Exhibit 1.2
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CHEVIOT FINANCIAL CORP.
(a federal stock corporation in formation)
__________ Shares
COMMON SHARES
($.01 Par Value)
Subscription Price $10.00 Per Share
AGENCY AGREEMENT
___________________, 2003
Xxxxx, Xxxxxxxx & Xxxxx, Inc.
000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000-0000
Ladies and Gentlemen:
Cheviot Mutual Holding Company, a federal mutual holding company (the
"MHC"), Cheviot Financial Corp., a federal corporation (the "Company"), and
Cheviot Savings Bank, an Ohio savings and loan association located in Cheviot,
Ohio (the "Bank") (references to the "Bank" include the Bank in the mutual or
stock form, as indicated by the context), with its deposit accounts insured by
the Savings Association Insurance Fund ("SAIF") administered by the Federal
Deposit Insurance Corporation ("FDIC"), hereby confirm their agreement with
Xxxxx, Xxxxxxxx & Xxxxx, Inc. ("the Agent"). As of the date hereof, each of the
MHC and the Company are in formation. Accordingly, the Bank hereby agrees to
cause the MHC and the Company to duly ratify, sign and deliver this Agreement
upon completion of their formation at or prior to the Closing Date as follows:
Section 1. The Offering. The Bank, in accordance with its plan of
reorganization adopted by its Board of Directors (the "Plan"), intends to
reorganize from an Ohio-chartered mutual savings and loan association into the
mutual holding company structure (the "Reorganization"), and issue all of its
issued and outstanding capital stock to the Company. The Reorganization will be
accomplished pursuant to Ohio state law, federal law and the rules and
regulations of the Office of Thrift Supervision (the "OTS"). Pursuant to the
Plan, the Company will offer and sell up to _________ shares of its common
stock, $.01 par value per share (the "Shares" or "Common Shares"), in a
subscription offering (the "Subscription Offering") to (1) depositors of the
Bank with Qualifying Deposits (as defined in the Plan) as of ______________
("Eligible Account Holders"), (2) the Cheviot Savings Bank Employee Stock
Ownership Plan (the "ESOP"), (3) depositors of the Bank with Qualifying Deposits
as of __________________
("Supplemental Eligible Account Holders") and (4) the Bank's Other Members as
defined in the Plan. Subject to the prior subscription rights of the
above-listed parties, the Company may offer for sale in a community offering
(the "Community Offering" and when referred to together with or subsequent to
the Subscription Offering, the "Subscription and Community Offering") conducted
concurrently with the Subscription Offering, the Shares not subscribed for or
ordered in the Subscription Offering to members of the general public to whom a
copy of the Prospectus (as hereinafter defined) is delivered with a preference
given to people who are residents of Xxxxxxxx County, Ohio. It is anticipated
that shares not subscribed for in the Subscription and Community Offering may be
offered to certain members of the general public on a best efforts basis through
a selected dealers agreement (the "Syndicated Community Offering") (the
Subscription Offering, Community Offering and Syndicated Community Offering are
collectively referred to as the "Offering"). It is acknowledged that the
purchase of Shares in the Offering is subject to the maximum and minimum
purchase limitations as described in the Plan and that the Company and the Bank
may reject, in whole or in part, any orders received in the Community Offering
or Syndicated Community Offering. Collectively, these transactions are referred
to herein as the "Reorganization."
In addition, as part of the Reorganization, and subject to compliance
with certain conditions as may be imposed by regulatory authorities, the Company
will contribute 75,000 newly issued shares of Common Stock and the Bank will
contribute $750,000 in cash to the Cheviot Savings Bank Charitable Foundation
(the "Charitable Foundation"), the shares contributed to the Charitable
Foundation hereinafter being referred to as the "Charitable Foundation Shares."
The Common Shares offered for sale in the Offering and the Charitable Foundation
Shares will represent a minority ownership interest of 45% of the Company's
total outstanding shares of Common Shares.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (File No. 333-106663) (the
"Registration Statement") containing a prospectus relating to the Offering for
the registration of the Shares under the Securities Act of 1933 (the "1933
Act"), and has filed such amendments thereof and such amended prospectuses as
may have been required to the date hereof. The term "Registration Statement"
shall include any documents incorporated by reference therein and all financial
schedules and exhibits thereto, as amended, including post-effective amendments.
The prospectus, as amended, on file with the Commission at the time the
Registration Statement initially became effective is hereinafter called the
"Prospectus," except that if any Prospectus is filed by the Company pursuant to
Rule 424(b) or (c) of the rules and regulations of the Commission under the 1933
Act (the "1933 Act Regulations") differing from the prospectus on file at the
time the Registration Statement initially becomes effective, the term
"Prospectus" shall refer to the prospectus filed pursuant to Rule 424(b) or (c)
from and after the time said prospectus is filed with the Commission.
In accordance with Title 12, Part 575 of the Code of Federal
Regulations (the "Reorganization Regulations"), the Bank has filed with the OTS
a Form MHC-1 Notice of Mutual Holding Company Reorganization and a Form MHC-2
Application for Approval of a Minority Stock Issuance by a Subsidiary of a
Mutual Holding Company (collectively, the
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"MHC-1/MHC-2 Application"), including the Prospectus and the Reorganization
Valuation Appraisal Report prepared by RP Financial LC (the "Appraisal") and has
filed such amendments thereto as may have been required by the OTS. The
MHC-1/MHC-2 Application has been approved by the OTS and the related Prospectus
has been authorized for use by the OTS. In addition, the Company has filed with
the OTS its application on Form H-(e)1 (the "Holding Company Application") to
become a registered savings and loan holding company under the Home Owners' Loan
Act, as amended ("HOLA") and the regulations promulgated thereunder (the
"Control Act Regulations").
The Bank has filed with the Ohio Division of Financial Institutions
(the "Ohio Division") a copy of the MHC-1/MHC-2 Application (the "Ohio
Application"), and has filed such amendments thereto. The Ohio Application has
been approved by the Ohio Division.
Section 2. Retention of Agent; Compensation; Sale and Delivery of the
Shares. Subject to the terms and conditions herein set forth, the Company and
the Bank hereby appoint the Agent as their exclusive financial advisor and
marketing agent (i) to utilize its best efforts to solicit subscriptions for
Common Shares and to advise and assist the Company and the Bank with respect to
the Company's sale of the Shares in the Offering and (ii) to participate in the
Offering in the areas of market making, research coverage and in syndicate
formation (if necessary).
On the basis of the representations, warranties, and agreements herein
contained, but subject to the terms and conditions herein set forth, the Agent
accepts such appointment and agrees to consult with and advise the Company and
the Bank as to the matters set forth in the letter agreement, dated April 11,
2003, between the Bank and the Agent (a copy of which is attached hereto as
Exhibit A). It is acknowledged by the Company and the Bank that the Agent shall
not be required to purchase any Shares or be obligated to take any action which
is inconsistent with all applicable laws, regulations, decisions or orders.
The obligations of the Agent pursuant to this Agreement (other than
those set forth in Section 2(a) and (c) hereof) shall terminate upon the
completion or termination or abandonment of the Plan by the Company or upon
termination of the Offering, but in no event later than 45 days after the
completion of the Subscription Offering (the "End Date"). All fees or expenses
due to the Agent but unpaid will be payable to the Agent in next day funds at
the earlier of the Closing Date (as hereinafter defined) or the End Date. In the
event the Offering is extended beyond the End Date, the Company, the Bank and
the Agent may agree to renew this Agreement under mutually acceptable terms.
In the event the Company is unable to sell a minimum of 1,722,750
Shares within the period herein provided, this Agreement shall terminate and the
Company shall refund to any persons who have subscribed for any of the Shares
the full amount which it may have received from them plus accrued interest, as
set forth in the Prospectus; and none of the parties to this Agreement shall
have any obligation to the other parties hereunder, except as set forth in this
Section 2 and in Sections 6, 8 and 9 hereof. In the event the Offering is
terminated for any reason not attributable to the action or inaction of the
Agent, the Agent shall be paid the fees due
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to the date of such termination pursuant to subparagraphs (a) and (d) below.
If all conditions precedent to the consummation of the Reorganization,
including, without limitation, the sale of all Shares required by the Plan to be
sold, are satisfied, the Company agrees to issue, or have issued, the Shares
sold in the Offering and to release for delivery certificates for such Shares on
the Closing Date (as hereinafter defined) against payment to the Company by any
means authorized by the Plan; provided, however, that no funds shall be released
to the Company until the conditions specified in Section 7 hereof shall have
been complied with to the reasonable satisfaction of the Agent and its counsel.
The release of Shares against payment therefor shall be made on a date and at a
place acceptable to the Company, the Bank and the Agent. Certificates for shares
shall be delivered directly to the purchasers in accordance with their
directions. The date upon which the Company shall release or deliver the Shares
sold in the Offering, in accordance with the terms herein, is called the
"Closing Date."
The Agent shall receive the following compensation for its services
hereunder:
(a) A management fee of $25,000 payable in four consecutive
monthly installments of $6,250 commencing with the adoption of this Plan. This
fee shall be due as it is earned and shall be non-refundable.
(b) A success fee upon completion of the Offering of 1.35% of
the aggregate purchase price of the Common Shares sold in the Subscription
Offering and Community Offering excluding shares purchased by the officers or
directors (or members of their immediate families) of the Bank and the ESOP. The
management fee described in (a) above will be applied against the success fee.
(c) If any of the Common Shares remain available after the
Subscription Offering, at the request of the Bank, the Agent will seek to form a
syndicate of registered broker-dealers ("Selected Dealers") to assist in the
sale of such Common Shares on a best efforts basis, subject to the terms and
conditions set forth in the selected dealers agreement. The Agent will endeavor
to distribute the Common Shares among the Selected Dealers in a fashion which
best meets the distribution objectives of the Bank and the Plan. The Agent will
be paid a fee not to exceed 5.5% of the aggregate Purchase Price of the Shares
sold by the Selected Dealers. The Agent will pass onto the Selected Dealers who
assist in the Syndicated Community Offering an amount competitive with gross
underwriting discounts charged at such time for comparable amounts of stock sold
at a comparable price per share in a similar market environment. Fees with
respect to purchases effected with the assistance of Selected Dealers other than
the Agent shall be transmitted by the Agent to such Selected Dealers. The
decision to utilize Selected Dealers will be made by the Bank upon consultation
with the Agent.
(d) The Bank and Company shall reimburse the Agent for
reasonable out-of-pocket expenses, including costs of travel, meals and lodging,
photocopying, telephone, facsimile and couriers. In addition, the Bank shall
reimburse the Agent for the fees of its counsel which will not exceed $75,000,
and which do not include legal fees to complete the qualification of the Common
Shares under the various state securities "Blue Sky" laws. The Bank will bear
the expenses of the Offering customarily borne by issuers including, without
limitation,
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regulatory filing fees, SEC, "Blue Sky," and NASD filing and registration fees;
the fees of the Bank's accountants, attorneys, appraiser, transfer agent and
registrar, printing, mailing and marketing expenses associated with the
reorganization; and the fees set forth under this Section 2. The Company or the
Bank will reimburse the Agent for any such expenses incurred by the Agent on
their behalf.
Full payment of Agent's actual and accountable expenses, advisory fees
and compensation shall be made in next day funds on the earlier of the Closing
Date or a determination by the Bank to terminate or abandon the Plan.
Section 3. Prospectus; Offering. The Shares are to be initially offered
in the Offering at the Purchase Price as defined and set forth on the cover page
of the Prospectus.
