Exhibit 1.1
AGENCY AGREEMENT
___________, 2002
▇▇▇▇, ▇▇▇▇ & Co., LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Dear Sirs:
Metropolitan Financial Corp., a corporation formed under the laws of
the State of Ohio (the "Company"), and Metropolitan Bank and Trust Company, an
Ohio chartered savings and loan association (the "Bank") whose common stock is
owned in its entirety by the Company (collectively the "Primary Parties"),
hereby confirm, jointly and severally, their agreement with ▇▇▇▇, ▇▇▇▇ & Co.,
LLC (the "Agent"), subject to the terms and conditions set out below, with
respect to the proposed issuance by the Company of up to 6,349,207 shares of the
Company's Common Stock, no par value per share.
SECTION 1. DEFINITIONS.
The following terms have the following meanings when used in this
Agreement:
(a) "Act" means the Securities Act of 1933, as amended.
(b) "Agreement" means this Agency Agreement as originally executed and
as amended, modified, supplemented or restated from time to time.
(c) "Basic Subscription" means a Right Holder's right to subscribe for
Common Stock during the Subscription Period at the Subscription Price.
(d) "Business Day" means a day other than a Saturday or Sunday, or a
day on which banking institutions in New York, New York or Cleveland, Ohio are
authorized or required by law, executive order or regulation to remain closed.
(e) "Closing Date" means the hour and date upon which the Company shall
release the shares of Common Stock for delivery in accordance with the terms of
this Agreement.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
(g) "Commission" means the U.S. Securities and Exchange Commission.
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(h) "Common Stock" means the Company's Common Stock, no par value per
share.
(i) "Community Offering Escrow Agent Agreement" means the Community
Subscription Agent Agreement between the Company and Fifth Third Bank executed
on ___________, 2002.
(j) "Effective Date" means the date on which the Registration Statement
is declared effective by the Commission.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(l) "Exercising Right Holders" means Record Date Shareholders
purchasing Common Stock in the Basic Subscription.
(m) "Material Adverse Effect" means any condition, event, change or
occurrence that has or may reasonably be expected to have a material adverse
effect on the condition (financial or otherwise), business, assets, liabilities,
business prospects or operations of Company and the Subsidiaries (as defined
herein) on a consolidated basis.
(n) "Over-Subscription Privilege" means the entitlement of a Record
Date Shareholder who fully exercises all Rights issued to it in the Basic
Subscription to subscribe for additional shares of Common Stock, subject to
allotment, that were not otherwise subscribed for by Exercising Right Holders in
the Basic Subscription.
(o) "Prospectus" means the prospectus, as amended, included in the
Registration Statement at the time it initially became effective, except that if
any prospectus is filed by the Company pursuant to Rule 424(b) or (c) of the
regulations of the Commission under the Act differing from the prospectus
included in the Registration Statement at the time it 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 and shall include any supplements and amendments thereto from and
after their dates of effectiveness or use, respectively.
(p) "Record Date" means January 10, 2002.
(q) "Record Date Shareholders" means the Company's shareholders of
record at the close of business on the Record Date.
(r) "Registration Statement" means the Registration Statement on Form
S-2 (File No. 333-69746) and any amendments to such Registration Statement,
filed by the Company with the Commission in order to register the Common Stock
under the Act.
(s) "Rights" means the non-transferable subscription rights proposed to
be issued by the Company to Record Date Shareholders, which rights entitle their
holders to subscribe for one share of Common Stock for every _____ shares of
Common Stock that the holder owned on the Record Date.
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(t) "Rules and Regulations" means the rules and regulations adopted by
the Commission under the Act.
(u) "Subscription Agent" means ▇▇▇▇▇▇▇▇▇ Shareholder Communications,
Inc.
(v) "Subscription Agent Agreement" means the Subscription Agent
Agreement between the Company and the Subscription Agent executed on
___________, 2002.
(w) "Subscription Period" means the period of time beginning on the
Effective Date and ending at 5:00 p.m., Eastern time, on the Expiration Date.
(x) "Subscription Price" means the price per share of Common Stock of
$______.
SECTION 2. THE OFFERINGS.
The Company is offering a minimum of _______ and a maximum of ______
shares of Common Stock to Record Date Shareholders and the general public by the
Prospectus of the Company. The Company is proposing to issue Rights to Record
Date Shareholders, which Rights entitle their holders to subscribe for one share
of Common Stock for every __________ shares of Common Stock that the holder
owned on the Record Date (the "Rights Offering"). No fractional Rights would be
issued. Each Right would entitle the Right Holder to acquire in the Basic
Subscription one share of Common Stock. All Rights would be exercisable from the
date of issuance until 5:00 p.m. on the Expiration Date. Included in the Rights
Offering to Record Date Shareholders is an Over-Subscription Privilege. Shares
available for sale but not subscribed for pursuant to the exercise of Rights and
the Over-Subscription Privilege will be offered to the general public in a
direct community offering on a best efforts basis (the "Community Offering"). If
requested by the Company, the Agent may also assemble and manage a selling group
of broker-dealers that are members of the National Association of Securities
Dealers, Inc. ("NASD") to participate in the solicitation in the Community
Offering on a "best efforts" basis of purchase orders for the shares not
subscribed for in the Rights Offering (the "Assisting Brokers") under a selected
dealer agreement ("Selected Dealer Agreement"), the form of which is set forth
as Exhibit B to this Agreement. The offer and sale of Common Stock pursuant to
the Prospectus in the Rights Offering and the Community Offering is referred to
herein as the "Offerings". The Offerings will commence on _______________ and
subscriptions for shares of Common Stock will be accepted until 5:00 P.M.
Eastern Time, ____________, 2002, subject to the Company's right to extend the
subscription period without notice as described in the Prospectus until
_____________2002 or terminate the Offerings at any time (the "Expiration
Date"). All shares of Common Stock sold in the Offerings will be sold at the
Subscription Price. Persons may subscribe for the shares of Common Stock offered
by completing, signing and delivering or mailing a subscription certificate
and/or notice of guaranteed delivery or an order form, substantially in the form
attached as an exhibit to the Registration Statement together with payment in
full for the number of shares of Common Stock for which such person is
subscribing. All subscription funds received in the Rights Offering will be
deposited into a separate, non-interest bearing escrow account maintained by the
Subscription Agent with Provident Bank and all subscription funds received in
the Community Offering will be deposited into a separate, non-interest bearing
escrow account with Fifth Third Bank (the
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"Community Offering Escrow Agent"). Any funds received by any broker-dealer
participating in the Community Offering as payment for the shares subscribed for
will be forwarded to the Community Offering Escrow Agent by noon of the day
following receipt. Additional terms and conditions of the Offerings are set out
in the Registration Statement.
SECTION 3. APPOINTMENT OF AGENT; SALE AND DELIVERY OF COMMON STOCK.
(a) The Primary Parties hereby appoint the Agent as the exclusive
financial advisor and marketing agent in connection with the Offerings and on
the basis of the representations and warranties of the Primary Parties contained
in, and subject to the terms and conditions of, this Agreement, the Agent
accepts such appointment and agrees to use its best efforts to solicit the
exercise of Rights in the Rights Offering and Common Stock purchases in the
Community Offering by potential Community Offering investors identified by the
Company and the Agent and agrees to consult with and advise the Primary Parties
as to the matters set forth in the letter agreement (the "Letter Agreement"),
dated December 20, 2001, (a copy of which is attached hereto as Exhibit A). It
is acknowledged by the Primary Parties that the Agent shall not be obligated to
purchase any shares of Common Stock and shall not be obligated to take any
action which is inconsistent with any applicable law, regulation, decision or
order. The appointment of the Agent to provide services hereunder shall
terminate upon consummation or termination of the Offerings.
(b) The Company and the Agent agree that the Agent is an independent
contractor with respect to the Offerings and the performance of any financial
advisory services to the Company contemplated by this Agreement or otherwise,
and the Agent represents and warrants that it is not a partner or agent of any
other securities broker, dealer or other person soliciting the exercise of
Rights contemplated by this Agreement, or of the Company or any of its
affiliates.
(c) In rendering the services contemplated by this Agreement, the Agent
will not be subject to any liability to the Company or any of its affiliates for
any act or omission on the part of any securities broker or dealer (other than
the Agent) or any other person, and the Agent will not be liable for acts or
omissions in performing their obligations under this Agreement, except for any
losses, claims, damages, liabilities and expenses determined in a final judgment
by a court of competent jurisdiction to have resulted directly from any acts or
omissions undertaken or omitted to be taken by the Agent through its gross
negligence or willful misconduct.
(d) On the Closing Date, in the event the Company has received and
accepted subscriptions for _______ shares of Common Stock (the "Requisite
Amount") and the other conditions precedent to the consummation of the Offerings
set forth herein have been satisfied or waived, the Agent and the Company will
advise the Subscription Agent and the Community Offering Escrow Agent to release
to the Company, for each subscription accepted by the Company, the funds
deposited with the Subscription Agent and the Community Offering Escrow Agent,
and the Company shall cause shares to be delivered to the purchasers thereof.
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SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PRIMARY PARTIES.
(a) The Primary Parties jointly and severally represent, warrant and
agree that:
(i) the Registration Statement was declared effective by the
Commission on ______, 2002. To the best knowledge of the Primary
Parties, no proceedings related to the Prospectus have been initiated
or threatened by the Commission. At the time the Registration
Statement, including the Prospectus contained therein (including any
amendment or supplement thereto), became effective, the Registration
Statement complied as to form in all material respects with the Act and
the Rules and Regulations. The Registration Statement, including the
Prospectus contained therein (including any amendment or supplement
thereto) at the time such Registration Statement became effective, 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
was filed with the Commission and at the Closing Date, the Registration
Statement, including the Prospectus contained therein (including any
amendment or supplement thereto) and, when taken together with the
Prospectus, any Blue Sky Applications (as defined herein) or Sales
Information (as defined herein) authorized for use by any of the
Primary Parties in connection with the Offerings, will 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; provided, however, that the representations and warranties
in this Section 4(a)(i) shall not apply to statements or omissions made
in reliance upon and in conformity with written information furnished
to the Primary Parties by the Agent expressly regarding the Agent for
use under the caption "Plan of Distribution" or with written statements
or omissions from any Sales Information (as defined herein) or
information filed pursuant to state securities or blue sky laws or
regulations regarding the Agent;
(ii) the documents of the Company incorporated by reference in
the Registration Statement and the Prospectus, when they were filed
with the Commission, conformed in all material respects to the
requirements of the Exchange Act and the rules and regulations of the
Commission thereunder, and none of such documents 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 not misleading; and any further documents so filed and
incorporated by reference in the Registration Statement and the
Prospectus or any further amendment or supplement thereto, when such
documents are filed with the Commission will conform in all material
respects to the requirements of the Exchange Act and the rules and
regulations of the Commission thereunder, and will not contain an
untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading.
