MARKET FINANCIAL CORPORATION
(an Ohio corporation)
Up to Shares of Common Stock
(No Par Value)
AGENCY AGREEMENT
August __, 1996
Charles Webb & Company
211 Bradenton
Dublin, Ohio 43017
Gentlemen and Ladies:
Market Financial Corporation, an Ohio corporation ("Company"), and The
Market Building and Saving Company, an Ohio mutual savings and loan association
("Bank"), hereby confirm their agreement with Charles Webb & Company ("Webb" or
"Agent" or "you"), as follows:
INTRODUCTION. The Bank is converting from an Ohio-chartered mutual savings
and loan association bank to an Ohio-chartered permanent capital stock savings
and loan association pursuant to the Home Owners' Loan Act ("HOLA") Part 563b of
the Code of Federal Regulations as administered by the Office of Thrift
Supervision ("OTS") and the Ohio _________ Act and the rules and regulations
promulgated thereunder by the Superintendent of the Division of Financial
Institutions of the Department of Commerce of the State of Ohio (the
"Superintendent") (such federal and state statutes and regulations are
hereinafter referred to collectively as the "Conversion Regulations"). The Bank
has filed with the OTS an Application For Conversion on Form AC (the "Conversion
Application"), and has filed with the Superintendent an Application For Approval
to Convert to a Stock Savings and Loan Association (the "Ohio Application"), and
all amendments and supplements, if any required to the date hereof have also
been filed. The Conversion Application and the Ohio Application include among
other things, the Bank's Plan of Conversion, as amended ("Plan"), and the Bank's
proxy statement ("Proxy Statement") for the Special Meeting of Members, to be
held on _______, 1996. The Company has filed with the OTS an Application on
Form H-(e)1-S (the "Holding Company Application"), and all amendments and
supplements, if any required to the date hereof have also been filed to obtain
approval to acquire the outstanding common stock of the Bank. Prior to the date
hereof, the Plan has been adopted by the Board of Directors of the Bank and
approved by the Superintendent and OTS subject to certain conditions. Pursuant
to the Plan: (i) the Bank will convert from an Ohio-chartered mutual savings and
loan association to an Ohio-chartered capital stock savings and loan
association; (ii) all of the issued and outstanding stock of the Bank will be
issued to the Company; and (iii) the Company will issue and sell the Common
Stock (as defined below) in a subscription offering ("Subscription Offering"), a
community offering ("Community Offering") and a syndicated community offering
("Syndicated Community Offering"), if necessary, each of which is described in
the Plan and are collectively referred to herein as the "Offerings. "
Collectively, these transactions are referred to herein as the "Conversion."
Charles Webb & Company
Page 2
August __, 1996
The Company has _________ shares of authorized capital stock, of which
__________ shares are common stock, without par value ("Common Stock"), and
__________ shares are preferred stock, without par value. Pursuant to the Plan,
the Company is offering in the Subscription Offering by way of nontransferable
subscription rights, Common Stock in order of priority to (i) "Eligible Account
Holders" (savings account holders whose deposits in the Bank totaled $50 or more
at the close of business on December 31, 1994); (ii) the Bank's tax qualified
Employee Stock Ownership Plan (the "ESOP"); (iii) "Supplemental Eligible Account
Holders" (savings account holders who are not Eligible Account Holders and whose
deposits in the Bank totaled $50 or more at the close of business on June 30,
1996); and (iv) members of the Bank who are not Eligible Account Holders or
Supplemental Account Holders, as of the voting record date (the "Voting Record
Date") for the Special Meeting of Members called to vote on the Conversion
("Other Eligible Members"). Subject to the prior rights of holders of
subscription rights, the Company is offering the shares of Common Stock not
subscribed for in the Subscription Offering for sale in the Community Offering
to certain members of the general public, with preference given to natural
persons residing in Hamilton County, Ohio. Except for the ESOP, no Eligible
Account Holder, Supplemental Eligible Account Holder or Other Eligible Member
may purchase more than 2.0 % of the total number of shares of Common Stock
offered in the Subscription Offering and no person, together with such person's
associates, may purchase more than 4% of the Common Stock offered in the
Conversion. Such purchase limitations are subject to increase at the sole
discretion of the Bank and the Company. Any Common Stock not subscribed for in
the Subscription Offering and Community Offering may be sold in the Syndicated
Community Offering. The Board of Directors of the Bank and the Company may
reject any subscriptions, in whole or in part, received from the general public
in the Community Offering or Syndicated Community Offering.
The Company has filed with the Securities and Exchange Commission
("Commission") a registration statement on Form S-1, including such amendments
and any supplements thereto (File No. 333-_____) ("Registration Statement"),
containing a prospectus relating to the Offerings, for the registration of the
Common Stock under the Securities Act of 1933, as amended (" 1933 Act"), and has
filed such amended prospectuses as may have been required as of the date hereof.
The prospectus, as amended or supplemented, on file with the Commission at the
time the Registration Statement initially became effective is hereinafter called
the "prospectus, " except that if the prospectus filed by the Company pursuant
to Rule 424(b) of the rules and regulations of the Commission under the 1933 Act
("1933 Act Regulations") differs from the prospectus on file at the time the
Registration Statement initially becomes effective, the term "Prospectus" shall
refer to the prospectus from and after the time it is filed with or mailed to
the Commission for filing pursuant to Rule 424(b) of the 1933 Act Regulations.
SECTION 1. RETENTION OF WEBB: COMPENSATION; SALE AND DELIVERY OF THE
SHARES. Subject to the terms and conditions herein set forth, the Bank and the
Company hereby appoint Webb as their agent to utilize its best efforts to
solicit subscriptions for the Common Stock in accordance with
Charles Webb & Company
Page 3
August __, 1996
the terms of this Agency Agreement ("Agreement") and the Prospectus.
On the basis of the representations, warranties, and agreements herein
contained, but subject to the terms and conditions herein set forth, Webb
accepts such appointment and agrees to consult with and advise the Bank and the
Company as to the conversion services set forth in Exhibit A to the letter
agreement between Webb and the Bank dated March 27, 1996 ("Letter Agreement").
During the term of this Agreement, Webb will have the exclusive right to perform
such conversion services. Such right of exclusivity means that neither the
Company nor the Bank shall retain, directly or indirectly, any other financial
advisor or investment banker to perform such services during the term of this
engagement or as may be hereafter extended.
The Company and the Bank acknowledge that Webb is not required to purchase
any Common Stock and is not obligated to take any action which is inconsistent
with any applicable laws, regulations, decisions or orders. Webb and the Bank
may jointly determine to engage additional broker-dealers that are members of
the National Association of Securities Dealers, Inc. ("NASD") to participate in
the solicitation of purchase orders for shares of the Common Stock ("Sub-
Agents") in the Syndicated Community Offering.
The obligations of Webb hereunder shall terminate upon the completion,
termination or abandonment of the Plan by the Bank or upon termination of the
Subscription Offering and Community Offering, but in no event later than March
31, 1997 ("End Date"). All unpaid fees and expenses due to Webb will be payable
to Webb in immediately available funds at the earlier of the Closing Date (as
hereinafter defined) or the End Date. If the Subscription Offering and Community
Offering are extended beyond the End Date, the Bank and Webb may agree to renew
this Agreement under mutually acceptable terms.
If the Company is unable to sell a minimum of ________ shares of the Common
Stock (or such lesser amount as the Superintendent and the OTS may permit)
within the period herein provided, this Agreement shall terminate, and the Bank
shall refund to all persons who have subscribed for any of the shares of Common
Stock the full amount which it may have received from them plus accrued interest
as set forth in the Prospectus. If this Agreement shall terminate pursuant to
the previous sentence, none of the parties to this Agreement shall have any
obligation to the other parties hereunder, except as set forth in this Section 1
and in Sections 2, 7, 8 and 10 hereof.
If the closing of the Conversion does not occur, the Conversion is
terminated or abandoned, or the terms of the Conversion are amended so as to
materially and adversely affect the role of Webb, Webb shall be paid the fees
due to it through the date of such termination, abandonment or amendment
together with reimbursement for reasonable legal fees and reasonable out-of-
pocket expenses upon such termination, abandonment or amendment within five (5)
days of such event.
Charles Webb & Company
Page 4
August __, 1996
In addition to the reimbursement of expenses specified in Section 2, the
Company and the Bank, jointly and severally, agree to pay Webb the following
fees as compensation for Webb's services hereunder:
(a) a management fee of $25,000 which is hereby acknowledged to have been
paid;
(b) a fee of 1.5% of the aggregate actual purchase price of the shares of
Common Stock sold in the Subscription Offering and Community Offering, excluding
those shares purchased by the Bank's officers, directors and employees (or
members of their "immediate families,") or by any ESOP, tax-qualified or stock-
based compensation plans (except IRAs) or similar plan created by the Bank for
some or all of its directors or employees. The management fee described in
Paragraph 7(a) will be deducted from this success fee;
(c) for any shares of Common Stock sold by Sub-Agents (excluding shares
purchased by officers, directors and employees, or members of their immediate
families, of the Bank or by the ESOP) during the Syndicated Community Offering,
a fee of 5.5 % of the aggregate purchase price of the shares of Common Stock
sold by Sub-Agents shall be paid to Webb and Webb will pass on to the selling
Sub-Agents an amount competitive with gross underwriting discounts charged at
such time for comparable amounts of stock sold at a comparable price per share
in a similar market environment;
(d) a fee of $6,500 for performance of conversion agent and other data
processing duties, which duties Webb shall sub-contract.
SECTION 2. PAYMENT OF EXPENSES. Whether or not the Conversion is completed,
the Company and the Bank jointly and severally agree to pay all expenses
incident to the performance of the obligations of the Company and the Bank under
this Agreement, including but not limited to the following: (i) the preparation,
printing, issuance and delivery of certificates for the Common Stock; (ii) the
fees and disbursements of the Company's and the Bank's counsel, accountants and
other advisors; (iii) the qualification of the Common Stock under all applicable
Blue Sky Laws, including filing fees and the fees and disbursements of counsel
in connection therewith and in connection with the preparation of a Blue Sky
survey; (iv) the printing and delivery to Webb in such quantities as Webb shall
reasonably request of copies of the Registration Statement, the Prospectus, the
Proxy Statement, the Conversion Application, the Ohio Application and the
Holding Company Application as originally filed and as amended or supplemented
and all other documents in connection with the Conversion and this Agreement;
(v) filing fees incurred in connection with the review of the Subscription
Offering and Community Offering by the Commission and by the NASD; (vi) the fees
for listing the shares on the Nasdaq Small Cap Market; (vii) fees and expenses
relating to the preparation of the independent appraisal and all updates
thereof; (viii) fees and expenses relating to advertising expenses, temporary
personnel expenses and, conversion center expenses,
Charles Webb & Company
Page 5
August __, 1996
investor meeting expenses, and other miscellaneous expenses relating to the
marketing of the Common Stock by the Agent; (ix) the fees and charges of any
transfer agent, registrar and other agents; and (x) all reasonable out-of-pocket
expenses of Webb and expenses of Webb's counsel not to exceed $25,000 incurred
in connection with the Conversion.
