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BANK MUTUAL CORPORATION
4,633,564 to 8,641,781 Shares
of Common Stock
(par value $.01 per share)
AGENCY AGREEMENT
August __, 2000
Ryan, Beck & Co., Inc.
220 South Orange Avenue
Livingston, New Jersey 07039-5817
Ladies and Gentlemen:
Bank Mutual Corporation, a to-be-formed federal subsidiary holding company
(the "Company"), Mutual Savings Bank (the "Bank"), a Wisconsin mutual savings
bank that is converting into a federal stock savings bank (the "Charter
Conversion"), and Mutual Savings Bancorp, MHC (the "MHC") hereby confirm their
agreement with Ryan, Beck & Co., Inc. ("Ryan, Beck") (the "Selling Agent") for
Ryan, Beck to serve as agent of the Company to assist the Company in the sale of
the Company's common stock ("Common Stock") in a subscription offering, and if
necessary, a community offering and/or a syndicated community offering. The
Offering, as defined below, is part of and is being conducted in connection with
the Bank's restructuring into the mutual holding company form of organization
(the "Reorganization").
Simultaneous with or immediately after the consummation of the Offering,
the Company will acquire First Northern Capital Corp. ("First Northern Capital")
in a merger transaction (the "Merger") pursuant to an Agreement and Plan of
Reorganization (the "Merger Agreement") dated as of February 21, 2000 (the
"Merger Agreement"). First Northern Capital is the holding company of First
Northern Savings Bank, SA ("First Northern Savings"). The Merger will be
accomplished in accordance with the laws of the United States and the State of
Wisconsin and applicable regulations of the OTS and State of Wisconsin
Department of Financial Institutions (the "Wisconsin Department"), which laws
and the regulations are collectively referred to herein as the "Merger
Regulations." Ryan, Beck is serving as financial advisor to the Company and the
Bank in connection with the Merger. Pursuant to the terms of the Merger
Agreement, upon consummation of the Merger each outstanding share of common
stock of First Northern Capital ("First Northern Common Stock") will be
converted into either $15.00 in cash or 1.5 shares of Common Stock. The percent
of shares converted into Common Stock will be between 40% and 70% of the
outstanding shares of First Northern Common Stock; the precise number will be
chosen by the Bank. The balance of the shares will be converted into cash. The
stock percentage will be at least 40%. If shares of Common Stock are available
after all orders have been filled in the subscription offering, Bank Mutual may
issue any amount of such available shares to former
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First Northern shareholders, in lieu of cash. Under no circumstances, however,
will more than 70% of the consideration in the Merger be paid in shares of
Common Stock. The Merger is expected to close simultaneously with or immediately
after consummation of the Reorganization. The Offering and the Merger are
separate, distinct transactions, but one will not occur without the other. The
Charter Conversion, the Offering and the Merger are sometimes collectively
referred to herein as the "Reorganization." The Company, the MHC, the Bank,
First Northern Capital and First Northern Savings are sometimes hereinafter
collectively referred to as the "Constituent Institutions."
The following applications have been filed with the OTS: (i) Holding
Company Applications on Forms H-(e)1 and H-(e)3 (together, the "Holding Company
Application"); (ii) a Charter Conversion Application (the "Charter Conversion
Application"); (iii) a Form MHC-1 Notice of Mutual Holding Company
Reorganization (the "Form MHC-1 Notice"); and (iv) a Form MHC-2 Application for
Approval of a Minority Stock Issuance (the "Form MHC-2 Application"). All
amendments to the foregoing required to the date hereof have also been filed.
The Holding Company Application, the Charter Conversion Application, the Form
MHC-1 Notice and the Form MHC-2 Application are referred to herein collectively
as the "Reorganization Applications." The Reorganization Applications have been
filed pursuant to applicable laws of the United States and Wisconsin and
regulations of the OTS and Wisconsin Department (together with the Merger
Regulations, the "Reorganization Regulations").
The Company, in accordance with the Plan, is offering, in a subscription
offering by way of nontransferable subscription rights, shares of Common Stock
("Shares") for a purchase price of $10.00 per share (the "Purchase Price") in
descending order of priority to (i) the Bank's Eligible Account Holders (defined
as holders of deposit accounts totaling $50 or more as of January 31, 1999);
(ii) the Bank's Employee Stock Ownership Plan (the "ESOP") (for a total of up to
8% of the Shares issued in the Offering); (iii) the Bank's Supplemental Eligible
Account Holders (defined as holders of deposit accounts totaling $50 or more as
of June 30, 2000); (iv) depositors with accounts at the Bank on August ___, 2000
who do not qualify as Eligible Account Holders or Supplemental Eligible Account
Holders; and (v) directors, officers and employees of the Bank who are not
Eligible Account Holders or Supplemental Eligible Account Holders (the
"Subscription Offering"). Shares not purchased in the Subscription Offering may
be offered to the general public in a community offering (the "Community
Offering"). It is acknowledged that the Company reserves the right, in its
absolute discretion, to accept or reject, in whole or in part, any or all orders
in the Community Offering. Depending on market conditions, shares not subscribed
for in the Subscription Offering or purchased in the Community Offering may be
offered in a syndicated community offering (the "Syndicated Community Offering")
to eligible members of the general public on a best efforts basis by approved
broker-dealer firms which may include the Agent ("Assisting Brokers") which are
members of the National Association of Securities Dealers, Inc. ("NASD"). The
Subscription Offering and any Community Offering and/or Syndicated Community
Offering are referred to collectively herein as the "Offering." Except pursuant
to employee stock benefit plans adopted by the Company or the Bank, generally no
individual or persons acting in concert may purchase
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in the Offering more than 80,000 Shares; provided that the Company may, in its
sole discretion and without further notice to or solicitation of subscribers or
other prospective purchasers, increase or decrease such maximum purchase
limitations.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (File No. 333-39362) (the
"Registration Statement") containing a prospectus relating to the Offering for
the registration of the Shares under the Securities Act of 1933, as amended (the
"1933 Act"), and has filed such amendments thereto and such amended prospectuses
as may have been required to the date hereof. The prospectus, as amended, on
file with the Commission at the time the Registration Statement becomes
effective is hereinafter called the "Subscription Prospectus," except that if
the Prospectus filed by the Company pursuant to Rule 424(b) of the rules and
regulations of the Commission under the 1933 Act (the "1933 Act Regulations")
differs from the prospectus on file at the time the Registration Statement
becomes effective, the term "Subscription Prospectus" shall refer to the
prospectus filed pursuant to Rule 424(b) from and after the time such prospectus
is filed with or mailed to the Commission for filing.
SECTION 1. Appointment of the Selling Agent; Compensation to the Selling
Agent. Subject to the terms and conditions set forth below, the Company hereby
appoints Ryan, Beck as its agent to consult with and advise the Company and the
Bank, and to solicit subscriptions and purchase orders for Shares on behalf of
the Company, in connection with the Company's offering of Shares in the
Subscription and Community Offerings. On the basis of the representations,
warranties and agreements herein contained, and subject to the terms and
conditions herein set forth, Ryan, Beck accepts such appointment and agrees to
consult with and advise the Company and the Bank as to the matters set forth in
Section 3 of the Engagement Letter between the Selling Agent and the Bank dated
as of February 3, 2000, as amended as of June 20, 2000, included as Exhibit A
attached hereto, and to use their best efforts to solicit subscriptions and
purchase orders for Shares in accordance with this Agreement; provided, however,
that the Selling Agent shall not be responsible for obtaining subscriptions or
purchase orders for any specific number of Shares, shall not be required to
purchase any Shares and shall not be obligated to take any action which is
inconsistent with any applicable law, regulation, decision or order.
If selected broker-dealers are used to assist in the sale of Shares in the
Syndicated Community Offering, the Primary Parties hereby, subject to the terms
and conditions of this Agreement, appoint the Agent to manage such
broker-dealers in this Syndicated Community Offering. On the basis of the
representations and warranties of the Primary Parties contained in, and subject
to the terms and conditions of, this Agreement, the Agent accepts such
appointment and agrees to manage the selling group of broker-dealers in the
Syndicated Community Offering.
In addition to the reimbursement of the expenses specified in Sections 6, 7
and 8 hereof, the Selling Agent shall receive and the Primary Parties shall pay
(i) an advisory and administrative fee of $100,000 (the "Management Fee"), and
(ii) a fee of 1.5% of the dollar
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amount of the Shares sold in the Subscription Offering and Community Offering
(the "Marketing Fee"), excluding shares purchased by officers, directors,
employees (and immediate family thereof) and employee benefit plans of the
Primary Parties, excluding any shares that are issued in the Merger. If shares
that otherwise could be sold in the Community Offering are set aside for
distribution to First Northern shareholders in connection with the Merger, the
Primary Parties shall also pay the Selling Agent a fee of 1.5% of the dollar
amount of such shares, up to a maximum of $100,000. In addition, the Primary
Parties shall pay the Selling Agent a fee equal to 5.5% of the aggregate
Purchase Price of the Shares sold by the Agent in any Syndicated Community
Offering. Assisting Brokers other than the Agent will also be paid 5.5% of the
aggregate Purchase Price of the Shares sold by them in the Syndicated Community
Offering. Assisting Brokers will not be utilized without the prior approval of
the Primary Parties, and it is agreed that Agent will manage the Assisting
Brokers in the Syndicated Offering.
If (i) the Plan is abandoned or terminated by the Company; (ii) the
Offering is not consummated by January 31, 2001; (iii) the Selling Agent
terminates this Agreement because there has been a material adverse change in
the financial condition or operations of the Bank since December 31, 1999; or
(iv) immediately prior to the commencement of the Offering, the Selling Agent
terminates this Agreement because, in its reasonable judgment, the Primary
Parties have failed to satisfactorily disclose all relevant information in the
Registration Statement, the Subscription Prospectus and the Reorganization
Applications or the Selling Agent determines that market conditions exist which
might render the sale of the Shares by the Company inadvisable, the Company will
pay the Management Fee to the Selling Agent, such fee to serve as compensation
for its advisory and administrative services as set forth in Exhibit A hereto,
in addition to reimbursement of the Selling Agent's reasonable out-of-pocket
expenses as set forth in Section 6 hereof. If there is a resolicitation of
subscriptions for any reason, and the Selling Agent is required to provide
significant additional services or expend significant additional time, the
parties agree to negotiate in good faith an agreement to cover the Selling
Agent's additional fees and expenses in connection therewith, including
attorneys' fees and expenses.
The compensation specified above shall be payable (to the extent not
already paid) to the Selling Agent in next day clearinghouse funds on the
earlier of the Closing Date (as hereinafter defined), a determination by the
Primary Parties to terminate or abandon the Plan or the termination of this
Agreement by the Selling Agent or the Primary Parties in accordance with the
preceding paragraph. The Bank and the Company agree to reimburse the Selling
Agent from time to time for the costs and expenses specified in Sections 6, 7
and 8 hereof, to the extent such costs and expenses are reasonably incurred by
the Selling Agent, promptly upon receiving a reasonable accounting of such costs
and expenses.
Section 2. Closing Date; Release of Funds and Delivery of Certificates. If
all conditions precedent to the consummation of the Reorganization and the
Offering are satisfied, the Company agrees to issue or have issued the Shares
sold in the Offering and to release for delivery certificates evidencing such
Shares on the Closing Date against payment therefor by release of funds from the
special, interest-bearing account referred to in Section 5(p) hereof and
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by the authorized withdrawal of funds from deposit accounts at the Bank in
accordance with the Plan; provided, however, that no such funds shall be
released to the Company or withdrawn until the conditions specified in Section 9
hereof shall have been complied with to the reasonable satisfaction of the
Selling Agent and its counsel. Such release, withdrawal and payment shall be
made on the Closing Date, on a business day and at a time and place selected by
the Selling Agent, which date and place shall be acceptable to the Bank and the
Company, on at least two business days prior notice to the Bank and the Company
(it being understood that such business day shall not be more than ten business
days after the termination of the Offering), or such other time or place as
shall be agreed upon by the Selling Agent, the Bank and the Company.