(iii) no order has been issued by the Commission preventing or
suspending the use of the Prospectus and, no action by or before any
such government entity to revoke any
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approval, authorization or order of effectiveness related to the
Offerings is, to the best knowledge of the Primary Parties, pending or
threatened;
(iv) the Company does not own or control, directly or
indirectly, any corporation, association or other entity other than the
subsidiaries set forth in the Prospectus under the caption "Business -
General," (collectively referred to herein as the "Subsidiaries").
Neither the Company nor the Subsidiaries own any equity interests in
any other entities except as disclosed in the Prospectus. The Company
and the Subsidiaries have been duly incorporated and are validly
existing as corporations in good standing under the laws of their
respective jurisdictions of incorporation, with full power and
authority (corporate and other) to own and lease their properties and
conduct their respective businesses as described in the Prospectus; the
Company owns directly all of the outstanding capital stock of the Bank
and directly or indirectly owns all of the outstanding capital stock of
the other Subsidiaries free and clear of all claims, liens, charges and
encumbrances except for Metropolitan III Corp. which has issued no
capital stock; the Company and the Subsidiaries are in possession of
and operating in compliance with all authorizations, licenses, permits,
consents, certificates and orders material to the conduct of their
respective businesses, all of which are valid and in full force and
effect; the Company and the Subsidiaries are duly qualified to do
business and are in good standing as foreign corporations in each
jurisdiction in which the ownership or leasing of properties or the
conduct of their respective businesses requires such qualification
except where the failure to be so qualified would not have a Material
Adverse Effect, and no proceeding has been instituted in any such
jurisdiction, revoking, limiting or curtailing, or seeking to revoke,
limit or curtail, such power and authority or qualification;
(v) neither the Company nor any Subsidiary is in violation of
their respective articles of incorporation or charter or their
respective bylaws, or in material breach or default in the performance
or observance of any obligation, agreement, covenant, or condition
contained in any agreement, judgment, decree, order, mortgage, deed of
trust, lease, franchise, license, indenture, permit or other instrument
to which they are a party or by which they, or any of their respective
property, may be bound which would result in a Material Adverse Effect
and there does not exist any state of facts which constitutes an event
of default on the part of the Company or any such Subsidiary as defined
in such documents or which, with notice or lapse of time or both, would
constitute such an event of default. The consummation of the
transactions herein contemplated will not (i) conflict with or
constitute a breach of, or default under, the articles of
incorporation, charter or bylaws of the Company or any Subsidiary, or
materially conflict with or constitute a material breach of, or default
under, any material contract, lease or other instrument to which the
Company or any Subsidiary has a beneficial interest, or any applicable
law, rule, regulation or order; (ii) violate any authorization,
approval, judgment, decree, order, statute, rule or regulation
applicable to the Company or any Subsidiary except for such violations
which would not have a Material Adverse Effect; or (iii) result in the
creation of any lien, charge or encumbrance upon any property of the
Company or any Subsidiary, except for such liens, changes or
encumbrances that would not individually or in the aggregate have a
Material Adverse Effect;
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(vi) each of the Subscription Agent Agreement and Community
Offering Escrow Agent Agreement has been duly authorized, executed and
delivered by the Company and, assuming due authorization, execution and
delivery by the Subscription Agent and Community Offering Escrow Agent,
constitutes a legal, valid and binding obligation of the Company
enforceable in accordance with its terms, subject to the qualification
that (i) enforcement thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization or other laws (including the laws of
fraudulent conveyance) or judicial decisions affecting the
enforceability of creditors' rights generally, the rights of creditors
of savings banks or financial institutions, the accounts of which are
insured by the Federal Deposit Insurance Corporation (the "FDIC"), and
(ii) enforcement thereof is subject to general equity principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law) and to the effect of certain laws and
judicial decisions upon the availability of injunctive relief and
enforceability of equitable remedies, including the remedies of
specific performance and self-help;
(vii) the Primary Parties have all such power, authority,
authorizations, approvals and orders as may be required to enter into
this Agreement, and to issue and sell the Common Stock as provided
herein and as described in the Prospectus. The execution, delivery and
performance of this Agreement, and the Letter Agreement and the
consummation of the transactions contemplated herein have been duly and
validly authorized by all necessary corporate action on the part of the
Company. This Agreement has been validly executed and delivered by the
Primary Parties, and assuming due authorization, execution and delivery
by the Agent is a valid, legal and binding obligation of the Primary
Parties, in each case enforceable in accordance with its terms, subject
to the qualification that (i) the legality, validity, binding nature
and enforcement thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization or other laws (including the laws of
fraudulent conveyance) or judicial decisions affecting the
enforceability of creditors' rights generally, the rights of creditors
of savings banks or financial institutions, the accounts of which are
insured by the FDIC, and (ii) enforcement thereof is subject to general
equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and to the effect of
certain laws and judicial decisions upon the availability of injunctive
relief and enforceability of equitable remedies, including the remedies
of specific performance and self-help;
(viii) no consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance of this Agreement or the Subscription Agent
Agreement by the Company, the consummation by the Company of the
transactions contemplated by this Agreement, or by the Subscription
Agent Agreement, including, without limitation, the distribution of the
Rights and the allotment, issue and sale of the Common Stock, except
those that have been obtained and those that may be required under the
Act or under state securities laws or blue sky laws of the various
states in which the Common Stock is to be offered;
(ix) the execution, delivery and performance of this
Agreement, the Subscription Agent Agreement, and the consummation by
the Company of the transactions contemplated
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by this Agreement or by the Subscription Agent Agreement, including,
without limitation, the distribution of the Rights and the allotment,
issue and sale of the Common Stock, will not conflict with, result in
the creation or imposition of any lien, charge or encumbrance upon the
assets of the Company pursuant to the terms of, result in a breach or
violation by the Company of any of the terms or provisions of, or
constitute a default by the Company under, any contract, including any
transfer agency agreement, indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which the Company
is a party or to which its properties is subject, the articles of
incorporation or bylaws of the Company, or any statute (including the
Act), judgment, decree, order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any
of its property;
(x) since the respective dates as of which information is
given in the Registration Statement and Prospectus, and except as
described in or specifically contemplated by the Prospectus: (i) the
Company and the Subsidiaries have not incurred any material liabilities
or obligations, indirect, direct or contingent, or entered into any
material verbal or written agreement or other transaction whether or
not arising in the ordinary course of business or which could result in
a Material Adverse Effect; (ii) there has not been any material
increase in the long-term debt of the Company and the Subsidiaries
(taken as a whole) or in the aggregate dollar or principal amount of
the Company's and the Subsidiaries' (taken as a whole) assets which are
classified as substandard, doubtful or loss or loans which are 90 days
or more past due or real estate acquired by foreclosure; (iii) there
has not been any material adverse change on the aggregate dollar amount
of the Company's and the Subsidiaries' (taken as a whole) deposits or
their consolidated net worth or spread; (iv) there has been no material
adverse change in the Company's and the Subsidiaries' relationship with
its insurance carriers, including, without limitation, cancellation or
other termination of the Company's or the Subsidiaries' 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
Company or the Subsidiaries; (vi) the Company and the Subsidiaries have
not sustained any material loss or interference with their respective
business or properties from fire, flood, windstorm, earthquake,
accident or other calamity, whether or not covered by insurance; (vii)
the Company has not paid or declared any dividends or other
distributions with respect to its capital stock and the Company and the
Subsidiaries are not in default in the payment of principal or interest
on any outstanding debt obligations; (viii) there has not been any
change in the capital stock (other than upon the sale of the Common
Stock hereunder or pursuant to employee benefit plans described in the
documents incorporated by reference into the Prospectus); and (ix)
there has not occurred any Material Adverse Effect;
(xi) ▇▇▇▇▇, ▇▇▇▇▇▇ and Company LLP, which certified the
financial statements filed as part of the Registration Statement, has
advised the Primary Parties that it is an independent certified public
accountant within the meaning of the Code of Ethics of the AICPA, and
▇▇▇▇▇, ▇▇▇▇▇▇ and Company LLP is, with respect to the Company and the
Subsidiaries, an independent certified public accountant as required by
the Act and the Rules and Regulations;
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(xii) the Rights and all the authorized shares of capital
stock of the Company to be sold hereunder, have been duly authorized,
the Company has a duly authorized and outstanding capitalization as set
forth under "Capitalization" in the Prospectus, and all the issued and
outstanding shares of capital stock are, and the shares of Common Stock
issuable in the Offerings, when issued, delivered and paid for as
described in the Prospectus will be, validly issued and outstanding,
fully paid and nonassessable with no personal liability attaching to
the ownership of them, the Common Stock is duly listed on the Nasdaq
Stock Market, and the Rights will be validly issued and outstanding;
the issuance of the Common Stock is not subject to preemptive rights;
and the terms and provisions of the shares of Common Stock will conform
in all material respects to the description thereof contained in the
Prospectus. Upon issuance of the Common Stock sold, good title to the
Common Stock will be transferred from the Company to the purchasers of
Common Stock against payment therefor as set forth in Prospectus and
the certificates used to evidence shares of Common Stock will be in due
and proper form;
(xiii) the financial statements and the notes thereto which
are incorporated by reference into the Registration Statement and which
are a part of the Prospectus present fairly in all material respects
the financial condition and retained earnings of the Company as of the
dates indicated and the results of operations and cash flows for the
periods specified. The financial statements comply in all material
respects with the applicable accounting requirements of Title 12 of the
Code of Federal Regulations, Regulation S-X of the Commission and
generally accepted accounting principles ("GAAP") applied on a
consistent basis during the periods presented, except as otherwise
noted therein, and present fairly in all material respects the
information required to be stated therein. The other financial,
statistical and pro forma information and related notes included in the
Prospectus present fairly the information shown therein on a basis
consistent with the audited and any unaudited financial statements
included in the Prospectus, and as to the pro forma adjustments, the
adjustments made therein have been consistently applied on the basis
described therein;
(xiv) the Bank is a duly organized and validly existing
Ohio-chartered savings and loan in stock form, duly authorized to
conduct its business as described in the Prospectus; the activities of
the Bank are permitted by the rules, regulations and practices of the
Office of Thrift Supervision ("OTS") and the Ohio Department of
Financial Institutions ("ODFI"); the deposits of the Bank are insured
by the FDIC up to legally applicable limits, and no proceedings for the
termination or revocation of such insurance are pending or, to the best
knowledge of the Primary Parties, threatened and no approvals by or
filings with the FDIC, ODFI, or OTS or any state bank regulatory
agency, except such as have been obtained, are necessary to consummate
the Offerings;
(xv) there are no legal or governmental actions, suits,
investigations, inquiries or proceedings pending or, to the knowledge
of the Primary Parties, threatened to which the Company or any
Subsidiary or any of their officers or directors is a party that might
have a Material Adverse Effect or that is required in the Registration
Statement and the Prospectus;
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(xvi) there are no material contracts or other documents that
are required to be described in the Prospectus or filed as exhibits to
the Registration Statement by the Act or by the Rules and Regulations
that have not been described in the Prospectus or filed as exhibits to
the Registration Statement or incorporated in the Registration
Statement by reference as permitted by the Rules and Regulations; the
contracts so described in the Prospectus are in full force and effect
on the date hereof; the descriptions thereof or references thereto are
correct in all material respects; and neither the Company nor any of
the Subsidiaries, nor, to the knowledge of the Company, any other party
is in breach of or default under any of such contracts;
(xvii) the Company has not distributed any offering material
in connection with the Offerings and sale of the Common Stock other
than the Prospectus, the Registration Statement and the other materials
permitted by the Act;
(xviii) the Company has timely filed all federal, state and
local tax returns required to be filed and is not in default in the
payment of any taxes, penalties, or interest which have become due
pursuant to said returns or pursuant to any law or any assessments.
