<PAGE> 1
EXHIBIT 1
OHIO LEGACY CORP
up to 1,200,000 Shares of Common Stock with up to 240,000 attached Warrants
Subscription Price $10.00 Per Share
PLACEMENT AGENT AGREEMENT
_________ __, 2000
McDonald Investments Inc.
1700 McDonald Investments Center
800 Superior Avenue
Cleveland, OH 44114
Ladies and Gentlemen:
Ohio Legacy Corp, an Ohio corporation (the "Company"), and Ohio Legacy
Bank, a national banking association in organization (the "Bank") hereby confirm
their agreement ("Agreement") with McDonald Investments Inc. ("McDonald"or
"Agent"), as follows:
SECTION 1. THE OFFERING. The Company is offering a minimum of 900,000
and up to a maximum of 1,200,000 shares of common stock, no par value ("Shares"
or "Common Stock"), with attached warrants (one warrant for each five Shares
purchased), being a minimum of 180,000 and a maximum of 240,000 warrants
(collectively the Shares and attached warrants being the "Units"), in connection
with the Company's initial public offering (the "Offering") and capitalization
of the Bank, a de novo, Federal Deposit Insurance Corporation ("FDIC") insured
national bank. The Company is offering the Units through approved broker-dealer
firms which are members of the National Association of Securities Dealers, Inc.
("NASD").
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form SB-2 (File No. 333-38328) (the
"Registration Statement") containing a prospectus relating to the Offering for
the registration of the Units under the Securities Act of 1933 ("1933 Act"), and
has filed such amendments thereof and such amended prospectuses as may have been
required to the date hereof. The term "Registration Statement" shall include any
documents incorporated by reference therein and all financial schedules and
exhibits thereto, as amended, including post-effective amendments. The
prospectus, as amended, on file with the Commission at the time the Registration
Statement initially became effective is hereinafter called the "Prospectus,"
except that if any Prospectus is filed by the Company pursuant to Rule 424(b) or
(c) of the rules and regulations of the Commission under the 1933 Act differing
from the prospectus on file at the time the Registration Statement initially
becomes effective, the term "Prospectus" shall refer to the prospectus filed
pursuant to Rule 424(b) or (c) from and after the time said prospectus is filed
with the Commission.
-1-
<PAGE> 2
The Bank has filed with the Office of the Comptroller of the Currency
("OCC") for approval to form a de novo national banking association, and with
the FDIC for insurance of accounts, and has filed amendments thereto as required
by the OCC and the FDIC (as so amended, the "Applications"). The Applications
have been approved by the OCC and the FDIC, subject to certain conditions
contained therein. The Company has filed with the Board of Governors of the
Federal Reserve System (the "FRB") its application (the "Holding Company
Application") to acquire the Bank under the Bank Holding Company Act, as
amended, and the regulations promulgated thereunder ("BHCA"). The Holding
Company Application has been approved, subject to certain conditions contained
therein. The OCC, FDIC and Federal Reserve being hereafter referred to
collectively as the "Regulatory Agencies."
SECTION 2. RETENTION OF AGENT; COMPENSATION; SALE AND DELIVERY
OF THE UNITS. Subject to the terms and conditions herein set forth, the Company
and the Bank hereby appoint the Agent as their exclusive financial advisor and
placement agent (i) to utilize its best efforts to solicit subscriptions for
Units and to advise and assist the Company and the Bank with respect to the
Company's sale of the Units in the Offering, and (ii) to manage the sale of
Units through a group of selected broker dealers, if necessary.
On the basis of the representations and warranties and subject to the
terms and conditions of this Agreement, the Agent accepts such appointment and
agrees to consult with and advise the Company and the Bank as to matters set
forth in the letter agreement dated May 22, 2000, between the Bank, the Company
and McDonald ("Letter Agreement"), a copy of which is attached hereto as Exhibit
A. It is acknowledged by the Company and the Bank that the Agent shall not be
obligated to purchase any Units and shall not be obligated to take any action
which is inconsistent with any applicable law, regulation, decision or order.
Subscriptions will be offered as described in the Prospectus. Except as
otherwise provided in this Agreement, the appointment of the Agent will
terminate upon completion of the Offering.
In the event the Company is unable to sell a minimum of 900,000 Units
within the period herein provided, this Agreement shall terminate and the
Company shall cause the Escrow Agent (as defined below) to refund to any persons
who have subscribed for any of the Units the full amount it received from them,
plus interest, as set forth in the Prospectus; and none of the parties to this
Agreement shall have any obligation to the other parties hereunder, except as
set forth in this Section 2 and in Sections 6, 8 and 9 hereof.
In the event the Offering is terminated and the Closing does not
occur, then in no event shall the Agent receive the fees set forth in
subparagraphs (a) and (b) below. Provided, however, that regardless of whether
or not the Closing occurs, the Agent shall be entitled to reimbursement of its
actual accountable out-of-pocket expenses, as set forth in subparagraph (d)
below.
If all conditions precedent to the consummation of the Offering are
satisfied, the Company agrees to issue, or have issued, the Units sold in the
Offering and to release for delivery certificates for such Units on the Closing
Date (as hereinafter defined) against payment to the Company by any means
authorized pursuant hereto; provided, however, that no funds shall be released
to the
-2-
<PAGE> 3
Company until the conditions specified in Section 7A hereof shall have been
complied with to the reasonable satisfaction of the Agent and its counsel. The
release of Units against payment therefor shall be made on a date and at a place
acceptable to the Company, the Bank and the Agent. Certificates for Units shall
be delivered directly to the purchasers in accordance with their directions. The
date upon which the Company shall release or deliver the Units sold in the
Offering, in accordance with the terms herein, is called the "Closing Date."
The Agent shall receive the following compensation for its services
hereunder:
(a) A management fee of $200,000, provided that an aggregate dollar
amount of Units is sold of at least $9,500,000 (before expenses).
(b) A commission equal to four percent (4.0%) of the aggregate dollar
amount of Units sold in excess of $4,000,000 and not to exceed $7,000,000; and
seven percent (7.0%) of the aggregate dollar amount of Units sold in excess of
$7,000,000 and not to exceed $9,500,000; and seven and one-half percent (7.5%)
of the aggregate dollar amount of Units sold in excess of $9,500,000 and not to
exceed $12,000,000.
(c) In the event that a syndicate of NASD member firms under selected
dealer's agreements are used to assist in the Offering, the commission for the
sale of Units pursuant to those agreements shall not exceed seven and one-half
percent (7.5%) of the aggregate actual purchase price of the Units sold through
such syndicate. Agent will pass on to such selected broker-dealers who assist in
the Offering an amount competitive with gross underwriting discounts charged at
such time for comparable amounts of stock sold at a comparable price per share
in a similar market environment. Fees with respect to purchases effected through
selected broker-dealers other than Agent's shall be transmitted by Agent to such
selected broker-dealer. The decision to utilize selected broker-dealers will be
made by the Agent upon consultation with the Company with regard to the
Company's stock distribution strategy.
(d) Reimbursement of Agent's out-of-pocket expenses incurred (which
includes but is not limited to the fairness filing fees and legal expenses). The
Agent's reimbursable out-of-pocket expenses will not exceed $20,000 without the
prior consent of the Company. Agent shall be reimbursed for expenses, regardless
of whether the Offering is successfully completed. Any management fee,
out-of-pocket expenses or commissions payable hereunder, shall be paid in next
day funds on the earlier of the Closing Date or a determination by the Company
to terminate or abandon the offering.
(e) The Company hereby grants the Agent the right of first refusal upon
customary terms on any subsequent offerings of debt or equity securities by the
Company or the Bank for a period of three years following completion of the
Offering. This commitment does not include any exercise or call of the warrants,
and is conditioned upon the successful completion of the Offering.
-3-
<PAGE> 4
SECTION 3. PROSPECTUS; OFFERING. The Units are to be offered at $10.00
per Unit.
