Company has authorized capital stock as set forth in the
Prospectus. There are 1,052,778 shares of Common Stock of the Company
issued and outstanding. No shares of Preferred Stock are issued and
outstanding. The issuance, sale and delivery of the Equity Contracts
have been duly authorized by all necessary corporate action by the
Company and, when issued, sold and delivered against payment therefor
pursuant to this Agreement and the Equity Contract Agency Agreement,
the Equity Contracts will be duly and validly issued, fully paid and
nonassessable, will not have been issued in violation of any
preemptive or other right and will constitute valid and legally
binding obligations of the Company, entitled to the benefits of the
Equity Contract Agency Agreement and enforceable against the Company
in accordance with their terms. The Common Stock issuable pursuant to
the Equity Contracts has been duly authorized and reserved for
issuance upon exercise of the Equity Contracts by all necessary
corporate action by the Company, and when issued upon such exercise,
and delivered against payment therefor pursuant to such Equity
Contracts, will be duly and validly issued, fully paid and
nonassessable, and will not have been issued in violation of any
preemptive or other right. There are no outstanding options, warrants
or other rights calling for the issuance of, and no commitment, plan
or arrangement to issue, any shares of stock of the Company or the
Bank or any security convertible into or exchangeable for stock of the
Company or the Bank, except for 106,000 shares of Common Stock that
will be issuable upon the exercise of outstanding options granted
under the Company's option plans. The Equity Contracts, the Common
Stock and the options conform in all material respects to all
statements in relation thereto contained in the Registration Statement
and the Prospectus.
(q) The Debentures are in the form contemplated by the Indenture, have
been duly authorized by the Company for issuance and sale as
contemplated by this Agreement and, when executed, authenticated,
issued and delivered in the manner provided for
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in this Agreement and the Indenture against payment of the
consideration therefor specified in this Agreement, the Debentures
will constitute valid and legally binding obligations of the Company,
entitled to the benefits of the Indenture, and the Debentures will be
enforceable against the Company in accordance with their terms. Upon
payment of the purchase price and delivery of the Debentures in
accordance with this Agreement, the Indenture and the Equity Contract
Agency Agreement, each purchaser of a Debenture will receive good,
valid and marketable title to such Debenture, free and clear of all
security interests, mortgages, pledges, liens, encumbrances, claims
and equities. The terms of the Debenture conform in all material
respects to all statements and descriptions of them in the Prospectus.
The Debentures are subordinated to the Company's other indebtedness to
the extent specified in the Prospectus and the Indenture. The
Indenture conforms in all material respects to the description thereof
in the Prospectus.
(r) Subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, neither the Company nor
the Bank has (i) issued any securities or incurred any material
liability or obligation, direct or contingent, (ii) entered into any
material transaction, or (iii) declared or paid any dividend or made
any distribution on any of their stock, except for liabilities,
obligations, and transactions reasonably expected based on the
disclosures in the Prospectus.
(s) Each of this Agreement, the Indenture and the Equity Contract Agency
Agreement has been duly and validly authorized, executed and delivered
by the Company and is the legal, valid and binding agreement and
obligation of the Company (assuming in the case of the Indenture, the
execution and delivery thereof by the Trustee). The Equity Contract
Agency Agreement has been duly and validly authorized, executed and
delivered by the Equity Contract Agent and is the legal, valid and
binding agreement and obligation of the Equity Contract Agent.
(t) The Commission has not issued any order preventing or suspending the
use of any Prospectus or Preliminary Prospectus.
(u) Neither the Company, nor the Bank, nor, to the Company's knowledge,
any director, officer, agent, employee or other person associated with
the Company or the Bank, acting on behalf of the Company or the Bank,
has used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political
activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the Foreign Corrupt
Practices Act of 1977; or made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.
(v) The Indenture is not required to be qualified under the Trust
Indenture Act of 1939, as amended.
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(w) Neither the Company nor the Bank nor any affiliate of either of them
has taken, and they will not take, directly or indirectly, any action
designed to cause or result in, or which has constituted or which
might reasonably be expected to constitute, the stabilization or
manipulation of the price of the Securities or the Common Stock in
order to facilitate the sale or resale of any of the Securities.
(x) No transaction has occurred between or among the Company or the Bank
and any of their officers, directors, organizers or the Company's
shareholders or any affiliate or affiliates of any such officer,
director, organizer, or shareholder, that is required to be described
in and is not described in the Prospectus.
(y) The Company is not and will not after the offering be an "investment
company," or a company "controlled" by an "investment company," within
the meaning of the Investment Company Act of 1940, as amended.
(z) The Company has obtained from each of its executive officers and
directors his or her written agreement that (i) for a period of 365
days from the Effective Date, he or she will not offer to sell,
transfer, contract to sell, or grant any option for the sale of or
otherwise dispose of, directly or indirectly, any Debentures, any
Equity Contracts or any shares of Common Stock of the Company (or any
securities convertible into or exercisable for such shares of Common
Stock), except for (A) the exercise of stock options under the stock
option plans or (B) gifts of Common Stock (or other securities) to a
donee or donees who agree in writing to be bound by this clause, and
(ii) for a period of three years from the one year anniversary of the
Effective Date, he or she will not sell, transfer, assign, pledge, or
hypothecate in any one twelve month period more than ten percent of
the shares of Common Stock, ten percent in principal amount of the
Debentures or ten percent in face amount of the Equity Contracts owned
by each such executive officer or director. These agreements shall
automatically terminate upon a change in control of the Company.