Such returns are complete and correct in all material respects. The
Company has not executed any waiver or extended the statute of
limitations, and there are no pending or to the Company's and
Subsidiaries' knowledge threatened claims, assessments, deficiencies,
audits or notices, with respect to any such taxes which could have a
Material Adverse Effect;
(xix) except as disclosed in or specifically contemplated by
the Prospectus, the Company and the Subsidiaries have sufficient
trademarks, trade names, patent rights, copyrights, licenses, approvals
and governmental authorizations to conduct their businesses as now
conducted; the expiration of any trademarks, trade names, patent
rights, copyrights, licenses, approvals or governmental authorizations
would not have a Material Adverse Effect; and the Company and the
Subsidiaries have no knowledge of any material infringement by them of
trademarks, trade names, patent rights, copyrights, licenses, trade
secrets or other similar rights of others, and, to the Company's and
the Subsidiaries' knowledge, there is no claim being made against the
Company or any of the Subsidiaries regarding trademark, trade name,
patent, copyright, license, trade secret or other infringement which
could have a Material Adverse Effect;
(xx) except as described in the documents incorporated by
reference into the Prospectus, the Company does not have contracts with
management or employment agreements, or any bonus, deferred
compensation, profit-sharing, pension, retirement, stock option, or
stock purchase plans, agreements or understandings;
(xxi) except as disclosed in the Prospectus, there are no
legal or governmental actions, suits or proceedings pending or, to the
knowledge of the Company, threatened to which the Company or any of the
Subsidiaries is or may be a party or of which property owned or leased
by the Company or any of the Subsidiaries is or may be the subject, or
related to environmental, discrimination or financial regulatory
matters, which actions, suits or proceedings might, individually or in
the aggregate, prevent or adversely affect the
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transactions contemplated by this Agreement or are likely to result in
a Material Adverse Effect and no labor disturbance by the employees of
the Company or the Subsidiaries exists or is imminent which might be
expected to result in a Material Adverse Effect. Except as disclosed in
the Prospectus, no enforcement proceeding, whether formal or informal,
has been commenced against the Company or any of the Subsidiaries by
the OTS, ODFI, FDIC or, to the Company's and the Subsidiaries'
knowledge, any other governmental authority, nor have any such
proceedings been instituted, threatened or recommended. Except as
disclosed in the Prospectus, neither the Company, nor any of the
Subsidiaries, or any of their respective officers, employees or
directors is a party or subject to the provisions of any regulatory
action, injunction, judgment, decree or order of any court, regulatory
body, administrative agency or other governmental body affecting the
business of the Company or any of the Subsidiaries;
(xxii) the Company has or the Subsidiaries have good and
marketable title to all their properties and assets, free and clear of
all liens, charges, encumbrances or restrictions, except such as do not
materially adversely affect the value of such properties and assets and
do not interfere with the use made or proposed to be made of such
properties and assets by the Company and the Subsidiaries; all of the
leases and subleases material to the business of the Company or the
Subsidiaries or under which the Company holds properties described in
the Prospectus are in full force and effect; and the Company has or the
Subsidiaries have no notice of any material claim of any sort which has
been asserted by anyone adverse to the rights of the Company or the
Subsidiaries as owner or as lessee or sublessee under any of the leases
or subleases mentioned above, or materially affecting or questioning
the rights of the Company or the Subsidiaries to the continued
possession of the leased or subleased premises under any such lease or
sublease. Except as disclosed in the Prospectus and other than such
leases and properties as are immaterial in the aggregate, the Company
or the Subsidiaries owns or leases all such properties as are necessary
to its operations as now conducted or as proposed to be conducted;
(xxiii) except as disclosed in the Prospectus, the Primary
Parties are not in material violation of any directive from the OTS,
ODFI, the FDIC, or any other agency to make any material change in the
method of conducting their respective businesses; the Primary Parties
have conducted and are conducting their respective businesses so as to
comply in all respects with all applicable statutes and regulations
(including, without limitation, regulations, decisions, directives and
orders of the OTS, the Commission and the FDIC), except where the
failure to so comply would not reasonably be expected to result in a
Material Adverse Effect, and there is no charge, investigation, action,
suit or proceeding before or by any court, regulatory authority or
governmental agency or body pending or, to the best knowledge of any of
the Primary Parties, threatened, which would reasonably be expected to
materially and adversely affect the Offerings, the performance of this
Agreement, or the consummation of the transactions described in the
Registration Statement, or which would reasonably be expected to result
in a Material Adverse Effect;
11
(xxiv) none of the Primary Parties has: (i) issued any
securities within the last 18 months (except for notes to evidence bank
loans or other liabilities in the ordinary course of business or
pursuant to employee benefit plans as described in a document
incorporated by reference into the Prospectus); (ii) had any dealings
with respect to sales of securities within the 12 months prior to the
date hereof with any member of the National Association of Securities
Dealers, Inc. (the "NASD"), or any person related to or associated with
such member, other than discussions and meetings relating to the
Offerings and purchases and sales of U.S. government and agency and
other securities in the ordinary course of business; or (iii) engaged
any intermediary between the Agent and the Primary Parties in
connection with the Offerings, and no person is being compensated in
any manner for such services;
(xxv) the Primary Parties have not made any payment of funds
of the Primary Parties as a loan to any person for the purchase of
Common Stock or have 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;
(xxvi) the Bank complies 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;
(xxvii) the Company and the Subsidiaries comply with all laws,
rules and regulations relating to environmental protection, and none of
them has been notified or is otherwise aware that any of them is
potentially liable, or is considered potentially liable, under the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, or any other federal, state or local environmental
laws and regulations except to the extent that any non-compliance would
not have a Material Adverse Effect; no action, suit, regulatory
investigation or other proceeding is pending, or to the knowledge of
the Primary Parties, threatened against the Company and the
Subsidiaries relating to environmental protection; and, to the
knowledge of the Primary Parties, no disposal, release or discharge of
hazardous or toxic substances, pollutants or contaminants, including
petroleum and gas products, as any of such terms may be defined under
federal, state or local law, has occurred on, in, at or about any
facilities or properties owned or leased by the Company and the
Subsidiaries or in which the Bank has a security interest, except to
the extent such disposal, release or discharge would not have a
Material Adverse Effect;
(xxviii) all of the loans represented as assets on the recent
developments or financial information of the Primary Parties included
in the Prospectus meet or are exempt from all requirements of federal,
state and local law pertaining to lending, including, without
limitation, truth in lending (including the requirements of Regulations
Z and 12 C.F.R. Part 226), real estate settlement procedures, consumer
credit protection, equal credit opportunity and all disclosure laws
applicable to such loans, except for violations which, if asserted,
would not result in a Material Adverse Effect;
(xxix) none of the Primary Parties are required to be
registered as an investment company under the Investment Company Act of
1940;
12
(xxx) the Company and the Subsidiaries maintain insurance of
the type and in the amount generally deemed adequate for their
respective businesses, including, but not limited to, general liability
insurance, fidelity bond insurance and insurance covering real and
personal property owned or leased by the Company or the Subsidiaries
against theft, forgery, damage, destruction, acts of vandalism and all
other risks customarily insured against, all of which insurance is in
full force and effect;
(xxxi) all material transactions between the Company and the
Subsidiaries and the officers, directors and major stockholders of the
Company that are required to be disclosed under the Act and the Rules
and Regulations have been accurately disclosed in the Prospectus; and
the terms of each such transaction are fair to the Company and no less
favorable to the Company than the terms that could have been obtained
from unrelated parties, except as disclosed in the Prospectus;
(xxxii) the Primary Parties have taken all actions necessary
to obtain at Closing (as defined herein) a Blue Sky Memorandum from
Silver ▇▇▇▇▇▇▇▇ & ▇▇▇▇, LLP; and
(xxxiii) the Primary Parties have not relied upon Agent or its
counsel for any legal, tax or accounting advice in connection with the
Offerings provided, however, that Silver, ▇▇▇▇▇▇▇▇ & Taff, L.L.P., has
prepared as counsel to the Company a Blue Sky Memorandum.
Any certificates signed by an officer of any of the Primary Parties and
delivered to the Agent or its counsel that refer to this Agreement shall be
deemed to be a representation and warranty by the Primary Parties to the Agent
as to the matters covered thereby with the same effect as if such representation
and warranty were set forth herein. Any certificate delivered by any of the
Primary Parties to its counsel for purposes of enabling such counsel to render
the opinions referred to in Section 11(b) will also be furnished to the Agent
and its counsel and shall be deemed to be additional representations and
warranties by the Primary Parties to the Agent as to the matters covered thereby
and the Agent and its counsel are entitled to rely thereon.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE AGENT.