SECTION 3. CLOSING DATE: RELEASE OF FUNDS AND DELIVERY OF CERTIFICATES. If
all conditions precedent to the consummation of the Conversion are satisfied,
including, without limitation, the sale of all Common Stock required by the
Plan, the Company agrees to issue or have issued the Common Stock sold in the
Offerings and to release for delivery certificates for such Common Stock on the
Closing Date (as hereinafter defined) against payment therefor by release of
funds from the special interest-bearing account referred to in the Prospectus
and by the authorized withdrawal of funds from deposit accounts of Eligible
Account Holders, Supplemental Eligible Account Holders, Other Eligible Members
and other subscribers in accordance with the Plan; provided, however, that no
funds shall be released to the Company or withdrawn until the conditions
specified in Section 9 hereof shall have been complied with to the reasonable
satisfaction of the Agent and its counsel. Such release, withdrawal and payment
shall be made at such date and time at the offices of Luse Lehman Gorman
Pomerenk & Schick, or such other place selected by the Agent, which date, time
and place are mutually acceptable to the Bank and the Company and Webb, on at
least two business days' prior notice to the Bank and Company (it being
understood that such business day shall not be more than 10 business days after
termination of the Subscription Offering and Community Offering unless an
amendment to the Registration Statement is required), or such other time or
place as shall be agreed upon by the Agent, the Bank and the Company.
Certificates for Common Stock shall be delivered directly to the purchasers
thereof or in accordance with their directions. The hour and date upon which the
Company shall release or deliver the Common Stock sold in the Subscription
Offering and Community Offering, according to the terms hereof, are herein
called the "Closing Date."
SECTION 4. PROSPECTUS; SUBSCRIPTION OFFERING, COMMUNITY OFFERING AND
SYNDICATED COMMUNITY OFFERING. The Common Stock shall be offered in the
Subscription Offering and Community Offering and in the Syndicated Community
Offering, if any, at the purchase price as set forth on the cover page of the
Prospectus. That price or the number of shares offered may be changed by the
Company and the Bank, after consultation with the Agent, with such approval of
the Superintendent or the OTS, if required.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Company and the Bank jointly
and severally represent and warrant to the Agent as of the date hereof as
follows:
(a) The Plan has been adopted by the Board of Directors of the Bank by the
requisite vote required by the Conversion Regulations.
Charles Webb & Company
Page 6
August __, 1996
(b) The Registration Statement was declared effective by the Commission on
____, 1996. At the time the Registration Statement became effective, the
Registration Statement complied as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations, and the Registration
Statement, any preliminary or final Prospectus, Proxy Statement, any Blue Sky
Application or any Sales Document (as such terms are defined previously herein
or in Section 7 hereof) authorized by the Company or the Bank for use in
connection with the Offerings did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, and at the time any Prospectus was filed with or
mailed to the Commission for filing under Rule 424(b) of the 1933 Act
Regulations, the Registration Statement, any preliminary or final Prospectus,
any Proxy Statement, any Blue Sky Application or any Sales Document (as such
terms are defined previously herein or in Section 7 hereof), authorized by the
Company or the Bank for use in connection with the Offerings did not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading, provided, however, that the
representations and warranties in this Section 5(b) shall not apply to
statements or omissions made in reliance upon and in conformity with written
information furnished to the Company or the Bank by Webb expressly regarding
Webb for use in the Prospectus under the caption "The Conversion- Marketing
Plan."
(c)(i) The Bank has filed the Ohio Application with the Superintendent. The
Superintendent approved the Plan on _______, 1996, and the Superintendent has
approved use of the Proxy Statement of the Bank. No order has been issued by or
is pending before the Superintendent preventing, suspending or revoking such
approval; and, to the best knowledge of the Company and the Bank, no person has
sought to obtain review of the final action of the Superintendent in approving
the Plan. At the time of the approval of the Plan by the Superintendent, the
Plan complied as to form in all material respects with the Conversion
Regulations. As of the date hereof, the Ohio Application complies as to form in
all material respects with the Conversion Regulations. At the time of approval
of the Ohio Application, the Ohio Application, including the Proxy Statement,
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(ii) The Bank has filed the Conversion Application with the OTS. The OTS
approved the Conversion Application, including the Plan contained therein, on
________, 1996, and the OTS has approved use of the proxy materials and
prospectus. No order has been issued by or is pending before the OTS
preventing, suspending or revoking such advice; and, to the best knowledge of
the Company and the Bank, no person has sought to obtain review of such action
by the OTS. At the time of the action on the Conversion Application by the OTS,
the Conversion Application complied as to form in all material respects with the
Conversion Regulations. As of the date hereof, the
Charles Webb & Company
Page 7
August __, 1996
Conversion Application complies as to form in all material respects with the
Conversion Regulations. At the time of approval of the Conversion Application,
the Conversion Application, including the Proxy Statement, did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(d) The Company has filed the Holding Company Application with the OTS.
The OTS approved the Holding Company Application on ____, 1996, subject to
certain conditions. No order has been issued by or is pending before the OTS
preventing, suspending or revoking such approval; and, to the best knowledge of
the Company and the Bank, no person has sought to obtain review of the final
action of the OTS in approving the Holding Company Application.
(e) The Prospectus has been approved by the Superintendent and the OTS and
has been declared effective by the Commission. The Prospectus contained in the
Conversion Application and the Ohio Application complies as to form, and at
______, 1996 complied as to form, in all material respects with the Conversion
Regulations, the 1933 Act and the 1933 Act Regulations. No order has been issued
by the Superintendent, the Commission, the OTS, or any Blue Sky authority
preventing or suspending the use of the Prospectus, and no action by or before
any such government entity to revoke any approval, authorization or order of
effectiveness related to the Conversion is pending or, to the best knowledge of
the Company or the Bank, threatened.
(f) Keller & Co., Inc. ("Keller"), the firm that prepared the independent
appraisal dated as of __________, 1996, and updated on ______, 1996, has advised
the Bank that it is independent with respect to the Company and the Bank within
the meaning of the Conversion Regulations.
(g) Grant Thornton, LLP, the firm that certified the financial statements
filed as part of the Registration Statement, has advised the Company and the
Bank that it is independent with respect to the Company and the Bank as required
by the 1933 Act, the 1933 Act Regulations, the Code of Professional Ethics of
the American Institute of Certified Public Accountants and the Conversion
Regulations, and nothing has come to the attention of the Company or the Bank
which causes them to believe that Grant Thornton, LLP is not independent within
the meaning of such provisions.
(h) The financial statements and notes thereto included in the Registration
Statement, the Conversion Application and the Ohio Application and which are
part of the Prospectus present fairly the financial condition, results of
operations, retained earnings and cash flows of the Bank for the dates indicated
and for the periods specified and comply as to form in all material respects
with the applicable accounting requirements of the Conversion Regulations, the
1933 Act, the 1933 Act Regulations, and generally accepted accounting principles
("GAAP") applied consistently during the periods involved. The other financial,
statistical and pro forma information and related notes included in the
Prospectus present fairly the information shown therein at the respective dates
Charles Webb & Company
Page 8
August __, 1996
thereof and for the respective periods covered thereby on a basis consistent
with the audited financial statements of the Bank included in the Prospectus,
and the pro forma adjustments made therein have been properly applied on the
basis described therein.
(i) Since the respective dates as of which information is given in the
Registration Statement, the Conversion Application, the Ohio Application and the
Prospectus, except as may otherwise be stated therein: (i) there has not been
any material adverse change, financial or otherwise, in the condition of the
Company or the Bank, considered as one enterprise, or in the results of
operations, earnings, capital, properties, business or affairs of the Bank or
the Company, whether or not arising in the ordinary course of business; (ii)
there has not been any material increase in the long-term debt or non-performing
assets of the Bank; (iii) there has not been any material decrease in retained
earnings, reserves or total assets of the Bank; (iv) neither the Company nor the
Bank has issued any securities or incurred any liability or obligation for
borrowing other than in the ordinary course of business; (v) there have not been
any material transactions entered into by the Company or the Bank, except those
transactions entered into by the Bank in the ordinary course of business; (vi)
there has been no material legal proceeding or employee grievances initiated
against the Bank or the Company; (vii) there has been no material change in
management of the Bank or the Company; and (viii) the capitalization,
liabilities, assets, properties and business of the Company and the Bank conform
in all material respects to the descriptions thereof contained in the
Prospectus. Neither the Company nor the Bank has any material liability of any
kind, except as set forth in the Prospectus.
(j) The Bank has been organized and is a validly existing Ohio state-
chartered mutual savings and loan association and upon the Conversion will
become a duly organized and validly existing Ohio state-chartered permanent
capital stock savings and loan association, in both instances duly authorized to
conduct its business and own its properties as described in the Registration
Statement, the Conversion Application, the Ohio Application and the Prospectus.
The Bank has obtained all licenses, permits and other governmental
authorizations currently required for the conduct of its business, all such
licenses, permits and governmental authorizations are in full force and effect,
and the Bank is in all material respects complying with all laws, rules,
regulations and orders applicable to the operation of its business. The Bank is
existing under the laws of the State of Ohio and is duly qualified as a foreign
corporation to transact business and is in good standing in each jurisdiction in
which its ownership of property or leasing of properties or the conduct of its
business requires such qualification except where failure to so qualify would
not have a material adverse effect on the financial condition or results of
operations of the Bank. The Bank does not own equity securities or any equity
interest in any other business enterprise except as described in the Prospectus.
Upon completion of the sale of the Common Stock contemplated by the Prospectus,
(i) the Bank will be converted pursuant to the Plan to an Ohio state-chartered
permanent capital stock savings and loan association; (ii) all of the issued and
outstanding capital stock of the Bank will be owned by the Company and (iii) the
Company will have no direct subsidiaries other than the Bank. The Conversion
will have been effected in all material respects in accordance with all
applicable statutes,
Charles Webb & Company
Page 9
August __, 1996
regulations, decisions and orders; and, except with respect to the filing of
certain post-Conversion reports and documents, all terms, conditions,
requirements and provisions with respect to the Conversion imposed by the
Commission, the Superintendent and the OTS, if any, will have been complied with
by the Company and the Bank or appropriate waivers will have been obtained and
all notice and waiting periods will have been satisfied, waived or elapsed.