3. CONDITIONS OF THE AGENT'S OBLIGATIONS. The obligations of the Agent
under this Agreement shall be subject to the accuracy of the representations and
warranties of the Company and the Bank in this Agreement as of the date of this
Agreement and as of the Initial Closing Date (which for purposes of this
Agreement is the date on which the terms of the Escrow Agreement between the
Company and The Huntington National Bank, as escrow agent, have been satisfied
and the funds held thereby are to be disbursed to the Company in accordance
therewith) and as of each date on which the Securities are sold pursuant to this
Agreement after the Initial Closing Date (each such date a "Subsequent Closing
Date" and, together with the Initial Closing Date, a "Closing Date"), and are
further subject to the performance by the Company of its obligations under this
Agreement, and to the following additional terms and conditions:
(a) The Registration Statement shall have become effective not later than
5:00 P.M., Indianapolis time, on the date of this Agreement or on such
later date and time as shall be consented to in writing by the Agent;
if the filing of the Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b) of the Rules, the Prospectus shall
have been filed in the manner and within the time period required by
Rule
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424(b) of the Rules; at each Closing Date, no stop order shall have
been issued or proceedings therefor initiated or threatened by the
Commission; and any request of the Commission for inclusion of
additional information in the Registration Statement, or otherwise,
shall have been complied with to the reasonable satisfaction of the
Agent.
(b) At the Effective Date, the Agent shall have received:
(1) The opinion of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel for the
Company, dated the Effective Date, addressed to the Agent and in
a form and scope reasonably satisfactory to counsel for the Agent
to the effect that:
(i) Each of the Company and the Bank (A) is a corporation or
banking corporation, as applicable, duly organized and
validly existing under the laws of the State of Indiana,
and (B) is not required to be qualified to do business in
any jurisdiction outside Indiana, except where the failure
to so qualify would not have a material adverse effect on
the Company or the Bank.
(ii) Each of the Company and the Bank has full corporate power
and authority and all material authorizations, approvals,
orders, licenses, certificates and permits of and from all
governmental regulatory officials and bodies necessary to
own or lease their respective properties and conduct their
respective businesses as described in the Registration
Statement and Prospectus.
(iii) The Company has authorized capital stock and outstanding
capital stock as set forth in the Prospectus. The capital
stock and stock options of the Company conform in all
material respects to the descriptions thereof contained in
the Registration Statement and the Prospectus.
(iv) The Company has no directly or indirectly held subsidiary
other than the Bank.
(v) The Company is the registered holder of all of the
outstanding capital stock of the Bank, and all such shares
of stock so held have been duly authorized and validly
issued, fully paid and nonassessable and are owned free and
clear of any liens, encumbrances or other claims or
restrictions whatsoever, subject to the provisions of the
Indiana Financial Institutions Act and the security
interest held in the Bank's stock by the Company's senior
lender.
(vi) Each of this Agreement, the Indenture and the Equity
Contract Agency Agreement has been duly and validly
authorized, executed and delivered by the Company, and is
the legal, valid and binding
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agreement and obligation of the Company enforceable in
accordance with its terms, except (A) as enforcement
thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or
affecting enforcement of creditors' rights or by general
equity principles, whether applied in an action at law or
in equity, or by the discretionary nature of specific
performance, injunctive relief, and other equitable
remedies, including the appointment of a receiver, and
(B), with respect to provisions relating to
indemnification and contribution, to the extent they are
held by a court of competent jurisdiction or regulatory
authority with jurisdiction over the subject matter to be
void or unenforceable as against public policy.
(vii) The Equity Contract Agency Agreement has been duly
and validly authorized, executed and delivered by the
Bank, and is the legal, valid and binding agreement and
obligation of the Bank enforceable in accordance with its
terms, except (A) as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or
other laws relating to or affecting enforcement of
creditors' rights or by general equity principles, whether
applied in an action at law or in equity, or by the
discretionary nature of specific performance, injunctive
relief, and other equitable remedies, including the
appointment of a receiver, and (B), with respect to
provisions relating to indemnification and contribution,
to the extent they are held by a court of competent
jurisdiction or regulatory authority with jurisdiction
over the subject matter to be void or unenforceable as
against public policy.
(viii) To the best of such counsel's knowledge or as set forth in
the Prospectus, after due inquiry, there are (A) no
contracts or other documents which are required to be
filed as exhibits to the Registration Statement other than
those filed as exhibits thereto, (B) no legal or
governmental proceedings pending or threatened against the
Company or the Bank, (C) no statutes or regulations
applicable to the Company or the Bank which are of a
character required to be disclosed in the Registration
Statement and Prospectus which have not been so disclosed
and properly described therein, and (D) no certificates,
permits, grants or other consents, approvals, orders,
licenses or authorizations from regulatory officials or
bodies, which are required to be obtained or maintained by
the Company or the Bank and which are of a character
required to be disclosed in the Registration Statement and
Prospectus which have not been so disclosed and properly
described therein.
(ix) The statements in the Registration Statement and the
Prospectus, insofar as they are descriptions of corporate
documents, stock option plans, contracts, agreements or
other documents specifically
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identified in the Registration Statement or descriptions
of laws, regulations, or regulatory requirements, or refer
to compliance with law or to statements of law or legal
conclusions, are correct in all material respects.