Certificates evidencing the Shares sold in the Offering shall be delivered
directly to the purchasers thereof or in accordance with their directions. The
hour and date upon which the Company shall release or deliver the Shares sold in
the Offering in accordance with the terms hereof are called the "Closing Date."
SECTION 3. Prospectus; Offering. The Shares are to be offered in the
Offering at $10.00 per share, as set forth on the cover page of the Prospectus.
There will be a maximum and minimum number of Shares offered. The number of
Shares offered may be changed by the Company after consultation with the Selling
Agent, subject to the provisions of the Plan, depending on market and financial
conditions.
SECTION 4A. Representations and Warranties; Certain Covenants of the
Primary Parties. The Primary Parties jointly and severally represent and warrant
to and covenant with the Selling Agent as follows:
a. The Registration Statement was declared effective by the Commission on
August __, 2000. At the time the Registration Statement, including the
Prospectus contained therein, became effective, the Registration Statement
complied in all material respects with the requirements of the 1933 Act and the
1933 Act Regulations and the Registration Statement, any preliminary or final
Prospectus or any Sales Information (as defined in Section 7 hereof) authorized
by any Primary Party for use in connection with the Offering did not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and at the time any
Rule 424(b) Prospectus is filed with the Commission for filing and at the
Closing Date referred to in Section 2, the Registration Statement, any
preliminary or final Prospectus or any Sales Information authorized by any
Primary Party for use in connection with the Offering will not contain an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that the representations and
warranties in this Section 4(a) shall not apply to statements in or omissions
from the Registration Statement, any preliminary or final Prospectus or any
Sales Information made in reliance upon and in conformity with information
furnished in writing to the Primary Parties by the Selling Agent expressly
regarding the Selling Agent for use under the captions "The Reorganization and
Stock Offering--Marketing Arrangements in the Subscription and
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Community Offering" and "The Reorganization and Stock Offering--Public Offering"
in the Prospectus.
b. The Company has filed with the OTS the Reorganization Applications
including the Plan, the Registration Statement and the Prospectus, each of which
included exhibits and supplemental material, and has filed an amendment or
amendments thereto, as required, and has published notice of such filings, as
required. The Reorganization Applications have been or prior to the Closing Date
will be approved by the OTS; and the Plan has been adopted by the Board of
Directors of the Bank, and prior to the completion of the Reorganization, the
Company, the MHC, and members of the Bank.
c. At the Closing Date, (i) the Charter Conversion will have been effected
in accordance with the laws of the United States and Wisconsin, and regulations
of the OTS and Wisconsin Department and all other applicable material laws,
regulations, decisions and orders, including in compliance with all terms,
conditions, requirements and provisions precedent to the Charter Conversion
imposed upon the Primary Parties by the OTS, any state regulatory authority or
any other regulatory authority; (ii) the Reorganization and the Offering will
have been effected in the manner described in the Prospectus and in accordance
with the Plan, the Reorganization Regulations and all other applicable material
laws, regulations, decisions and orders, including in compliance with all terms,
conditions, requirements and provisions precedent to the Reorganization and the
Offering imposed upon the Primary Parties by the Commission, the OTS, any state
regulatory or Blue Sky authority or any other regulatory authority, and (iii)
the Constituent Institutions will have completed the conditions precedent to the
Merger in accordance with the Merger Agreement, and all applicable laws,
regulations, decisions and orders, including all material terms, conditions,
requirements and provisions precedent to the Merger imposed upon the Constituent
Institutions by the OTS or any other regulatory authority, other than those
which the regulatory authority permits to be completed after the effective time
of the Merger ("Effective Time").
d. No order has been issued by the OTS or any state regulatory or Blue Sky
authority preventing or suspending the use of the Prospectus, and no action by
or before any such governmental entity to revoke any approval, authorization or
order of effectiveness related to the Reorganization or the Offering is pending
or threatened.
e. At the time of the approval of the Reorganization Applications by the
applicable regulatory authorities (including any amendment or supplement
thereto) and at all times subsequent thereto until the Closing Date, the
Reorganization Applications complied and will comply in all material respects
with the Reorganization Regulations. The Prospectus contained in the
Reorganization Applications (including any amendment or supplement thereto), at
the time of the approval of the Reorganization Applications by the OTS and at
all times subsequent thereto until the Closing Date and the Effective Time,
complied and will comply in all material respects with the Reorganization
Regulations.
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f. RP Financial, LC. ("RP Financial"), which prepared the Independent
Valuation dated as of June 9, 2000, described in the Prospectus, is independent
with respect to the Primary Parties within the meaning of the Plan and the
Reorganization Regulations and is believed by the Primary Parties to be
experienced and expert in the valuation and the appraisal of business entities,
including savings institutions, and the Primary Parties believe that RP
Financial has prepared the pricing information set forth in the Prospectus in
accordance with the requirements of the Reorganization Regulations.
g. Ernst & Young LLP ("Ernst & Young"), the firm which certified the
financial statements of the Bank filed as part of the Registration Statement,
is, with respect to the Primary Parties, an independent certified public
accountant as required by the 1933 Act and the 1933 Act Regulations. Wipfli
Ullrich Bertelsen LLP ("Wipfli"), the firm which certified the financial
statements of First Northern Capital filed as part of the Registration
Statement, is, with respect to First Northern Capital and First Northern
Savings, an independent certified public accountant as required by the 1933 Act
and the 1933 Act Regulations.
h. The consolidated financial statements, together with the related
schedules and notes thereto, included in the Registration Statement and which
are part of the Prospectus present fairly the financial condition, results of
operations, changes in retained earnings and cash flows of (i) the Bank and its
consolidated subsidiaries and (ii) to the best knowledge of the Primary Parties,
First Northern Capital and its consolidated subsidiaries, at and for the dates
indicated and the periods specified and comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act
Regulations. The Bank's and, to the best knowledge of the Primary Parties, First
Northern Capital's financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis during
the periods involved, present fairly in all material respects the information
required to be stated therein and are consistent with financial statements and
other reports filed by each of them with the OTS, the FDIC or the Wisconsin
Department except to the extent that accounting principles employed in such
filings conform to the requirements of such authorities and not necessarily to
generally accepted accounting principles. The Bank's and, to the best knowledge
of the Primary Parties, First Northern Capital's other financial, statistical
and pro forma information and related notes thereto included in the Prospectus
present fairly the information shown therein on a basis consistent with the
audited financial statements of the Bank and/or First Northern Capital included
in the Registration Statement and which are part of the Prospectus, and as to
the pro forma adjustments, such adjustments have been properly applied on the
basis described therein.
i. With respect to the Primary Parties or their subsidiaries, and to the
best knowledge of the Primary Parties, with respect to First Northern Capital,
First Northern Savings or their subsidiaries, since the respective dates as of
which information is given in the Registration Statement and Prospectus, except
as may otherwise be stated therein: (i) there has not been any material adverse
change in the financial condition, net income, capital, properties, affairs or
prospects of the Primary Parties, First Northern Capital, First Northern
Savings, or their respective subsidiaries (the "combined institution"), taken as
a whole, whether or not arising in
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the ordinary course of business, (ii) there has not been any material increase
in the long-term debt of the combined institution, taken as a whole, nor have
the Primary Parties, First Northern Capital, First Northern Savings or their
respective subsidiaries issued any securities or incurred any liability or
obligations for borrowing other than in the ordinary course of business, (iii)
there have not been any material transactions entered into by the Primary
Parties, First Northern Capital, First Northern Savings or their respective
subsidiaries, except those transactions entered into in the ordinary course of
business and those specifically described in or contemplated by the Prospectus,
including the execution of loan documents pertaining to the ESOP, and (iv) the
capitalization, liabilities, assets, properties and business of the Primary
Parties, First Northern Capital, First Northern Savings and their respective
subsidiaries conform in all material respects to the descriptions thereof
contained in the Prospectus. The Primary Parties, First Northern Capital, First
Northern Savings and their subsidiaries have no material liability of any kind,
contingent or otherwise, except as reflected in the financial statements filed
as part of the Registration Statement or otherwise set forth in the Prospectus.
j. The Company will be formed as a federal subsidiary holding company, and
the MHC will be formed as a federal mutual holding company, both will duly
organized and validly existing and in good standing under the laws of the United
States and regulations of the OTS with the corporate power and authority to
conduct the business and own the property as described in the Registration
Statement and Prospectus.
k. The Bank is a Wisconsin savings bank, duly organized and validly
existing and in good standing under the laws of the State of Wisconsin with the
corporate power and authority to conduct its business and own its property as
described in the Registration Statement and Prospectus under Wisconsin law. Upon
completion of the Charter Conversion, the Bank will be a duly organized and
validly existing federally chartered savings bank and after the Reorganization
will continue as such, and will have the corporate power and authority to
conduct its business and own its property as described in the Registration
Statement and Prospectus under the Home Owners' Loan Act ( "HOLA") and the
regulations thereunder.
l. First Northern Capital is a Wisconsin corporation, duly organized and
validly existing and in good standing under the laws of the State of Wisconsin
with the corporate power and authority to conduct its business and own its
property as described in the Registration Statement and Prospectus. First
Northern Savings is a Wisconsin-chartered savings and loan association, duly
organized and validly existing under the laws of the State of Wisconsin with the
corporate power and authority to conduct its business and own its property as
described in the Registration Statement and Prospectus.
m. The Primary Parties and their subsidiaries, and, to the best knowledge
of the Primary Parties, First Northern Capital, First Northern Savings and their
subsidiaries, have obtained all material licenses, permits and other
governmental authorizations currently required for the conduct of their
respective businesses; all such licenses, permits and governmental
authorizations are in full force and effect. The Primary Parties and their
subsidiaries and, to the
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best knowledge of the Primary Parties, First Northern Capital, First Northern
Savings and their subsidiaries, are in all material respects complying with all
laws, rules, regulations and orders applicable to the operation of their
respective businesses; and none of the Primary Parties, First Northern Capital,
First Northern Savings or their subsidiaries has received notice of any
proceeding or action relating to the revocation or modification of any such
license, permit or governmental authorization which, singly or in the aggregate,
if subject to an unfavorable decision, ruling or finding, might materially and
adversely affect the conduct of the business, the financial condition or the net
income, affairs or prospects of the combined institution taken as a whole.
n. The articles of incorporation, charter or similar instruments of the
Primary Parties and, to the best knowledge of the Primary Parties, First
Northern Capital and First Northern Savings are in full force and effect; no
conservator or receiver has been appointed for any of the Primary Parties, or,
to the best knowledge of the Primary Parties, First Northern Capital or First
Northern Savings; and the Bank and First Northern Savings are each operating as
an insured depository institution. Each of the Primary Parties, and, to the best
knowledge of the Primary Parties, First Northern Capital and First Northern
Savings is duly qualified to transact business and is in good standing in each
jurisdiction in which its ownership or leasing of property or the conduct of its
business (currently and as contemplated following the Reorganization) requires
such qualification unless the failure to be so qualified in one or more of such
jurisdictions would not have a material adverse effect on the financial
condition or the business, operations, net income or prospects of the combined
institution, taken as a whole.
