MFB Corp./Placement Agreement
MFB Corp./Placement Agreement
MFB CORP.
5,000 Capital Securities
Fixed/Floating Rate Capital Securities
(Liquidation Amount $1,000.00 per Capital Security)
PLACEMENT AGREEMENT
--------------------
July 29, 2005
FTN Financial Capital Markets
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
MFB Corp., an Indiana corporation (the "Company"), and its financing
subsidiary, MFBC Statutory Trust I, a Delaware statutory trust (the "Trust," and
hereinafter together with the Company, the "Offerors"), hereby confirm their
agreement (this "Agreement") with you as placement agents (the "Placement
Agents"), as follows:
Section 1. Issuance and Sale of Securities.
1.1. Introduction. The Offerors propose to issue and sell at the Closing (as
defined in Section 2.3.1 hereof) 5,000 of the Trust's Fixed/Floating Rate
Capital Securities, with a liquidation amount of $1,000.00 per capital security
(the "Capital Securities"), to First Tennessee Bank National Association (the
"Purchaser") pursuant to the terms of a Subscription Agreement entered into, or
to be entered into on or prior to the Closing Date (as defined in Section 2.3.1
hereof), between the Offerors and the Purchaser (the "Subscription Agreement"),
the form of which is attached hereto as Exhibit A and incorporated herein by
this reference.
1.2. Operative Agreements. The Capital Securities shall be fully and
unconditionally guaranteed on a subordinated basis by the Company with respect
to distributions and amounts payable upon liquidation, redemption or repayment
(the "Guarantee") pursuant and subject to the Guarantee Agreement (the
"Guarantee Agreement"), to be dated as of the Closing Date and executed and
delivered by the Company and Wilmington Trust Company ("WTC"), as trustee (the
"Guarantee Trustee"), for the benefit from time to time of the holders of the
Capital Securities. The entire proceeds from the sale by the Trust to the
holders of the Capital Securities shall be combined with the entire proceeds
from the sale by the Trust to the Company of its common securities (the "Common
Securities"), and shall be used by the Trust to purchase $5,155,000.00 in
principal amount of the Fixed/Floating Rate Junior Subordinated Deferrable
Interest Debentures (the "Debentures") of the Company. The Capital Securities
and the Common Securities for the Trust shall be issued pursuant to an Amended
and Restated Declaration of Trust among WTC, as Delaware trustee (the "Delaware
Trustee"), WTC, as institutional trustee (the "Institutional Trustee"), the
Administrators named therein, and the Company, to be dated as of the Closing
Date and in substantially the form heretofore delivered to the Placement Agents
(the "Trust Agreement"). The Debentures shall be issued pursuant to an Indenture
(the "Indenture"), to be dated as of the Closing Date, between the Company and
WTC, as indenture trustee (the "Indenture Trustee"). The documents identified in
this Section 1.2 and in Section 1.1 are referred to herein as the "Operative
Documents."
1.3. Rights of Purchaser. The Capital Securities shall be offered and sold by
the Trust directly to the Purchaser without registration of any of the Capital
Securities, the Debentures or the Guarantee under the Securities Act of 1933, as
amended (the "Securities Act"), or any other applicable securities laws in
reliance upon exemptions from the registration requirements of the Securities
Act and other applicable securities laws. The Offerors agree that this Agreement
shall be incorporated by reference into the Subscription Agreement and the
Purchaser shall be entitled to each of the benefits of the Placement Agents and
the Purchaser under this Agreement and shall be entitled to enforce obligations
of the Offerors under this Agreement as fully as if the Purchaser were a party
to this Agreement. The Offerors and the Placement Agents have entered into this
Agreement to set forth their understanding as to their relationship and their
respective rights, duties and obligations.
1.4. Legends. Upon original issuance thereof, and until such time as the same is
no longer required under the applicable requirements of the Securities Act, the
Capital Securities and Debentures certificates shall each contain a legend as
required pursuant to any of the Operative Documents.
Section 2. Purchase of Capital Securities.
2.1. Exclusive Rights; Purchase Price. From the date hereof until the Closing
Date (which date may be extended by mutual agreement of the Offerors and the
Placement Agents), the Offerors hereby grant to the Placement Agents the
exclusive right to arrange for the sale of the Capital Securities to the
Purchaser at a purchase price of $1,000.00 per Capital Security.
2.2. Subscription Agreement. The Offerors hereby agree to evidence their
acceptance of the subscription by countersigning a copy of the Subscription
Agreement and returning the same to the Placement Agents.
2.3. Closing and Delivery of Payment.
2.3.1. Closing; Closing Date. The sale and purchase of the Capital Securities by
the Offerors to the Purchaser shall take place at a closing (the "Closing") at
the offices of ▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇.▇., at 10:00 a.m. (St. Louis time) on
July 28, 2005, or such other business day as may be agreed upon by the Offerors
and the Placement Agents (the "Closing Date"). Payment by the Purchaser shall be
payable in the manner set forth in the Subscription Agreement and shall be made
prior to or on the Closing Date.
2.3.2. Delivery. The certificate for the Capital Securities shall be in
definitive form, registered in the name of the Purchaser, or the Purchaser's
designee, and in the aggregate amount of the Capital Securities purchased by the
Purchaser.
2.3.3. Transfer Agent. The Offerors shall deposit the certificate representing
the Capital Securities with the Institutional Trustee or other appropriate party
prior to the Closing Date.
2.4. Costs and Expenses. Whether or not this Agreement is terminated or the sale
of the Capital Securities is consummated, the Company hereby covenants and
agrees that it shall pay or cause to be paid (directly or by reimbursement) all
reasonable costs and expenses incident to the performance of the obligations of
the Offerors under this Agreement, including all fees, expenses and
disbursements of counsel and accountants for the Offerors; all reasonable
expenses incurred by the Offerors incident to the preparation, execution and
delivery of the Trust Agreement, the Indenture, and the Guarantee; and all other
reasonable costs and expenses incident to the performance of the obligations of
the Company hereunder and under the Trust Agreement.
2.5. Failure to Close. If any of the conditions to the Closing specified in this
Agreement shall not have been fulfilled to the satisfaction of the Placement
Agents or if the Closing shall not have occurred on or before 10:00 a.m. (St.
Louis time) on July 29, 2005, then each party hereto, notwithstanding anything
to the contrary in this Agreement, shall be relieved of all further obligations
under this Agreement without thereby waiving any rights it may have by reason of
such nonfulfillment or failure; provided, however, that the obligations of the
parties under Sections 2.4, 7.5 and 9 shall not be so relieved and shall
continue in full force and effect.
Section 3. Closing Conditions. The obligations of the Purchaser and the
Placement Agents on the Closing Date shall be subject to the accuracy, at and as
of the Closing Date, of the representations and warranties of the Offerors
contained in this Agreement, to the accuracy, at and as of the Closing Date, of
the statements of the Offerors made in any certificates pursuant to this
Agreement, to the performance by the Offerors of their respective obligations
under this Agreement, to compliance, at and as of the Closing Date, by the
Offerors with their respective agreements herein contained, and to the following
further conditions:
3.1. Opinions of Counsel. On the Closing Date, the Placement Agents shall have
received the following favorable opinions, each dated as of the Closing Date:
(a) from ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, counsel for the Offerors and addressed to the
Purchaser, the Placement Agents and WTC in substantially the form set forth on
Exhibit B-1 attached hereto and incorporated herein by this reference, (b) from
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger, P.A., special Delaware counsel to the Offerors and
addressed to the Purchaser, the Placement Agents and the Offerors, in
substantially the form set forth on Exhibit B-2 attached hereto and incorporated
herein by this reference and (c) from ▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇.▇., special tax
counsel to the Offerors, and addressed to the Placement Agents and the Offerors,
addressing the items set forth on Exhibit B-3 attached hereto and incorporated
herein by this reference, subject to the receipt by ▇▇▇▇▇, Rice & ▇▇▇▇▇▇▇▇, ▇.▇.
of a representation letter from the Company in the form set forth in Exhibit B-3
completed in a manner reasonably satisfactory to ▇▇▇▇▇, Rice & ▇▇▇▇▇▇▇▇, ▇.▇.
(collectively, the "Offerors' Counsel Opinions"). In rendering the Offerors'
Counsel Opinions, counsel to the Offerors may rely as to factual matters upon
certificates or other documents furnished by officers, directors and trustees of
the Offerors (copies of which shall be delivered to the Placement Agents and the
Purchaser) and by government officials, and upon such other documents as counsel
to the Offerors may, in their reasonable opinion, deem appropriate as a basis
for the Offerors' Counsel Opinions. Counsel to the Offerors may specify the
jurisdictions in which they are admitted to practice and that they are not
admitted to practice in any other jurisdiction and are not experts in the law of
any other jurisdiction. If the Offerors' counsel is not admitted to practice in
the State of New York, the opinion of Offerors' counsel may assume, for purposes
of the opinion, that the laws of the State of New York are substantively
identical, in all respects material to the opinion, to the internal laws of the
state in which such counsel is admitted to practice. Such Offerors' Counsel
Opinions shall not state that they are to be governed or qualified by, or that
they are otherwise subject to, any treatise, written policy or other document
relating to legal opinions, including, without limitation, the Legal Opinion
Accord of the ABA Section of Business Law (1991).
3.2. Officer's Certificate. At the Closing Date, the Purchaser and the Placement
Agents shall have received certificates from an authorized officer of the
Company, dated as of the Closing Date, stating that (i) the representations and
warranties of the Offerors set forth in Section 5 hereof are true and correct as
of the Closing Date and that the Offerors have complied with all agreements and
satisfied all conditions on their part to be performed or satisfied at or prior
to the Closing Date, (ii) since the date of this Agreement the Offerors have not
incurred any liability or obligation, direct or contingent, or entered into any
material transactions, other than in the ordinary course of business, which is
material to the Offerors, and (iii) covering such other matters as the Placement
Agents may reasonably request.
3.3. Administrator's Certificate. At the Closing Date, the Purchaser and the
Placement Agents shall have received a certificate of one or more Administrators
of the Trust, dated as of the Closing Date, stating that the representations and
warranties of the Trust set forth in Section 5 are true and correct as of the
Closing Date and that the Trust has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied at or prior to the
Closing Date.
3.4. Purchase Permitted by Applicable Laws; Legal Investment. The purchase of
and payment for the Capital Securities as described in this Agreement and
pursuant to the Subscription Agreement shall (a) not be prohibited by any
applicable law or governmental regulation, (b) not subject the Purchaser or the
Placement Agents to any penalty or, in the reasonable judgment of the Purchaser
and the Placement Agents, other onerous conditions under or pursuant to any
applicable law or governmental regulation, and (c) be permitted by the laws and
regulations of the jurisdictions to which the Purchaser and the Placement Agents
are subject.
3.5. Consents and Permits. The Company and the Trust shall have received all
consents, permits and other authorizations, and made all such filings and
declarations, as may be required from any person or entity pursuant to any law,
statute, regulation or rule (federal, state, local and foreign), or pursuant to
any agreement, order or decree to which the Company or the Trust is a party or
to which either is subject, in connection with the transactions contemplated by
this Agreement.
3.6. Information. Prior to or on the Closing Date, the Offerors shall have
furnished to the Placement Agents such further information, certificates,
opinions and documents addressed to the Purchaser and the Placement Agents,
which the Placement Agents may reasonably request, including, without
limitation, a complete set of the Operative Documents or any other documents or
certificates required by this Section 3; and all proceedings taken by the
Offerors in connection with the issuance, offer and sale of the Capital
Securities as herein contemplated shall be reasonably satisfactory in form and
substance to the Placement Agents.
If any condition specified in this Section 3 shall not have been
fulfilled when and as required in this Agreement, or if any of the opinions or
certificates mentioned above or elsewhere in this Agreement shall not be
reasonably satisfactory in form and substance to the Placement Agents, this
Agreement may be terminated by the Placement Agents by notice to the Offerors at
any time at or prior to the Closing Date. Notice of such termination shall be
given to the Offerors in writing or by telephone or facsimile confirmed in
writing.
Section 4. Conditions to the Offerors' Obligations. The obligations of the
Offerors to sell the Capital Securities to the Purchaser and consummate the
transactions contemplated by this Agreement shall be subject to the accuracy, at
and as of the Closing Date, of the representations and warranties of the
Placement Agents contained in this Agreement and to the following further
conditions:
4.1. Executed Agreement. The Offerors shall have received from the Placement
Agents an executed copy of this Agreement.
4.2. Fulfillment of Other Obligations. The Placement Agents shall have fulfilled
all of their other obligations and duties required to be fulfilled under this
Agreement prior to or at the Closing.
Section 5. Representations and Warranties of the Offerors. Except as set forth
on the Disclosure Schedule (as defined in Section 11.1) attached hereto, if any,
the Offerors jointly and severally represent and warrant to the Placement Agents
and the Purchaser as of the date hereof and as of the Closing Date as follows:
5.1. Securities Law Matters.
(a) Neither the Company nor the Trust, nor any of their "Affiliates" (as defined
in Rule 501(b) of Regulation D under the Securities Act ("Regulation D")), nor
any person acting on any of their behalf has, directly or indirectly, made
offers or sales of any security, or solicited offers to buy any security, under
circumstances that would require the registration under the Securities Act of
any of the Capital Securities, the Guarantee or the Debentures (collectively,
the "Securities") or any other securities to be issued, or which may be issued,
by the Purchaser.
(b) Neither the Company nor the Trust, nor any of their Affiliates, nor any
person acting on its or their behalf has (i) other than the Placement Agents,
offered for sale or solicited offers to purchase the Securities, or (ii) engaged
in any form of offering, general solicitation or general advertising (within the
meaning of Regulation D) in connection with any offer or sale of any of the
Securities.
(c) The Securities satisfy the eligibility requirements of Rule 144A(d)(3) under
the Securities Act.
(d) Neither the Company nor the Trust is or, after giving effect to the offering
and sale of the Capital Securities and the consummation of the transactions
described in this Agreement, will be an "investment company" or an entity
"controlled" by an "investment company," in each case within the meaning of
Section 3(a) of the Investment Company Act of 1940, as amended (the "Investment
Company Act"), without regard to Section 3(c) of the Investment Company Act.
(e) Neither the Company nor the Trust has paid or agreed to pay to any person or
entity (other than the Placement Agents) any compensation for soliciting another
to purchase any of the Securities.