SECTION 4. REPRESENTATIONS AND WARRANTIES. The Company and the Bank
jointly and severally represent and warrant to the Agent as follows:
(a) The Company and the Bank have all such power, authority,
authorizations, approvals and orders as may be required to enter into this
Agreement, to carry out the provisions and conditions hereof and to issue and
sell the capital stock of the Bank to the Company and the Units to be sold by
the Company as provided herein and as described in the Prospectus. The
consummation of the Offering, the execution, delivery and performance of this
Agreement and the consummation of the transactions herein contemplated have been
duly and validly authorized by all necessary corporate action on the part of the
Company and the Bank and this Agreement has been validly executed and delivered
by the Company and the Bank and is the valid, legal and binding agreement of the
Company and the Bank enforceable in accordance with its terms, except to the
extent, if any, that the provisions of Sections 8 and 9 hereof may be
unenforceable as against public policy, and except to the extent that such
enforceability may be limited by bankruptcy laws, insolvency laws, or other laws
affecting the enforcement of creditors' rights generally, or the rights of
creditors of financial institutions insured by the FDIC (including the laws
relating to the rights of the contracting parties to equitable remedies).
(b) As of the Closing Date, the Company shall have completed all
conditions precedent to the Offering in accordance with the Prospectus and the
Company and the Bank shall have complied in all material respects with
applicable laws, regulations (except as modified or waived in writing by
Regulatory Agencies), decisions and orders, including all terms, conditions,
requirements and provisions precedent to the Offering imposed upon it by the
Regulatory Agencies as set forth in the correspondence received from the
Regulatory Agencies.
(c) The Registration Statement was declared effective by the Commission
on June 29, 2000; and no stop order has been issued with respect thereto and no
proceedings therefore have been initiated or to the best knowledge of the Bank
threatened by the Commission. At the time the Registration Statement, including
the Prospectus contained therein (including any amendment or supplement
thereto), became effective, the Registration Statement complied as to form in
all material respects with the requirements of the 1933 Act and the regulations
promulgated thereunder and the Registration Statement including the Prospectus
contained therein (including any amendment or supplement thereto), any Blue Sky
Application or any Sales Information (as such terms are defined in Section 8
hereof) authorized by the Company or the Bank for use in connection with the
Offering did not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and at the time any Rule 424(b) or (c) Prospectus was filed
with or mailed to the Commission for filing and at the Closing Date, the
Registration Statement including the Prospectus contained therein (including
any amendment or supplement thereto) and any Blue Sky Application or any Sales
Information authorized by the Company or the Bank for use in
-4-
<PAGE> 5
connection with the Offering will not contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the representations and warranties in this
Section 4A shall not apply to statements or omissions made in reliance upon and
in conformity with written information furnished to the Company or the Bank by
the Agent expressly regarding the Agent for use under the caption "Sales Agent"
or written statements or omissions from any sales information or information
filed pursuant to state securities or blue sky laws or regulations regarding the
Agent.
(d) The OCC application, was approved by the OCC on a preliminary
basis on November 1, 1999, as amended on June 10, 2000. At the time of the
approval of the Application, by the OCC (including any amendment or supplement
thereto) and at all times subsequent thereto until the Closing Date, the
Application, will comply as to form in all material respects with all
applicable rules and regulations of the OCC (except as modified or waived in
writing by the OCC). The Application, does not include any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(e) No order has been issued by the Commission, the OCC, the FRB or
the FDIC (and hereinafter reference to the FDIC shall include the Bank
Insurance Fund ("BIF"), or any state regulatory authority, preventing or
suspending the use of the Prospectus and no action by or before any such
government entity to revoke any approval, authorization or order of
effectiveness related to the Offering or the Application is, to the best
knowledge of the Bank or the Company, pending or threatened.
(f) The Offering will have been adopted by the Board of Directors of
the Company and by the organizers of the Bank, and, following the Closing Date,
the Company and the Bank will have completed all conditions precedent to the
Offering specified in the Applications and approvals from the Regulatory
Agencies, and the offer and sale of the Units will have been conducted in all
material respects in compliance with all applicable laws, regulations, decisions
and orders, including all terms, conditions, requirements and provisions
precedent to the Offering imposed upon the Company or the Bank by the Regulatory
Agencies, the Commission or any regulatory authority, and in the manner
described in the Prospectus. At the Closing Date, to the best knowledge of the
Company and the Bank, no person will have sought to obtain review of the
preliminary action of the Regulatory Agencies in approving the Applications
pursuant to any applicable state or federal statute or regulation.
-5-
<PAGE> 6
(g) The Company has filed with the FRB the Holding Company Application
and has received, as of the Closing Date, approval of its acquisition of the
Bank from the FRB.
(h) Crowe Chizek & Company, LLP, which audited the December 31, 1999
financial statements filed as part of the Registration Statement, have advised
the Company and the Bank in writing that they are, with respect to the Company
and the Bank, independent certified public accountants within the meaning of the
Code of Professional Ethics of the American Institute of Certified Public
Accountants and under the 1933 Act and the regulations promulgated thereunder.
(i) The financial statements and the schedules and notes thereto which
are included in the Registration Statement and which are a part of the
Prospectus present fairly the financial position and retained earnings of the
Company as of the dates indicated and the results of operations and cash flows
for the periods specified. The financial statements comply in all material
respects with 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 and are consistent with the most recent financial statements and
other reports filed by the Bank with the Regulatory Agencies except that
accounting principles employed in such filings conform to requirements of such
authorities and not necessarily to GAAP. The other financial statistical and pro
forma information and related notes included in the Prospectus fairly present
the information shown therein on a basis consistent with the audited and
unaudited financial statements included in the Prospectus, and as to the pro
forma adjustments, the adjustments made therein have been properly 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 or in the management,
earnings, capital, properties or business affairs of the Company or the Bank
considered as one enterprise, whether or not arising in the ordinary course of
business, (ii) there has not been any material change in total assets,
liabilities or equity from the amount set forth in the Prospectus; nor has the
Company issued any securities or incurred any liability or obligation for
borrowings other than set forth in the Prospectus; (iii) there has not been any
material transactions entered into by the Company or the Bank, other than those
set forth in the Prospectus; and (iv) the capitalization, liabilities, assets,
properties and business of the Company and the Bank conform in all material
respects to the descriptions thereof contained in the Prospectus and, neither
the Bank nor the Company has any material liabilities of any kind, contingent or
otherwise, except as set forth in or contemplated by the Registration Statement
and the Prospectus.
(k) The Company is a corporation duly organized and in good standing
under the laws of the State of Ohio, with corporate power and authority to own
its properties and to conduct its business as described in the Prospectus, and
is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its 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, earnings, capital,
properties or business affairs of the Company and the Bank considered as a
whole.
-6-
<PAGE> 7
(l) The Bank is a bank in organization and has all conditional
approvals to transact its business. Following the closing, the Bank will be a
duly organized and validly existing national banking association, with FDIC
insurance of accounts and 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 OCC and the FDIC; the Bank has or will obtain
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 of the Company and the
Bank taken as a whole; 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 the United States and is or will be duly qualified as a
foreign corporation to transact business in each jurisdiction in which failure
to so qualify would have a material adverse effect upon the financial condition,
earnings, capital, properties or business affairs of the Bank; all of the issued
and outstanding capital stock of the Bank after the Offering will be duly and
validly issued and fully paid and nonassessable; and the Company will directly
own all of such capital stock free and clear of any mortgage, pledge, lien,
encumbrance, claim or restriction. The Bank does not own equity securities or
any equity interest in any other business enterprise except as described in the
Prospectus.
(m) The Bank will be a member of the Federal Reserve Bank; the deposit
accounts of the Bank will be insured by the FDIC up to applicable limits.
(n) Upon the completion of the Offering, the authorized, issued and
outstanding equity capital of the Company will be as described in the Prospectus
under the caption "Capitalization," and no shares of Common Stock with warrants
attached have been or will be issued and outstanding prior to the Closing Date
other than the shares of Common Stock issued to the organizing shareholders as
listed in the Prospectus; the Units to be subscribed for in the Offering have
been duly and validly authorized for issuance, and when issued and delivered by
the Company against payment of the consideration calculated as set forth in the
Prospectus, will be duly and validly issued and fully paid and nonassessable;
the issuance of the Units is not subject to preemptive rights; and the terms and
provisions of the Units will conform in all material respects to the description
thereof contained in the Prospectus. Upon issuance of the Units, good title to
the Units will be transferred from the Company to the purchaser thereof against
payment therefore, subject to such claims as may be asserted against the
purchasers thereof by third party claimants.