o. Upon consummation of the Reorganization, all of the outstanding capital
stock of the Bank will be duly authorized and validly issued and fully paid and
nonassessable subject to Wis. Stats. Section 180.0622(2)(b), as judicially
interpreted ("Section 180.0622(2)(b)"); and all such stock will be owned
directly by the Company, free and clear of all liens, encumbrances, claims or
other restrictions. Each of the Primary Parties, and, to the best knowledge of
the Primary Parties, First Northern Capital, and First Northern Savings does not
own equity securities or any equity interest in any other business enterprise
except as described in the Prospectus; each of the subsidiaries of the Primary
Parties and, to the best knowledge of the Primary Parties, of First Northern
Capital and First Northern Savings, has been duly organized and is validly
existing and in good standing under the laws of its jurisdiction of organization
with the authority to conduct its business and own its property as described in
the Registration Statement and the Prospectus; all of the outstanding stock of
each subsidiary has been duly authorized and validly issued and is fully paid
and nonassessable subject to Section 180.0622(2)(b); all such stock is owned
directly by the Company, First Northern Capital or First Northern Savings, as
the case may be, free and clear of all liens, encumbrances, claims or other
restrictions; and each of the subsidiaries is duly qualified to transact
business and is in good standing in each jurisdiction in which its ownership or
leasing of property or the conduct of its business requires such qualification,
unless the failure to be so qualified would not have a material adverse effect
on the operations of the combined institution, taken as a whole. The activities
of the Bank's subsidiaries are permitted to subsidiaries of Wisconsin-chartered
and
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federally chartered savings banks, and to the best knowledge of the Primary
Parties, the activities of the First Northern Savings' subsidiaries are
permitted to subsidiaries of a Wisconsin-chartered savings and loan
associations, in each case by the rules, regulations, policies and practices of
the Wisconsin Department (in the case of the Bank's and First Northern Savings'
subsidiaries), the OTS (in the case of subsidiaries of the Bank), and any other
state or federal authority having jurisdiction over such matters.
p. The deposit accounts of the Bank and, to the best knowledge of the
Primary Parties, First Northern Savings are, and following the Closing Date of
the Reorganization the deposit accounts of the Bank will be, insured by the
FDIC, up to the maximum amounts allowed by law. Upon consummation of the
Reorganization, the liquidation account for the benefit of Eligible Account
Holders and Supplemental Eligible Account Holders ("Liquidation Account") will
be duly established in accordance with the requirements of the Reorganization
Regulations.
q. Upon consummation of the Reorganization, the authorized equity capital
of the Company will consist of 100,000,000 shares of Common Stock and 10,000,000
shares of preferred stock, and the issued and outstanding equity capital of the
Company will be consistent with that set forth in the Prospectus under the
caption "Historical and Pro Forma Capitalization"; no shares of Common Stock, or
securities exercisable into or exchangeable for shares of the Common Stock, will
have been issued prior to the Closing Date (other than shares received by the
Bank in the formation of the Company, which shares will be cancelled upon
consummation of the Reorganization); the Shares will have been duly and validly
authorized for issuance and, when issued and delivered by the Company pursuant
to the Plan, will be duly and validly issued and fully paid and nonassessable,
the issuance of the Shares is not subject to any preemptive rights; and the
terms and provisions of the Common Stock will conform in all material respects
to the description thereof contained in the Prospectus. Upon the issuance of the
Shares, good title to the Shares will be transferred from the Company to the
purchasers thereof against payment therefor, subject to such claims as may be
asserted against the purchasers thereof by third-party claimants.
r. As of the date hereof and as of the Closing Date, none of the Primary
Parties or any subsidiary, or, to the best knowledge of the Primary Parties,
First Northern Capital, First Northern Savings, or any subsidiary is or will be
in violation of its charter or By- Laws or in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any material contract, lease, loan agreement, indenture or other
instrument to which it is a party or by which it or any of its property may be
bound; the consummation of the Reorganization, the execution, delivery and
performance of this Agreement and the consummation of the transactions herein
contemplated have been duly and validly authorized by all necessary corporate
action on the part of the Primary Parties, and this Agreement has been validly
executed and delivered by the Primary Parties and is the valid, legal and
binding obligation of the Primary Parties, enforceable in accordance with its
terms, except to the extent that rights to indemnity hereunder may be limited
under applicable law and subject to bankruptcy, insolvency, reorganization or
other laws related to or affecting the enforcement of
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creditors' rights generally and equitable principles limiting the right to
obtain specific enforcement or similar equitable relief. The execution and
delivery of this Agreement, the fulfillment of the terms herein set forth and
the consummation of the transactions herein contemplated will not (i) conflict
with or constitute a breach of, or default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, the charter or
By-Laws of the Primary Parties, First Northern Capital, First Northern Savings,
or any subsidiary, or any material contract, lease or other instrument to which
the Primary Parties, First Northern Capital, First Northern Savings, or any
subsidiary is a party or in which the Primary Parties, First Northern Capital,
First Northern Savings, or any subsidiary has a beneficial interest, or any
applicable law, rule, regulation or order; (ii) violate any authorization,
approval, judgment, decree, order, statute, rule or regulation applicable to the
Primary Parties, First Northern Capital, First Northern Savings, or any
subsidiary; or (iii) result in the creation of any lien, charge or encumbrance
upon any property of the Primary Parties, First Northern Capital, First Northern
Savings, or any subsidiary.
s. The Primary Parties have all such power, authority, authorizations,
approvals and orders as may be required to enter into this Agreement and to
carry out the provisions and conditions hereof, and the Company has all such
power, authority, authorizations and orders as may be required to issue and sell
the Shares as provided in the Plan and described in the Prospectus, subject to
the approval of the applicable regulatory authorities and the satisfaction of
any conditions of such approval.
t. The Primary Parties, First Northern Capital, First Northern Savings, and
their respective subsidiaries have good and marketable title to all properties
and assets which are material to the business of the combined institution taken
as a whole, including those properties and assets described in the Prospectus as
owned by them, free and clear of all liens, except such liens as are described
in the Prospectus or are not materially significant or important in relation to
the business of the combined institution and its subsidiaries on a consolidated
basis; and all leases and subleases which are material to the business of the
combined institution taken as a whole under which the Primary Parties, First
Northern Capital, First Northern Savings, or any subsidiary holds properties,
including those leases and subleases described in the Prospectus, are in full
force and effect.
u. As of the date hereof and as of the Closing Date and the Effective Date,
the Primary Parties, First Northern Capital, and First Northern Savings, are not
and will not be in violation of any directive from the Commission, the OTS, the
FDIC, the Board of Governors of the Federal Reserve System ("FRB"), the
Wisconsin Department or any other agency to make any material change in the
method of conducting their respective businesses so as to comply in all material
respects with all applicable statutes and regulations (including, without
limitation, regulations, decisions, directives and orders of such governmental
agencies), and no suit or proceeding, charge, investigation or action before or
by any court, regulatory authority or governmental agency or body is or will be
pending or, to the knowledge of the Primary Parties, threatened, which might
materially and adversely affect the Reorganization or the Merger, the
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performance of this Agreement or the consummation of the transactions
contemplated in the Plan and as described in the Prospectus, or which might
result in any material adverse change in the financial condition, net income,
capital, properties, affairs or prospects of the combined institution taken as a
whole, or which would materially affect its respective properties and assets.
v. The Primary Parties have received an opinion of their counsel, Quarles &
Brady LLP, Milwaukee, Wisconsin, with respect to the federal and Wisconsin state
income tax consequences of the Reorganization; the tax opinion of Quarles &
Brady LLP, is accurately summarized in the Reorganization Applications and the
Prospectus. The facts and representations upon which such opinions are based are
truthful, accurate and complete, and no Primary Party will take any action
inconsistent therewith.
w. No default exists, and no event has occurred which, with notice or lapse
of time or both, would constitute a default, on the part of any Primary Party or
any subsidiary in the due performance and observance of any term, covenant or
condition of any indenture, mortgage, deed of trust, note, bank loan or credit
agreement or any other instrument or agreement to which any Primary Party or
subsidiary thereof is a party or by which any of them or any of their respective
property is bound or affected which, in any such case, is material to the
Primary Parties and their subsidiaries taken as a whole; such agreements are in
full force and effect and no other party to any such agreement has instituted
or, to the knowledge of the Primary Parties, threatened any action or proceeding
wherein the Primary Parties or any subsidiary would or might be alleged to be in
default thereunder. No default exists, and no event has occurred which with
notice or lapse of time, or both, would constitute a default, on the part of
First Northern Capital, First Northern Savings or any subsidiary in the due
performance and observance of any term, covenant or condition of any indenture,
mortgage, deed of trust, note, bank loan or credit agreement or any other
instrument or agreement to which First Northern Capital, First Northern Savings
or any subsidiary is a party or by which any of them or any of their respective
property is bound or affected which, in any such case, is material to First
Northern Capital, First Northern Savings and its subsidiaries, taken as a whole;
such agreements are in full force and effect and no other party to any such
agreement has instituted or, to the knowledge of First Northern Capital or First
Northern Savings, threatened any action or proceeding wherein First Northern
Capital, First Northern Savings or any subsidiary would or might be alleged to
be in default thereunder.
x. Subsequent to the date the Registration Statement is declared effective
by the Commission and prior to the Closing Date, except as otherwise may be
indicated or contemplated therein, none of the Primary Parties or any subsidiary
has or will have: (i) issued any securities or incurred any liability or
obligation, direct or contingent, for borrowed money, except borrowings from the
same or similar sources indicated in the Prospectus in the ordinary course of
its business, or (ii) entered into any transaction which is material in light of
the business and properties of the Primary Parties taken as a whole. Subsequent
to the date the Registration Statement is declared effective by the Commission
and prior to the Closing Date, except as otherwise may be indicated or
contemplated therein, none of First Northern Capital, First Northern Savings or
any subsidiary has or will have: (i) issued any securities or incurred
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<PAGE> 13
any liability or obligation, direct or contingent, for borrowed money, except
borrowings from the same or similar sources indicated in the Prospectus in the
ordinary course of its business, or (ii) entered into any transaction which is
material in light of the business and properties of First Northern Capital and
First Northern Savings taken as a whole. For purposes of this paragraph,
obligations for borrowed money do not include deposits.
y. The Primary Parties, First Northern Capital, First Northern Savings and
their subsidiaries have filed all federal, state and local tax returns required
to be filed and have made timely payment of all taxes due and payable in respect
of such returns and no deficiency has been asserted with respect thereto by any
taxing authority.
z. Except as disclosed in the Prospectus with respect to the ESOP, none of
the Primary Parties, First Northern Capital, First Northern Savings or any
subsidiary has made any payment of funds of the Primary Parties, First Northern
Capital, First Northern Savings or any subsidiary as a loan for the purchase of
the Shares or made any other payment of funds prohibited by law, and no funds
have been set aside to be used for any payment prohibited by law.
aa. Prior to the Reorganization, the Bank is not authorized to issue
capital stock. Prior to the completion of the Reorganization none of the Primary
Parties will have: (i) other than as described in the Prospectus issued any
securities within the last 18 months (except for notes to evidence other bank
loans and reverse repurchase agreements); (ii) had any material dealings within
the 12 months prior to the date hereof with any member of the NASD, or any
person related to or associated with such member, other than discussions and
meetings relating to the Offering and the Merger and routine purchases and sales
of securities for or from its portfolio; (iii) entered into a financial or
management consulting agreement relating to the sale of stock, except as
contemplated hereunder and in connection with the Merger; or (iv) engaged any
intermediary between the Selling Agent and any Primary Party in connection with
any offering of shares of its capital stock, and no person is being compensated
in any manner for such service.
bb. Neither the Primary Parties, First Northern Capital, or First Northern
Savings is required to be registered under the Investment Company Act of 1940,
as amended.
cc. To the knowledge of the Primary Parties, the Company has taken all
necessary action to make such filings and/or to qualify or register the Shares
for offer and sale in the Offering and the Merger under the securities or Blue
Sky laws of all jurisdictions wherein such Shares will be offered which require
such filings and/or qualification or registration.
dd. All Sales Information used by the Company in connection with the
Offering that is required by the Reorganization Regulations to be filed has been
filed with and approved by the applicable regulatory authority.
