KHHB&E DRAFT
SEPTEMBER 14, 2001
WAYNE SAVINGS BANCSHARES, INC.
(a Delaware-chartered Stock Corporation)
Up to 2,070,000 Shares
(Subject to Increase Up to 2,380,500 Shares)
COMMON STOCK ($.10 Par Value)
Subscription Price $10.00 Per Share
AGENCY AGREEMENT
__________, 2001
Ryan, Beck & Co., LLC
220 South Orange Avenue
Livingston, NJ 07039-5817
Ladies and Gentlemen:
Wayne Savings Bancshares, Inc., a federal-chartered stock corporation
(the "Mid-Tier Holding Company"), Wayne Savings Bancshares, M.H.C., a
federally-chartered mutual holding company which owns 52.5% of the common stock
of the Mid-Tier Holding Company (the "MHC"), and Wayne Savings Community Bank,
an Ohio savings and loan association (together with its subsidiaries, the
"Bank") whose common stock is owned in its entirety by the Mid-Tier Holding
Company (collectively, the "Primary Parties") hereby confirm, jointly and
severally, their agreement with Ryan, Beck & Co., LLC (the "Agent"), as follows:
SECTION 1. THE OFFERING. The MHC, in accordance with the Plan of
Conversion and Reorganization adopted __________, 2001 (the "Plan"), intends to
convert from a federally-chartered mutual holding company to a newly formed
Delaware-chartered stock form corporation (the "Holding Company") which will
offer stock on a priority basis to (i) Eligible Account Holders; (ii) Employee
Plans of the Holding Company; (iii) Supplemental Account Holders; and (iv) Other
Members (all capitalized terms used in this Agreement and not defined in this
Agreement shall have the meanings set forth in the Plan). Pursuant to the Plan,
the Holding Company is offering a minimum of 1,530,000 and a maximum of
2,070,000 shares of common stock, par value $.10 per share (the "Common Stock")
(subject to an increase of up to 2,380,000 shares), in the Subscription
Offering, and, if necessary, (i) the Community Offering and/or (ii) Syndicated
Community Offering.
Pursuant to the Plan, the Holding Company will offer and sell shares of
its Common Stock (the "Shares") in the Subscription Offering, Community
Offering, and/or Syndicated Community Offering (the "Offerings") and issue
shares of the Holding Company to existing public shareholders of the Mid-Tier
Holding Company in exchange for such shares (the
"Exchange") so that, upon completion of the Offerings, 100% of the outstanding
Common Stock of the Holding Company will be publicly held. The Holding Company
will sell the Shares in the Offerings at $10.00 per share (the "Purchase
Price"). If the number of Shares is increased or decreased in accordance with
the Plan, the term "Shares" shall mean such greater or lesser number, where
applicable.
Pursuant to the Plan, in the Subscription Offering, the Holding Company
will offer the Shares in descending order of priority to: (1) the Bank's
depositors with aggregate account balances of $50 or more on June 30, 2000,
subject to the allocation procedures and purchase limitations set forth in the
Plan; (2) Employee Plans of the Company; (3) the Bank's depositors with
aggregate account balances of $50 or more on the Supplemental Eligibility Record
Date; and (4) Other Members. The Holding Company may offer Shares, if any,
remaining after the Subscription Offering, in the Community Offering on a
priority basis to the Mid-Tier Holding Company's public stockholders at the
Voting Record Date, and then to the natural persons residing within the Ohio
counties of Wayne, Ashland, Holmes, Medina and Stark, and then to the general
public. In the event a Community Offering is held, it may be held at any time
during or immediately after the Subscription Offering. Depending on market
conditions, Shares available for sale but not subscribed for in the Subscription
Offering or purchased in the Community Offering may be offered in the Syndicated
Community Offering to the general public on a best efforts basis, as described
in subsection 4(c) below.
The Holding Company has filed with the U.S. Securities and Exchange
Commission (the "Commission") Registration Statements on Form SB-2 (File No.
333-_____) and Form 8-A (File No. 333-_____) in order to register the Shares
under the Securities Act of 1933, as amended (the "1933 Act"), and has filed
such amendments thereto as have been required to the date hereof (the
"Registration Statement"). The prospectus, as amended, included in the
Registration Statement at the time it initially became effective is hereinafter
called the "Prospectus," except that if any prospectus is filed by the Holding
Company pursuant to Rule 424(b) or (c) of the regulations of the Commission
under the 1933 Act differing from the prospectus included in the Registration
Statement at the time it initially becomes effective, the term "Prospectus"
shall refer to the prospectus filed pursuant to Rule 424(b) or (c) from and
after the time said prospectus is filed with the Commission and shall include
any supplements and amendments thereto from and after their dates of
effectiveness or use, respectively.
In connection with the Conversion, the MHC and the Mid-Tier Holding
Company each filed with the Office of Thrift Supervision (the "OTS") an
application for conversion to a stock company (the "Conversion Application") and
amendments thereto as required by the OTS. The Holding Company has also filed
with the OTS its application on Form H-(e)1-S (the "Holding Company
Application") to become a unitary savings and loan holding company under the
Home Owners Loan Act of 1933, as amended, and the regulations promulgated
thereunder (the "HOLA"). Collectively, the Conversion Application and the
Holding Company Application may also be termed the "Applications."
SECTION 2. APPOINTMENT OF AGENT. Subject to the terms and conditions of this
Agreement, the Primary Parties hereby appoint the Agent to consult with, advise
and assist the Primary Parties with the solicitation of subscriptions and
purchase orders for the Shares in connection with the sale of the Shares in the
Offerings.
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On the basis of the representations and warranties of the Primary
Parties contained in, and subject to the terms and conditions of, this
Agreement, the Agent accepts such appointment and agrees to use its best efforts
to assist the Primary Parties with the solicitation of subscriptions and
purchase orders for the shares and agrees to consult with and advise the Primary
Parties as to the matters set forth in Section 3 of the letter agreement (the
"Letter Agreement"), dated July 9, 2001, between the MHC, the Mid-Tier Holding
Company and Agent (a copy of which is attached hereto as EXHIBIT A). It is
acknowledged by the Primary Parties that the Agent shall not be obligated to
purchase any Shares and shall not be obligated to take any action which is
inconsistent with any applicable law, regulation, decision or order. The
appointment of the Agent to provide services hereunder shall terminate upon
consummation of the Offerings.
If requested by the MHC or the Mid-Tier Holding Company, Agent may also
assemble and manage a selling group of broker-dealers that are members of the
National Association of Securities Dealers, Inc. ("NASD") to participate in the
solicitation on a "best efforts" basis of purchase orders for the Shares (the
"Assisting Brokers") under a selected dealer agreement ("Selected Dealer
Agreement"), the form of which is set forth as EXHIBIT B to this Agreement. The
Agent will distribute the Shares among dealers in the Syndicated Community
Offering in a fashion which best meets the distribution objectives of the Bank
and the Plan. The Agent will not commence the Syndicated Community Offering
without the prior approval of the Primary Parties.
SECTION 3. REFUND OF PURCHASE PRICE. In the event that the Conversion
is not consummated for any reason, including but not limited to the inability to
sell a minimum of 1,530,000 Shares during the Offerings (including any permitted
extension thereof) or such other minimum number of Shares as shall be
established consistent with the Plan and the Conversion Regulations, this
Agreement shall terminate and any persons who have subscribed for any of the
Shares shall have refunded to them within five (5) business days of the date of
such termination the full amount which has been received from such person,
together with interest as provided in the Prospectus.
SECTION 4. FEES. In addition to the expenses specified in Section 9
hereof, as compensation for the Agent's services under this Agreement, the Agent
has received or will receive the following fees from the Primary Parties:
(a) An advisory and management fee and customer proxy solicitation of
$50,000 shall be paid as follows: (i) $25,000 was paid upon execution of the
Letter Agreement, and (ii) $25,000 shall be paid upon the initial filing of the
Registration Statement. Fees for services shall be one and one half percent
(1.5%) of the dollar amount of the Common Stock sold in the Offering which will
be paid at Closing; provided, however, that such fees payable under this Section
4(a) shall not exceed $350,000. No fee shall be payable for stock sold in the
Offering to officers, directors, employees or immediate family of such persons
("Insiders") and qualified and non-qualified employee benefit plans of the
Company or the Insiders. The term "immediate family" includes spouse, siblings,
parents and also children who reside within the same household as an officer,
director or employee.
(b) If any of the Shares remain unsubscribed after the Subscription
Offering and Community Offering, at the request of the Holding Company, the
Agent will form a group of
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approved broker-dealer firms in accordance with Section 2 for purposes of the
Syndicated Community Offering. The fees payable by the Holding Company pursuant
to this subsection to the Agent will not exceed seven percent (7%) of the
aggregate dollar amount of the Shares sold in the Syndicated Community Offering.
Of such fee, the Agent will receive (1.5%) of the aggregate dollar amount of the
shares sold pursuant to this subsection 4(b) as a management fee, and the
Primary Parties will pay the remainder to the Assisting Brokers, which may
include the Agent, in amounts relating to the number of Shares sold by such
Assisting Brokers pursuant to this Section 4(b). All such fees payable under
this Section 4(b) shall be in addition to all fees payable under Section 4(a).
In the event that the Holding Company is required to resolicit
subscribers for Shares in the Subscription Offering and Community Offering and
the Agent is required to provide significant additional services in connection
with such a resolicitation, the Primary Parties and the Agent shall mutually
agree to the dollar amount of additional compensation due to the Agent and the
Primary Parties shall pay such amount, if any. Until any agreement called for by
this paragraph is reached, the Agent shall not incur expenses relating to any
resolicitation in an amount that would cause the total expenses incurred by the
Agent that are reimbursable by the Bank pursuant to Section 9 hereof to be
greater than those permitted without the prior written consent of the Holding
Company, which consent shall not be unreasonably withheld.