Section 4. Representations and Warranties of the MHC, the Company and
the Bank. The MHC, the Company and the Bank jointly and severally represent and
warrant to and agree with the Agent as follows:
(a) The Registration Statement which was prepared by the
Company and the Bank and filed with the Commission has been declared effective
by the Commission, no stop order has been issued with respect thereto and no
proceedings therefor have been initiated or, to the knowledge of the Company,
the Bank and the MHC, threatened by the Commission. At the time the Registration
Statement, including the Prospectus contained therein (including any amendment
or supplement), 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, including the Prospectus contained
therein (including any amendment or supplement thereto), and any information
regarding the Company or the Bank contained in Sales Information (as such term
is defined in Section 8 hereof) authorized by the Company or the Bank for use in
connection with the Offering, did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, and at the time any Rule 424(b) or (c) Prospectus is
filed with the Commission and at the Closing Date referred to in Section 2, the
Prospectus (including any amendment or supplement thereto) and any information
regarding the Company or the Bank contained in Sales Information (as such term
is defined in Section 8 hereof) authorized by the Company or the Bank for use in
connection with the Offering will contain all statements that are required to be
stated therein in accordance with the 1933 Act and the 1933 Act Regulations and
will not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that the representations and warranties in this Section 4(a) shall not apply to
statements or omissions made in reliance upon and in conformity with written
information furnished to the Company or the Bank by the Agent or its counsel
expressly regarding the Agent for use in the Prospectus under the caption "The
Reorganization--Marketing and Underwriting Arrangements" or statements in or
omissions from any Sales Information or information filed pursuant to state
securities or blue sky laws or regulations regarding the Agent.
(b) The MHC-1/MHC-2 Application which was prepared by the
Company and
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the Bank and filed with the OTS has been approved by the OTS and the related
Prospectus and proxy statement to be delivered to members of the Bank (the
"Proxy Statement") have been authorized for use by the OTS. No order has been
issued by the OTS or the FDIC (hereinafter any reference to the FDIC shall
include the SAIF) preventing or suspending the use of the Prospectus, and no
action by or before any such government entity to revoke any approval,
authorization or order of effectiveness related to the Reorganization is, to the
best knowledge of the Company or the Bank, pending or threatened. At the time of
the approval of the MHC-1/MHC-2 Application, including the Prospectus and the
Proxy Statement (including any amendment or supplement thereto), by the OTS and
at all times subsequent thereto until the Closing Date, the MHC-1/MHC-2
Application, including the Prospectus (including any amendment or supplement
thereto), will comply in all material respects with the Reorganization
Regulations, except to the extent waived in writing by the OTS. The MHC-1/MHC-2
Application, including the Prospectus and the Proxy Statement (including any
amendment or supplement thereto), does not include any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that the
representations and warranties in this Section 4(b) shall not apply to
statements or omissions made in reliance upon and in conformity with written
information furnished to the Company or the Bank by the Agent or its counsel
expressly regarding the Agent for use in the Prospectus contained in the
MHC-1/MHC-2 Application under the caption "The Reorganization--Marketing and
Underwriting Arrangements" or statements in or omissions from any sales
information or information filed pursuant to state securities or blue sky laws
or regulations regarding the Agent.
(c) The Company has filed with the OTS the Company's
application for approval of its acquisition of the Bank (the "Holding Company
Application") on Form H-(e)1 promulgated under the savings and loan holding
company provisions of the HOLA and the Control Act Regulations. The Company has
received written notice from the OTS of its approval of the acquisition of the
Bank, such approval remains in full force and effect and no order has been
issued by the OTS suspending or revoking such approval and no proceedings
therefor have been initiated or, to the knowledge of the Company, the Bank or
the MHC, threatened by the OTS. At the date of such approval, the Holding
Company Application complied in all material respects with the applicable
provisions of HOLA and the regulations promulgated thereunder.
(d) The Bank has filed with Ohio Division the Ohio
Application. The Bank has received the written approval of the Ohio Division to
undertake the Reorganization and complete the transaction and the Offering as
contemplated in the Plan. Such approval remains in full force and effect and no
action has been taken by the Ohio Division, and to the Bank's knowledge no
action has been threatened, to revoke its approval.
(e) At the Closing Date, the Plan will have been adopted by
the Boards of Directors of the MHC, the Company and the Bank and approved by the
members of the Bank, and the offer and sale of the Shares and the establishment
and funding of the Charitable Foundation will have been conducted in all
material respects in accordance with the Plan, the Reorganization Regulations,
and all other applicable laws, regulations, decisions and orders, including all
terms, conditions, requirements and provisions precedent to the Reorganization
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imposed upon the MHC, the Company or the Bank by the OTS, the Ohio Division, the
Commission, or any other regulatory authority and in the manner described in the
Prospectus. To the best knowledge of the MHC, the Company and the Bank, no
person has sought to obtain review of the final action of the OTS in approving
the Plan or in approving the Reorganization or the Holding Company Application
pursuant to the HOLA or any other statute or regulation.
(f) The Bank has been organized and is a validly existing
Ohio-chartered savings and loan association in mutual form of organization and
upon the Reorganization will become a duly organized and validly existing
Ohio-chartered savings and loan association in permanent capital stock form of
organization, in both instances duly authorized to conduct its business and own
its property as described in the Registration Statement and the Prospectus; the
Bank has obtained all licenses, permits and other governmental authorizations
currently required for the conduct of its business, except those that
individually or in the aggregate would not materially adversely affect the
financial condition, results of operations or business of the MHC, the Company
and the Bank, taken as a whole; all such licenses, permits and governmental
authorizations are in full force and effect, and the Bank is in compliance with
all material laws, rules, regulations and orders applicable to the operation of
its business, except where failure to be in compliance would not materially
adversely affect the financial condition, results of operations or business of
the MHC, the Company and the Bank, taken as a whole; the Bank is duly qualified
as a foreign corporation to transact business and is in good standing in each
jurisdiction in which its ownership of property or leasing of property or the
conduct of its business requires such qualification, unless the failure to be so
qualified in one or more of such jurisdictions would not have a material adverse
effect on the financial condition, results of operations or business of the
Bank. The Bank does not own equity securities or any equity interest in any
other business enterprise except as described in the Prospectus or as would not
be material to the operations of the Bank. Upon completion of the sale by the
Company of the Shares contemplated by the Prospectus, (i) all of the authorized
and outstanding capital stock of the Bank will be owned by the Company and (ii)
the Company will have no direct subsidiaries other than the Bank. The
Reorganization will be effected in all material respects in accordance with all
applicable statutes, regulations, decisions and orders; and, except with respect
to the filing of certain post-sale, post-Reorganization reports, and documents
in compliance with the 1933 Act Regulations, the Reorganization Regulations or
letters of approval, and the Ohio Division's regulations or letter(s) of
approval at the time of the Closing all terms, conditions, requirements and
provisions with respect to the Reorganization imposed by the Commission, the OTS
and the FDIC, if any, will have been complied with by the Company and the Bank
in all material respects or appropriate waivers will have been obtained and all
material notice and waiting periods will have been satisfied, waived or elapsed.
(g) Upon completion of its formation, and in any event no
later than the Closing Date, the Company will be duly incorporated and validly
existing as a corporation under the laws of the United States of America with
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and the
Prospectus, and at the Closing Date the Company will be qualified to do business
as a foreign corporation in each jurisdiction in which the conduct of its
business requires such qualification, except where the failure to so qualify
would not have a material adverse effect on the financial condition, results of
operations or business of the Company. At the Closing Date the Company
7
will have obtained all licenses, permits and other governmental authorizations
currently required for the conduct of its business except those that
individually or in the aggregate would not materially adversely affect the
financial condition, results of operations or business of the Company and the
Bank, taken as a whole; all such licenses, permits and governmental
authorizations will be in full force and effect, and the Company will be in all
material respects complying with all laws, rules, regulations and orders
applicable to the operation of its business.
(h) Upon completion of its formation, and in any event no
later than the Closing Date, the MHC will be duly incorporated and validly
existing as a corporation under the laws of the United States of America with
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and the
Prospectus, and at the Closing Date the MHC will be qualified to do business as
a foreign corporation in each jurisdiction in which the conduct of its business
requires such qualification, except where the failure to so qualify would not
have a material adverse effect on the financial condition, results of operations
or business of the Company and the Bank, taken as a whole. The MHC will have
obtained all licenses, permits and other governmental authorizations currently
required for the conduct of its business except those that individually or in
the aggregate would not materially adversely affect the financial condition,
results of operations or business of the Company and the Bank, taken as a whole;
all such licenses, permits and governmental authorizations will be in full force
and effect, and the MHC will be in all material respects complying with all
laws, rules, regulations and orders applicable to the operation of its business.
(i) The Charitable Foundation has been duly incorporated and
is validly existing as a non-stock, non-profit corporation in good standing
under the laws of the State of Ohio with corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Prospectus; the Charitable Foundation will not be a savings and loan holding
company within the meaning of 12 C.F.R. Section 574.2(q) as a result of the
issuance of shares of Common Stock to it in accordance with the terms of the
Plan and in the amounts as described in the Prospectus; no approvals are
required to establish the Charitable Foundation and to contribute the shares of
Common Stock thereto as described in the Prospectus other than those imposed by
the OTS and the FDIC; except as specifically disclosed in the Prospectus and the
Proxy Statement, there are no agreements and/or understandings, written or oral,
between the Company, the Bank and/or the MHC and the Charitable Foundation with
respect to the control, directly or indirectly, over the voting and the
acquisition or disposition of the Charitable Foundation Shares; at the time of
the Reorganization, the Charitable Foundation Shares will have been duly
authorized for issuance and, when issued and contributed by the Company pursuant
to the Plan, will be duly and validly issued and fully paid and non-assessable;
and the issuance of the Charitable Foundation Shares is not subject to
preemptive or similar rights.
(j) The Bank is a member of the Federal Home Loan Bank of
Cincinnati ("FHLB-Cincinnati"). The deposit accounts of the Bank are insured by
the FDIC up to the applicable limits, and no proceedings for the termination or
revocation of such insurance are pending or, to the best knowledge of the MHC,
the Company or the Bank, threatened. The Bank is a "qualified thrift lender"
within the meaning of 12 U.S.C. ss.1467(a)(m). Upon consummation of the
Reorganization, the liquidation account for the benefit of Eligible Account
Holders and Supplemental Eligible Account Holders will be duly established in
accordance with the
8
requirements of the Reorganization Regulations.
(k) The Bank, and upon their formation, the Company and the
MHC, has or will have, as the case may be, good and marketable title to all real
property and good title to all other assets material to the business of the
Company and the Bank, taken as a whole, and to those properties and assets
described in the Registration Statement and Prospectus as owned by them, free
and clear of all liens, charges, encumbrances or restrictions, except such as
are described in the Registration Statement and Prospectus, or are not material
to the business of the Company and the Bank, taken as a whole; and all of the
leases and subleases material to the business of the Company and the Bank, taken
as a whole, under which the MHC, the Company or the Bank hold properties,
including those described in the Registration Statement and Prospectus, are in
full force and effect.
(l) The Company and the Bank have received an opinion of their
special counsel, Xxxxx Xxxxx Xxxx LLC, with respect to the federal income tax
consequences of the Reorganization, and an opinion of Xxxxx Xxxxxxxx LLP with
respect to the Ohio income tax consequences of the Reorganization; all material
aspects of such opinions are accurately summarized in the Registration Statement
and the Prospectus. The MHC, the Company and the Bank represent and warrant that
the facts upon which such opinions are based are truthful, accurate and
complete.