(x) To the best of such counsel's knowledge, after due
inquiry, the execution, delivery and performance of this
Agreement, the Indenture and the Equity Contract Agency
Agreement, the consummation of the transactions herein and
therein contemplated and the compliance with the terms and
provisions hereof and thereof by the Company and the Bank,
as the case may be, will not give rise to a right to
terminate or accelerate the due date of any payment due
under, or conflict with or result in a breach of any of
the terms or provisions of, or constitute a default (or an
event which, with notice or lapse of time, or both, would
constitute a default) under, or require any consent under,
or result in the execution or imposition of any lien,
charge or encumbrance upon any properties or assets of the
Company or the Bank pursuant to the terms of, any lease,
indenture, mortgage, note or other agreement or instrument
to which the Company or the Bank is a party or by which
either of them or either of their properties or businesses
is or may be bound or affected, nor will such action
result in any violation of the provisions of the articles
of incorporation, charter or bylaws of the Company or the
Bank or any statute or any order, rule, or regulation
applicable to the Company or the Bank of any court or any
federal, state, local or other regulatory authority or
other governmental body, the effect of which, in any such
case, would be expected to have a material adverse effect
on the Company or the Bank.
(xi) To the best of such counsel's knowledge, after due
inquiry, no consent, approval, authorization or order of
any court or governmental agency or body, domestic or
foreign, is required to be obtained by the Company or the
Bank in connection with the execution and delivery of this
Agreement, the Indenture or the Equity Contract Agency
Agreement or the sale of the Debentures or Equity
Contracts as contemplated by this Agreement, the Indenture
and the Equity Contract Agency Agreement, except such as
have been obtained.
(xii) The Indenture is not required to be qualified under the
Trust Indenture Act of 1939, as amended.
(xiii) To the best of such counsel's knowledge, after due
inquiry, (A) neither the Company nor the Bank is in breach
of, or in default (and no event has occurred which, with
notice or lapse of time, or both, would constitute a
default) under, any lease, indenture, mortgage,
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note, or other agreement or instrument to which the
Company or the Bank is a party; or (B) neither the Company
nor the Bank is in violation of any term or provision of
either of their articles of incorporation, charter or
bylaws, or of any franchise, license, grant, permit,
judgment, decree, order, statute, rule or regulation; and
(C) neither the Company nor the Bank has received any
notice of conflict with the asserted rights of others in
respect of Intangibles necessary for the commencement or
conduct of its business, the effect of which, in any such
case, would be expected to have a material adverse effect
on the Company or the Bank.
(xiv) The Registration Statement and the Prospectus and any
amendments or supplements thereto (other than financial
statement and notes, any related schedules or other
financial information contained in such Prospectus or
amendment or supplement thereto, as to which such counsel
need express no opinion or belief) comply as to form in
all material respects with the requirements of the
Securities Act and the Rules.
(xv) The Registration Statement is effective under the
Securities Act, and any required filing of the Prospectus
pursuant to Rule 424(b) has been made in the manner and
within the time period required by Rule 424(b) and, to the
best of such counsel's knowledge, after due inquiry, no
stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment to
the Registration Statement and no order directed at any
document incorporated by reference in the Registration
Statement or the Prospectus or any amendment or supplement
thereto has been issued, and no proceedings for that
purpose have been instituted or threatened or are
contemplated by the Commission.
(xvi) The Debentures are in the form contemplated by the
Indenture, have been duly authorized by the Company for
issuance and sale as contemplated by this Agreement and
the Indenture and, when executed, authenticated, issued
and delivered in the manner provided for in this Agreement
and the Indenture against payment of the consideration
therefor specified in this Agreement, the Debentures will
constitute valid and legally binding obligations of the
Company, will be entitled to the benefits of the
Indenture, and the Debentures will be enforceable against
the Company in accordance with their terms, except as
enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws
relating to or affecting enforcement of creditors' rights
or by general equity principles, whether applied in an
action at law or in equity, or by the discretionary nature
of specific performance, injunctive relief, and other
equitable remedies, including the appointment of a
receiver.
-12-
Upon payment of the purchase price and delivery of the
Debentures in accordance with this Agreement, the
Indenture and the Equity Contract Agency Agreement, each
purchaser of a Debenture will receive good, valid and
marketable title to such Debenture, free and clear of all
security interests, mortgages, pledges, liens,
encumbrances and claims, whether in law or in equity. The
terms of the Debentures conform in all material respects
to all statements and descriptions of them in the
Prospectus. The Debentures are subordinated to the
Company's other indebtedness to the extent specified in
the Prospectus and the Indenture. The Indenture conforms
in all material respects to the description thereof in
the Prospectus.
(xvii) The Equity Contracts are in the form contemplated by the
Equity Contract Agency Agreement, have been duly
authorized by the Company for issuance and sale as
contemplated by this Agreement and, when executed,
authenticated, issued and delivered in the manner
provided for in this Agreement and the Equity Contract
Agency Agreement against payment of the consideration
therefor specified in this Agreement, the Equity
Contracts will constitute valid and legally binding
obligations of the Company, will be entitled to the
benefits of the Equity Contract Agency Agreement, and the
Equity Contracts will be enforceable against the Company
in accordance with their terms, except as enforcement
thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or
affecting enforcement of creditors' rights or by general
equity principles, whether applied in an action at law or
in equity, or by the discretionary nature of specific
performance, injunctive relief, and other equitable
remedies, including the appointment of a receiver. Upon
payment of the purchase price and delivery of the Equity
Contracts in accordance with this Agreement and the
Equity Contract Agency Agreement, each purchaser of an
Equity Contract will receive good, valid and marketable
title to such Equity Contract, free and clear of all
security interests, mortgages, pledges, liens,
encumbrances and claims, whether in law or in equity. The
terms of the Equity Contracts conform in all material
respects to all statements and descriptions of them in
the Prospectus. The Equity Contract Agency Agreement
conforms in all material respects to the description
thereof in the Prospectus.
(xviii) The Common Stock issuable pursuant to the Equity
Contracts has been duly authorized and reserved for
issuance upon exercise of the Equity Contracts by all
necessary corporate action by the Company, and when
issued upon such exercise and delivered against payment
therefor pursuant to such Equity Contracts, will be duly
and validly issued, fully paid and nonassessable, and
will not have been issued in violation of any preemptive
or other right.