Agent represents and warrants to the Primary Parties that:
(a) Agent is a limited liability company and is validly existing and in
good standing under the laws of the State of New Jersey with full power and
authority to provide the services to be furnished to the Primary Parties
hereunder;
(b) the execution, delivery and performance of this Agreement and the
Letter Agreement and the consummation of the transactions contemplated herein
have been duly and validly authorized by all necessary corporate action on the
part of Agent, and this Agreement is the legal, valid and binding agreement of
Agent, enforceable in accordance with its terms, except as the legality,
validity, binding nature and enforceability thereof may be limited by (i)
bankruptcy, insolvency, moratorium, reorganization, conservatorship,
receivership or other similar laws relating to or affecting the
13
enforcement of creditors' rights generally, and (ii) general equity principles
regardless of whether such enforceability is considered in a proceeding in
equity or at law;
(c) each of Agent and its employees, agents and representatives who
shall perform any of the services hereunder has, and until the Offerings are
consummated or terminated shall maintain, all licenses, approvals and permits
necessary to perform such services and shall comply in all material respects
with all applicable laws and regulations in connection with the performance of
such services;
(d) no action, suit, charge or proceeding before the Commission, the
NASD, any state securities commission or any court is pending, or to the
knowledge of Agent threatened, against Agent which, if determined adversely to
Agent, would have a material adverse effect upon the ability of Agent to perform
its obligations under this Agreement; and
(e) agent is registered as a broker/dealer pursuant to Section 15(b) of
the Exchange Act and is a member of the NASD.
SECTION 6. FEES.
(a) In addition to the expenses specified in Section 7 (k) hereof, as
compensation for the Agent's services under this Agreement, the Agent has
received or will receive the following fees from the Company: an advisory and
management fee of $200,000 shall be paid as follows: $50,000 upon execution of
the Letter Agreement and $150,000 upon the Registration Statement being declared
effective by the Commission. Fees for marketing services shall be the aggregate
of (i) two and one-half percent (2.5%) of the aggregate dollar amount of the
Common Stock sold in the Rights Offering; (ii) two and one-half percent (2.5%)
of the aggregate dollar amount of the Common Stock sold in the Community
Offering to persons identified by the Company pursuant to Section 7(x); and
(iii) five percent (5.0%)of the aggregate dollar amount of the Common Stock sold
in the Community Offering to persons not identified by the Company pursuant to
Section 7(x), provided, however, that in no event shall a fee be payable for the
Common Stock sold to ▇▇▇▇▇▇ ▇▇▇▇ and his affiliates or related entities.
(b) At the request of the Company, the Agent will seek to form a group
of approved broker-dealer firms in accordance with Section 2 for purposes of
soliciting orders in the Community Offering. The fees payable by the Company
pursuant to this subsection directly to the Assisting Brokers will be 5% of the
aggregate dollar amount of the shares of Common Stock solicited by them and sold
in the Community Offering as evidenced by the Community Offering order form or
as otherwise determined by the Company. No fee related to Common Stock sold by
Assisting Brokers shall be paid to the Agent.
(c) In the event that the Company is required to resolicit subscribers
for shares in the Rights Offering and Community Offering and the Agent is
required to provide significant additional services in connection with such a
resolicitation, the Company and the Agent shall mutually agree to the dollar
amount of additional expenses which may be incurred by the Agent. Until any
14
agreement called for by this paragraph is reached, the Agent shall not incur
expenses relating to any resolicitation.
(d) The aggregate fees for marketing services will be paid
concurrently with the issuance of the Common Stock subscribed for on the Closing
Date. The closing (the "Closing") shall be held at the offices of ▇▇▇▇▇▇▇▇ ▇▇▇▇
LLP, Cleveland, Ohio or at such other place as shall be mutually agreed upon by
the Company and the Agent. At the Closing, the Company shall deliver to the
Agent by wire transfer in same day-funds the fees for services set forth in this
Section 6 and expenses owing to the Agent and its counsel as set forth in
Section 7(k).
SECTION 7. COVENANTS OF THE COMPANY.
The Company agrees:
(a) to prepare and file with the Commission, as promptly as
practicable upon the Agent's reasonable request, any amendments or supplements
to the Registration Statement or Prospectus that, in the Agent's reasonable
opinion, may be necessary or advisable and to file no amendment or supplement to
the Registration Statement or the Prospectus to which the Agent reasonably
objects by notice to the Company after being furnished a copy a reasonable time
before filing, to furnish promptly to the Agent and their counsel a conformed
copy of the Registration Statement as originally filed with the Commission, and
each amendment to the Registration Statement filed with the Commission,
including all consents and exhibits filed with the Registration Statement;
(b) to deliver to the Agent, as soon as the Registration
Statement becomes effective and thereafter when the Prospectus is required to be
delivered under the Act, as many copies of the Prospectus and as many conformed
copies of the Registration Statement originally filed and of each amendment to
the Registration Statement (including exhibits filed with the Registration
Statement or incorporated by reference in the Registration Statement) as the
Agent may reasonably request;
(c) during the period of time (the "Delivery Period") in which
the Prospectus is, in the opinion of the Agent's counsel, required to be
delivered by the Agent, to deliver promptly to the Agent the number of copies of
the Prospectus (as amended or supplemented and including all documents
incorporated by reference in the Prospectus) as the Agent may reasonably
request;
(d) to file promptly with the Commission the Prospectus
pursuant to Rule 424 under the Act and any amendment to the Registration
Statement or the Prospectus or any supplement to the Prospectus that may, in the
judgment of the Company or the Agent, be required by the Act or requested by the
Commission and approved by the Agent;
(e) during the Delivery Period, prior to filing with the
Commission an amendment to the Registration Statement or supplement to the
Prospectus, or to the filing of any Prospectus pursuant to Rule 424 under the
Act, to furnish a copy of the filing to the Agent and their
15
counsel and obtain the Agent's consent to the filing, which consent may not be
unreasonably withheld or delayed;
(f) during the Delivery Period, to advise the Agent promptly
(i) when the Registration Statement and any post-effective amendment to the
Registration Statement is declared effective, (ii) of any request by the
Commission for an amendment to the Registration Statement, a supplement to the
Prospectus or for any additional information, (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement, the suspension of the qualification of the Rights, if qualification
is necessary, or the suspension of the qualification or registration of the
shares of Common Stock issuable in the Offerings for offering, sale or trading
in any jurisdiction or the initiation or threat of any proceeding for that
purpose or any action by The Nasdaq Stock Market rejecting, suspending or
terminating the application for the listing of, or the listing of, the Company's
Common Stock, and (iv) of the happening of any event that makes untrue any
statement of a material fact made in the Registration Statement or the
Prospectus, or that requires the making of a change in the Registration
Statement or the Prospectus in order to make any material statement therein not
misleading or if during such period it is necessary to amend the Registration
Statement or supplement the Prospectus to comply with the Act and to amend the
Registration Statement or supplement the Prospectus (at the expense of the
Company) so as to correct such statement or omission or effect such compliance;
(g) if the Commission issues a stop order suspending the
effectiveness of the Registration Statement, to make every commercially
reasonable effort to obtain the lifting of any such order at the earliest
possible time;
(h) as soon as practicable after the Effective Date, to make
generally available to its shareholders and to deliver to the Agent an earnings
statement, conforming with the requirements of Section 11(a) of the Act and Rule
158 of the Rules and Regulations, covering a period of at least 12 months
beginning after the Effective Date;
(i) for a period of two years from the date of this Agreement,
the Company will furnish to the Agent, as soon as practical after such
information is available (i) a copy of each report of the Company furnished to
or filed with the Commission under the Exchange Act or any national securities
exchange or system on which any class of securities of the Company is listed or
quoted, (ii) a copy of each report of the Company mailed to holders of Common
Stock, (iii) each press release and material news item and article released by
the Company and/or Bank, and (iv) from time- to-time, such other publicly
available information concerning the Primary Parties as the Agent may reasonably
request;
(j) to use its best efforts to qualify the shares of Common
Stock issuable in the Offerings for offering and sale under the securities laws
of the United States (including all states) for so long as necessary for the
distribution of the Rights, to the extent required, and the shares of Common
Stock issuable in the Offerings, except that in no event will the Company be
obligated in connection with seeking to qualify the Rights, to the extent
required or, the shares of Common Stock issuable in the Offerings under the
securities laws of any jurisdiction to qualify as a foreign
16
corporation or, except as to matters and transactions relating to the Offerings,
to execute a consent for service of process;
(k) to pay regardless of whether the Offerings are completed
(i) the costs incident to the authorization, issuance and delivery of the Rights
and the authorization, issuance, sale and delivery of the Rights and the shares
of Common Stock issuable in the Offerings and any taxes payable in connection
with those actions, (ii) the costs incident to the preparation, printing and
filing under the Act of the Registration Statement, the costs of preparing,
printing, mailing and otherwise distributing the Registration Statement and the
Prospectus as originally filed and each amendment or supplement to the
Prospectus as provided in this Agreement, (iii) the costs of any filings with
the NASD, (iv) the costs of listing the Common Stock issuable in the Offerings
on The Nasdaq Stock Market, (v) the fees and expenses of qualifying the Rights,
to the extent required, and the shares of Common Stock issuable in the Offerings
under the securities laws of the several jurisdictions as provided in paragraph
(j) of this Section 7 and of preparing and delivering a Blue Sky Memorandum
(including the related fees and expenses of counsel), (vi) the costs and
expenses of mailing, distributing and preparing advertising and sales materials
used in the Offerings, and the shares of Common Stock issuable in the Offerings,
(vii) the fees and disbursements of counsel and accountants for the Company,
(viii) the fees and expenses of the Subscription Agent and the Company's
transfer agent and registrar and (ix) all other costs and expenses incident to
the performance of the obligations of the Company under this Agreement,
including transportation, communications, meals and lodging relating to the
solicitation of the exercise of the Rights and to pay the Agent in reimbursement
of its fees and expenses and that of its counsel in connection with the
Offerings, including up to $90,000 of the fees of its counsel (excluding fees
and expenses related to the preparation of a Blue Sky Memorandum);
(l) to apply the net proceeds from the sale of the Common
Stock in the Offerings for the purposes described in the Prospectus;
(m) the Company will refrain during a period of 180 days after
the date of the Prospectus, without the prior written consent of the Agent, from
(i) offering, pledging, selling, contracting to sell, or selling any option,
warrant, or contract to purchase, purchasing any option, warrant, or contract to
sell, granting any option for the sale of, or otherwise disposing of or
transferring, directly or indirectly, any Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock, or filing any
registration statement under the Act with respect to any of the foregoing or
(ii) entering into any swap or any other agreement or transaction that
transfers, in whole or in part, directly or indirectly, the economic consequence
of ownership of the Common Stock or any security convertible into or
exchangeable for Common Stock, whether any such swap or transaction described in
clause (i) or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The Company shall also cause each
executive officer and director of the Company to furnish to the Agent, on or
prior to the date hereof, a letter or letters, in form and substance
satisfactory to counsel for the Agent, pursuant to which each such person or
entity shall agree to abide by the aforementioned restrictions, unless they have
received prior written consent from the Agent, for a period of 180 days from the
date of the Prospectus. The foregoing sentence shall not apply to (A) the Rights
and the Common Stock to be sold hereunder; (B) any shares of Common Stock issued
by the Company upon the exercise of
17
an option outstanding on the date hereof or pursuant to an employee benefit plan