5.2. Organization, Standing and Qualification of the Trust. The Trust has been
duly created and is validly existing in good standing as a statutory trust under
the Delaware Statutory Trust Act (the "Statutory Trust Act") with the power and
authority to own property and to conduct the business it transacts and proposes
to transact and to enter into and perform its obligations under the Operative
Documents. The Trust is duly qualified to transact business as a foreign entity
and is in good standing in each jurisdiction in which such qualification is
necessary, except where the failure to so qualify or be in good standing would
not have a material adverse effect on the Trust. The Trust is not a party to or
otherwise bound by any agreement other than the Operative Documents. The Trust
is and will, under current law, be classified for federal income tax purposes as
a grantor trust and not as an association taxable as a corporation.
5.3. Trust Agreement. The Trust Agreement has been duly authorized by the
Company and, on the Closing Date, will have been duly executed and delivered by
the Company and the Administrators of the Trust, and, assuming due
authorization, execution and delivery by the Delaware Trustee and the
Institutional Trustee, will be a valid and binding obligation of the Company and
such Administrators, enforceable against them in accordance with its terms,
subject to (a) applicable bankruptcy, insolvency, moratorium, receivership,
reorganization, liquidation and other laws relating to or affecting creditors'
rights generally, and (b) general principles of equity (regardless of whether
considered and applied in a proceeding in equity or at law) ("Bankruptcy and
Equity"). Each of the Administrators of the Trust is an employee or a director
of the Company or of a financial institution subsidiary of the Company and has
been duly authorized by the Company to execute and deliver the Trust Agreement.
5.4. Guarantee Agreement and the Indenture. Each of the Guarantee and the
Indenture has been duly authorized by the Company and, on the Closing Date will
have been duly executed and delivered by the Company, and, assuming due
authorization, execution and delivery by the Guarantee Trustee, in the case of
the Guarantee, and by the Indenture Trustee, in the case of the Indenture, will
be a valid and binding obligation of the Company enforceable against it in
accordance with its terms, subject to Bankruptcy and Equity.
5.5. Capital Securities and Common Securities. The Capital Securities and the
Common Securities have been duly authorized by the Trust Agreement and, when
issued and delivered against payment therefor on the Closing Date to the
Purchaser, in the case of the Capital Securities, and to the Company, in the
case of the Common Securities, will be validly issued and represent undivided
beneficial interests in the assets of the Trust. None of the Capital Securities
or the Common Securities is subject to preemptive or other similar rights. On
the Closing Date, all of the issued and outstanding Common Securities will be
directly owned by the Company free and clear of any pledge, security interest,
claim, lien or other encumbrance.
5.6. Debentures. The Debentures have been duly authorized by the Company and, at
the Closing Date, will have been duly executed and delivered to the Indenture
Trustee for authentication in accordance with the Indenture, and, when
authenticated in the manner provided for in the Indenture and delivered against
payment therefor by the Trust, will constitute valid and binding obligations of
the Company entitled to the benefits of the Indenture enforceable against the
Company in accordance with their terms, subject to Bankruptcy and Equity, except
as any indemnification or contribution provisions may be limited by public
policy or under applicable securities laws.
5.7. Power and Authority. This Agreement has been duly authorized, executed and
delivered by the Company and the Trust and constitutes the valid and binding
obligation of the Company and the Trust, enforceable against the Company and the
Trust in accordance with its terms, subject to Bankruptcy and Equity.
5.8. No Defaults. The Trust is not in violation of the Trust Agreement or, to
the knowledge of the Administrators, any provision of the Statutory Trust Act.
The execution, delivery and performance by the Company or the Trust of this
Agreement or the Operative Documents to which it is a party, and the
consummation of the transactions contemplated herein or therein and the use of
the proceeds therefrom, will not conflict with or constitute a breach of, or a
default under, or result in the creation or imposition of any lien, charge or
other encumbrance upon any property or assets of the Trust, the Company or any
of the Company's Subsidiaries (as defined in Section 5.11 hereof) pursuant to
any contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Trust, the Company or any of its Subsidiaries is a party
or by which it or any of them may be bound, or to which any of the property or
assets of any of them is subject, except for a conflict, breach, default, lien,
charge or encumbrance which could not, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect nor will such action result in any
violation of the Trust Agreement or the Statutory Trust Act or require the
consent, approval, authorization or order of any court or governmental agency or
body. As used herein, the term "Material Adverse Effect" means any one or more
effects that individually or in the aggregate are material and adverse to the
Offerors' ability to consummate the transactions contemplated herein or in the
Operative Documents or any one or more effects that individually or in the
aggregate are material and adverse to the condition (financial or otherwise),
earnings, affairs, business, prospects or results of operations of the Company
and its Subsidiaries taken as whole, whether or not occurring in the ordinary
course of business.
5.9. Organization, Standing and Qualification of the Company. The Company has
been duly incorporated and is validly existing as a corporation in good standing
under the laws of Indiana, with all requisite corporate power and authority to
own its properties and conduct the business it transacts and proposes to
transact, and is duly qualified to transact business and is in good standing as
a foreign corporation in each jurisdiction where the nature of its activities
requires such qualification, except where the failure of the Company to be so
qualified would not, singly or in the aggregate, have a Material Adverse Effect.
5.10. Subsidiaries of the Company. Each of the Company's significant
subsidiaries (as defined in Section 1-02(w) of Regulation S-X to the Securities
Act (the "Significant Subsidiaries")) is listed in Exhibit C attached hereto and
incorporated herein by this reference. Each Significant Subsidiary has been duly
organized and is validly existing and in good standing under the laws of the
jurisdiction in which it is chartered or organized, with all requisite power and
authority to own its properties and conduct the business it transacts and
proposes to transact, and is duly qualified to transact business and is in good
standing as a foreign entity in each jurisdiction where the nature of its
activities requires such qualification, except where the failure of any such
Significant Subsidiary to be so qualified would not, singly or in the aggregate,
have a Material Adverse Effect. All of the issued and outstanding shares of
capital stock of the Significant Subsidiaries (a) have been duly authorized and
are validly issued, (b) are fully paid and nonassessable, and (c) are wholly
owned, directly or indirectly, by the Company free and clear of any security
interest, mortgage, pledge, lien, encumbrance, restriction upon voting or
transfer, preemptive rights, claim, equity or other defect.
5.11. Permits. The Company and each of its subsidiaries (as defined in Section
1-02(x) of Regulation S-X to the Securities Act) (the "Subsidiaries") have all
requisite power and authority, and all necessary authorizations, approvals,
orders, licenses, certificates and permits of and from regulatory or
governmental officials, bodies and tribunals, to own or lease their respective
properties and to conduct their respective businesses as now being conducted,
except such authorizations, approvals, orders, licenses, certificates and
permits which, if not obtained and maintained, would not, singly or in the
aggregate, have a Material Adverse Effect, and neither the Company nor any of
its Subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such authorizations, approvals, orders,
licenses, certificates or permits which, singly or in the aggregate, if the
failure to be so licensed or approved is the subject of an unfavorable decision,
ruling or finding, would, singly or in the aggregate, have a Material Adverse
Effect; and the Company and its Subsidiaries are in compliance with all
applicable laws, rules, regulations and orders and consents, the violation of
which would, singly or in the aggregate, have a Material Adverse Effect.
5.12. Conflicts, Authorizations and Approvals. Neither the Company nor any of
its Subsidiaries is in violation of its respective articles or certificate of
incorporation, charter or by-laws or similar organizational documents or in
default in the performance or observance of any obligation, agreement, covenant
or condition contained in any contract, indenture, mortgage, loan agreement,
note, lease or other agreement or instrument to which either the Company or any
of its Subsidiaries is a party, or by which it or any of them may be bound or to
which any of the property or assets of the Company or any of its Subsidiaries is
subject, the effect of which violation or default in performance or observance
would have, singly or in the aggregate, a Material Adverse Effect.
5.13. Holding Company Registration and Deposit Insurance. The Company is duly
registered (i) as a bank holding company or financial holding company under the
Bank Holding Company Act of 1956, as amended, and the regulations of the Board
of Governors of the Federal Reserve System (the "Federal Reserve") or (ii) as a
savings and loan holding company under the Home Owners' Loan Act of 1933, as
amended, and the regulations of the Office of Thrift Supervision (the "OTS"),
and the deposit accounts of the Company's Subsidiary depository institutions are
insured by the Federal Deposit Insurance Corporation ("FDIC") to the fullest
extent permitted by law and the rules and regulations of the FDIC, and no
proceedings for the termination of such insurance are pending or threatened.
5.14. Financial Statements.
(a) The consolidated balance sheets of the Company and all of its Subsidiaries
as of September 30, 2004 and September 30, 2003 and related consolidated income
statements and statements of changes in shareholders' equity for the three years
ended September 30, 2004 together with the notes thereto, and the consolidated
balance sheets of the Company and all of its Subsidiaries as of March 31, 2005
and the related consolidated income statements and statements of changes in
shareholders' equity for the six months then ended, copies of each of which have
been provided to the Placement Agents (together, the "Financial Statements"),
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as may be disclosed therein) and fairly
present in all material respects the financial position and the results of
operations and changes in shareholders' equity of the Company and all of its
Subsidiaries as of the dates and for the periods indicated (subject, in the case
of interim financial statements, to normal recurring year-end adjustments, none
of which shall be material). The books and records of the Company and all of its
Subsidiaries have been, and are being, maintained in all material respects in
accordance with generally accepted accounting principles and any other
applicable legal and accounting requirements and reflect only actual
transactions.
(b) The information in the Company's most recently filed (i) FR Y-9C filed with
the Federal Reserve if the Company is a bank holding company, (ii) FR Y-9SP
filed with the Federal Reserve if the Company is a small bank holding company or
(iii) H-(b)11 filed with the OTS if the Company is a savings and loan holding
company (the "Regulatory Report"), previously provided to the Placement Agents
fairly presents in all material respects the financial position of the Company
and, where applicable, all of its Subsidiaries as of the end of the period
represented by such Regulatory Report.
(c) Since the respective dates of the Financial Statements and the Regulatory
Report, there has been no material adverse change or development with respect to
the financial condition or earnings of the Company and all of its Subsidiaries,
taken as a whole, other than matters which have been reported in publicly
available filings made by the Company under the Securities Exchange Act of 1934.
(d) The accountants of the Company who certified the Financial Statements are
independent public accountants of the Company and its Subsidiaries within the
meaning of the Securities Act and the rules and regulations thereunder.
5.15. Exchange Act Reporting. The reports filed with the Securities and Exchange
Commission (the "Commission") by the Company under the Securities Exchange Act
of 1934, as amended (the "1934 Act") and the regulations thereunder at the time
they were filed with the Commission complied as to form in all material respects
with the requirements of the 1934 Act and such reports did not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.
5.16. Regulatory Enforcement Matters. Neither the Company nor any of its
Subsidiaries is subject or is party to, or has received any notice or advice
that any of them may become subject or party to, any investigation with respect
to, any cease-and-desist order, agreement, consent agreement, memorandum of
understanding or other regulatory enforcement action, proceeding or order with
or by, or is a party to any commitment letter or similar undertaking to, or is
subject to any directive by, or has been since January 1, 2002, a recipient of
any supervisory letter from, or since January 1, 2002, has adopted any board
resolutions at the request of, any Regulatory Agency (as defined below) that
currently restricts in any material respect the conduct of their business or
that in any material manner relates to their capital adequacy, their credit
policies, their ability or authority to pay dividends or make distributions to
their shareholders or make payments of principal or interest on their debt
obligations, their management or their business (each, a "Regulatory
Agreement"), nor has the Company or any of its Subsidiaries been advised since
January 1, 2002, by any Regulatory Agency that it is considering issuing or
requesting any such Regulatory Agreement. There is no material unresolved
violation, criticism or exception by any Regulatory Agency with respect to any
report or statement relating to any examinations of the Company or any of its
Subsidiaries. As used herein, the term "Regulatory Agency" means any federal or
state agency charged with the supervision or regulation of depository
institutions, bank, financial or savings and loan holding companies, or engaged
in the insurance of depository institution deposits, or any court,
administrative agency or commission or other governmental agency, authority or
instrumentality having supervisory or regulatory authority with respect to the
Company or any of its Subsidiaries. Neither the Company nor any of the
Subsidiaries is currently unable to pay dividends or make distributions to its
shareholders with respect to any class of its equity securities, or prohibited
from paying principal or interest on its debt obligations, due to a restriction
or limitation, whether by statute, contract or otherwise, and, in the reasonable
judgment of the Company's management, neither the Company nor any of the
Subsidiaries will be unable in the foreseeable future to pay dividends or make
distributions with respect to any class of equity securities, or be prohibited
from paying principal or interest on its debt obligations, due to a restriction
or limitation, whether by statute, contract or otherwise.
5.17. No Material Change. Since September 30, 2004, there has been no material
adverse change or development with respect to the condition (financial or
otherwise), earnings, affairs, business, prospects or results of operations of
the Company or its Subsidiaries on a consolidated basis, whether or not arising
in the ordinary course of business other than matters which havew been reported
in publicly available filings made by the Company under the Securities ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇.
5.18. No Undisclosed Liabilities. Neither the Company nor any of its
Subsidiaries has any material liability, whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become due,
including any liability for taxes (and there is no past or present fact,
situation, circumstance, condition or other basis for any present or future
action, suit, proceeding, hearing, charge, complaint, claim or demand against
the Company or its Subsidiaries giving rise to any such liability), except (i)
for liabilities set forth in the Financial Statements and (ii) normal
fluctuation in the amount of the liabilities referred to in clause (i) above
occurring in the ordinary course of business of the Company and all of its
Subsidiaries since the date of the most recent balance sheet included in the
Financial Statements.
5.19. Litigation. No charge, investigation, action, suit or proceeding is
pending or, to the knowledge of the Offerors, threatened against or affecting
the Company or its Subsidiaries or any of their respective properties before or
by any courts or any regulatory, administrative or governmental official,
commission, board, agency or other authority or body, or any arbitrator, wherein
an unfavorable decision, ruling or finding could have, singly or in the
aggregate, a Material Adverse Effect.
5.20. Deferral of Interest Payments on Debentures. The Company has no present
intention to exercise its option to defer payments of interest on the Debentures
as provided in the Indenture. The Company believes that the likelihood that it
would exercise its right to defer payments of interest on the Debentures as
provided in the Indenture at any time during which the Debentures are
outstanding is remote because of the restrictions that would be imposed on the
Company's ability to declare or pay dividends or distributions on, or to redeem,
purchase, acquire or make a liquidation payment with respect to, any of the
Company's capital stock and on the Company's ability to make any payments of
principal, interest or premium on, or repay, repurchase or redeem, any of its
debt securities that rank pari passu in all respects with, or junior in interest
to, the Debentures.