(k) The Bank is a member of the Federal Home Loan Bank of Cincinnati. The
deposit accounts of the Bank are insured by the Savings Association Insurance
Fund ("SAIF") as administered by the FDIC up to the maximum amount allowed under
law. No proceedings for the termination or revocation of such membership or
insurance coverage are pending or, to the best knowledge of the Company and the
Bank, threatened.
(l) Upon consummation of the Conversion, the authorized, issued and
outstanding equity capital of the Company will be as set forth in the Prospectus
under the caption "Capitalization;" no shares of Common Stock or other equity
securities of the Company, other than shares of Common Stock issued in
connection with the incorporation of the Company, have been or will be issued
and outstanding prior to the Closing Date; the Common Stock has been duly and
validly authorized for issuance and, when issued and delivered by the Company
pursuant to the Plan against payment of the consideration calculated as set
forth in the Plan and in the Prospectus, will be duly and validly issued and
fully paid and non-assessable. Except as disclosed in the Registration
Statement, the Conversion Application, the Ohio Application and the Prospectus,
there are no preemptive or similar rights to subscribe for or to purchase, or
any restriction upon the voting or transfer of, any shares of Common Stock
pursuant to the Company's Articles of Incorporation, bylaws or any agreement or
other instrument to which the Company is a party or by which the Company is
bound. Except as disclosed in the Registration Statement, the Conversion
Application, the Ohio Application and the Prospectus, there are no options,
warrants, agreements, contracts or other rights in existence to purchase or
acquire from the Company any shares of the capital stock of the Company. The
terms and provisions of the Common Stock conform in all material respects to the
description thereof contained in the Registration Statement, the Conversion
Application, the Ohio Application and the Prospectus. Upon the issuance of the
Common Stock, good title to the Common Stock will be transferred from the
Company to the purchasers thereof against payment therefor, subject to such
claims as may be asserted against the purchasers thereof by third-party
claimants.
(m) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Ohio with corporate
power and authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement, the Conversion Application,
the Ohio Application and the Prospectus, and the Company is qualified to do
business as a foreign corporation in each jurisdiction in which the conduct of
its business requires such qualification except where failure to so qualify
would not have a material adverse effect on the financial condition or results
of operations of the Company. The Company has obtained all licenses,
Charles Webb & Company
Page 10
August __, 1996
permits and other governmental authorizations currently required for the conduct
of its business, except where failure to obtain such licenses, permits or
authorizations which individually or in the aggregate would not have a material
adverse effect on the financial condition or results of operations of the
Company and the Bank taken as a whole; all such licenses, permits and
governmental authorizations are in full force and effect; and the Company is in
all material respects complying with all laws, rules, regulations and orders
applicable to the operation of its business.
(n) Neither the Company nor the Bank is in violation of its Articles of
Incorporation, Code of Regulation, Constitution or bylaws (and the Bank will not
be in violation of its Articles of Incorporation, Constitution or bylaws in
capital stock form upon consummation of the Conversion) or in default in the
performance or observance of any obligation, agreement, covenant, or condition
contained in any material contract, lease, loan agreement, indenture or other
instrument to which it is a party or by which it or any of its property may be
bound. The consummation of the Conversion, the execution, delivery and
performance of this Agreement and the consummation of the transactions herein
contemplated have been duly and validly authorized by all necessary corporate
action on the part of the Company and the Bank and this Agreement has been
validly executed and delivered by the Company and the Bank and is the valid,
legal and binding agreement of the Company and the Bank enforceable in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, moratorium, reorganization or similar laws relating
to or affecting the enforcement of creditors' rights generally or the rights of
creditors, or by general equity principles, regardless of whether such
enforceability is considered in a proceeding in equity or at law, and except to
the extent, if any, that the provisions of Sections 8 and 9 hereof may be
unenforceable as against public policy. The consummation of the transactions
herein contemplated will not (i) conflict with or constitute a breach of, or
default under, the Articles of Incorporation, Code of Regulation or bylaws of
the Company, the Articles of Incorporation, Constitution or bylaws of the Bank
(in either mutual or capital stock form), or any contract, lease or other
instrument to which the Company or the Bank is a party or in which the Company
or the Bank is a party or in which the Company, the Bank has a beneficial
interest, or any applicable law, rule, regulation or order; (ii) violate any
authorization, approval, judgment, decree, order, statute, rule or regulation
applicable to the Company or the Bank, except for such violations which would
not have a material adverse effect on the financial condition or results of
operations of the Company or the Bank, taken as a whole, or (iii) with the
exception of the liquidation account established in the Conversion in accordance
with the Conversion Regulations, result in the creation of any lien, charge or
encumbrance upon any property of the Company or the Bank.
(o) The Company and the Bank have all such corporate power, authority,
authorizations, approvals and orders as may be required to enter into this
Agreement, to carry out the provisions and conditions hereof and to issue and
sell the capital stock of the Bank and the Common Stock as provided in the Plan
and as described in the Prospectus.
Charles Webb & Company
Page 11
August __, 1996
(p) The Company and the Bank have good and marketable title to all
properties and assets that are material to the business of the Company and the
Bank and to those properties and assets described in the Registration Statement
and the Prospectus as owned by them, free and clear of all liens, charges,
encumbrances, or restrictions, except as such are described in the Registration
Statement, the Conversion Application, the Ohio Application or the Prospectus or
which do not have a material adverse effect on the business of the Company and
the Bank taken as a whole; and all of the leases and subleases material to the
business of the Company and the Bank under which the Company or the Bank hold
properties, including those described in the Registration Statement, the
Conversion Application, the Ohio Application and the Prospectus, are in full
force and effect.
(q) The Company and the Bank are not in violation of any directive from the
Superintendent, the OTS, or any other governmental agency or authority to make
any change in the method of conducting their businesses so as to comply with all
applicable statutes and regulations (including, without limitation, regulations,
decisions, directives and orders of the Superintendent and the OTS) and, except
as set forth in the Registration Statement, the Conversion Application, the Ohio
Application and the Prospectus, there is no suit, proceeding, charge,
investigation or action before or by any court, regulatory authority or
governmental agency or body, pending or, to the best knowledge of the Company
and the Bank, threatened, which might materially and adversely affect the
Conversion, the performance of this Agreement or the consummation of the
transactions contemplated in the Plan and as described in the Registration
Statement, the Conversion Application, the Ohio Application and the Prospectus
or which might result in any material adverse change in the condition, financial
or otherwise, earnings, capital, properties or affairs of the Company or the
Bank.
(r) The Plan has been approved by the Superintendent and the OTS, subject
to certain conditions. To the best knowledge of the Company and the Bank, no
person has sought to obtain review of the actions of the Superintendent or the
OTS with respect to the Plan, the Conversion or the Holding Company Application.
(s) The Bank has received an opinion of its counsel, Vorys, Sater, Seymour
and Pease, with respect to the federal income tax consequences and Grant
Thornton, LLP, with respect to the Ohio tax consequences of the Conversion as
described in the Prospectus; and the facts and representations upon which such
opinions are based are true, accurate and complete, and neither the Bank nor the
Company has taken any action inconsistent therewith.
(t) No default exists, and no event has occurred which, with notice or
lapse of time or both, would constitute a default on the part of the Company or
the Bank, in the due performance and observance of any term, covenant or
condition of any indenture, mortgage, deed of trust, note, bank loan or credit
agreement or any other instrument or agreement to which the Company or the Bank
is a party or by which any of them or any of their property is bound or affected
in any respect which, in any individual case or in the aggregate, would have a
material adverse effect on the business,
Charles Webb & Company
Page 12
August __, 1996
results of operations, financial condition or affairs of the Company or the
Bank; such agreements are in full force and effect; and no other party to any
such agreements has instituted or, to the best knowledge of the Company and the
Bank, threatened any action or proceeding wherein the Company or the Bank would
or might be alleged to be in default thereunder, under circumstances where such
action or proceeding, if determined adversely to the Company or the Bank, would
have a material adverse effect on the Company and the Bank. taken as a whole.
(u) Subsequent to the respective dates as of which information is given in
the Registration Statement, the Conversion Application, the Ohio Application and
the Prospectus, except as otherwise may be indicated or contemplated therein,
neither the Company nor the Bank has (i) issued any securities or incurred any
liability or obligation, direct or contingent, for borrowed money, except
borrowings from the same or similar sources indicated in the Prospectus in the
ordinary course of its business, or (ii) entered into any transaction which is
material in light of the business and properties of the Company and the Bank.
(v) The Company and the Bank have filed all federal, state and local tax
returns required to be filed and have made timely payments of all taxes due and
payable with respect to such returns, except where permitted to be extended and
no deficiency has been asserted with respect thereto by any taxing authority.
(w) Neither the Company, the Bank nor, to the best knowledge of the Company
and the Bank, any of their respective employees has made any payment of funds of
the Company or the Bank as a loan for the purchase of the Common Stock or made
any other payment of funds prohibited by law, and no funds have been set aside
by the Company or the Bank to be used for any payment prohibited by law.
(x) Neither the Bank nor the Company has: (i) placed any securities within
the last 18 months (except for liabilities incurred in the ordinary course of
business or described in the Prospectus); (ii) had any dealings within the 12
months prior to the date hereof with any member of the NASD, or any person
related to or associated with such member, other than discussions and meetings
relating to the transactions contemplated hereby and routine purchases and sales
of U.S. government and agency securities; (iii) entered into a financial or
management consulting agreement except as contemplated hereunder and except for
the Letter Agreement; or (iv) engaged any intermediary between the Agent and the
Company or the Bank in connection with the offering of Common Stock, and no
person has been or shall be compensated in any manner for such service
(y) As of the date hereof, the Company and the Bank have taken all
necessary corporate action to file such applications for registration or
qualification in the jurisdictions selected by the Company and the Bank in which
the Common Stock will be offered for sale and which require such registration or
qualification.
Charles Webb & Company
Page 13
August __, 1996
(z) All documents delivered by the Bank or the Company or their
representatives in connection with the issuance and sale of the Common Stock, or
in connection with Webb's exercise of due diligence, were on the dates on which
they were delivered, complete in all material respects.