described in a document incorporated by reference into the Prospectus; or (C)
any shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock issued in connection with a merger, acquisition of
another entity, acquisition of assets or any other similar transaction;
(n) to extend the Subscription Period, as described in the
Registration Statement, upon the request of the Agent;
(o) the Primary Parties will distribute the Prospectus or
other offering materials in connection with the Offerings and sale of the Common
Stock only in accordance with the Act and the Exchange Act and the rules and
regulations promulgated under such statutes, and the laws of any state in which
the shares are qualified for sale;
(p) for so long as the Common Stock is registered under the
Exchange Act, the Company will furnish to its stockholders as soon as
practicable after the end of each fiscal year such reports and other information
as are required to be furnished to its stockholders under the Exchange Act;
(q) the Primary Parties 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 "Interpretation of the Board of Governors of the
NASD on Free Riding and Withholding;"
(r) the Primary Parties will conduct their businesses in
compliance in all material respects with all applicable federal and state laws,
rules, regulations, decisions, directives and orders, including all decisions,
directives and orders of the Commission, the ODFI, FDIC and the OTS;
(s) the Primary Parties shall comply with any and all terms,
conditions, requirements and provisions with respect to the Offerings and the
transactions contemplated thereby imposed by the ODFI and the OTS, if any, the
Commission, the Act, the Rules and Regulations, and the Exchange Act. The
Company will comply with all provisions of all undertakings contained in the
Registration Statement;
(t) the Company agrees to furnish, or cause to be furnished,
to the Agent, lists, or copies of those lists, showing the names and addresses
of, and number of shares of Common Stock held by Record Date Shareholders as of
the Record Date, and to the extent available to the Company, similar information
regarding any beneficial owners of the Company's Common Stock for whom such
Record Date Shareholders act as nominees;
(u) the Company will, and will arrange for the Subscription
Agent to inform the Agent in writing, on each Business Day during the
Subscription Period and ending on the Expiration Date (and in the case of
deliveries pursuant to the guaranteed delivery procedure, the period ending
three National Market System trading days after the Expiration Date), of (i) the
number of Rights exercised each day, including the name of the purchaser and the
number of shares purchased, (ii) the number of shares of Common Stock subscribed
for pursuant to the Basic Subscription Privilege each day, (iii) the number of
shares of Common Stock subscribed for pursuant to the Over-Subscription
18
Privilege each day, (iv) the number of Rights (included in (i)) exercised
pursuant to the guaranteed delivery procedure each day, (v) the number of Rights
for which defective subscription certificates have been received each day, and
(vi) cumulative total with respect to the information set forth in each of the
clauses (i) through (v) above. At or before 3:30 p.m., Eastern time, on the
first National Market System trading day following the Expiration Date, the
Subscription Agent will certify in writing to the Company and the Agent the
cumulative total through the Expiration Date with respect to the information set
forth in clauses (i) through (iv) above. The Company shall also cause the
Subscription Agent to (i) maintain and update a listing of Rights Holders who
have fully or partially exercised their Rights and Right Holders who have not
exercised their Rights; (ii) provide the Agent and its designated
representatives with the information compiled pursuant to this Section 7 (u) and
any subscription certificates or other documents or data from which such
information derived, as any of them may request, (iii) as promptly as possible
but in any event on or before 3:30 p.m., New York City Time, on the first full
business day following the Expiration Date, advise the Agent of the number of
shares subscribed for, the number of subscription guarantees received and the
number of shares of additional Common Stock unsubscribed for;
(v) the Company will, and will arrange for the Community
Offering Escrow Agent to inform the Agent in writing, on each Business Day
during the Subscription Period and ending on the Expiration Date (i) the name of
the purchaser and the number of shares subscribed for, (ii) the number of shares
of Common Stock for which defective Community Offering order forms have been
received each day, and (iii) cumulative total with respect to the information
set forth in clause (i) above. At or before 3:30 p.m., Eastern time, on the
first National Market System trading day following the Expiration Date, the
Community Offering Escrow Agent will certify in writing to the Company and the
Agent the cumulative total through the Expiration Date with respect to the
information set forth in clause (i) above. The Company shall also cause the
Community Offering Escrow Agent to provide the Agent and its designated
representatives with the information compiled pursuant to this Section 7 (v) and
any order forms or other documents or data from which such information derived,
as any of them may request;
(w) the Company shall provide the Agent with any other
information necessary to allow the Agent to monitor the allocation of the Common
Stock by the Subscription Agent on behalf of the Company in the event of an
oversubscription by shareholders in the Rights Offering and the allocation of
the Common Stock in the Community Offering, and all such information shall be
accurate and reliable in all material respects;
(x) the Company will not deliver the Common Stock until the
Primary Parties have satisfied or caused to be satisfied each condition set
forth in Section 11 hereof, unless such condition is waived in writing by the
Agent; and
(y) to deliver to the Agent, as soon as the Registration
Statement becomes effective and during the three weeks thereafter, the name,
address and telephone number of potential Community Offering investors
identified by the Company.
19
SECTION 8. INDEMNIFICATION.
(a) The Primary Parties jointly and severally agree to
indemnify and hold harmless the Agent, its officers, directors, agents,
attorneys, and employees and each person, if any, who controls the Agent within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act,
against any and all loss, liability, claim, damage or expense whatsoever
(including but not limited to settlement expenses, subject to the limitation set
forth in the last sentence of subsection (c) below), joint or several, that the
Agent or any of such officers, directors, agents, attorneys, employees and
controlling Persons (collectively, the "Related Persons") may suffer or to which
the Agent or the Related Persons may become subject under all applicable federal
and state laws or otherwise, and to promptly reimburse the Agent and any Related
Persons upon written demand for any reasonable expenses (including out-of-pocket
expenses, fees and disbursements of outside counsel) incurred by the Agent or
any Related Persons in connection with investigating, preparing or defending any
actions, proceedings or claims (whether commenced or threatened) to the extent
such losses, claims, damages, liabilities or actions: (i) arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement (or any amendment or supplement
thereto), the Prospectus (or any amendment or supplement thereto), or other
instrument or document of the Primary Parties or based upon written information
supplied by any of the Primary Parties filed in any state or jurisdiction to
register or qualify any or all of the shares of Common Stock issuable in the
Offerings under the securities laws thereof (collectively, the "Blue Sky
Applications"), or any application or other document, advertisement, or
communication ("Sales Information") prepared, made or executed by or on behalf
of any of the Primary Parties with their consent or based upon information
furnished by or on behalf of any of the Primary Parties, in order to qualify or
register the shares of Common Stock issuable in the Offerings 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; (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), the Prospectus (or any amendment or supplement thereto),
any Blue Sky Applications or Sales Information or other documentation
distributed in connection with the Offerings or (iv) result from any claims made
with respect to the accuracy, reliability and completeness of the stockholder
records, for any denial or reduction of Rights exercised, whether as a result of
a properly calculated allocation based upon such records or otherwise, provided,
however, that no indemnification is required under this subsection (a) to the
extent such losses, claims, damages, liabilities or actions arise out of or are
based upon any untrue material statements or alleged untrue material statements
in, or material omission or alleged material omission from, the Registration
Statement (or any amendment or supplement thereto) or the Prospectus (or any
amendment or supplement thereto), the Blue Sky Applications or Sales Information
or other documentation distributed in connection with the Offerings made in
reliance upon and in conformity with information furnished to the Primary
Parties by the Agent or its representatives (including counsel) with respect to
the Agent expressly for use in the Registration Statement (or any amendment or
supplement thereto) or Prospectus (or any amendment or supplement thereto) under
the caption "Plan of Distribution." Provided further, that the Primary Parties
will not be responsible for any loss, liability, claim, damage or expense to the
extent a court of competent jurisdiction finds they result primarily from
actions taken or omitted
20
to be taken by the Agent in bad faith or from the Agent's gross negligence or
willful misconduct, and the Agent agrees to repay to the Primary Parties any
amounts advanced to it by the Primary Parties in connection with matters as to
which it is found by a court of competent jurisdiction not to be entitled to
indemnification hereunder. This indemnity agreement will be in addition to any
liability which the Primary Parties may otherwise have.
(b) The Agent agrees to indemnify and hold harmless the
Primary Parties, their directors and officers, agents, and employees and each
person, if any, who controls any of the Primary Parties within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act against any and all
loss, liability, claim, damage or expense whatsoever (including but not limited
to settlement expenses, subject to the limitation set forth in the last sentence
of subsection (c) below), joint or several which they, or any of them, may
suffer or to which they, or any of them, may become subject under all applicable
federal and state laws or otherwise, and to promptly reimburse the Primary
Parties and any such persons upon written demand for any reasonable expenses
(including out-of-pocket expenses, fees and disbursements of outside counsel)
incurred by 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 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 Prospectus (or any amendment or supplement thereto), or any Blue
Sky Applications or Sales Information or 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; 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) or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with information furnished to the Primary Parties by the Agent or its
representatives (including counsel) expressly for use under the caption "Plan of
Distribution." This indemnity agreement will be in addition to any liability
which the Agent may otherwise have.
(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,
Section 9 or otherwise, unless the failure to give such notice promptly results
in material prejudice to the indemnifying party. An indemnifying party may
participate at its own expense in the defense of such action. In addition, if it
so elects within a reasonable time after receipt of such notice, an indemnifying
party, jointly with any other indemnifying parties receiving such notice, may
assume the defense of such action with counsel chosen by it if reasonably
acceptable to the indemnified parties that are defendants in such action, unless
such indemnified parties reasonably object to such assumption on the ground that
there may be legal defenses available to them that are different from or in
addition to those available to such indemnifying party. If an indemnifying party
assumes the defense of such action, the indemnifying parties shall not be liable
for any fees and expenses of
21
counsel for the indemnified parties incurred thereafter in connection with such
action, proceeding or claim. In no event shall the indemnifying parties be
liable for the fees and expenses of more than one separate firm of attorneys
(unless an indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from or in
addition to those of other indemnified parties) for all indemnified parties in
connection with any one action, proceeding or claim or separate but similar or
related actions, proceedings or claims in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall be
liable for any settlement of any action, proceeding or suit, which settlement is
affected without its prior written consent. The Indemnifying Party shall not,
without the written consent of the Indemnified Party, settle or compromise any
claim against them based upon circumstances giving rise to an indemnification
claim against the Indemnifying Party hereunder unless such settlement or
compromise provides that the Indemnified Party and the other indemnified parties
shall be unconditionally and irrevocably released from all liability in respect
to such claim.
