CHEVIOT FINANCIAL CORP.
(a federal stock corporation in formation)
__________ Shares
COMMON SHARES
($.01 Par Value)
Subscription Price $10.00 Per Share
AGENCY AGREEMENT
___________________, 2003
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
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
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, 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. 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 ▇▇▇▇▇▇▇▇ 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 $750,000 in cash and 75,000 newly issued shares of Common Stock 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-_____) (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 563b of the Code of Federal Regulations
(the "Reorganization Regulations"), the Bank has filed with the Office of Thrift
Supervision (the "OTS") a combined Application for Reorganization and Minority
Stock Issuance (the "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
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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") an application with respect to the Reorganization (the "Ohio
Application"), and has filed such amendments thereto as may have been required
by the Ohio Division. 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 to the date of such termination
pursuant to subparagraphs (a) and (d) below.
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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 $50,000, 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, regulatory
filing fees, SEC, "Blue Sky," and NASD filing
4
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.
5
(b) The MHC-1/MHC-2 Application which was prepared by the Company and 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 remain 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
6
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 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 bank 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
7
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
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 corporation in good standing under the laws of the
State of Delaware 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
8
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 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, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ LLC, with respect to the federal income tax
consequences of the Reorganization, and an opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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
9
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 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, 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,
10
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 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
11
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, 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
12
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) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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 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
13
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 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.
14
(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 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
15
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.
(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
16
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, if any such order shall at any time be
issued, and (ii) 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 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
17
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 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
18
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 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.
19
(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 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
20
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 ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ LLC by the
Bank and the Company and upon which ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ 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
▇▇▇▇▇▇▇▇-▇▇▇▇▇ 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; (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,
21
regulations, 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 ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ 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 bank 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.
22
(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.
s.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 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 and validly 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
23
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 be 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.
(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 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).
24
(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
tot eh 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 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,
25
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 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
26
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
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 ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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 Delaware 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
27
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 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 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 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 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 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 States of Ohio
and Delaware.
The term "Actual Knowledge" as used herein shall have the
meaning set forth in the Legal Opinion Accord of the American
Bar Association Section of Business Law. 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
28
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 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.
29
(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 ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP dated as of the date of the
Prospectus and addressed to the Agent: (i) confirming that ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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 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
30
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
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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.7(f)(1)(i), (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.
31
(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 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
32
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 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,
33
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 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
34
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 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
35
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 1933 Act) 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
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
36
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 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 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 ▇▇▇▇▇, ▇▇▇▇▇▇▇▇
& ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ (with a copy to ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, A Professional
Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇ ▇▇▇▇▇▇ and, if sent to the Company and the Bank, shall be
mailed, delivered or telegraphed and confirmed to the Company and the Bank at
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
President (with a copy to ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ LLC, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇ ▇▇▇▇▇▇▇).
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
37
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 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.
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:
--------------------------------- ----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
CHEVIOT MUTUAL HOLDING COMPANY
(In formation)
By Its Authorized Representative:
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
Accepted as of the date first above
written
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
By Its Authorized Representative:
---------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Managing Director
39