-13-
(2) A favorable opinion from Bose ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, counsel to
the Agent, dated as of the Effective Date, with respect to such
of the matters set forth under Subsections (b)(1)(i), (vi),
(xii), (xvi) (with respect to the first sentence only and (xvii)
(with respect to the first sentence only) of this Section 3, and
with respect to such other related matters as the Agent may
require, if the failure to receive a favorable opinion with
respect to such other related matters would cause the Agent to
deem it inadvisable to proceed with the sale of the Securities.
(3) In rendering the foregoing opinions, such counsel may rely upon
certificates of public officials (as to matters of fact and law)
and officers of the Company and the Bank (as to matters of fact),
and include customary qualifications in their opinions as are
acceptable to the Agent. Copies of all such certificates relied
upon by Company counsel shall be furnished to counsel to the
Agent on the Effective Date. In addition, Leagre ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP and Bose ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP shall state that they
have participated in conferences with officials of the Company
and its independent auditors, and representatives of the Agent at
which the content of the Registration Statement and Prospectus
and related matters were discussed, and also had discussions with
such officials of the Company with a view toward a clear
understanding on their part of the requirements of the Securities
Act with reference to the preparation of registration statements
and prospectuses. Such counsel may also state that they did not
independently verify the accuracy or completeness of the
statements made in the Registration Statement and Prospectus;
however, based on such counsel's examination of the Registration
Statement and the Prospectus and on their participation in the
above-mentioned conferences, nothing has come to the attention of
such counsel that gives them reason to believe that the
Registration Statement or Prospectus (other than financial
statements and notes, any related schedules or other financial
information contained in such Registration Statement or
Prospectus as to which such counsel need express no opinion or
belief), at the time the Registration Statement became effective,
contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or
necessary to make the statements therein not misleading or that
the Prospectus (other than financial statements and notes, any
related schedules or other financial information contained in
such Prospectus or amendment or supplement thereto, as to which
such counsel need express no opinion or belief), as of the date
of the opinion, contains any untrue statement of a material fact
or omits to state a material fact necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading.
(c) On or prior to the Effective Date and each Closing Date, the Agent
shall have been furnished such documents, certificates and opinions as
it may reasonably require for the purpose of enabling it to review the
matters referred to in subsection (b) of this
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Section 3 and its counsel to render the opinion referred to in
subsection (g) of this Section 3, and in order to evidence the
accuracy, completeness or satisfaction of the representations,
warranties, covenants or conditions herein contained.
(d) Prior to the Effective Date and the Initial Closing Date, (i) there
shall have been no material adverse change in the condition or
prospects, financial or otherwise, of the Company or the Bank except
as set forth in the Prospectus; (ii) there shall have been no material
transaction, not in the ordinary course of business, entered into by
the Company or the Bank except as set forth in the Registration
Statement and Prospectus, other than transactions referred to or
contemplated therein or to which the Agent has given its written
consent; (iii) neither the Company nor the Bank shall be in default
(nor shall an event have occurred which, with notice or lapse of time,
or both, would constitute a default) under any provision of any
material agreement, understanding or instrument relating to any
outstanding indebtedness that is material in amount; (iv) no action,
suit or proceeding, at law or in equity, shall be pending or
threatened against the Company or the Bank before or by any court or
Federal, state or other commission, board or other administrative
agency having jurisdiction over the Company or the Bank, as the case
may be, which is expected to have a material adverse effect on the
Company or the Bank; and (v) no stop order shall have been issued
under the Securities Act and no proceedings therefor shall have been
initiated or be threatened by the Commission.
(e) At the Effective Date and the Initial Closing Date, the Agent shall
have received a certificate signed by the Chairman of the Board, the
President, and the Treasurer of the Company dated the Closing Date to
the effect that the conditions set forth in subsection (d) above have
been satisfied and as to the accuracy, as of the Closing Date, of the
representations and warranties of the Company set forth in Section 2
hereof.
(f) At or prior to the Effective Date, the Agent shall have received a
"blue sky" memorandum (upon which the Agent may rely) of Bose ▇▇▇▇▇▇▇▇
& ▇▇▇▇▇ LLP, counsel for the Agent, addressed to the Agent and in form
and scope reasonably satisfactory to the Agent concerning compliance
with the blue sky or securities laws of the states listed in Exhibit A
attached to this Agreement.
(g) All proceedings taken in connection with the sale of the Securities as
herein contemplated shall be reasonably satisfactory in form and
substance to the Agent and to counsel for the Agent.
(h) No order suspending the sale of the Securities prior to the Effective
Date or any Closing Date, in any jurisdiction listed in Exhibit A,
shall have been issued, and no proceedings for that purpose shall have
been instituted or, to the Agent's knowledge or that of the Company,
shall be contemplated.
(i) The NASD, upon review of the terms of the public offering of the
Securities, shall not have objected to the Agent's participation in
the same. If any condition to the
-15-
Agent's obligations hereunder to be fulfilled prior to or at the
Effective Date or any Closing Date is not so fulfilled, the Agent may
terminate this Agreement pursuant to Section 8(a)(iii) hereof or, if
the Agent so elects, waive any such conditions which have not been
fulfilled or extend the time of their fulfillment.
(j) At the Effective Date, the Agent shall have received a letter from
▇▇▇▇▇ ▇▇▇▇▇▇ and Company, LLP, dated the Effective Date, addressed to
the Agent and in a form and scope reasonably satisfactory to the
Agent, (i) stating that they are independent public accountants with
respect to the Company and the Bank as required by the Securities Act
and the Rules; and (ii) containing other information and statements of
the type ordinarily included in accountant's "comfort letters" with
respect to the financial statements and certain financial information
included in the Registration Statement.