(m) The Bank has all such power, authority, authorizations,
approvals and orders as may be required to enter into this Agreement, to carry
out the provisions and conditions hereof and to issue and sell the Shares to be
sold by the Company as provided herein and as described in the Prospectus,
subject to approval or confirmation by the OTS of the final appraisal of the
Bank. 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 Bank. This
Agreement has been validly executed and delivered by the Bank and is the valid,
legal and binding agreement of the Bank enforceable in accordance with its terms
(except as the enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization or similar laws relating to or affecting the
enforcement of creditors' rights generally or the rights of creditors of savings
and loan holding companies, the accounts of whose subsidiaries are insured by
the FDIC, or by general equity principles, regardless of whether such
enforceability is considered in a proceeding in equity or at law, and except to
the extent, if any, that the provisions of Sections 8 and 9 hereof may be
unenforceable as against public policy). Upon completion of their formation, and
in any event no later than the Closing Date, the MHC and the Company will have
all such power, authority, authorizations, approvals and orders as may be
required to enter into this Agreement, to carry out the provisions and
conditions hereof and to issue and sell the Shares to be sold by the Company as
provided herein and as described in the Prospectus, subject to approval or
confirmation by the OTS of the final appraisal of the Bank. The execution,
delivery and performance of this Agreement and the consummation of the
transactions herein contemplated will have been duly and validly authorized by
all necessary corporate action on the part of the MHC and the Company. This
Agreement will have been validly executed and delivered by the MHC and the
Company and will be the valid, legal and binding agreement of the MHC and the
Company enforceable in accordance with its terms (except as the enforceability
thereof may be limited by bankruptcy,
9
insolvency, moratorium, reorganization or similar laws relating to or affecting
the enforcement of creditors' rights generally or the rights of creditors of
savings and loan holding companies, the accounts of whose subsidiaries are
insured by the FDIC, or by general equity principles, regardless of whether such
enforceability is considered in a proceeding in equity or at law, and except to
the extent, if any, that the provisions of Sections 8 and 9 hereof may be
unenforceable as against public policy).
(n) Neither the Bank, the Company or the MHC is, or at the
time of their formation will be, in violation of any directive received from the
OTS, the FDIC, or any other agency to make any material change in the method of
conducting their businesses so as to comply in all material respects with all
applicable statutes and regulations (including, without limitation, regulations,
decisions, directives and orders of the OTS and the FDIC) and, except as may be
set forth in the Registration Statement and the Prospectus, there is no suit or
proceeding or charge or action before or by any court, regulatory authority or
governmental agency or body, pending or, to the knowledge of the MHC, the
Company or the Bank, threatened, which might materially and adversely affect the
Reorganization, the performance of this Agreement or the consummation of the
transactions contemplated in the Plan and as described in the Registration
Statement and the Prospectus or which might result in any material adverse
change in the financial condition, results of operations or business of the MHC,
the Company or the Bank, or which would materially affect their properties and
assets.
(o) The financial statements, schedules and notes related
thereto which are included in the Prospectus fairly present the balance sheet,
income statement, statement of changes in equity capital and statement of cash
flows of the Bank at the respective dates indicated and for the respective
periods covered thereby and comply as to form in all material respects with the
applicable accounting requirements of Title 12 of the Code of Federal
Regulations. Such financial statements, schedules and notes related thereto have
been prepared in accordance with generally accepted accounting principles
("GAAP") consistently applied through the periods involved, present fairly in
all material respects the information required to be stated therein and are
consistent with the most recent financial statements and other reports filed by
the Bank with the OTS and the Ohio Division, except that accounting principles
employed in such regulatory filings conform to the requirements of the OTS and
not necessarily to GAAP. The other financial, statistical and pro forma
information and related notes included in the Prospectus present fairly the
information shown therein on a basis consistent with the audited and unaudited
financial statements of the Bank included in the Prospectus, and as to the pro
forma adjustments, the adjustments made therein have been properly applied on
the basis described therein.
(p) Since the respective dates as of which information is
given in the Registration Statement including the Prospectus: (i) there has not
been any material adverse change, financial or otherwise, in the condition of
the MHC, the Company or the Bank and its subsidiaries, considered as one
enterprise, or in the earnings, capital or properties of the MHC, the Company or
the Bank, whether or not arising in the ordinary course of business; (ii) there
has not been any material increase in the long-term debt of the Bank or in the
principal amount of the Bank's assets which are classified by the Bank as
substandard, doubtful or loss or in loans past due 90 days or more or real
estate acquired by foreclosure, by deed-in-lieu of foreclosure or deemed
10
in-substance foreclosure or any material decrease in equity capital or total
assets of the Bank, nor has the MHC, the Company or the Bank issued any
securities (other than in connection with the incorporation of the Company) or
incurred any liability or obligation for borrowing other than in the ordinary
course of business; (iii) there have not been any material transactions entered
into by the MHC, the Company or the Bank; (iv) there has been no material
adverse change in the MHC's, the Company's or the Bank's relationship with its
insurance carriers, including, without limitation, cancellation or other
termination of the MHC's, the Company's or the Bank's fidelity bond or any other
type of insurance coverage; (v) except as disclosed in the Prospectus, there has
been no material change in management of the MHC, the Company or the Bank; (vi)
neither the MHC, the Company nor the Bank has sustained any material loss or
interference with its respective business or properties from fire, flood,
windstorm, earthquake, accident or other calamity, whether or not covered by
insurance; and (vii) neither the MHC, the Company nor the Bank has defaulted in
the payment of principal or interest on any outstanding debt obligations. All
documents made available to or delivered or to be made available to or delivered
by the Bank, the MHC, or the Company or their representatives in connection with
the issuance and sale of the Shares, including records of account holders,
depositors, borrowers and other members of the Bank, or in connection with the
Agent's exercise of due diligence, except for those documents which were
prepared by parties other than the Bank, the Company, the MHC or their
representatives, to the best knowledge of the Bank, the MHC and the Company,
were on the dates on which they were delivered, or will be on the dates on which
they are to be delivered, true, complete and correct in all material respects.
(q) Neither the MHC, the Company nor the Bank is or will be
(i) in violation of its charter or articles of incorporation, respectively, or
bylaws and/or constitution (and the Bank will not be in violation of its
charter, bylaws or constitution in capital stock form upon consummation of the
Reorganization), or (ii) in default in the performance or observance of any
material obligation, agreement, covenant, or condition contained in any material
contract, lease, loan agreement, indenture or other instrument to which it is a
party or by which it or any of its property may be bound. The consummation of
the transactions herein contemplated will not: (i) conflict with or constitute a
breach of, or default under, or result in the creation of any material lien,
charge or encumbrance (with the exception of the liquidation account established
in the Reorganization) upon any of the assets of the MHC, the Company or the
Bank pursuant to the Charter and Bylaws of the Company and the MHC or the
Articles of Incorporation, Constitution and Bylaws of the Bank (in either mutual
or capital stock form) or any material contract, lease or other instrument in
which the MHC, the Company or the Bank 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
MHC, the Company or the Bank, except for such violations which would not have a
material adverse effect on the financial condition and results of operations of
the MHC, the Company and the Bank on a consolidated basis; or (iii) with the
exception of the liquidation account established in the Reorganization, result
in the creation of any material lien, charge or encumbrance upon any property of
the MHC, the Company or the Bank.
(r) No default exists, and no event has occurred which with
notice or lapse of time, or both, would constitute a default on the part of the
MHC, the Company or the Bank in the due performance and observance of any term,
covenant or condition of any indenture, mortgage,
11
deed of trust, note, bank loan or credit agreement or any other instrument or
agreement to which the MHC, the Company or the Bank is a party or by which any
of them or any of their property is bound or affected, except such defaults
which would not have a material adverse affect on the financial condition or
results of operations of the MHC, the Company and the Bank on a consolidated
basis; such agreements are in full force and effect; and no other party to any
such agreements has instituted or, to the best knowledge of the MHC, the Company
and the Bank, threatened any action or proceeding wherein the MHC, the Company
or the Bank would or might be alleged to be in default thereunder, where such
action or proceeding, if determined adversely to the MHC, the Company or the
Bank, would have a material adverse effect on the financial condition, results
of operations, or business of the MHC, the Company or the Bank considered as one
enterprise.
(s) Upon consummation of the Reorganization and the
contribution of the Charitable Foundation Shares, the authorized, issued and
outstanding equity capital of the Company will be within the range set forth in
the Prospectus under the caption "Capitalization," and no Shares have been or
will be issued and outstanding prior to the Closing Date; the Shares (including
the Charitable Foundation Shares and shares to be issued to the MHC) will have
been duly and validly authorized for issuance and, when issued and delivered by
the Company pursuant to the Plan against payment of the consideration calculated
as set forth in the Plan and in the Prospectus, will be duly and validly issued,
fully paid and non-assessable, except for shares purchased by the ESOP with
funds borrowed from the Company to the extent payment therefor in cash has not
been received by the Company; except to the extent that subscription rights and
priorities pursuant thereto exist pursuant to the Plan, no preemptive rights
exist with respect to the Shares; and the terms and provisions of the Shares
will conform in all material respects to the description thereof contained in
the Registration Statement and the Prospectus. To the best knowledge of the
Company and the Bank, 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.
(t) No approval of any regulatory or supervisory or other
public authority is required in connection with the execution and delivery of
this Agreement or the issuance of the Shares, except for the approval of the
Commission, the Ohio Division and the OTS, and any necessary qualification,
notification, registration or exemption under the securities or blue sky laws of
the various states in which the Shares are to be offered, and except as may be
required under the rules and regulations of the National Association of
Securities Dealers, Inc. ("NASD").
(u) Xxxxx Xxxxxxxx LLP, which has certified the audited
financial statements and schedules of the Bank included in the Prospectus, has
advised the MHC, the Company and the Bank in writing that they are, with respect
to the MHC, the Company and the Bank, independent public accountants within the
meaning of the Code of Professional Ethics of the American Institute of
Certified Public Accountants and applicable regulations of the OTS.
(v) RP Financial LC., which has prepared the Bank's Valuation
Appraisal Report (as amended or supplemented, if so amended or supplemented)
(the "Appraisal"), has advised the Company in writing that it is independent of
the MHC, the Company and the Bank within the
12
meaning of the Reorganization Regulations.
(w) The Company, the MHC and the Bank have timely filed all
required federal, state and local tax returns; the Company, the MHC and the Bank
have paid all taxes that have become due and payable in respect of such returns,
except where permitted to be extended, have made adequate reserves for similar
future tax liabilities and no deficiency has been asserted with respect thereto
by any taxing authority.
(x) The Bank and upon their formation, the Company and the
MHC, is and will be, as the case may be in compliance in all material respects
with the applicable financial record-keeping and reporting requirements of the
Currency and Foreign Transactions Reporting Act of 1970, as amended, and the
regulations and rules thereunder.
(y) To the knowledge of the MHC, the Company and the Bank,
neither the MHC, the Company, the Bank nor employees of the MHC, the Company or
the Bank has made any payment of funds of the MHC, the Company or the Bank as a
loan for the purchase of the Shares or made any other payment of funds
prohibited by law, and no funds have been set aside to be used for any payment
prohibited by law.
(z) Prior to the Reorganization, neither the MHC, the Company
nor the Bank has: (i) issued any securities within the last 18 months (except
for notes to evidence bank loans and reverse repurchase agreements or other
liabilities in the ordinary course of business or as described in the
Prospectus); (ii) had any material dealings within the 12 months prior to the
date hereof with any member of the NASD, or any person related to or associated
with such member, other than discussions and meetings relating to the proposed
Offering and routine purchases and sales of United States government and agency
and other securities in the ordinary course of business; (iii) entered into a
financial or management consulting agreement except as contemplated hereunder;
and (iv) engaged any intermediary between the Agent and the MHC, the Company and
the Bank in connection with the offering of the Shares, and no person is being
compensated in any manner for such service. Appropriate arrangements have been
made for placing the funds received from subscriptions for Shares in a special
interest-bearing account with the Bank until all Shares are sold and paid for,
with provision for refund to the purchasers in the event that the Reorganization
is not completed for whatever reason or for delivery to the Company if all
Shares are sold.