(o) As of the date hereof and as of the Closing Date, neither the
Company nor the Bank is in violation of its articles of incorporation or
articles of association, respectively, or its code of regulations or 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 it is a party or by which it,
or any of its property, may be bound which would result in a material adverse
change in the condition (financial or otherwise), earnings, capital, properties
or business affairs of the Company or Bank considered as one enterprise or which
would materially affect their properties or assets. The consummation of the
transactions herein contemplated will not (i) conflict with or constitute a
breach of, or default under, the articles of incorporation and code of
regulations of the Company, the articles of association and bylaws of the
-7-
<PAGE> 8
Bank, or materially conflict with or constitute a material breach of, or default
under any material contract, lease or other instrument to which the Company or
the Bank has a beneficial interest, or any applicable law, rule, regulation or
order that is material to the financial condition of the Company and the Bank on
a consolidated basis; (ii) violate any authorization, approval, judgment,
decree, order, statute, rule or regulation applicable to the Company or the Bank
except for such violations which would not have a material adverse effect on the
financial condition and results of operations of the Company and the Bank on a
consolidated basis; or (iii) result in the creation of any material lien, charge
or encumbrance upon any property of the Company or the Bank.
(p) No material default exists, and no event has occurred which with
notice or lapse of time, or both, would constitute a material default on the
part of the Company or the Bank, in the due performance and observance of any
term, covenant or condition of any indenture, mortgage, deed of trust, note,
bank loan or credit agreement or any other material instrument or agreement to
which the Company or the Bank is a party or by which any of them or any of their
property is bound or affected in any respect which, in any such case, is
material to the Company or the Bank considered as one enterprise, 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 the Company or the Bank,
threatened any action or proceeding wherein the Company or the Bank is alleged
to be in default thereunder under circumstances where such action or proceeding,
if determined adversely to the Company or the Bank, as the case may be, would
have a material adverse effect upon the Company and the Bank considered as one
enterprise.
(q) The Company and the Bank have good and marketable title to all
assets which are material to the business of the Company and the Bank and to
those assets described in the Prospectus as owned by them free and clear of all
material liens, charges, encumbrances, restrictions or other claims, except such
as are described in the Prospectus or which do not have a material adverse
effect on the business of the Company and the Bank taken as a whole; and all of
the leases and subleases which are material to the business of the Company and
the Bank, as described in the Registration Statement or Prospectus, are in full
force and effect.
(r) Except as, described in the Prospectus, the Company and the Bank
are not in material violation of any directive from the OCC, the FRB, the FDIC,
the Commission or any other agency to make any material change in the method of
conducting their respective businesses; the Company and the Bank have conducted
and are conducting their respective businesses so as to comply in all material
respects with all applicable statutes and regulations (including, without
limitation, regulations, decisions, directives and orders of the OCC, the FRB,
the Commission and the FDIC) and except as set forth in the Prospectus, 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 either the Company or the Bank, threatened, which would reasonably
be expected to materially and adversely affect the Offering, the performance of
this Agreement, or the consummation of the transactions contemplated as
described in the Registration Statement, or which would reasonably be expected
to result in any material adverse change in the financial condition or in the
earnings, capital, properties or business affairs of the Company and the Bank
considered as one enterprise.
-8-
<PAGE> 9
(s) Neither the Bank, the Company nor their counsel or agents have
relied on the Agent or the Agent's counsel with respect to any legal, tax, or
accounting advice in connection with the Offering.
(t) The Company and the Bank have timely filed all required federal,
state and local tax returns, have paid all taxes that have become due and
payable in respect of such returns, except where permitted to be extended, have
made adequate reserves for similar future tax liabilities and no deficiency has
been asserted with respect thereto by any taxing authority.
(u) No approval, authorization, consent or order of any regulatory or
supervisory or other public authority is required for the execution and delivery
by the Company and the Bank of this Agreement, or the issuance of the Units,
except for the approval of the Regulatory Agencies and the Commission (which
have been received) and any necessary qualification, notification, or
registration or exemption under the securities or blue sky laws of the various
states in which the Units are to be offered and except as may be required under
the rules and regulations of The Nasdaq Stock Market, Inc. ("Nasdaq") or the
NASD.
(v) The Company and the Bank have made appropriate arrangements for
placing the funds received from subscriptions for Units in the designated
subscription escrow account at KeyBank, N.A. (the "Escrow Agent") until the
minimum number of Units are sold and paid for, with provision for refund to the
purchasers in the event that the Offering is not completed for whatever reason
or for delivery to the Company if all Units are sold.
(w) Prior to the Offering, neither the Company nor the Bank has: (i)
issued any securities (except as disclosed in the Prospectus); (ii) had any
material dealings with respect to sales of securities with any member of the
NASD (except as disclosed in the Prospectus), or any person related to or
associated with such member, other than discussions and meetings relating to the
proposed Offering and routine purchases and sales of U.S. government and agency
and other securities; (iii) entered into a financial or management consulting
agreement except as contemplated hereunder (except as disclosed in the
Prospectus); or (iv) engaged any intermediary between the Agent and the Company
and the Bank in connection with the offering of Units and no person is being
compensated in any manner for such service.
(x) To the best knowledge of the Company and the Bank, neither the
Company, the Bank nor the employees of the Company or the Bank have made any
payment of funds of the Company or the Bank as a loan to any person for the
purchase of the Units.
Any certificates signed by an officer of the Company or the Bank and
delivered to the Agent or its counsel that refer to this Agreement shall be
deemed to be a representation and warranty by the Company or the Bank to the
Agent as to the matters covered thereby with the same effect as if such
representation and warranty were set forth herein.
-9-
<PAGE> 10
SECTION 5. REPRESENTATIONS AND WARRANTIES.
McDonald represents and warrants to the Company and the Bank that:
(a) It is a corporation and is validly existing in good standing under
the laws of the State of Ohio with full power and authority to provide the
services to be furnished to the Bank and the Company hereunder.
(b) The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly authorized by
all necessary action on the part of the Agent, and this Agreement has been duly
and validly executed and delivered by the Agent and is a legal, valid and
binding agreement of the Agent, enforceable in accordance with its terms.
(c) Each of the Agent and its employees, agents and representatives who
shall perform any of the services hereunder shall be duly authorized and
empowered, and shall have all licenses, approvals and permits necessary to
perform such services; and the Agent is a registered selling agent in each of
the jurisdictions in which the Units are to be offered by the Company in
reliance upon the Agent as a registered selling agent as set forth in the blue
sky memorandum prepared with respect to the Offering.
SECTION 5.A COVENANTS OF THE COMPANY AND THE BANK. The Company and the
Bank hereby jointly and severally covenant to the Agent as follows:
(a) The Company has filed the Registration Statement with the
Commission. The Company will not, at any time after the date the Registration
Statement is declared effective, file any amendment or supplement to the
Registration Statement without providing the Agent and its counsel an
opportunity to review such amendment or file any amendment or supplement to
which amendment the Agent or its counsel shall reasonably object.
(b) The Bank has filed the Applications with the Regulatory Agencies
and the Company has filed the Holding Company Application with the Federal
Reserve. Neither the Bank nor the Company will at any time after the date an
application is approved, file any amendment or supplement to an application
without providing the Agent and its counsel an opportunity to review such
amendment or supplement or file any amendment or supplement to which amendment
or supplement the Agent or its counsel shall reasonably object.
(c) The Company and the Bank will use their best efforts to cause any
post-effective amendment to the Registration Statement to be declared effective
by the Commission and any post- effective amendment to an Application to be
approved by the Regulatory Agencies, and will immediately upon receipt of any
information concerning the events listed below notify the Agent (i) when the
Registration Statement, as amended, has become effective; (ii) when an
Application,
-10-
<PAGE> 11
as amended, has been approved by the Regulatory Agencies; (iii) of the receipt
of any comments from the Commission, a Regulatory Agency or any other
governmental entity with respect to the Offering or the transactions
contemplated by this Agreement; (iv) of any request by the Commission, a
Regulatory Agency or any other governmental entity for any amendment or
supplement to the Registration Statement or an Application or for additional
information; (v) of the issuance by the Commission, a Regulatory Agency or any
other governmental agency of any order or other action suspending the Offering
or the use of the Registration Statement or the Prospectus or any other filing
of the Company and the Bank under applicable regulations or other applicable
law, or the threat of any such action; (vi) of the issuance by the Commission,
any Regulatory Agency or any 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 (vii) of the
occurrence of any event mentioned in paragraph (g) below. The Company and the
Bank will make every reasonable effort to prevent the issuance by the
Commission, any Regulatory Agency or any state authority of any such order and,
if any such order shall at any time be issued, to obtain the lifting thereof at
the earliest possible time.