SECTION 5. CLOSING. If the minimum number of Shares permitted to be
sold in the Offerings on the basis of the most recently updated Appraisal (as
defined in Section 6(g)) are subscribed for at or before the termination date of
the Offerings (which may be extended), and the other conditions (including those
in Section 10) to the completion of the Conversion are satisfied, the Holding
Company agrees to issue the Shares on the Closing Date (as hereinafter defined)
against payment therefor by the means authorized by the Plan and to deliver
certificates evidencing ownership of the Shares in such authorized denominations
and registrations directly to the purchasers thereof or as instructed as
promptly as practicable after the Closing Date. The closing (the "Closing")
shall be held at the offices of Klehr, Harrison, Harvey, Branzburg & Ellers LLP,
Philadelphia, Pennsylvania, or at such other place as shall be agreed upon among
the Primary Parties and the Agent, at 10:00 a.m., Eastern Time, on the business
day selected by the Holding Company, which business day shall be no less than
two business days following the giving of prior notice by the Holding Company to
the Agent or at such other time as shall be agreed upon by the Primary Parties
and the Agent. At the Closing, the Primary Parties shall deliver to the Agent by
wire transfer in same-day funds the commissions, fees and expenses owing to the
Agent as set forth in Sections 4 and 9 hereof and the opinions required hereby
and other documents deemed reasonably necessary for the Agent shall be executed
and delivered to effect the sale of the Shares as contemplated hereby and
pursuant to the terms of the Prospectus; provided, however, that all
out-of-pocket expenses to which the Agent is entitled under this Section 4 and 9
hereof shall be due and payable upon receipt by the Holding Company or the Bank
of a written accounting therefor setting forth in reasonable detail the expenses
incurred by the Agent. The hour and date upon which the Holding Company shall
release the Shares for delivery in accordance with the terms hereof is referred
to herein as the "Closing Date."
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE PRIMARY
PARTIES. The Primary Parties jointly and severally represent and warrant to the
Agent that:
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(a) The MHC, the Mid-Tier Holding Company and the Bank have all
such power, authority, authorizations, approvals and orders as may be required
to enter into this Agreement, and, as of the Closing Date, the MHC, the Holding
Company and the Bank will have all such power, authority, authorizations,
approvals and orders as may be required to carry out the provisions and
conditions hereof and to issue and sell the Shares as provided herein and as
described in the Prospectus. The consummation of the Conversion, the execution,
delivery and performance of this Agreement and the Letter Agreement and the
consummation of the transactions contemplated herein have been duly and validly
authorized by all necessary corporate action on the part of the MHC, the Holding
Company and the Bank. This Agreement has been validly executed and delivered by
the Primary Parties, and is a valid, legal and binding obligation of the Primary
Parties, in each case enforceable in accordance with its terms, except as the
legality, validity, binding nature and enforceability thereof may be limited by
(i) bankruptcy, insolvency, moratorium, reorganization, conservatorship,
receivership or other similar laws relating to or affecting the enforcement of
creditors' rights generally, (ii) general equity principles regardless of
whether such enforceability is considered in a proceeding in equity or at law,
and (iii) the extent, if any, that the provisions of Sections 11 or 12 hereof
may be unenforceable as against public policy.
(b) The Registration Statement was declared effective by the
Commission on __________, 2001. No stop order has been issued with respect to
the Prospectus. No proceedings related to the Prospectus have been initiated or
threatened by the Commission. At the time the Registration Statement, including
the Prospectus contained therein (including any amendment or supplement
thereto), became effective, the Registration Statement complied as to form with
the 1933 Act and the regulations promulgated thereunder. The Registration
Statement and the Prospectus did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. At the time any Rule 424(b) or (c) Prospectus was
filed with the Commission and at the Closing Date referred to in Section 5, the
Registration Statement, including the Prospectus (including any amendment or
supplement thereto) and, when taken together with the Prospectus, any Blue Sky
Application or Sales Information authorized for use by any of the Primary
Parties in connection with the Offerings, will not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that the representations and warranties in this Section 6(b) shall not apply to
statements or omissions made in reliance upon and in conformity with written
information furnished to the Primary Parties by the Agent expressly regarding
the Agent for use under the caption " The Conversion - Plan of Distribution,
Selling Agent Compensation."]
(c) The Conversion Application has been approved by the OTS. The
Conversion Application did, and will, as of the Closing Date comply as to form
in all material respects with the Conversion Regulations and any other
applicable rules and regulations of the OTS.
(d) No order has been issued by the Commission preventing or
suspending the use of the Registration Statement or the Prospectus and, except
as disclosed in Schedule 6(d), no action by or before any such government entity
to revoke any approval, authorization or order of
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effectiveness related to the Conversion is, to the best knowledge of the Primary
Parties, pending or threatened.
(e) The Plan has been duly adopted by the Board of the MHC. To the
best knowledge of the Primary Parties, except as disclosed in Schedule 6(d), no
person has, or at the Closing Date will have, sought to obtain review of the
final action of the OTS in approving the Plan or the Conversion Application or
the Holding Company Application, pursuant to the HOLA or any other statute or
regulation.
(f) The Holding Company has filed the Holding Company Application
with the OTS. As of the Closing Date, the OTS will have approved of the Holding
Company's becoming a unitary savings and loan holding company with respect to
the Bank.
(g) RP Financial, LC, which prepared the appraisal of the
faggregate pro forma market value of the Common Stock on which the Offerings
were based (the "Appraisal"), has advised the Primary Parties in writing that it
is independent with respect to each of the Primary Parties and the Primary
Parties believe RP Financial, LC to be expert in preparing appraisals of savings
institutions.
(h) Grant Thornton LLP, which certified the financial statements
filed as part of the Registration Statement and the Conversion Application, has
advised the Primary Parties that it is an independent certified public
accountant within the meaning of the Code of Ethics of the AICPA, and Grant
Thornton LLP is, with respect to the Holding Company, the Bank and each
subsidiary of the Bank, independent certified public accountants as required by
the 1933 Act and the 1933 Act Regulations.
(i) The financial statements and the notes thereto which are
included in the Registration Statement and which are a part of the Prospectus
present fairly in all material respects the financial condition and retained
earnings of the Mid-Tier Holding Company and the Bank as of the dates indicated
and the results of operations and cash flows for the periods specified. The
financial statements comply in all material respects with the applicable
accounting requirements of Title 12 of the Code of Federal Regulations,
Regulation S-X of the Commission and generally accepted accounting principles
("GAAP") applied on a consistent basis during the periods presented, except as
otherwise noted therein, and present fairly in all material respects the
information required to be stated therein. The other financial, statistical and
pro forma information and related notes included in the Prospectus present
fairly the information shown therein on a basis consistent with the audited and
any unaudited financial statements included in the Prospectus, and as to the pro
forma adjustments, the adjustments made therein have been consistently applied
on the basis described therein.
(j) Since the respective dates as of which information is given
in the Registration Statement, including the Prospectus; (i) there has not been
any material adverse change in the financial condition, results of operation,
earnings, capital, properties, business affairs or prospects of the Primary
Parties considered as one enterprise, whether or not arising in the ordinary
course of business; (ii) there have not been any material transactions entered
into by any of the Primary Parties, other than those in the ordinary course of
business; and (iii) the capitalization, liabilities, assets, properties and
business of the Primary Parties conform in all
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material respects to the descriptions thereof contained in the Prospectus and,
none of the Primary Parties has any material liabilities of any kind, contingent
or otherwise, except as disclosed in the Registration Statement or the
Prospectus.
(k) As of the Closing Date, the Holding Company will be a stock
corporation duly organized and in good standing under the laws of the State of
Delaware, with corporate power and authority to own its properties and to
conduct its business as described in the Prospectus, and will be qualified to
transact business and in good standing in Delaware and in each jurisdiction in
which the conduct of business requires such qualification, unless the failure to
qualify in one or more of such jurisdictions would not have a material adverse
effect on the financial condition, results of operation, earnings, capital,
properties, business affairs or prospects of the Primary Parties taken as a
whole (a "Material Adverse Effect"). As of the Closing Date, the Holding Company
will have obtained all licenses, permits and other governmental authorizations
required for the conduct of its business, except those that individually or in
the aggregate would not materially adversely affect the financial condition,
earnings, or business of the Primary Parties taken as a whole; and as of the
Closing Date, all such licenses, permits and governmental authorizations will be
in full force and effect, and the Holding Company will be in compliance
therewith in all material respects.
(l) The Holding Company does not, and as of the Closing Date, will
not own any equity securities or any equity interest in any business enterprise
except as described in the Prospectus.
(m) The Bank is a duly organized and validly existing Ohio savings
and loan association, duly authorized to conduct its business as described in
the Prospectus; the activities of the Bank are permitted by the rules,
regulations and practices of the OTS; the Bank has obtained all licenses,
permits and other governmental authorizations currently required for the conduct
of its business, except those that individually or in the aggregate would not
have a Material Adverse Effect; all such licenses, permits and other
governmental authorizations are in full force and effect and the Bank is in good
standing under the laws of State of Ohio and the Bank is duly qualified as a
foreign corporation to transact business in each jurisdiction in which the
failure to so qualify would have a Material Adverse Effect; all of the issued
and outstanding capital stock of the Bank after the Conversion will be duly and
validly issued and fully paid and nonassessable; and the Holding Company will
directly own all of the capital stock of the Bank free and clear of any
mortgage, pledge, lien, encumbrance, claim or restriction of any kind. The Bank
does not own equity securities or any equity interest in any other business
enterprise except as otherwise described in the Prospectus or as are immaterial
in amount and are not required to be described in the Prospectus.
(n) The MHC is a federally chartered mutual holding company
operating under the laws and regulations of the United States and under the
supervision of the OTS and is in good standing under such laws.
(o) The Mid-Tier Holding Company is a duly organized and validly
existing federal-chartered stock corporation, duly authorized to conduct its
business as described in the Prospectus; the activities of the Mid-Tier Holding
Company are permitted by the rules, regulations and practices of the OTS; the
Mid-Tier Holding Company has obtained all licenses,
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permits and other governmental authorizations currently required for the conduct
of its business, except those that, individually or in the aggregate, would not
have a Material Adverse Effect; all such licenses, permits and other
governmental authorizations are in full force and effect and the Mid-Tier
Holding Company is in good standing under the laws of United States and the
Mid-Tier Holding Company is duly qualified as a foreign corporation to transact
business in each jurisdiction in which the failure to so qualify would have a
Material Adverse Effect.