4. COVENANTS. The Company covenants and agrees that it will:
(a) Use its best efforts to cause the Registration Statement to become
effective and will notify the Agent immediately, and confirm the
notice in writing, (i) when the Registration Statement and any
post-effective amendment thereto becomes effective, (ii) of the
issuance by the Commission of any stop order or of the initiation, or
the threatening, of any proceedings for that purpose and (iii) of the
receipt of any comments from the Commission. The Company will make
every reasonable effort to prevent the issuance of a stop order, and,
if the Commission shall enter a stop order at any time, the Company
will make every reasonable effort to obtain the lifting of such order
at the earliest possible moment.
(b) During the time when a prospectus is required to be delivered under
the Securities Act, comply so far as it is able with all requirements
imposed upon it by the Securities Act, as now and hereafter amended,
and by the Rules, as from time to time in force, so far as necessary
to permit the continuance of sales of or dealings in the Securities.
If at any time when a prospectus relating to the Securities is
required to be delivered under the Securities Act any event shall have
occurred as a result of which, in the reasonable opinion of counsel
for the Company or counsel for the Agent, the Registration Statement
or Prospectus as then amended or supplemented includes an untrue
statement of a material fact 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, or if it is necessary at any time to amend or
supplement the Registration Statement or Prospectus to comply with the
Securities Act or the Rules, the Company will notify the Agent
promptly and prepare and file with the Commission an appropriate
amendment or supplement in form satisfactory to the Agent. The cost of
preparing, filing and delivering copies of such amendment or
supplement shall be paid by the Company.
(c) Deliver to the Agent, from time to time as requested, such number of
copies of each Preliminary Prospectus as may reasonably be requested
by them and, as soon as the
-16-
Registration Statement, or any amendment or supplement thereto,
becomes effective, deliver to the Agent three signed copies of the
Registration Statement, including exhibits, and all post-effective
amendments thereto and deliver to the Agent such number of copies of
the Prospectus, the Registration Statement and supplements and
amendments thereto, if any, without exhibits, as they may reasonably
request.
(d) Endeavor in good faith, in cooperation with the Agent and its counsel,
at or prior to the time the Registration Statement becomes effective,
to qualify the Securities for offering and sale under the securities
laws relating to the offering or sale of the Securities of the states
listed in Exhibit A. In each jurisdiction where such qualification
shall be effected, the Company will, unless the Agent agrees that such
action is not at the time necessary or advisable, file and make such
statements or reports at such times as are or may reasonably be
required by the laws of such jurisdiction. The Company will advise the
Agent promptly of the suspension of the qualification of the
Securities for offering, sale or trading in any jurisdiction, or any
initiation or threat of any proceeding for such purpose, and in the
event of the issuance of any order suspending such qualification, the
Company, with the cooperation of the Agent, will use all reasonable
efforts to obtain the withdrawal thereof.
(e) Furnish its security holders as soon as practicable (within the time
periods contemplated by Rule 158 under the Securities Act) an earnings
statement (which need not be certified by independent certified public
accountants unless required by the Securities Act or the Rules)
covering a period of at least twelve months beginning after the
effective date of the Registration Statement, which shall satisfy the
provisions of Section 11(a) of the Securities Act and the Rules
thereunder.
(f) For a period of five years from the Effective Date, furnish to its
shareholders annual audited and quarterly unaudited consolidated
financial statements with respect to the Company including balance
sheets and income statements.
(g) For a period of five years from the Effective Date, furnish to the
Agent the following:
(i) at the time they have been sent to shareholders of the Company
or filed with the Commission, one copy of each annual,
quarterly, interim, or current financial and other report or
communication;
(ii) as soon as practicable, one copy of every press release which
was released by the Company; and
(iii) all other information reasonably requested by the Agent with
respect to the Company to comply with Rule 15c2-11 of the Rules
and Rule 6740 of the NASD Rules.
(h) In all material respects, apply the net proceeds from the Offering in
the manner set forth under "Use of Proceeds" in the Prospectus.
-17-
(i) Not file any amendment or supplement to the Registration Statement or
Prospectus after the Effective Date to which the Agent shall
reasonably object in writing after being furnished a copy thereof.
(j) Comply with all registration, filing and reporting requirements of the
Securities Act or the Exchange Act, which may from time to time be
applicable to the Company.
(k) Take no actions that reasonably could prevent its Common Stock from
being listed on the OTC Bulletin Board (or, if so quoted, on the
Nasdaq SmallCap Market) for not fewer than five years.
(l) Apply to have the Common Stock quoted on the Nasdaq SmallCap Market as
soon as the Company is eligible to do so.
(m) Pay, or reimburse if paid by the Agent, whether or not the
transactions contemplated hereby are consummated or this Agreement is
terminated, all costs and expenses incident to the performance of the
obligations of the Company under this Agreement, including those
relating to (i) the preparation, printing, filing and delivery of the
Registration Statement, including all exhibits thereto, each
Preliminary Prospectus, the Prospectus, all amendments of and
supplements to the Registration Statement and the Prospectus, and the
printing of this Agreement and related agreements including, without
limitation, the Dealer Agreements; (ii) the issuance of the Securities
and the preparation and delivery of Debentures and certificates for
the Equity Contracts to the Agent; (iii) the registration or
qualification of the Securities for offer and sale under the
securities or "blue sky" laws of the various jurisdictions referred to
in Exhibit A, including the fees and disbursements of counsel in
connection with such registration and qualification and the
preparation and printing of preliminary, supplemental, and final blue
sky memoranda; (iv) the furnishing (including costs of shipping and
mailing) to the Agent of copies of each Preliminary Prospectus, the
Prospectus and all amendments of or supplements to the Prospectus, and
of the several documents required by this Section to be so furnished;
(v) the filing requirements and fees of the NASD in connection with
its review of the terms of the public offering and the underwriting;
(vi) the furnishing (including costs of shipping and mailing) of
copies of all reports and information required by Section 4(g); (vii)
all transfer taxes, if any, with respect to the sale and delivery of
the Securities by the Company to the Agent; and (viii) the Agent's
out-of-pocket expenses, including without limitation, road show
expenses and legal fees of counsel to the Agent.