(d) The Company and the Bank will provide the Agent and its counsel
with notice of its intention to file, and reasonable time to review prior to
filing, any amendment or supplement to the any Application or the Holding
Company Application and will not file any such amendment or supplement to which
the Agent shall reasonably object or which shall be reasonably disapproved by
its counsel.
(e) The Company and the Bank will deliver to the Agent and to its
counsel conformed copies of each of the following documents, with all exhibits:
the Applications and the Holding Company Application, as originally filed and of
each amendment or supplement thereto, and the Registration Statement, as
originally filed and each amendment thereto. Further, the Company and the Bank
will deliver such additional copies of the foregoing documents to counsel to the
Agent as may be required for any NASD filings. In addition, the Company and the
Bank will also deliver to the Agent such number of copies of the Prospectus, as
amended or supplemented, as the Agent may reasonably request.
(f) The Company and the Bank will comply in all material respects with
any and all terms, conditions, requirements and provisions with respect to the
Offering and the transactions contemplated thereby imposed by the Commission, by
applicable state law and regulations, and by the 1933 Act, the Securities
Exchange Act of 1934 ("1934 Act") and the rules and regulations of the
Commission promulgated under such statutes, to be complied with prior to or
subsequent to the Closing Date; and when the Prospectus is required to be
delivered, the Company and the Bank will comply in all material respects, at
their own expense, with all material requirements imposed upon them by the
Regulatory Agencies, 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 necessary to permit the continuance of sales or dealing in the Units
during such period in accordance with the provisions hereof and the Prospectus.
-11-
<PAGE> 12
(g) If any event relating to or affecting the Company or the Bank shall
occur, as a result of which it is necessary, in the reasonable opinion of
counsel for the Company or the Bank or for the Agent, to amend or supplement the
Registration Statement or the Prospectus in order to make them not misleading in
light of the circumstances existing at the time of its use, the Company and the
Bank will, at their expense, forthwith prepare, file with the Commission and the
Regulatory Agencies, 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 (in form and substance satisfactory to
counsel for the Agent after a reasonable time for review) 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, the Company and the Bank each will furnish such
information with respect to itself as the Agent may from time to time reasonably
request.
(h) The Company will endeavor in good faith, in cooperation with the
Agent, to register or to qualify the Units for offering and sale under the
applicable securities laws of the jurisdictions in which the Offering will be
conducted; provided, however, that the Company shall not be obligated to file
any general consent to service of process or to qualify to do business in any
jurisdiction in which it is not so qualified. In each jurisdiction where any of
the Units shall have been registered or qualified as above provided, the Company
will make and file such statements and reports in each year as are or may be
required by the laws of such jurisdictions.
The Company and the Bank and each of the directors and officers of the
Company and the Bank will not sell or issue, contract to sell or otherwise
dispose of, for a period of 180 days after the date hereof, without the Agent's
prior written consent, which consent shall not be unreasonably withheld, any
Units other than in connection with any plan or arrangement described in the
Prospectus.
(i) For the period of three years from the date of this Agreement, the
Company will furnish to the Agent upon request (i) a copy of each report of the
Company furnished to or filed with the Commission under the 1934 Act or any
national securities exchange or system on which any class of securities of the
Company is listed or quoted, (ii) a copy of each report of the Company mailed to
holders of Units or non-confidential report filed with the Commission or a
Regulatory Agency or any other supervisory or regulatory authority or any
national securities exchange or system on which any class of the securities of
the Company is listed or quoted, and (iii) from time to time, such other
publicly available information concerning the Company and the Bank as the Agent
may reasonably request.
(j) The Company and the Bank will use the net proceeds from the sale of
the Units in the manner set forth in the Prospectus under the caption "Use of
Proceeds."
-12-
<PAGE> 13
(k) Prior to the Closing Date, the Company and the Bank will inform the
Agent of any event or circumstances of which it is aware as a result of which
the Registration Statement and/or Prospectus, or the Applications 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.
(l) The Company and the Bank will distribute the Prospectus or other
offering materials in connection with the offering and sale of the Units only as
set forth in the Prospectus, and only in accordance with 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 Units are qualified for sale.
(m) [Reserved]
(n) The Company will furnish to its stockholders such reports as may
be required under Section 15(d) of the 1934 Act.
(o) The Company will comply with the provisions of Rule 158 of the
1933 Act.
(p) [Reserved]
(q) The Company will maintain appropriate arrangements with the Escrow
Agent for depositing all funds received from persons mailing subscriptions for
or orders to purchase Units in the Offering as described in the Prospectus until
the Closing Date and satisfaction of all conditions precedent to the release of
the Company's obligation to refund payments received from persons subscribing
for or ordering Units in the Offering as described in the Prospectus.
(r) The Company will promptly register as a Bank Holding Company under
the BHCA.
(s) The Company and the Bank will take such actions and furnish such
information as are reasonably requested by the Agent in order for the Agent to
ensure compliance with the "Interpretation of the Board of Governors of the NASD
on Free Riding and Withholding."
(t) The Company and the Bank 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 OCC, the FRB and the FDIC.
(u) The Bank will not amend the Offering without notifying the Agent
prior thereto.
(v) The Company will not deliver the Units until the Company and the
Bank have satisfied or caused to be satisfied each condition set forth in
Section 7A hereof, unless such condition is waived in writing by the Agent.
-13-
<PAGE> 14
SECTION 6. PAYMENT OF EXPENSES. Whether or not the Offering is
completed or the sale of the Units by the Company is consummated, the Company
and the Bank will pay for all expenses incident to the performance of this
Agreement, including without limitation: (a) the preparation and filing of the
Applications; (b) the preparation, printing, filing, delivery and shipment of
the Registration Statement, including the Prospectus, and all amendments and
supplements thereto; (c) all filing fees and expenses in connection with the
qualification or registration of the Units for offer and sale by the Company
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; (e) all expenses related to "road shows" and (f)
the actual out-of-pocket expenses of the Agent up to a maximum of $20,000
without prior approval. Subject to such maximum limitation, any such expense
incurred by the Agent shall be reimbursed by the Company and the Bank.
SECTION 7A. CONDITIONS TO THE AGENT'S OBLIGATIONS. The obligations
of the Agent hereunder and the occurrence of the Closing of the Offering are
subject to the condition that all representations and warranties and other
statements of the Company and the Bank herein contained are at and as of the
commencement of the Offering and at and as of the Closing Date, true and correct
in all material respects, the condition that the Company and the Bank 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 and the Applications approved by the Regulatory Agencies not
later than 5:30 p.m. on the date of this Agreement, and no stop order or other
action suspending the effectiveness of the Registration Statement shall have
been issued under the 1933 Act or proceedings therefore initiated or, to the
Company's or Bank's best knowledge, 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 Offering shall have been issued or
proceedings therefore initiated or, to the Company's or Bank's best knowledge,
threatened by the Regulatory Agencies, the Commission, or any other governmental
body.
(b) At the Closing Date, the Agent shall have received:
(1) The favorable opinion, dated as of the Closing Date, of Squire,
Sanders & Dempsey, L.L.P., special counsel for the Company and the Bank, and
Critchfield, Critchfield & Johnson, counsel for the Company and the Bank, as
appropriate, and in form and substance satisfactory to counsel for the Agent to
the effect that:
(i) The Company is a corporation duly organized and validly
existing and in good standing under the laws of the State of Ohio, with
corporate power and authority to own its properties and to conduct its business
as described in the Prospectus, and to such counsel"s knowledge is duly
qualified to transact business and is in good standing in each jurisdiction in
which the conduct of its business requires such qualification and in which the
failure to qualify would have a material adverse effect on the financial
condition, earnings, capital, properties or business affairs of the Company.