(p) The deposit accounts of the Bank are insured by the FDIC up to
applicable limits. Upon consummation of the Conversion, the Bank will establish
a liquidation account for the benefit of the Bank's depositors, in accordance
with the Plan and the requirements of applicable Conversion Regulations.
(q) As of the Closing Date, the Bank will be a wholly owned
subsidiary of the Holding Company.
(r) Upon consummation of the Conversion, the authorized, issued
and outstanding capital stock of the Holding Company will be within the range
set forth in the Prospectus under the caption "Capitalization" and no shares of
Common Stock have been or will be issued and outstanding prior to the Closing
Date; the shares of Common Stock to be subscribed for in the Offerings have been
duly and validly authorized for issuance and, when issued and delivered by the
Holding Company pursuant to the Plan against payment of the consideration
calculated as set forth in the Plan and the Prospectus, will be duly and validly
issued and fully paid and nonassessable; the issuance of the Shares is not
subject to preemptive rights, except for the subscription rights granted
pursuant to the Plan; and the terms and provisions of the shares of Common Stock
will conform in all material respects to the description thereof contained in
the Prospectus. Upon issuance of the Shares sold, good title to the Shares will
be transferred from the Holding Company to the purchasers of Shares against
payment therefor in the Offering as set forth in the Plan and the Prospectus.
(s) The Primary Parties are not in violation of their respective
certificates of incorporation or charter or their respective bylaws, or in
material default in the performance or observance of any obligation, agreement,
covenant, or condition contained in any contract, lease, loan agreement,
indenture or other instrument to which they are a party or by which they, or any
of their respective properties, may be bound which would result in a Material
Adverse Effect. The consummation of the transactions contemplated herein and in
the Plan will not (i) conflict with or constitute a breach of, or default under,
the Certificate of Incorporation, charter or bylaws of any of the Primary
Parties, or conflict with or constitute a breach of, or default under, any
material contract, lease or other instrument to which any of the Primary Parties
has a beneficial interest, or any applicable law, rule, regulation or order that
is material to the financial condition of the Bank; (ii) violate any
authorization, approval, judgment, decree, order, statute, rule or regulation
applicable to the Primary Parties except for such violations which would not
have a Material Adverse Effect on the financial condition and results of
operations of the Bank or Holding Company; or (iii) result in the creation of
any lien, charge or encumbrance upon any property of the Primary Parties, except
for such liens, changes or encumbrances that would not individually or in the
aggregate have a Material Adverse Effect.
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(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 any of the
Primary Parties, in the due performance and observance of any term, covenant or
condition of any indenture, mortgage, deed of trust, note, bank loan or credit
agreement or any other instrument or agreement to which any of the Primary
Parties is a party or by which any of their property is bound or affected in any
respect which, in any such case, would have a Material Adverse Effect on the
Primary Parties taken as a whole, and such agreements are in full force and
effect; and no other party to any such agreements has instituted or, to the best
knowledge of any of the Primary Parties, threatened any action or proceeding
wherein any of the Primary Parties is alleged to be in default thereunder under
circumstances where such action or proceeding, if determined adversely to any of
the Primary Parties, would have a Material Adverse Effect.
(u) The Primary Parties have good and marketable title to all
assets which are material to the businesses of the Primary Parties, free and
clear of all liens, charges, encumbrances, restrictions or other claims, except
such as are described in the Prospectus or which do not have a Material Adverse
Effect; and all of the leases and subleases which are material to the businesses
of the Primary Parties, including those described in the Registration Statement
or Prospectus, are in full force and effect.
(v) The Primary Parties are not in violation of any material
directive from the OTS, the FDIC, or any other agency to make any material
change in the method of conducting their respective businesses; the Primary
Parties have conducted and are conducting their respective businesses so as to
comply in all respects with all applicable statutes and regulations (including,
without limitation, regulations, decisions, directives and orders of the OTS,
the Commission and the FDIC), except where the failure to so comply would not
reasonably be expected to result in a Material Adverse Effect, and there is no
charge, investigation, action, suit or proceeding before or by any court,
regulatory authority or governmental agency or body pending or, to the best
knowledge of any of the Primary Parties, threatened, which would reasonably be
expected to materially and adversely affect the Conversion, the performance of
this Agreement, or the consummation of the transactions contemplated in the Plan
as described in the Registration Statement, or which would reasonably be
expected to result in a Material Adverse Effect.
(w) Prior to the Closing Date, the Primary Parties will have
received an opinion of their special counsel, Luse Lehman Gorman Pomerenk &
Schick, with respect to the federal income tax consequences of the Conversion,
as described in the Registration Statement and the Prospectus, and an opinion
from Grant Thornton LLP with respect to the tax consequences of the Conversion
under the laws of the State of Ohio; and the facts and representations upon
which such opinions will be based, will be truthful, accurate and complete, and
none of the Primary Parties will take any action inconsistent therewith.
(x) The Mid-Tier Holding Company and the Bank have filed all
required federal and state tax returns, paid all taxes that have become due and
payable, except where permitted to be extended, and no deficiency has been
asserted with respect thereto by any taxing authority.
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(y) No approval, authorization, consent or other order of any
regulatory or supervisory or other public authority is required for the
execution and delivery by the Primary Parties of this Agreement, or the issuance
of the Shares, except for the approval of the OTS and the Commission and any
necessary qualification, notification, or registration or exemption under the
securities or blue sky laws of the various states in which the Shares are to be
offered.
(z) None of the Primary Parties has: (i) issued any securities
within the last 18 months (except for (a) notes to evidence bank loans or other
liabilities in the ordinary course of business or as described in the
Prospectus, and (b) shares of Common Stock issued with respect to the initial
capitalization of the Holding Company); (ii) had any dealings with respect to
sales of securities 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 Offerings and purchases and
sales of U.S. government and agency and other securities in the ordinary course
of business; or (iii) engaged any intermediary between the Agent and the Primary
Parties in connection with the Offerings or the offering of shares of the common
stock of the Mid-Tier Holding Company, and no person is being compensated in any
manner for such services.
(aa) The Primary Parties have not made any payment of funds of the
Primary Parties as a loan to any person for the purchase of Shares, except for
the Holding Company's loan to the employee stock ownership plan the proceeds of
which will be used to purchase Shares, or has made any other payment or loan of
funds prohibited by law, and no funds have been set aside to be used for any
payment prohibited by law.
(bb) The Bank complies in all material respects with the applicable
financial record keeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, and the regulations and rules
thereunder.
(cc) The Primary Parties have not relied upon Agent or its counsel
for any legal, tax or accounting advice in connection with the Conversion.
(dd) The records of Eligible Account Holders and Supplemental
Eligible Account Holders and Other Members are accurate and complete in all
material respects.
(ee) The Primary Parties comply with all laws, rules and
regulations relating to environmental protection, and none of them has been
notified or is otherwise aware that any of them is potentially liable, or is
considered potentially liable, under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, or any other Federal, state
or local environmental laws and regulations except to the extent that any
non-compliance would not have a Material Adverse Effect; no action, suit,
regulatory investigation or other proceeding is pending, or to the knowledge of
the Primary Parties, threatened against the Primary Parties relating to
environmental protection, nor do the Primary Parties have any reason to believe
any such proceedings may be brought against any of them; and, to the knowledge
of the Primary Parties, no disposal, release or discharge of hazardous or toxic
substances, pollutants or contaminants, including petroleum and gas products, as
any of such terms may be defined under federal, state or local law, has occurred
on, in, at or about any facilities or properties owned or leased by any of the
Primary Parties or in which the Bank has a security interest,
10
except to the extent such disposal, release or discharge would not have a
Material Adverse Effect.
(ff) All of the loans represented as assets on the recent
developments or financial information of the Primary Parties included in the
Prospectus meet or are exempt from all requirements of federal, state and local
law pertaining to lending, including, without limitation, truth in lending
(including the requirements of Regulations Z and 12 C.F.R. Part 226), real
estate settlement procedures, consumer credit protection, equal credit
opportunity and all disclosure laws applicable to such loans, except for
violations which, if asserted, would not result in a Material Adverse Effect.
(gg) None of the Primary Parties are required to be registered as
an investment company under the Investment Company Act of 1940.
(hh) Any certificates signed by an officer of any of the Primary
Parties and delivered to the Agent or its counsel that refer to this Agreement
shall be deemed to be a representation and warranty by the Primary Parties to
the Agent as to the matters covered thereby with the same effect as if such
representation and warranty were set forth herein.
(ii) The Primary Parties have taken all actions necessary to obtain
at closing a Blue Sky Memorandum from Luse Lehman Gorman Pomerenk & Schick.
SECTION 7. REPRESENTATIONS AND WARRANTIES OF THE AGENT. Agent represents
and warrants to the Primary Parties that:
(a) Agent is a corporation and is validly existing and in good
standing under the laws of the State of New Jersey with full power and authority
to provide the services to be furnished to the Primary Parties hereunder.
(b) The execution, delivery and performance of this Agreement and
the Letter Agreement and the consummation of the transactions contemplated
herein have been duly and validly authorized by all necessary corporate action
on the part of Agent, and this Agreement is the legal, valid and binding
agreement of Agent, enforceable in accordance with its terms, except as the
legality, validity, binding nature and enforceability thereof may be limited by
(i) bankruptcy, insolvency, moratorium, reorganization, conservatorship,
receivership or other similar laws relating to or affecting the enforcement of
creditors' rights generally, and (ii) general equity principles regardless of
whether such enforceability is considered in a proceeding in equity or at law.
(c) Each of Agent and its employees, agents and representatives
who shall perform any of the services hereunder shall have, and until the
Offerings are consummated or terminated shall maintain, all licenses, approvals
and permits necessary to perform such services and shall comply in all material
respects with all applicable laws and regulations in connection with the
performance of such services.