Section 6. Representations and Warranties of the Placement Agents. Each
Placement Agent represents and warrants to the Offerors as to itself (but not as
to the other Placement Agent) as follows:
6.1. Organization, Standing and Qualification.
(a) FTN Financial Capital Markets is a division of First Tennessee Bank National
Association, a national banking association duly organized, validly existing and
in good standing under the laws of the United States, with full power and
authority to own, lease and operate its properties and conduct its business as
currently being conducted. FTN Financial Capital Markets is duly qualified to
transact business as a foreign corporation and is in good standing in each other
jurisdiction in which it owns or leases property or conducts its business so as
to require such qualification and in which the failure to so qualify would,
individually or in the aggregate, have a material adverse effect on the
condition (financial or otherwise), earnings, business, prospects or results of
operations of FTN Financial Capital Markets.
(b) ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York, with full
power and authority to own, lease and operate its properties and conduct its
business as currently being conducted. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. is duly
qualified to transact business as a foreign corporation and is in good standing
in each other jurisdiction in which it owns or leases property or conducts its
business so as to require such qualification and in which the failure to so
qualify would, individually or in the aggregate, have a material adverse effect
on the condition (financial or otherwise), earnings, business, prospects or
results of operations of ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
6.2. Power and Authority. The Placement Agent has all requisite power and
authority to enter into this Agreement, and this Agreement has been duly and
validly authorized, executed and delivered by the Placement Agent and
constitutes the legal, valid and binding agreement of the Placement Agent,
enforceable against the Placement Agent in accordance with its terms, subject to
Bankruptcy and Equity and except as any indemnification or contribution
provisions thereof may be limited under applicable securities laws.
6.3. General Solicitation. In the case of the offer and sale of the Capital
Securities and Common Securities, no form of general solicitation or general
advertising was used by the Placement Agent or its representatives including,
but not limited to, advertisements, articles, notices or other communications
published in any newspaper, magazine or similar medium or broadcast over
television or radio or any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising.
6.4. Purchaser. The Placement Agent has made such reasonable inquiry as is
necessary to determine that the Purchaser is acquiring the Capital Securities
for its own account, except as contemplated in Section 7.8 hereto, and that the
Purchaser does not intend to distribute the Capital Securities in contravention
of the Securities Act or any other applicable securities laws.
6.5. Qualified Purchasers. The Placement Agent has not offered or sold and will
not arrange for the offer or sale of the Capital Securities and Common
Securities except (i) to those the Placement Agent reasonably believes are
"accredited investors" (as defined in Rule 501 of Regulation D), or (ii) in any
other manner that does not require registration of the Capital Securities or
Common Securities under the Securities Act. In connection with each such sale,
the Placement Agent has taken or will take reasonable steps to ensure that the
Purchaser is aware that (a) such sale is being made in reliance on an exemption
under the Securities Act and (b) future transfers of the Capital Securities will
not be made except in compliance with applicable securities laws.
6.6. Offering Circulars. Neither the Placement Agent nor its representatives
will include any non-public information about the Company, the Trust or any of
their Affiliates in any registration statement, prospectus, offering circular or
private placement memorandum used in connection with any purchase of Capital
Securities without the prior written consent of the Trust and the Company.
Section 7. Covenants of the Offerors. The Offerors covenant and agree with the
Placement Agents and the Purchaser as follows:
7.1. Compliance with Representations and Warranties. During the period from the
date of this Agreement to the Closing Date, the Offerors shall use their best
efforts and take all action necessary or appropriate to cause their
representations and warranties contained in Section 5 hereof to be true as of
the Closing Date, after giving effect to the transactions contemplated by this
Agreement, as if made on and as of the Closing Date.
7.2. Sale and Registration of Securities. The Offerors and their Affiliates
shall not nor shall any of them permit any person acting on their behalf (other
than the Placement Agents), to directly or indirectly (i) sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security (as
defined in the Securities Act) that would or could be integrated with the sale
of the Capital Securities in a manner that would require the registration under
the Securities Act of the Securities or (ii) make offers or sales of any such
Security, or solicit offers to buy any such Security, under circumstances that
would require the registration of any of such Securities under the Securities
Act.
7.3. Use of Proceeds. The Trust shall use the proceeds from the sale of the
Capital Securities and the Common Securities to purchase the Debentures from the
Company.
7.4. Investment Company. The Offerors shall not engage, or permit any Subsidiary
to engage, in any activity which would cause it or any Subsidiary to be an
"investment company" under the provisions of the Investment Company Act.
7.5. Reimbursement of Expenses. If the sale of the Capital Securities provided
for herein is not consummated (i) because any condition set forth in Section 3
hereof is not satisfied, or (ii) because of any refusal, inability or failure on
the part of the Company or the Trust to perform any agreement herein or comply
with any provision hereof other than by reason of a breach by the Placement
Agents, the Company shall reimburse the Placement Agents upon demand for all of
their pro rata share of out-of-pocket expenses (including reasonable fees and
disbursements of counsel) in an amount not to exceed $50,000.00 that shall have
been incurred by them in connection with the proposed purchase and sale of the
Capital Securities. Notwithstanding the foregoing, the Company shall have no
obligation to reimburse the Placement Agents for their out-of-pocket expenses if
the sale of the Capital Securities fails to occur because the Placement Agents
fail to fulfill a condition set forth in Section 4.
7.6. Solicitation and Advertising. In connection with any offer or sale of any
of the Securities, the Offerors shall not, nor shall either of them permit any
of their Affiliates or any person acting on their behalf, other than the
Placement Agents, to engage in any form of general solicitation or general
advertising (as defined in Regulation D).
7.7. Compliance with Rule 144A(d)(4) under the Securities Act. So long as any of
the Securities are outstanding and are "restricted securities" within the
meaning of Rule 144(a)(3) under the Securities Act, the Offerors will, during
any period in which they are not subject to and in compliance with Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
or the Offerors are not exempt from such reporting requirements pursuant to and
in compliance with Rule 12g3-2(b) under the Exchange Act, provide to each holder
of such restricted securities and to each prospective purchaser (as designated
by such holder) of such restricted securities, upon the request of such holder
or prospective purchaser in connection with any proposed transfer, any
information required to be provided by Rule 144A(d)(4) under the Securities Act,
if applicable. This covenant is intended to be for the benefit of the holders,
and the prospective purchasers designated by such holders, from time to time of
such restricted securities. The information provided by the Offerors pursuant to
this Section 7.7 will not, at the date thereof, contain any untrue statement of
a material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
7.8. Transfer Notice. The Offerors acknowledge that the Purchaser may transfer
the Capital Securities, in whole or in part, at any time and from time to time
following the Closing Date by delivering the notice (the "Transfer Notice")
attached as Exhibit B to the Master Custodian Agreement, dated May 27, 2004 and
attached as Exhibit A to the Subscription Agreement. In order to facilitate such
transfer, the Company shall execute in blank five additional Capital Securities
certificates, to be delivered at Closing, such certificates to be completed with
the name of the transferee(s) to which the Capital Securities, in whole or in
part, will be transferred upon the receipt of a Transfer Notice and
authenticated by the Institutional Trustee at the time of each such transfer.
7.9. Quarterly Reports. Within 50 days of the end of each calendar year quarter
and within 100 days of the end of each calendar year during which the Debentures
are issued and outstanding and Purchaser holds any of the Capital Securities,
the Offerors shall submit to Purchaser a completed quarterly report in the form
attached hereto as Exhibit D as well as a copy of the applicable Regulatory
Report for the Company. If the Purchaser transfers the Capital Securities as
contemplated under Section 7.8, in addition to the reporting obligations of the
Offerors to Purchaser provided for in this Section 7.9, the Offerors shall
submit to the trustee designated in the Transfer Notice such periodic reports as
may be required by such trustee in the form and at such times as such trustee
may require. The Offerors acknowledge and agree that such designated trustee and
its successors and assigns are third party beneficiaries of this Section 7.9.
Section 8. Covenants of the Placement Agents. The Placement Agents covenant and
agree with the Offerors that, during the period from the date of this Agreement
to the Closing Date, the Placement Agents shall use their best efforts and take
all action necessary or appropriate to cause their representations and
warranties contained in Section 6 to be true as of Closing Date, after giving
effect to the transactions contemplated by this Agreement, as if made on and as
of the Closing Date. The Placement Agents further covenant and agree not to
engage in hedging transactions with respect to the Capital Securities unless
such transactions are conducted in compliance with the Securities Act.
Section 9. Indemnification.
9.1. Indemnification Obligation. The Offerors shall jointly and severally
indemnify and hold harmless the Placement Agents and the Purchaser and each of
their respective agents, employees, officers and directors and each person that
controls either of the Placement Agents or the Purchaser within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, and agents,
employees, officers and directors or any such controlling person of either of
the Placement Agents or the Purchaser (each such person or entity, an
"Indemnified Party") from and against any and all losses, claims, damages,
judgments, liabilities or expenses, joint or several, to which such Indemnified
Party may become subject under the Securities Act, the Exchange Act or other
federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of the Offerors), insofar as such losses, claims, damages,
judgments, liabilities or expenses (or actions in respect thereof) arise out of,
or are based upon, or relate to, in whole or in part, (a) any untrue statement
or alleged untrue statement of a material fact contained in any information
(whether written or oral) or documents executed in favor of, furnished or made
available to the Placement Agents or the Purchaser by the Offerors, or (b) any
omission or alleged omission to state in any information (whether written or
oral) or documents executed in favor of, furnished or made available to the
Placement Agents or the Purchaser by the Offerors a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
shall reimburse each Indemnified Party for any legal and other expenses as such
expenses are reasonably incurred by such Indemnified Party in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, judgments, liability, expense or action described in this Section 9.1.
In addition to their other obligations under this Section 9, the Offerors hereby
agree that, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of, or based upon, or
related to the matters described above in this Section 9.1, they shall reimburse
each Indemnified Party on a quarterly basis for all reasonable legal or other
expenses incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, each Indemnified Party
shall promptly return such amounts to the Offerors together with interest,
determined on the basis of the prime rate (or other commercial lending rate for
borrowers of the highest credit standing) announced from time to time by First
Tennessee Bank National Association (the "Prime Rate"). Any such interim
reimbursement payments which are not made to an Indemnified Party within 30 days
of a request for reimbursement shall bear interest at the Prime Rate from the
date of such request.
9.2. Conduct of Indemnification Proceedings. Promptly after receipt by an
Indemnified Party under this Section 9 of notice of the commencement of any
action, such Indemnified Party shall, if a claim in respect thereof is to be
made against the Offerors under this Section 9, notify the Offerors in writing
of the commencement thereof; but, subject to Section 9.4, the omission to so
notify the Offerors shall not relieve them from any liability pursuant to
Section 9.1 which the Offerors may have to any Indemnified Party unless and to
the extent that the Offerors did not otherwise learn of such action and such
failure by the Indemnified Party results in the forfeiture by the Offerors of
substantial rights and defenses. In case any such action is brought against any
Indemnified Party and such Indemnified Party seeks or intends to seek indemnity
from the Offerors, the Offerors shall be entitled to participate in, and, to the
extent that they may wish, to assume the defense thereof with counsel reasonably
satisfactory to such Indemnified Party; provided, however, if the defendants in
any such action include both the Indemnified Party and the Offerors and the
Indemnified Party shall have reasonably concluded that there may be a conflict
between the positions of the Offerors and the Indemnified Party in conducting
the defense of any such action or that there may be legal defenses available to
it and/or other Indemnified Parties which are different from or additional to
those available to the Offerors, the Indemnified Party shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such Indemnified Party.
Upon receipt of notice from the Offerors to such Indemnified Party of their
election to so assume the defense of such action and approval by the Indemnified
Party of counsel, the Offerors shall not be liable to such Indemnified Party
under this Section 9 for any legal or other expenses subsequently incurred by
such Indemnified Party in connection with the defense thereof unless (i) the
Indemnified Party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso in the preceding
sentence (it being understood, however, that the Offerors shall not be liable
for the expenses of more than one separate counsel representing the Indemnified
Parties who are parties to such action), or (ii) the Offerors shall not have
employed counsel reasonably satisfactory to the Indemnified Party to represent
the Indemnified Party within a reasonable time after notice of commencement of
the action, in each of which cases the fees and expenses of counsel of such
Indemnified Party shall be at the expense of the Offerors.
9.3. Contribution. If the indemnification provided for in this Section 9 is
required by its terms, but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an Indemnified Party under Section 9.1
in respect of any losses, claims, damages, liabilities or expenses referred to
herein or therein, then the Offerors shall contribute to the amount paid or
payable by such Indemnified Party as a result of any losses, claims, damages,
judgments, liabilities or expenses referred to herein (i) in such proportion as
is appropriate to reflect the relative benefits received by the Offerors, on the
one hand, and the Indemnified Party, on the other hand, from the offering of
such Capital Securities, or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Offerors, on the one hand, and the Placement Agents,
on the other hand, in connection with the statements or omissions or
inaccuracies in the representations and warranties herein or other breaches
which resulted in such losses, claims, damages, judgments, liabilities or
expenses, as well as any other relevant equitable considerations. The respective
relative benefits received by the Offerors, on the one hand, and the Placement
Agents, on the other hand, shall be deemed to be in the same proportion, in the
case of the Offerors, as the total price paid to the Offerors for the Capital
Securities sold by the Offerors to the Purchaser (net of the compensation paid
to the Placement Agents hereunder, but before deducting expenses), and in the
case of the Placement Agents, as the compensation received by them, bears to the
total of such amounts paid to the Offerors and received by the Placement Agents
as compensation. The relative fault of the Offerors and the Placement Agents
shall be determined by reference to, among other things, whether the untrue
statement or alleged untrue statement of a material fact or the omission or
alleged omission of a material fact or the inaccurate or the alleged inaccurate
representation and/or warranty relates to information supplied by the Offerors
or the Placement Agents and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The provisions set forth in Section 9.2 with respect to notice of commencement
of any action shall apply if a claim for contribution is made under this Section
9.3; provided, however, that no additional notice shall be required with respect
to any action for which notice has been given under Section 9.2 for purposes of
indemnification. The Offerors and the Placement Agents agree that it would not
be just and equitable if contribution pursuant to this Section 9.3 were
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in this Section
9.3. The amount paid or payable by an Indemnified Party as a result of the
losses, claims, damages, judgments, liabilities or expenses referred to in this
Section 9.3 shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or claim. In no
event shall the liability of the Placement Agents hereunder be greater in amount
than the dollar amount of the compensation (net of payment of all expenses)
received by the Placement Agents upon the sale of the Capital Securities giving
rise to such obligation. No person found guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not found guilty of such fraudulent
misrepresentation.