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<PAGE> 14
ee. Except for information provided in writing to the Primary Parties by
the Selling Agent for use in the Prospectus, the Primary Parties have not relied
upon the Selling Agent or its legal or other advisors for any legal, tax or
accounting advice in connection with the Reorganization.
ff. To the knowledge of the Primary Parties on the one hand and to the
knowledge of First Northern Capital and First Northern Savings on the other
hand, each of the Primary Parties, First Northern Capital, First Northern
Savings and their respective subsidiaries is in compliance with all laws, rules
and regulations relating to environmental protection, except where such failure
would not have a material adverse effect on the financial condition of the
combined institution taken as a whole, and none of the Primary Parties, First
Northern Capital, First Northern Savings or any subsidiary has been notified or
is otherwise aware that any of them is potentially liable, or is considered
potentially liable, under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, or any similar state law. No actions,
suits, regulatory investigations or other proceedings are pending, or, to the
knowledge of the Primary Parties, threatened against any Primary Party, First
Northern Capital, First Northern Savings or any subsidiary relating to
environmental protection, nor does any Primary Party have any reason to believe
any such proceedings may be brought against any of such entities. To the
knowledge of the Primary Parties on the one hand and to the knowledge of First
Northern Capital and First Northern Savings, on the other hand, no disposal,
release or discharge of hazardous or toxic substances, pollutants or
contaminants, including petroleum and gas products, as any of such terms may be
defined under federal, state or local law, has occurred on, in, at or about any
of the facilities or properties owned, operated or leased by, or pledged to, any
Primary Party, First Northern Capital, First Northern Savings or any subsidiary,
except such disposal, release or discharge which would not have a material
adverse effect on the combined institution taken as a whole.
gg. No labor dispute with the employees of any Primary Party, First
Northern Capital, First Northern Savings or any subsidiary exists or, to the
knowledge of the Primary Parties, is imminent.
hh. All of the loans represented as assets on the most recent financial
statements or selected financial information of the Bank and First Northern
Capital included in the Prospectus meet or are exempt from all requirements of
federal, state and local law pertaining to lending, including, without
limitation, truth in lending (including the requirements of Regulation Z and 12
C.F.R. Part 226), real estate settlement procedures, consumer credit protection,
equal credit opportunity and all disclosure laws applicable to such loans,
except for violations which, if asserted, would not result in a material adverse
effect on the financial condition, results of operations or business of the
combined institution taken as a whole.
ii. Any certificate signed by an officer of any Primary Party and delivered
to the Selling Agent or their counsel that refers to this Agreement shall be
deemed to be a
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representation and warranty by such Primary Party to the Selling Agent as to the
matters covered thereby with the same effect as if such representation and
warranty were set forth herein.
SECTION 4B. Representations and Warranties; Certain Covenants of the
Selling Agent. The Selling Agent represents and warrants to the Primary Parties
as follows:
a. The Selling Agent is registered as a broker-dealer with the Commission
and the NASD.
b. The Selling Agent is validly existing and in good standing as a
corporation under the laws of the State of New Jersey with the corporate power
and authority to provide the services to be furnished to the Primary Parties
hereunder.
c. The execution and delivery of this Agreement and the consummation of the
transactions herein contemplated have been duly and validly authorized by all
necessary corporate action on the part of the Selling Agent, and this Agreement
is a legal, valid and binding obligation of the Selling Agent, enforceable in
accordance with its terms, except to the extent that rights to indemnity
hereunder may be limited under applicable law and subject to bankruptcy,
insolvency, reorganization or other laws related to or affecting the enforcement
of creditors' rights generally and equitable principles limiting the right to
obtain specific enforcement or similar equitable relief.
d. The Selling Agent and, to the Selling Agent's knowledge, its employees,
agents and representatives who shall perform any of the services required
hereunder to be performed by the Selling Agent shall be duly authorized and
shall have all licenses, approvals and permits necessary to perform such
services, and Ryan, Beck is a registered selling agent in the jurisdictions
listed in Exhibit C hereto and will remain registered in such jurisdictions in
which the Company is relying on such registration for the sale of the Shares,
until the Reorganization is consummated or terminated.
e. The execution and delivery of this Agreement by the Selling Agent, the
fulfillment of the terms set forth herein and the consummation of the
transactions herein contemplated shall not violate or conflict with the
corporate charter or By-Laws of the Selling Agent or violate, conflict with or
constitute a breach of, or default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, any material agreement,
indenture or other instrument by which the Selling Agent is bound or under any
governmental license or permit or any law, administrative regulation,
authorization, approval or order or court decree, injunction or order applicable
to it.
f. Any funds received by the Selling Agent to purchase Shares will be
handled in accordance with Rule 15c2-4 under the Securities Exchange Act of 1934
(the "1934 Act"), if applicable.
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g. There is not now pending or, to the Selling Agent's knowledge,
threatened against the Selling Agent any material action or proceeding before
the Commission, the NASD, any state securities commission or any state or
federal court concerning the Selling Agent's activities as a broker-dealer.
SECTION 5: Additional Covenants of the Primary Parties. The Primary Parties
hereby jointly and severally covenant with the Selling Agent as follows:
a. The Primary Parties will not file any amendment or supplement to the
Registration Statement or any Reorganization Application without notifying the
Selling Agent of its intention to do so and providing the Selling Agent and its
counsel an opportunity to review such amendment or supplement, nor will any
Primary Party file any such amendment or supplement to which the Selling Agent
or its counsel shall reasonably object.
b. The Primary Parties will use their best efforts to cause each
Reorganization Application not heretofore approved to be approved by the
applicable regulatory authority and will promptly upon receipt of any
information concerning the events listed below notify the Selling Agent: (i) of
the approval of any Reorganization Application not heretofore approved; (ii) of
the receipt of any comments from the OTS or any other governmental entity with
respect to the Charter Conversion, the Reorganization, the Merger or the
transactions contemplated by this Agreement; (iii) of the request by the OTS or
any other governmental entity for any amendment or supplement to the
Registration Statement, the Prospectus or any Reorganization Application or for
additional information; (iv) of the issuance by the Commission, the OTS or any
other governmental entity of any order or other action suspending the Charter
Conversion, the Reorganization or the Merger or the use of the Registration
Statement or the Prospectus or any other filing of the Primary Parties under the
Reorganization Regulations, the 1933 Act, 1933 Act Regulations or other
applicable law, or the threat of any such action; (v) of the issuance by the
Commission, the OTS or any other state governmental authority of any stop order
suspending the effectiveness of the Registration Statement or any Reorganization
Application or of the initiation or threat of any proceedings for such purpose;
or (vi) of the occurrence of any event mentioned in paragraph (f) below. The
Primary Parties will make every reasonable effort to prevent the issuance by the
Commission, the OTS or any other governmental authority of any such order and,
if any such order shall at any time be issued, to obtain the lifting thereof at
the earliest possible time. The Primary Parties will provide copies of the
foregoing comments, requests and orders to the Selling Agent upon receipt of
such items.
c. The Primary Parties will deliver to the Selling Agent and to its counsel
two conformed copies of each of the following documents, with all exhibits: each
Reorganization Application as originally filed and each amendment or supplement
thereto and the Registration Statement as originally filed and each amendment
thereto. In addition, the Primary Parties will also deliver to the Selling Agent
such number of copies of the closing documents with respect to the
Reorganization and the Offering as the Selling Agent may reasonably request.
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<PAGE> 17
d. The Primary Parties will furnish to the Selling Agent, from time to time
during the period when the Prospectus is required to be delivered under federal
or state securities laws or regulations or the applicable rules and regulations
of any other governmental entity, such number of copies of the Prospectus (as
amended or supplemented) as the Selling Agent may reasonably request for the
purposes contemplated by such federal or state securities laws or regulations or
the applicable rules and regulations of any other governmental entity. The
Company authorizes the Selling Agent to use the Prospectus (as amended or
supplemented) for any lawful manner in connection with the sale of the Shares.
e. The Primary Parties will comply with any and all terms, conditions,
requirements and provisions with respect to the Reorganization and the
transactions contemplated thereby imposed by the Commission, the OTS, any state
regulatory or Blue Sky authority or any other governmental entity, including the
terms, conditions, requirements and provisions contained in the Reorganization
Regulations, the 1933 Act, the 1933 Act Regulations, the 1934 Act and the rules
and regulations of the Commission promulgated under the 1934 Act (the "1934 Act
Regulations").
f. If, at any time during the period when the Prospectus is required to be
delivered, any event relating to or affecting any Primary Party shall occur, as
a result of which it is necessary or appropriate, in the opinion of counsel for
the Primary Parties, to amend or supplement the Registration Statement or the
Prospectus in order to make the Registration Statement or Prospectus not
misleading in light of the circumstances existing at the time it is delivered to
a purchaser, the Primary Parties will, at their expense, forthwith prepare, file
with the Commission and furnish to the Selling Agent a reasonable number of
copies of an amendment or amendments of, or a supplement or supplements to, the
Registration Statement or Prospectus (in form and substance reasonably
satisfactory to the Selling Agent and its counsel after a reasonable time for
review) which will amend or supplement the Registration Statement or Prospectus
so that as amended or supplemented it will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances existing at the time the
Prospectus is delivered to a purchaser, not misleading.
g. The Primary Parties will take all necessary actions, in cooperation with
the Selling Agent, and furnish to whomever the Selling Agent may direct such
information as may be required to qualify or register the Shares for the
Offering and sale by the Company under the applicable securities or Blue Sky
laws of such jurisdictions as the Selling Agent may reasonably designate;
provided, however, that the Company shall not be obligated to file any general
consent to service of process or to qualify to do business in any jurisdiction
in which it is not otherwise required to be so qualified. In each jurisdiction
where any of the Shares shall have been so qualified or registered, the Company
will make and file such statements and reports as are or may be required by the
laws of such jurisdiction.
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h. The Company will not sell or issue, contract to sell or otherwise
dispose of, for a period of 180 days after the Closing Date, without the prior
written consent of the Selling Agent, any shares of, or any securities
convertible into or exercisable for shares of, Common Stock other than in
connection with the Merger or any other plan or arrangement described in the
Prospectus.
i. During the period in which the Company's Common Stock is registered
under the 1934 Act, the Company will furnish to its stockholders as soon as
practicable after the end of each fiscal year an annual report (including a
consolidated balance sheet and consolidated statements of income, stockholders'
equity and cash flows of the Primary Parties as at the end of and for such year,
certified by independent public accountants in accordance with Regulation S-X
under the 1934 Act) and make available as soon as practicable after the end of
each of the first three quarters of each fiscal year (beginning with the first
fiscal quarter ending after the Closing Date) financial information of the
Primary Parties for such quarter in reasonable detail.
j. During the period of three years from the date hereof, the Company will
furnish to the Selling Agent: (i) promptly after it becomes available, a copy of
each report of the Company furnished generally to stockholders of the Company or
furnished to or filed with the Commission under the 1934 Act or any national
securities exchange or system on which any class of securities of the Company is
listed or quoted (including, but not limited to, reports of Forms 10-K, 10-Q and
8-K and all proxy statements and annual reports to stockholders), a copy of each
other report of the Company mailed to its stockholders or filed with the
Commission or any other supervisory or regulatory authority or any national
securities exchange or system on which any class of securities of the Company is
listed or quoted and each press release and material news item and article
released by the Company or the Bank, and (ii) from time to time, such other
public information concerning the Primary Parties as the Selling Agent may
reasonably request.
k. The Primary Parties will use the net proceeds from the sale of the
Shares substantially in the manner set forth in the Prospectus under the caption
"Use of Proceeds."