(d) The agreements contained in this Section 8 and in Section
9 hereof and the representations and warranties of the Primary Parties and the
Agent set forth in this Agreement shall remain operative and in full force and
effect regardless of (i) any investigation made by or on behalf of the Agent or
its officers, directors, controlling persons, agents or employees or by or on
behalf of any of the Primary Parties or any officers, directors, controlling
persons, agents or employees of any of the Primary Parties; (ii) delivery of and
payment hereunder for the Common Stock; or (iii) any termination of this
Agreement.
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 found in a final judgment by a
court to be unavailable from the Primary Parties or the Agent, the Primary
Parties and the Agent shall contribute to the aggregate losses, claims, damages
and liabilities of the nature contemplated by such indemnification (including
any investigation, legal and other expenses incurred in connection therewith and
any amount paid in settlement of any action, suit, or proceeding of any claims
asserted, but after deducting any contribution received by the Primary Parties
or the Agent from persons other than the other party thereto, who may also be
liable for contribution) in such proportion so that (i) the Agent is responsible
for that portion represented by the percentage that the fees paid to the Agent
pursuant to Section 6 of this Agreement (not including expenses) ("Agent's
Fees"), bear to the total proceeds received by the Primary Parties from the sale
of the Common Stock in the Offerings, net of all expenses of the Offerings,
except Agent's Fees and (ii) the Primary Parties shall be responsible for the
balance. If, however, the allocation provided above is not permitted by
applicable law or if the indemnified party failed to give the notice required
under Section 8 above, then each indemnifying party shall contribute to such
amount paid or payable to such indemnified party in such proportion as is
appropriate to reflect not only such relative fault of the Primary Parties 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 thereof), but also the relative
benefits received by the Primary Parties on the one hand and the Agent on the
other from the Offerings, as well as any other relevant equitable
considerations. The relative benefits received by the Primary Parties on the one
hand and the Agent
22
on the other hand shall be deemed to be in the same proportion as the total
proceeds from the Offerings, net of all expenses of the Offerings except Agent's
Fees, received by the Primary Parties bear, with respect to the Agent, to the
total fees (not including expenses) received by the Agent. 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 Primary Parties
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 Primary Parties 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 account of 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 action, 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
which in the aggregate exceeds the amount paid (excluding reimbursable expenses)
to the Agent under this Agreement. It is understood and agreed that the
above-stated limitation on the Agent's liability is essential to the Agent and
that the Agent would not have entered into this Agreement if such limitation had
not been agreed to by the parties to this Agreement. No person found guilty of
any fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution with respect to any loss or liability
arising from such misrepresentation from any person who was not found guilty of
such fraudulent misrepresentation. The duties, obligations and liabilities of
the Primary Parties and the Agent under this Section 9 and under Section 8 shall
be in addition to any duties, obligations and liabilities which the Primary
Parties and the Agent may otherwise have. For purposes of this Section 9, each
of the Agent's and the Primary Parties' officers, directors and, in the case of
the Primary Parties, trustees and each person, if any, who controls the Agent or
any of the Primary Parties within the meaning of the Act and the Exchange Act
shall have the same rights to contribution as the Primary Parties and the Agent.
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. TERMINATION.
The Agent's obligation under this Agreement may be terminated
by the Agent, in its absolute discretion, by notice given to and received by the
Company prior to delivery of the Rights, in the event the Company fails to sell
the Requisite Amount prior to the Expiration Date or if (i) the Company has
failed, refused or been unable to perform any agreement on its part to be
performed under this Agreement, (ii) there has been, since the dates as of which
information is given in the Registration Statement, any material adverse change
in the net asset value of the Company or the tax, exchange, control or other
laws or regulations applicable to the Company or the Company has made any
material change in its management or method of operations as described in the
Prospectus, the
23
effect of which, in the reasonable judgment of the Agent, renders it
impracticable to proceed with the Offerings, (iii) any other condition of the
Agent's obligations under this Agreement is not fulfilled, (iv) trading in
securities generally on the New York Stock Exchange ("NYSE") or the American
Stock Exchange ("AMEX") has been suspended, or there shall have been established
by the NYSE, the AMEX or by the Commission or by any federal or New York State
agency or by the decision of any court of competent jurisdiction, any general
limitation on prices for such trading or any general restrictions on the
distribution of securities, all to such a degree as would, in the reasonable
judgment of the Agent, render it impracticable to proceed with the Offerings,
(v) a general banking moratorium has been declared by federal or New York
authorities or by any other state authorities that, in the Agent's reasonable
judgment, makes it impracticable to proceed with the Offerings, (vi) there has
been a material adverse change in general economic, political or financial
conditions in the United States including without limitation as a result of
terrorist activities after the date hereof, or in the effect of international
conditions on the financial markets in the United States such that, in the
reasonable judgment of the Agent, it is impracticable to proceed with the
Offerings or (vii) a material escalation occurs in any hostilities in which the
United States is engaged, or war or a national emergency is declared by the
United States on or after the date of this Agreement the effect of which, in the
reasonable judgment of the Agent, would render it impracticable to proceed with
the Offerings. Any termination of this Agreement pursuant to this Section 10
will be without liability on the part of the Company or the Agent except that
the Company shall be liable to refund to each person who has subscribed for or
ordered any of the shares of Common Stock the full amount which it may have
received from such person, without interest, and except as otherwise provided in
Section 7(k), Section 8, Section 9 and/or Section 12 of this Agreement.
SECTION 11. CONDITIONS TO THE AGENT'S OBLIGATIONS.
(a) The obligations of the Agent hereunder and the occurrence
of the Closing are subject to the condition that the Company has received and
accepted subscriptions for the Requisite Amount prior to the Expiration Date,
all representations and warranties of the Primary Parties herein contained are,
at and as of the commencement of the Offerings and at and as of the Closing
Date, true and correct, the condition that the Primary Parties shall have
performed, in all material respects, all of their obligations hereunder to be
performed on or before such dates and to the following further conditions:
(i) the Prospectus shall have been timely filed by
the Company with the Commission in accordance with the terms
of this Agreement;
(ii) the Registration Statement shall have become
effective and at or before the date of this Agreement, no stop
order suspending the effectiveness of the Registration
Statement shall have been issued, and prior to that time, no
stop order proceeding shall have been initiated or threatened
by the Commission;
(iii) any request of the Commission for inclusion of
additional information in the Registration Statement or the
Prospectus or otherwise shall have been complied with;
24
(iv) the Company shall not have filed with the
Commission the Prospectus or any amendment or supplement to
the Registration Statement or the Prospectus without consent
of the Agent, which consent shall not have been unreasonably
withheld or delayed;
(v) the Agent shall not have discovered and disclosed
to the Company, on or prior to the date of this Agreement,
that the Registration Statement or the Prospectus or any
amendment or supplement to the Registration Statement or the
Prospectus contains an untrue statement of a fact that, in the
reasonable opinion of the Agent, is material or omits to state
a fact that, in the reasonable opinion of that counsel, is
material and is required to be stated therein or is necessary
to make the statements therein not misleading; and
(vi) all corporate proceedings and other legal
matters incident to the authorization, form and validity of
this Agreement and the Rights and the Common Stock and the
form of the Registration Statement and the Prospectus, and all
other legal matters relating to this Agreement and the
transactions contemplated by this Agreement are reasonably
satisfactory in all material respects to the Agent and its
counsel, and the Company has furnished to the Agent and such
counsel all documents and information that they may reasonably
request to enable them to pass upon those matters.