9.4. Additional Remedies. The indemnity and contribution agreements contained in
this Section 9 are in addition to any liability that the Offerors may otherwise
have to any Indemnified Party.
9.5. Additional Indemnification. The Company shall indemnify and hold harmless
the Trust against all loss, liability, claim, damage and expense whatsoever, as
due from the Trust under Sections 9.1 through 9.4 hereof.
Section 10. Rights and Responsibilities of Placement Agents.
10.1. Reliance. In performing their duties under this Agreement, the Placement
Agents shall be entitled to rely upon any notice, signature or writing which
they shall in good faith believe to be genuine and to be signed or presented by
a proper party or parties. The Placement Agents may rely upon any opinions or
certificates or other documents delivered by the Offerors or their counsel or
designees to either the Placement Agents or the Purchaser.
10.2. Rights of Placement Agents. In connection with the performance of their
duties under this Agreement, the Placement Agents shall not be liable for any
error of judgment or any action taken or omitted to be taken unless the
Placement Agents were grossly negligent or engaged in willful misconduct in
connection with such performance or non-performance. No provision of this
Agreement shall require the Placement Agents to expend or risk their own funds
or otherwise incur any financial liability on behalf of the Purchaser in
connection with the performance of any of their duties hereunder. The Placement
Agents shall be under no obligation to exercise any of the rights or powers
vested in them by this Agreement.
Section 11. Miscellaneous.
11.1. Disclosure Schedule. The term "Disclosure Schedule," as used herein, means
the schedule, if any, attached to this Agreement that sets forth items the
disclosure of which is necessary or appropriate as an exception to one or more
representations or warranties contained in Section 5 hereof; provided, that any
item set forth in the Disclosure Schedule as an exception to a representation or
warranty shall be deemed an admission by the Offerors that such item represents
an exception, fact, event or circumstance that is reasonably likely to result in
a Material Adverse Effect. The Disclosure Schedule shall be arranged in
paragraphs corresponding to the section numbers contained in Section 5. Nothing
in the Disclosure Schedule shall be deemed adequate to disclose an exception to
a representation or warranty made herein unless the Disclosure Schedule
identifies the exception with reasonable particularity and describes the
relevant facts in reasonable detail. Without limiting the generality of the
immediately preceding sentence, the mere listing (or inclusion of a copy) of a
document or other item in the Disclosure Schedule shall not be deemed adequate
to disclose an exception to a representation or warranty made herein unless the
representation or warranty has to do with the existence of the document or other
item itself. Information provided by the Company in response to any due
diligence questionnaire shall not be deemed part of the Disclosure Schedule and
shall not be deemed to be an exception to one or more representations or
warranties contained in Section 5 hereof unless such information is specifically
included on the Disclosure Schedule in accordance with the provisions of this
Section 11.1.
11.2. Legal Expenses. At Closing, the Placement Agents shall provide a credit
for the Offerors' transaction-related legal expenses in the amount of
$10,000.00.
11.3. Non-Disclosure. Except as required by applicable law, including without
limitation securities laws and regulations promulgated thereunder (including the
requirements of disclosure on Form 8-K), (i) the Offerors shall not, and will
cause their advisors and representatives not to, issue any press release or
other public statement regarding the transactions contemplated by this Agreement
or the Operative Documents prior to or on the Closing Date and (ii) following
the Closing Date, the Offerors shall not include in any press release, other
public statement or other communication regarding the transactions contemplated
by this Agreement or the Operative Documents, any reference to the Placement
Agents, WTC, the Purchaser, the term "PreTS" or any derivations thereof, or the
terms and conditions of this Agreement or the Operative Documents.
Notwithstanding anything to the contrary, the Offerors may (1) consult any tax
advisor regarding U.S. federal income tax treatment or tax structure of the
transaction contemplated under this Agreement and the Operative Documents and
(2) disclose to any and all persons, without limitation of any kind, the U.S.
Federal income tax structure (in each case, within the meaning of Treasury
Regulation ss. 1.6011-4) of the transaction contemplated under this Agreement
and the Operative Documents and all materials of any kind (including opinions or
other tax analyses) that are provided to you relating to such tax treatment and
tax structure. For this purpose, "tax structure" is limited to any facts
relevant to the U.S. federal income tax treatment of the transaction and does
not include information relating to identity of the parties.
11.4. Notices. Prior to the Closing, and thereafter with respect to matters
pertaining to this Agreement only, all notices and other communications provided
for or permitted hereunder shall be made in writing by hand-delivery,
first-class mail, telex, telecopier or overnight air courier guaranteeing next
day delivery:
if to the Placement Agents, to:
FTN Financial Capital Markets
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, General Counsel
with a copy to:
▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇.▇.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇, Esq.
and
Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier: 212-839-5599
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
if to the Offerors, to:
MFB Corp.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
All such notices and communications shall be deemed to have been duly
given (i) at the time delivered by hand, if personally delivered, (ii) five
business days after being deposited in the mail, postage prepaid, if mailed,
(iii) when answered back, if telexed, (iv) the next business day after being
telecopied, or (v) the next business day after timely delivery to a courier, if
sent by overnight air courier guaranteeing next day delivery. From and after the
Closing, the foregoing notice provisions shall be superseded by any notice
provisions of the Operative Documents under which notice is given. The Placement
Agents, the Offerors, and their respective counsel, may change their respective
notice addresses from time to time by written notice to all of the foregoing
persons.
11.5. Parties in Interest, Successors and Assigns. Except as expressly set forth
herein, this Agreement is made solely for the benefit of the Placement Agents,
the Purchaser and the Offerors and any person controlling the Placement Agents,
the Purchaser or the Offerors and their respective successors and assigns; and
no other person shall acquire or have any right under or by virtue of this
Agreement. This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties.
11.6. Counterparts. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
11.7. Headings. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
11.8. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAWS PERTAINING TO CONFLICTS OF
LAWS) OF THE STATE OF NEW YORK.
11.9. Entire Agreement. This Agreement, together with the Operative Documents
and the other documents delivered in connection with the transactions
contemplated by this Agreement, is intended by the parties as a final expression
of their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein. This Agreement, together with the Operative Documents and the other
documents delivered in connection with the transaction contemplated by this
Agreement, supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
11.10. Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired or affected, it
being intended that all of the Placement Agents' and the Purchaser's rights and
privileges shall be enforceable to the fullest extent permitted by law.
11.11. Survival. The Placement Agents and the Offerors, respectively, agree that
the representations, warranties and agreements made by each of them in this
Agreement and in any certificate or other instrument delivered pursuant hereto
shall remain in full force and effect and shall survive the delivery of, and
payment for, the Capital Securities.
Signatures appear on the following page
If this Agreement is satisfactory to you, please so indicate by signing
the acceptance of this Agreement and deliver such counterpart to the Offerors
whereupon this Agreement will become binding between us in accordance with its
terms.
Very truly yours,
MFB CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇
-----------------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇
---------------------------------------------------------
Title: President/CEO
--------------------------------------------------------
MFBC STATUTORY TRUST I
By: /s/ ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇
-----------------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇
---------------------------------------------------------
Title: Administrator
CONFIRMED AND ACCEPTED,
as of the date first set forth above
FTN FINANCIAL CAPITAL MARKETS,
a division of First Tennessee Bank National Association,
as a Placement Agent
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇
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Title: Vice President
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▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC.,
a New York corporation, as a Placement Agent
By: /s/ ▇▇▇▇▇ ▇ ▇▇▇▇▇
-------------------------------------------------------------------
Name: ▇▇▇▇▇ ▇ ▇▇▇▇▇
------------------------------------------------------------------
Title: Managing Director
-----------------------------------------------------------------
A-6
1218499.1
MFB Corp./Placement Agreement
EXHIBIT A
FORM OF SUBSCRIPTION AGREEMENT
MFBC STATUTORY TRUST I
MFB CORP.
SUBSCRIPTION AGREEMENT
July 29, 2005
THIS SUBSCRIPTION AGREEMENT (this "Agreement") made among MFBC
Statutory Trust I (the "Trust"), a statutory trust created under the Delaware
Statutory Trust Act (Chapter 38 of Title 12 of the Delaware Code, 12 Del. C.
▇▇.▇▇. 3801, et seq.), MFB Corp., an Indiana corporation, with its principal
offices located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇ (the "Company" and, collectively with the Trust, the "Offerors"), and
First Tennessee Bank National Association (the "Purchaser").
RECITALS:
A. The Trust desires to issue 5,000 of its Fixed/Floating Rate Capital
Securities (the "Capital Securities"), liquidation amount $1,000.00 per Capital
Security, representing an undivided beneficial interest in the assets of the
Trust (the "Offering"), to be issued pursuant to an Amended and Restated
Declaration of Trust (the "Declaration") by and among the Company, Wilmington
Trust Company ("WTC"), the administrators named therein, and the holders (as
defined therein), which Capital Securities are to be guaranteed by the Company
with respect to distributions and payments upon liquidation, redemption and
otherwise pursuant to the terms of a Guarantee Agreement between the Company and
WTC, as trustee (the "Guarantee"); and
B. The proceeds from the sale of the Capital Securities will be combined with
the proceeds from the sale by the Trust to the Company of its common securities,
and will be used by the Trust to purchase an equivalent amount of Fixed/Floating
Rate Junior Subordinated Deferrable Interest Debentures of the Company (the
"Debentures") to be issued by the Company pursuant to an indenture to be
executed by the Company and WTC, as trustee (the "Indenture"); and
C. In consideration of the premises and the mutual representations and covenants
hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF CAPITAL SECURITIES
1.1. Upon the execution of this Agreement, the Purchaser hereby agrees to
purchase from the Trust 5,000 Capital Securities at a price equal to $1,000.00
per Capital Security (the "Purchase Price") and the Trust agrees to sell such
Capital Securities to the Purchaser for said Purchase Price. The rights and
preferences of the Capital Securities are set forth in the Declaration. The
Purchase Price is payable in immediately available funds on July 29, 2005, or
such other business day as may be designated by the Purchaser (the "Closing
Date"). The Offerors shall provide the -Purchaser wire transfer instructions no
later than 1 day following the date hereof.
1.2. As a condition to its purchase of the Capital Securities, Purchaser shall
enter into the Joinder Agreement to the Master Custodian Agreement, the form of
which is attached hereto as Exhibit A (the "Custodian Agreement") and, in
accordance therewith, the certificate for the Capital Securities shall be
delivered by the Trust on the Closing Date to the custodian in accordance with
the Custodian Agreement. Purchaser shall not transfer the Capital Securities to
any person or entity except in accordance with the terms of the Custodian
Agreement.
1.3. The Placement Agreement, dated July 29, 2005 (the "Placement Agreement"),
among the Offerors and the placement agents identified therein (the "Placement
Agents") includes certain representations and warranties, covenants and
conditions to closing and certain other matters governing the Offering. The
Placement Agreement is hereby incorporated by reference into this Agreement and
the Purchaser shall be entitled to each of the benefits of the Placement Agents
and the Purchaser under the Placement Agreement and shall be entitled to enforce
the obligations of the Offerors under such Placement Agreement as fully as if
the Purchaser were a party to such Placement Agreement.
1.4. Anything herein or in the Placement Agreement notwithstanding, the Offerors
acknowledge and agree that, so long as Purchaser holds some or all of the
Capital Securities, the Purchaser may in its discretion from time to time
transfer or sell, or sell or grant participation interests in, some or all of
such Capital Securities to one or more parties, provided that any such
transaction complies, as applicable, with the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act") and any other
applicable securities laws, is pursuant to an exemption therefrom, or is
otherwise not subject thereto.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PURCHASER
2.1. The Purchaser understands and acknowledges that none of the Capital
Securities, the Debentures or the Guarantee have been registered under the
Securities Act or any other applicable securities law, are being offered for
sale by the Trust in transactions not requiring registration under the
Securities Act, and may not be offered, sold, pledged or otherwise transferred
by the Purchaser except in compliance with the registration requirements of the
Securities Act or any other applicable securities laws, pursuant to an exemption
therefrom or in a transaction not subject thereto.
2.2. The Purchaser represents and warrants that, except as contemplated under
Section 1.4 hereof, it is purchasing the Capital Securities for its own account,
for investment, and not with a view to, or for offer or sale in connection with,
any distribution thereof in violation of the Securities Act or other applicable
securities laws, subject to any requirement of law that the disposition of its
property be at all times within its control and subject to its ability to resell
such Capital Securities pursuant to an effective registration statement under
the Securities Act or under Rule 144A or any other exemption from registration
available under the Securities Act or any other applicable securities law.
2.3. The Purchaser represents and warrants that neither the Offerors nor the
Placement Agents are acting as a fiduciary or financial or investment adviser
for the Purchaser.
2.4. The Purchaser represents and warrants that it is not relying (for purposes
of making any investment decision or otherwise) upon any advice, counsel or
representations (whether written or oral) of the Offerors or of the Placement
Agents.
2.5. The Purchaser represents and warrants that (a) it has consulted with its
own legal, regulatory, tax, business, investment, financial and accounting
advisers in connection herewith to the extent it has deemed necessary, (b) it
has had a reasonable opportunity to ask questions of and receive answers from
officers and representatives of the Offerors concerning their respective
financial condition and results of operations and the purchase of the Capital
Securities, and any such questions have been answered to its satisfaction, (c)
it has had the opportunity to review all publicly available records and filings
concerning the Offerors and it has carefully reviewed such records and filings
that it considers relevant to making an investment decision, and (d) it has made
its own investment decisions based upon its own judgment, due diligence and
advice from such advisers as it has deemed necessary and not upon any view
expressed by the Offerors or the Placement Agents.
2.6. The Purchaser represents and warrants that it is a "qualified institutional
buyer" as defined under Rule 144A under the Securities Act. If the Purchaser is
a dealer of the type described in paragraph (a)(1)(ii) of Rule 144A under the
Securities Act, it owns and invests on a discretionary basis not less than U.S.
$25,000,000.00 in securities of issuers that are not affiliated with it. The
Purchaser is not a participant-directed employee plan, such as a 401(k) plan, or
any other type of plan referred to in paragraph (a)(1)(i)(D) or (a)(1)(i)(E) of
Rule 144A, or a trust fund referred to in paragraph (a)(1)(i)(F) of Rule 144A
that holds the assets of such a plan, unless investment decisions with respect
to the plan are made solely by the fiduciary, trustee or sponsor of such plan.