(n) Not, without the prior written consent of the Agent, sell, contract to
sell or grant any option for the sale of or otherwise dispose of,
directly or indirectly, or register with the Commission, any shares of
Common Stock of the Company (or any securities convertible into or
exercisable for such shares of Common Stock) within 150 days after the
date of the Prospectus, except as provided in this Agreement and
except for grants and exercises of stock options under the stock
option plans as described in the Prospectus.
-18-
(o) For not less than three fiscal years after the Effective Date,
maintain the Exchange Act registration of the Common Stock, unless the
Company's shareholders direct the Company to deregister the Common
Stock.
(p) Provide to the Agent, at or prior to each Closing Date, the documents
required by subsections (c) and (e) of Section 3.
(q) For a period of three years from the Effective Date, furnish to the
Agent upon request copies of the Company's daily transfer sheets with
respect to the Securities.
SECTION 5. ENGAGEMENT AND COMPENSATION.
(a) (i) Subject to the terms and conditions of this Agreement, and except
as provided in Section 8(c), the Company hereby engages Agent
from the date hereof until October 31, 2002, as the Company's
exclusive agent in connection with the sale, on a "best efforts"
basis, of a minimum of $2,500,000 to a maximum of $5,000,000 in
principal amount of Debentures and a like face amount of Equity
Contracts. Each of Agent and the Company agree to comply with the
terms of that certain Escrow Agreement (the "Escrow Agreement")
by and among the Company, Agent, and The Huntington National Bank
(the "Escrow Agent") dated _______, 2002. The minimum amount of
each sale shall be $10,000, except with the Company's consent.
The maximum amount of any sale shall not exceed $500,000, except
with the Company's consent. Except with the Company's consent,
the aggregate principal amount of Debentures and the aggregate
face amount of Equity Contracts sold to each purchaser will be
equal.
(ii) The price at which Agent shall sell the Securities, as agent for
the Company, shall be $990 per $1,000 principal amount of
Debentures and $10 per $1,000 face amount of Equity Contracts,
and the Company shall pay to Agent a commission of (A) 4.5% of
the offering price of the Securities sold to officers, directors,
and employees of the Company (and their immediate family members)
and certain other persons designated by the Company in the
Offering (subject to a limit of $1,000,000 in offering price of
such Securities), and (B) 6.5% of the offering price of the
Securities sold to all other persons including those Securities
sold through other brokers or dealers. No commissions shall be
payable in connection with the purchase of Common Stock under the
Equity Contracts. All subscriptions shall be subject to the
Company's and Agent's acceptance, and Agent shall have the right
in its sole discretion to allocate Securities among subscribers
subject to the requirement that each purchaser shall be allocated
Debentures in a principal amount equal to the face amount of
Equity Contracts allocated to such purchaser unless the Company
otherwise agrees. Agent may form a group of securities dealers
(the "Selected Dealers"), who are members in good standing of the
NASD, pursuant to a Dealer Agreement to find subscribers for the
Securities. However, failure to engage any Selected
-19-
Dealers shall not constitute a failure to discharge its duties
under this Agreement. The allocation of Securities among Agent
and the Selected Dealers shall be made by Agent.
(iii) The Company shall deliver certificates representing the
Securities to purchasers (or their designees), and shall pay to
the Agent (or to Selected Dealers designated by the Agent to the
Company) by check or wire transfer all commissions due under
this Section 5, at the time of or as soon as practicable after
the distribution of the escrowed funds in accordance with the
terms of the Escrow Agreement, and thereafter, as soon as
practicable after acceptance of any subscription.
(iv) Agent shall use its best efforts to assist the Company in making
sales of the Securities pursuant to the Offering. Agent makes no
representations as to the amount of Securities it will be able
to sell. There is no firm commitment to sell any certain amount
of the Securities by Agent. In the event that the minimum
$2,500,000 in Securities is not subscribed and paid for by the
"Expiration Date" (as such term is defined in the Prospectus),
this Agreement shall automatically be terminated and the
proceeds received from the subscriptions distributed in
accordance with the terms of the Escrow Agreement.
(v) Agent will only offer and sell the Securities in those states
listed on Exhibit A to this Agreement.
(b) Agent shall offer the Securities pursuant to the Prospectus.
6. INDEMNIFICATION.
(a) The Company will indemnify and hold harmless the Agent (including its
officers, directors, employees, counsel for Agent, and Selected
Dealers or any affiliate of any of the foregoing) and each person, if
any, who controls Agent, and each Selected Dealer and their
affiliates, within the meaning of the Securities Act or the Exchange
Act (all collectively "Agent Indemnitees") against any and all losses,
claims, damages and liabilities, joint or several (including any
reasonable investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted), to which they may become
subject under the Securities Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise
(collectively, "Losses"), insofar as such Losses arise out of or are
based upon any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading; provided, however, that such indemnity shall not inure to
the benefit of any Agent Indemnitee on account of any Losses arising
from the sale of the
-20-
Securities in the public offering to any person by the Agent or any
Selected Dealer if such untrue statement or omission or alleged untrue
statement or omission was made in such Preliminary Prospectus, the
Registration Statement or the Prospectus, or such amendment or
supplement, in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of the Agent
specifically for use therein. The Company shall not be liable
hereunder to any Agent Indemnitee to the extent that any Loss incurred
by the Agent Indemnitee arises from such person's fraudulent act or
omission.