(aa) The records of account holders, depositors, borrowers and other
members of the Bank are accurate and complete in all material respects. Webb
shall have no liability to any person for the accuracy, reliability and
completeness of such records or for any denial or reduction of a subscription to
purchase Common Stock, whether as a result of a properly calculated allocation
pursuant to the Plan or otherwise' based upon such records.
(bb) To the best knowledge of the Company and the Bank, the Company and the
Bank are in compliance with all laws, rules and regulations relating to
environmental protection, and neither the Company nor the Bank has been notified
or is otherwise aware that either of them is potentially liable, or is
considered potentially liable, under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, or any similar state law. To
the best knowledge of the Company and the Bank, no action, suits, regulatory
investigations or other proceedings pending, or to the best knowledge of the
Company and the Bank, threatened against the Company or the Bank relating to
environmental protection, nor does the Company or the Bank have any reason to
believe any such proceedings may be brought against either of them. To the best
knowledge of the Company and the Bank, no disposal, release or discharge of
hazardous or toxic substances, pollutants or contaminants, including petroleum
and gas products, as any of such terms may be defined under federal, state or
local law, has occurred on, in, at or about any of the facilities or properties
of the Company or the Bank.
Any certificate signed by an officer of the Bank or of the Company and
delivered to the Agent or its counsel in connection with this Agreement shall be
deemed to be a representation and warranty by the Bank or the Company to the
Agent as to the matters covered thereby with the same effect as if such
representation and warranty were set forth herein.
SECTION 6. COVENANTS OF THE COMPANY AND BANK. The Company and the Bank
hereby jointly and severally covenant with you as follows:
(a) At any time after the date the Registration Statement is declared
effective and the Conversion Application, the Ohio Application and the Holding
Company Application are approved, the Company and the Bank will not file any
amendment or supplement to the Registration Statement, the Conversion
Application, the Ohio Application or the Holding Company Application without
providing you and your counsel an opportunity to review such amendment or to
which amendment you or your counsel shall reasonably object.
(b) The Company and the Bank will use their best efforts to cause any post-
effective
Charles Webb & Company
Page 14
August __, 1996
amendments to the Registration Statement to be declared effective by the
Commission and any post-approval amendments to the Conversion Application, the
Ohio Application or the Holding Company Application to be approved by the
Superintendent and the OTS, as applicable. The Company and the Bank will notify
you: (i) when the Registration Statement has become effective and each of the
Conversion Application, the Ohio Application and the Holding Company Application
has been approved; (ii) of the receipt of any comments from the Commission, the
Superintendent, the OTS or any other governmental entity with respect to the
transactions contemplated by this Agreement; (iii) of the request by the
Commission, the Superintendent, the OTS or any other governmental entity for any
amendment or supplement to the Registration Statement, the Conversion
Application, the Ohio Application or the Holding Company Application or for
additional information; (iv) of the issuance by the Commission, the
Superintendent, the OTS or any other governmental entity of any order or other
action suspending the Offerings or the use of the Registration Statement, the
Conversion Application, the Ohio Application, the Holding Company Application or
the Prospectus or any other filing of the Company and the Bank under the
Conversion Regulations or other applicable law, or the threat of any such
action; (v) the issuance by the Commission, the Superintendent or OTS or any
other authority of any stop order suspending the effectiveness of the
Registration Statement or the approval of the Conversion Application, the Ohio
Application or the Holding Company Application or of the initiation or threat of
initiation or threat of any proceedings for those purposes; or (vi) of the
occurrence of any event mentioned in paragraph (g) below. The Company and the
Bank will make every reasonable effort to prevent the issuance by the
Commission, the Superintendent, the OTS or any other authority of any such order
and, if any such order shall at any time be issued, to obtain the lifting
thereof at the earliest possible time.
(c) The Company will notify you of its intention to file, and will allow
you reasonable time to review prior to filing, any amendment or supplement to
the Registration Statement, the Conversion Application, the Ohio Application,
the Holding Company Application or the Prospectus and will not file any such
amendment or supplement to which you shall reasonably object or which shall be
reasonably disapproved by your counsel.
(d) The Company and the Bank will deliver to you and to your counsel two
conformed copies, with all exhibits, of each of the Conversion Application, the
Ohio Application and the Holding Company Application, as originally filed and of
each amendment or supplement thereto, and the Registration Statement, as
originally filed and each amendment thereto. In addition, the Company and the
Bank will also deliver to you such number of copies of the Prospectus, as
amended or supplemented, as you may reasonably request.
(e) The Company will furnish to you, from time to time during the period
when the Prospectus (or any later prospectus related to this offering) is
required to be delivered under the 1933 Act or the 1934 Act, such number of
copies of the Prospectus as you may reasonably request for the purposes
contemplated by the 1933 Act, the 1933 Act
Charles Webb & Company
Page 15
August __, 1996
Regulations, the 1934 Act or the 1934 Act Regulations. The Company authorizes
the Agent to use the Prospectus for any lawful manner in connection with the
sale of the Common Stock by the Agent.
(f) The Company and the Bank will comply with any and all terms,
conditions, requirements and provisions with respect to the Conversion imposed
by the Superintendent, the OTS, applicable state law, the Conversion
Regulations, the 1933 Act, the 1933 Act Regulations, the 1934 Act and the 1934
Act Regulations, to be complied with subsequent to the Closing Date. During the
period prior to the Closing Date and when the Prospectus is required to be
delivered, the Company and the Bank will comply, at their own expense, with all
requirements imposed upon them by the Commission, the Superintendent, the OTS,
applicable state law, the Conversion Regulations, the 1933 Act, the 1933 Act
Regulations, the 1934 Act and the 1934 Act Regulations, including, without
limitation, Rule 10b-5 of the 1934 Act Regulations, in each case as from time to
time in force, in accordance with the provisions hereof and the Prospectus.
(g) If, at any time during the period when the Prospectus is required to be
delivered, any event relating to or affecting the Company or the Bank shall
occur, as a result of which it is necessary or appropriate, in the opinion of
counsel to Webb, to amend or supplement the Registration Statement, the
Conversion Application, the Ohio Application, the Holding Company Application or
the Prospectus in order to make the Registration Statement, the Conversion
Application, the Ohio Application, the Holding Company Application or the
Prospectus not misleading in light of the circumstances existing at the time it
is delivered to a purchaser, the Company and the Bank will, at their expense,
prepare and file such amendment or supplement with the Commission, the
Superintendent and the OTS, as applicable, and furnish to you a reasonable
number of copies of all amendments or supplements to the Registration Statement,
the Conversion Application, the Ohio Application, the Holding Company
Application or the Prospectus (in form and substance satisfactory to you and
your counsel after a reasonable time for review) so that, as amended or
supplemented, the Registration Statement, Conversion Application, the Ohio
Application, the Holding Company Application and the Prospectus will not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the circumstances
existing at the time the Prospectus is delivered to a purchaser, not misleading.
For the purpose of this Agreement, the Company and the Bank each will timely
furnish to you such information with respect to itself as you may from time to
time request.
(h) The Company and the Bank will take all necessary actions, in
cooperation with you, and furnish such information as may be required to qualify
or register the Common Stock for offering and sale by the Company under the
applicable securities laws and regulations (collectively, the "Blue Sky Laws")
of such jurisdictions as you may reasonably designate; provided, however, that
the Company shall not be obligated to file any general consent to service of
process or to qualify to do business in any jurisdiction in which it is not so
qualified. In each jurisdiction where any of the Common Stock shall have been
qualified or registered as above provided, the Company will make
Charles Webb & Company
Page 16
August __, 1996
and file such statements and reports in each fiscal period as are or may be
required by the Blue Sky Laws of such jurisdiction.
(i) The Company will not for a period of 90 days after the Closing Date,
without your prior written consent, offer for sale, sell or issue, contract to
sell or otherwise dispose of any shares of Common Stock, or any securities
convertible into or exercisable for common stock, other than the Common Stock or
other than in connection with any plan or arrangement described in the
Prospectus.
(j) During the period during which the Common Stock is registered under the
1934 Act or for three years from the Closing Date, whichever period is greater,
the Company will furnish to its stockholders as soon as practicable after the
end of each fiscal year an annual report to stockholders meeting the
requirements of the 1934 Act and the 1934 Act Regulations (including
consolidated statements of financial condition, operations, stockholders' equity
and cash flows of the Company and its subsidiary as at the end of and for such
year, certified by independent public accountants in accordance with Regulation
S-X of the Commission).
(k) For three years after the Closing Date, the Company will furnish to
Webb: (i) as soon as publicly available, a copy of each report of the Company
furnished generally to stockholders or furnished to or filed with the Commission
under the 1934 Act or the 1934 Act Regulations or any national securities
exchange or system on which any class of securities of the Company is listed or
quoted (including, but not limited to, reports on Forms 10-K, 10-Q and 8-K and
all proxy statements and annual reports to stockholders), a copy of each other
report of the Company mailed to its stockholders or filed with the Commission,
the Superintendent, the OTS or any other supervisory or regulatory authority or
any national securities exchange or system on which any class of securities of
the Company is listed or quoted, each press release released by the Company and
such additional documents and information with respect to the Company or the
Bank as Webb may reasonably request, and (ii) from time to time, such other non-
confidential information concerning the Company and the Bank as you may
reasonably request.
(l) The Company and the Bank will use the net proceeds of the Offerings in
the manner set forth in the Prospectus under the caption "Use of Proceeds."
(m) Upon consummation of the Conversion, the liquidation account for the
benefit of Eligible Account Holders and Supplemental Eligible Account Holders
will be duly established in accordance with the Plan and the requirements of the
Conversion Regulations.
(n) The Bank and the Company will conduct the Conversion in accordance with
the Plan, all applicable laws and regulations and in the manner described in the
Prospectus.
Charles Webb & Company
Page 17
August __, 1996
(o) Other than as permitted by the Conversion Regulations, the 1933 Act,
the 1933 Act Regulations and the Blue Sky Laws of any state in which the Common
Stock is qualified for sale, neither the Company nor the Bank will distribute
any prospectus as defined in the 1933 Act in connection with the offer and sale
of the Common Stock.
(p) The Company will make generally available to its security holders as
soon as practicable, but not later than 60 days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 of the 1933 Act Regulations) covering a twelve-month period beginning
not later than the first day of the Company's fiscal quarter next following the
effective date (as defined in Rule 158) of the Registration Statement.
(q) The Company will file with the Commission a report on Form SR pursuant
to Rule 463 of the 1933 Act Regulations.
(r) The Company will register the Common Stock under Section 12(g) of the
1934 Act.
(s) The Company will use its best efforts to obtain approval for and
maintain quotation of the shares on the Nasdaq Small Cap Market effective on or
prior to the Closing Date.