2.7. The Purchaser represents and warrants that on each day from the date on
which it acquires the Capital Securities through and including the date on which
it disposes of its interests in the Capital Securities, either (i) it is not (a)
an "employee benefit plan" (as defined in Section 3(3) of the United States
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) which is
subject to the provisions of Part 4 of Subtitle B of Title I of ERISA, or any
entity whose underlying assets include the assets of any such plan (an "ERISA
Plan"), (b) any other "plan" (as defined in Section 4975(e)(1) of the United
States Internal Revenue Code of 1986, as amended (the "Code")) which is subject
to the provisions of Section 4975 of the Code or any entity whose underlying
assets include the assets of any such plan (a "Plan"), (c) an entity whose
underlying assets include the assets of any such ERISA Plan or other Plan by
reason of Department of Labor regulation section 2510.3-101 or otherwise, or (d)
a governmental or church plan that is subject to any federal, state or local law
which is substantially similar to the provisions of Section 406 of ERISA or
Section 4975 of the Code (a "Similar Law"); or (ii) the purchase, holding and
disposition of the Capital Securities by it will satisfy the requirements for
exemptive relief under Prohibited Transaction Class Exemption ("PTCE") ▇▇-▇▇,
▇▇▇▇ ▇▇-▇, ▇▇▇▇ 91-38, ▇▇▇▇ ▇▇-▇▇, ▇▇▇▇ 96-23 or a similar exemption, or, in the
case of a plan subject to a Similar Law, will not result in a non-exempt
violation of such Similar Law.
2.8. The Purchaser represents and warrants that it is acquiring the Capital
Securities as principal for its own account for investment and, except as
contemplated under Section 1.4 hereof, not for sale in connection with any
distribution thereof. It was not formed solely for the purpose of investing in
the Capital Securities, and additional capital or similar contributions were not
specifically solicited from any person owning a beneficial interest in it for
the purpose of enabling it to purchase any Capital Securities. The Purchaser is
not a (i) partnership, (ii) common trust fund or (iii) special trust, pension,
profit sharing or other retirement trust fund or plan in which the partners,
beneficiaries or participants, as applicable, may designate the particular
investments to be made or the allocation of any investment among such partners,
beneficiaries or participants, and except as contemplated under Section 1.4
hereof, it agrees that it shall not hold the Capital Securities for the benefit
of any other person and shall be the sole beneficial owner thereof for all
purposes and that it shall not sell participation interests in the Capital
Securities or enter into any other arrangement pursuant to which any other
person shall be entitled to a beneficial interest in the distribution on the
Capital Securities. The Capital Securities purchased directly or indirectly by
the Purchaser constitute an investment of no more than 40% of its assets. The
Purchaser understands and agrees that any purported transfer of the Capital
Securities to a purchaser which would cause the representations and warranties
of Section 2.6 and this Section 2.8 to be inaccurate shall be null and void ab
initio and the Offerors retain the right to resell any Capital Securities sold
to non-permitted transferees.
2.9. The Purchaser represents and warrants that it has full power and authority
to execute and deliver this Agreement, to make the representations and
warranties specified herein, and to consummate the transactions contemplated
herein and it has full right and power to subscribe for Capital Securities and
perform its obligations pursuant to this Agreement.
2.10. The Purchaser represents and warrants that no filing with, or
authorization, approval, consent, license, order, registration, qualification or
decree of, any governmental body, agency or court having jurisdiction over the
Purchaser, other than those that have been made or obtained, is necessary or
required for the performance by the Purchaser of its obligations under this
Agreement or to consummate the transactions contemplated herein.
2.11. The Purchaser represents and warrants that this Agreement has been duly
authorized, executed and delivered by the Purchaser.
2.12. The Purchaser understands and acknowledges that the Company will rely upon
the truth and accuracy of the foregoing acknowledgments, representations,
warranties and agreements and agrees that, if any of the acknowledgments,
representations, warranties or agreements deemed to have been made by it by its
purchase of the Capital Securities are no longer accurate, it shall promptly
notify the Company.
2.13. The Purchaser understands that no public market exists for any of the
Capital Securities, and that it is unlikely that a public market will ever exist
for the Capital Securities.
ARTICLE III
MISCELLANEOUS
3.1. Any notice or other communication given hereunder shall be deemed
sufficient if in writing and sent by registered or certified mail, return
receipt requested, international courier or delivered by hand against written
receipt therefor, or by facsimile transmission and confirmed by telephone, to
the following addresses, or such other address as may be furnished to the other
parties as herein provided:
To the Offerors: MFB Corp.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
To the Purchaser: First Tennessee Bank National Association
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Unless otherwise expressly provided herein, notices shall be
deemed to have been given on the date of mailing, except notice of change of
address, which shall be deemed to have been given when received.
3.2. This Agreement shall not be changed, modified or amended except by a
writing signed by the parties to be charged, and this Agreement may not be
discharged except by performance in accordance with its terms or by a writing
signed by the party to be charged.
3.3. Upon the execution and delivery of this Agreement by the Purchaser, this
Agreement shall become a binding obligation of the Purchaser with respect to the
purchase of Capital Securities as herein provided.
3.4. NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF
THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND
PROVISIONS HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
3.5. The parties agree to execute and deliver all such further documents,
agreements and instruments and take such other and further action as may be
necessary or appropriate to carry out the purposes and intent of this Agreement.
3.6. This Agreement may be executed in one or more counterparts each of which
shall be deemed an original, but all of which shall together constitute one and
the same instrument.
3.7. In the event that any one or more of the provisions contained herein, or
the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired or affected, it being
intended that all of the Offerors' and the Purchaser's rights and privileges
shall be enforceable to the fullest extent permitted by law.
Signatures appear on the following page
IN WITNESS WHEREOF, this Agreement is agreed to and accepted as of the
day and year first written above.
FIRST TENNESSEE BANK NATIONAL ASSOCIATION
By:
--------------------------------------------------
Print Name:
-----------------------------------------
Title:
----------------------------------------------
MFB CORP.
By:
----------------------------------------------------------
Name:
--------------------------------------------------------
Title:
-------------------------------------------------------
MFBC STATUTORY TRUST I
By:
----------------------------------------------------------
Name:
--------------------------------------------------------
Title: Administrator
A-A-6
1218499.1
MFB Corp./Placement Agreement
A-A-1
1218499.1
MFB Corp./Placement Agreement
EXHIBIT A TO SUBSCRIPTION AGREEMENT
FORM OF MASTER CUSTODIAN AGREEMENT
This Master Custodian Agreement (this "Agreement") is made and entered
into as of May 27, 2004 by and among each purchaser (each a "Purchaser" and
collectively the "Purchasers") that enters into a Joinder Agreement attached
hereto as Exhibit A (the "Joinder Agreement"), Wilmington Trust Company, a
Delaware banking corporation (the "Custodian") and each financial institution
(each an "Issuer" and collectively the "Issuers") that enters into a Joinder
Agreement. The Purchasers and the Issuers are sometimes referred to herein as
the "Interested Parties".
RECITALS
A. The Purchasers intend to purchase from the Issuers or their respective
statutory business trust subsidiaries Securities issued by such Issuers (the
"Securities").
B. In order to facilitate any future transfer of all or any portion of the
Securities by the Purchasers, the Interested Parties intend to provide for the
custody of the Securities and certain other securities on the terms set forth
herein.
C. The Custodian is willing to hold and administer such securities and to
distribute the securities held by it in accordance with the agreement of the
Interested Parties and/or arbitral or judicial orders and decrees as set forth
in this Agreement.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
herein contained and other good and valuable consideration (the receipt,
adequacy and sufficiency of which are hereby acknowledged by the parties by
their execution hereof), the parties agree as follows:
1. Joinder Agreement. On or before the delivery to the Custodian of any
Securities issued by an Issuer, such Issuer and the applicable
Purchaser or Purchasers shall enter into a Joinder Agreement
substantially in the form of Exhibit A attached hereto, with such
additional provisions as the Interested Parties may wish to add from
time to time. An executed copy of each such Joinder Agreement shall be
delivered to the Custodian on or before the date on which such Issuer's
Securities are issued. This Agreement and each Joinder Agreement
constitute the entire agreement among the Purchasers, Issuers and the
Custodian pertaining to the subject matter hereof.
2. Delivery of Securities. On or before each date on which an Issuer
enters into a Joinder Agreement:
(a) The applicable Issuer shall deliver to the Custodian a signed,
authenticated certificate representing a beneficial interest in such
Issuer's Securities, with the Purchaser designated as owner thereof
(the "Original Securities"). The Custodian shall have no responsibility
for the genuineness, validity, market value, title or sufficiency for
any intended purpose of the Original Securities.
(b) The applicable Issuer shall deliver to the Custodian five signed,
unauthenticated and undated certificates with no holder designated,
each of which when completed representing a beneficial interest in such
Issuer's Securities (the "Replacement Securities"). The Custodian shall
have no responsibility for the genuineness, validity, market value,
title or sufficiency for any intended purpose of the Replacement
Securities.
3. Timing of Release from Custody. Upon receipt of a signed transfer
notice in the form of Exhibit B to be delivered in connection with the
Purchaser's transfer of all or any portion of an Issuer's Securities,
on the effective date set forth in such transfer notice, the Custodian
shall:
(a) Deliver the Original Securities certificate corresponding to the Issuer
identified in the transfer notice to Wilmington Trust Company, as
Institutional Trustee under the Amended and Restated Declaration of
Trust, dated as of the date of the applicable Joinder Agreement, among
the Institutional Trustee, the Issuer and the administrators named
therein (the "Declaration") or as Trustee under the Indenture, dated as
of the date of the applicable Joinder Agreement, between the Issuer and
the Trustee (the "Indenture"), as applicable, for the purpose of
canceling the applicable Original Securities certificate in accordance
with the terms of the Issuer's Amended and Restated Declaration of
Trust or Indenture, as applicable; and
(b) Deliver the Replacement Securities certificate(s) corresponding to the
Issuer identified in the transfer notice in the amount designated in
and in accordance with the transfer notice for the purpose of
completing and authenticating the applicable Replacement Securities
certificate(s) in accordance with the terms of the Issuer's Declaration
or Indenture, as applicable.
The initial term of this Agreement shall be one year (the "Initial
Term"). Unless FTN Financial Capital Markets or ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇, Inc. shall otherwise notify the Custodian in writing, upon
expiration of the Initial Term, this Agreement shall automatically
renew for an additional one-year term and shall continue to
automatically renew for succeeding one-year terms until terminated.
Upon termination of this Agreement, the Custodian and the Interested
Parties shall be released from all obligations hereunder, except for
the indemnification obligations set forth in paragraphs 5(b) and 5(c)
hereof.
4. Concerning the Custodian.
(a) Each Interested Party acknowledges and agrees that the Custodian
(i) shall not be responsible for any of the agreements
referred to or described herein (including without limitation any
Issuer's Declaration or Indenture relating to such
Issuer's Securities), or for determining or compelling compliance
therewith, and shall not otherwise be bound thereby, (ii)
shall be obligated only for the performance of such duties as are
expressly and specifically set forth in this Agreement on
its part to be performed, each of which are ministerial (and shall
not be construed to be fiduciary) in nature, and no
implied duties or obligations of any kind shall be read into this
Agreement against or on the part of the Custodian, (iii)
shall not be obligated to take any legal or other action hereunder
which might in its judgment involve or cause it to incur
any expense or liability unless it shall have been furnished with
acceptable indemnification, (iv) may rely on and shall be
protected in acting or refraining from acting upon any written notice,
instruction, instrument, statement, certificate,
request or other document furnished to it hereunder and believed by it
to be genuine and to have been signed or presented by
the proper person, and shall have no responsibility for determining
the accuracy thereof, and (v) may consult counsel
satisfactory to it, including in-house counsel, and the opinion or
advice of such counsel in any instance shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and
in accordance with the opinion or advice of such counsel.
(b) The Custodian shall not be liable to anyone for any action taken or
omitted to be taken by it hereunder except in the case of the
Custodian's negligence or willful misconduct in breach of the terms of
this Agreement. In no event shall the Custodian be liable for indirect,
punitive, special or consequential damage or loss (including but not
limited to lost profits) whatsoever, even if the Custodian has been
informed of the likelihood of such loss or damage and regardless of the
form of action.
(c) The Custodian shall have no more or less responsibility or liability on
account of any action or omission of any book-entry depository,
securities intermediary or other subcustodian employed by the Custodian
than any such book-entry depository, securities intermediary or other
subcustodian has to the Custodian, except to the extent that such
action or omission of any book-entry depository, securities
intermediary or other subcustodian was caused by the Custodian's own
negligence, bad faith or willful misconduct in breach of this
Agreement.
(d) The recitals contained herein shall be taken as the statements of each
of the Issuers and the Purchaser, and the Custodian assumes no
responsibility for the correctness of the same. The Custodian makes no
representations as to the validity or sufficiency of this Agreement or
the Securities. The Custodian shall not be accountable for the use or
application by any of the Issuers or the Purchaser of any Securities or
the proceeds of any Securities.
5. Compensation, Expense Reimbursement and Indemnification.
(a) The Custodian shall be compensated pursuant to a separate fee
agreement.
(b) Each of the Interested Parties agrees, jointly and severally, to
reimburse the Custodian on demand for all costs and expenses incurred
in connection with the administration of this Agreement or the
performance or observance of its duties hereunder which are in excess
of its customary compensation for normal services hereunder, including
without limitation, payment of any legal fees and expenses incurred by
the Custodian in connection with resolution of any claim by any party
hereunder.
(c) Each of the Interested Parties covenants and agrees, jointly and
severally, to indemnify the Custodian (and its directors,
officers and employees) and hold it (and such directors, officers
and employees) harmless from and against any loss,
liability, damage, cost and expense of any nature incurred by the
Custodian arising out of or in connection with this
Agreement or with the administration of its duties hereunder,
including but not limited to attorney's fees and other costs
and expenses of defending or preparing to defend against any claim of
liability unless and except to the extent such loss,
liability, damage, cost and expense shall be caused by the Custodian's
negligence, bad faith, or willful misconduct. The
provisions in this paragraph 5 shall survive the expiration of
this Agreement and the resignation or removal of the
Custodian.
6. Voting Rights. The Custodian shall be under no obligation to preserve,
protect or exercise rights in the Original Securities, and shall be
responsible only for reasonable measures to maintain the physical
safekeeping thereof, and otherwise to perform and observe such duties
on its part as are expressly set forth in this Agreement. The Custodian
shall not be responsible for forwarding to any Interested Party,
notifying any Interested Party with respect to, or taking any action
with respect to, any notice, solicitation or other document or
information, written or otherwise, received from an issuer or other
person with respect to the Original Securities, including but not
limited to, proxy material, tenders, options, the pendency of calls and
maturities and expiration of rights.