-14-
<PAGE> 15
(ii) Upon receipt of final approval of the OCC, the Bank will
be a duly organized and validly existing national banking association with full
power and authority to own its properties and to conduct its business as
described in the Prospectus and to enter into this Agreement and perform its
obligations hereunder; the activities of the Bank as described in the
Prospectus are permitted by the rules, regulations and practices of the
Regulatory Agencies; the issuance and sale of the capital stock of the Bank to
the Company has been duly and validly authorized by all necessary corporate
action on the part of the Company and the Bank and, upon payment therefore as
described in the Prospectus, will be validly issued, fully paid and
nonassessable; and will be owned of record and beneficially by the Company,
free and clear of any mortgage, pledge, lien, encumbrance, claim or
restriction.
(iii) Following the Closing, the Bank will apply to become a
member of the Federal Reserve and, upon receipt of final FDIC approval, the
deposit accounts of the Bank will be insured by the FDIC up to the maximum
amount allowed by law and to such counsel's knowledge no proceedings for the
termination or revocation of such insurance are pending or threatened.
(iv) Upon the completion of the Offering, the authorized,
issued and outstanding capital stock of the Company and the Bank will be as set
forth in the Prospectus under the caption "Capitalization," and no shares of
Common Stock or attached warrants have been or will be issued and outstanding
prior to the Closing Date, other than as set forth in the Prospectus; the Units
of the Company to be subscribed for in the Offering have been duly and validly
authorized for issuance, and when issued and delivered by the Company pursuant
to the plan of distribution against payment of the consideration calculated as
set forth in the plan of distribution, will be fully paid and nonassessable; and
the issuance of the Units is not subject to preemptive rights.
(v) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary action on the part of the Company and the Bank; and this
Agreement constitutes a valid, legal and binding obligation of each of the
Company and the Bank, enforceable in accordance with its terms, except to the
extent that the provisions of Sections 8 and 9 hereof may be unenforceable as
against public policy, and except to the extent that such enforceability may be
limited by bankruptcy laws, insolvency laws, or other laws affecting the
enforcement of creditors' rights generally, or the rights of creditors of
financial institutions insured by the FDIC (including the laws relating to the
rights of the contracting parties to equitable remedies).
(vi) Subject to the satisfaction of the conditions to the
Regulatory Agencies' approval of the Applications, no further approval,
registration, authorization, consent or other order of any federal 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 Units and the
consummation of the Offering.
-15-
<PAGE> 16
(vii) The Applications, as filed with the Regulatory Agencies,
have been granted preliminary approval by the Regulatory Agencies. The FRB has
issued its preliminary order of approval under the BHCA, and the purchase by
the Company of all of the issued and outstanding capital stock of the Bank has
been authorized by the FRB and no action has been taken, or to such counsel's
knowledge is pending or threatened, to revoke any such authorization or
approval.
(viii) The Registration Statement has become effective under
the 1933 Act, no stop order suspending the effectiveness of the Registration
Statement has been issued, and to the best of such counsel's knowledge no
proceedings for that purpose have been instituted or threatened.
(ix) The consummation of the Offering and the transactions
contemplated thereunder will have no material tax consequences to the Company,
the Bank or any person subscribing for Units in the Offering.
(x) The terms and provisions of the Units conform to the
description thereof contained in the Registration Statement and the Prospectus
and such description describes in all material respects the rights of the
holders thereof, the information in the Prospectus under the caption "Articles
of Incorporation" to the extent that it constitutes matters of law or legal
conclusions has been prepared by such counsel and is accurate in all material
respects; and the forms of certificates proposed to be used to evidence the
Units are in due and proper form.
(xi) At the time the Application, was approved, the
Application (as amended or supplemented) complied as to form in all material
respects with the requirements of the Regulatory Agencies and all applicable
laws, rules and regulations and decisions and orders of the Regulatory
Agencies, except as modified or waived in writing by the Regulatory Agencies,
(other than the financial statements, notes to financial statements, financial
tables and other financial and statistical data included therein as to which
counsel need express no opinion and other than compliance with state securities
or Blue Sky laws as to which such 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 Regulatory Agencies approving the
Applications.
(xii) At the time that the Registration Statement became
effective (i) the Registration Statement (as amended or supplemented) (other
than the financial statements, notes to financial statements, financial tables
or other financial and statistical data included therein 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; and (ii) the Prospectus (other than the financial statements, notes
to financial statements, financial tables and other financial and statistical
data included therein, 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, and the rules, regulations and
decisions and orders of the Regulatory Agencies, except as modified or waived in
writing by the Regulatory Agencies.
-16-
<PAGE> 17
(xiii) To the best of such counsel's knowledge, there are no
legal or governmental proceedings pending, or threatened (i) asserting the
invalidity of this Agreement or, (ii) seeking to prevent the Offering.
(xiv) The information in the Prospectus under the caption
"Supervision and Regulation," to the extent that it constitutes matters of law,
summaries and supervision of legal matters, documents or proceedings, or legal
conclusions, has been prepared by such counsel and is accurate in all material
respects (except as to the financial statements and other financial data
included therein as to which such counsel need express no opinion).
(xv) To the best of counsel's knowledge, the Company and the
Bank have obtained all material licenses, permits and other governmental
authorizations (including preliminary approval from the OCC) required for the
conduct of their respective businesses as described in the Registration
Statement and the Prospectus, except where the failure to obtain such licenses,
permits and other governmental authorizations would not have a material adverse
effect on the financial condition of the Company or the Bank considered as one
enterprise, or on the earnings, capital, properties or business affairs of the
Company or the Bank considered as one enterprise, and all such licenses,
permits and other governmental authorizations (including preliminary approval
from the OCC), are in full force and effect and the Company and the Bank are in
all material respects complying therewith.
(xvi) Neither the Company nor the Bank is in violation of its
articles of incorporation or its articles of association, respectively, or its
code of regulations or bylaws, respectively, or to the best of such counsel's
knowledge, in violation of any material obligation, agreement, covenant or
condition contained in any material contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which it is a party or by which it
or its property may be bound, which violation would have a material adverse
effect on the financial condition of the Company or the Bank considered as one
enterprise, or on the earnings, capital, properties or business affairs of the
Company and the Bank considered as one enterprise; the execution and delivery of
this Agreement by the Company and the Bank, the incurrence of the obligations
herein set forth and the consummation of the transactions contemplated herein,
will not materially conflict with, constitute a material breach of, or default
under, or result in the creation or imposition of any material lien, charge or
encumbrance upon any property or assets of the Company or the Bank which are
material to their business considered as one enterprise, pursuant to any
contract, indenture, mortgage, loan agreement, note, lease or other instrument
to which the Company or the Bank is a party or by which any of them may be
bound, or to which any of the property or assets of the Company or the Bank is
subject. In addition, such action will not result in any material violation of
the provisions of the certificate of incorporation or bylaws of the Company or
the Bank or any material violation of any applicable law, act, regulation or to
such counsel's knowledge, order or court order, writ, injunction or decree.
(xvii) To the best of counsel's knowledge, the Company and the
Bank are not in violation in any material respect of any directive from any
Regulatory Agency to make any material change in the method of conducting their
business.
-17-
<PAGE> 18
(2) The letter of Squire, Sanders & Dempsey, L.L.P., special counsel
for the Company and the Bank, and Critchfield, Critchfield & Johnson, counsel
for the Company and the Bank in form and substance to the effect that:
In addition, during the preparation of the Registration Statement and
the Prospectus, Squire, Sanders & Dempsey, L.L.P. and Critchfield,
Critchfield & Johnson participated in conferences with certain
officers of and other representatives of the Bank and the Company,
counsel to the Agent, representatives of the independent public
accountants for the Bank and the Company and representatives of the
Agent at which the contents of the Registration Statement and the
Prospectus and related matters were discussed and, although Squire,
Sanders & Dempsey, L.L.P. and Critchfield, Critchfield & Johnson are
not passing upon and do not assume the accuracy of the statements
contained in the Registration Statement and Prospectus, on the basis
of the foregoing without independent verification (relying as to
materiality as to factual matters on certificates of officers and
other factual representations by the Bank and the Company), nothing
has come to the attention of Squire, Sanders & Dempsey, L.L.P. and
Critchfield, Critchfield & Johnson that caused Squire, Sanders &
Dempsey, L.L.P. or Critchfield, Critchfield & Johnson to believe that
the Registration Statement at the time it was declared effective by
the Commission or the Prospectus as of its date, contained or contains
any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading (it being understood that counsel need
express no comment or opinion with respect to the financial
statements, schedules and other financial and statistical data
included, or statistical or appraisal methodology employed, in the
Registration Statement or Prospectus).