l. Other than as permitted by the Reorganization Regulations, the HOLA, the
1933 Act, the 1933 Act Regulations and the laws of any jurisdiction in which the
Shares are qualified for sale, neither the Company nor the Bank will distribute
any Prospectus or other Sales Information in connection with the offer and sale
of the Shares.
m. The Company will make generally available to its security holders as
soon as practicable, but not later than 60 days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 of the 1933 Act Regulations) covering a twelve-month period beginning
not later than the first day of the Company's fiscal quarter next following the
effective date (as defined in such Rule 158) of the Registration Statement.
n. The Company will register the Common Stock under Section 12(g) of the
1934 Act effective on or prior to the Closing Date.
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<PAGE> 19
o. The Company will use its best efforts to obtain approval for, effective
on or prior to the Closing Date, and maintain quotation of the Common Stock on
the Nasdaq National Market System.
p. The Primary Parties will maintain appropriate arrangements for
depositing all funds received from persons delivering orders to purchase Shares
in the Subscription and Community Offerings on an interest-bearing basis at the
rate described in the Prospectus until the Closing Date or until the Offering is
terminated in accordance with the Plan and as described in the Prospectus. The
Primary Parties will maintain such records of all funds received to permit the
funds of each subscriber to be separately insured by the FDIC and to enable the
Company to make appropriate refunds of such funds in the event that such refunds
are required to be made in accordance with the Plan and as described in the
Prospectus.
q. The Primary Parties will take such actions and furnish such information
as are reasonably requested by the Selling Agent in order for the Selling Agent
to ensure compliance with Article III, Section 1, of the NASD's Rules of Fair
Practice and the NASD's "Interpretation to Free Riding and Withholding."
r. The Primary Parties will conduct their respective businesses in
compliance in all material respects with all applicable federal and state laws,
rules, regulations, decisions, directives and orders including, all decisions,
directives and orders of the OTS.
s. The Primary Parties will not amend the Plan without the Selling Agent's
prior written consent in any manner that, in the opinion of the Selling Agent,
would affect the sale of the Shares or the terms of this Agreement, which
approval shall not be unreasonably withheld.
t. The Primary Parties will use all reasonable efforts to comply with, or
cause to be complied with, the conditions precedent to the several obligations
of the Selling Agent specified in Section 9 hereof.
u. Prior to the Closing Date, the Primary Parties shall have received
approval of each Reorganization Application required to consummate the Merger,
and all applicable waiting periods shall have expired.
SECTION 6. Payment of Expenses. Whether or not the Reorganization is
completed or the sale of the Shares by the Company is consummated, the Primary
Parties jointly and severally agree to pay all expenses incident to the
performance of the obligations of any Primary Party under this Agreement,
including the following: (i) the preparation, printing, issuance and delivery of
the certificates evidencing the Shares sold to the purchasers in the Offering
and the printing and delivery of all other documents applicable to the
Reorganization and the Merger; (ii) the fees and disbursements of the Primary
Parties' counsel, accountants and other advisors; (iii) the qualification of the
Shares under all applicable securities or Blue Sky laws, including filing fees
and the reasonable fees and disbursements of counsel in connection therewith and
in
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connection with the preparation of a Blue Sky Survey concerning such
jurisdictions as the Selling Agent may reasonably designate; (iv) the printing
and delivery to the Selling Agent in such quantities as the Selling Agent shall
reasonably request of copies of the Registration Statement, the Prospectus and
the Reorganization Applications as originally filed and as amended or
supplemented and all other documents in connection with the Reorganization and
this Agreement; (v) the filing fees incurred in connection with the review of
the Registration Statement, the Reorganization Applications and any other
application, form or filing by the Commission and the OTS; (vi) the filing fees
and the fees and disbursements of counsel incurred in connection with the review
of the Offering by the NASD; (vii) the fees for listing the Shares on the Nasdaq
National Market System; (viii) the fees and expenses relating to the Independent
Valuation; (ix) the fees and expenses relating to advertising expenses,
temporary personnel expenses, expenses related to the Stock Information Center
to be established, investor meeting expenses and other miscellaneous expenses
relating to the marketing of the Shares; and (x) the fees and charges of any
transfer agent, registrar or other agent. In the event that the Selling Agent
incurs any such expenses on behalf of the Primary Parties, the Primary Parties
will pay or reimburse the Selling Agent for such expenses regardless of whether
the Reorganization is successfully completed, and such reimbursements will not
be included in the expense limitations set forth in the following paragraph. The
Selling Agent will not incur any single expense of more than $1,000 pursuant to
this paragraph without the prior approval of the Company or the Bank.
In addition, the Primary Parties will reimburse the Selling Agent for all
reasonable out-of-pocket expenses, including legal fees and expenses, incurred
by the Selling Agent in connection with the services provided by the Selling
Agent to the Primary Parties pursuant to this Agreement. Such legal fees shall
not exceed $75,000 and such other out-of-pocket expenses incurred by Ryan Beck
shall not exceed $35,000. The Selling Agent will provide a detailed accounting
of the out-of-pocket expenses referred to in this paragraph, which will be paid
by the Company and/or the Bank on the Closing Date. The parties hereto
acknowledge that the expense limitations set forth in this paragraph may be
exceeded in the event of a material delay in the Offering that requires an
update of financial information contained in the Registration Statement.
Section 7. Indemnification.
a. The Primary Parties jointly and severally agree to indemnify and hold
harmless the Selling Agent, its officers, directors, agents and employees and
each person, if any, who controls the Selling Agent within the meaning of
Section 15 of the 1933 Act or Section 20(a) of the 1934 Act against any and all
loss, liability, claim, damage or expense whatsoever (including but not limited
to settlement expenses, subject to the limitation in the last sentence of
paragraph (c) below), joint or several, that the Selling Agent or any of such
persons may suffer or to which the Selling Agent or any such persons may become
subject under all applicable federal and state laws or otherwise, and to
promptly reimburse the Selling Agent and any of such persons upon written demand
for any expenses (including reasonable fees and disbursements of counsel)
reasonably incurred by the Selling Agent or any of such persons in connection
with investigating,
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preparing or defending any actions, proceedings or claims (whether commenced or
threatened) to the extent such losses, claims, damages, liabilities or actions:
(i) arise out of or are based upon any untrue statement, or alleged untrue
statement, of any material fact contained in any Reorganization Application (or
any amendment or supplement thereto), the Registration Statement (or any
amendment or supplement thereto), the Prospectus (or any amendment or supplement
thereto), or any application or other document, advertisement or communication
prepared, made or executed by or on behalf of any Primary Party or based upon
written information or statements furnished or made by any Primary Party or its
representatives (including counsel) whether or not filed in any jurisdiction in
order to register or qualify any or all of the Shares under the securities law
thereof (the "Sales Information"); (ii) arise out of or are based upon the
omission or alleged omission to state in any of the foregoing documents or
information a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; or (iii) arise from any theory of liability whatsoever
relating to or arising from or based upon any Reorganization Application (or any
amendment or supplement thereto), the Registration Statement (or any amendment
or supplement thereto), the Prospectus (or any amendment or supplement thereto),
the Sales Information or other documentation prepared by a Primary Party and
distributed in connection with the Offering; except to the extent such losses,
claims, damages, liabilities or actions arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact in, or omission
or alleged omission of a material fact from, any Reorganization Application (or
any amendment or supplement thereto), the Registration Statement (or any
amendment or supplement thereto), the Prospectus (or any amendment or supplement
thereto), the Sales Information or other documentation prepared by any Primary
Party and distributed in connection with the Offering made in reliance upon and
in conformity with information furnished in writing to any Primary Party by the
Selling Agent or their representatives (including counsel) regarding the Selling
Agent expressly for use in the Prospectus, which the Primary Parties acknowledge
includes only the information contained in the Prospectus under the caption "The
Restructuring and the Offering--Marketing Arrangements"; nor shall
indemnification be required for material oral misstatements to a purchaser of
Shares made by the Selling Agent which are not based upon information provided
by any Primary Party in writing or based upon information contained in any
Reorganization Application (or any amendment or supplement thereto), the
Registration Statement (or any amendment or supplement thereto), the Prospectus
(or any amendment or supplement thereto), or the Sales Information or other
documentation prepared by a Primary Party and distributed in connection with the
Reorganization. In addition, no Primary Party will be liable under the foregoing
indemnification provisions to the extent that any loss, claim, damage, liability
or action is found in a final judgment by a court to have resulted from the
Selling Agent's bad faith, misconduct or negligence in performing the services
to be performed by the Selling Agent under this Agreement. Notwithstanding the
foregoing, the indemnification provided for in this paragraph (a) shall not
apply to the Bank to the extent that such indemnification by the Bank would
constitute a covered transaction under Section 23A of the Federal Reserve Act.
For purposes of this Section 7, the term "expense" shall include, but not be
limited to, counsel fees and costs, court costs and out-of-pocket costs. The
foregoing agreement to indemnify shall be in
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addition to any liability any Primary Party may otherwise have to the Selling
Agent or the persons entitled to the benefit of these indemnification
provisions.
b. The Selling Agent agrees to indemnify and hold harmless the Primary
Parties, their respective officers, directors, agents and employees and each
person, if any, who controls a Primary Party within the meaning of Section 15 of
the 1933 Act or Section 20(a) of the 1934 Act against any and all loss
liability, claim, damage or expense whatsoever (including but not limited to
settlement expenses, subject to the limitation in the last sentence of paragraph
(c) below), joint or several, that they or any of such persons may suffer or to
which they or any such persons may become subject under all applicable federal
and state laws or otherwise, and to promptly reimburse the Primary Parties and
any of such persons upon written demand for any expenses (including reasonable
fees and disbursements of counsel) reasonably incurred by them or any of such
persons in connection with investigating, preparing or defending any actions,
proceedings or claims (whether commenced or threatened) to the extent such
losses, claims, damages, liabilities or actions: (i) arise out of or are based
upon any untrue statement, or alleged untrue statement, of a material fact
contained in any Reorganization Application (or any amendment or supplement
thereto), the Registration Statement (or any amendment or supplement thereto),
the Prospectus (or any amendment or supplement thereto), the Sales Information
or other documentation prepared by any Primary Party and distributed in
connection with the Offering; or (ii) arise out of or which are based upon the
omission or alleged omission to state in any of the foregoing documents or
information a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that obligations of the Selling Agent
under this paragraph shall exist only if and to the extent that such untrue
statement or alleged untrue statement was made in, or such omission or alleged
omission was from, any Reorganization Application (or any amendment or
supplement thereto), the Registration Statement (or any amendment or supplement
thereto), the Prospectus (or any amendment or supplement thereto), the Sales
Information or other documentation prepared by any Primary Party and distributed
in connection with the Offering in reliance upon and in conformity with
information furnished in writing to any Primary Party by the Selling Agent or
its representatives (including counsel) regarding the Selling Agent expressly
for use in the Prospectus, which the Primary Parties acknowledge includes only
the information contained in the Prospectus under the caption "The Restructuring
and the Offering--Marketing Arrangements." In addition, the Selling Agent will
not be liable under the foregoing indemnification provisions to the extent that
any loss, claim, damage, liability or action is found in a final judgment by a
court to have resulted from any Primary Party's bad faith, misconduct or
negligence. The foregoing agreement to indemnify shall be in addition to any
liability the Selling Agent may otherwise have to the Primary Parties or the
persons entitled to the benefit of these indemnification provisions.
c. Each indemnified party shall give prompt written notice to each
indemnifying party of any action, proceeding, claim (whether commenced or
threatened) or suit instituted against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve it from any liability which it may have on account of this
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Section 7 and Section 8 herein. An indemnifying party may participate at its own
expense in the defense of such action. In addition, if it so elects within a
reasonable time after receipt of such notice, an indemnifying party, jointly
with any other indemnifying parties receiving such notice, may assume the
defense of such action with counsel chosen by it and reasonably acceptable to
the indemnified parties that are defendants in such action, unless such
indemnified parties reasonably object to such assumption on the ground that
there may be legal defenses available to them that are different from or in
addition to those available to such indemnifying party. If an indemnifying party
assumes the defense of such action, the indemnifying parties shall not be liable
for any fees and expenses of counsel for the indemnified parties incurred
thereafter in connection with such action, proceeding or claim, other than
reasonable costs of investigation. In no event shall the indemnifying parties be
liable for the fees and expenses of more than one firm of attorneys for the
indemnified parties (unless an indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them which
are different from or additional to those of the other indemnified parties) in
connection with any one action, proceeding or claim or separate but similar or
related actions, proceedings or claims in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall be
liable for any settlement of any action, proceeding or suit effected without its
prior written consent.
d. The agreement contained in this Section 7 and in Section 8 hereof and
the representations and warranties of the Primary Parties set forth in this
Agreement shall remain operative and in full force and effect regardless of: (i)
any investigation made by or on behalf of the Selling Agent or its directors,
officers, agents, employees or controlling persons or by or on behalf of the
Primary Parties or their respective directors, officers, agents, employees or
controlling persons; (ii) delivery of and payment hereunder for the Shares; or
(iii) any termination of this Agreement.