(aa) The Company, the MHC and the Bank have not relied upon
the Agent or its legal counsel for any legal, tax or accounting advice in
connection with the Reorganization.
(bb) The Company and the MHC are not required to be registered
under the Investment Company Act of 1940, as amended.
(cc) Any certificates signed by an officer of the MHC, the
Company or the Bank pursuant to the conditions of this Agreement and delivered
to the Agent or their counsel that refers to this Agreement shall be deemed to
be a representation and warranty by the MHC, the Company or the Bank to the
Agent as to the matters covered thereby with the same effect as
13
if such representation and warranty were set forth herein.
(dd) Neither the Company, the Bank nor the MHC nor any
properties owned or operated by the Company, the Bank or the MHC, is in
violation of or liable under any Environmental Law (as defined below), except
for such violations or liabilities that, individually or in the aggregate, would
not have a material adverse effect on the financial condition, results of
operations or business of the Company, the Bank and the MHC, taken as a whole.
There are no actions, suits or proceedings, or demands, claims, notices or
investigations (including, without limitation, notices, demand letters or
requests for information from any environmental agency) instituted or pending
or, to the knowledge of the Company, the Bank or the MHC, threatened relating to
the liability of any property owned or operated by the Company, the Bank or the
MHC under any Environmental Law. For purposes of this subsection, the term
"Environmental Law" means any federal, state, local or foreign law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, order, judgment, decree, injunction or agreement with any regulatory
authority relating to (i) the protection, preservation or restoration of the
environment (including, without limitation, air, water, vapor, surface water,
groundwater, drinking water supply, surface soil, subsurface soil, plant and
animal life or any other natural resource), and/or (ii) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of any substance presently listed,
defined, designated or classified as hazardous, toxic, radioactive or dangerous,
or otherwise regulated, whether by type or by quantity, including any material
containing any such substance as a component.
(ee) The Company has filed a registration statement for the
Common Shares under Section 12(g) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act Registration Statement").
(ff) The Company and its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (A)
transactions are executed in accordance with management's general or specific
authorizations, (B) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets, (C) access to assets is
permitted only in accordance with management's general or specific
authorization, and (D) the recorded accounts or assets is compared with the
existing assets at reasonable intervals and appropriate action is taken with
respect thereto. The books, records and accounts and systems of internal
accounting control of the Company and its subsidiaries comply in all material
respects with the requirements of Section 13(b)(2) of the 1934 Act. The Company
maintains "disclosure controls and procedures" (as defined in Rule 13a-14(c)
under the Exchange Act) that are effective in ensuring that the information it
will be required to disclose in the reports it files or submits under the
Exchange Act is accumulated and communicated to the Company's management
(including the Company's chief executive officer and chief financial officer) in
a timely manner and recorded, processed, summarized and reported within the
periods specified in the Commission's rules and forms.
Section 5. Representations and Warranties of the Agent. The Agent
represents and
14
warrants to the MHC, Company and the Bank as follows:
(i) The Agent is a corporation and is validly
existing in good standing under the laws of the State of New York and licensed
to conduct business in the State of Ohio with full power and authority to
provide the services to be furnished to the Bank, the MHC and the Company
hereunder.
(ii) The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary action on the part of the Agent, and this
Agreement has been duly and validly executed and delivered by the Agent and is a
legal, valid and binding agreement of the Agent, enforceable in accordance with
its terms.
(iii) Each of the Agent and its employees, agents
and representatives who shall perform any of the services hereunder shall be
duly authorized and empowered, and shall have all licenses, approvals and
permits necessary to perform such services; and the Agent is a registered
selling agent in each of the jurisdictions in which the Shares are to be offered
by the Company in reliance upon the Agent as a registered selling agent as set
forth in the blue sky memorandum prepared with respect to the Offering.
(iv) The execution and delivery of this Agreement
by the Agent, the consummation of the transactions contemplated hereby and
compliance with the terms and provisions hereof will not conflict with, or
result in a breach of, any of the terms, provisions or conditions of, or
constitute a default (or an event which with notice or lapse of time or both
would constitute a default) under, the Articles of Incorporation or Bylaws of
the Agent or any agreement, indenture or other instrument to which the Agent is
a party or by which it or its property is bound.
(v) No approval of any regulatory or supervisory
or other public authority is required in connection with the Agent's execution
and delivery of this Agreement, except as may have been received.
(vi) There is no suit or proceeding or charge or
action before or by any court, regulatory authority or government agency or body
or, to the knowledge of the Agent, pending or threatened, which might materially
adversely affect the Agent's performance under this Agreement.
Section 5.l Covenants of the MHC, the Company and the Bank. The MHC,
the Company and the Bank hereby jointly and severally covenant with the Agent as
follows:
(a) The Company will not, at any time after the date the
Registration Statement is declared effective, file any amendment or supplement
to the Registration Statement without providing the Agent and its counsel an
opportunity to review such amendment or supplement or file any amendment or
supplement to which amendment or supplement the Agent or its counsel shall
reasonably object.
15
(b) The Bank will not, at any time after the MHC-1/MHC-2
Application is approved by the OTS, file any amendment or supplement to such
MHC-1/MHC-2 Application without providing the Agent and its counsel an
opportunity to review such amendment or supplement or file any amendment or
supplement to which amendment or supplement the Agent or its counsel shall
reasonably object.
(c) The Company will not, at any time after the Holding
Company Application is approved by the OTS, file any amendment or supplement to
such Holding Company Application without providing the Agent and its counsel an
opportunity to review the non-confidential portions of such amendment or
supplement or file any amendment or supplement to which amendment or supplement
the Agent or its counsel shall reasonably object.
(d) The Company, the MHC and the Bank will use their best
efforts to cause any post-effective amendment to the Registration Statement to
be declared effective by the Commission and any post-effective amendment to the
MHC-1/MHC-2 Application to be approved by the OTS and will immediately upon
receipt of any information concerning the events listed below notify the Agent:
(i) when the Registration Statement, as amended, has become effective; (ii) when
the MHC-1/MHC-2 Application, as amended, has been approved by the OTS; (iii) of
any comments from the Commission, the OTS, the Ohio Division or any other
governmental entity with respect to the Reorganization or the transactions
contemplated by this Agreement; (iv) of the request by the Commission, the OTS,
the Ohio Division or any other governmental entity for any amendment or
supplement to the Registration Statement, the MHC-1/MHC-2 Application or for
additional information; (v) of the issuance by the Commission, the OTS, the Ohio
Division or any other governmental entity of any order or other action
suspending the Offering or the use of the Registration Statement or the
Prospectus or any other filing of the Company or the Bank under the
Reorganization Regulations, or other applicable law, or the threat of any such
action; (vi) of the issuance by the Commission, the OTS, the Ohio Division or
any authority of any stop order suspending the effectiveness of the Registration
Statement or of the initiation or threat of initiation or threat of any
proceedings for that purpose; or (vii) of the occurrence of any event mentioned
in paragraph (h) below. The Company, the MHC and the Bank will make every
reasonable effort (i) to prevent the issuance by the Commission, the OTS, the
Ohio Division or any other state authority of any such order and, (ii) if any
such order shall at any time be issued, to obtain the lifting thereof at the
earliest possible time.
(e) The Company, the MHC and the Bank will deliver to the
Agent and to its counsel two conformed copies of the Registration Statement, the
MHC-1/MHC-2 Application and the Holding Company Application, as originally filed
and of each amendment or supplement thereto, including all exhibits. Further,
the Company and the Bank will deliver such additional copies of the foregoing
documents to counsel to the Agent as may be required for any NASD filings.
(f) The Company, the MHC and the Bank will furnish to the
Agent, from time to time during the period when the Prospectus (or any later
prospectus related to this offering) is required to be delivered under the 1933
Act or the Securities Exchange Act of 1934 (the "1934
16
Act"), such number of copies of such Prospectus (as amended or supplemented) as
the Agent may reasonably request for the purposes contemplated by the 1933 Act,
the 1933 Act Regulations, the 1934 Act or the rules and regulations promulgated
under the 1934 Act (the "1934 Act Regulations"). The Company authorizes the
Agent to use the Prospectus (as amended or supplemented, if amended or
supplemented) in any lawful manner contemplated by the Plan in connection with
the sale of the Shares by the Agent.
(g) The Company, the MHC and the Bank will comply with any and
all material terms, conditions, requirements and provisions with respect to the
Reorganization (including the establishment and operation of a Charitable
Foundation) and the transactions contemplated thereby imposed by the Commission,
the OTS, the Ohio Division or the Reorganization Regulations, and by the 1933
Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations to be
complied with prior to or subsequent to the Closing Date and when the Prospectus
is required to be delivered, and during such time period the Company and the
Bank will comply, at their own expense, with all material requirements imposed
upon them by the Commission, the OTS, the Ohio Division or the Reorganization
Regulations, and by the 1933 Act, the 1933 Act Regulations, the 1934 Act and the
1934 Act Regulations, including, without limitation, Rule 10b-5 under the 1934
Act, in each case as from time to time in force, so far as necessary to permit
the continuance of sales or dealing in the Common Shares during such period in
accordance with the provisions hereof and the Prospectus.
(h) If, at any time during the period when the Prospectus
relating to the Shares is required to be delivered, any event relating to or
affecting the MHC, the Company or the Bank shall occur, as a result of which it
is necessary or appropriate, in the opinion of counsel for the MHC, the Company
and the Bank or in the reasonable opinion of the Agent's counsel, to amend or
supplement the Registration Statement or Prospectus in order to make the
Registration Statement or Prospectus not misleading in light of the
circumstances existing at the time the Prospectus is delivered to a purchaser,
the MHC, the Company and the Bank will immediately so inform the Agent and
prepare and file, at their own expense, with the Commission and the OTS, and
furnish to the Agent a reasonable number of copies, of an amendment or
amendments of, or a supplement or supplements to, the Registration Statement or
Prospectus (in form and substance reasonably satisfactory to the Agent and its
counsel after a reasonable time for review) which will amend or supplement the
Registration Statement or Prospectus so that as amended or supplemented it will
not contain an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the
circumstances existing at the time the Prospectus is delivered to a purchaser,
not misleading. For the purpose of this Agreement, the MHC, the Company and the
Bank each will timely furnish to the Agent such information with respect to
itself as the Agent may from time to time reasonably request.
(i) The Company, the MHC and the Bank will take all necessary
actions in cooperating with the Agent and furnish to whomever the Agent may
direct such information as may be required to qualify or register the Shares for
offering and sale by the Company or to exempt such Shares from registration, or
to exempt the Company as a broker-dealer and its officers, directors and
employees as broker-dealers or agents under the applicable securities or blue
sky laws of such jurisdictions in which the Shares are required under the
Reorganization
17
Regulations to be sold or as the Agent and the Company, the MHC and the Bank may
reasonably agree upon; provided, however, that the Company shall not be
obligated to file any general consent to service of process, to qualify to do
business in any jurisdiction in which it is not so qualified, or to register its
directors or officers as brokers, dealers, salesmen or agents in any
jurisdiction. In each jurisdiction where any of the Shares shall have been
qualified or registered as above provided, the Company will make and file such
statements and reports in each fiscal period as are or may be required by the
laws of such jurisdiction.
(j) The Company and the Bank will not sell or issue, contract
to sell or otherwise dispose of, for a period of 90 days after the Closing Date,
without the Agent's prior written consent, any of their Common Shares, other
than the Common Shares or other than in connection with any plan or arrangement
described in the Prospectus, including existing stock benefit plans.