(b) At the Closing Date, the Agent shall have received:
(i) The opinion, dated as of the Closing Date, of
▇▇▇▇▇▇▇▇ ▇▇▇▇ LLP and/or local counsel acceptable to the
Agent, in form and substance satisfactory to the Agent and
counsel for the Agent to the effect that:
(A) the Company and each of the Subsidiaries
other than the Bank is a corporation duly organized
and validly existing and in good standing under the
laws of the State of Ohio, with corporate power and
authority to own its properties and to conduct its
business as described in the Prospectus, and is duly
qualified to transact business and is in good
standing in Ohio and in each other jurisdiction in
which the conduct of its business requires such
qualification and except where the failure to qualify
would have a Material Adverse Effect;
(B) the Company has the corporate power and
authority to enter into and perform this Agreement
and to issue and deliver the Rights and the shares of
Common Stock issuable in the Offerings, and this
Agreement and the Subscription Agent Agreement have
each been duly authorized, and duly executed and
delivered by the Company in accordance with the laws
of the State of Ohio and, assuming due authorization,
execution and delivery of each of such agreements by
the other parties to it, each constitutes the valid
and binding obligation of the Company enforceable
against the Company in
25
accordance with its terms, subject to the
qualification that (i) enforcement thereof may be
limited by bankruptcy, insolvency, moratorium,
reorganization or other laws (including the laws of
fraudulent conveyance) or judicial decisions
affecting the enforceability of creditors' rights
generally, the rights of creditors of savings banks
or financial institutions, the accounts of which are
insured by the FDIC, and (ii) enforcement thereof is
subject to general equity principles (regardless of
whether such enforceability is considered in a
proceeding in equity or at law) and to the effect of
certain laws and judicial decisions upon the
availability of injunctive relief and enforceability
of equitable remedies, including the remedies of
specific performance and self-help;
(C) to such counsel's knowledge, the
execution, delivery and performance of this Agreement
and the Subscription Agent Agreement by the Company
will not conflict with, or result in the creation of
imposition of any material lien, charge or
encumbrance upon any of the assets of the Company or
result in a material violation of the articles of
incorporation or bylaws of the Company or the Act or
the Exchange Act;
(D) on the date hereof, the Bank is a
validly existing Ohio- chartered stock savings bank,
with full power and authority to own its properties
and to conduct its business as described in the
Prospectus and to enter into this Agreement and
perform its obligations hereunder; the activities of
the Bank as described in the Prospectus are permitted
by federal law and the rules, regulations and
practices of the ODFI, FDIC and the OTS. Similarly,
any subsidiaries of the Bank are validly existing
corporations in good standing in the jurisdiction of
incorporation and authorized under state and
applicable federal law to conduct the businesses in
which they now engage;
(E) to the best of such counsel's knowledge,
each of the Company and the Subsidiaries has obtained
all licenses, permits, and other governmental
authorizations that are material for the conduct of
its business, and all such licenses, permits and
other governmental authorization are in full force
and effect, and, to the best of such counsel's
knowledge, the Company and the Subsidiaries comply
therewith in all material respects;
(F) the Bank is an insured depository
institution under the provisions of the Federal
Deposit Insurance Act, as amended, and, to such
counsel's knowledge, no proceedings for the
termination or revocation of the federal or state
deposit insurance of the Bank are pending or
threatened;
(G) upon consummation of the Offerings, (i)
the authorized, issued and outstanding capital stock
of the Company will be within the range set forth in
the Prospectus under the caption "Capitalization,";
(ii) the Rights
26
have been duly authorized and validly issued; (iii)
the shares to be sold in the Offerings will have been
duly and validly authorized for issuance, and when
issued and delivered by the Company against payment
of the consideration in accordance with this
Agreement will be fully paid and nonassessable; and
(iv) the issuance of the Common Stock is not subject
to preemptive rights under the charter, articles of
incorporation or bylaws of the Company, or arising or
outstanding by operation of law or, to the best
knowledge of such counsel, under any contract,
indenture, agreement, instrument or other document;
(H) the execution and delivery of this
Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Bank;
and this Agreement constitutes a valid, legal and
binding obligation of the Bank, enforceable in
accordance with its terms, except as rights to
indemnity and contribution thereunder may be limited
under applicable law, subject to the qualification
that (i) enforcement thereof may be limited by
bankruptcy, insolvency, moratorium, reorganization or
other laws (including the laws of fraudulent
conveyance) or judicial decisions affecting the
enforceability of creditors' rights generally, the
rights of creditors of savings banks or financial
institutions, the accounts of which are insured by
the FDIC, and (ii) enforcement thereof is subject to
general equity principles (regardless of whether such
enforceability is considered in a proceeding in
equity or at law) and to the effect of certain laws
and judicial decisions upon the availability of
injunctive relief and enforceability of equitable
remedies, including the remedies of specific
performance and self-help;
(I) all required action has been taken by
the Company under the Act and the Exchange Act to
issue the Rights and to make the Offerings and
consummate the sale of the Common Stock contemplated
by this Agreement. No further approval, registration,
authorization, consent or other order of any federal
or state regulatory agency, public board or body is
required in connection with the execution and
delivery of this Agreement or the Subscription Agent
Agreement, the Offerings, sale and issuance of the
Rights and the Common Stock, except such, if any, as
has been obtained under the Act, the Exchange Act,
blue sky or state securities laws and the rules and
regulations of the NASD, as to which such counsel
need not express any opinion;
(J) the Registration Statement has become
effective under the Act, no stop order suspending the
effectiveness of the Registration Statement has been
issued, and, to such counsel's knowledge, no
proceedings for that purpose have been instituted or
threatened by the Commission;
27
(K) the form of subscription document used
to evidence the Rights, and the forms of certificates
used to evidence the shares of Common Stock have been
approved by the Board of Directors of the Company,
comply with the articles of incorporation and the
bylaws of the Company, and comply in all material
respects with all provisions of Ohio corporate law
and all applicable Nasdaq requirements;
(L) the Common Stock is listed on The Nasdaq
Stock Market and is registered under the Exchange
Act;
(M) there are no preemptive, or to such
counsel's knowledge, other rights (other than the
Rights) to subscribe for or to purchase the Rights
nor any restrictions upon the voting or transfer of
the Common Stock pursuant to the Company's articles
of incorporation or bylaws nor any agreements or
other outstanding instruments known to such counsel;
(N) the Rights and the Common Stock comply
in all material respects with the statements
concerning them contained in the Prospectus;
(O) at the time that the Registration
Statement became effective and as of the Closing
Date, the Registration Statement, including the
Prospectus contained therein (as amended or
supplemented) (other than the financial statements,
notes to financial statements, financial tables or
other financial and statistical data included therein
and the appraisal valuation and the business plan as
to which counsel need express no opinion), complied
as to form in all material respects with the
requirements of the Act and the Rules and
Regulations;
(P) there are no legal or governmental
proceedings pending or, to such counsel's knowledge,
threatened (i) asserting the invalidity of this
Agreement or (ii) seeking to prevent the Offerings,
sale or issuance of the Common Stock;
(Q) to such counsel's knowledge, there are
no contracts or other documents that are required to
be filed as exhibits to the Registration Statement by
the Act or by the Rules and Regulations that have not
been filed as exhibits to the Registration Statement
or incorporated in the Registration Statement by
reference as permitted by the Rules and Regulations;
(R) the information in the Prospectus under
the captions "Summary," "Background," "Questions and
Answers About The Offerings," "Risk Factors,"
"Forward-Looking Statements," "Regulation and
Supervision," "The Offerings," "Plan of
Distribution," and "Description of Common Stock," to
the extent that it constitutes matters of law or
legal
28
conclusions, has been reviewed by counsel and fairly
presents information disclosed therein.
(S) none of the Primary Parties are required
to be registered as an investment company under the
Investment Company Act of 1940; and
(T) none of the Company or the Subsidiaries
is in violation of its articles of incorporation or
its charter, as the case may be, or its bylaws or, to
the best of such counsel's knowledge, any material
obligation, agreement, covenant or condition
contained in any material contract, indenture,
mortgage, loan agreement, note, lease or other
instrument, which violation would have a Material
Adverse Effect. In addition, the execution and
delivery of and performance under this Agreement by
the Primary Parties and the Subscription Agent
Agreement by the Company, the incurrence of the
obligations set forth therein and the consummation of
the transactions contemplated therein will not result
in any violation of the provisions of the articles of
incorporation or charter, as the case may be, or the
bylaws of any of the Primary Parties or any violation
of any applicable law, act, regulation, or to such
counsel's knowledge, order or court order, writ,
injunction or decree.
The Agent's counsel may rely on the opinion of
▇▇▇▇▇▇▇▇ ▇▇▇▇ LLP and/or local counsel for purposes of its own
opinion (▇▇▇▇▇▇▇▇ ▇▇▇▇ LLP and/or local counsel shall
expressly authorize such reliance). The opinion of ▇▇▇▇▇▇▇▇
▇▇▇▇ LLP may be limited to matters governed by the laws of the
United States and the corporate laws of the State of Ohio. In
rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction
other than the United States, to the extent such counsel deems
proper and specified in such opinion, upon the opinion of
counsel reasonably acceptable to the Agent, as long as such
other opinion indicates that the Agent may rely on the
opinion, and (B) as to matters of fact, to the extent such
counsel deems proper, on certificates of responsible officers
of the Primary Parties and public officials; provided copies
of any such opinion(s) or certificates of public officials are
delivered to Agent together with the opinion to be rendered
hereunder by special counsel to the Primary Parties. In
rendering such opinion, all statements contained therein "to
our knowledge" or "to our attention" means the actual
knowledge of the attorneys who have worked on the transactions
contemplated herein. The opinion of such counsel for the
Primary Parties shall state that it has no reason to believe
that the Agent is not reasonably justified in relying thereon.
(ii) The letter of ▇▇▇▇▇▇▇▇ ▇▇▇▇ LLP to the effect
that during the preparation of the Registration Statement and
the Prospectus, ▇▇▇▇▇▇▇▇ ▇▇▇▇ LLP participated in conferences
with certain officers of and other representatives of the
Primary Parties, counsel to the Agent, representatives of the
independent public accountants for the Primary Parties and
representatives of the Agent at which the
29
contents of the Registration Statement and the Prospectus and
related matters were discussed and has considered the matters
required to be stated therein and the statements contained
therein and, although (without limiting the opinions provided
pursuant to this Section 11(b)), ▇▇▇▇▇▇▇▇ ▇▇▇▇ LLP has not
independently verified the accuracy, completeness or fairness
of the statements contained in the Registration Statement and
Prospectus, on the basis of the foregoing, nothing has come to
the attention of ▇▇▇▇▇▇▇▇ ▇▇▇▇ LLP that caused ▇▇▇▇▇▇▇▇ ▇▇▇▇
LLP to believe that the Registration Statement at the time it
was declared effective by the Commission and as of the date of
such letter, contained or contains any untrue statement of a
material fact or omitted to state any material fact required
to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading (it being understood that counsel need
express no comment or opinion with respect to statements,
notes to financial statements, schedules and other financial
and statistical data included, in the Registration Statement
or Prospectus).
(iii) The favorable opinion, dated as of the Closing
Date, of Silver, ▇▇▇▇▇▇▇▇ & Taff, LLP, counsel for the Agent,
with respect to such matters as the Agent may reasonably
require; such opinion may rely, as to matters of fact, upon
certificates of officers and directors of the Primary Parties
delivered pursuant hereto or as such counsel may reasonably
request.
(iv) A Blue Sky Memorandum from Silver ▇▇▇▇▇▇▇▇ &
Taff, LLP relating to the Offerings, including Agent's
participation therein, addressed to Agent. The Blue Sky
Memorandum will relate to the necessity of obtaining or
confirming exemptions, qualifications or the registration of
the Common Stock under applicable state securities law.
30
(c) Concurrently with the execution of this Agreement, the
Agent shall receive a letter from ▇▇▇▇▇ ▇▇▇▇▇▇ & Company LLP, dated the date
hereof and addressed to the Agent, such letter (i) confirming that ▇▇▇▇▇ ▇▇▇▇▇▇
& Company LLP is a firm of independent public accountants within the meaning of
the Act and the regulations promulgated thereunder, and stating in effect that
in ▇▇▇▇▇ ▇▇▇▇▇▇ & Company LLP's opinion the consolidated financial statements of
the Company included in the Prospectus comply as to form in all material
respects with the applicable accounting requirements of the Act and the Exchange
Act and the related rules and regulations of the Commission thereunder; (ii)
stating in effect that, on the basis of certain agreed upon procedures (but not
an audit examination in accordance with generally accepted auditing standards)
consisting of a review (in accordance with Statement on Auditing Standards No.