The opinion shall be limited to matters governed by the laws of the
United States or 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 or Ohio, to the extent such counsel deems proper
and specified in such opinion, upon the opinion of other counsel of good
standing, 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 Company and the Bank and public
officials; provided copies of any such opinion(s) or certificates of public
officials are delivered to you together with the opinion to be rendered
hereunder by special counsel to the Company and the Bank. The opinion of such
counsel for the Company shall state that it has no reason to believe that you
are not justified in relying thereon.
(3) The favorable opinion, dated as of the Closing Date, of 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 Company and the Bank delivered pursuant hereto or as such
counsel may reasonably request.
(c) Concurrently with the execution of this Agreement, the Agent shall
receive a letter from Crowe Chizek and Company LLP dated the date hereof and
addressed to the Agent, (i) such letter confirming that Crowe Chizek and Company
LLP is a firm of independent public accountants within
-18-
<PAGE> 19
the meaning of the Code of Professional Ethics of the American Institute of
Certified Public Accountants, the 1933 Act and the regulations promulgated
thereunder, and no information concerning its relationship with or interests in
the Company or the Bank is required by the Application or Item 10 of the
Registration Statement, and stating in effect that in Crowe Chizek and Company
LLP's opinion the financial statements of the Company included in the Prospectus
comply as to form in all material respects with the applicable accounting
requirements of the 1933 Act, the 1934 Act and the related published rules and
regulations of the Commission thereunder and generally accepted accounting
principles; (ii) stating in effect that, on the basis of certain agreed upon
procedures (but not an audit examination in accordance with generally accepted
auditing standards) consisting of a reading of the latest available unaudited
interim financial statements of the Company and the Bank prepared by the Company
and the Bank, a reading of the minutes of the meetings of the Board of Directors
of the Company and the Bank, a review of interim financial information in
accordance with Statement on Auditing Standards No. 71, and consultations with
officers of the Company and the Bank responsible for financial and accounting
matters, nothing came to their attention, other than as set forth in such
letter, which caused them to believe that: (A) such unaudited financial
statements, including Recent Developments, if any, 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) other than as set forth in such letter, during the period
from the date of the latest unaudited consolidated financial statements
included in the Prospectus to a specified date not more than five business days
prior to the date hereof, there was any material increase in borrowings
(defined as securities sold under agreements to repurchase and any other form
of debt other than deposits) of the Company or the Bank (other than as
disclosed in the Prospectus); or (C) other than as set forth in such letter,
there was any decrease in retained earnings of the Bank at the date of such
letter as compared with amounts shown in the latest unaudited statement of
condition included in the Prospectus or there was any decrease in net income or
net interest income of the Bank for the number of full months commencing
immediately after the period covered by the latest unaudited income statement
included in the Prospectus and ended on the latest month ending prior to the
date of the Prospectus or in such letter as compared to the corresponding
period in the preceding year; and (iii) stating that, in addition to the audit
examination referred to in its opinion included in the Prospectus and the
performance of the procedures referred to in clause (ii) of this subsection
(c), they have compared with the general accounting records of the Company
and/or the Bank, as applicable, which are subject to the internal controls of
the Company and/or the Bank, as applicable, accounting system and other data
prepared by the Company and/or the Bank, as applicable, directly from such
accounting records, to the extent specified in such letter, such amounts
and/or percentages set forth in the Prospectus as 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 letters from Crowe
Chizek and Company 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 7A, the "specified date" referred to in clause
(ii)(B) thereof to be a date specified in such letter, which shall not be more
than five business days prior to the Closing Date.
-19-
<PAGE> 20
(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 Units 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 Company and
the Bank, dated the Closing Date, to the effect that (i) they have carefully
examined the Prospectus and at the time the Prospectus became authorized for
final use, the Prospectus did not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; (ii) there has not been, since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
financial condition or in the management, earnings, capital, properties,
business prospects or business affairs of the Company or the Bank, considered as
one enterprise, whether or not arising in the ordinary course of business; (iii)
the representations and warranties contained in Section 4 of this Agreement are
true and correct with the same force and effect as though made at and as of the
Closing Date; (iv) the Company and the Bank 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 7A; (v) no stop order has been issued or,
to the best of their knowledge, is threatened, by the Commission, a Regulatory
Agency or any other governmental body; (vi) no order suspending the Offering,
the acquisition of all of the shares of the Bank by the Company 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 any Regulatory Agency 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 OCC, FRB or FDIC in granting preliminary approval
of the Applications.
(g) The Company or the Bank shall not have sustained since the date of
the latest audited financial statements included in the Registration Statement
and Prospectus, any material 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 are given in the Registration
Statement and the Prospectus, there shall not have been any material change in
the long-term debt of the Company or the Bank or any material change, or any
development, involving a prospective material change in or affecting the general
affairs of the management, financial position, stockholders' equity or results
of operations of the Company or the Bank, otherwise than as set forth or
contemplated in the Registration Statement 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 Units on the terms and in the
manner contemplated in the Prospectus.
-20-
<PAGE> 21
(h) Prior to and at the Closing Date: (1) in the reasonable opinion of
the Agent, there shall have been no material adverse change in the management,
financial condition or in the earnings, capital, properties or business affairs
of the Company or the Bank independently, or of the Company and the Bank,
considered as one enterprise, from that as of the latest dates as of which such
condition is set forth in the Prospectus, except as referred to therein; (ii)
there shall have been no material transaction entered into by the Company and
the Bank, considered as one enterprise, from the latest date as of which the
financial condition of the Company or the Bank is set forth in the Prospectus
other than transactions referred to or contemplated therein; (iii) the Company
or the Bank shall not have received from the OCC, FRB or the FDIC any direction
(oral or written) to make any material change in the method of conducting their
business with which it has not complied in all material respects (which
direction, if any, shall have been disclosed to the Agent) and which would
reasonably be expected to have a material and adverse effect on the management,
condition (financial or otherwise) or on the earnings, capital, properties or
business affairs of the Company or the Bank considered as one enterprise; (iv)
neither the Company nor the Bank shall have been in default (nor shall an event
have occurred which, with notice or lapse of time or both, would constitute a
default) under any provision of any agreement or instrument relating to any
material outstanding indebtedness; (v) no action, suit or proceedings, at law or
in equity or before or by any federal or state commission, board or other
administrative agency, shall be pending or, to the knowledge of the Company or
the Bank, threatened against the Company or the Bank or affecting any of their
properties wherein an unfavorable decision, ruling or finding would reasonably
be expected to have a material and adverse effect on the management, financial
condition or on the earnings, capital, properties or business affairs of the
Company or the Bank, considered as one enterprise; and (vi) the Units have been
qualified or registered for offering and sale under the securities or blue sky
laws of the jurisdictions as to which the Company and the Agent shall have
agreed.
(i) At or prior to the Closing Date, the Agent shall receive (i) a copy
of the letters from the OCC and FDIC granting preliminary approval of the
Applications, (ii) a copy of the order from the Commission declaring the
Registration Statement effective, (iii) a certificate of good standing from the
State of Ohio evidencing the good standing of the Company and (iv) a copy of
the letter from the FRB granting preliminary approval of the Company
Application.
(j) Subsequent to the date hereof, there shall not have occurred any of
the following: (i) a suspension or limitation in trading in securities generally
on the New York Stock Exchange 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;
(ii) a general moratorium on the operations of commercial banks or other
federally-insured financial institutions or general moratorium on the withdrawal
of deposits from commercial banks or other federally-insured financial
institutions declared by either federal or state authorities; (iii) the
engagement by the United States in hostilities which have resulted in the
declaration, on or after the date hereof, of a national
-21-
<PAGE> 22
emergency or war; or (iv) a material decline in the price of equity or debt
securities if the effect of any of (i) through (iv) herein, in the Agent's
reasonable judgment, makes it impracticable or inadvisable to proceed with the
Offering or the delivery of the Units on the terms and in the manner
contemplated in the Registration Statement and the Prospectus.
SECTION 7B. CONDITIONS TO THE COMPANY AND THE BANK'S
OBLIGATIONS.
The obligations of the Company and the Bank hereunder are subject to
the accuracy of the representations and warranties of the Agent, to the
performance by the Agent of its obligations hereunder, and to the satisfaction
of the conditions contained in Paragraph (a) of Section 7A hereunder.