(b) The Agent agrees to indemnify and hold harmless the Company, each
person, if any, who controls the Company within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act, each
director of the Company and each officer of the Company who signs the
Registration Statement (collectively, the "Company Indemnitees"), to
the same extent as the foregoing indemnity from the Company to the
Agent, but only insofar as such Losses arise out of or are based upon
any untrue statement or omission or alleged untrue statement or
omission which was made in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment thereof or
supplement thereto, in reliance upon and in conformity with
information furnished in writing to the Company by the Agent
specifically for use therein; provided, however, that the obligation
of the Agent to indemnify the Company (including any controlling
person, director or officer thereof) hereunder shall be limited to the
total commissions earned by the Agent hereunder. The Agent shall not
be liable hereunder to any Company Indemnitee to the extent that any
Loss incurred by the Company Indemnitee arises from such person's
fraudulent act or omission.
(c) Any party that proposes to assert the right to be indemnified under
this Section will, promptly after receipt of notice of commencement of
any action, suit or proceeding against such party in respect of which
a claim is to be made against an indemnifying party or parties under
this Section, notify each such indemnifying party of the commencement
of such action, suit or proceeding, enclosing a copy of all papers
served, but the omission so to notify such indemnifying party of any
such action, suit or proceeding shall not relieve it from any
liability that it may have to any indemnified party otherwise than
under this Section. In case any such action, suit or proceeding shall
be brought against any indemnified party and it shall notify the
indemnifying parties of the commencement thereof, the indemnifying
party shall be entitled to participate in, and, to the extent that it
shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to
assume the defense thereof and the approval by the indemnified party
of such counsel, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses, except as provided
below and except for the reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the
defense thereof. The indemnified party shall have the right to employ
its counsel in any such action, but the fees and expenses of such
counsel shall be at the expense of such
-21-
indemnified party unless (i) the employment of counsel by such
indemnified party has been authorized in writing by the indemnifying
parties, (ii) the indemnified party shall have reasonably concluded
that, because of the existence of different or additional defenses
available to the indemnified party or of other reasons, there may be a
conflict of interest between the indemnifying parties and the
indemnified party in the conduct of the defense of such action (in
which case the indemnifying parties shall not have the right to direct
the defense of such action on behalf of the indemnified party), or
(iii) the indemnifying parties shall not have employed counsel to
assume the defense of such action within a reasonable time after
notice of the commencement thereof, in each of which cases the fees
and expenses of counsel shall be at the expense of the indemnifying
parties. An indemnifying party shall not be liable for any settlement
of any action, suit, proceeding or claims effected without its written
consent.
7. CONTRIBUTION. In order to provide for just and equitable contribution
in circumstances under which the indemnity provided for in Section 6 is for any
reason judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or the
denial of the right of appeal) to be unenforceable by the indemnified parties
although applicable in accordance with its terms, the Company on the one hand,
and Agent, or the Selected Dealer seeking indemnification, on the other shall
contribute to the aggregate Losses of the nature contemplated by such indemnity
incurred by the Company and Agent, or the Selected Dealer seeking
indemnification, as incurred, in such proportions that (a) Agent, or the
Selected Dealer seeking indemnification, is responsible pro rata for that
portion represented by the commissions earned by it as a percentage of the
aggregate public offering price (before deducting expenses) appearing on the
cover page of the Prospectus, and (b) the Company is responsible for the
balance; provided, however, that no person guilty of fraudulent
misrepresentations (within the meaning of Section 12(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation; provided, further, that if the allocation provided
above is not permitted by applicable law, the Company, on the one hand and
Agent, or the Selected Dealer seeking indemnification, on the other shall
contribute to the aggregate Losses in such proportion as is appropriate to
reflect not only the relative benefits referred to above but also the relative
fault of the Company on the one hand, and Agent, or the Selected Dealer seeking
indemnification, on the other in connection with the statements or omissions
which resulted in such Losses, as well as any other relevant equitable
considerations. 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 to state a material fact relates to information supplied by the Company
on the one hand, or by Agent, or the Selected Dealer seeking indemnification, on
the other hand, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and Agent agree that it would not be just and equitable if
contributions pursuant to this Section 7 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The amount paid or
payable by a party as a result of the Losses referred to above shall be deemed
to include any legal or other fees or expenses reasonably incurred by such party
in connection with investigating or defending such action or claim.