7. Resignation. The Custodian may at any time resign as Custodian
hereunder by giving thirty (30) days' prior written notice of
resignation to each of the Interested Parties. Prior to the effective
date of the resignation as specified in such notice, the Interested
Parties will issue to the Custodian a written instruction authorizing
redelivery of the Original Securities and the Replacement Securities to
a bank or trust company that they select as successor to the Custodian
hereunder. If, however, the Interested Parties shall fail to name such
a successor custodian within twenty days after the notice of
resignation from the Custodian, the Purchasers shall be entitled to
name such successor custodian. If no successor custodian is named by
the Interested Parties or the Purchasers, the Custodian may apply to a
court of competent jurisdiction for appointment of a successor
custodian.
8. Dispute Resolution. It is understood and agreed that should any dispute
arise with respect to the delivery, ownership, right of possession,
and/or disposition of the Original Securities or the Replacement
Securities, or should any claim be made upon the Custodian, the
Original Securities or the Replacement Securities by a third party, the
Custodian upon receipt of notice of such dispute or claim is authorized
and shall be entitled (at its sole option and election) to retain in
its possession without liability to anyone, all or any of said Original
Securities and Replacement Securities until such dispute shall have
been settled either by the mutual written agreement of the parties
involved or by a final order, decree or judgment of a court in the
United States of America, the time for perfection of an appeal of such
order, decree or judgment having expired. The Custodian may, but shall
be under no duty whatsoever to, institute or defend any legal
proceedings which relate to the Original Securities and Replacement
Securities.
9. Consent to Jurisdiction and Service. Each of the Interested Parties
hereby absolutely and irrevocably consents and submits to the
jurisdiction of the courts in the State of Delaware and of any Federal
court located in said State in connection with any actions or
proceedings brought against any of the Interested Parties (or each of
them) by the Custodian arising out of or relating to this Agreement. In
any such action or proceeding, the Interested Parties each hereby
absolutely and irrevocably (i) waives any objection to jurisdiction or
venue, (ii) waives personal service of any summons, complaint,
declaration or other process, and (iii) agrees that the service thereof
may be made by certified or registered first-class mail directed to
such party, as the case may be, at their respective addresses in
accordance with paragraph 10 hereof.
10. Force Majeure. The Custodian shall not be responsible for delays or
failures in performance resulting from acts beyond its control. Such
acts shall include but not be limited to acts of God, strikes,
lockouts, riots, acts of war, epidemics, governmental regulations
superimposed after the fact, fire, communication line failures,
computer viruses, power failures, earthquakes or other disasters.
11. Notices.
(a) Any notice permitted or required hereunder shall be in writing, and
shall be sent by personal delivery, overnight delivery by a recognized
courier or delivery service, mailed by registered or certified mail,
return receipt requested, postage prepaid, or by confirmed facsimile
accompanied by mailing of the original on the same day by first class
mail, postage prepaid, in each case the parties at their address set
forth below (or to such other address as any such party may hereafter
designate by written notice to the other parties).
If to an Issuer, to the address appearing on such Issuer's Joinder Agreement
If to the Purchaser, to the address appearing on such Purchaser's Joinder
Agreement
If to the Custodian:
Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ - Corporate Trust Administration
Fax: ▇▇▇-▇▇▇-▇▇▇▇
12. Miscellaneous.
(a) Binding Effect. This Agreement shall be binding upon the respective
parties hereto and their heirs, executors, successors and assigns.
(b) Modifications. This Agreement may not be altered or modified without
the express written consent of the parties hereto. No course of conduct
shall constitute a waiver of any of the terms and conditions of this
Agreement, unless such waiver is specified in writing, and then only to
the extent so specified. A waiver of any of the terms and conditions of
this Agreement on one occasion shall not constitute a waiver of the
other terms of this Agreement, or of such terms and conditions on any
other occasion.
(c) Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware.
(d) Reproduction of Documents. This Agreement and all documents relating
thereto, including, without limitation, (a) consents, waivers and
modifications which may hereafter be executed, and (b) certificates and
other information previously or hereafter furnished, may be reproduced
by any photographic, photostatic, microfilm, optical disk, micro-card,
miniature photographic or other similar process. The parties agree that
any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made
by a party in the regular course of business, and that any enlargement,
facsimile or further reproduction of such reproduction shall likewise
be admissible in evidence.
(e) Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
signatures appear on the following page
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day first above written.
WILMINGTON TRUST COMPANY
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Print Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Financial Services Officer
A-A-A-2
1218499.1
MFB Corp./Placement Agreement
EXHIBIT A TO MASTER CUSTODIAN AGREEMENT
FORM OF JOINDER AGREEMENT
July 29, 2005
This Joinder Agreement (this "Agreement") is entered into as of July
29, 2005 by First Tennessee Bank National Association (the "Purchaser") and MFB
Corp. (the "Issuer").
RECITALS
A. Wilmington Trust Company (the "Custodian") is party to that certain
Master Custodian Agreement dated as of May 27, 2004 (the "Custodian Agreement").
B. The Custodian Agreement provides that certain financial institutions
that have issued securities (or whose statutory trust subsidiaries have issued
securities) and the Purchaser of such securities will join into the Custodian
Agreement pursuant to the terms of a joinder agreement.
C. On the date hereof, Issuer is issuing securities to the Purchaser
and the Issuer and the Purchaser desire to enter into this Agreement to
facilitate the subsequent transfer of the Issuer's securities by the Custodian.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
herein contained and other good and valuable consideration (the receipt,
adequacy and sufficiency of which are hereby acknowledged by the Issuer by its
execution hereof), the Issuer agrees as follows:
1. Joinder. The Issuer and Purchaser hereby join in the Custodian
Agreement and agree to be subject to, and bound by, the terms and provisions of
the Custodian Agreement that are ascribed to "Issuers" and "Purchasers"
respectively therein to the same extent as if the Issuer and Purchaser had
signed the Custodian Agreement as an original party thereto.
2. Notice. Any notice permitted or required to be sent to an Issuer
under the Custodian Agreement shall be sent to the following address:
MFB Corp.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Any notice permitted or required to be sent to a Purchaser under the
Custodian Agreement shall be sent to the following address:
First Tennessee Bank National Association
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
3. Termination. This Agreement and the Purchaser's and Issuer's
respective rights and obligations under the Custodian Agreement shall terminate
upon the transfer of all of Issuer's securities pursuant to the Custodian
Agreement.
4. Entire Agreement. This Agreement and the Custodian Agreement
constitute the entire agreement among the Purchaser, Issuer and the Custodian
pertaining to the subject matter hereof.
IN WITNESS WHEREOF, the Issuer and Purchaser have executed this
Agreement as of the day first above written.
MFB CORP.
By:
-----------------------------------------------------------
Name:
---------------------------------------------------------
Title:
--------------------------------------------------------
FIRST TENNESSEE BANK NATIONAL ASSOCIATION
By:
-----------------------------------------------------------
Name:
---------------------------------------------------------
Title:
--------------------------------------------------------
A-A-B-1
1218499.1
MFB Corp./Placement Agreement
EXHIBIT B TO MASTER CUSTODIAN AGREEMENT
FORM OF TRANSFER NOTICE
[DATE]
Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration
Dear Sir or Madam:
The undersigned hereby notifies you of the transfer of [________] of
the Capital Securities of MFBC Statutory Trust I, such transfer to be effective
on [DATE OF TRANSFER]. In accordance with Section 7.9 of the Placement Agreement
dated July 29, 2005 between the Offerors and the placement agents named therein
(the "Placement Agreement"), periodic reports shall be delivered to
[_______________] in accordance with such Section 7.9 during the term of the
Capital Securities, in the form attached thereto. Capitalized terms used in this
notice and not otherwise defined shall have the meanings ascribed to such terms
in the Placement Agreement.
The undersigned hereby instructs you as Custodian to deliver the
Original Securities certificate to Wilmington Trust Company, as Institutional
Trustee (the "Trustee") under the Amended and Restated Trust Agreement dated
July 29, 2005 among the Trustee, MFB Corp. and the administrative trustees named
therein (the "Trust Agreement") for cancellation in accordance with the terms of
the Trust Agreement and to deliver the Replacement Securities certificate to the
Trustee for authentication in accordance with the terms of the Trust Agreement.
By copy of this notice, the Institutional Trustee is hereby instructed
to make the Replacement Securities certificate registered to [NAME, ADDRESS AND
IDENTITY OF TRANSFEREE] in the liquidation amount of [_________] and bearing the
identification number "CUSIP NO. [__________]" and to authenticate and deliver
the Replacement Securities certificate to [_____________].
FIRST TENNESSEE BANK NATIONAL ASSOCIATION
By:
-------------------------------------------------------------------
Name:
-----------------------------------------------------------------
Title:
----------------------------------------------------------------
cc: MFB Corp.
Wilmington Trust Company, as Trustee
B-1-4
1218499.1
MFB Corp./Placement Agreement
EXHIBIT B-1
FORM OF COMPANY COUNSEL OPINION
July 29, 2005
First Tennessee Bank National Association FTN Financial Capital Markets
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Wilmington Trust Company ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
▇▇▇▇▇▇ Square North ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Wilmington, Delaware 19890-1600
Ladies and Gentlemen:
We have acted as counsel to MFB Corp. (the "Company"), an Indiana
corporation in connection with a certain Placement Agreement, dated July 29,
2005, (the "Placement Agreement"), between the Company and MFBC Statutory Trust
I (the "Trust"), on one hand, and FTN Financial Capital Markets and ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. (the "Placement Agents"), on the other hand. Pursuant to
the Placement Agreement, and subject to the terms and conditions stated therein,
the Trust will issue and sell to First Tennessee Bank National Association (the
"Purchaser"), $5,000,000.00 aggregate principal amount of Fixed/Floating Rate
Capital Securities (liquidation amount $1,000.00 per capital security) (the
"Capital Securities").
Capitalized terms used herein and not otherwise defined shall have the
same meanings ascribed to them in the Placement Agreement.
The law covered by the opinions expressed herein is limited to the law
of the United States of America and of the State of Indiana.
We have made such investigations of law as, in our judgment, were
necessary to render the following opinions. We have also reviewed (a) the
Company's Articles of Incorporation, as amended, and its By-Laws, as amended;
and (b) such corporate documents, records, information and certificates of the
Company and the Subsidiaries, certificates of public officials or government
authorities and other documents as we have deemed necessary or appropriate as a
basis for the opinions hereinafter expressed. As to certain facts material to
our opinions, we have relied, with your permission, upon statements,
certificates or representations, including those delivered or made in connection
with the above-referenced transaction, of officers and other representatives of
the Company and the Subsidiaries and the Trust.
As used herein, the phrases "to the best of our knowledge" or "known to
us" or other similar phrases mean the actual knowledge of the attorneys who have
had active involvement in the transactions described above or who have prepared
or signed this opinion letter, or who otherwise have devoted substantial
attention to legal matters for the Company.
Based upon and subject to the foregoing and the further qualifications
set forth below, we are of the opinion as of the date hereof that:
1. The Company is validly existing and in good standing under the laws
of the State of Indiana and is duly registered as a savings and loan holding
company under the Home Owners' Loan Act of 1933, as amended. Each of the
Significant Subsidiaries is validly existing and in good standing under the laws
of its jurisdiction of organization. Each of the Company and the Significant
Subsidiaries has full corporate power and authority to own or lease its
properties and to conduct its business as such business is currently conducted
in all material respects. To the best of our knowledge, all outstanding shares
of capital stock of the Significant Subsidiaries have been duly authorized and
validly issued, and are fully paid and nonassessable except to the extent such
shares may be deemed assessable under 12 U.S.C. Section 1831o or 12 U.S.C.
Section 55, and are owned of record and beneficially, directly or indirectly, by
the Company.
2. The issuance, sale and delivery of the Debentures in accordance with
the terms and conditions of the Placement Agreement and the Operative Documents
have been duly authorized by all necessary actions of the Company. The issuance,
sale and delivery of the Debentures by the Company and the issuance, sale and
delivery of the Capital Securities and the Common Securities by the Trust do not
give rise to any preemptive or other rights to subscribe for or to purchase any
shares of capital stock or equity securities of the Company or the Significant
Subsidiaries pursuant to the corporate Articles of Incorporation or Charter,
By-Laws or other governing documents of the Company or the Significant
Subsidiaries, or, to the best of our knowledge, any agreement or other
instrument to which either the Company or the Subsidiaries is a party or by
which the Company or the Significant Subsidiaries may be bound.
3. The Company has all requisite corporate power to enter into and
perform its obligations under the Placement Agreement and the Subscription
Agreement, and the Placement Agreement and the Subscription Agreement have been
duly and validly authorized, executed and delivered by the Company and
constitute the legal, valid and binding obligations of the Company enforceable
in accordance with their terms, except as the enforcement thereof may be limited
by general principles of equity and by bankruptcy or other laws affecting
creditors' rights generally, and except as the indemnification and contribution
provisions thereof may be limited under applicable laws and certain remedies may
not be available in the case of a non-material breach.
4. Each of the Indenture, the Trust Agreement and the Guarantee
Agreement has been duly authorized, executed and delivered by the Company, and
is a valid and legally binding obligation of the Company enforceable in
accordance with its terms, subject to the effect of bankruptcy, insolvency,
reorganization, receivership, moratorium and other laws affecting the rights and
remedies of creditors generally and of general principles of equity.
5. The Debentures have been duly authorized, executed and delivered by
the Company, are entitled to the benefits of the Indenture and are legal, valid
and binding obligations of the Company enforceable against the Company in
accordance with their terms, subject to the effect of bankruptcy, insolvency,
reorganization, receivership, moratorium and other laws affecting the rights and
remedies of creditors generally and of general principles of equity.
6. To the best of our knowledge, neither the Company, the Trust, nor
any of the Subsidiaries is in breach or violation of, or default under, with or
without notice or lapse of time or both, its Articles of Incorporation or
Charter, By-Laws or other governing documents (including without limitation, the
Trust Agreement). The execution, delivery and performance of the Placement
Agreement and the Operative Documents and the consummation of the transactions
contemplated by the Placement Agreement and the Operative Documents do not and
will not (i) result in the creation or imposition of any material lien, claim,
charge, encumbrance or restriction upon any property or assets of the Company or
the Subsidiaries, or (ii) conflict with, constitute a material breach or
violation of, or constitute a material default under, with or without notice or
lapse of time or both, any of the terms, provisions or conditions of (A) the
Articles of Incorporation or Charter, By-Laws or other governing documents of
the Company or the Subsidiaries, or (B) to the best of our knowledge, any
material contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease, franchise, license or any other agreement or instrument to which
the Company or the Subsidiaries is a party or by which any of them or any of
their respective properties may be bound or (C) any order, decree, judgment,
franchise, license, permit, rule or regulation of any court, arbitrator,
government, or governmental agency or instrumentality, domestic or foreign,
known to us having jurisdiction over the Company or the Subsidiaries or any of
their respective properties which, in the case of each of (i) or (ii) above, is
material to the Company and the Subsidiaries on a consolidated basis.