(k) The Company has registered its Common Shares under Section
12(g) of the 1934 Act concurrently with the Offering and such registration
automatically became effective at the time the Registration Statement was
declared effective. The Company shall maintain the effectiveness of such
registration for not less than three years or such shorter period as may be
required by the OTS.
(l) During the period during which the Common Shares are
registered under the 1934 Act or for three years from the date hereof, whichever
period is greater, the Company will furnish to its shareholders as soon as
practicable after the end of each fiscal year an annual report of the Company
(including a consolidated balance sheet and statements of consolidated income,
shareholders' equity and cash flows of the Company and its subsidiaries as at
the end of and for such year, certified by independent public accountants in
accordance with Regulation S-X under the 1933 Act and the 1934 Act).
(m) During the period of three years from the date hereof, the
Company will furnish to the Agent: (i) as soon as practicable after such
information is publicly available, a copy of each report of the Company
furnished to or filed with the Commission under the 1934 Act or any national
securities exchange or system on which any class of securities of the Company is
listed or quoted (including, but not limited to, reports on Forms 10-K or
10-KSB, 10-Q or 10-QSB and 8-K and all proxy statements and annual reports to
stockholders), (ii) a copy of each other non-confidential report of the Company
mailed to its shareholders or filed with the Commission, the OTS or any other
supervisory or regulatory authority or any national securities exchange or
system on which any class of securities of the Company is listed or quoted, each
press release and material news items and additional documents and information
with respect to the Company or the Bank as the Agent may reasonably request; and
(iii) from time to time, such other nonconfidential information concerning the
MHC, the Company or the Bank as the Agent may reasonably request.
(n) The Company, the MHC and the Bank will use the net
proceeds from the sale of the Shares in the manner set forth in the Prospectus
under the caption "Use of Proceeds."
(o) Other than as permitted by the Reorganization Regulations,
the HOLA, the
18
Ohio Regulations, the 1933 Act, the 1933 Act Regulations and the rules and
regulations and the laws of any state in which the Shares are registered or
qualified for sale or exempt from registration, neither the Company nor the Bank
will distribute any prospectus, offering circular or other offering material in
connection with the offer and sale of the Shares.
(p) The Company will use its best efforts to maintain listing
of the Shares on the Nasdaq SmallCap Market.
(q) The Bank will maintain appropriate arrangements for
depositing all funds received from persons mailing subscriptions for or orders
to purchase Shares in the Offering on an interest-bearing basis at the rate
described in the Prospectus until the Closing Date and satisfaction of all
conditions precedent to the release of the Bank's obligation to refund payments
received from persons subscribing for or ordering Shares in the Offering in
accordance with the Plan and as described in the Prospectus or until refunds of
such funds have been made to the persons entitled thereto or withdrawal
authorizations canceled in accordance with the Plan and as described in the
Prospectus. The Bank will maintain such records of all funds received to permit
the funds of each subscriber to be separately insured by the FDIC (to the
maximum extent allowable) and to enable the Bank to make the appropriate refunds
of such funds in the event that such refunds are required to be made in
accordance with the Plan and as described in the Prospectus.
(r) The Company and the MHC will promptly take all necessary
action to register as savings and loan holding companies under the HOLA.
(s) The Company, the MHC and the Bank will take such actions
and furnish such information as are reasonably requested by the Agent in order
for the Agent to ensure compliance with the NASD's "Interpretation Relating to
Free Riding and Withholding."
(t) Neither the Company, the MHC nor the Bank will amend the
Plan of Reorganization without notifying the Agent and the Agent's counsel prior
thereto.
(u) The Company shall assist the Agent, if necessary, in
connection with the allocation of the Shares in the event of an oversubscription
and shall provide the Agent with any information necessary to assist the Company
in allocating the Shares in such event and such information shall be accurate
and reliable in all material respects.
(v) Prior to the Closing Date, the Company, the MHC and the
Bank will inform the Agent of any event or circumstances of which it is aware as
a result of which the Registration Statement and/or Prospectus, as then amended
or supplemented, would contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein not
misleading.
(w) Subsequent to the date the Registration Statement is
declared effective by the Commission and prior to the Closing Date, except as
otherwise may be indicated or contemplated therein or set forth in an amendment
or supplement thereto, neither the MHC, the
19
Company nor the Bank will have: (i) issued any securities or incurred any
liability or obligation, direct or contingent, for borrowed money, except
borrowings from the same or similar sources indicated in the 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 MHC, the Company and the
Bank, taken as a whole.
(x) The facts and representations provided to Xxxxx Xxxxx Xxxx
LLC by the Bank and the Company and upon which Xxxxx Xxxxx Xxxx LLC will base
its opinion under Section 7(c)(1) are and will be truthful, accurate and
complete.
(y) The Company, the Bank and the MHC shall use their best
efforts to ensure that the Charitable Foundation submits within the time frames
required by applicable law a request to the Internal Revenue Service to be
recognized as a tax-exempt organization under Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended (the "Code"); the Company, the Bank and the MHC
will take no action which will result in the possible loss of the Charitable
Foundation's tax-exempt status; and neither the Company, the Bank nor the MHC
will contribute any additional assets to the Charitable Foundation until such
time that such additional contributions will be deductible for federal and state
income tax purposes.
(z) The Company shall comply with all applicable provisions of
the Xxxxxxxx-Xxxxx Act.
Section 6. Payment of Expenses. Whether or not the Reorganization is
completed or the sale of the Shares by the Company is consummated, the Company
and the Bank jointly and severally agree to pay or reimburse the Agent for: (a)
all filing fees in connection with all filings related to the Offering with the
NASD; (b) any stock issue or transfer taxes which may be payable with respect to
the sale of the Shares; and (c) subject to Section 2(c), all reasonable expenses
of the Reorganization, including out not limited to the Agent's attorneys' fees
and expenses, blue sky fees, transfer agent, registrar and other agent charges,
fees relating to auditing and accounting or other advisors and costs of printing
all documents necessary in connection with the Reorganization. In the event the
Company is unable to sell the minimum number of shares necessary to complete the
offering or the Reorganization is terminated or otherwise abandoned, the
Company, the MHC and the Bank shall promptly reimburse the Agent in accordance
with Section 2(c) hereof.
Section 7. Conditions to the Agent's Obligations. The obligations of
the Agent hereunder, as to the Shares to be delivered at the Closing Date, are
subject, to the extent not waived in writing by the Agent, to the condition that
all representations and warranties of the Company, the MHC and the Bank herein
are, at and as of the commencement of the Offering and at and as of the Closing
Date, true and correct in all material respects, the condition that the Company,
the MHC and the Bank shall have performed all of their obligations hereunder to
be performed on or before such dates, and to the following further conditions:
(a) At the Closing Date, the Company, the MHC and the Bank
shall have conducted the Reorganization in all material respects in accordance
with the Plan, the Reorganization Regulations, the laws of Ohio, and all other
applicable laws, regulations,
20
decisions and orders, including all terms, conditions, requirements and
provisions precedent to the Reorganization imposed upon them by the OTS and the
Ohio Division.
(b) The Registration Statement shall have been declared
effective by the Commission and the MHC-1/MHC-2 Application and the Holding
Company Application approved by the OTS not later than 5:30 p.m. on the date of
this Agreement, or with the Agent's consent at a later time and date; and at the
Closing Date, no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefore
initiated or threatened by the Commission or any state authority, and no order
or other action suspending the authorization of the Prospectus or the
consummation of the Reorganization shall have been issued or proceedings
therefore initiated or, to the Company's or the Bank's knowledge, threatened by
the Commission, the OTS, the FDIC, the Ohio Division or any other state
authority.
(c) At the Closing Date, the Agent shall have received:
(1) The favorable opinion, dated as of the Closing
Date and addressed to the Agent and for its benefit, of Xxxxx Xxxxx Xxxx LLC,
special counsel for the Company, the MHC and the Bank, in form and substance to
the effect that:
(i) The Company and the MHC have been
duly incorporated and are validly existing as corporations under the laws of the
United States of America.
(ii) The Company and the MHC have
corporate power and authority to own, lease and operate their properties and to
conduct their business as described in the Registration Statement and the
Prospectus.
(iii) The Bank is a validly existing
Ohio-chartered savings and loan association in mutual form and immediately
following the completion of the Reorganization will be a validly existing
Ohio-chartered savings and loan association in stock form in permanent capital
stock form of organization, in both instances duly authorized to conduct its
business and own its property as described in the Registration Statement and the
Prospectus. All of the outstanding capital stock of the Bank upon completion of
the Reorganization will be duly authorized and, upon payment therefor, will be
validly issued, fully-paid and non-assessable and will be owned by the Company,
to such counsel's Actual Knowledge, free and clear of any liens, encumbrances,
claims or other restrictions.
(iv) The Bank is a member of the
FHLB-Cincinnati. The deposit accounts of the Bank are insured by the FDIC up to
the maximum amount allowed under law and to such counsel's Actual Knowledge, no
proceedings for the termination or revocation of such insurance are pending or
threatened; The Bank is a "qualified thrift lender" within the meaning of 12
U.S.C. ss.1467(a)(m).
(v) Immediately following the
consummation of the Reorganization, the authorized, issued and outstanding
Common Shares of the Company will be within the range set forth in the
Prospectus under the caption "Capitalization," and no Common
21
Shares have been issued prior to the Closing Date; at the time of the
Reorganization, the Common Shares subscribed for pursuant to the Offering and
the Charitable Foundation Shares will have been duly and validly authorized for
issuance, and when issued and delivered by the Company pursuant to the Plan
against payment of the consideration calculated as set forth in the Plan and
Prospectus, will be duly and validly issued and fully paid and non-assessable,
except for shares purchased by the ESOP with funds borrowed from the Company to
the extent payment therefor in cash has not been received by the Company; except
to the extent that subscription rights and priorities pursuant thereto exist
pursuant to the Plan, the issuance of the Shares and the Charitable Foundation
Shares is not subject to preemptive rights and the terms and provisions of the
Shares conform in all material respects to the description thereof contained in
the Prospectus. Upon the issuance of the Shares, good title to the Shares will
be transferred from the Company to the purchasers thereof against payment
therefor, subject to such claims as may be asserted against the purchasers
thereof by third-party claimants. Upon the issuance of the Charitable Foundation
Shares, good title to the Charitable Foundation Shares will be transferred from
the Company to the purchasers thereof against payment therefor, subject to such
claims as may be asserted against the purchasers thereof by third-party
claimants.
(vi) The Bank, the Company and the MHC
have full corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated thereby and by the Plan. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby, including the establishment of the Charitable Foundation
have been duly authorized by all necessary action on the part of the Company,
the MHC and the Bank; and this Agreement is a valid and binding obligation of
the Company, the MHC and the Bank, enforceable against the Company, the MHC and
the Bank in accordance with its terms, except as the enforceability thereof may
be limited by (i) bankruptcy, insolvency, reorganization, moratorium,
conservatorship, receivership or other similar laws now or hereafter in effect
relating to or affecting the enforcement of creditors' rights generally or the
rights of creditors of federally chartered savings institutions, (ii) general
equitable principles, (iii) laws relating to the safety and soundness of insured
depository institutions, and (iv) applicable law or public policy with respect
to the indemnification and/or contribution provisions contained herein,
including without limitation the provisions of Sections 23A and 23B of the
Federal Reserve Act and except that no opinion need be expressed as to the
effect or availability of equitable remedies or injunctive relief (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
(vii) The MHC-1/MHC-2 Application has
been approved by the OTS and the Prospectus has been authorized for use by the
OTS. The OTS has approved the Holding Company Application and the purchase by
the Company of all of the issued and outstanding capital stock of the Bank and
the issuance of the Charitable Foundation Shares and no action has been taken,
and none is pending or to such counsel's Actual Knowledge threatened, to revoke
any such authorization or approval.