(d) No action, suit, charge or proceeding before the Commission,
the NASD, any state securities commission or any court is pending, or to the
knowledge of Agent
11
threatened, against Agent which, if determined adversely to Agent, would have a
material adverse effect upon the ability of Agent to perform its obligations
under this Agreement.
(e) Agent is registered as a broker/dealer pursuant to Section
15(b) of the Securities Exchange Act of 1934, as amended (the "1934 Act") and is
a member of the National Association of Securities Dealers, Inc.
(f) Any funds received in the Offerings by the Agent will be
handled by the Agent in accordance with Rule 15c2-4 under the 1934 Act to the
extent applicable.
SECTION 8. COVENANTS OF THE PRIMARY PARTIES. The Primary Parties hereby
jointly and severally covenant with the Agent as follows:
(a) The Holding Company will not, at any time after the date the
Registration Statement is declared effective, file any amendment or supplement
to the Registration Statement without providing the Agent and its counsel an
opportunity to review and comment on such amendment or supplement. The Holding
Company will furnish promptly to the Agent and its counsel copies of all
correspondence from the Commission with respect to the Registration Statement
and the Holding Company's responses thereto.
(b) The Primary Parties will not, at any time after the date any
Application is approved, file any amendment or supplement to such Application
without providing the Agent and its counsel an opportunity to review and comment
on such amendment or supplement. The Primary Parties will furnish promptly to
the Agent and its counsel copies of all correspondence from the OTS with respect
to the Applications and the Primary Parties' responses thereto.
(c) The Primary Parties will use their best efforts to cause the
OTS to approve the Holding Company's acquisition of the Bank, and will use their
best efforts to cause any post-effective amendment to the Registration Statement
to be declared effective by the Commission and any post-effective amendment to
the Conversion Application to be approved by the OTS, as applicable, and will
promptly upon receipt of any information concerning the events listed below
notify the Agent (i) when the Registration Statement, as amended, has become
effective; (ii) when the Conversion Application as amended, has received the
approval of the OTS; (iii) when the Holding Company Application, as amended, has
been approved by the OTS; (iv) of the receipt of any comments from the OTS or
any other governmental entity with respect to the Conversion or the transactions
contemplated by this Agreement; (v) of any request by the Commission, the OTS,
or any other governmental entity for any amendment or supplement to the
Registration Statement or the Applications or for additional information; (vi)
of the issuance by the Commission or the OTS, or any other governmental agency
of any order or other action suspending the Offerings or the use of the
Registration Statement or the Prospectus or any other filing of the Primary
Parties under the Conversion Regulations or other applicable law, or the threat
of any such action; (vii) of the issuance by the Commission or the OTS, or any
other state authority of any stop order suspending the effectiveness of the
Registration Statement or of the initiation or threat of initiation or threat of
any proceedings for that purpose; or (viii) of the occurrence of any event
mentioned in subsection (f) below. The Primary Parties will make every
reasonable effort to prevent the issuance by the Commission, the OTS, or any
other state
12
authority of any order referred to in (vi) and (vii) above and, if any such
order shall at any time be issued, to obtain the lifting thereof at the earliest
possible time.
(d) The Primary Parties will deliver to the Agent and to its
counsel conformed copies of each of the following documents, with all exhibits:
the Applications as originally filed and of each amendment or supplement
thereto, and the Registration Statement, as originally filed and each amendment
thereto. Further, the Primary Parties will deliver such additional copies of the
foregoing documents to counsel to the Agent as may be required for any NASD
filings. In addition, the Primary Parties will also deliver to the Agent such
number of copies of the Prospectus, as amended or supplemented, as the Agent may
reasonably request.
(e) The Primary Parties will comply in all material respects with
any and all terms, conditions, requirements and provisions with respect to the
Conversion and the transactions contemplated thereby imposed by the Commission,
by applicable state law and regulations, and by the 1933 Act, the 1934 Act, and
the rules and regulations of the Commission promulgated under such Acts, to be
complied with prior to the Closing Date; and when the Prospectus is required to
be delivered, the Primary Parties will comply in all material respects, at their
own expense, with all requirements imposed upon them by the OTS, the Conversion
Regulations (except as modified or waived in writing by the OTS), the
Commission, by applicable state law and regulations and by the 1933 Act, the
1934 Act and the rules and regulations of the Commission promulgated under such
statutes, in each case as from time to time in force, so far as is necessary to
permit the continuance of sales or dealing in shares of Common Stock during such
period in accordance with the provisions hereof and the Prospectus.
(f) During any period when the Prospectus is required to be
delivered, each of the Primary Parties will inform the Agent of any event or
circumstance of which it is or becomes aware as a result of which the
Registration Statement and/or Prospectus, as then supplemented or amended, would
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading. If it is
necessary, in the reasonable opinion of counsel for the Primary Parties, to
amend or supplement the Registration Statement or the Prospectus in order to
correct such untrue statement of a material fact or to make the statements
therein not misleading in light of the circumstances existing at the time of
their use, the Primary Parties will, at their expense, prepare, file with the
Commission and the OTS, and furnish to the Agent, a reasonable number of copies
of an amendment or amendments of, or a supplement or supplements to, the
Registration Statement and the Prospectus (after a reasonable time for review by
counsel for the Agent) which will amend or supplement the Registration Statement
and/or the Prospectus so that as amended or supplemented it will not contain an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances existing
at the time, not misleading. For the purpose of this subsection, each of the
Primary Parties will furnish such information with respect to itself as the
Agent may from time to time reasonably request.
(g) Pursuant to the terms of the Plan, the Holding Company will
endeavor in good faith, in cooperation with the Agent, to register or to qualify
the Shares for offering and sale or to exempt such Shares from registration and
to exempt the Holding Company and its officers, directors and employees from
registration as broker-dealers, under the applicable securities laws of the
jurisdictions in which the Offering will be conducted; provided, however,
13
that the Holding Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation to do business in any
jurisdiction in which it is not so qualified. In each jurisdiction where any of
the Shares shall have been registered or qualified as above provided, the
Holding Company will make and file such statements and reports as are requested
in connection with such registration or qualification for a period of not less
than one year from the effective date of the Registration Statement.
(h) The Holding Company will not sell or issue, contract to sell
or otherwise dispose of, for a period of 90 days after the date hereof, any
shares of Common Stock or securities into or exercisable for shares of Common
Stock, without the Agent's prior written consent other than in connection with
any plan or arrangement described in the Prospectus.
(i) For a period of three years from the date of this Agreement,
the Holding Company will furnish to the Agent, as soon as practical after such
information is available (i) a copy of each report of the Holding Company
furnished to or filed with the Commission under the 1934 Act or any national
securities exchange or system on which any class of securities of the Holding
Company is listed or quoted, (ii) a copy of each report of the Holding Company
mailed to holders of Common Stock, (iii) each press release and material news
item and article released by the Holding Company and/or Bank, and (iv) from
time-to-time, such other publicly available information concerning the Primary
Parties as the Agent may reasonably request.
(j) The Primary Parties will use the net proceeds from the sale of
the Common Stock in the manner set forth in the Prospectus under the caption
"Use of Proceeds."
(k) The Holding Company and the Bank will distribute the
Prospectus or other offering materials in connection with the offering and sale
of the Common Stock only in accordance with the Conversion Regulations of the
OTS, the 1933 Act and the 1934 Act and the rules and regulations promulgated
under such statutes, and the laws of any state in which the shares are qualified
for sale.
(l) Prior to the Closing Date, the Holding Company shall register
its Common Stock under Section 12(b) or 12(g) of the 1934 Act, and will request
that such registration statement shall be effective no later than the completion
of the Conversion. The Holding Company shall maintain the effectiveness of such
registration for not less than three years.
(m) For so long as the Shares are registered under the 1934 Act,
the Holding Company will furnish to its stockholders as soon as practicable
after the end of each fiscal year such reports and other information as are
required to be furnished to its stockholders under the 1934 Act.
(n) The Holding Company will report the use of proceeds of the
Offering in accordance with Rule 463 under the 1933 Act.
(o) The Primary Parties will maintain appropriate arrangements for
depositing all funds received from persons mailing subscriptions for or orders
to purchase Shares on an interest bearing basis as described in the Prospectus
until the Closing Date and satisfaction of all conditions precedent to the
release of the Holding Company's obligation to refund payments received from
persons subscribing for or ordering Shares in the Offerings, in accordance with
the
14
Plan as described in the Prospectus, or until refunds of such funds have been
made to the persons entitled thereto or withdrawal authorizations canceled in
accordance with the Plan and as described in the Prospectus. The Primary Parties
will maintain such records of all funds received to permit the funds of each
subscriber to be separately insured by the FDIC (to the maximum extent
allowable) and to enable the Primary Parties to make the appropriate refunds of
such funds in the event that such refunds are required to be made in accordance
with the Plan and as described in the Prospectus.
(p) The Holding Company will register as a unitary savings and
loan holding company under HOLA.
(q) The Primary Parties will take such actions and furnish such
information as are reasonably requested by the Agent in order for the Agent to
ensure compliance with the "Interpretation of the Board of Governors of the NASD
on Free Riding and Withholding."
(r) The Primary Parties will conduct their businesses in
compliance in all material respects with all applicable federal and state laws,
rules, regulations, decisions, directives and orders, including all decisions,
directives and orders of the Commission, the FDIC and the OTS.
(s) The Primary Parties shall comply with any and all terms,
conditions, requirements and provisions with respect to the Conversion and the
transactions contemplated thereby imposed by the OTS, the HOLA, the Commission,
the 1933 Act, the Regulations, the 1934 Act and the regulations promulgated by
the Commission pursuant to the 1934 Act to be complied with subsequent to the
Closing Date. The Holding Company will comply with all provisions of all
undertakings contained in the Registration Statement.
(t) The Primary Parties will not amend the Plan without notifying
the Agent prior thereto.
(u) The Holding Company shall provide the Agent with any
information necessary to allow the Agent to manage the allocation process in
order to permit the Holding Company to carry out the allocation of the Shares in
the event of an oversubscription, and such information shall be accurate and
reliable in all material respects.