7. Except for filings, registrations or qualifications that may be
required by applicable securities laws, no authorization, approval, consent or
order of, or filing, registration or qualification with, any person (including,
without limitation, any court, governmental body or authority) is required under
the laws of the State of Indiana in connection with the transactions
contemplated by the Placement Agreement and the Operative Documents in
connection with the offer and sale of the Capital Securities as contemplated by
the Placement Agreement and the Operative Documents.
8. To the best of our knowledge (i) no action, suit or proceeding at
law or in equity is pending or threatened to which the Company, the Trust or the
Subsidiaries are or may be a party, and (ii) no action, suit or proceeding is
pending or threatened against or affecting the Company, the Trust or the
Subsidiaries or any of their properties, before or by any court or governmental
official, commission, board or other administrative agency, authority or body,
or any arbitrator, wherein an unfavorable decision, ruling or finding could
reasonably be expected to have a material adverse effect on the consummation of
the transactions contemplated by the Placement Agreement and the Operative
Documents or the issuance and sale of the Capital Securities as contemplated
therein or the condition (financial or otherwise), earnings, affairs, business,
or results of operations of the Company, the Trust and the Subsidiaries on a
consolidated basis.
9. Assuming the truth and accuracy of the representations and
warranties of the Placement Agents in the Placement Agreement and the Purchaser
in the Subscription Agreement, it is not necessary in connection with the
offering, sale and delivery of the Capital Securities, the Debentures and the
Guarantee Agreement (or the Guarantee) to register the same under the Securities
Act of 1933, as amended, under the circumstances contemplated in the Placement
Agreement and the Subscription Agreement.
10. Neither the Company nor the Trust is or after giving effect to the
offering and sale of the Capital Securities and the consummation of the
transactions described in the Placement Agreement will be, an "investment
company" or an entity "controlled" by an "investment company," in each case
within the meaning of the Investment Company Act of 1940, as amended, without
regard to Section 3(c) of such Act.
The opinion expressed in the first two sentences of numbered paragraph
1 of this opinion is based solely upon certain certificates and confirmations
issued by the applicable governmental officer or authority with respect to each
of the Company and the Significant Subsidiaries.
With respect to the foregoing opinions, since no member of this firm is
actively engaged in the practice of law in the States of Delaware or New York,
we do not express any opinions as to the laws of such states and have (i)
relied, with your approval, upon the opinion of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger, P.A.
with respect to matters of Delaware law and (ii) assumed, with your approval and
without rendering any opinion to such effect, that the laws of the State of New
York, in all respects material to this opinion, are substantively identical to
the laws of the State of Indiana, without regard to conflict of law provisions.
The opinions expressed herein are rendered to you solely pursuant to
Section 3.1(a) of the Placement Agreement. As such, they may be relied upon by
you only and may not be used or relied upon by any other person for any purpose
whatsoever without our prior written consent.
Very truly yours,
B-2-6
1218499.1
MFB Corp./Placement Agreement
EXHIBIT B-2
FORM OF DELAWARE COUNSEL OPINION
To Each of the Persons
Listed on Schedule A Hereto
Re: MFBC Statutory Trust I
Ladies and Gentlemen:
We have acted as special Delaware counsel for MFBC Statutory
Trust I, a Delaware statutory trust (the "Trust"), in connection with the
matters set forth herein. At your request, this opinion is being furnished to
you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust (the "Certificate of
Trust"), as filed in the office of the Secretary of State of the State of
Delaware (the "Secretary of State") on July 13, 2005;
(b) The Declaration of Trust, dated as of July 13, 2005, among
MFB Corp., an Indiana corporation (the "Company"), Wilmington Trust Company, a
Delaware banking corporation ("WTC"), as trustee and the administrators named
therein (the "Administrators");
(c) The Amended and Restated Declaration of Trust of the
Trust, dated as of July 29, 2005 (including the form of Capital Securities
Certificate attached thereto as Exhibit A-1 and the terms of the Capital
Securities attached as Annex I) (the "Declaration of Trust"), among the Company,
as sponsor, WTC, as Delaware trustee (the "Delaware Trustee") and institutional
trustee (the "Institutional Trustee"), the Administrators and the holders, from
time to time, of undivided beneficial interests in the assets of the Trust;
(d) The Placement Agreement, dated July 29, 2005 (the
"Placement Agreement"), among the Company, the Trust, and FTN Financial Capital
Markets and ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc., as placement agents;
(e) The Subscription Agreement, dated July 29, 2005 (the
"Subscription Agreement"), among the Trust, the Company and First Tennessee Bank
National Association (the documents identified in items (c) through (e) being
collectively referred to as the "Operative Documents");
(f) The Capital Securities being issued on the date hereof
(the "Capital Securities");
(g) The Common Securities being issued on the date hereof (the
"Common Securities") (the documents identified in items (f) and (g) being
collectively referred to as the "Trust Securities"); and
(h) A Certificate of Good Standing for the Trust, dated
July 28, 2005, obtained from the Secretary of State.
Capitalized terms used herein and not otherwise defined are
used as defined in the Declaration of Trust, except that reference herein to any
document shall mean such document as in effect on the date hereof. This opinion
is being delivered pursuant to Section 3.1 of the Placement Agreement.
For purposes of this opinion, we have not reviewed any
documents other than the documents listed in paragraphs (a) through (h) above.
In particular, we have not reviewed any document (other than the documents
listed in paragraphs (a) through (h) above) that is referred to in or
incorporated by reference into the documents reviewed by us. We have assumed
that there exists no provision in any document that we have not reviewed that is
inconsistent with the opinions stated herein. We have conducted no independent
factual investigation of our own but rather have relied solely upon the
foregoing documents, the statements and information set forth therein and the
additional matters recited or assumed herein, all of which we have assumed to be
true, complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed
(i) the authenticity of all documents submitted to us as authentic originals,
(ii) the conformity with the originals of all documents submitted to us as
copies or forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the
Declaration of Trust constitutes the entire agreement among the parties thereto
with respect to the subject matter thereof, including with respect to the
creation, operation, and termination of the Trust, and that the Declaration of
Trust and the Certificate of Trust are in full force and effect and have not
been amended further, (ii) that there are no proceedings pending or
contemplated, for the merger, consolidation, liquidation, dissolution or
termination of the Trust, (iii) except to the extent provided in paragraph 1
below, the due creation, due formation or due organization, as the case may be,
and valid existence in good standing of each party to the documents examined by
us under the laws of the jurisdiction governing its creation, formation or
organization, (iv) that each party to the documents examined by us is qualified
to do business in each jurisdiction where such qualification is required
generally or necessary in order for such party to enforce its rights under the
documents examined by us, (v) the legal capacity of each natural person who is a
party to the documents examined by us, (vi) except to the extent set forth in
paragraph 2 below, that each of the parties to the documents examined by us has
the power and authority to execute and deliver, and to perform its obligations
under, such documents, (vii) except to the extent provided in paragraph 3 below,
that each of the parties to the documents examined by us has duly authorized,
executed and delivered such documents, (viii) the receipt by each Person to whom
a Capital Security is to be issued by the Trust (the "Capital Security Holders")
of a Capital Security Certificate for the Capital Security and the payment for
the Capital Securities acquired by it, in accordance with the Declaration of
Trust and the Subscription Agreement, (ix) that the Capital Securities are
issued and sold to the Holders of the Capital Securities in accordance with the
Declaration of Trust and the Subscription Agreement, (x) the receipt by the
Person (the "Common Securityholder") to whom the common securities of the Trust
representing common undivided beneficial interests in the assets of the Trust
(the "Common Securities" and, together with the Capital Securities, the "Trust
Securities") are to be issued by the Trust of a Common Security Certificate for
the Common Securities and the payment for the Common Securities acquired by it,
in accordance with the Declaration of Trust, (xi) that the Common Securities are
issued and sold to the Common Securityholder in accordance with the Declaration
of Trust, (xii) that each of the parties to the documents reviewed by us has
agreed to and received the stated consideration for the incurrence of its
obligations under such documents and (xiii) that each of the documents reviewed
by us (other than the Declaration of Trust) is a legal, valid, binding and
enforceable obligation of the parties thereto in accordance with the terms
thereof. We have not participated in the preparation of any offering materials
with respect to the Trust Securities and assume no responsibility for its
contents.
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder that are currently in effect.
We express no opinion as to (i) the effect of suretyship
defenses, or defenses in the nature thereof, with respect to the obligations of
any applicable guarantor, joint obligor, surety, accommodation party, or other
secondary obligor or any provisions of the Declaration of Trust with respect to
indemnification or contribution and (ii) the accuracy or completeness of any
exhibits or schedules to the Operative Documents. No opinion is given herein as
to the choice of law or internal substantive rules of law that any court or
other tribunal may apply to the transactions contemplated by the Operative
Documents.
We express no opinion as to the enforceability of any
particular provision of the Declaration of Trust or the other Operative
Documents relating to remedies after default.
We express no opinion as to the enforceability of any
particular provision of any of the Operative Documents relating to (i) waivers
of rights to object to jurisdiction or venue, or consents to jurisdiction or
venue, (ii) waivers of rights to (or methods of) service of process, or rights
to trial by jury, or other rights or benefits bestowed by operation of law,
(iii) waivers of any applicable defenses, setoffs, recoupments, or
counterclaims, (iv) waivers or variations of provisions which are not capable of
waiver or variation under the Uniform Commercial Code ("UCC") of the State, (v)
the grant of powers of attorney to any person or entity, or (vi) exculpation or
exoneration clauses, indemnity clauses, and clauses relating to releases or
waivers of unmatured claims or rights.
We have made no examination of, and no opinion is given herein
as to the Trustee's or the Trust's title to or other ownership rights in, or the
existence of any liens, charges or encumbrances on, or adverse claims against,
any asset or property held by the Institutional Trustee or the Trust. We express
no opinion as to the creation, validity, attachment, perfection or priority of
any mortgage, security interest or lien in any asset or property held by the
Institutional Trustee or the Trust.
We express no opinion as to the effect of events occurring,
circumstances arising, or changes of law becoming effective or occurring, after
the date hereof on the matters addressed in this opinion letter, and we assume
no responsibility to inform you of additional or changed facts, or changes in
law, of which we may become aware.
We express no opinion as to any requirement that any party to
the Operative Documents (or any other persons or entities purportedly entitled
to the benefits thereof) qualify or register to do business in any jurisdiction
in order to be able to enforce its rights thereunder or obtain the benefits
thereof.
Based upon the foregoing, and upon our examination of such
questions of law and statutes of the State of Delaware as we have considered
necessary or appropriate, and subject to the assumptions, qualifications,
limitations and exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in
good standing as a statutory trust under the Delaware Statutory Trust Act (12
Del. C. ss. 3801, et seq.) (the "Act"). All filings required under the laws of
the State of Delaware with respect to the creation and valid existence of the
Trust as a statutory trust have been made.
2. Under the Declaration of Trust and the Act, the Trust has
the trust power and authority to (A) execute and deliver the Operative
Documents, (B) perform its obligations under such Operative Documents and (C)
issue the Trust Securities.
3. The execution and delivery by the Trust of the Operative
Documents, and the performance by the Trust of its obligations thereunder, have
been duly authorized by all necessary trust action on the part of the Trust.
4. The Declaration of Trust constitutes a legal, valid and
binding obligation of the Company, the Trustees and the Administrators, and is
enforceable against the Company, the Trustees and the Administrators, in
accordance with its terms.
5. Each of the Operative Documents constitutes a legal, valid
and binding obligation of the Trust, enforceable against the Trust, in
accordance with its terms.
6. The Capital Securities have been duly authorized for
issuance by the Declaration of Trust, and, when duly executed and delivered to
and paid for by the purchasers thereof in accordance with the Declaration of
Trust, the Subscription Agreement and the Placement Agreement, the Capital
Securities will be validly issued, fully paid and, subject to the qualifications
set forth in paragraph 8 below, nonassessable undivided beneficial interests in
the assets of the Trust and will entitle the Capital Securities Holders to the
benefits of the Declaration of Trust. The issuance of the Capital Securities is
not subject to preemptive or other similar rights under the Act or the
Declaration of Trust.
7. The Common Securities have been duly authorized for
issuance by the Declaration of Trust and, when duly executed and delivered to
the Company as Common Security Holder in accordance with the Declaration of
Trust, will be validly issued, fully paid and, subject to paragraph 8 below and
Section 9.1(b) of the Declaration of Trust (which provides that the Holder of
the Common Securities are liable for debts and obligations of Trust),
nonassessable undivided beneficial interests in the assets of the Trust and will
entitle the Common Security Holder to the benefits of the Declaration of Trust.
The issuance of the Common Securities is not subject to preemptive or other
similar rights under the Act or the Declaration of Trust.
8. Under the Declaration of Trust and the Act, the Holders of
the Capital Securities, as beneficial owners of the Trust, will be entitled to
the same limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware. We note that the Holders of the Capital Securities and the Holder
of the Common Securities may be obligated, pursuant to the Declaration of Trust,
(A) to provide indemnity and/or security in connection with and pay taxes or
governmental charges arising from transfers or exchanges of Capital Security
Certificates and the issuance of replacement Capital Security Certificates, and
(B) to provide security or indemnity in connection with requests of or
directions to the Institutional Trustee to exercise its rights and powers under
the Declaration of Trust.
9. Neither the execution, delivery and performance by the
Trust of the Operative Documents, nor the consummation by the Trust of any of
the transactions contemplated thereby, requires the consent or approval of, the
authorization of, the withholding of objection on the part of, the giving of
notice to, the filing, registration or qualification with, or the taking of any
other action in respect of, any governmental authority or agency of the State of
Delaware, other than the filing of the Certificate of Trust with the Secretary
of State (which Certificate of Trust has been duly filed).