Section 8. Contribution. If the indemnification of an indemnified party
provided for in Section 7 of this Agreement is for any reason held
unenforceable, the Primary Parties, on the one hand, and the Selling Agent, on
the other, agree to contribute to the losses, liabilities, claims, damages and
expenses for which such indemnification is held unenforceable: (i) in such
proportion as is appropriate to reflect the relative benefits to the Primary
Parties, on the one hand, and the Selling Agent, on the other, of the
Reorganization as contemplated (whether or not the Reorganization is
consummated), or (ii) if the application provided for in clause (i) is for any
reason held unenforceable, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) but also the relative fault
of the Primary Parties, on the one hand, and the Selling Agent, on the other, as
well as other equitable considerations. The Primary Parties agree that for the
purposes of this Section 8, the relative benefits to the Primary Parties and the
Selling Agent of the Reorganization as contemplated shall be deemed to be in the
same proportion that the total net proceeds from the Reorganization and the
Offering received by the Bank and the Company in connection with the
Reorganization bear to the total fees paid or to be paid to the Selling Agent
under this Agreement. No person found guilty of any fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
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<PAGE> 24
contribution from any person who was not found guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each of the Selling Agent's
officers and directors and each person, if any, who controls the Selling Agent
within the meaning of the 1933 Act and the 1934 Act shall have the same rights
to contribution as the Selling Agent, and each of the Primary Parties' officers
and directors and each person, if any, who controls the Primary Parties within
the meaning of the 1933 Act and the 1934 Act shall have the same rights to
contribution as the Primary Parties. Any party entitled to contribution shall,
promptly after receipt of notice of commencement of any action, suit, claim or
proceeding against such party in respect to which a claim for contribution may
be made against another party, notify such other party, but the omission to so
notify such party shall not relieve the party from whom contribution may be
sought from any other obligation it may have hereunder or otherwise than under
this Section 8. The Primary Parties and the Selling Agent agree that it would
not be just and equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation or by other method of allocation that does not
take into account the equitable considerations referred to in this Section 8.
Section 9. Conditions of the Selling Agent's Obligations. The obligations
of the Selling Agent hereunder as to the Shares to be delivered at the Closing
Date are subject, in the discretion of the Selling Agent, to the condition that
all representations and warranties and other statements of the Primary Parties
herein are, at and as of the commencement of the Offering and at and as of the
Closing Date, true and correct in all material respects, the condition that the
Primary Parties shall have performed in all material respects all of their
respective obligations hereunder to be performed on or before such dates and to
the following conditions:
a. The Registration Statement shall have been declared effective by the
Commission not later than 5:30 p.m. on the date of this Agreement, or with the
consent of the Selling Agent at a later time and date; and at the Closing Date
no stop order suspending the effectiveness of the Registration Statement or the
consummation of the Reorganization shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission or any state
securities or Blue Sky authority, and no order or other action suspending the
effectiveness of the Prospectus or the consummation of the Reorganization shall
have been issued or proceedings therefore initiated or threatened by the OTS.
b. At the Closing Date, the Selling Agent shall have received the favorable
opinion, dated as of the Closing Date addressed to the Selling Agent and for
their and their counsel's benefit, of Quarles & Brady LLP as to issues of
federal and Wisconsin law set forth below. The opinion of Quarles & Brady LLP
shall be in form and substance to the effect that:
1. Prior to the Charter Conversion, the Bank was duly organized and
validly existing under the laws of Wisconsin as a mutual savings
bank, and had the full power and authority to own its properties
and to conduct its business as described in the Prospectus and to
enter into this Agreement and perform its obligations hereunder,
and the activities of the Bank as
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described in the Prospectus are permitted by the rules,
regulations and practices of the FDIC and the Wisconsin
Department; following the Charter Conversion, the Bank was duly
organized and validly existing under the laws of the United
States as a capital stock savings bank, and had the full power
and authority to own its properties and to conduct its business
as described in the Prospectus and to enter into this Agreement
and perform its obligations hereunder, and the activities of the
Bank as described in the Prospectus are permitted by the rules,
regulations and practices of the OTS; the issuance and sale of
the capital stock of the Bank to the Company in the
Reorganization has been duly and validly authorized by all
necessary corporate action on the part of the Company and the
Bank and, upon payment therefor in accordance with the terms of
the Plan, will be validly issued, fully paid and nonassessable,
subject to Section 180.0622(2)(b), and will be owned of record
and beneficially by the Company, free and clear of any mortgage,
pledge, lien, encumbrance, claim or restriction.
2. The Company is a corporation duly organized and validly existing
and in good standing under the federal laws of the United States
of America, with corporate power and authority to own its
properties and to conduct its business as described in the
Prospectus, and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its
business requires such qualification and in which the failure to
qualify would have a material adverse effect on the financial
condition, earnings, capital, properties or business affairs of
the Primary Parties.
3. Upon consummation of the Reorganization, the MHC will have been
duly organized and will be validly existing as a federally
chartered mutual holding company, duly authorized to conduct its
business and own its properties as described in the Registration
Statement and Prospectus.
4. Each of the Primary Parties and their subsidiaries is duly
qualified as a foreign corporation to transact business and is in
good standing in each jurisdiction in which such qualification is
and, following consummation of the Reorganization, will be
required, unless the failure to be so qualified in one or more of
such jurisdictions would not have a material adverse effect on
the financial condition or the business, operations, net income
or prospects of the Primary Parties taken as a whole.
5. Each of the Bank's subsidiaries is validly existing and in good
standing under the laws of its jurisdiction of organization, and
each has the corporate power and authority to own, lease and
operate its properties and to conduct its business as described
in the Registration Statement and
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Prospectus; the activities of each subsidiary of the Bank as
described in the Registration Statement and Prospectus are
permitted (i) to subsidiaries of a Wisconsin chartered savings
bank by the rules, regulations, policies and practices of the
Wisconsin Department, the FDIC, and any other federal or state
authority having jurisdiction over such matters, and (ii) to
subsidiaries of a federally-chartered savings bank and savings
and loan holding company by the rules, regulations, policies and
practices of the OTS and any other federal or state authority
having jurisdiction over such matters; all of the outstanding
stock of each subsidiary of the Bank has been duly authorized and
validly issued and is fully paid and nonassessable, subject to
Section 180.0622(2)(b); and upon consummation of the
Reorganization all such stock will be owned of record and
beneficially by the Bank, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity.
6. Upon consummation of the Reorganization, the authorized equity
capital of the Company will consist of 100,000,000 shares of
common stock and 10,000,000 shares of preferred stock, and the
issued and outstanding equity capital of the Company will be
consistent with that set forth in the Registration Statement and
the Prospectus under the caption "Capitalization"; no shares of
the Company's common stock, or securities exercisable into or
exchangeable for common stock, will have been issued prior to the
Closing Date (other than shares issued to the Bank in connection
with the formation of the Company, which shares will be cancelled
upon consummation of the Reorganization); at the time of the
Reorganization the Shares will have been duly and validly
authorized for issuance, and when issued and delivered by the
Company pursuant to the Plan, will be duly authorized and validly
issued and fully paid and nonassessable, subject to Section
180.0622(2)(b); the issuance of the Shares is not subject to any
preemptive rights. Upon the issuance of the Shares, against
payment therefor in accordance with the Prospectus, the
purchasers will have full legal title to the shares, subject to
such claims as may be asserted against the purchasers thereof by
third-party claimants.
7. Each Reorganization Application has been approved by the
applicable regulatory authority pursuant to the Reorganization
Regulations and the Prospectus has been authorized for use by the
OTS, and, to such counsel's knowledge, no action has been taken
or is pending or threatened to revoke any such authorization or
approval.
8. Each Reorganization Application, as amended or supplemented, if
amended or supplemented, as filed with the applicable regulatory
authority
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<PAGE> 27
complied as to form in all material respects with the
requirements of the Reorganization Regulations.
9. The OTS's approval of the Plan remains in full force and effect;
the Primary Parties have conducted the Reorganization in all
material respects in accordance with the requirements of the
Reorganization Regulations, federal law, all other applicable
regulations, decisions and orders and the Plan, including all
material applicable terms, conditions, requirements and
conditions precedent to the Reorganization imposed by the OTS; no
order has been issued by the OTS to suspend the Charter
Conversion, the Reorganization or the Merger and no action for
such purpose has been instituted or, to such counsel's knowledge,
threatened by the OTS; and, to such counsel's knowledge, no
person has sought to obtain review of the final action of the OTS
in approving any Reorganization Application or the Plan.
10. This Agreement has been duly authorized, executed and delivered
by each of the Primary Parties and is the legal, valid and
binding agreement of the Bank, the Company, and the MHC, subject,
as to enforceability, to bankruptcy, insolvency, reorganization,
moratorium, conservatorship, receivership and other laws of
general applicability relating to or affecting creditors' rights
or the rights of creditors of depository institutions the
deposits of which are insured by the FDIC, to general principles
of equity (whether considered in an action at law or in equity)
and to the extent that rights to indemnity and contribution
thereunder may be limited under applicable laws or under
considerations of public policy.
11. The Registration Statement is effective under the 1933 Act and no
stop order suspending effectiveness has been issued under the
1933 Act and, to such counsel's knowledge, no proceedings
therefor have been initiated or threatened by the Commission or
any state securities or Blue Sky authority.
12. All conditions imposed by the OTS in connection with its
approvals of the Reorganization Applications have been satisfied,
and no further approval, authorization, consent or other order of
any federal or state board or body is required in connection with
the execution and delivery of this Agreement, the issuance of the
Shares and the consummation of the Reorganization, except as may
be required under the securities or Blue Sky laws of various
jurisdictions.
13. At the time the Registration Statement became effective, (i) the
Registration Statement (as amended or supplemented, if so amended
or
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supplemented) (other than the financial statements, stock
valuation information and other financial and statistical data
included therein, as to which no opinion need be rendered),
complied as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and
(ii) the Prospectus (other than the financial statements, stock
valuation information and other financial and statistical data
included therein, as to which no opinion need be rendered)
complied as to form in all material respects with the
requirements of the Reorganization Regulations.
14. The information in the Registration Statement and Prospectus
under the captions "Restrictions on Acquisition of Bank Mutual"
and "Description of Capital Stock of Bank Mutual," to the extent
that it constitutes matters of law, summaries of legal matters,
documents or proceedings or legal conclusions, has been reviewed
by such counsel and is correct in all material respects.