(v) The Holding Company will not deliver the Shares until the
Primary Parties have satisfied or caused to be satisfied each condition set
forth in Section 10 hereof, unless such condition is waived in writing by the
Agent.
(w) Immediately upon completion of the sale by the Holding Company
of the Shares contemplated by the Plan and the Prospectus and the completion of
certain transactions necessary to implement the Plan, (i) all of the issued and
outstanding shares of capital stock of the Bank shall be owned by the Holding
Company, (ii) the Holding Company shall have no direct subsidiaries other than
the Bank, and (iii) the Conversion shall have been effected in accordance with
all applicable statutes, regulations, decisions and orders; and all terms,
conditions, requirements and provisions with respect to the Conversion (except
those that are conditions subsequent) imposed by the Commission, the OTS or any
other governmental agency, if any, shall have been complied with by the Primary
Parties in all material respects or
15
appropriate waivers shall have been obtained and all notice and waiting periods
shall have been satisfied, waived or elapsed.
(x) Prior to the Closing Date, the Plan shall have been approved
by the voting members of the MHC and the stockholders of the Mid-Tier Holding
Company in accordance with the Plan and the Conversion Regulations and the
applicable provisions, if any, of the MHC's charter and bylaws.
(y) On or before the Closing Date, the Primary Parties will have
used their best efforts to obtain approval for quotation of shares of the Common
Stock on the NASDAQ National Market System by the Closing Date and will use its
best efforts to maintain such quotation and will have completed all conditions
precedent to the Conversion specified in the Plan and the offer and sale of the
Shares will have been conducted in all material respects in accordance with the
Plan, the Conversion Regulations (except as modified or waived in writing by the
OTS) and with all other applicable laws, regulations, decisions and orders,
including all terms, conditions, requirements and provisions precedent to the
Conversion imposed upon any of the Primary Parties by the OTS, the Commission or
any other regulatory authority and in the manner described in the Prospectus.
(z) The Holding Company shall notify the Agent when funds shall
have been received for the minimum number of Shares set forth in the Prospectus.
SECTION 9. PAYMENT OF EXPENSES. Whether or not the Conversion is
completed or the sale and exchange of the Shares by the Holding Company is
consummated, the Primary Parties will pay for all expenses incident to the
performance of this Agreement, including without limitation: (a) the preparation
and filing of the Application and Registration Statement; (b) the preparation,
printing, filing, delivery and mailing of the Registration Statement, including
the Prospectus, and all documents related to the Offerings and proxy
solicitation; (c) all filing fees and expenses in connection with the
qualification or registration of the Shares for offer and sale by the Holding
Company or the Bank under the securities or "blue sky" laws, including without
limitation filing fees, reasonable legal fees and disbursements of counsel in
connection therewith, and in connection with the preparation of a blue sky law
survey; (d) the filing fees of the NASD related to the Agent's fairness filing
under NASD Rule 2710 and the application of the Holding Company to list its
shares; (e) fees and expenses related to the preparation of the independent
appraisal; (f) fees and expenses related to auditing and accounting services;
(g) expenses relating to advertising, temporary personnel, investor meetings and
stock information center; (h) transfer agent fees and costs of preparation and
distribution of stock certificates; and (i) Nasdaq listing fees. The Primary
Parties also agree to reimburse Agent for reasonable out-of-pocket expenses,
including legal fees and expenses, incurred by Agent in connection with the
services hereunder. Agent will not incur legal fees (excluding counsel's
out-of-pocket expenses not to exceed $10,000) in excess of $35,000 without the
approval of the Mid-Tier Holding Company. The Agent will not incur other
out-of-pocket expenses in excess of $25,000 without prior approval of the
Mid-Tier Holding Company. In the event that the Agent incurs any such expenses
on behalf of the Primary Parties, the Primary Parties will pay or reimburse the
Agent for such expenses regardless of whether the Conversion is successfully
completed, and such reimbursements will not be included in the expense
limitations set forth in the following paragraph. The Agent will not incur any
single expense of more than $3,000 pursuant to this
16
paragraph without the prior approval of MHC or the Bank. The Primary Parties
acknowledge, however, that such limitations may be increased by the mutual
consent of the Bank and Agent in the event of delay in the Offering requiring
the Agent to utilize a Syndicated Community Offering, a delay as a result of
circumstances requiring material additional work by Agent or its counsel or an
update of the financial information in tabular form contained in the Prospectus
for a period later than September 30, 2001. Not later than two days prior to the
Closing Date, the Agent will provide the Bank with a detailed accounting of all
reimbursable expenses to be paid at the Closing.
SECTION 10. CONDITIONS TO THE AGENT'S OBLIGATIONS. The obligations of the
Agent hereunder and the occurrence of the Closing and the Conversion are subject
to the condition that all representations and warranties of the Primary Parties
herein contained are, at and as of the commencement of the Offering and at and
as of the Closing Date, true and correct, the condition that the Primary Parties
shall have performed, in all material respects, all of their obligations
hereunder to be performed on or before such dates and to the following further
conditions:
(a) The Registration Statement shall have been declared effective
by the Commission, the Conversion Application and Holding Company Application
shall have been approved by the OTS and no stop order or other action suspending
the effectiveness of the Registration Statement shall have been issued under the
1933 Act or proceedings therefor initiated or threatened by the Commission or
any state authority and no order or other action suspending the authorization
for use of the Prospectus or the consummation of the Conversion shall have been
issued, or proceedings therefor initiated or threatened by the OTS, the
Commission, or any other governmental body.
(b) At the Closing Date, the Agent shall have received:
(1) The opinion, dated as of the Closing Date, of Luse
Lehman Gorman Pomerenk & Schick, and/or local counsel acceptable
to the Agent, in form and substance satisfactory to the Agent and
counsel for the Agent to the effect that:
(i) The Holding Company is a corporation duly organized
and validly existing and in good standing under the laws of
the State of Delaware, with corporate power and authority to
own its properties and to conduct its business as described
in the Prospectus, and is duly qualified to transact
business and is in good standing in Delaware and in each
other jurisdiction in which the conduct of its business
requires such qualification and except where the failure to
qualify would have a Material Adverse Effect.
(ii) On the date hereof, the Bank is a validly existing
federally-chartered stock savings bank, and upon
consummation of the Conversion, the Bank will continue to be
a validly existing federally-chartered stock savings bank,
with full power and authority to own its properties and to
conduct its business as described in the Prospectus and to
enter into this Agreement and perform its obligations
hereunder; the activities of the
17
Bank as described in the Prospectus are permitted by federal
law and the rules, regulations and practices of the FDIC and
the OTS; the issuance and sale of the capital stock of the
Bank to the Holding Company in the Conversion has been duly
and validly authorized by all necessary corporate action on
the part of the Holding Company and the Bank and, upon
payment therefor in accordance with the terms of the Plan,
will be validly issued, fully paid and nonassessable and
will be owned of record and beneficially by the Holding
Company, free and clear of any mortgage, pledge, lien,
encumbrance, claim or restriction. Similarly, any
subsidiaries of the Bank are validly existing corporations
in good standing in the jurisdiction of incorporation and
authorized under state and applicable federal law to conduct
the businesses in which they now engage.
(iii) The activities of the Mid-Tier Holding Company, the
MHC and the Bank, as described in the Prospectus, are
permitted for savings and loan holding companies, mutual
holding companies and a federally-chartered stock holding
company under applicable federal law. To the best of such
counsel's knowledge, each of the MHC, the Mid-Tier Holding
Company and the Bank has obtained all licenses, permits, and
other governmental authorizations that are material for the
conduct of its business, and all such licenses, permits and
other governmental authorization are in full force and
effect, and to the best of such counsel's knowledge the
Mid-Tier Holding Company and the Bank comply therewith in
all material respects.
(iv) The Bank is an insured depository institution under
the provisions of the Federal Deposit Insurance Act, as
amended, and to such counsel's knowledge, no proceedings for
the termination or revocation of the federal or state
deposit insurance of the Bank are pending or threatened.
(v) Upon consummation of the Conversion, (a) the
authorized, issued and outstanding capital stock of the
Holding Company will be within the range set forth in the
Prospectus under the caption "Capitalization," and no shares
of Common Stock have been or will be issued and outstanding
prior to the Closing Date (except for the shares issued upon
incorporation of the Holding Company to facilitate the
Conversion); (b) the shares to be subscribed for in the
Offerings will have been duly and validly authorized for
issuance, and when issued and delivered by the Holding
Company pursuant to the Plan against payment of the
consideration calculated as set forth in the Plan, will be
fully paid and nonassessable; and (c) the issuance of the
Shares is not subject to preemptive rights under the
charter, certificate of incorporation or bylaws of the
Holding Company, or arising or outstanding by operation of
law or, under any contract, indenture, agreement, instrument
or other document known to such counsel, except for the
subscription rights under the Plan.
18
(vi) The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action
on the part of the Primary Parties; and this Agreement
constitutes a valid, legal and binding obligation of each of
the Primary Parties, enforceable in accordance with its
terms, except as rights to indemnity and contribution
thereunder may be limited under applicable law, subject to
the qualification that (i) enforcement thereof may be
limited by bankruptcy, insolvency, moratorium,
reorganization or other laws (including the laws of
fraudulent conveyance) or judicial decisions affecting the
enforceability of creditors' rights generally, the rights of
creditors of savings banks or financial institutions, the
accounts of which are insured by the FDIC, and (ii)
enforcement thereof is subject to general equity principles
(regardless of whether such enforceability is considered in
a proceeding in equity or at law) and to the effect of
certain laws and judicial decisions upon the availability of
injunctive relief and enforceability of equitable remedies,
including the remedies of specific performance and
self-help.
(vii) The Plan has been duly adopted by the Board of
Directors of the MHC in the manner required by the
Conversion Regulations and the MHC's charter and bylaws.