10. Neither the execution, delivery and performance by the
Trust of the Trust Documents, nor the consummation by the Trust of the
transactions contemplated thereby, (i) is in violation of the Declaration of
Trust or of any law, rule or regulation of the State of Delaware applicable to
the Trust or (ii) to the best of our knowledge, without independent
investigation, violates, contravenes or constitutes a default under, or results
in a breach of or in the creation of any lien (other than as permitted by the
Operative Documents) upon any property of the Trust under any indenture,
mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan
or credit agreement, license or other agreement or instrument to which the Trust
is a party or by which it is bound.
11. Assuming that the Trust will not be taxable as a
corporation for federal income tax purposes, but rather will be classified for
such purposes as a grantor trust under Subpart E, Part I of Subchapter J of the
Internal Revenue Code of 1986, as amended, the Trust will not be subject to any
tax, fee or governmental charge under the laws of the State of Delaware.
The opinions expressed in paragraph 4, 5, 6, 7 and 8 above are
subject, as to enforcement, to the effect upon the Declaration of Trust of (i)
bankruptcy, insolvency, moratorium, receivership, reorganization, liquidation,
fraudulent conveyance and transfer, and other similar laws relating to or
affecting the rights and remedies of creditors generally, (ii) principles of
equity, including applicable law relating to fiduciary duties (regardless of
whether considered and applied in a proceeding in equity or at law), and (iii)
the effect of applicable public policy on the enforceability of provisions
relating to indemnification or contribution.
In basing the opinions set forth herein on "our knowledge,"
the words "our knowledge" signify that no information has come to the attention
of the attorneys in the firm who are directly involved in the representation of
the Trust in this transaction that would give us actual knowledge that any such
opinions are not accurate. Except as otherwise stated herein, we have undertaken
no independent investigation or verification of such matters.
We consent to your relying as to matters of Delaware law upon
this opinion in connection with the Placement Agreement. We also consent to
▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇.▇.'s and ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP's relying as to
matters of Delaware law upon this opinion in connection with opinions to be
rendered by them on the date hereof pursuant to the Placement Agreement. Except
as stated above, without our prior written consent, this opinion may not be
furnished or quoted to, or relied upon by, any other Person for any purpose.
Very truly yours,
SCHEDULE A
Wilmington Trust Company
FTN Financial Capital Markets
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
First Tennessee Bank National Association
MFB Corp.
B-3-1
1218499.1
MFB Corp./Placement Agreement
EXHIBIT B-3
TAX COUNSEL OPINION ITEMS
1. The Debentures will be classified as indebtedness of the
Company for U.S. federal income tax purposes.
2. The Trust will be characterized as a grantor trust and not as
an association taxable as a corporation for U.S. federal
income tax purposes.
B-3-4
1218499.1
MFB Corp./Placement Agreement
▇▇▇▇▇, Rice & ▇▇▇▇▇▇▇▇, ▇.▇.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Re: Representations Concerning the Issuance of Junior Subordinated
Deferrable Interest Debentures (the "Debentures") to
MFBC Statutory Trust I (the "Trust") and Sale of Trust Securities (the "Trust
Securities") of the Trust
Ladies and Gentlemen:
In accordance with your request, MFB Corp. (the "Company") hereby makes
the following representations in connection with the preparation of your opinion
letter as to the United States federal income tax consequences of the issuance
by the Company of the Debentures to the Trust and the sale of the Trust
Securities.
Company hereby represents that:
1. The sole assets of the Trust will be the Debentures, any interest paid on the
Debentures to the extent not distributed, proceeds of the Debentures, or any of
the foregoing.
2. The Company intends to use the net proceeds from the sale of the Debentures
for general corporate purposes.
3. The Trust was not formed to conduct any trade or business and is not
authorized to conduct any trade or business. The Trust exists for the exclusive
purposes of (i) issuing and selling the Trust Securities, (ii) using the
proceeds from the sale of Trust Securities to acquire the Debentures, and (iii)
engaging only in activities necessary or incidental thereto.
4. The Company has not entered into an agency agreement with the Trust or
authorized the trustee to act as its agent in dealing with third parties. To
Company's knowledge, after due inquiry, the Trust has not acted as the agent of
the Company or of anyone else in dealing with third parties.
5. The Trust was formed to facilitate direct investment in the assets of the
Trust, and the existence of multiple classes of ownership is incidental to that
purpose. There is no intent to provide holders of such interests in the Trust
with diverse interests in the assets of the Trust.
6. The Company intends to create a debtor-creditor relationship between the
Company, as debtor, and the Trust, as a creditor, upon the issuance and sale of
the Debentures to the Trust by the Company. The Company will (i) record and at
all times continue to reflect the Debentures as indebtedness on its separate
books and records for financial accounting purposes, and (ii) treat the
Debentures as indebtedness for all United States tax purposes.
7. During each year, the Trust's income will consist solely of payments made by
the Company with respect to the Debentures. Such payments will not be derived
from the active conduct of a financial business by the Trust. Both the Company's
obligation to make such payments and the measurement of the amounts payable by
the Company are defined by the terms of the Debentures. Neither the Company's
obligation to make such payments nor the measurement of the amounts payable by
the Company is dependent on income or profits of Company or any affiliate of the
Company.
8. The Company expects that it will be able to make, and will make, timely
payment of amounts identified by the Debentures as principal and interest in
accordance with the terms of the Debentures with available capital or
accumulated earnings.
9. The Company presently has no intention to defer interest payments on the
Debentures, and it considers the likelihood of such a deferral to be remote
because, if it were to exercise its right to defer payments of interest with
respect to the Debentures, it would not be permitted to declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any capital stock of the Company or any
affiliate of the Company (other than payments of dividends or distributions to
the Company or payments of dividends from direct or indirect subsidiaries of the
Company to their parent corporations, which also shall be direct or indirect
subsidiaries of the Company) or make any payment of principal of or interest or
premium, if any, on or repay, repurchase, or redeem any debt securities of the
Company or any affiliate of the Company that rank pari passu in all respects
with or junior in interest to the Debentures, in each case subject to limited
exceptions stated in Section 2.11 of the Indenture to be entered into in
connection with the issuance of the Debentures.
10. The Company has no present intention (a) to take the position that a
deferral of interest payments on the Debentures is not a remote contingency, or
(b) to make an explicit disclosure on the Company's tax return, under Reg. ss.
1.1275-2(h)(5) that its determination as holder with respect to remote
contingency status is different from its determination as issuer.
11. Immediately after the issuance of the Debentures, the debt-to-equity ratio
of the Company (as determined for financial accounting purposes, but excluding
deposit liabilities from the Company's debt) will be within standard depository
institution industry norms and, in any event, will be no higher than four to one
(4 : 1).
12. To the best of our knowledge, the Company is currently in compliance with
all federal, state, and local capital requirements, except to the extent that
failure to comply with any such requirements would not have a material adverse
effect on the Company and its affiliates.
13. The Company will not issue any class of common stock or preferred stock
senior to the Debentures during their term.
14. The Internal Revenue Service has not challenged the interest deduction on
any class of the Company's subordinated debt in the last ten (10) years on the
basis that such debt constitutes equity for federal income tax purposes.
The above representations are accurate as of the date below and will
continue to be accurate through the issuance of the Trust Securities, unless you
are otherwise notified by us in writing. The undersigned understands that you
will rely on the foregoing in connection with rendering certain legal opinions,
and possesses the authority to make the representations set forth in this letter
on behalf of the Company.
Very truly yours,
MFB CORP.
Date: July 25, 2005 By: ___________________________________
Title: ___________________________________
C-1
1218499.1
MFB Corp./Placement Agreement
EXHIBIT C
SIGNIFICANT SUBSIDIARIES
MFB Financial
D-2
1218499.1
MFB Corp./Placement Agreement
DISCLOSURE SCHEDULE
Sections 5.14(c) and 5.17
MFB Financial, the savings association subsidiary of MFB Corp. (the "Bank"), has
an approximately $4.7 million exposure in connection with a loan to a computer
assembly and distribution company that the Bank placed on its watch list during
the quarter ended June 30, 2005. The borrower has been growing rapidly. The
Bank's loan is secured by the borrower's assets (other than real estate)
consisting primarily of accounts receivable and inventory. This is one of the
Bank's largest loans. Cash flow has become an issue and the account is 60-90
days delinquent. For the quarter ended June 30, 2005, the Bank established
typical reserves on its books based on its current analysis. The Bank believes
it is adequately collateralized, but if the borrower were to liquidate, issues
about collateral adequacy might arise.
The Bank is actively assessing the asset quality of this loan and working with
the borrower to seek an alternative financing arrangement that would take the
Bank out of this credit. The borrower has a large vendor payable in the amount
of approximately $8.2 million, which is in an inferior position to the Bank's
position with respect to this loan.
EXHIBIT D
FORM OF QUARTERLY REPORT
First Tennessee Bank National Association
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
SAVINGS AND LOAN HOLDING COMPANY
As of [March 31, June 30, September 30 or December 31], 20__
Tier 1 to Risk Weighted Assets _________%
Ratio of Double Leverage _________%
Non-Performing Assets to Loans and OREO _________%
Ratio of Reserves to Non-Performing Loans _________%
Ratio of Net Charge-Offs to Loans _________%
Return on Average Assets (annualized)** _________%
Net Interest Margin (annualized)** _________%
Efficiency Ratio _________%
Ratio of Loans to Assets _________%
Ratio of Loans to Deposits _________%
Total Assets $__________
Year to Date Income $__________
-------------------
*A table describing the quarterly report calculation procedures is provided on
page D-2
** To annualize Return on Average Assets and Net Interest Margin do the
following: 1st Quarter-multiply income statement item by 4, then divide by
balance sheet item(s) 2nd Quarter-multiply income statement item by 2,then
divide by balance sheet item(s) 3rd Quarter-divide income statement item by 3,
then multiply by 4, then divide by balance sheet item(s) 4th Quarter-should
already be an annual number NO ADJUSTMENT SHOULD BE MADE TO BALANCE SHEET ITEMS
Financial Definitions
----------------------- -------------------------------------------------- ---------------------------------------------------
Report Item Corresponding FRY-9C or LP Line Items with Line
Item corresponding Schedules Description of Calculation
----------------------- -------------------------------------------------- ---------------------------------------------------
----------------------- -------------------------------------------------- ---------------------------------------------------
"Tier 1 Capital" to BHCK7206 Tier 1 Risk Ratio: Core Capital (Tier 1)/
Risk Weighted Assets Schedule HC-R Risk-Adjusted Assets
----------------------- -------------------------------------------------- ---------------------------------------------------
----------------------- -------------------------------------------------- ---------------------------------------------------
Ratio of Double (BHCP0365)/(BHCP3210) Total equity investments in subsidiaries divided
Leverage Schedule PC in the LP by the total equity capital. This field is
calculated at the parent company level.
"Subsidiaries" include bank, bank holding
company, and nonbank subsidiaries.
----------------------- -------------------------------------------------- ---------------------------------------------------
----------------------- -------------------------------------------------- ---------------------------------------------------
Non-Performing Assets (BHCK5525-BHCK3506+BHCK5526-BHCK3507+BHCK2744)/(BHCTotal+Nonperforming Assets (NPLs+Foreclosed Real
to Loans and OREO Schedules HC-C, HC-M & HC-N Estate+Other Nonaccrual & Repossessed Assets)/
Total Loans + Foreclosed Real Estate
----------------------- -------------------------------------------------- ---------------------------------------------------
----------------------- -------------------------------------------------- ---------------------------------------------------
Ratio of Reserves to (BHCK3123+BHCK3128)/(BHCK5525-BHCK3506+BHCK5526-BHCTotal) Loan Loss and Allocated Transfer Risk
Non-Performing Loans Schedules HC & HC-N Reserves/ Total Nonperforming Loans (Nonaccrual +
Restructured)
----------------------- -------------------------------------------------- ---------------------------------------------------
----------------------- -------------------------------------------------- ---------------------------------------------------
Ratio of Net (BHCK4635-BHCK4605)/(BHCK3516) Net charge offs for the period as a percentage of
Charge-Offs to Loans Schedules HI-B & HC-K average loans.
----------------------- -------------------------------------------------- ---------------------------------------------------
----------------------- -------------------------------------------------- ---------------------------------------------------
Return on Assets (BHCK4340/BHCK3368) Net Income as a percentage of Assets.
Schedules HI & HC-K
----------------------- -------------------------------------------------- ---------------------------------------------------
----------------------- -------------------------------------------------- ---------------------------------------------------
Net Interest Margin (BHCK4519)/(BHCK3515+BHCK3365+BHCK3516+BHCK3401+BHC(Net5Interest Income Fully Taxable Equivalent, if
Schedules HI Memorandum and HC-K available / Average Earning Assets)
----------------------- -------------------------------------------------- ---------------------------------------------------
----------------------- -------------------------------------------------- ---------------------------------------------------
Efficiency Ratio (BHCK4093)/(BHCK4519+BHCK4079) (Noninterest Expense)/ (Net Interest Income
Schedule HI Fully Taxable Equivalent, if available, plus
Noninterest Income)
----------------------- -------------------------------------------------- ---------------------------------------------------
----------------------- -------------------------------------------------- ---------------------------------------------------
Ratio of Loans to (BHCKB528+BHCK5369)/BHCK2170) Total Loans & Leases (Net of Unearned Income &
Assets Schedule ▇▇ ▇▇▇▇▇ of Reserve)/ Total Assets
----------------------- -------------------------------------------------- ---------------------------------------------------
----------------------- -------------------------------------------------- ---------------------------------------------------
Ratio of Loans to (BHCKB528+BHCK5369)/(BHDM6631+BHDM6636+BHFN6631+BHFTotal) Loans & Leases (Net of Unearned Income &
Deposits Schedule ▇▇ ▇▇▇▇▇ of Reserve)/ Total Deposits (Includes
Domestic and Foreign Deposits)
----------------------- -------------------------------------------------- ---------------------------------------------------
----------------------- -------------------------------------------------- ---------------------------------------------------
Total Assets (BHCK2170) The sum of total assets. Includes cash and
Schedule HC balances due from depository institutions;
securities; federal funds sold and securities purchased
under agreements to resell; loans and lease financing
receivables; trading assets; premises and fixed assets;
other real estate owned; investments in unconsolidated
subsidiaries and associated companies; customer's
liability on acceptances outstanding; intangible assets;
and other assets.
----------------------- -------------------------------------------------- ---------------------------------------------------
----------------------- -------------------------------------------------- ---------------------------------------------------
Net Income (BHCK4300) The sum of income (loss) before extraordinary
Schedule HI items and other adjustments and extraordinary
items; and other adjustments, net of income
taxes.
----------------------- -------------------------------------------------- ---------------------------------------------------