15. The terms and provisions of the Common Stock conform in all
material respects to the description thereof contained in the
Prospectus, and the form of certificate used to evidence the
Shares is in due and proper form.
16. To such counsel's knowledge, there are no legal or governmental
proceedings pending or threatened against any Primary Party or
any subsidiary which are required to be disclosed in the
Registration Statement and Prospectus other than those disclosed
therein, and all pending legal and governmental proceedings to
which any Primary Party or any subsidiary is the subject which
are not disclosed in the Registration Statement, including
ordinary routine litigation, are, considered in the aggregate,
not material.
17. To such counsel's knowledge, there are no material contracts,
indentures, mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to in the
Registration Statement and Prospectus or to be filed as exhibits
thereto other than those described or referred to therein or
filed as exhibits thereto, and the description thereof or
references thereto are correct in all material respects.
18. To such counsel's knowledge, the Bank and its subsidiaries, and
the Company and the MHC have obtained all material licenses,
permits and other governmental authorizations currently required
for the conduct of their respective businesses, taken as a whole,
as described in the Registration Statement and Prospectus; all
such licenses, permits and other governmental authorizations are
in full force and effect; and the Bank and
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<PAGE> 29
its subsidiaries, the Company, and the MHC are in all material
respects complying therewith.
19. The Plan has been duly adopted by the required votes of the Board
of Directors of the Bank, the Company, the MHC, and the Bank's
members.
20. The Bank's Charter and bylaws comply in all material respects
with Wisconsin and federal law and regulations of the OTS. The
Bank is not in violation of its Charter or bylaws; the execution
and delivery of this Agreement, the incurrence of the obligations
herein set forth and the consummation of the transactions
contemplated herein will not result in any violation of the
provisions of the Charter or Bylaws of the Company.
21. The charters and by-laws of the Company and the MHC, and
following the Charter Conversion, the Bank, comply in all
material respects with the HOLA and the rules and regulations of
the OTS. None of the Bank, the Company or the MHC is in violation
of its charter or by-laws; the execution and delivery of this
Agreement, the incurrence of the obligations herein set forth and
the consummation of the transactions contemplated herein will not
result in any violation of the provisions of the Charter or
Bylaws of the Bank, the Company or the MHC.
22. To such counsel's knowledge, none of the Bank's subsidiaries is
in violation of its charter or by-laws; to such counsel's
knowledge, the execution and delivery of this Agreement, the
incurrence of the obligations herein set forth and the
consummation of the transactions contemplated herein will not
result in any violation of the provisions of the charter or by-
laws of such subsidiary.
23. To such counsel's knowledge, none of the Primary Parties is in
violation of any directive from the Wisconsin Department, the OTS
or the FDIC to make any material change in the method of
conducting its business, and the Primary Parties have conducted
and are conducting their respective businesses so as to comply in
all material respect with all applicable statutes and regulations
(including, without limitation, regulations, decisions,
directives and orders of the Wisconsin Department, the FDIC, and
the OTS).
24. Neither the Bank, the Company nor the MHC is required to be
registered as an investment company under the Investment Company
Act of 1940.
25. The Primary Parties have the power and authority to consummate
the transactions contemplated by the Merger Agreement.
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26. The Merger Agreement has been duly authorized, executed and
delivered by each of the Primary Parties and constitutes the
valid and binding obligation of each of them, enforceable in
accordance with its terms subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general
principles of equity, whether applied in a court of law or a
court of equity.
27. To such counsel's knowledge, all corporate acts and other
proceedings required to be taken by or on the part of the Primary
Parties to consummate the Merger have been properly taken;
neither the execution and delivery of the Merger Agreement, nor
the consummation of the transactions contemplated thereby, with
and without the giving of notice or the lapse of time, or both,
will violate any provision of the Articles, Charter or Bylaws of
any Primary Party.
28. Except as disclosed in such opinion, to such counsel's knowledge,
there are no actions, suits, proceedings or investigations
(public or private) of any nature pending or threatened that
challenge the validity or propriety of the transactions
contemplated by the Merger Agreement or which seek or threaten to
restrain, enjoin or prohibit or to obtain substantial damages in
connection with the consummation of such transactions.
29. All regulatory and governmental approvals and consents which are
necessary to be obtained by the Primary Parties and their
subsidiaries to permit the execution, delivery and performance of
the Merger Agreement have been obtained.
30. All conditions precedent to consummation of the Merger have been
satisfied or waived, including but not limited to those
referenced in the Merger Agreement, and all statutory waiting
periods with respect to all regulatory and governmental approvals
of the Merger have expired.
c. At the Closing Date, the Selling Agent shall have received the favorable
opinion, dated as of the Closing Date addressed to the Selling Agent and for
their and their counsel's benefit, of Schiff Hardin & Waite, counsel to First
Northern Capital and First Northern Savings, concerning the following matters:
1. First Northern Capital is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Wisconsin, and First Northern Savings is a federally chartered
savings bank duly organized in stock form, validly existing and
in good standing under the laws of the United States.
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2. First Northern Capital and First Northern Savings have the
corporate power and authority to carry on their respective
businesses as such businesses are described in the Prospectus
and, and First Northern Capital has the corporate power and
authority to consummate the Merger.
3. The Merger Agreement has been duly authorized and approved by the
Boards of Directors of First Northern Capital and First Northern
Savings, the Merger Agreement and the Merger have been approved
by the requisite vote of First Northern Capital's shareholders,
the Merger Agreement has been duly executed and delivered by
First Northern Capital and First Northern Savings and the Merger
Agreement constitutes the valid and binding obligation of First
Northern Capital and First Northern Savings, enforceable in
accordance with its terms subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general
principles of equity, whether applied in a court of law or a
court of equity. To such counsel's actual knowledge, no other
corporate acts or proceedings are required to be taken by First
Northern Capital or First Northern Savings in order to consummate
the Merger.
4. To such counsel's actual knowledge, all federal and state banking
agency approvals, consents, authorizations or notifications
required to be received or made by First Northern Capital or
First Northern Savings prior to consummation of the Merger have
been properly obtained or made; neither the execution and
delivery of the Merger Agreement nor the consummation of the
Merger, with or without the giving of notice or the lapse of
time, or both, will (i) violate any provision of the Articles of
Incorporation, Charter or Bylaws of First Northern Capital or
First Northern Savings; or (ii) to the actual knowledge of such
counsel, violate any federal or state banking statute, rule or
regulation applicable to First Northern Capital and First
Northern Savings, which would have a material adverse effect on
the financial condition, assets, liabilities, or business of
First Northern Capital and First Northern Savings; to the actual
knowledge of such counsel, no consent, approval, authorization,
order, registration or qualification of or with any court,
federal or state banking regulatory authority or other federal or
state banking governmental body other than as specifically
contemplated by the Merger Agreement is required for the
consummation by First Northern Capital and First Northern Savings
of the Merger.
5. To such counsel's actual knowledge, there are no actions, suits,
proceedings, or investigations of any nature pending or
threatened that challenge the validity or legality of the Merger
or which seek or threaten
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<PAGE> 32
to restrain, enjoin or prohibit (or obtain substantial damages in
connection with) the consummation of the Merger.
6. To such counsel's actual knowledge, there is no litigation,
appraisal or other judicial or administrative proceeding or
governmental investigation pending or threatened against or
relating to the business or property of First Northern Capital or
First Northern Savings which would have a materially adverse
effect on the consolidated financial condition of First Northern
Capital, or any legal impediment to the continued operation of
the properties and business of First Northern Capital and First
Northern Savings in the ordinary course after the consummation of
the Merger.
Counsel may expressly exclude any opinions as to choice of law and
anti-trust matters and may add other qualifications and explanations of the
basis of its opinions as are consistent with the Legal Opinion Accord prepared
by the Section of Business Law of the American Bar Association.
d. At the Closing Date, the Selling Agent shall have received a letter of
Quarles & Brady LLP, addressed to the Selling Agent, dated the Closing Date, in
form and substance to the effect that during the preparation of the
Reorganization Applications, the Registration Statement and the Prospectus, such
counsel participated in conferences with management of and the independent
certified public accountants for the Primary Parties. Based upon such
conferences and such review of corporate records of the Primary Parties as such
counsel conducted in connection with the preparation of the Registration
Statement and Reorganization Applications, nothing has come to their attention
that would lead them to believe that any Reorganization Application, the
Registration Statement, the Prospectus or any amendment or supplement thereto
(other than financial statements, stock valuation information and other
financial and statistical data included therein, as to which such counsel need
express no view), contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
e. At the Closing Date, the Selling Agent shall have received the favorable
opinion, dated as of the Closing Date, of Luse Lehman Gorman Pomerenk & Schick,
counsel for the Selling Agent, with respect to such matters as the Selling Agent
may reasonably require. Such opinion may rely upon certificates of officers and
directors of the Primary Parties delivered pursuant hereto or as such counsel
shall reasonably request.
f. At the Closing Date, the Selling Agent shall receive a certificate of
the Chief Executive Officer and the Chief Financial Officer of each of the
Primary Parties, dated the Closing Date, to the effect that: (i) since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, there has been no material adverse change in the
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<PAGE> 33
financial condition or in the net income, capital, properties, affairs or
prospects of the Primary Parties taken as a whole, whether or not arising in the
ordinary course of business; (ii) the representations and warranties in Section
4 of this Agreement are true and correct with the same force and effect as
though expressly made at and as of the Closing Date; (iii) the Primary Parties
have complied with all agreements and satisfied all conditions on their part to
be performed or satisfied at or prior to the Closing Date and will comply with
all obligations to be satisfied by them after the Reorganization; (iv) no stop
order suspending the effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been initiated or threatened by the
Commission or any state securities or Blue Sky authority; and (v) no order
suspending the Offering, the Reorganization or the effectiveness of the
Prospectus has been issued and no proceedings for that purpose have been issued
and no proceedings for that purpose have been initiated or threatened by the
OTS.
g. Prior to and at the Closing Date: (i) there shall have been no material
adverse change in the financial condition or in the net income, affairs or
prospects of the Primary Parties taken as a whole since the respective dates as
of which information is given in the Prospectus, except as referred to therein;
(ii) there shall have been no material transaction entered into by any Primary
Party since the latest dates as of which the financial condition of the Primary
Parties is set forth in the Prospectus, other than transactions referred to or
contemplated therein; (iii) no Primary Party shall have received from the OTS or
any other government agency any direction (oral or written) to make any material
change in the method of conducting its business with which it has not complied
(which direction, if any, shall have been disclosed to the Selling Agent) or
which would materially and adversely affect its business, operations, financial
condition or net income; (iv) no Primary Party shall have been in default (nor
shall an event have occurred which, with notice or lapse of time or both, would
constitute a default) under any provision of any agreement or instrument
relating to any outstanding indebtedness; (v) no action, suit or proceeding, at
law or in equity or before or by any federal or state commission, board or other
administrative agency, shall be pending or, to the knowledge of any Primary
Party, threatened against any Primary Party or subsidiary or affecting any of
their respective properties wherein an unfavorable decision, ruling or finding
would materially and adversely affect the business, operations, financial
condition or net income of the Primary Parties taken as a whole; and (vi) the
Shares shall have been qualified or registered for offering and sale under the
securities or Blue Sky laws of the jurisdictions set forth in the Blue Sky
Survey prepared by Luse Lehman Gorman Pomerenk & Schick, A Professional
Corporation.