(viii) The Conversion Application and the Holding Company
Application have been approved by the OTS, and subject to
the satisfaction of any conditions set forth in such
approvals, no further approval, registration, authorization,
consent or other order of any federal or state regulatory
agency, public board or body is required in connection with
the execution and delivery of this Agreement, the offer,
sale and issuance of the Shares 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.
(ix) The Registration Statement has become effective
under the 1933 Act and to such counsel's knowledge, no stop
order suspending the effectiveness of the Registration
Statement has been issued, or proceedings for that purpose
have been instituted or threatened by the Commission.
(x) The terms and provisions of the shares of Common
Stock conform to the description thereof contained in the
Registration Statement and the Prospectus, and the forms of
certificates proposed to be used to evidence the shares of
Common Stock are in due and proper form.
(xi) A the time the Conversion Application was approved,
the Conversion Application (as amended or supplemented),
complied as to form in all material respects with the
requirements of the Conversion Regulations and all
applicable laws, rules and regulations and decisions
19
and orders of the OTS, except as modified or waived in
writing by the OTS (other than the financial statements,
notes to financial statements, financial tables and other
financial and statistical data included therein and the
appraisal valuation and the business plan as to which
counsel need express no opinion). To such counsel's
knowledge, no person has sought to obtain regulatory or
judicial review of the final action of the OTS in approving
the Applications.
(xii) At the time that the Registration Statement became
effective and as of the Closing Date the Registration
Statement, including the Prospectus (as amended or
supplemented) (other than the financial statements, notes to
financial statements, financial tables or other financial
and statistical data included therein and the appraisal
valuation and the business plan as to which counsel need
express no opinion), complied as to form in all material
respects with the requirements of the 1933 Act and the rules
and regulations promulgated thereunder.
(xiii) There are no legal or governmental proceedings
pending, or, to such counsel's knowledge, threatened (i)
asserting the invalidity of this Agreement or (ii) seeking
to prevent the Conversion or the offer, sale or issuance of
the Shares.
(xiv) The information in the Prospectus under the
captions "Regulation," "Taxation," "Restrictions on
Acquisition of Wayne Savings Bancshares, Inc.," "Description
of Capital Stock of Wayne Savings Bancshares, Inc.," and
"The Conversion," to the extent that such information
constitutes matters of law, summaries of legal matters,
documents or proceedings, or legal conclusions, has been
reviewed by such counsel and is accurate in all material
respects.
(xv) None of the Primary Parties are required to be
registered as an investment company under the Investment
Company Act of 1940.
(xvi) None of the Primary Parties is in violation of its
Certificate of Incorporation or its charter, as the case may
be, or its bylaws or, to the best of such counsel's
knowledge, any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument filed as an
exhibit to, or incorporated by reference in, the
Registration Statement, which violation would have a
Material Adverse Effect. In addition, the execution and
delivery of and performance under this Agreement by the
Primary Parties, the incurrence of the obligations set forth
herein and the consummation of the transactions contemplated
herein will not result in (i) any violation of the
provisions of the articles of incorporation or charter, as
the case may be, or the bylaws of any of the Primary
Parties, (ii) any violation of any applicable law, act,
regulation, or to such counsel's knowledge, order or court
order, writ, injunction or decree, and (iii) any violation
of any
20
obligation, agreement, covenant or condition contained in
any contract, indenture, mortgage, loan agreement, note,
lease or other instrument filed as an exhibit to, or
incorporated by reference in, the Registration Statement or
otherwise known by such counsel, which violation would have
a Material Adverse Effect.
The Agent's counsel may rely for purposes of its own opinion the
opinion(s) of Luse Lehman Gorman Pomerenk & Schick and/or local counsel, whose
opinion(s) shall expressly authorize such reliance. The opinion may be limited
to matters governed by the laws of the United States and the corporate laws of
the State of Delaware and, in the case of local counsel, the State of Ohio. In
rendering such opinion, such counsel may rely (A) as to matters involving the
application of laws of any jurisdiction other than the United States, to the
extent such counsel deems proper and specified in such opinion, upon the opinion
of counsel reasonably acceptable to the Agent, as long as such other opinion
indicates that the Agent may rely on the opinion, and (B) as to matters of fact,
to the extent such counsel deems proper, on certificates of responsible officers
of the Primary Parties and public officials; provided copies of any such
opinion(s) or certificates of public officials are delivered to Agent together
with the opinion to be rendered hereunder by special counsel to the Primary
Parties. In rendering such opinion, all statements contained therein "to our
knowledge" or "to our attention" means the actual knowledge, following
reasonable investigation, of the attorneys who have worked on the transactions
contemplated herein. The opinion of such counsel for the Primary Parties shall
state that it has no reason to believe that the Agent is not reasonably
justified in relying thereon.
(2) The letter of Luse Lehman Gorman Pomerenk & Schick
shall also state that during the preparation of the Registration
Statement and the Prospectus, Luse Lehman Gorman Pomerenk &
Schick participated in conferences with certain officers of and
other representatives of the Primary Parties, counsel to the
Agent, representatives of the independent public accountants for
the Primary Parties and representatives of the Agent at which the
contents of the Registration Statement and the Prospectus and
related matters were discussed and has considered the matters
required to be stated therein and the statements contained
therein and, although (without limiting the opinions provided
pursuant to Section 10(b)(1)), Luse Lehman Gorman Pomerenk &
Schick has not independently verified the accuracy, completeness
or fairness of the statements contained in the Registration
Statement and Prospectus, on the basis of the foregoing, nothing
has come to the attention of Luse Lehman Gorman Pomerenk & Schick
that caused Luse Lehman Gorman Pomerenk & Schick to believe that
the Registration Statement at the time it was declared effective
by the Commission and as of the date of such letter, contained or
contains any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or
necessary to make the statements therein not misleading (it being
understood that counsel need express no comment or opinion with
respect to statements, notes to financial statements, schedules
and other financial and statistical data included, or statistical
or appraisal methodology employed, in the Registration Statement
or Prospectus, the appraisal valuation or the business plan).
(3) The favorable opinion, dated as of the Closing Date,
of Klehr,
21
Harrison, Harvey, Branzburg & Ellers LLP, counsel for the Agent,
with respect to such matters as the Agent may reasonably require;
such opinion may rely, as to matters of fact, upon certificates
of officers and directors of the Primary Parties delivered
pursuant hereto or as such counsel may reasonably request.
(4) A Blue Sky Memorandum from Luse Lehman Gorman Pomerenk
& Schick and/or local counsel relating to the offering, including
Agent's participation therein, and should be furnished to Agent
with a copy thereof addressed to Agent or upon which Luse Lehman
Gorman Pomerenk & Schick and/or local counsel shall state Agent
may rely. The Blue Sky Memorandum will relate to the necessity of
obtaining or confirming exemptions, qualifications or the
registration of the common stock under applicable state
securities law.
(c) Concurrently with the execution of this Agreement, the
Agent shall receive a letter from Grant Thornton LLP, dated the date hereof and
addressed to the Agent, such letter (i) confirming that Grant Thornton LLP is a
firm of independent public accountants within the meaning of the 1933 Act and
the regulations promulgated thereunder, and stating in effect that in Grant
Thornton LLP's opinion the financial statements of the Mid-Tier Holding Company
included in the Prospectus comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the 1934 Act and the
related rules and regulations of the Commission thereunder; (ii) stating in
effect that, on the basis of certain agreed upon procedures (but not an audit
examination in accordance with generally accepted auditing standards) consisting
of a review (in accordance with Statement of Auditing Standards No. 71) of the
latest available unaudited interim financial statements of the Mid-Tier Holding
Company prepared by the Mid-Tier Holding Company, a reading of the minutes of
the meetings of the Board of Directors, Executive Committee and stockholders and
Audit Committee of the Mid-Tier Holding Company and the Bank and consultations
with officers of the Mid-Tier Holding Company and the Bank responsible for
financial and accounting matters, nothing came to their attention which caused
them to believe that: (A) such unaudited financial statements are not in
conformity with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements included
in the Prospectus; or (B) during the period from the date of the latest audited
consolidated financial statements included in the Prospectus to a specified date
not more than five business days prior to the date of the Prospectus, there was
any material increase in borrowings (defined as securities sold under agreements
to repurchase and any other form of debt other than deposits), or non-performing
loans or decrease in the deposits or loan allowance, total assets, stockholders
equity or changes in common stock outstanding (other than for stock option
plans) 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, non-interest income or net interest income,
provision for loan losses or increase in non-interest expense of the Bank for
the period commencing immediately after the period covered by the latest audited
income statement included in the Prospectus and ended not more than five
business days prior to the date of the Prospectus as compared to the
corresponding period in the preceding year; and (iii) stating that, in addition
to the audit examination referred to in its opinion included in the Prospectus
and the performance of the procedures referred to in clause (ii) of this
subsection (c), they have compared with the general accounting records of the
Mid-Tier Holding Company, which are subject to the internal controls of the
accounting system of the Bank and other data prepared by
22
the Primary Parties from accounting records, to the extent specified in such
letter, such amounts and/or percentages set forth in the Prospectus as the Agent
may reasonably request, and they have found such amounts and percentages to be
in agreement therewith (subject to rounding).
(d) At the Closing Date, the Agent shall receive a letter from
Grant Thornton LLP dated the Closing Date, addressed to the Agent, confirming
the statements made by its letter delivered by it pursuant to subsection (c) of
this Section 10, the "specified date" referred to in clause (ii)(B) thereof to
be a date specified in such letter, which shall not be more than one business
day prior to the Closing Date.
(e) At the Closing Date, counsel to the Agent shall have been
furnished with such documents and opinions as counsel for the Agent may require
for the purpose of enabling them to advise the Agent with respect to the
issuance and sale of the Common Stock as herein contemplated and related
proceedings, or in order to evidence the accuracy of any of the representations
and warranties, or the fulfillment of any of the conditions herein contained.