(viii) The Ohio Application has been
approved by the Ohio Division and, no action has been taken, and none is pending
or to such counsel's Actual Knowledge threatened, to revoke any such
authorization or approval.
22
(ix) The Plan has been duly adopted by
the required vote of the directors of the Company, the MHC and the Bank, and
based upon the certificate of the inspectors of election, by the members of the
Bank.
(x) Subject to the satisfaction of the
conditions to the OTS's approval, the Ohio Division's approval and the FDIC's
approval of the Reorganization, no further approval, registration,
authorization, consent or other order of any federal regulatory agency is
required in connection with the execution and delivery of this Agreement, the
issuance of the Shares, the issuance of the Charitable Foundation Shares and the
consummation of the Reorganization, except as may be required under the
securities or blue sky laws of various jurisdictions (as to which no opinion
need be rendered) and except as may be required under the rules and regulations
of the NASD (as to which no opinion need be rendered).
(xi) The Registration Statement is
effective under the 1933 Act and no stop order suspending the effectiveness has
been issued under the 1933 Act or proceedings therefor initiated or, to such
counsel's Actual Knowledge, threatened by the Commission.
(xii) At the time the MHC-1/MHC-2
Application, including the Prospectus contained therein, was approved by the
OTS, the MHC-1/MHC-2 Application, including the Prospectus contained therein,
complied as to form in all material respects with the requirements of the
Reorganization Regulations (other than the financial statements, the notes
thereto, and other tabular, financial, statistical and appraisal data included
therein, as to which no opinion need be rendered).
(xiii) At the time that the Registration
Statement became effective, (i) the Registration Statement (as amended or
supplemented, if so amended or supplemented) (other than the financial
statements, the notes thereto, and other tabular, financial, statistical and
appraisal data included therein, as to which no opinion need be rendered),
complied as to form in all material respects with the requirements of the 1933
Act and the 1933 Act Regulations, and (ii) the Prospectus (other than the
financial statements, the notes thereto, and other tabular, financial,
statistical and appraisal data included therein, as to which no opinion need be
rendered) complied as to form in all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations.
(xiv) The terms and provisions of the
Shares of the Company conform, in all material respects, to the description
thereof contained in the Registration Statement and Prospectus, and the form of
certificate used to evidence the Shares is in due and proper form.
(xv) There are no legal or governmental
proceedings pending or to the Actual Knowledge of such counsel threatened which
are required to be disclosed in the Registration Statement and Prospectus, other
than those disclosed therein.
(xvi) To such counsel's Actual Knowledge,
there are no material contracts, indentures, mortgages, loan agreements, notes,
leases or other instruments required to
23
be described or referred to in the MHC-1/MHC-2 Application, the Registration
Statement or the Prospectus or required to be filed as exhibits thereto other
than those described or referred to therein or filed as exhibits thereto in the
MHC-1/MHC-2 Application, the Registration Statement or the Prospectus. The
description in the MHC-1/MHC-2 Application, the Registration Statement and the
Prospectus of such documents and exhibits is accurate in all material respects
and fairly presents the information required to be shown.
(xvii) The Plan complies in all material
respects with all applicable federal law, rules, regulations, decisions and
orders including, but not limited to, the Reorganization Regulations; no order
has been issued by the OTS, the Commission, the FDIC, or any state authority to
suspend the Offering or the use of the Prospectus, and no action for such
purposes has been instituted or to such counsel's Actual Knowledge threatened by
the OTS, the Commission, the FDIC, or any other state authority and, to such
counsel's Actual Knowledge, no person has sought to obtain regulatory or
judicial review of the final action of the OTS approving the Plan, the
MHC-1/MHC-2 Application, the Holding Company Application or the Prospectus.
(xviii) The Company, the MHC and the Bank
have obtained all material licenses, permits and other governmental
authorizations currently required for the conduct of their businesses as
described in the Registration Statement and all such licenses, permits and other
governmental authorizations are in full force and effect, and to such counsel's
Actual Knowledge the Company, the MHC and the Bank are in all material respects
complying therewith.
(xix) Neither the MHC, the Company nor
the Bank is in violation of its Charter and Bylaws or its Articles of
Incorporation, Constitution and Bylaws, as appropriate or, to such counsel's
Actual Knowledge, in default or violation of any obligation, agreement, covenant
or condition contained in any contract, indenture, mortgage, loan agreement,
note, lease or other instrument to which it is a party or by which it or its
property may be bound, except for such defaults or violations which would not
have a material adverse impact on the financial condition or results of
operations of the MHC, the Company and the Bank on a consolidated basis; to such
counsel's Actual Knowledge, the execution and delivery of this Agreement, the
incurrence of the obligations herein set forth and the consummation of the
transactions contemplated herein will not conflict with or constitute a breach
of, or default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the MHC, the Company or the
Bank pursuant to any material contract, indenture, mortgage, loan agreement,
note, lease or other instrument to which the MHC, the Company or the Bank is a
party or by which any of them may be bound, or to which any of the property or
assets of the MHC, the Company or the Bank are subject (other than the
establishment of the liquidation account); and such action will not result in
any violation of the provisions of the Charter or Bylaws of the Company or MHC
or the Articles of Incorporation, Constitution or the Bylaws of the Bank or
result in any violation of any applicable federal or state law, act, regulation
(except that no opinion with respect to the securities and blue sky laws of
various jurisdictions or the rules or regulations of the NASD need be rendered)
or order or court order, writ, injunction or decree.
(xx) The Company's Charter and Bylaws
comply in all material
24
respects with the laws of the United States of America. The MHC's Charter and
Bylaws comply in all material respects with the laws of the United States of
America. The Bank's Articles of Incorporation, Constitution and Bylaws comply in
all material respects with Ohio law.
(xxi) The information in the Prospectus
under the captions "Regulation," "The Reorganization and Offering,"
"Restrictions on Acquisition of Cheviot Financial Corp.," "Cheviot Savings Bank
Charitable Foundation" and "Description of Capital Stock," to the extent that
such information constitutes matters of law, summaries of legal matters,
documents or proceedings, or legal conclusions, has been reviewed by such
counsel and is correct in all material respects. The description of the
Reorganization process in the Prospectus under the caption "The Reorganization
and Offering" to the extent that such information constitutes matters of law,
summaries of legal matters, documents or proceedings, or legal conclusions, has
been reviewed by such counsel and fairly describes such process in all material
respects. The descriptions in the Prospectus of statutes or regulations are
accurate summaries and fairly present the information required to be shown. The
information under the caption "The Reorganization and Offering--Federal and
State Tax Consequences of the Reorganization" has been reviewed by such counsel
and fairly describes the federal and state tax opinions rendered by them and
Xxxxx Xxxxxxxx LLP, respectively, to the Company, the MHC and the Bank with
respect to such matters.
(xxii) The Charitable Foundation has been
duly incorporated and is validly existing as a non-stock corporation in good
standing under the laws of the State of Ohio with corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Prospectus; the Charitable Foundation is not a savings and loan
holding company within the meaning of 12 C.F.R. Section 574.2(q) as a result of
the issuance of shares of Common Stock to it in accordance with the terms of the
Plan and in the amounts as described in the Prospectus; no approvals.
In addition, such counsel shall
state that during the preparation of the MHC-1/MHC-2 Application, the Holding
Company Application, the Registration Statement and the Prospectus, they
participated in conferences with certain officers of, the independent public and
internal accountants for, and other representatives of, the Company, the MHC and
the Bank, at which conferences the contents of the MHC-1/MHC-2 Application, the
Holding Company Application, the Registration Statement and the Prospectus and
related matters were discussed and, while such counsel have not confirmed the
accuracy or completeness of or otherwise verified the information contained in
the MHC-1/MHC-2 Application, the Holding Company Application, the Registration
Statement or the Prospectus and do not assume any responsibility for such
information, based upon such conferences and a review of documents deemed
relevant for the purpose of rendering their opinion (relying as to materiality
as to factual matters on certificates of officers and other factual
representations by the Company, the MHC and the Bank), nothing has come to their
attention that would lead them to believe that the MHC-1/MHC-2 Application, the
Holding Company Application, the Registration Statement, the Prospectus, or any
amendment or supplement thereto (other than the financial statements, the notes
thereto, and other tabular, financial, statistical and appraisal data
25
included therein as to which no view need be rendered) contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
In giving such opinion, such
counsel may rely as to all matters of fact on certificates of officers or
directors of the Company, the MHC and the Bank and certificates of public
officials. Such counsel's opinion shall be limited to matters governed by
federal laws and by the laws of the State of Ohio.
For purposes of such opinion, no
proceedings shall be deemed to be pending, no order or stop order shall be
deemed to be issued, and no action shall be deemed to be instituted unless, in
each case, a director or executive officer of the Company, the MHC or the Bank
shall have received a copy of such proceedings, order, stop order or action. In
addition, such opinion may be limited to present statutes, regulations and
judicial interpretations and to facts as they presently exist; in rendering such
opinion, such counsel need assume no obligation to revise or supplement it
should the present laws be changed by legislative or regulatory action, judicial
decision or otherwise; and such counsel need express no view, opinion or belief
with respect to whether any proposed or pending legislation, if enacted, or any
proposed or pending regulations or policy statements issued by any regulatory
agency, whether or not promulgated pursuant to any such legislation, would
affect the validity of the Reorganization or any aspect thereof. Such counsel
may assume that any agreement is the valid and binding obligation of any parties
to such agreement other than the Company or the Bank.
(d) At the Closing Date, the Agent shall receive a certificate
of the Chief Executive Officer and the Chief Financial Officer of the Company,
the MHC and the Bank in form and substance reasonably satisfactory to the
Agent's Counsel, dated as of such Closing Date, to the effect that: (i) they
have carefully examined the Prospectus and, in their opinion, at the time the
Prospectus became authorized for final use, the Prospectus did not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading; (ii) since the date the Prospectus became
authorized for final use, no event has occurred which should have been set forth
in an amendment or supplement to the Prospectus which has not been so set forth,
including specifically, but without limitation, any material adverse change in
the condition, financial or otherwise, or in the earnings, capital, properties
or business of the Company, the MHC or the Bank and the conditions set forth in
this Section 7 have been satisfied; (iii) since the respective dates as of which
information is given in the Registration Statement and the Prospectus, there has
been no material adverse change in the condition, financial or otherwise, or in
the earnings, capital or properties of the Company, the MHC or the Bank
independently, or of the Company, the MHC and the Bank considered as one
enterprise, whether or not arising in the ordinary course of business; (iv) the
representations and warranties in Section 4 are true and correct with the same
force and effect as though expressly made at and as of the Closing Date; (v) the
Company, the MHC and the Bank have complied in all material respects with all
agreements and satisfied all conditions on their part to be performed or
satisfied at or prior to the Closing Date and will comply in all material
respects with all obligations to be
26
satisfied by them after the Reorganization; (vi) no stop order suspending the
effectiveness of the Registration Statement has been initiated or, to the best
knowledge of the Company, the MHC or the Bank, threatened by the Commission or
any state authority; (vii) no order suspending the Offering, the Reorganization,
the acquisition of all of the shares of the Bank by the Company or the
effectiveness of the Prospectus has been issued and no proceedings for that
purpose are pending or, to the best knowledge of the Company, the MHC or the
Bank, threatened by the OTS, the Commission, the FDIC, or any state authority;
and (viii) to the best knowledge of the Company or the Bank, no person has
sought to obtain review of the final action of the OTS approving the Plan.