h. Concurrently with the execution of this Agreement, the Selling Agent and
the Primary Parties shall receive a letter from Ernst & Young dated the date
hereof and addressed to the Selling Agent: (i) confirming that Ernst & Young is
a firm of independent certified public accountants with respect to the Bank
within the meaning of the 1933 Act and the 1933 Act Regulations and the Code of
Ethics of the American Institute of Certified Public Accountants and no
information concerning its relationship with or interests in any Primary Party
is required to be disclosed in the Prospectus, and stating in effect that in its
opinion the consolidated financial statements of the Bank included in the
Prospectus and covered by its opinion included
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therein comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act, the 1934 Act, the 1933 Act Regulations,
the 1934 Act Regulations and generally accepted accounting principles; (ii)
stating in effect that, on the basis of certain agreed upon procedures (but not
an examination in accordance with generally accepted auditing standards)
consisting of a reading of the latest available unaudited interim consolidated
financial statements of the Bank prepared by the Bank, a reading of the minutes
of the meetings of the Board of Directors and members of the Bank and
consultations with officers of the Bank responsible for financial and accounting
matters, nothing has come to its attention which causes it to believe that: (A)
the unaudited consolidated financial statements of the Bank included in the
Prospectus do not comply as to form in all material respects with applicable
accounting requirements; (B) such unaudited consolidated financial statements
are not in conformity with generally accepted accounting principles applied on a
basis substantially consistent with that of the audited consolidated financial
statements included in the Prospectus; (C) during the period from the date of
the latest audited consolidated financial statements included in the Prospectus
to a specified date not more than five business days prior to the date hereof,
there was any material increase in borrowings by the Bank; or (D) there was any
material decrease in retained earnings of the Bank at the date of such letter as
compared with amounts shown in the latest audited consolidated balance sheet
included in the Prospectus or any material decrease in net income or net
interest income of the Bank for the number of full months commencing immediately
after the period covered by the latest audited consolidated income statement
included in the Prospectus and ended on the latest month end prior to the date
of the Prospectus as compared to the corresponding period in the preceding year;
and (iii) stating that, in addition to the examination referred to in its
opinion included in the Prospectus and the performance of the procedures
referred to in clause (ii) of this paragraph (e), it has compared with the
general accounting records of the Bank's accounting system and other data
prepared by the Bank directly from such accounting records, to the extent
specified in such letter, such amounts and/or percentages set forth in the
Prospectus as the Selling Agent may reasonably request; and they have found such
amounts and percentages to be in agreement therewith (subject to rounding).
i. Concurrently with the execution of this Agreement, the Selling Agent,
and the Primary Parties shall receive a letter from Wipfli dated the date hereof
and addressed to the Selling Agent: (i) confirming that Wipfli is a firm of
independent certified public accountants with respect to First Northern Capital
and First Northern Savings within the meaning of the 1933 Act and the 1933 Act
Regulations and the Code of Ethics of the American Institute of Certified Public
Accountants and no information concerning its relationship with or interests in
First Northern Savings or First Northern Capital is required to be disclosed in
the Prospectus, and stating in effect that in its opinion the consolidated
financial statements of First Northern Capital included in the Prospectus and
covered by its opinion included therein comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act, the 1934
Act, the 1933 Act Regulations, the 1934 Act Regulations and generally accepted
accounting principles; (ii) stating in effect that, on the basis of certain
agreed upon procedures (but not an examination in accordance with generally
accepted auditing standards) consisting of a reading of the latest available
unaudited interim consolidated financial statements of First Northern Capital
prepared
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by First Northern Capital, a reading of the minutes of the meetings of the Board
of Directors and stockholders of First Northern Capital and consultations with
officers of First Northern Capital responsible for financial and accounting
matters, nothing has come to its attention which causes it to believe that: (A)
the unaudited consolidated financial statements of First Northern Capital
included in the Prospectus do not comply as to form in all material respects
with applicable accounting requirements; (B) such unaudited consolidated
financial statements are not in conformity with generally accepted accounting
principles applied on a basis substantially consistent with that of the audited
consolidated financial statements included in the Prospectus; (C) during the
period from the date of the latest audited consolidated financial statements
included in the Prospectus to a specified date not more than five business days
prior to the date hereof, there was any material increase in borrowings by First
Northern Capital or First Northern Savings; or (D) there was any material
decrease in retained earnings of First Northern Capital at the date of such
letter as compared with amounts shown in the latest audited consolidated balance
sheet included in the Prospectus or any material decrease in net income or net
interest income of First Northern Capital for the number of full months
commencing immediately after the period covered by the latest audited
consolidated income statement included in the Prospectus and ended on the latest
month end prior to the date of the Prospectus as compared to the corresponding
period in the preceding year; and (iii) stating that, in addition to the
examination referred to in its opinion included in the Prospectus and the
performance of the procedures referred to in clause (ii) of this paragraph (e),
it has compared with the general accounting records of First Northern Capital
and/or First Northern Savings, as applicable, accounting system and other data
prepared by First Northern Capital and/or First Northern Savings, as applicable,
directly from such accounting records, to the extent specified in such letter,
such amounts and/or percentages set forth in the Prospectus as the Selling Agent
may reasonably request; and they have found such amounts and percentages to be
in agreement therewith (subject to rounding).
j. At the Closing Date, the Selling Agent shall receive letters from each
of Ernst & Young and Wipfli, dated the Closing Date, addressed to the Selling
Agent, confirming the statements made by them in the letter delivered by it
pursuant to paragraph (e) of this Section 9, the "specified date" referred to in
clause (ii) (C) thereof to be a date specified in such letter, which shall not
be more than five business days prior to the Closing Date.
k. At the Closing Date, the Selling Agent shall have received a letter from
RP Financial, dated as of the Closing Date, confirming the Independent
Valuation.
l. At the Closing Date, counsel to the Selling Agent shall have been
furnished with such documents and opinions as they may reasonably require for
the purpose of enabling them to pass upon the sale of the Shares as herein
contemplated and related proceedings or in order to evidence the accuracy or
completeness of any of the representations and warranties, or the fulfillment of
any of the conditions, herein contained; and all proceedings taken by the
Primary Parties in connection with the Reorganization and the sale of the Shares
as herein contemplated shall be satisfactory in form and substance to the
Selling Agent and counsel to the Selling Agent.
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m. The Primary Parties shall not have sustained since the date of the
latest audited consolidated financial statements included in the Registration
Statement and Prospectus any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, other than
as set forth or contemplated in the Registration Statement, which is in the
judgment of the Selling Agent sufficiently material and adverse as to make it
impracticable or inadvisable to proceed with the Offering or the delivery of the
Shares on the terms and in the manner contemplated in the Prospectus.
n. Subsequent to the date hereof, there shall not have occurred any of the
following: (i) a suspension or limitation in trading in securities generally on
the New York Stock Exchange or American Stock Exchange or in the
over-the-counter market, or quotations halted generally on the Nasdaq Stock
Market, or minimum or maximum prices for trading fixed, or maximum ranges for
prices for securities required by either of such exchanges or the NASD or by
order of the Commission or any other governmental authority; (ii) a general
moratorium on the operation of commercial banks, federal or state savings and
loan associations or savings banks in Wisconsin or a general moratorium on the
withdrawal of deposits from commercial banks, federal or state savings and loan
associations or savings banks in Wisconsin declared by either federal or
Wisconsin authorities; (iii) the engagement by the United States in hostilities
which have resulted in the declaration, on or after the date hereof, a national
emergency or war; or (iv) a material decline in the price of equity or debt
securities, if the effect of such a decline, in the judgment or the Selling
Agent, makes it impracticable or inadvisable to proceed with the Offering or the
delivery of the Shares on the terms and in the manner contemplated in the
Prospectus.
o. If any of the conditions specified in this Section 9 shall not have been
fulfilled when and as required by this Agreement, or by ____________, this
Agreement and all of the Selling Agent's obligations hereunder may be canceled
by the Selling Agent by notifying the Bank of such cancellation in writing or by
telegram at any time at or prior to the Closing Date, and any such cancellation
shall be without liability of any party to any other party except as otherwise
provided in Sections 1, 6, 7 and 8 hereof. Notwithstanding the above, if this
Agreement is canceled pursuant to this paragraph, the Primary Parties jointly
and severally agree to reimburse the Selling Agent for all of the Selling
Agent's out-of-pocket expenses reasonably incurred by the Selling Agent,
including any legal fees (and out-of- pocket expenses) to be paid to the Selling
Agent's counsel, subject to the limits expressed in Section 6 hereof, and an
advisory and administrative services fee of $__________ in connection with the
preparation of the Registration Statement and the Prospectus and in
contemplation of the proposed Offering.
SECTION 10. Termination.
a. In the event the Company fails to sell the minimum number of Shares in
the Offering as set forth in the Prospectus and does not modify the Offering
within the period specified in, and in accordance with the provisions of, the
Plan or as required by the Reorganization Regulations, this Agreement shall
terminate upon refund by the Company to each
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person who has subscribed for or ordered any of the Shares the full amount which
it may have received from such person, together with interest, as provided in
the Prospectus, and no party to this Agreement shall have any obligation to the
other hereunder, except for payment by the Primary Parties as set forth in
Sections 1, 6, 7 and 8 hereof.
b. This Agreement may be terminated by the Selling Agent, with respect to
the Selling Agent's obligations hereunder, by notifying the Company at any time
or prior to the Closing Date, if any of the conditions specified in Section 9
hereof shall not have been fulfilled when and as required by this Agreement or
if the Reorganization has not been completed by___________________.
SECTION 11. Survival. The respective indemnities, agreements,
representations, warranties and other statements of the Primary Parties and the
Selling Agent, as set forth in this Agreement, shall remain in full force and
effect, regardless of any investigation (or any statement as to the results
thereof) made by or on behalf of the Selling Agent or any of the Selling Agent's
officers or directors or any person controlling the Selling Agent, or the
Primary Parties, or any of their respective officers or directors or any person
controlling the Primary Parties, and shall survive termination of this Agreement
and receipt or delivery of any payment for the Shares.
SECTION 12. Miscellaneous. Notices hereunder, except as otherwise provided
herein, shall be given in writing or by telegraph, addressed (a) to Ryan, Beck
at 220 South Orange Avenue, Livingston, New Jersey 07039-5817 (Attention:
Michelle Darcey, First Vice President), with a copy to Luse Lehman Gorman
Pomerenk & Schick, 5335 Wisconsin Avenue, NW., Washington, DC 20015 (Attention:
Kenneth R. Lehman, Esq.) and (b) to the Primary Parties at the Bank's principal
office (Attention: Michael T. Crowley, Jr., President and Chief Executive
Officer), with a copy to Quarles & Brady LLP 411 E. Wisconsin Avenue, Milwaukee,
Wisconsin 53202-4492 (Attention: James D. Friedman, Esq.).
This Agreement is made solely for the benefit of and will be binding upon
the parties hereto and their respective successors and the directors, officers
and controlling persons referred to in Section 7 hereof, and no other person
will have any right or obligation hereunder. The term "successors" shall not
include any purchaser of any of the Shares.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Wisconsin.
Time shall be of the essence of this Agreement.
This Agreement may be signed in various counterparts which together will
constitute one agreement.
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If the foregoing correctly sets forth the arrangement among the Company,
the Bank and the Selling Agent, please indicate acceptance thereof in the space
provided below for that purpose, whereupon this letter shall constitute a
binding agreement.
MUTUAL SAVINGS BANK BANK MUTUAL CORPORATION
By: __________________________________ By: _________________________________
Michael T. Crowley, Jr., President Michael T. Crowley, Jr., Chairman
and Chief Executive Officer and Chief Executive Officer
MUTUAL SAVINGS BANCORP, MHC
By: __________________________________
Michael T. Crowley, Jr., President
and Chief Executive Officer
RYAN, BECK & CO.
By: _____________________________________
Michelle Darcey, First Vice President
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EXHIBIT A
Engagement Letter
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EXHIBIT B
[Form of Selected Dealers' Agreement]
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EXHIBIT C
[Ryan, Beck is registered in all U.S. jurisdictions except Arkansas.]
41