SECTION 8. INDEMNIFICATION.
(a) The Company and the Bank jointly and severally agree to indemnify
and hold harmless the Agent, its respective officers and directors, employees
and agents, and each person, if any, who controls the Agent within the meaning
of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act, against any and
all loss, liability, claim, damage or expense whatsoever (including, but not
limited to, settlement expenses), joint or several, that the Agent or any of
them may suffer or to which the Agent and any such persons may become subject
under all applicable federal or state laws or otherwise, and to promptly
reimburse the Agent and any such persons upon written demand for any expense
(including reasonable fees and disbursements of counsel) incurred by the Agent
or any of them in connection with investigating, preparing or defending any
actions, proceedings or claims (whether commenced or threatened) to the extent
such losses, claims, damages, liabilities or actions: (i) arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement (or any amendment or supplement
thereto), preliminary or final Prospectus (or any amendment or supplement
thereto), the Application (or any amendment or supplement thereto), the Holding
Company Application or any instrument or document executed by the Company or the
Bank or based upon written information supplied by the Company or the Bank filed
in any state or jurisdiction to register or qualify any or all of the Units or
to claim an exemption therefrom or provided to any state or jurisdiction to
exempt the Company as a broker-dealer or its officers, directors and employees
as broker-dealers or agent, under the securities laws thereof (collectively, the
"Blue Sky Application"), or any document, advertisement, oral statement or
communication ("Sales Information") prepared, made or executed by or on behalf
of the Company or the Bank with their consent or based upon written or oral
information furnished by or on behalf of the Company or the Bank, whether or not
filed in any jurisdiction, in order to qualify or register the Units or to claim
an exemption therefrom under the securities laws thereof; (ii) arise out of or
are based upon the omission or alleged omission to state in any of the foregoing
documents or information a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; or (iii) arise from any theory of
liability whatsoever relating to or arising from or based upon the Registration
Statement (or any amendment or supplement thereto), preliminary or final
Prospectus (or any amendment or
-22-
<PAGE> 23
supplement thereto), the Application (or any amendment or supplement thereto),
any Blue Sky Application or Sales Information or other documentation distributed
in connection with the Offering; provided, however, that no indemnification is
required under this paragraph (a) to the extent such losses, claims, damages,
liabilities or actions arise out of or are based upon any untrue material
statement or alleged untrue material statement in, or material omission or
alleged material omission from, the Registration Statement (or any amendment or
supplement thereto), preliminary or final Prospectus (or any amendment or
supplement thereto), the Application, any Blue Sky Application or Sales
Information made in reliance upon and in conformity with information furnished
in writing to the Company or the Bank by the Agent or its counsel regarding the
Agent, provided, that it is agreed and understood that the only information
furnished in writing to the Company or the Bank by the Agent regarding the Agent
is set forth in the Prospectus under the caption "Sales Agent;" and, provided
further, that neither the Company nor the Bank should be liable under this
Section 8 in respect of any losses, claims, damages, liabilities, actions or
expenses to the extent same is determined, in a final judgment by a court of
competent jurisdiction, to have resulted from the gross negligence or bad faith
of McDonald.
(b) The Agent agrees to indemnify and hold harmless the Company and the
Bank, their directors and officers and each person, if any, who controls the
Company or the Bank within the meaning of Section 15 of the 1933 Act or Section
20(a) of the 1934 Act against any and all loss, liability, claim, damage or
expense whatsoever (including but not limited to settlement expenses), joint or
several, which they, or any of them, may suffer or to which they, or any of them
may become subject under all applicable federal and state laws or otherwise, and
to promptly reimburse the Company, the Bank, and any such persons upon written
demand for any expenses (including reasonable fees and disbursements of counsel)
incurred by them, or any of them, in connection with investigating, preparing or
defending any actions, proceedings or claims (whether commenced or threatened)
to the extent such losses, claims, damages, liabilities or actions: (i) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (or any amendment or
supplement thereto), the Application (or any amendment or supplement thereto),
the preliminary or final Prospectus (or any amendment or supplement thereto),
any Blue Sky Application or Sales Information, (ii) are based upon the omission
or alleged omission to state in any of the foregoing documents a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, or
(iii) arise from any theory of liability whatsoever relating to or arising from
or based upon the Registration Statement (or any amendment or supplement
thereto), preliminary or final Prospectus (or any amendment or supplement
thereto), the Application (or any amendment or supplement thereto), or any Blue
Sky Application or Sales Information or other documentation distributed in
connection with the Offering; provided, however, that the Agent's obligations
under this Section 8(b) shall exist only if and only to the extent that such
untrue statement or alleged untrue statement was made in, or such material fact
or alleged material fact was omitted from, the Registration Statement (or any
amendment or supplement thereto), the preliminary or final Prospectus (or any
amendment or supplement thereto), the Application (or any amendment or
supplement thereto), any Blue Sky Application or Sales Information in reliance
upon and in conformity with information furnished in writing to the Company or
the Bank by the Agent or its
-23-
<PAGE> 24
counsel regarding the Agent, provided, that it is agreed and understood that the
only information furnished in writing to the Company or the Bank by the Agent
regarding the Agent is set forth in the Prospectus under the caption "Sales
Agent," provided further that the Company and the Bank also agree that neither
McDonald, nor any of its affiliates, nor officer, director, employee or agent of
McDonald or any of its affiliates, nor any person controlling McDonald or any of
its affiliates, shall have any liability to the Company or the Bank for or in
connection with such engagement except for any such liability for losses,
claims, damages, liabilities or expenses incurred by the Company that is finally
judicially determined to have resulted from gross negligence or bad faith of
McDonald. Notwithstanding the foregoing, McDonald shall not be required to
indemnify or reimburse the Company for expenses hereunder in an amount, in the
aggregate, in excess of any fees actually paid pursuant to Section 2 above. The
foregoing shall be in addition to any rights that McDonald or any Agent thereof
may have at common law or otherwise.
(c) Each indemnified party shall give prompt written notice to each
indemnifying party of any action, proceeding, claim (whether commenced or
threatened), or suit instituted against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve it from any liability which it may have on account of this Section 8 or
otherwise. An indemnifying party may participate at its own expense in the
defense of such action. In addition, if it so elects within a reasonable time
after receipt of such notice, an indemnifying party, jointly with any other
indemnifying parties receiving such notice, may assume defense of such action
with counsel chosen by it and approved by the indemnified parties that are
defendants in such action, unless such indemnified parties reasonably object to
such assumption on the ground that there may be legal defenses available to them
that are different from or in addition to those available to such indemnifying
party. If an indemnifying party assumes the defense of such action, the
indemnifying parties shall not be liable for any fees and expenses of counsel
for the indemnified parties incurred thereafter in connection with such action,
proceeding or claim, other than reasonable costs of investigation. In no event
shall the indemnifying parties be liable for the fees and expenses of more than
one separate firm of attorneys (and any special counsel that said firm may
retain) for 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.
(d) The agreements contained in this Section 8 and in Section 9 hereof
and the representations and warranties of the Company and the Bank 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 or controlling persons, agent or employees or by or on behalf of the
Company or the Bank or any officers, directors or controlling persons, agent or
employees of the Company or the Bank; (ii) delivery of and payment hereunder for
the Units; or (iii) any termination of this Agreement.