(t) The Bank will maintain appropriate arrangements for depositing all
subscription funds to purchase Common Stock in the Conversion in an interest-
bearing account at the rate described in the Prospectus until the Closing Date
and satisfaction of all conditions precedent to the release of the Bank's
obligation to refund payments received from persons subscribing for or ordering
Common Stock in the Offerings in accordance with the Plan as described in the
Prospectus, or until refunds of such funds have been made to the persons
entitled thereto in accordance with the Plan and as described in the Prospectus.
The Bank will maintain such records of all funds received to permit each
subscriber's funds to be separately insured by the Federal Deposit Insurance
Corporation (to the maximum extent allowable by law) and to enable the Bank to
make appropriate refunds of such funds if required in accordance with the Plan
and as described in the Prospectus.
(u) The Company will promptly register, if so required, as a savings and
loan holding company under the applicable Federal and Ohio laws.
(v) The Company will take such actions and furnish such information as is
reasonably requested by the Agent to ensure compliance with the NASD
"Interpretation on Free Riding and Withholding."
(w) The Company and the Bank will conduct their businesses in material
compliance with all applicable federal and state laws, rules, regulations,
decisions, directives and orders including, all decisions, directives and orders
of the Commission, the Superintendent, the OTS, the FDIC and
Charles Webb & Company
Page 18
August __, 1996
the Federal Reserve Board.
(x) The Bank will not amend the Plan without notifying the Agent prior
thereto.
(y) Subsequent to the date the Registration Statement is declared effective
by the Commission and prior to the Closing Date, except as otherwise may be
indicated or contemplated therein, neither the Company nor the Bank will: (i)
issue any securities or incur any liability or obligations, direct or
contingent, for borrowed money, except borrowing from the same or similar
sources indicated in the Prospectus in the ordinary course of its business, or
(ii) enter into any transaction that is material in light of the business and
properties of the Company and the Bank, excluding origination, purchase and sale
of loans in the ordinary course of its business.
(z) Neither the Bank nor the Company will take, directly or indirectly, any
action designed to or which has constituted or which reasonably might be
expected to cause or result, under the 1934 Act or otherwise, in the
stabilization or manipulation of the price of the Common Stock to facilitate the
sale or resale of the Common Stock.
(aa) The Company and the Bank will comply with each and every undertaking
or commitment made by them under Blue Sky Laws, including, without limitation,
each and every undertaking or commitment made in connection with the Offerings.
(bb) The Company and the Bank will use their best efforts to comply with,
or cause to be complied with, the conditions precedent to the several
obligations of the Agent specified in Section 9 hereof.
(cc) The records of account holders, depositors, borrowers and other
members of the Bank are complete in all material respects. Webb shall have no
liability to any person for the accuracy, reliability and completeness of such
records or for any denial or reduction of a subscription to purchase Common
Stock, whether as a result of a properly calculated allocation pursuant to the
Plan or otherwise, based upon such records.
SECTION 7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless Webb, its officers,
directors, agents, servants and employees and each person, if any, who controls
Webb within the meaning of Section 15 of the 1933 Act or Section 20(a) of the
1934 Act, against any and all loss, liability, claim, damage or expense
whatsoever (including but not limited to any and all amounts paid in settlement
of any claim or litigation) that Webb or any of them may suffer or to which Webb
or any of them may become subject under all applicable federal and state laws or
otherwise, and to promptly reimburse Webb and any such persons upon written
demand for any expenses (including reasonable fees and
Charles Webb & Company
Page 19
August __, 1996
disbursements of counsel) incurred by Webb or any of them in connection with
investigating, preparing or defending any actions, proceedings or claims
(whether commenced or threatened) to the extent such losses, claims, damages,
liabilities or actions: (i) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement, the Conversion Application, the Ohio Application or the Holding
Company Application (or any amendment or supplement thereto), preliminary or
final Prospectus (or any amendment or supplement thereto), or any Blue Sky
application or other instrument or document of the Company or based upon written
information supplied by the Company and filed in any state or jurisdiction to
register or qualify any or all of the Common Stock under the Blue Sky Laws
thereof (collectively, the "Blue Sky Application"), or any application or other
document, advertisement or communication ("Sales Information") prepared, made or
executed by or on behalf of the Company or based upon information furnished by
or on behalf of the Company filed in any jurisdiction in order to qualify or
register the Common Stock under the Blue Sky Laws thereto; (ii) arise out of or
are based upon the omission or alleged omission to state in any of the foregoing
documents or information, a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; or, (iii) arise from any theory of
liability whatsoever relating to or arising from or based upon the Registration
Statement, the Conversion Application, the Ohio Application, the Holding Company
Application (or any amendment or supplement thereto), preliminary or final
Prospectus, Blue Sky Application or Sales Information distributed in connection
with the Conversion, except 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, the Conversion
Application, the Ohio Application, the Holding Company Application (or any
amendment or supplement thereto), the preliminary or final Prospectus (or any
amendment or supplement thereto), or Sales Information made in reliance upon and
in conformity with information furnished in writing to the Company by you
regarding you expressly for use under the caption "The Conversion-Marketing
Plan" therein or statistical information regarding national averages provided by
Webb for the Sales Information. This indemnity agreement will be in addition to
any liability which the Company may otherwise have, including under this
Agreement.
(b) Webb agrees to indemnify and hold harmless the Company, its directors
and officers and each person, if any, who controls the Company within the
meaning of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act against
any and all loss, liability, claim, damage or expense whatsoever, joint or
several which they, or any of them, may suffer or to which they, or any of them,
may become subject under all applicable federal and state laws or otherwise, and
to promptly reimburse the Company and any such persons upon written demand for
any expenses (including reasonable fees and disbursements of counsel) incurred
by them, or any of them, in connection with investigating, preparing or
defending any actions, proceedings or claims (whether commenced or threatened)
to the extent such losses, claims, damages, liabilities or actions arise out of
or are based upon any untrue statement or alleged untrue statement of a material
fact contained in the
Charles Webb & Company
Page 20
August __, 1996
Registration Statement (or any amendment of supplement thereto) or the
preliminary or final Prospectus (or any amendment or supplement thereto), 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 Webb's obligations under this
Section 7(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 preliminary or final Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with
information furnished in writing to the Company by Webb regarding Webb expressly
for use under the caption "The Conversion-Marketing Plan" in the Prospectus or
statistical information regarding national averages provided by Webb for the
Sales Information.
(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 7 or
otherwise. An indemnifying party may participate at its own expense in the
defense of such action. In addition, if it so elects within a reasonable time
after receipt of such notice, an indemnifying party, jointly with any other
indemnifying parties receiving such notice, may assume the defense of such
action with counsel chosen by it and approved by the indemnified parties that
are defendants in such action, unless such indemnified parties reasonably object
to such assumption on the ground that there may be legal defenses available to
them that are different from or in addition to those available to such
indemnifying party. If an indemnifying party assumes the defense of such action,
the indemnifying parties shall not be liable for any fees and expenses of
counsel for the indemnified parties incurred thereafter in connection with such
action, proceeding or claim, other than reasonable costs of investigation. In no
event shall the indemnifying parties be liable for the fees and expenses of more
than one separate firm of attorneys (and any special counsel that said firm may
retain) for each indemnified party in connection with any one action, proceeding
or claim or separate but similar or related actions, proceedings or claims in
the same jurisdiction arising out of the same general allegations or
circumstances.
SECTION 8. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 7 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Company or Webb, the Company and Webb shall
contribute to the aggregate losses, claims, damages and liabilities (including
any investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of any action, suit or proceeding of any claims
asserted, but after deducting any contribution received by the Company or Webb
from persons other than the other party thereto, who may also be liable for
contribution) in such proportion so that Webb is responsible for that portion
Charles Webb & Company
Page 21
August __, 1996
represented by the percentage that the fees paid to the Agent pursuant to
Section 1 of this Agreement bears to the gross proceeds received by the Company
in the Offerings and the Company 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 7 above,
then each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company, on the one
hand, and you 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), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and you on the other shall be deemed to be in the same proportion as the total
gross proceeds from the Offerings received by the Company bear to the total fees
received by the Agent pursuant to Section 1 of this Agreement. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand or you on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and you agree that it would not be just and equitable if
contribution pursuant to this Section 8 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 8. 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 8 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. Notwithstanding this Section
8, it is expressly agreed that Webb 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 to Webb under Section 1 of this Agreement. It
is understood that the above-stated limitation on Webb's liability is essential
to Webb and that Webb 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
ll(f) of the 1933 Act) shall be entitled to contribution from any person who was
not found guilty of such fraudulent misrepresentation. The obligations of the
Company and Webb under this Section 8 and under Section 7 shall be in addition
to any liability which the Company and Webb may otherwise have. For purposes of
this Section 8, each of Webb's officers and directors and each person, if any,
who controls Webb within the meaning of the 1933 Act and the 1934 Act shall have
the same rights to contribution as you and each person, if any, who controls the
Company within the meaning of the 1933 Act and the 1934 Act, and each officer
and director of the Company shall have the same rights to contribution as the
Company. 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 8, will notify such party from whom contribution may be
sought, but the omission to so notify such party shall not relieve
Charles Webb & Company
Page 22
August __, 1996
the party from whom contribution may be sought from any other obligation it may
have hereunder or otherwise than under this Section 8.
SECTION 9. CONDITIONS TO WEBB'S OBLIGATIONS. Webb's obligations hereunder,
as to the Common Stock to be delivered at the Closing Date, are subject to the
condition that all representations and warranties and other statements of the
Bank and the Company herein are, at and as of the commencement of the Offerings
and at and as of the Closing Date, true and correct in all material respects,
the condition that the Bank and the Company shall have performed in all material
respects all of its obligations hereunder to be performed on or before such
dates, and to the following further conditions:
(a) The Registration Statement shall have been declared effective by the
Commission. The Plan shall have been approved by the Superintendent and the OTS,
and the Holding Company Application shall have been approved by the OTS,
respectively, not later than 5:30 p.m. on the date of this Agreement, or with
your consent at a later time and date, and at the Closing Date no stop order
suspending the effectiveness or approval of the Registration Statement, the
Conversion Application, the Ohio Application, the Holding Company Application,
or the consummation of the Conversion shall have been issued under the 1933 Act,
the 1933 Act Regulations or the Conversion Regulations or proceedings therefor
initiated or threatened by the Commission, the Superintendent, the OTS or any
state authority, and no order or other action suspending the effectiveness of
the Prospectus or the consummation of the Conversion shall have been issued or
proceedings therefore initiated or threatened by the Commission, the
Superintendent, the OTS or any state authority.