(e) Prior to and at the Closing Date: (i) in the reasonable
opinion of the Agent, there shall have been no material adverse change in the
financial condition, results of operations or business of the Company, the MHC
and the Bank considered as one enterprise, from that as of the latest dates as
of which such condition is set forth in the Prospectus, other than transactions
referred to or contemplated therein; (ii) the Company, the MHC or the Bank shall
not have received from the OTS, the Ohio Division or the FDIC any direction
(oral or written) to make any material change in the method of conducting their
business with which it has not complied (which direction, if any, shall have
been disclosed to the Agent) or which materially and adversely would affect the
financial condition, results of operations or business of the Company, the MHC
and the Bank taken as a whole; (iii) neither the Company nor the Bank shall have
been in default (nor shall an event have occurred which, with notice or lapse of
time or both, would constitute a default) under any provision of any agreement
or instrument relating to any outstanding indebtedness; (iv) no action, suit or
proceeding, at law or in equity or before or by any federal or state commission,
board or other administrative agency, shall be pending or, to the knowledge of
the Company, the MHC or the Bank, threatened against the Company, the MHC or the
Bank or affecting any of their properties wherein an unfavorable decision,
ruling or finding would materially and adversely affect the financial condition,
results of operations or business taken as a whole; and (v) the Shares shall
have been qualified or registered for offering and sale or exempted therefrom
under the securities or blue sky laws of the jurisdictions as the Agent shall
have reasonably requested and as agreed to by the Company, the MHC and the Bank.
(f) Concurrently with the execution of this Agreement, the
Agent shall receive a letter from Xxxxx Xxxxxxxx LLP dated as of the date of the
Prospectus and addressed to the Agent: (i) confirming that Xxxxx Xxxxxxxx LLP is
a firm of independent public accountants within the meaning of Rule 101 of the
Code of Professional Ethics of the American Institute of Certified Public
Accountants and applicable regulations of the OTS and stating in effect that in
its opinion the financial statements, schedules and related notes of the Bank as
of March 31, 2003 and 2002, and for each of the two years in the period ended
March 31, 2003, included in the Prospectus and covered by their opinion included
therein, comply as to form in all material respects with the applicable
accounting requirements and related published rules and regulations of the OTS
and the 1933 Act; (ii) stating in effect that, on the basis of certain agreed
upon procedures (but not an audit in accordance with generally accepted auditing
standards) consisting of a reading of the latest available unaudited interim
financial statements of the Bank prepared by the Bank, a reading of the minutes
of the meetings of the Board of Directors and members of the Bank and
consultations with officers of the Bank responsible for financial and accounting
27
matters, nothing came to their attention which caused them to believe that: (A)
the unaudited financial statements included in the Prospectus are not in
conformity with the 1933 Act, applicable accounting requirements of the OTS and
accounting principles generally accepted in the United States of America applied
on a basis substantially consistent with that of the audited financial
statements included in the Prospectus; or (B) during the period from the date of
the latest unaudited financial statements included in the Prospectus to a
specified date not more than three business days prior to the date of the
Prospectus, except as has been described in the Prospectus, there was any
increase in borrowings, other than normal deposit fluctuations, by the Bank; or
(C) there was any decrease in the net assets of the Bank at the date of such
letter as compared with amounts shown in the latest unaudited balance sheets
included in the Prospectus; and (iii) stating that, in addition to the audit
referred to in their opinion included in the Prospectus and the performance of
the procedures referred to in clause (ii) of this subsection (g), they have
compared with the general accounting records of the Bank, which are subject to
the internal controls of the Bank, the 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
Agent may reasonably request; and they have reported on the results of such
comparisons.
(g) At the Closing Date, the Agent shall receive a letter
dated the Closing Date, addressed to the Agent, confirming the statements made
by Xxxxx Xxxxxxxx LLP in the letter delivered by it pursuant to subsection (g)
of this Section 7, the "specified date" referred to in clause (ii) of subsection
(g) to be a date specified in the letter required by this subsection (h) which
for purposes of such letter shall not be more than three business days prior to
the Closing Date.
(h) At the Closing Date, the Bank shall receive a letter from
RP Financial LC., dated the Closing Date (i) confirming that said firm is
independent of the Company, the MHC and the Bank and is experienced and expert
in the area of corporate appraisals within the meaning of Title 12 of the Code
of Federal Regulations, Section 563b.200(b), (ii) stating in effect that the
Appraisal prepared by such firm complies in all material respects with the
applicable requirements of Title 12 of the Code of Federal Regulations, and
(iii) further stating that its opinion of the aggregate pro forma market value
of the Company and the Bank, as most recently updated, remains in effect.
(i) At or prior to the Closing Date, the Agent shall receive:
(i) a copy of the letters from the OTS approving the MHC-1/MHC-2 Application and
authorizing the use of the Prospectus; (ii) a copy of the order from the
Commission declaring the Registration Statement effective; (iii) a certificate
from the OTS evidencing the valid existence of the Bank; (iv) a certificate from
the State of Ohio evidencing the good standing of the Bank; (v) a certificate
from the FDIC evidencing the Bank's insurance of accounts; (vi) a certificate
from the FHLB-Cincinnati evidencing the Bank's membership therein; (vii) a copy
of the letter from the OTS approving the Company's Holding Company Application;
and (viii) a certified copy of the Bank's Charter and Bylaws.
(j) 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
28
Exchange (the "NYSE") or in the over-the-counter market, or quotations halted
generally on The Nasdaq Stock Market, or minimum or maximum prices for trading
have been fixed, or maximum ranges for prices for securities have been required
by either of such exchanges or the NASD or by order of the Commission or any
other governmental authority; (ii) a general moratorium on the operations of
commercial banks, or federal savings and loan associations or a general
moratorium on the withdrawal of deposits from commercial banks or federal
savings and loan associations declared by federal or state authorities; (iii)
the engagement by the United States in hostilities which have resulted in the
declaration, on or after the date hereof, of a national emergency or war; or
(iv) a material decline in the price of equity or debt securities if the effect
of such a declaration or decline, in the Agent's reasonable judgment, makes it
impracticable or inadvisable to proceed with the Offering or the delivery of the
Shares on the terms and in the manner contemplated in the Registration Statement
and the Prospectus.
(k) At or prior to the Closing Date, counsel to the Agent
shall have been furnished with such documents and opinions as they may
reasonably require for the purpose of enabling them to pass upon the sale of the
Shares as herein contemplated and related proceedings or in order to evidence
the occurrence or completeness of any of the representations or warranties, or
the fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company or the Bank in connection with the Reorganization and the
sale of the Shares as herein contemplated shall be satisfactory in form and
substance to the Agent and its counsel.
Section 8. Indemnification.
(a) The Company, the MHC and the Bank jointly and severally
agree to indemnify and hold harmless the Agent, its respective officers and
directors, employees and agents, and each person, if any, who controls the Agent
within the meaning of Section 15 of the 1933 Act or Section 20(a) of the 1934
Act, against any and all loss, liability, claim, damage or expense whatsoever
(including, but not limited to, settlement expenses), joint or several, that the
Agent or any of them may suffer or to which the Agent and any such persons may
become subject under all applicable federal or state laws or otherwise, and to
promptly reimburse the Agent and any such persons upon written demand for any
expense (including reasonable fees and disbursements of counsel) incurred by the
Agent or any of them in connection with investigating, preparing or defending
any actions, proceedings or claims (whether commenced or threatened) to the
extent such losses, claims, damages, liabilities or actions: (i) arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or any amendment or supplement
thereto), preliminary or final Prospectus (or any amendment or supplement
thereto), the MHC-1/MHC-2 Application (or any amendment or supplement thereto),
the Holding Company Application or any instrument or document executed by the
Company, the MHC or the Bank or based upon written information supplied by the
Company, the MHC or the Bank filed in any state or jurisdiction to register or
qualify any or all of the Shares or to claim an exemption therefrom or provided
to any state or jurisdiction to exempt the Company as a broker-dealer or its
officers, directors and employees as broker-dealers or agent, under the
securities laws thereof (collectively, the "Blue Sky Application"), or any
document, advertisement, oral statement or communication ("Sales Information")
prepared, made or executed by or on behalf of the Company, the MHC or the
29
Bank with their consent or based upon written or oral information furnished by
or on behalf of the Company, the MHC or the Bank, whether or not filed in any
jurisdiction, in order to qualify or register the Shares or to claim an
exemption therefrom under the securities laws thereof; (ii) arise out of or are
based upon the omission or alleged omission to state in any of the foregoing
documents or information a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; or (iii) arise from any theory of
liability whatsoever relating to or arising from or based upon the Registration
Statement (or any amendment or supplement thereto), preliminary or final
Prospectus (or any amendment or supplement thereto), the MHC-1/MHC-2 Application
(or any amendment or supplement thereto), any Blue Sky Application or Sales
Information or other documentation distributed in connection with the
Reorganization; provided, however, that no indemnification is required under
this paragraph (a) to the extent such losses, claims, damages, liabilities or
actions arise out of or are based upon any untrue material statement or alleged
untrue material statement in, or material omission or alleged material omission
from, the Registration Statement (or any amendment or supplement thereto),
preliminary or final Prospectus (or any amendment or supplement thereto), the
MHC-1/MHC-2 Application, any Blue Sky Application or Sales Information made in
reliance upon and in conformity with information furnished in writing to the
Company, the MHC or the Bank by the Agent or its counsel regarding the Agent,
provided, that it is agreed and understood that the only information furnished
in writing to the Company, the MHC or the Bank by the Agent regarding the Agent
is set forth in the Prospectus under the caption "The Reorganization and
Offering--Plan of Distribution and Marketing Arrangements"; and, provided
further, that such indemnification shall be to the extent not prohibited by the
Commission, the OTS, the FDIC, the Ohio Division and the Board of Governors of
the Federal Reserve.
(b) The Agent agrees to indemnify and hold harmless the
Company, the MHC and the Bank, their directors and officers and each person, if
any, who controls the Company, the MHC or the Bank within the meaning of Section
15 of the 1933 Act or Section 20(a) of the 1934 Act against any and all loss,
liability, claim, damage or expense whatsoever (including but not limited to
settlement expenses), joint or several, which they, or any of them, may suffer
or to which they, or any of them may become subject under all applicable federal
and state laws or otherwise, and to promptly reimburse the Company, the Bank,
and any such persons upon written demand for any expenses (including reasonable
fees and disbursements of counsel) incurred by them, or any of them, in
connection with investigating, preparing or defending any actions, proceedings
or claims (whether commenced or threatened) to the extent such losses, claims,
damages, liabilities or actions: (i) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment or supplement thereto), the MHC-1/MHC-2
Application (or any amendment or supplement thereto), the preliminary or final
Prospectus (or any amendment or supplement thereto), any Blue Sky Application or
Sales Information, (ii) are based upon the omission or alleged omission to state
in any of the foregoing documents a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or (iii) arise from any theory of
liability whatsoever relating to or arising from or based upon the Registration
Statement (or any amendment or supplement thereto), preliminary or final
Prospectus (or any amendment or supplement thereto), the
30
MHC-1/MHC-2 Application (or any amendment or supplement thereto), or any Blue
Sky Application or Sales Information or other documentation distributed in
connection with the Reorganization; provided, however, that the Agent's
obligations under this Section 8(b) shall exist only if and only to the extent
that such untrue statement or alleged untrue statement was made in, or such
material fact or alleged material fact was omitted from, the Registration
Statement (or any amendment or supplement thereto), the preliminary or final
Prospectus (or any amendment or supplement thereto), the MHC-1/MHC-2 Application
(or any amendment or supplement thereto), any Blue Sky Application or Sales
Information in reliance upon and in conformity with information furnished in
writing to the Company, the MHC or the Bank by the Agent or its counsel
regarding the Agent, provided, that it is agreed and understood that the only
information furnished in writing to the Company, the MHC or the Bank by the
Agent regarding the Agent is set forth in the Prospectus under the caption "The
Reorganization and Offering--Plan of Distribution and Marketing Arrangements."