SECTION 9. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 8 is due in accordance with its
-24-
<PAGE> 25
terms but is for any reason held by a court to be unavailable from the Company,
the Bank or the Agent, the Company, the Bank and the Agent shall contribute to
the aggregate losses, claims, damages and liabilities (including any
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding, but after
deducting any contribution received by the Company, the Bank or the Agent from
persons other than the other parties thereto, who may also be liable for
contribution) in such proportion so that the Agent is responsible for that
portion represented by the percentage that the fees paid to the Agent pursuant
to Section 2 of this Agreement (not including expenses) bears to the gross
proceeds received by the Company from the sale of the Units in the Offering, and
the Company and the Bank shall be responsible for the balance. If, however, the
allocation provided above is not permitted by applicable law, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative fault of the Company and the Bank on the one hand and the Agent on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions, proceedings or claims in
respect thereto), but also the relative benefits received by the Company and the
Bank on the one hand and the Agent on the other from the Offering (before
deducting expenses). The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company and/or the Bank on the one hand or the Agent
on the other and the parties' relative intent, good faith, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Bank and the Agent agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro-rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to above in this Section 9. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions, proceedings or claims in respect thereof)
referred to above in this Section 9 shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action, proceeding or claim. It is expressly
agreed that the Agent shall not be liable for any loss, liability, claim, damage
or expense or be required to contribute any amount pursuant to Section 8(b) or
this Section 9 which in the aggregate exceeds the amount paid (excluding
reimbursable expenses) to the Agent under this Agreement. It is understood that
the above stated limitation on the Agent's liability is essential to the Agent
and that the Agent would not have entered into this Agreement if such limitation
had not been agreed to by the parties to this Agreement. No person found guilty
of any fraudulent misrepresentation (within the meaning of Section 11(f) of the
1933 Act) shall be entitled to contribution from any person who was not found
guilty of such fraudulent misrepresentation. The obligations of the Company, the
Bank and the Agent under this Section 9 and under Section 8 shall be in addition
to any liability which the Company, the Bank and the Agent may otherwise have.
For purposes of this Section 9, each of the Agent's, the Company's or the Bank's
officers and directors and agents and each person, if any, who controls the
Agent or the Company or the Bank within the meaning of the 1933 Act and the 1934
Act shall have the same rights to contribution as the Agent, the Company or the
Bank. Any party entitled to contribution, promptly after receipt of notice of
commencement of any action, suit, claim or proceeding against such party in
respect of which a claim for contribution may be made against another party
under this
-25-
<PAGE> 26
Section 9, will notify such party from whom contribution may be sought, but the
omission to so notify such party shall not relieve the party from whom
contribution may be sought from any other obligation it may have hereunder or
otherwise than under this Section 9.
SECTION 10. SURVIVAL OF AGREEMENTS, REPRESENTATIONS AND
INDEMNITIES. The respective indemnities of the Company, the Bank and the Agent
and the representations and warranties and other statements of the Company, the
Bank and the Agent set forth in or made pursuant to this Agreement shall remain
in full force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of the Agent, the Company,
the Bank or any controlling person referred to in Section 8 hereof, and shall
survive the issuance of the Units, and any successor or assign of the Agent, the
Company, the Bank, and any such controlling person shall be entitled to the
benefit of the respective agreements, indemnities, warranties and
representations.
SECTION 11. TERMINATION. The Agent may terminate this Agreement by
giving the notice indicated below in this Section 11 at any time after this
Agreement becomes effective as follows:
(a) In the event the Company fails to sell the required minimum number
of the Units within the period specified by the Prospectus or as required by
applicable law, this Agreement shall terminate upon refund by the Escrow Agent
on behalf of the Company to each person who has subscribed for or ordered any of
the Units the full amount which it may have received from such person as
provided in the Prospectus, and no party to this Agreement shall have any
obligation to the other hereunder, except as set forth in Sections 2, 6, 8 and 9
hereof.
(b) If any of the conditions specified in Section 7A shall not have
been fulfilled when and as required by this Agreement, unless waived in writing,
or by the Closing Date, this Agreement and all of the Agent's obligations
hereunder may be canceled by the Agent by notifying the Company and the Bank of
such cancellation in writing or by telegram at any time at or prior to the
Closing Date, and any such cancellation shall be without liability of any party
to any other party except as otherwise provided in Sections 2, 6, 8 and 9
hereof.
(c) If the Agent elects to terminate this Agreement as provided in this
Section, the Company and the Bank shall be notified promptly by telephone or
telegram, confirmed by letter.
(d) The Company and the Bank may terminate this Agreement in the event
the Agent is in material breach of the representations and warranties or
covenants contained in Section 5 and such breach has not been cured in a timely
fashion after the Company and the Bank have provided the Agent with notice of
such breach. The Agent may terminate this Agreement in the event the Company or
the Bank, or either of them, is in material breach of the representations and
warranties and covenants in Sections 4 and 5.1 and such breach has not been
cured in a timely fashion after the Agent has provided the Company or the Bank
with notice of such breach.
-26-
<PAGE> 27
(e) This Agreement may also be terminated by mutual written consent of
the parties hereto.
SECTION 12. NOTICES. All communications hereunder, except as herein
otherwise specifically provided, shall be mailed in writing and if sent to the
Agent shall be mailed, delivered or telegraphed and confirmed to Charles R.
Crowley, McDonald Securities, Inc., 1700 McDonald Investments Center, 800
Superior Avenue, Cleveland, OH 44114 (with a copy to Kevin C. O'Neil, Brouse
McDowell, L.P.A., 500 First National Tower, Akron, Ohio 44308) and, if sent to
the Company and the Bank, shall be mailed, delivered or telegraphed and
confirmed to the Company and the Bank at 132 East Liberty Street, Wooster, Ohio
44691, Attention: L. Dwight Douce, President and Chief Executive Officer (with a
copy to Squire, Sanders & Dempsey, L.L.P., 4900 Key Tower, 127 Public Square,
Cleveland, Ohio 44114, Attention: M. Patricia Oliver, Esq.).
SECTION 13. PARTIES. The Company and the Bank shall be entitled to act
and rely on any request, notice, consent, waiver or agreement purportedly given
on behalf of the Agent when the same shall have been given by the undersigned.
The Agent shall be entitled to act and rely on any request, notice, consent,
waiver or agreement purportedly given on behalf of the Company or the Bank, when
the same shall have been given by the undersigned or any other officer of the
Company or the Bank. This Agreement shall inure solely to the benefit of, and
shall be binding upon, the Agent, the Company, the Bank, and their respective
successors and assigns, and no other person shall have or be construed to have
any legal or equitable right, remedy or claim under or in respect of or by
virtue of this Agreement or any provision herein contained. It is understood and
agreed that this Agreement is the exclusive agreement among the parties hereto,
and supersedes any prior agreement among the parties and may not be varied
except in writing signed by all the parties.
SECTION 14. CLOSING. The closing for the sale of the Units shall take
place on the Closing Date at such location as mutually agreed upon by the Agent
and the Company and the Bank. At the closing, the Company and the Bank shall
deliver to the Agent in next day funds the commissions, fees and expenses due
and owing to the Agent as set forth in Sections 2 and 6 hereof and the opinions
and certificates required hereby and other documents deemed reasonably necessary
by the Agent shall be executed and delivered to effect the sale of the Units as
contemplated hereby and pursuant to the terms of the Prospectus.
SECTION 15. PARTIAL INVALIDITY. In the event that any term, provision
or covenant herein or the application thereof to any circumstance or situation
shall be invalid or unenforceable, in whole or in part, the remainder hereof and
the application of said term, provision or covenant to any other circumstances
or situation shall not be affected thereby, and each term, provision or covenant
herein shall be valid and enforceable to the full extent permitted by law.
SECTION 16. CONSTRUCTION. This Agreement shall be construed in
accordance with the laws of the State of Ohio.
-27-
<PAGE> 28
SECTION 17. COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which so executed and delivered shall be an original, but
all of which together shall constitute but one and the same instrument.
If the foregoing correctly sets forth the arrangement among the
Company, the Bank and the Agent, please indicate acceptance thereof in the space
provided below for that purpose, whereupon this letter and the Agent's
acceptance shall constitute a binding agreement.
SECTION 18. ENTIRE AGREEMENT. This Agreement, including schedules and
exhibits hereto, which are integral parts hereof and incorporated as though set
forth in full, constitutes the entire agreement between the parties pertaining
to the subject matter hereof superseding any and all prior or contemporaneous
oral or prior written agreements, proposals, letters of intent and
understandings, and cannot be modified, changed, waived or terminated except by
a writing which expressly states that it is an amendment, modification or
waiver, refers to this Agreement and is signed by the party to be charged. No
course of conduct or dealing shall be construed to modify, amend or otherwise
affect any of the provisions hereof.
Very truly yours,
OHIO LEGACY CORP OHIO LEGACY BANK (IN ORGANIZATION)
By:__________________________________ By:__________________________________
L. Dwight Douce L. Dwight Douce
President and Chief Executive Officer President and Chief Executive Officer
Accepted as of the date first above
written:
MCDONALD INVESTMENTS, INC.
By:__________________________________
Charles R. Crowley
Managing Director
-28-