71) of the latest available unaudited consolidated interim financial statements
of the Company prepared by the Company, a reading of the minutes of the meetings
of the Board of Directors, Executive Committee, Audit Committee and stockholders
of the Company and the Bank and consultations with officers of the Company and
the Bank responsible for financial and accounting matters, nothing came to their
attention which caused them to believe that: (A) such unaudited financial
statements including any "Recent Developments" section of the Prospectus are not
in conformity with GAAP 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 consolidated financial statements
included in the Prospectus to a specified date not more than five business days
prior to the date of the Prospectus, there was any material increase in
borrowings (defined as securities sold under agreements to repurchase and any
other form of debt other than deposits), or non-performing loans, special
mention loans or decrease in the deposits or loan allowance, total assets,
stockholders equity or any changes in common stock outstanding (other than for
stock option plans or employee benefit plans described in a document
incorporated by reference into the Prospectus) at the date of such letter as
compared with amounts shown in the latest unaudited statement of condition
included in the Prospectus or there was any decrease in net income, non-interest
income or net interest income, provision for loan losses, net income after
provision or increase in non-interest expense for the period commencing
immediately after the period covered by the latest unaudited income statement
included in the Prospectus and ended not more than five business days prior to
the date of the Prospectus as compared to the corresponding period in the
preceding year; and (iii) stating that, in addition to the audit examination
referred to in its opinion included in the Prospectus and the performance of the
procedures referred to in clause (ii) of this subsection (c), they have compared
with the general accounting records of the Company, which are subject to the
internal controls of the accounting system of the Bank and other data prepared
by the Primary Parties from 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 found such amounts and percentages to be
in agreement therewith (subject to rounding).
(d) At the Closing Date, the Agent shall receive a letter from
▇▇▇▇▇ ▇▇▇▇▇▇ & Company LLP dated the Closing Date, addressed to the Agent,
confirming the statements made by its letter previously delivered by it pursuant
to subsection (c) of this Section 11, the "specified date" referred to in clause
(ii)(B) of subsection (c) thereof to be a date specified in such letter, which
shall not be more than five business days prior to the Closing Date.
31
(e) At the Closing Date, counsel to the Agent shall have been
furnished with such documents and opinions as counsel for the Agent may require
for the purpose of enabling them to advise the Agent with respect to the
issuance and sale of the Common Stock as herein contemplated and related
proceedings, or in order to evidence the accuracy of any of the representations
and warranties, or the fulfillment of any of the conditions herein contained.
(f) At the Closing Date, the Agent shall receive a certificate
of the Chief Executive Officer and Chief Financial Officer of each of the
Primary Parties, dated the Closing Date, to the effect that: (i) they have
examined the Prospectus and at the time the Prospectus became authorized for
final use, the Prospectus did 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 the light of the circumstances under which they were made, not
misleading; (ii) there has not been, since the respective dates as of which
information is given in the Prospectus, any Material Adverse Effect otherwise
than as set forth or contemplated in the Registration Statement and the
Prospectus; (iii) the representations and warranties contained in Section 4 of
this Agreement are true and correct with the same force and effect as though
made at and as of the Closing Date; (iv) the Primary Parties have complied in
all material respects with all material agreements and satisfied all conditions
on its part to be performed or satisfied at or prior to the Closing Date
including the conditions contained in this Section 11; (v) no stop order has
been issued or, to the best of their knowledge, is threatened, by the Commission
or any other governmental body; (vi) no order suspending the Offerings or the
effectiveness of the Prospectus has been issued and to the best of their
knowledge, no proceedings for any such purpose have been initiated or threatened
by the Commission, or any other federal or state authority; and (vii) to the
best of their knowledge, no person has sought to obtain regulatory or judicial
review to enjoin the Offerings.
(g) None of the Primary Parties shall have sustained, since
the date of the latest financial statements included in the Registration
Statement and Prospectus, any material loss or interference with their business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth in the Registration Statement and the
Prospectus, and since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there shall not have been any
Material Adverse Effect, otherwise than as set forth or contemplated in the
Registration Statement and the Prospectus, the effect of which, in any such case
described above, is in the Agent's reasonable judgment sufficiently material and
adverse as to make it impracticable or inadvisable to proceed with the Offerings
or the delivery of the shares of Common Stock on the terms and in the manner
contemplated in the Prospectus.
(h) Prior to and at the Closing Date, in the reasonable
opinion of the Agent there shall have been no material adverse change in the
financial condition or in the earnings or business affairs of any of the Primary
Parties independently, or the Primary Parties taken as a whole, from and as of
the latest dates as of which such condition is set forth in the Prospectus,
except as referred to therein.
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(i) At or prior to the Closing Date, the Agent shall receive
(i) a copy of the order from the Commission declaring the Registration Statement
effective, (ii) a certified copy of the articles of incorporation of the
Company, (iii) a certificate from the FDIC evidencing the Bank's insurance of
accounts, and (vi) any other documents that Agent shall reasonably request.
(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 NYSE or AMEX 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 other than temporary trading
halts or limitation (A) imposed as a result of intraday changes in the Dow ▇▇▇▇▇
Industrial Average, (B) lasting no longer than until the regularly scheduled
commencement of trading on the next succeeding business-day, and (C) which, when
combined with all other such halts occurring during the previous five business
days, total less than three; (ii) a general moratorium on the operations of
federally-insured financial institutions or a general moratorium on the
withdrawal of deposits from commercial banks or other federally-insured
financial institutions declared by either federal or state authorities; or (iii)
there shall not have occurred any material adverse change in the financial
markets in the United States or elsewhere or any outbreak of hostilities or
escalation thereof or other calamity or crisis the effect of which, in the
judgment of the Agent, is so material and adverse as to make it impracticable to
market the shares of Common Stock or to enforce contracts, including
subscriptions or orders, for the sale of the shares of Common Stock.
(k) All such options, certificates, letters and documents will
be in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to the Agent and to counsel for the Agent.
Any certificate signed by an officer of the Company, or the Bank and delivered
to the Agent or to counsel for the Agent shall be deemed a representation and
warranty by the Company, or the Bank, as the case may be, to the Agent as to the
statements made therein.
(l) All opinions, letters, evidence and certificates described
in this Section 11 or elsewhere in this Agreement will be deemed to be in
compliance with the provisions of this Agreement only if they are in form and
substance reasonably satisfactory to the Agent and Silver, ▇▇▇▇▇▇▇▇ & ▇▇▇▇, LLP,
as counsel to the Agent.
SECTION 12. EXPENSES.
If the issuance of the Rights and the sale of the Common Stock
is not consummated because of any failure, refusal or inability on the part of
the Company to perform any agreement on its part to be performed, because any
other condition to the obligations of the Agent under this Agreement is not
fulfilled or pursuant to Section 10 of this Agreement, the Company will
reimburse the Agent and its counsel for their out-of-pocket expenses incurred in
connection with this Agreement and the proposed Offerings, including up to
$90,000 of the fees of its counsel (excluding fees and expenses related to the
preparation of a Blue Sky Memorandum).
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SECTION 13. SURVIVAL.
(a) All representations, warranties and indemnities and other
statements contained in this Agreement and in the Letter Agreement, or contained
in certificates of officers of the Primary Parties or the Agent submitted
pursuant hereto, shall remain operative and 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 or its controlling persons, or by or on behalf of
the Primary Parties and shall survive the issuance of the Rights and the Common
Stock, and any legal representative, successor or assign of the Agent, any of
the Primary Parties, and any indemnified person shall be entitled to the benefit
of the respective agreements, indemnities, warranties and representations.
(b) If this Agreement is terminated in accordance with the
provisions of this Agreement, the payment of the $200,000 advisory and
management fee (previously paid to the Agent) shall not be affected and the
Primary Parties will reimburse the Agent for its reasonable expenses pursuant to
Section 10, including without limitation, communication, legal and travel
expenses.
SECTION 14. NOTICES.
All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted by
any standard form of telecommunication. Notices to Agent shall be directed to
▇▇▇▇, ▇▇▇▇ & Co., LLC, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention:
▇▇. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Director (with a copy to Silver, ▇▇▇▇▇▇▇▇ & ▇▇▇▇, LLP,
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇; Attention: ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇, Esq.); notices to the Primary Parties shall be directed to
Metropolitan Financial Corp., ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq. (with a copy to ▇▇▇▇▇▇▇▇ ▇▇▇▇ LLP, ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.)
SECTION 15. PARTIES.
This Agreement shall inure to the benefit of and be binding
upon the Agent and the Primary Parties, and their respective successors. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person, firm or corporation, other than the parties hereto and their
respective successors and the controlling persons and officers and directors
referred to in Sections 8 and 9 and their heirs and legal representatives, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provisions herein contained. It is understood and agreed that this
Agreement is the exclusive agreement among the parties, supersedes any prior
Agreement among the parties and may not be varied except by a writing signed by
all parties, except for the Letter Agreement, which is not hereby superseded.
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SECTION 16. PARTIAL INVALIDITY.
In the event that any term, provision or covenant herein or
the application thereof to any circumstances 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 circumstance 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 17. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE.
(a) This Agreement will be governed by and construed in
accordance with the law of the State of Ohio.
(b) The Company irrevocably submits to the exclusive
jurisdiction of any Ohio State Court or United States Federal Court sitting in
Cleveland Ohio over any suit, action or proceeding arising out of or relating to
this Agreement, the Registration Statement, the Prospectus, the Rights, the
shares of Common Stock issuable upon exercise of the Rights or the Offerings and
the parties agree to waive any rights to a jury trial.
(c) The Company consents to process being served in any suit,
action or proceeding arising out of or relating to this Agreement, the
Registration Statement, the Prospectus, the Rights, and the Offerings either by
mailing a copy of such process to it or by serving a copy of the process upon
the individual referred to in Section 14, so long as, to the extent lawful and
possible, written notice of the service is also mailed to the Company. The
Company agrees that such service will be deemed in every respect effective
service of process upon it in any such suit, action or proceeding and will, to
the fullest extent permitted by law, be taken and held to be valid personal
service upon and personal delivery to it. Nothing in this Section 17 will affect
or limit any right to serve process in any manner permitted by law or to enforce
in any lawful manner a judgment obtained in one jurisdiction in any other
jurisdiction.
SECTION 18. COUNTERPARTS.
This Agreement may be executed in one or more counterparts
and, if executed in more than one counterpart, the executed counterparts will
each be deemed to be an original but all such counterparts will together
constitute one and the same instrument.
SECTION 19. HEADINGS.
The headings used in this Agreement have been inserted for
convenience of reference only and are not intended to be a part of, or to affect
the meaning or interpretations of, this Agreement.
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* * * * *
If the foregoing correctly sets forth the Agreement between
the Company and the Agent, please indicate the Agent's acceptance in the space
provided for that purpose below.
Very truly yours,
METROPOLITAN FINANCIAL CORP.
By:
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Title:
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METROPOLITAN BANK & TRUST
By:
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Title:
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Accepted:
▇▇▇▇, ▇▇▇▇ & CO., LLC
By:
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▇▇▇▇, ▇▇▇▇ & CO., LLC
Title:
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By:
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Title:
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