(f) At the Closing Date, the Agent shall receive a certificate of
the Chief Executive Officer and Chief Financial Officer of each of the Primary
Parties, dated the Closing Date, to the effect that: (i) they have examined the
Registration Statement and at the time the Registration Statement became
authorized for final use, the Prospectus did not contain an untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein not misleading; (ii) there has not been, since the respective
dates as of which information is given in the Registration Statement, any
Material Adverse Effect otherwise than as set forth or contemplated in the
Registration Statement; (iii) the representations and warranties contained in
Section 6 of this Agreement are true and correct with the same force and effect
as though made at and as of the Closing Date; (iv) the Primary Parties have
complied in all material respects with all material agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to the Closing
Date including the conditions contained in this Section 10; (v) no stop order
has been issued or, to the best of their knowledge, is threatened, by the
Commission or any other governmental body; (vi) no order suspending the
Offering, the Conversion, the acquisition of all of the shares of the Bank by
the Holding Company, the transactions required under the Plan to consummate the
conversion or the effectiveness of the Prospectus has been issued and to the
best of their knowledge, no proceedings for any such purpose have been initiated
or threatened by the OTS, the Commission, or any other federal or state
authority; (vii) to the best of their knowledge, no person has sought to obtain
regulatory or judicial review of the action of the OTS in approving the Plan or
to enjoin the Conversion.
(g) At the Closing Date, the Agent shall receive a letter from RP
Financial, LC, dated as of the Closing Date, (i) confirming that said firm is
independent of the Primary Parties and is experienced and expert in the area of
corporate appraisals, (ii) stating in effect that the Appraisal complies in all
material respects with the applicable requirements of the Conversion
Regulations, and (iii) further stating that its opinion of the aggregate pro
forma market value of the Primary Parties, as converted, expressed in the
appraisal as most recently updated, remains in effect.
(h) None of the Primary Parties shall have sustained, since the
date of the latest financial statements included in the Registration Statement
and Prospectus, any material
23
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 in
the Registration Statement and the Prospectus, and since the respective dates as
of which information is given in the Registration Statement and the Prospectus,
there shall not have been any Material Adverse Effect, otherwise than as set
forth or contemplated in the Registration Statement and the Prospectus, the
effect of which, in any such case described above, is in the Agent's reasonable
judgment sufficiently material and adverse as to make it impracticable or
inadvisable to proceed with the Offering or the delivery of the Shares on the
terms and in the manner contemplated in the Prospectus.
(i) Prior to and at the Closing Date, in the reasonable opinion of
the Agent there shall have been no material adverse change in the financial
condition or in the earnings, business affairs or prospects of any of the
Primary Parties independently, or the Primary Parties taken as a whole, from and
as of the latest dates as of which such condition is set forth in the
Prospectus, except as referred to therein.
(j) At or prior to the Closing Date, the Agent shall receive (i)a
copy of the Conversion Application and a copy of the letter from the OTS
approving the Conversion Application, (ii) a copy of the order from the
Commission declaring the Registration Statement effective, (iii) a certified
copy of the certificate of incorporation of the Holding Company, (iv) a copy of
the letter from the OTS approving the Holding Company Application, (v) a
certificate from the FDIC evidencing the Bank's insurance of accounts, and (vi)
any other documents that Agent shall reasonably request.
(k) Subsequent to the date hereof, there shall not have occurred
any of the following: (i) a suspension or limitation in trading in securities
generally on the New York Stock Exchange or American Stock Exchange or in the
over-the-counter market, or quotations halted generally on the Nasdaq Stock
Market, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices for securities have been required by either of such exchanges
or the NASD or by order of the Commission or any other governmental authority
other than temporary trading halts or limitation (A) imposed as a result of
intraday changes in the Dow Jones Industrial Average, and (B) lasting no longer
than until the regularly scheduled commencement of trading on the next
succeeding business-day; (ii) a general moratorium on the operations of
federally-insured financial institutions or a general moratorium on the
withdrawal of deposits from commercial banks or other federally-insured
financial institutions declared by either federal or state authorities; or (iii)
there shall not have occurred any material adverse change in the financial
markets in the United States or elsewhere or any outbreak of hostilities or
escalation thereof or other calamity or crisis the effect of which, in the
judgment of the Agent, is so material and adverse as to make it impracticable to
market the Shares or to enforce contracts, including subscriptions or orders,
for the sale of the Shares.
(l) All such opinions, certificates, letters and documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to the Agent and to counsel for the Agent.
Any certificate signed by an officer of the Mid-Tier Holding Company, the
Holding Company or the Bank and delivered to the Agent or to counsel for the
Agent shall be deemed a representation and warranty by the Mid-Tier Holding
24
Company, the Holding Company or the Bank, as the case may be, to the Agent as to
the statements made therein.
SECTION 11. INDEMNIFICATION.
(a) The Primary Parties jointly and severally agree to indemnify
and hold harmless the Agent, its officers, directors, agents, attorneys,
servants and employees and each person, if any, who controls the Agent within
the meaning of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act,
against any and all loss, liability, claim, damage or expense whatsoever
(including but not limited to settlement expenses, subject to the limitation set
forth in the last sentence of subsection (c) below), joint or several, that the
Agent or any of such officers, directors, agents, attorneys, servants, employees
and controlling Persons (collectively, the "Related Persons") may suffer or to
which the Agent or the Related Persons may become subject under all applicable
federal and state laws or otherwise, and to promptly reimburse the Agent and any
Related Persons upon written demand for any reasonable expenses (including
reasonable fees and disbursements of counsel and Agent's time spent according to
normal hourly rates) incurred by the Agent or any Related Persons in connection
with investigating, preparing or defending any actions, proceedings or claims
(whether commenced or threatened) to the extent such losses, claims, damages,
liabilities or actions: (i) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment or supplement thereto), the Prospectus (or any
amendment or supplement thereto), the Applications, or other instrument or
document of the Primary Parties or based upon written information supplied by
any of the Primary Parties filed in any state or jurisdiction to register or
qualify any or all of the Shares under the securities laws thereof
(collectively, the "Blue Sky Applications"), or any application or other
document, advertisement, or communication ("Sales Information") prepared, made
or executed by or on behalf of any of the Primary Parties with its consent or
based upon information furnished by or on behalf of any of the Primary Parties,
in order to qualify or register the Shares under the securities laws thereof,
(ii) arise out of or are based upon the omission or alleged omission to state in
any of the foregoing documents or information, a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; (iii) arise from any
theory of liability whatsoever relating to or arising from or based upon the
Registration Statement (or any amendment or supplement thereto), the Prospectus
(or any amendment or supplement thereto), the Applications, any Blue Sky
Applications or Sales Information or other documentation distributed in
connection with the Offerings; or (iv) result from any claims made with respect
to the accuracy, reliability and completeness of the records of Eligible Account
Holders and Supplemental Eligible Account Holders or Other Members or for any
denial or reduction of a subscription or order to purchase Common Stock, whether
as a result of a properly calculated allocation pursuant to the Plan or
otherwise, based upon such records; provided, however, that no indemnification
is required under this subsection (a) to the extent such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
material statements or alleged untrue material statements in, or material
omission or alleged material omission from, the Registration Statement (or any
amendment or supplement thereto) or the Prospectus (or any amendment or
supplement thereto), the Applications, the Blue Sky Applications or Sales
Information or other documentation distributed in connection with the Conversion
made in reliance upon and in conformity with information furnished to the
Primary Parties by the Agent or its representatives (including counsel) with
respect to the Agent expressly
25
for use in the Registration Statement (or any amendment or supplement thereto)
or Prospectus (or any amendment or supplement thereto) under the caption "The
Conversion -- Plan of Distribution; Selling Agent Compensation" except for
information derived from the Prospectus. Provided further, that the Primary
Parties will not be responsible for any loss, liability, claim, damage or
expense to the extent a court of competent jurisdiction finds they result
primarily from material oral misstatements by the Agent to a purchaser of Shares
which are not based upon information in the Registration Statement or
Prospectus, or from actions taken or omitted to be taken by the Agent in bad
faith or from the Agent's gross negligence or willful misconduct.
(b) The Agent agrees to indemnify and hold harmless the Primary
Parties, their directors and officers, agents, servants and employees and each
person, if any, who controls any of the Primary Parties within the meaning of
Section 15 of the 1933 Act or Section 20(a) of the 1934 Act against any and all
loss, liability, claim, damage or expense whatsoever (including but not limited
to settlement expenses, subject to the limitation set forth in the last sentence
of subsection (c) below), joint or several, which they, or any of them, may
suffer or to which they, or any of them, may become subject under all applicable
federal and state laws or otherwise, and to promptly reimburse the Primary
Parties and any such persons upon written demand for any reasonable expenses
(including out-of-pocket expenses, fees and disbursements of counsel) incurred
by them in connection with investigating, preparing or defending any actions,
proceedings or claims (whether commenced or threatened) to the extent such
losses, claims, damages, liabilities or actions arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment or supplement thereto), the
Applications or any Blue Sky Applications or Sales Information or are based upon
the omission or alleged omission to state in any of the foregoing documents a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that the Agent's obligations under this Section
11(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 Applications, Registration Statement (or any
amendment or supplement thereto) or the Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with information
furnished to the Primary Parties by the Agent or its representatives (including
counsel) expressly for use under the caption "The Conversion - Plan of
Distribution; Selling Agent Compensation."
(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 11,
Section 12 or otherwise, unless the failure to give such notice promptly results
in material prejudice to the indemnifying party. An indemnifying party may
participate at its own expense in the defense of such action. In addition, if it
so elects within a reasonable time after receipt of such notice, an indemnifying
party, jointly with any other indemnifying parties receiving such notice, may
assume the defense of such action with counsel chosen by it reasonably
acceptable to the indemnified parties that are defendants in such action, unless
such indemnified parties reasonably object to such assumption on the ground that
there may be legal defenses available to them that are different from or in
addition to those available to such indemnifying party. If an indemnifying party
assumes the defense of such action, the
26
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 (unless an indemnified party or parties shall
have reasonably concluded that there may be defenses available to it or them
which are different from or in addition to those of other indemnified parties)
for all indemnified parties in connection with any one action, proceeding or
claim or separate but similar or related actions, proceedings or claims in the
same jurisdiction arising out of the same general allegations or circumstances.