(c) Each indemnified party shall give prompt written notice to
each indemnifying party of any action, proceeding, claim (whether commenced or
threatened), or suit instituted against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve it from any liability which it may have on account of this Section 8 or
otherwise. An indemnifying party may participate at its own expense in the
defense of such action. In addition, if it so elects within a reasonable time
after receipt of such notice, an indemnifying party, jointly with any other
indemnifying parties receiving such notice, may assume defense of such action
with counsel chosen by it and approved by the indemnified parties that are
defendants in such action, unless such indemnified parties reasonably object to
such assumption on the ground that there may be legal defenses available to them
that are different from or in addition to those available to such indemnifying
party. If an indemnifying party assumes the defense of such action, the
indemnifying parties shall not be liable for any fees and expenses of counsel
for the indemnified parties incurred thereafter in connection with such action,
proceeding or claim, other than reasonable costs of investigation. In no event
shall the indemnifying parties be liable for the fees and expenses of more than
one separate firm of attorneys (and any special counsel that said firm may
retain) for each indemnified party in connection with any one action, proceeding
or claim or separate but similar or related actions, proceedings or claims in
the same jurisdiction arising out of the same general allegations or
circumstances.
Section 9. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 8 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Company, the Bank or the Agent, the Company,
the MHC, the Bank and the Agent shall contribute to the aggregate losses,
claims, damages and liabilities (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding, but after deducting any contribution received by the
Company, the MHC, the Bank or the Agent from persons other than the other
parties thereto, who may also be liable for contribution) in such proportion so
that the Agent is responsible for that portion represented by the percentage
that the fees paid to the Agent pursuant to Section 2 of this Agreement (not
including expenses) bears to the gross proceeds received by the Company from the
sale of the Shares in the Offering, and the Company, the MHC and the Bank shall
be responsible for the balance. If, however, the
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allocation provided above is not permitted by applicable law, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative fault of the Company, the MHC and the Bank on the one hand and the
Agent on the other in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities (or actions, proceedings or
claims in respect thereto), but also the relative benefits received by the
Company, the MHC and the Bank on the one hand and the Agent on the other from
the Offering (before deducting expenses). The relative fault shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company , the MHC and/or
the Bank on the one hand or the Agent on the other and the parties' relative
intent, good faith, knowledge, access to information and opportunity to correct
or prevent such statement or omission. The Company, the MHC, the Bank and the
Agent agree that it would not be just and equitable if contribution pursuant to
this Section 9 were determined by pro-rata allocation or by any other method of
allocation which does not take into account the equitable considerations
referred to above in this Section 9. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions, proceedings or claims in respect thereof) referred to above in this
Section 9 shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action, proceeding or claim. It is expressly agreed that the Agent
shall not be liable for any loss, liability, claim, damage or expense or be
required to contribute any amount pursuant to Section 8(b) or this Section 9
which in the aggregate exceeds the amount paid (excluding reimbursable expenses)
to the Agent under this Agreement. It is understood that the above stated
limitation on the Agent's liability is essential to the Agent and that the Agent
would not have entered into this Agreement if such limitation had not been
agreed to by the parties to this Agreement. No person found guilty of any
fraudulent misrepresentation (within the meaning of Section 11(f) of the 0000
Xxx) shall be entitled to contribution from any person who was not found guilty
of such fraudulent misrepresentation. The obligations of the Company, the Bank
and the Agent under this Section 9 and under Section 8 shall be in addition to
any liability which the Company, the Bank and the Agent may otherwise have. For
purposes of this Section 9, each of the Agent's, the Company's or the Bank's
officers and directors and each person, if any, who controls the Agent or the
Company, the MHC or the Bank within the meaning of the 1933 Act and the 1934 Act
shall have the same rights to contribution as the Agent, or the MHC, the Company
or the Bank. Any party entitled to contribution, promptly after receipt of
notice of commencement of any action, suit, claim or proceeding against such
party in respect of which a claim for contribution may be made against another
party under this Section 9, will notify such party from whom contribution may be
sought, but the omission to so notify such party shall not relieve the party
from whom contribution may be sought from any other obligation it may have
hereunder or otherwise than under this Section 9.
Section 10. Survival of Agreements, Representations and Indemnities.
The respective indemnities of the Company, the MHC, the Bank and the Agent, the
representations and warranties and other statements of the Company, the MHC, the
Bank and the Agent set forth in or made pursuant to this Agreement and the
provisions relating to contribution shall remain in full force and effect,
regardless of any termination or cancellation of this Agreement or any
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investigation made by or on behalf of the Agent, the Company, the MHC, the Bank
or any controlling person referred to in Section 8 hereof, and shall survive the
issuance of the Shares, and any successor or assign of the Agent, the Company,
the MHC, the Bank, and any such controlling person shall be entitled to the
benefit of the respective agreements, indemnities, warranties and
representations.
Section 11. Termination. The Agent may terminate this Agreement by
giving the notice indicated below in this Section 11 at any time after this
Agreement becomes effective as follows:
(a) If any domestic or international event or act or
occurrence has materially disrupted the United States securities markets such as
to make it, in the Agent's reasonable opinion, impracticable to proceed with the
offering of the Shares; or if trading on the NYSE shall have suspended (except
that this shall not apply to the imposition of NYSE trading collars imposed on
program trading); or if the United States shall have become involved in a war or
major hostilities; or if a general banking moratorium has been declared by a
state or federal authority which has a material effect on the Bank or the
Reorganization; or if a moratorium in foreign exchange trading by major
international banks or persons has been declared; or if there shall have been a
material adverse change in the financial condition, results of operations or
business of the Bank, or if the Bank shall have sustained a material or
substantial loss by fire, flood, accident, hurricane, earthquake, theft,
sabotage or other calamity or malicious act, whether or not said loss shall have
been insured; or if there shall have been a material adverse change in the
financial condition, results of operations or business of the Company, the MHC
or the Bank.
(b) In the event the Company fails to sell the required
minimum number of the Shares by March 31, 2004, and in accordance with the
provisions of the Plan or as required by the Reorganization Regulations, and
applicable law, this Agreement shall terminate upon refund by the Company to
each person who has subscribed for or ordered any of the Shares of the full
amount which it may have received from such person, together with interest as
provided in the Prospectus, and no party to this Agreement shall have any
obligation to the other hereunder, except as set forth in Sections 2(b), 6, 8
and 9 hereof.
(c) If any of the conditions specified in Section 7 shall not
have been fulfilled when and as required by this Agreement, unless waived in
writing, or by the Closing Date, this Agreement and all of the Agent's
obligations hereunder may be cancelled by the Agent by notifying the Company,
the MHC and 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 2(b), 6, 8 and 9 hereof.
(d) If the Agent elects to terminate this Agreement as
provided in this Section, the Company, the MHC and the Bank shall be notified
promptly by telephone or telegram, confirmed by letter.
The Company, the MHC and the Bank may terminate this Agreement in the
event the Agent is in material breach of the representations and warranties or
covenants contained in Section 5 and such breach has not been cured after the
Company and the Bank have provided the
33
Agent with notice of such breach.
This Agreement may also be terminated by mutual written consent of the
parties hereto.
Section 12. Notices. All communications hereunder, except as herein
otherwise specifically provided, shall be mailed in writing and if sent to the
Agent shall be mailed, delivered or telegraphed and confirmed to Xxxxx, Xxxxxxxx
& Xxxxx, 000 Xxxxxxxxx Xxxxx, Xxxxxx, Xxxx 00000-0000, Attention: Xxxxxxxx X.
XxXxxxx (with a copy to Xxxx Xxxxxx Xxxxxxxx & Xxxxxx, A Professional
Corporation, 0000 Xxxxxxxxx Xxxxxx, XX, Xxxxx 000, Xxxxxxxxxx, XX 00000,
Attention: Xxxx Xxxxxx, and, if sent to the Company and the Bank, shall be
mailed, delivered or telegraphed and confirmed to the Company and the Bank at
0000 Xxxxxxxx Xxxxxx, Xxxxxxx, XX 00000, Attention: Xxxxxx Xxxxxxxx, President
(with a copy to Xxxxx Xxxxx Xxxx LLC, 000 Xxxx Xxxxx Xxxxxx, Xxxxxxxxxx, XX
00000 Attention: Xxxx Xxxxxxx).
Section 13. Parties. The Company, the MHC and the Bank shall be
entitled to act and rely on any request, notice, consent, waiver or agreement
purportedly given on behalf of the Agent when the same shall have been given by
the undersigned. The Agent shall be entitled to act and rely on any request,
notice, consent, waiver or agreement purportedly given on behalf of the Company,
the MHC or the Bank, when the same shall have been given by the undersigned or
any other officer of the Company, the MHC or the Bank. This Agreement shall
inure solely to the benefit of, and shall be binding upon, the Agent, the
Company, the MHC, the Bank, and their respective successors and assigns, and no
other person shall have or be construed to have any legal or equitable right,
remedy or claim under or in respect of or by virtue of this Agreement or any
provision herein contained. It is understood and agreed that this Agreement is
the exclusive agreement among the parties hereto, and supersedes any prior
agreement among the parties and may not be varied except in writing signed by
all the parties.
Section 14. Closing. The closing for the sale of the Shares shall take
place on the Closing Date at such location as mutually agreed upon by the Agent
and the Company and the Bank. At the closing, the Company and the Bank shall
deliver to the Agent in next day funds the commissions, fees and expenses due
and owing to the Agent as set forth in Sections 2 and 6 hereof and the opinions
and certificates required hereby and other documents deemed reasonably necessary
by the Agent shall be executed and delivered to effect the sale of the Shares as
contemplated hereby and pursuant to the terms of the Prospectus.
Section 15. Partial Invalidity. In the event that any term, provision
or covenant herein or the application thereof to any circumstance or situation
shall be invalid or unenforceable, in whole or in part, the remainder hereof and
the application of said term, provision or covenant to any other circumstances
or situation shall not be affected thereby, and each term, provision or covenant
herein shall be valid and enforceable to the full extent permitted by law.
Section 16. Construction. This Agreement shall be construed in
accordance with the laws of the State of Ohio.
Section 17. Counterparts. This Agreement may be executed in separate
counterparts, each of which so executed and delivered shall be an original, but
all of which together shall
34
constitute but one and the same instrument.
Section 18. Entire Agreement. This Agreement, including schedules and
exhibits hereto, which are integral parts hereof and incorporated as though set
forth in full, constitutes the entire agreement between the parties pertaining
to the subject matter hereof superseding any and all prior or contemporaneous
oral or prior written agreements, proposals, letters of intent and
understandings, and cannot be modified, changed, waived or terminated except by
a writing which expressly states that it is an amendment, modification or
waiver, refers to this Agreement and is signed by the party to be charged. No
course of conduct or dealing shall be construed to modify, amend or otherwise
affect any of the provisions hereof.
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If the foregoing correctly sets forth the arrangement among the
Company, the MHC, the Bank and the Agent, please indicate acceptance thereof in
the space provided below for that purpose, whereupon this letter and the Agent's
acceptance shall constitute a binding agreement.
Very truly yours,
CHEVIOT FINANCIAL CORP. CHEVIOT SAVINGS BANK
(In formation)
By Its Authorized Representative: By Its Authorized Representative:
Xxxxxx Xxxxxxxx, President Xxxxxx Xxxxxxxx, President
CHEVIOT MUTUAL HOLDING COMPANY
(In formation)
By Its Authorized Representative:
Xxxxxx Xxxxxxxx, President
Accepted as of the date first above
written
Xxxxx, Xxxxxxxx & Xxxxx, Inc.
By Its Authorized Representative:
Xxxxxxxx X. XxXxxxx
Managing Director
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