(b) At the Closing Date, Webb shall have received:
(1) The opinion, dated as of the Closing Date, addressed to Webb and for
its benefit, of Vorys, Sater, Seymour and Pease, counsel for the Company and the
Bank, in form and substance satisfactory to Webb to the effect that:
(i) The Company has been incorporated and duly organized and is validly
existing as a corporation in good standing under the laws of the State of Ohio,
with corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Registration Statement, the
Conversion Application, the Ohio Application, the Holding Company Application
and the Prospectus; to the best of such counsel's knowledge the Company is duly
qualified as a foreign corporation to transact business and is in good standing
in each jurisdiction in which such qualification is required, except where
failure to so qualify would not have a material adverse effect on the business,
financial condition, results of operations or affairs of the Company or the
Bank.
(ii) Prior to the Closing Date, the Bank has been an Ohio state-chartered
mutual savings and loan association, and, at the Closing Date, has become a duly
incorporated and validly existing Ohio
Charles Webb & Company
Page 23
August __, 1996
state-chartered capital stock savings and loan association, in both instances
with corporate power and authority to own, lease and operate its properties and
to conduct its business substantially as described in the Registration
Statement, the Conversion Application, the Ohio Application, the Holding Company
Application and the Prospectus.
(iii) The Bank is a member of the FHLB of Cincinnati. The deposit accounts
of the Bank are insured by the FDIC up to the current maximum amount for each
depositor, as defined by applicable law, and no proceeding for the revocation of
such membership or insurance is pending or, to the best of such counsel's
knowledge, threatened.
(iv) To the best of such counsel's knowledge, the Company and the Bank have
good and marketable title to all properties and assets which are material to the
business of the Company and the Bank and to those properties and assets
described in the Prospectus as owned by them, free and clear of all liens,
charges, encumbrances or restrictions, except such as are described in the
Prospectus; and all of the leases and subleases material to the business of the
Company and the Bank under which the Company and the Bank hold properties, as
described in the Prospectus, are in full force and effect.
(v) No material default by the Company or the Bank exists in the due
performance or observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan agreement, note
or lease or other instrument so described, referred to or filed.
(vi) The information in the Prospectus describing the liquidation account,
to the extent that such information constitutes matters of law and legal
conclusions, has been reviewed by such counsel and is described accurately.
(vii) Upon consummation of the Conversion, the authorized, issued and
outstanding capital stock of the Company will be within the range set forth in
the Prospectus under the caption "Capitalization," and no shares of Common Stock
have been issued and outstanding prior to the Closing Date, except for shares
issued to the incorporator of the Company, which shares were canceled on the
Closing Date. At the Closing Date, the shares of Common Stock subscribed for
pursuant to the Offerings will have been duly and validly authorized for
issuance, and when issued and delivered by the Company pursuant to the Plan
against payment of the consideration therefor, will be duly and validly issued,
fully paid and nonassessable. To the best of such counsel's knowledge, the
holders of the Common Stock will acquire good title thereto, free and clear of
any security interest, mortgage, pledge, lien, claim or other encumbrance or
other defect in title (other than restrictions on transfer under applicable law
and subject to such claims as may be asserted against the purchasers thereof by
third party claimants) and except for the subscription rights under the Plan,
there are no preemptive or other rights to subscribe for or to purchase, or,
except as
Charles Webb & Company
Page 24
August __, 1996
otherwise set forth in the articles of incorporation and bylaws of the Company,
any restriction upon the voting of the Common Stock.
(viii) Upon consummation of the Conversion, when issued and delivered by
the Company pursuant to the Plan against payment of consideration therefor, all
of the issued and outstanding capital stock of the Bank will be duly authorized,
validly issued, fully paid and nonassessable, and all such capital stock will be
owned beneficially and of record by the Company, free and clear of any security
interest, mortgage, pledge, lien, claim or other encumbrances or other defect in
title.
(ix) The OTS has approved the Holding Company Application, subject to
certain conditions, and no order has been issued by the OTS suspending or
revoking such approval, and no action for such purpose has been instituted or,
to the best of such counsel's knowledge, threatened with respect to the Holding
Company Application and, to the best of such counsel's knowledge, no person has
sought to obtain review of the final action of the OTS in approving the Holding
Company Application. The Holding Company Application complies as to form with
the applicable requirements of OTS regulations; and the Company and the Bank
have obtained all necessary approvals under and are duly authorized pursuant to
OTS regulations to consummate the acquisition of the Bank as contemplated by the
Holding Company Application and as described in the Registration Statement, the
Conversion Application, the Ohio Application and the Prospectus.
(x) The Conversion Application and the Ohio Application, including the
Prospectus and Proxy Statement, as filed with the OTS and the Superintendent,
respectively, comply as to form in all material respects with the Conversion
Regulations and have been approved by the OTS and the Superintendent,
respectively. The Prospectus and Proxy Statement have been authorized for use by
the Superintendent and the OTS. The Superintendent and the OTS have authorized
the Conversion, and no action has been taken, is pending or, to the best of such
counsel's knowledge, been threatened to revoke such approvals or authorizations.
(xi) The Plan complies in all material respects with the Conversion
Regulations. To the best of such counsel's knowledge, the Company and the Bank
have conducted the Conversion in all material respects in accordance with the
Plan and the Conversion Regulations and all applicable rules, decisions and
orders thereunder; the Plan has been duly authorized by the Boards of Directors
of the Company and the Bank and approved by the required vote of the members of
the Bank.
(xii) The Bank has duly amended its articles of incorporation,
constitution, and bylaws effective upon consummation of the Conversion to read
in the form of an Ohio state-chartered capital stock savings and loan
association; all applicable terms, conditions, requirements and conditions
precedent to the Conversion imposed upon the Company and the Bank by the
Commission, the Superintendent or the OTS, except with respect to the filing of
certain post-Conversion reports and any other actions required to be performed
after the Closing Date, have been
Charles Webb & Company
Page 25
August __, 1996
complied with by the Company and the Bank, and no order has been issued by the
Commission, the Superintendent or the OTS to suspend the Offerings, and no
action for such purpose has been instituted or to the best of such counsel's
knowledge threatened by the Commission, the Superintendent or the OTS or any
other agency; and, to the best of such counsel's knowledge, no person has sought
to obtain review of the final action of the Superintendent or the OTS in
approving the Conversion Application or the OTS Application, respectively, or
the Plan.
(xiii) The execution and delivery of this Agreement has been duly
authorized by all necessary corporate action on the part of the Company and the
Bank and this Agreement is a valid and binding obligation of the Company and the
Bank, subject to the execution of this Agreement by a duly authorized officer of
Webb and subject, as to enforceability, to bankruptcy, insolvency,
reorganization, moratorium, conservatorship, receivership and other laws of
general applicability relating to or affecting creditors' rights, laws relating
to the safety and soundness of insured depository institutions as set forth in
12 U.S.C. Section 1818(b) or the appointment of a conservator or receiver by the
FDIC, to general principles of equity (whether considered in an action at law or
in equity) and to the extent that rights to indemnity and contribution
thereunder may be limited under applicable laws or under considerations of
public policy. The Bank and the Company have full corporate power and authority
to enter into this Agreement and to consummate the transactions contemplated
thereby and by the Plan.
(xiv) The Registration Statement is effective under the 1933 Act and no
stop order suspending effectiveness has been issued under the 1933 Act or
proceedings therefore initiated or, to the best knowledge of such counsel,
threatened by the Commission or any state authority.
(xv) Subject to the satisfaction of the conditions to the Superintendent's
and the OTS's approval of the Conversion, and the OTS' approval of the Holding
Company Application, no further approval, authorization, consent or other order
of any public board or body is required in connection with the execution and
delivery of this Agreement, the issuance of the Common Stock and the
consummation of the Conversion, except as may be required under the securities
or blue sky laws of various jurisdictions (as to which no opinion need be
rendered) and except as may be required under the regulations of the NASD or the
Nasdaq Small Cap Market.
(xvi) At the time the Registration Statement became effective and the
Conversion Application and the Ohio Application were approved by the OTS and the
Superintendent, respectively, (i) the Registration Statement and the Prospectus
(other than the financial statements, notes to financial statements, tables,
schedules or other financial and statistical data included therein, as to which
no opinion need be rendered) complied as to form in all material respects with
the requirements of the 1933 Act and the 1933 Act Regulations and (ii) the
Conversion Application, the Ohio Application, the Proxy Statement and the
Prospectus (other than the financial statements, notes to financial statements,
tables, schedules or other financial and statistical data included therein, as
Charles Webb & Company
Page 26
August __, 1996
to which no opinion need be rendered) complied as to form in all material
respects with the requirements of the Conversion Regulations.
(xvii) The information in the Prospectus under the captions "Regulation,"
"Taxation," "Restrictions on Acquisition of MFC and the Association and Related
Anti-Takeover Provisions," "The Conversion" and "Description of Authorized
Shares" to the extent that it constitutes matters of law, summaries of legal
matters, documents or proceedings, or legal conclusions, has been reviewed by
such counsel and is correct in all material respects (except as to the financial
statements and other financial and statistical data included therein as to which
no opinion need be expressed), and the information under the caption "The
Conversion - Principal Effects of the Conversion-Tax Consequences" has been
reviewed by them and constitutes a correct summary of the opinions rendered to
the Bank with respect to such matters.
(xviii) The form of certificate used to evidence the shares of Common Stock
is in due and proper form and complies with Ohio law and requirements of the
Superintendent and the OTS applicable thereto.
(xix) To the best of such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened against the Company or the Bank
which are required to be disclosed in the Registration Statement, the Conversion
Application, the Ohio Application, the Holding Company Application or the
Prospectus, other than those disclosed therein, and all pending legal and
governmental proceedings to which the Company, or the Bank is the subject, if
any, which are not disclosed in the Registration Statement, the Conversion
Application, the Ohio Application, the Holding Company Application and the
Prospectus including ordinary routine litigation incidental to the business,
are considered in the aggregate, not material.
(xx) To the best of such counsel's knowledge, there are no contracts,
indentures, mortgages, loan agreements, notes, leases or other instruments
required to be described or referred to in the Registration Statement, the
Conversion Application, the Ohio Application, the Holding Company Application or
the Prospectus or to be filed as exhibits to the Registration Statement, the
Conversion Application, the Ohio Application or the Holding Company Application,
other than those described or referred to therein or filed as exhibits thereto,
and the descriptions thereof or references thereto are correct in all material
respects.