No indemnifying party, shall be liable for any settlement of any action,
proceeding or suit, which settlement is effected without its prior written
consent. The Primary Parties shall not, without the written consent of the
Agent, settle or compromise any claim against them based upon circumstances
giving rise to an indemnification claim against the Primary Parties hereunder
unless such settlement or compromise provides that the Agent and the other
indemnified parties shall be unconditionally and irrevocably released from all
liability in respect to such claim.
(d) The agreements contained in this Section 11 and in Section 12
hereof and the representations and warranties of the Primary Parties set forth
in this Agreement shall remain operative and in full force and effect regardless
of (i) any investigation made by or on behalf of the Agent or its officers,
directors, controlling persons, agents, attorneys, servants or employees or by
or on behalf of any of the Primary Parties or any officers, directors,
controlling persons, agents, attorneys , servants or employees of any of the
Primary Parties; (ii) delivery of and payment hereunder for the Shares; or (iii)
any termination of this Agreement. Notwithstanding the prior sentence, Sections
11 and 12 hereof are subject to and limited by Section 23A of the Federal
Reserve Act, as applicable.
SECTION 12. CONTRIBUTION.
(a) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 11 is due in
accordance with its terms but is for any found in a final judgment by a court to
be unavailable from the Primary Parties or the Agent, the Primary Parties and
the Agent shall contribute to the aggregate losses, claims, damages and
liabilities of the nature contemplated by such indemnification (including any
investigation, legal and other expenses incurred in connection therewith and any
amount paid in settlement of any action, suit, or proceeding of any claims
asserted, but after deducting any contribution received by the Primary Parties
or the Agent from persons other than the other party thereto, who may also be
liable for contribution) in such proportion so that (i) the Agent is responsible
for that portion represented by the percentage that the fees paid to the Agent
pursuant to Section 4 of this Agreement (not including expenses) ("Agent's
Fees"), less any portion of Agent's Fees paid by Agent to Assisting Brokers,
bear to the total proceeds received by the Primary Parties from the sale of the
Shares in the Offering, net of all expenses of the Offering, except Agent's fees
and (ii) the Primary Parties shall be responsible for the balance. If, however,
the allocation provided above is not permitted by applicable law or if the
indemnified party failed to give the notice required under Section 11 above,
then each indemnifying party shall contribute to such amount paid or payable to
such indemnified party in such proportion as is appropriate to reflect not only
such relative fault of the Primary Parties on the one hand and the Agent on the
other in connection with the statements or omissions which resulted in such
losses,
27
claims, damages or liabilities (or actions, proceedings or claims in respect
thereof), but also the relative benefits received by the Primary Parties on the
one hand and the Agent on the other from the Offering, as well as any other
relevant equitable considerations. The relative benefits received by the Primary
Parties on the one hand and the Agent on the other hand shall be deemed to be in
the same proportion as the total proceeds from the Offering, except Agent's
fees, net of all expenses of the Offering, received by the Primary Parties bear,
with respect to the Agent, to the total fees (not including expenses) received
by the Agent less the portion of such fees paid by the Agent to Assisting
Brokers. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Primary Parties on the one hand or the Agent on the other and
the parties relative intent, good faith, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Primary
Parties and the Agent agree that it would not be just and equitable if
contribution pursuant to this Section 12 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 12. 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 12 shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action, proceeding or claim. It is expressly agreed that
the Agent shall not be liable for any loss, liability, claim, damage or expense
or be required to contribute any amount which in the aggregate exceeds the
amount paid (excluding reimbursable expenses) to the Agent under this Agreement
less the portion of such fees paid by the Agent to Assisting Brokers. It is
understood and agreed that the above-stated limitation on the Agent's liability
is essential to the Agent and that the Agent would not have entered into this
Agreement if such limitation had not been agreed to by the parties to this
Agreement. No person found guilty of any fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
with respect to any loss or liability arising from such misrepresentation from
any person who was not found guilty of such fraudulent misrepresentation. The
duties, obligations and liabilities of the Primary Parties and the Agent under
this Section 12 and under Section 11 shall be in addition to any duties,
obligations and liabilities which the Primary Parties and the Agent may
otherwise have. For purposes of this Section 12, each of the Agent's and the
Primary Parties' officers, directors and, controlling persons within the meaning
of the 1933 Act and the 1934 Act shall have the same rights to contribution as
the Primary Parties and the Agent. Any party entitled to contribution, promptly
after receipt of notice of commencement of any action, suit, claim or proceeding
against such party in respect of which a claim for contribution may be made
against another party under this Section 12, will notify such party from whom
contribution may be sought, but the omission to so notify such party shall not
relieve the party from whom contribution may be sought from any other obligation
it may have hereunder or otherwise than under this Section 12.
SECTION 13. SURVIVAL.
(a) All representations, warranties and indemnities and other
statements contained in this Agreement (and in Paragraph 11 of the Letter
Agreement), or contained in certificates of officers of the Primary Parties or
the Agent submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any termination or cancellation of this Agreement or
any investigation made by or on behalf of the Agent or its controlling persons,
or
28
by or on behalf of the Primary Parties and shall survive the issuance of the
Shares, and any legal representative, successor or assign of the Agent, any of
the Primary Parties, and any indemnified person shall be entitled to the benefit
of the respective agreements, indemnities, warranties and representations.
(b) The provisions of Paragraph 10 of the Letter Agreement,
"Availability of `Stars' Program," shall survive the issuance of the Shares (but
not any termination or cancellation of this Agreement) for a period of one (1)
year, and any legal representative, successor or assign of the Agent, and any of
the Primary Parties shall be entitled during such period to the benefit of the
agreements contained therein.
SECTION 14. TERMINATION. Agent may terminate this Agreement by giving
the notice indicated below in this Section at any time after this Agreement
becomes effective as follows:
(a) In the event the Holding Company fails to consummate the sale
of the minimum number of the Shares prior to January 14, 2002, in accordance
with the provisions of the Plan or as required by the Conversion Regulations and
applicable law, this Agreement shall terminate and the Primary Parties shall
refund to each person who has subscribed for or ordered any of the Shares the
full amount which it may have received from such person, together with interest
in accordance with Section 3 hereof and any such termination shall be without
liability of any party to any other party except as otherwise provided in
Sections 3, 4, 9, 11 and 12 hereof and Paragraph 11 of the Letter Agreement,
"Indemnification."
(b) If any of the conditions specified in Section 10 hereof shall
not have been fulfilled when and as required by this Agreement, or by January
14, 2002, or waived in writing by the Agent, this Agreement and all of the
Agent's obligations hereunder may be canceled by the Agent by notifying the Bank
of such cancellation in writing 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 3, 4, 9, 11 and 12 hereof and Paragraph
11 of the Letter Agreement, "Indemnification."
(c) If Agent elects to terminate this Agreement as provided in
this Section, the Mid-Tier Holding Company and the MHC shall be notified by the
Agent as provided in Section 15 hereof.
(d) If this Agreement is terminated in accordance with the
provisions of this Agreement, the Primary Parties shall pay the Agent the
$50,000 advisory and management fee (less any portion previously paid) pursuant
to Section 4 and will reimburse the Agent for its reasonable expenses pursuant
to Section 9, including without limitation, communication, legal and travel
expenses.
SECTION 15. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to Agent shall be
directed to Ryan, Beck & Co. LLC, 401 City Avenue, Suite 902, Bala Cynwyd, PA
19004, Attention: Ms. Michelle Darcey, Director (with a copy to Klehr, Harrison,
Harvey, Branzburg & Ellers LLP, 260 South Broad Street, Philadelphia,
Pennsylvania 19102, Attention: Stephen T. Burdumy, Esq.); notices to the Primary
29
Parties shall be directed to Wayne Savings Bancshares, Inc., 151 North Market
Street, P.O. Box 858, Wooster, Ohio 44691, Attention: Charles F. Finn, President
and Chief Executive Officer (with a copy to Luse Lehman Gorman Pomerenk &
Schick, 5535 Wisconsin Avenue, N.W., Washington, D.C. 20005, Attention: Kenneth
R. Lehman, Esq.)
SECTION 16. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the Agent and the Primary Parties, and their respective successors.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person, firm or corporation, other than the parties hereto
and their respective successors and the controlling persons and officers and
directors referred to in Sections 11 and 12 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provisions herein contained. It is understood
and agreed that this Agreement is the exclusive agreement among the parties,
supersedes any prior Agreement among the parties and may not be varied except by
a writing signed by all parties, except for Paragraphs 4, 10, 11 and 17 of the
Letter Agreement, which are not hereby superseded.
SECTION 17. PARTIAL INVALIDITY. In the event that any term, provision or
covenant herein or the application thereof to any circumstances or situation
shall be invalid or unenforceable, in whole or in part, the remainder hereof and
the application of said term, provision or covenant to any other circumstance or
situation shall not be affected thereby, and each term, provision or covenant
herein shall be valid and enforceable to the full extent permitted by law.
SECTION 18. CONSTRUCTION AND WAIVER OF JURY TRIAL. This Agreement shall be
construed in accordance with the laws of the State of New York and the parties
agree to waive any rights to a jury trial.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
30
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
you and us in accordance with its terms.
Very truly yours,
WAYNE SAVINGS BANCSHARES, M.H.C.
By: /s/ Charles F. Finn
-----------------------------------------
Charles F. Finn
President and Chief Executive Officer
WAYNE SAVINGS BANCSHARES, INC.
By: /s/ Charles F. Finn
------------------------------------------
Charles F. Finn
President and Chief Executive Officer
WAYNE SAVINGS BANCSHARES II, INC.
By: /s/ Charles F. Finn
-----------------------------------------
Charles F. Finn
President and Chief Executive Officer
WAYNE SAVINGS COMMUNITY BANK
By: /s/ Charles F. Finn
----------------------------------------
Charles F. Finn
President and Chief Executive Officer
The foregoing Agency Agreement is hereby confirmed and accepted as of the date
first set forth above.
RYAN, BECK & CO., LLC
By: /s/ Michelle Darcey
--------------------------
Michelle Darcey
Director