-22-
8. TERMINATION.
(a) This Agreement may be terminated by the Agent by notifying the Company
at any time:
(i) before the earlier of (A) 11:00 a.m., Indianapolis time, on the
business day following the Effective Date, or (B) the time when
the Securities are first generally offered by the Agent to
dealers by letter or telegram;
(ii) at or before any Closing Date if, in the judgment of the Agent,
payment for and delivery of the Securities is rendered
impracticable or inadvisable because (A) additional material
governmental restrictions, not known to be in force and effect
when this Agreement is signed, shall have been imposed upon
trading in securities generally or minimum or maximum prices
shall have been generally established on the New York Stock
Exchange, on the American Stock Exchange or on the
over-the-counter market, or trading in securities generally
shall have been suspended on either such Exchange or on the
over-the-counter market or a general banking moratorium shall
have been established by federal, New York or Indiana
authorities, (B) a war or other calamity shall have occurred or
shall have accelerated to such an extent as to affect adversely
the marketability of the Securities, (C) the Company or the Bank
shall have sustained a material loss by fire, flood, accident,
hurricane, earthquake, theft, sabotage or other calamity or
malicious act, which, whether or not said loss shall have been
insured, will in the Agent's opinion, make it inadvisable to
proceed with the offering of the Securities, (D) there shall
have been such material change in the condition, business
operations or prospects of the Company or the market for the
Securities or similar securities as in the Agent's judgment
would make it inadvisable to proceed with the offering of the
Securities; or
(iii) at or before any Closing Date, if any of the conditions
specified in Section 3 or any other agreements, representations
or warranties of the Company or the Bank in this Agreement are
untrue in any material respect or shall not have been fulfilled
in any material respect when and as required by this Agreement.
(b) This Agreement may be terminated by the Company by notifying the Agent
at any time:
(i) after the Agent has breached or failed to perform any material
provision or obligation under this Agreement; or
(ii) after June 30, 2002, if the minimum offering amount has not been
sold.
(c) The parties to this Agreement shall have the following rights and
remedies in the event of a termination of this Agreement:
(i) If (A) this Agreement is terminated pursuant to subsection
(a)(i) or (b)(ii) of
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this Section at any time or pursuant to subsection (a)(ii),
(a)(iii) or (b)(i) of this Section before the escrow account
(the "Escrow Account") required by the Escrow Agreement is
terminated, and (B) the Company releases all subscriptions
previously delivered to the Escrow Agent and thereafter
terminates the Escrow Account and causes all proceeds associated
with such subscriptions to be returned to subscribers in
accordance with the Escrow Agreement, then neither party shall
have any further liability or obligation to the other party
under this Agreement, except the obligations and liabilities
under Section 4(m) of this Agreement.
(ii) If this Agreement is terminated pursuant to subsection (b)(i) of
this Section (A) after the Escrow Account is terminated or (B)
before the Escrow Account is terminated and the Company does not
release all subscriptions previously delivered to the Escrow
Agent and thereafter terminate the Escrow Account and cause all
proceeds associated with such subscriptions to be returned to
subscribers in accordance with the Escrow Agreement, then
neither party shall have any further liability or obligation to
the other party under this Agreement, except the obligations and
liabilities under Sections 4(e), (f), (g), (h) and (m), 5(a)(ii)
and (iii), 6 and 7 of this Agreement.
(iii) If this Agreement is terminated pursuant to subsection (a)(ii)
or (a)(iii) of this Section (A) after the Escrow Account is
terminated or (B) before the Escrow Account is terminated and
the Company does not release all subscriptions previously
delivered to the Escrow Agent and thereafter terminate the
Escrow Account and cause all proceeds associated with such
subscriptions to be returned to subscribers in accordance with
the Escrow Agreement, then neither party shall have any further
liability or obligation to the other party under this Agreement,
except the obligations and liabilities under Sections 4(e), (f),
(g), (h), (k), (l), (m), (n), (o) and (q), 5(a)(ii) and (iii), 6
and 7 of this Agreement.
9. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All representations,
warranties and agreements contained in this Agreement shall be deemed to be
representations, warranties and agreements at the Effective Date and each
Closing Date, and such representations, warranties and agreements of the
Company, the Bank and the Agent, including, without limitation, the payment and
reimbursement agreements contained in Sections 4 and 5 hereof and the indemnity
and contribution agreements contained in Sections 6 and 7 hereof, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any other party and shall survive termination of this Agreement
and/or delivery of the Securities to and payment for the Securities by
subscribers therefor unless they are earlier terminated pursuant to Section
8(c).
10. MISCELLANEOUS. This Agreement has been and is made for the benefit of
the Agent, the Company and their respective successors and assigns, and, to the
extent expressed herein, for the benefit of persons controlling the Agent or the
Company, and directors and certain officers of the Company and their respective
successors and assigns, and no other person, partnership,
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association or corporation shall acquire or have any right under or by virtue of
this Agreement. The term "successors and assigns" shall not include any
purchaser of Securities from or through the Agent merely because of such
purchase.
If any action or proceeding shall be brought by the Agent or the Company in
order to enforce any right or remedy under this Agreement, the Agent and the
Company hereby consent to, and agree that they will submit to, the jurisdiction
of the courts of the State of Indiana and of any Federal court sitting in the
State of Indiana.
All notices and communications hereunder shall be in writing and mailed or
delivered or by telephone or facsimile, if subsequently confirmed in writing, as
follows:
If to the Agent: ▇▇▇▇▇ ▇. ▇▇▇▇▇ & Company
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇,
Executive Vice President
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: 317-684-5173
If to the Company: First Shares Bancorp, Inc.
P. O. Box 390
Greenwood, Indiana 46143
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇, President
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Leagre ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
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This Agreement shall be construed in accordance with the laws of the State
of Indiana, without giving effect to principles of conflicts of laws. Please
confirm that the foregoing correctly sets forth the agreement between us.
Very truly yours,
FIRST SHARES BANCORP, INC.
By:
---------------------------------------
▇▇▇▇▇ ▇▇▇▇▇, President and Director
Confirmed by ▇▇▇▇▇ ▇. ▇▇▇▇▇ & Company
▇▇▇▇▇ ▇. ▇▇▇▇▇ & COMPANY
By:
---------------------------------------
▇▇▇▇ ▇. ▇▇▇▇, Executive Vice President
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EXHIBIT A
BLUE SKY STATES
California Kentucky
Connecticut Michigan
Florida Ohio
Illinois Pennsylvania
Indiana
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