(xxi) To the best of such counsel's knowledge, the Company and the Bank
have obtained all licenses, permits and other governmental authorizations
currently required for the conduct of their respective businesses as described
in the Registration Statement, the Conversion Application, the Ohio Application,
the Holding Company Application, and the Prospectus except where failure to
obtain the same would not have a material adverse effect on the business,
financial condition, results of operations or affairs of the Company and the
Bank, and all such licenses, permits and other
Charles Webb & Company
Page 27
August __, 1996
governmental authorizations are in full force and effect, and the Company and
the Bank are in all material respects complying therewith.
(xxii) Neither the Company nor the Bank is in violation of its articles of
incorporation, constitution or bylaws (and the Bank will not be in violation of
its articles of incorporation or constitution in stock form upon consummation of
the Conversion) or, to the best of such counsel's knowledge, is in default in
the performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan agreement, note,
lease or other instrument to which the Company or the Bank is a party or by
which the Company or the Bank or any of their property may be bound except for
such defaults which would not have a material adverse impact on the financial
condition or results of operations of the Company and the Bank on a consolidated
basis; to the best of such counsel's knowledge, the execution and delivery of
this Agreement, the incurrence of the obligations herein set forth and the
consummation of the transactions contemplated herein will not conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any material lien, charge or encumbrance upon any property or
assets of the Company or the Bank pursuant to any contract, indenture, mortgage,
loan agreement, note, lease or other instrument to which the Company or the Bank
is a party or by which any of them may be bound, or to which any of the property
or assets of the Company or the Bank is subject, nor will such action result in
any violation of the provisions of the articles of incorporation, constitution
or bylaws of the Company or the Bank (and will not result in any violation of
the Bank's articles of incorporation or constitution in stock form upon
consummation of the Conversion).
(xxiii) To the best of such counsel's knowledge, the Company and the Bank
are not in violation of any directive from the Commission, the Superintendent or
the OTS to make any change in the method of conducting their businesses.
Such counsel shall include an additional statement to the effect that,
during the preparation of the Registration Statement, the Conversion
Application, the Ohio Application, the Holding Company Application, and the
Prospectus, counsel participated in conferences with certain officers and other
representatives of the Bank and the Company, representatives of Webb, counsel to
Webb, representatives of the independent public accountants for the Bank and the
Company at which conferences the contents of the Registration Statement, the
Conversion Application, the Ohio Application, the Holding Company Application,
and the Prospectus and related matters were discussed and, although they are not
passing upon and do not assume the responsibility for the accuracy, completeness
or fairness of the statements contained in the Registration Statement, the
Conversion Application, the Ohio Application, the Holding Company Application,
and the Prospectus, on the basis of the foregoing (relying as to factual matters
on certificates of officers and other factual representations by the Bank and
the Company), nothing has come to such counsel's attention that caused them to
believe that the Registration Statement at the time it was declared effective by
the SEC, the Conversion Application at the time it was approved by the OTS, the
Ohio
Charles Webb & Company
Page 28
August __, 1996
Application at the time it was approved by the Superintendent, the Holding
Company Application at the time it was approved by the OTS, or the Prospectus as
of its date and as of the Closing Date, contained or contains any untrue
statement of a material fact or omitted or omits to state any 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 (it
being understood that such counsel shall express no comment or opinion with
respect to the financial statements, schedules and other financial and
statistical data included, or statistical methodology employed, in the
Registration Statement, the Conversion Application, the Ohio Application, the
Holding Company Application and the Prospectus).
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 and Ohio, to the extent such counsel deems proper and specified in such
opinion, upon the opinion of other counsel of good standing, and (B) as to
matters of fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company and the Bank and public officials; provided
copies of any such opinion or certificates of public officials are delivered to
you together with the opinion to be rendered hereunder by counsel to the Company
and the Bank. The opinion of such counsel for the Company and the Bank shall
state that the opinion of any such other counsel is in form satisfactory to such
counsel and, in their opinion, you are justified in relying thereon. Such
counsel may assume that any agreement is the valid and binding obligation of any
parties to such agreement other than the Company and the Bank.
(2) The favorable opinion, dated as of the Closing Date, of Luse Lehman
Gorman Pomerenk & Schick, P.C., your counsel, with respect to such matters as
you may reasonably require. Such opinion may rely upon the opinions of counsel
to the Bank and the Company, and as to matters of fact, upon certificates of
officers and directors of the Company and the Bank delivered pursuant hereto.
(c) At the Closing Date, you shall receive a certificate of the Chief
Executive Officer and the Chief Financial Officer of the Company and of the
Chief Executive Officer and Chief Financial Officer of the Bank, dated as of
such Closing Date, to the effect that: (i) since the respective dates as of
which information is given in the Registration Statement, the Conversion
Application, the Ohio Application, the Holding Company Application and the
Prospectus, there has been no material adverse change in the business, financial
condition, earnings, properties or affairs of the Company or the Bank, whether
or not arising in the ordinary course of business; (ii) the representations and
warranties in Section 5 are true and correct with the same force and effect as
though expressly made at and as of the Closing Date; (iii) the Company and the
Bank have complied with all agreements and satisfied all conditions on their
part to be performed or satisfied at or prior to the Closing Date, and the
Company and Bank will comply with all obligations to be satisfied by them after
the Conversion; (iv) no stop order suspending the effectiveness of the
Registration Statement has been
Charles Webb & Company
Page 29
August __, 1996
initiated or, to the best knowledge of such officers, threatened by the
Commission or any other authority; and (v) no order suspending the Offerings,
the Conversion, the acquisition of all of the shares of the Bank by the Company
or the effectiveness of the Prospectus has been issued and no proceedings for
that purpose have been initiated or, to the best knowledge of such officers,
threatened by the Commission, the Superintendent, the OTS or any other state
authority.
(d) Prior to and at the Closing Date: (i) in the reasonable opinion of
Webb, there shall have been no material adverse change in the business,
financial condition, earnings, affairs of the Company or the Bank from that as
of the latest dates as of which such condition is set forth in the Prospectus,
except as referred to therein; (ii) there shall have been no material
transaction entered into by the Company or the Bank from the latest date as of
which the financial condition of the Company or the Bank is set forth in the
Prospectus other than transactions referred to or contemplated therein; (iii)
the Company or the Bank shall not have received from the Commission, the
Superintendent or the OTS any direction (oral or written) to make any material
change in the method of conducting their business with which it has not complied
(which direction, if any, shall have been disclosed to Webb) or which materially
and adversely would affect the business, financial condition, results of
operations or affairs of the Company or the Bank; (iv) neither the Company nor
the Bank shall have been in default (nor shall an event have occurred which,
with notice or lapse of time or both, would constitute a default) under any
provision of any agreement or instrument relating to any material outstanding
indebtedness; (v) no action, suit or proceedings, at law or in equity or before
or by any federal or state commission, board or other administrative agency,
shall be pending or, to the best knowledge of the Company and the Bank,
threatened against the Company or the Bank or affecting any of their properties
wherein an unfavorable decision, ruling or finding would materially and
adversely affect the business, financial condition, results of operations or
affairs of the Company or the Bank; and (vi) the Common Stock shall have been
qualified or registered for offering and sale in the jurisdictions in which the
Common Stock will he offered for sale.
(e) Concurrently with the execution of this Agreement, Webb and the Bank
shall receive a letter from Grant Thornton, LLP, dated the date hereof and
addressed to Webb: (i) confirming that Grant Thornton, LLP, is a firm of
independent public accountants within the meaning of the 1933 Act, the 1933 Act
Regulations, the Conversion Regulations and the Code of Professional Conduct of
the American Institute of Certified Public Accountants, and stating in effect
that in their opinion the financial statements of the Bank at June 30, 1996 and
1995 and for the years ended September 30, 1995, 1994, and 1993 included in the
Prospectus and covered by their opinion included therein comply as to form in
all material respects with the applicable accounting requirements of the 1933
Act, the 1933 Act Regulations, the Conversion Regulations, and GAAP applied
consistently; (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 reading of the latest available unaudited
interim consolidated financial statements of the Bank prepared by the Bank, a
reading of the minutes of the meetings of the Boards of Directors of the Bank
and the Company and
Charles Webb & Company
Page 30
August __, 1996
the members of the Bank and consultations with officers of the Bank responsible
for financial and accounting matters, nothing came to its attention which caused
it to believe that: (A) the unaudited financial statements of the Bank included
in 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; and (B) during the period from the date of the latest audited
financial statements included in the Prospectus to a specified date not more
than three business days prior to the date hereof, there was any increase in
borrowing or in non-performing assets by the Company or the Bank; and (C) except
as otherwise discussed in the Prospectus there was any decrease in retained
earnings of the Bank at the date of such letter as compared with amounts shown
in the latest audited statement of condition included in the Prospectus or there
was any decrease in net income or net interest income of the Bank for the number
of full months commencing immediately after the period covered by the latest
income statement included in the Prospectus and ended on the latest month end
prior to the date of the Prospectus or in such letter as compared to the
corresponding period in the preceding year (included in the "Recent
Developments" section of the Prospectus, if any); and (iii) stating that, in
addition to the audit referred to in its opinion included in the Prospectus and
the performance of the procedures referred to in clause (ii) of this subsection
(e), it has compared with the general accounting records of the Company and/or
the Bank, as applicable, which are subject to the internal controls of the
Company's and/or the Bank's, as applicable, accounting system and other data
prepared by the Company and/or the Bank, as applicable, directly from such
accounting records, to the extent specified in such letter, such amounts and/or
percentages set forth in the Prospectus as you may reasonably request, and they
have found such amounts and percentages to be in agreement therewith.
(f) At the Closing Date, Webb shall receive a letter from Grant Thornton,
LLP, dated the Closing Date, addressed to Webb, confirming the statements made
by it in the letter delivered by it pursuant to subsection (e) of this Section
9, the "specified date" referred to in clause (ii) (C) thereof to be a date
specified in such letter, which shall not be more than three business days prior
to the Closing Date.
(g) At the Closing Date, you shall have received a letter from Keller &
Co., Inc., dated as of the Closing Date, confirming its independent appraisal.
Such independent appraisal shall be in form and substance satisfactory to you
and shall be consistent with the terms of the Plan.
(h) At the Closing Date, your counsel shall have been furnished with such
documents and opinions as they may reasonably require for the purpose of
enabling them to pass upon the sale of the Common Stock as herein contemplated
and related proceedings or in order to evidence the accuracy or completeness of
any of the representations or warranties or the fulfillment of any of the
conditions contained herein; and all proceedings taken by the Company and the
Bank in connection with the Conversion and the sale of the Common Stock as
herein contemplated shall be satisfactory in form and substance to you and your
counsel.
Charles Webb & Company
Page 31
August __, 1996
(i) The Company and the Bank shall not have sustained since the date of the
latest audited financial statements included in the Registration Statement, the
Conversion Application, the Ohio Application, the Holding Company Application,
and the Prospectus any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Registration Statement, the Conversion
Application, the Ohio Application, the Holding Company Application, and the
Prospectus, and since the respective dates as of which information is given in
the Registration Statement, the Conversion Application, the Ohio Application,
the Holding Company Application, and the Prospectus, there shall not have been
any material change in the consolidated long-term debt of the Company or the
Bank other than debt incurred in relation to the purchase of Common Stock by the
ESOP, if any, or any material change, or any development involving a prospective
change, in or affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company or the Bank,
otherwise than as set forth or contemplated in the Registration Statement, the
Conversion Application, the Ohio Application, the Holding Company Registration,
and the Prospectus, the effect of which, in any such case described above, is in
your judgment sufficiently material and adverse as to make it impracticable or
inadvisable to proceed with the Offerings or the delivery of the Common Stock on
the terms and in the manner contemplated in the Registration Statement, the
Conversion Application, the Ohio Application, the Holding Company Application,
and the Prospectus.
(j) Subsequent to the date hereof, there shall not have occurred any of the
following: (i) a suspension or limitation in trading in securities generally on
the New York Stock Exchange, American Stock Exchange or the over-the-counter
market, or quotations halted generally on the Nasdaq National Market, Nasdaq
Small Cap Market, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices for securities have been required by either of such
exchanges or the NASD or by order of the Commission or any other governmental
authority; (ii) a general moratorium on commercial banks, federal savings banks
or savings and loan association in Ohio or a general moratorium on the
withdrawal of deposits from commercial banks, federal savings banks or savings
and loan associations in Ohio, declared by either federal or Ohio authorities;
(iii) the engagement by the United States in hostilities which have resulted in
the declaration, on or after the date hereof, of a national emergency or war; or
(iv) a material decline in the price of equity or debt securities if the effect
of such a decline, in your judgment, makes it impracticable or inadvisable to
proceed with the Offerings or the delivery of the Common Stock on the terms and
in the manner contemplated in the Registration Statement, the Conversion
Application, the Ohio Application, the Holding Company Application, and the
Prospectus.
SECTION 10. TERMINATION AND CANCELLATION.
(a) If the Company fails to sell the minimum amount of Common Stock
required to be sold
Charles Webb & Company
Page 32
August __, 1996
by the Superintendent and the OTS within the period specified, and in accordance
with the provisions of the Plan or as required by the Conversion Regulations,
this Agreement shall terminate upon refund by the Bank to each person who has
subscribed for or ordered any of the Common Stock the full amount which it may
have received from such person, together with interest as provided in the
Prospectus, and no party to this Agreement shall have any obligation to the
other hereunder, except for payment by the Bank and/or the Company as set forth
in Sections 1, 2, 7, and 8 hereof.
(b) This Agreement may be terminated by the Agent, with respect to the
Agent's obligations hereunder, by notifying the Company or the Bank at any time
at or prior to the Closing Date, if any of the conditions specified in Section 9
hereof shall not have been fulfilled when and as required by this Agreement or
if the Conversion has not been completed by December 31, 1996.
(c) If any of the conditions specified herein shall not have been fulfilled
when and as required by this Agreement, or by December 31, 1996, this Agreement
and all of Webb's obligations hereunder may be canceled by Webb by notifying the
Bank of such cancellation in writing or by telegram at any time at or prior to
the Closing Date, and any such cancellation shall be without liability of any
party to any other party except as otherwise provided in Sections 1, 2, 7 and 8
hereof. Notwithstanding the above, if this Agreement is canceled pursuant to
this paragraph, the Bank and the Company jointly and severally agree to
reimburse you for all of your out-of-pocket expenses (including the reasonable
fees and expenses of Webb's counsel) subject to the applicable provision of
Sections 1 and 2 reasonably incurred by you and your counsel in contemplation of
the Offerings.
SECTION 11. SURVIVAL. The respective indemnities, contributions,
agreements, representations, warranties and other statements of the Bank, the
Company and you, as set forth in this Agreement, shall remain in full force and
effect, regardless of (i) any investigation (or any statement as to the results
thereof) made by or on behalf of Webb or its officers, directors, controlling
persons, agents or employees or by or on behalf of the Company or the Bank or
any officers, directors, controlling persons, agents or employees of the Company
or the Bank; (ii) delivery of and payment hereunder for the Common Stock; or
(iii) any termination of this Agreement.
SECTION 12. NOTICES. Notices hereunder, except as otherwise provided
herein, shall be given in writing or by telegraph, addressed (a) to the Agent at
211 Bradenton, Dublin, Ohio 43017 (Attention: Patricia A. McJoynt), with a copy
to Luse Lehman Gorman Pomerenk & Schick, P.C., 5335 Wisconsin Avenue, N.W.,
Suite 400, Washington, D.C. 20015 (Attention: Kenneth R. Lehman, Esq.) and (b)
to the Company and the Bank at the Bank's principal office, 7522 Hamilton
Avenue, Mt. Healthy, Ohio 45231 (Attention: John T. Larimer, President and Chief
Executive Officer) with a copy to Vorys, Sater, Seymour and Pease, 221 East
Fourth Street, Atrium II, Suite 2100, Cincinnati, Ohio 45202 (Attention: Cynthia
A. Shafer, Esq.).
Charles Webb & Company
Page 33
August __, 1996
SECTION 13. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio except if federal law
shall be deemed to apply.
SECTION 14. SEVERABILITY. Any provision or term of this Agreement found to
be invalid or unenforceable shall not effect the validity or enforceability of
the remaining provisions and terms of this Agreement.
SECTION 15. MISCELLANEOUS.
(a) Time shall be of the essence of this Agreement.
(b) This Agreement is made solely for the benefit of and will be binding
upon the parties hereto and their respective successors and the controlling
persons, directors and officers referred to in Section 7 hereof, and no other
person will have any right or obligation hereunder. The term "successors" shall
not include any purchaser of any of the Common Stock.
(c) This Agreement sets forth the entire understanding and agreement among
the parties hereto representing the subject matter hereof and supersedes and
cancels all prior agreements and understanding, written or oral, including the
Letter Agreement (except to the extent of the reference to Exhibit A of the
Letter Agreement in Section 1 hereof.
(d) This Agreement may be signed in various counterparts which together
will constitute one agreement.
Charles Webb & Company
Page 34
August __, 1996
If the foregoing correctly sets forth the arrangement among the Company,
the Bank and the Agent, please indicate acceptance thereof in the space provided
below for that purpose, whereupon this letter and your acceptance shall
constitute a binding agreement.
Very truly yours,
MARKET FINANCIAL CORPORATION THE MARKET BUILDING AND SAVING
COMPANY
By: By:
-------------------------------- ------------------------------
John T. Larimer John T. Larimer
President and Chief Officer President and Chief Officer
Accepted as of the date first above written.
CHARLES WEBB & COMPANY
By:
----------------------------------
Patricia A. McJoynt
EXHIBIT A
SUPPLEMENTAL AGREEMENT
This Supplemental Agreement ("Agreement") is entered into this ______ day
of __________1996, by and between The Market Building and Saving Company
("Bank") and Charles Webb & Company ("Webb");
W I T N E S S E T H:
WHEREAS, the Bank has retained Webb as its financial agent to assist in the
sale of the stock of its proposed holding company, Market Financial Corporation
("Company"), pursuant to the Agency Agreement dated __________, 1996 ("Agency
Agreement");
WHEREAS, in consideration for the rendering of its services, Webb seeks the
Bank to indemnify and provide contribution to it to the same extent the Company
has agreed to indemnify and provide contribution to Webb pursuant to Sections 7
and 8 of the Agency Agreement, and the Bank desires Webb to indemnify and
provide contribution to it to the same extent Webb has agreed to indemnify and
provide contribution to the Company pursuant to Sections 7 and 8 of the Agency
Agreement;
WHEREAS, the Bank has been informed by its special counsel, Vorys, Sater,
Seymour and Pease, that such an indemnification and contribution by the Bank may
not comply with the quantitative limitations and collateral requirements of
Section 23A of the Federal Reserve Act ("Section 23A") and may be violative of
federal law and, therefore, should not be entered into by the Bank;
WHEREAS, the Bank and Webb mutually desire the provisions of this Agreement
to become a part of, and not be superseded by, the Agency Agreement;
NOW THEREFORE, in consideration of the promises and the mutual covenants,
and agreements set forth herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, it is agreed that:
1. INDEMNIFICATION
(a) The Bank will indemnify Webb to the extent permissible under Section
23A. Such indemnification by the Bank, if any, permitted shall be in conformity
with and subject to the conditions and limitations contained in Section 7 of the
Agency Agreement; provided such conditions and limitations do not conflict with
the applicable requirements of Section 23A.
(b) Webb will indemnify the Bank to the same extent Webb has agreed to
indemnify the Company pursuant to Section 7 of the Agency Agreement.
2. CONTRIBUTION
In order to provide for just and equitable contribution in circumstances in
which the indemnification provided for in Section 1 of this Agreement is due,
the Bank and Webb hereby agree that the contribution provision contained in
Section 8 of the Agency Agreement shall apply to the extent that the Bank's
contribution does not exceed the provisions of Section 23A.
3. EXISTING OBLIGATIONS
This Agreement shall not in any way, other than as stated in Sections 1 and
2 above, be viewed as affecting, either by limiting or expanding, the rights,
obligations and duties set forth in the Agency Agreement.
4. MISCELLANEOUS PROVISIONS
(a) This Agreement shall be construed in accordance with the laws of the
State of Ohio.
(b) This Agreement shall be binding upon the Bank and Webb and shall inure
to the benefit of their successors and assigns.
(c) No amendment, modification, or cancellation of this Agreement shall be
effective unless in writing signed by all parties hereto.
(d) This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(e) This Agreement shall become effective upon execution and delivery
hereof by all the parties hereto; delivery of this Agreement may be made by
telecopier to the parties with original copies promptly to follow by
overnight courier.
IN WITNESS WHEREOF, the Bank and Webb have executed this Agreement by their
duly authorized representatives.
THE MARKET BUILDING AND SAVING
COMPANY
By:
----------------------------------
John T. Larimer
President and Chief Executive Officer
CHARLES WEBB & COMPANY
By:
------------------------------------
Patricia A. McJoynt